Exhibit 10.3

TERM LOAN AGREEMENT

Dated as of
 
November 30, 2011
 
among
 
VANGUARD NATURAL GAS, LLC,
as Borrower,
 
CITIBANK, N.A.,
as Administrative Agent,
 

 
and
 

 
The Other Lenders Party Hereto
 

$100,000,000
SENIOR SECURED SECOND LIEN
TERM LOAN FACILITY

 
TABLE OF CONTENTS
 
 
ARTICLE I
Definitions and Accounting Matters
 
Section 1.01
Terms Defined Above
1
Section 1.02
Certain Defined Terms
1
Section 1.03
General Terms and Headings
23
Section 1.04
Accounting Terms and Determinations; GAAP
23
Section 1.05
Changes in GAAP
24
Section 1.06
Calculations: Rounding
24
Section 1.07
Determination of Time of Day
24

 
 
ARTICLE II
The Loans
 
Section 2.01
The Term Borrowing
24
Section 2.02
Loans and Borrowing
24
Section 2.03
Requests for Borrowing
25
Section 2.04
Intentionally Omitted
25
Section 2.05
Funding of Borrowing
25
Section 2.06
Scheduled Termination of Aggregate Commitments
26
Section 2.07
Collateral Coverage
26
Section 2.08
Collateral
27
Section 2.09
Swap Agreements for Properties to be Acquired
27
Section 2.10
Defaulting Lenders
29

 
ARTICLE III
Payments of Principal and Interest; Prepayments; Fees
 
Section 3.01
Repayment of Loans
30
Section 3.02
Interest
30
Section 3.03
Intentionally Omitted
31
Section 3.04
Prepayments
31
Section 3.05
Fees
32

 
ARTICLE IV
Payments; Pro Rata Treatment; Sharing of Set-offs
 
Section 4.01
Payments Generally; Pro Rata Treatment; Sharing of Set-offs
33
Section 4.02
Presumption of Payment by the Borrower
34
Section 4.03
Certain Deductions by the Administrative Agent
34
Section 4.04
Disposition of Proceeds
34

 
 
 

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

 
ARTICLE V
Increased Costs; Taxes; Illegality
 
Section 5.01
Increased Costs
35
Section 5.02
Intentionally Omitted
36
Section 5.03
Taxes
36
Section 5.04
Mitigation Obligations; Replacement of Lenders
39
Section 5.05
Intentionally Omitted
40

 
 
ARTICLE VI
Conditions Precedent
 
Section 6.01
Intentionally Omitted
40
Section 6.02
Conditions to Effectiveness
40
Section 6.03
Conditions Precedent to Lending
46

 

 
 
ARTICLE VII
Representations and Warranties
 
Section 7.01
Organization; Powers
46
Section 7.02
Authority; Enforceability
47
Section 7.03
Approvals; No Conflicts
47
Section 7.04
Financial Condition; No Material Adverse Change
47
Section 7.05
Litigation
48
Section 7.06
Environmental Matters
48
Section 7.07
Compliance with the Laws and Agreements; No Defaults
49
Section 7.08
Investment Company Act
49
Section 7.09
Taxes
50
Section 7.10
ERISA
50
Section 7.11
Disclosure; No Material Misstatements
51
Section 7.12
Insurance
51
Section 7.13
Restriction on Liens
52
Section 7.14
Subsidiaries
52
Section 7.15
Location of Business and Offices
52
Section 7.16
Properties; Titles, Etc
52
Section 7.17
Maintenance of Properties
53
Section 7.18
Gas Imbalances, Prepayments
54
Section 7.19
Marketing of Production
54
Section 7.20
Swap Agreements
54
Section 7.21
Use of Loans
55
Section 7.22
Solvency
55
Section 7.23
Sanctioned Persons
55
Section 7.24
Security Instruments
55
Section 7.25
Article 8 of Uniform Commercial Code
56

 
 

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

 
 
ARTICLE VIII
Affirmative Covenants
 
Section 8.01
Financial Statements; Other Information
56
Section 8.02
Notices of Material Events
59
Section 8.03
Existence; Conduct of Business
61
Section 8.04
Payment of Obligations
61
Section 8.05
Performance of Obligations under Loan Documents
61
Section 8.06
Operation and Maintenance of Properties
61
Section 8.07
Insurance
63
Section 8.08
Books and Records; Inspection Rights
63
Section 8.09
Compliance with Laws
63
Section 8.10
Environmental Matters
63
Section 8.11
Further Assurances
64
Section 8.12
Reserve Reports
65
Section 8.13
Title Information
66
Section 8.14
Additional Collateral; Additional Guarantors
67
Section 8.15
ERISA Compliance
67

 

 
ARTICLE IX
Negative Covenants
 
Section 9.01
Financial Covenants
68
Section 9.02
Debt
68
Section 9.03
Liens
69
Section 9.04
Dividends, Distributions and Redemptions
70
Section 9.05
Investments, Loans and Advances
70
Section 9.06
Nature of Business; International Operations
71
Section 9.07
Limitation on Leases
72
Section 9.08
Proceeds of Loans
72
Section 9.09
ERISA Compliance
72
Section 9.10
Sale or Discount of Receivables
73
Section 9.11
Mergers, Etc
73
Section 9.12
Sale of Properties
74
Section 9.13
Environmental Matters
74
Section 9.14
Transactions with Affiliates
74
Section 9.15
Subsidiaries
74
Section 9.16
Negative Pledge Agreements; Dividend Restrictions
74
Section 9.17
Gas Imbalances, Take-or-Pay or Other Prepayments
75
Section 9.18
Swap Agreements
75
Section 9.19
Marketing Activities
76

 
 
ARTICLE X
Events of Defaul; Remedies
 
Section 10.01
Events of Default
76
Section 10.02
Remedies
79

 
 
 

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

 
ARTICLE XI
The Agents
 
Section 11.01
Appointment; Powers; Removal
80
Section 11.02
Rights as a Lender
82
Section 11.03
Exculpatory Provisions
82
Section 11.04
Reliance by Administrative Agent
83
Section 11.05
Delegation of Duties
83
Section 11.06
Resignation of Administrative Agent
84
Section 11.07
Non-Reliance on Administrative Agent and Other Lenders
84
Section 11.08
No Other Duties, etc
84
Section 11.09
Administrative Agent May File Proofs of Claim
85
Section 11.10
Collateral and Guaranty Matters
85
Section 11.11
Secured Swap Agreements and Secured Treasury Management Agreements
86

 
 
ARTICLE XII
Miscellaneous
 
Section 12.01
Notices
86
Section 12.02
Waivers; Amendments
88
Section 12.03
Expenses, Indemnity; Damage Waiver
90
Section 12.04
Successors and Assigns Generally
92
Section 12.05
Survival; Revival; Reinstatement
96
Section 12.06
Counterparts; Integration; Effectiveness; Electronic Signatures
97
Section 12.07
Severability
98
Section 12.08
Right of Setoff
98
Section 12.09
GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER OF JURY TRIAL
99
Section 12.10
Headings
100
Section 12.11
Confidentiality
100
Section 12.12
Interest Rate Limitation
101
Section 12.13
EXCULPATION PROVISIONS
102
Section 12.14
Collateral Matters; Swap Agreements; Treasury Management Agreements
102
Section 12.15
No Third Party Beneficiaries
102
Section 12.16
USA Patriot Act Notice
103
Section 12.17
Release
103
Section 12.18
Replacement of Lenders
103
Section 12.19
Time of the Essence
104
Section 12.20
No Advisory or Fiduciary Responsibility
104
Section 12.21
The Parent
105
Section 12.22
Concerning the Intercreditor Agreement
105

 
 
 

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

 
 
ANNEXES, EXHIBITS AND SCHEDULES
 
Annex I                                Commitments and Applicable Percentages

Exhibit A                                Form of Note
Exhibit B                                Form of Borrowing Request
Exhibit C                                N/A
Exhibit D                                Form of Compliance Certificate
Exhibit E                                Security Instruments
Exhibit F                                Form of Assignment and Assumption
Exhibit G-1
Form of U.S. Tax Compliance Certificate (Foreign Lenders that are not
partnerships)

Exhibit G-2
Form of U.S. Tax Compliance Certificate (Foreign Participants that are not
partnerships)

Exhibit G-3
Form of U.S. Tax Compliance Certificate (Foreign Lenders that are partnerships)

Exhibit G-4
Form of U.S. Tax Compliance Certificate (Foreign Participants that are
partnerships)

Schedule 7.05                                           Litigation
Schedule 7.06                                           Environmental
Schedule 7.12                                           Insurance
Schedule 7.14                                           Subsidiaries and
Partnerships
Schedule 7.18                                           Gas Imbalances
Schedule 7.19                                           Marketing Contracts
Schedule 7.20                                           Current Swap Agreements
Schedule 9.03                                           Existing Liens
Schedule 9.05                                           Investments
 
 
 

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

 
THIS TERM LOAN AGREEMENT dated as of November 30, 2011, is among VANGUARD
NATURAL GAS, LLC, a limited liability company duly formed and existing under the
laws of the Commonwealth of Kentucky (the "Borrower"); each of the Lenders from
time to time party hereto; and CITIBANK, N.A. (in its individual capacity,
"Citibank"), as administrative agent for the Lenders (in such capacity, together
with its successors in such capacity, the "Administrative Agent").
 
R E C I T A L S
 
The Borrower has requested that the Lenders provide a term loan facility, and
the Lenders are willing to do so on the terms and conditions set forth herein.
 
In consideration of the mutual covenants and agreements herein contained and of
the loans, extensions of credit and commitments hereinafter referred to, the
parties hereto hereby agree as follows:
 
ARTICLE I
 
Definitions and Accounting Matters
 
Section 1.01. Terms Defined Above.  As used in this Agreement, each term defined
above has the meaning indicated above.
 
Section 1.02. Certain Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:
 
"Acquiring Entity" has the meaning assigned to such term in Section 2.09.
 
"Acquisition Company" means Vanguard Acquisition Company, LLC, a Delaware
company, formed by the Borrower to effectuate the merger and the ENP
Transactions pursuant to the terms of the Merger Agreement.
 
"Act" has the meaning assigned such term in Section 12.16.
 
"Administrative Questionnaire" means an Administrative Questionnaire in a form
supplied from time to time by the Administrative Agent.
 
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
 
"Agent Parties" has the meaning assigned such term in Section 12.01(d)(ii).
 
"Agents" means, collectively, the Administrative Agent and other agents
subsequently named; and "Agent" shall mean either the Administrative Agent or
such other agent, as the context requires.
 
 
1

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

 
"Aggregate Commitments" at any time, means the aggregate amount of the
Commitments of all of the Lenders.  The amount of the initial Aggregate
Commitments on the Effective Date is $100,000,000.
 
"Agreement" means this Term Loan Agreement, as the same may from time to time be
amended, modified, supplemented or restated.
 
"Applicable Margin" means, for any day the rate per annum set forth in the grid
below based upon the number of days after the Effective Date:
 
Applicable Margin Grid
 
Days
1-180
Days
181-360
Days
360+
Applicable Margin
5.50%
6.00%
8.50%

 
Provided, however, that if the Borrower fails to comply with Section 8.13, then
the Applicable Margin means, for any day the rate per annum set forth in the
grid below based upon the timing indicated below:
 
Section 8.13(c) Alternative Applicable Margin Grid
 
Until 1/15/12
1/16/12 -5/30/12
5/31/12 and thereafter
Applicable Margin
5.50%
6.00%
8.50%

 
Each change in the Applicable Margin shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change.
 
"Applicable Percentage" means, with respect to any Lender, the percentage of the
Aggregate Commitments represented by such Lender's Commitment.  If the Aggregate
Commitments have terminated, the Applicable Percentages shall be the percentage
of the Total Outstandings represented by such Lender’s Outstanding Amount.  The
initial Applicable Percentage of each Lender is set forth on Annex I or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable.
 
"Approved Counterparty" means (a) any Lender or any Affiliate of a Lender, or
(b) any other Person engaged in the business of writing Swap Agreements whose
long term senior unsecured debt rating is A-/A3 by S&P or Moody's (or their
equivalent) or higher and that is acceptable to the Administrative Agent, or
(c) any other Person from time to time approved by the Required Lenders.
 
"Approved Fund" means any Person (other than a natural person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its activities
and that is administered or managed by (a) a Lender, (b) an Affiliate of a
Lender or (c) an entity or an Affiliate of an entity that administers or manages
a Lender.
 
 
2

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

 
"Approved Petroleum Engineers" means DeGolyer and MacNaughton and any other
independent petroleum engineers acceptable to the Administrative Agent.
 
"Arranger" means (a) Citigroup Global Markets Inc., in its capacities as the
co-lead arranger, sole bookrunner and co-syndication agent hereunder, and
(b) BNP Paribas, in its capacities as co-lead arranger and co-syndication agent
hereunder.
 
"ASC 815" means the Accounting Standards Codification No. 815 (Derivatives and
Hedging), as issued by the Financial Accounting Standards Board.
 
"Assignment and Assumption" means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 12.04(b)), and accepted by the Administrative Agent, in
substantially the form of Exhibit F or any other form approved by the
Administrative Agent.
 
"Board" means the Board of Governors of the Federal Reserve System of the United
States of America or any successor Governmental Authority.
 
"Borrowing" means the aggregate Loans made by the Lenders on the Effective Date
hereof.
 
"Borrowing Request" means the request by the Borrower for the Borrowing in
accordance with Section 2.03.
 
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City or Houston, Texas are authorized or
required by law to remain closed.
 
"Capital Expenditures" means, in respect of any Person, for any period, the
aggregate (determined without duplication) of all exploration and development
expenditures and costs that are capital in nature and any other expenditures
that are capitalized on the balance sheet of such Person in accordance with
GAAP.
 
"Capital Leases" means, in respect of any Person, all leases which shall have
been, or should have been, in accordance with GAAP, recorded as capital leases
on the balance sheet of the Person liable (whether contingent or otherwise) for
the payment of rent thereunder.
 
"Casualty Event" means any loss, casualty or other insured damage to, or any
nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Borrower or any of the Subsidiaries
having a fair market value in excess of $5,000,000.
 
"Change in Control" means an event or series of events by which (a) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Securities Exchange Act of 1934
and the rules of the SEC thereunder as in effect on the date hereof) of Equity
Interests representing more than 25% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Parent, or (b)
occupation of a majority of those seats (other than vacant seats) on the board
of managers of Parent by Persons who were neither (i) nominated by the board of
managers of the Parent nor (ii) appointed by managers so nominated.
 
 
3

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

 
"Change in Law" means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (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
thereunder 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 or otherwise, in each case pursuant to Basel
III, shall in each case be deemed to be a "Change in Law" introduced or adopted
after the date hereof, regardless of the date enacted, adopted or issued.
 
"Code" means the Internal Revenue Code of 1986, as amended from time to time,
and any successor statute.
 
"Collateral" means all of the "Collateral" and Mortgaged Property referred to in
the Security Instruments, and all of the other Property and other Equity
Interests of the Loan Parties and other Persons that is or is intended under the
terms of the Security Instruments to be subject to Liens in favor of the
Administrative Agent for the benefit of the Secured Parties.
 
“Collateral Coverage Ratio” means the ratio of Pre-Tax PV10% Value to Total
Debt.
 
"Commitment" means, with respect to each Lender, the obligation of such Lender
to make  the Loans hereunder, in the original principal equal to the amount set
forth opposite such Lender's name as its "Commitment" on Annex 1 or in the
Assignment and Assumption pursuant to which it became a Lender.
 
"Communications" has the meaning assigned such term in Section 12.01(d).
 
"Connection Income Taxes" means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.
 
"Consolidated Leverage Ratio" means, as of any date of determination, for the
Parent, the Borrower and the Subsidiaries on a consolidated basis, the ratio of
(a) Total Debt as of such date to (b) EBITDA for each four consecutive fiscal
quarter period ending on such date of determination.  For purposes of
calculating the Consolidated Leverage Ratio at any date, EBITDA shall be
calculated on a pro forma basis (as certified by the Borrower to the
Administrative Agent and as approved by the Administrative Agent) assuming that
all acquisitions made, and all dispositions completed, during the four
consecutive fiscal quarters then most recently ended have been made on the first
day of such period (but without any adjustment for projected cost savings or
other synergies).
 
 
4

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

 
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.  For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 10% or more of the Equity
Interests having ordinary voting power for the election of the managers or other
governing body of a Person will be deemed to "control" such other
Person.  "Controlling" and "Controlled" have meanings correlative thereto.
 
"Debt" means, for any Person, the sum of the following (without
duplication):  (a) all obligations of such Person for borrowed money or
evidenced by bonds, bankers' acceptances, debentures, notes or other similar
instruments; (b) all obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, surety or other bonds and similar
instruments; (c) all accounts payable and all accrued expenses, liabilities or
other obligations of such Person to pay the deferred purchase price of Property
or services; (d) all obligations under Capital Leases; (e) all obligations under
Synthetic Leases; (f) all Debt (as defined in the other clauses of this
definition) of others secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) a Lien on any
Property of such Person, whether or not such Debt is assumed by such Person; (g)
all Debt (as defined in the other clauses of this definition) of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the Debt (howsoever such assurance shall be made) to the extent
of the lesser of the amount of such Debt and the maximum stated amount of such
guarantee or assurance against loss; (h) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or covenants
of others or to purchase the Debt or Property of others; (i) obligations to
deliver commodities, goods or services, including, without limitation,
Hydrocarbons, in consideration of one or more advance payments, other than gas
balancing arrangements in the ordinary course of business; (j) obligations to
pay for goods or services even if such goods or services are not actually
received or utilized by such Person; (k) any Debt of a partnership for which
such Person is liable either by agreement, by operation of law or by a
Governmental Requirement but only to the extent of such liability; (l)
Disqualified Capital Stock; and (m) the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly
or indirectly received payment.  The Debt of any Person shall include all
obligations of such Person of the character described above to the extent such
Person remains legally liable in respect thereof notwithstanding that any such
obligation is not included as a liability of such Person under GAAP.
 
"Debtor Relief Laws" means the Bankruptcy Code of the United States of America,
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 any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
 
"Defaulting Lender" means at any time, subject to Section 2.10(b), (i) any
Lender that has failed for two or more Business Days to comply with its
obligations under this Agreement to make a Loan or make any other payment due
hereunder (each, a "funding obligation"), unless such Lender has notified the
Administrative Agent and the Borrower in writing that such failure is the result
of such Lender’s determination that one or more conditions precedent to funding
has not been satisfied (which conditions precedent, together with the applicable
default, if any, will be specifically identified in such writing), (ii) any
Lender that has notified the Administrative Agent or the Borrower in writing, or
has stated publicly, that it does not intend to comply with its funding
obligations hereunder, unless such writing or statement states that such
position is based on such Lender’s determination that one or more conditions
precedent to funding cannot be satisfied (which conditions precedent, together
with the applicable default, if any, will be specifically identified in such
writing or public statement), (iii) any Lender that has, for three or more
Business Days after written request of the Administrative Agent or the Borrower,
failed 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 will cease to be a Defaulting Lender pursuant to this clause (iii)
upon the Administrative Agent’s and the Borrower’s receipt of such written
confirmation), or (iv) any Lender with respect to which a Lender Insolvency
Event has occurred and is continuing with respect to such Lender or its Parent
Company.  Any determination by the Administrative Agent that a Lender is a
Defaulting Lender under any of clauses (i) through (v) above will be conclusive
and binding absent manifest error, and such Lender will be deemed to be a
Defaulting Lender) upon notification of such determination by the Administrative
Agent to the Borrower and the Lenders.
 
 
5

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

 
"Determining Lenders" means, at any time, Lenders having Loans representing more
than 50% of the sum of all Loans outstanding at such time (without regard to any
sale by a Lender of a participation in any Loan under Section 12.04(d));
provided that the Loan of any Defaulting Lender at that time shall be
disregarded for purposes of making a determination of Determining Lenders.
 
"Disqualified Capital Stock" means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, or requires the payment of any cash dividend or any other
scheduled payment constituting a return of capital, in the case of each of the
foregoing, on or prior to the date that is after the earlier of (a) the Maturity
Date and (b) the date on which there are no Loans or other obligations hereunder
outstanding and all of the Aggregate Commitments are terminated.
 
"dollars" or "$" refers to lawful money of the United States of America.
 
"Domestic Subsidiary" means any Subsidiary that is organized under the laws of
the United States of America or any state thereof or the District of Columbia.
 
"EBITDA" means, for any twelve-month period (except as otherwise expressly
provided) ending on the last day of any fiscal quarter, consolidated net income,
excluding any non-cash revenue or expense associated with Swap Agreements
resulting from ASC 815, less income or plus loss from discontinued operations
and extraordinary items, plus without duplication and to the extent deducted
from revenues in determining consolidated net income, the sum of (a) the
aggregate amount of consolidated Interest Expense for such period, (b) the
aggregate amount of income tax expense for such period, (c) all amounts
attributable to depletion, depreciation and amortization for such period, and
(d) all other non-cash charges, all determined on a consolidated basis with
respect to Parent, the Borrower and the Subsidiaries in accordance with GAAP,
using the results of the twelve-month period ending with that reporting period
(except as otherwise herein provided).
 
 
6

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

 
"Effective Date" means November 30, 2011.
 
"Eligible Assignee" means any Person that meets the requirements to be an
assignee under Section 12.04(b)(iii), (v) and (vi) (subject to such consents, if
any, as may be required under Section 12.04(b)(iii)); provided that
notwithstanding the foregoing, "Eligible Assignee" shall not include the Parent,
the Borrower or any of the Parent's Affiliates or Subsidiaries.
 
"Engineering Reports" has the meaning assigned such term in Section 2.07(c)(i).
 
"ENP" means Encore Energy Partners LP, a publicly traded Delaware limited
partnership.
 
"ENP Common Units" means the common units issued by ENP representing limited
partner interests in ENP.
 
"ENP Credit Agreement" means that certain Amended and Restated Credit Agreement
dated March 7, 2007 among ENP Operating as borrower, ENP as a guarantor, Bank of
America, N.A., as administrative agent, and the lenders named therein, as from
time to time amended, supplemented or restated.
 
"ENP Entities " means ENP, ENP GP, ENP Operating, Encore Energy Partners Finance
Corporation, and Encore Clear Fork Pipeline LLC.
 
"ENP General Partner Units" means the general partner units issued by ENP or
representing general partner interests issued by ENP.
 
"ENP GP" means Encore Energy Partners GP LLC, a Delaware limited liability
company, the general partner of ENP.
 
"ENP GP LLC Member Interests" means the membership interests issued by ENP GP.
 
"ENP Oil and Gas Properties" means that portion of the ENP Properties which
constitutes Oil and Gas Properties.
 
"ENP Operating" means Encore Energy Partners Operating LLC, a Delaware limited
liability company, a wholly owned Subsidiary of ENP.
 
"ENP Pledged Interests" means collectively, the ENP General Partner Units, the
ENP Common Units and the ENP GP LLC Member Interests, all rights, titles and
interests with respect thereto, and all proceeds thereof, together constituting
100% of the Equity Interests of ENP.
 
 
7

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

 
"ENP Properties" means all Property owned by ENP and its Subsidiaries.
 
"ENP Transaction" means the acquisition by the Borrower through merger in
accordance with the terms of the ENP Transaction Documents of the ENP Common
Units not currently owned directly or indirectly by the Borrower.
 
"ENP Transaction Documents" means the Merger Agreement, and all documents,
instruments and certificates delivered or executed in connection therewith or
related thereto, as each is in existence on the Effective Date with only such
waivers, consents, amendments and modifications as have been consented to in
writing by the Administrative Agent and the Required Lenders.
 
"Environmental Laws" means any and all Governmental Requirements relating to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
 
"Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.
 
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute.
 
"ERISA Affiliate" means each trade or business (whether or not incorporated)
which together with the Parent, the Borrower or a Subsidiary would be deemed to
be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
 
"ERISA Event" means (a) a "Reportable Event" described in section 4043 of ERISA
and the regulations issued thereunder, (b) the withdrawal of the Parent, the
Borrower, a Subsidiary or any ERISA Affiliate 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, (e) receipt of a notice of
withdrawal liability pursuant to Section 4202 of ERISA or (f) any other event or
condition which might constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.
 
"Event of Default" has the meaning assigned such term in Section 10.01.
 
 
8

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

 
"Excepted Liens" means:  (a) Liens for Taxes, assessments or other governmental
charges or levies which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been
established and maintained in accordance with GAAP; (b) Liens in connection with
workers' compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are
being contested in good faith by appropriate action and for which adequate
reserves have been established and maintained in accordance with GAAP; (c)
statutory landlord's liens, operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', suppliers', workers', materialmen's, construction or
other like Liens arising by operation of law in the ordinary course of business
or incident to the exploration, development, operation and maintenance of Oil
and Gas Properties each of which is in respect of obligations that are not
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been established and maintained in accordance
with GAAP; (d) contractual Liens which arise in the ordinary course of business
under operating agreements, joint venture agreements, oil and gas partnership
agreements, oil and gas leases, farm-out agreements, division orders, contracts
for the sale, transportation or exchange of oil and natural gas, unitization and
pooling declarations and agreements, area of mutual interest agreements,
overriding royalty agreements, marketing agreements, processing agreements, net
profits agreements, development agreements, gas balancing or deferred production
agreements, injection, repressuring and recycling agreements, salt water or
other disposal agreements, seismic or other geophysical permits or agreements,
and other agreements which are usual and customary in the oil and gas business
and are for claims which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been
established and maintained in accordance with GAAP, provided that any such Lien
referred to in this clause does not materially impair the use of the Property
covered by such Lien for the purposes for which such Property is held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (e) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar rights
and remedies and burdening only deposit accounts or other funds maintained with
a creditor depository institution, provided that no such deposit account is a
dedicated cash collateral account or is subject to restrictions against access
by the depositor in excess of those set forth by regulations promulgated by the
Board and no such deposit account is intended by Borrower or any of the
Subsidiaries to provide collateral to the depository institution; (f) easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in any Property of the Borrower or any Subsidiary for the purpose
of roads, pipelines, transmission lines, transportation lines, distribution
lines for the removal of gas, oil, coal or other minerals or timber, and other
like purposes, or for the joint or common use of real estate, rights of way,
facilities and equipment, which do not secure any monetary obligations and which
in the aggregate do not materially impair the use of such Property for the
purposes of which such Property is held by the Borrower or any Subsidiary or
materially impair the value of such Property subject thereto; (g) minor defects
and irregularities in title to any Property which do not secure any monetary
obligations and which in the aggregate do not materially impair use of such
Property for the purposes for which such Property is held by the Borrower and
any Subsidiary or materially impair the value of such Property subject thereto;
(h) Liens on cash or securities pledged to secure performance of tenders, surety
and appeal bonds, government contracts, performance and return of money bonds,
bids, trade contracts, leases, statutory obligations, regulatory obligations and
other obligations of a like nature incurred in the ordinary course of business
and (i) judgment and attachment Liens not giving rise to an Event of Default,
provided that any appropriate legal proceedings which may have been duly
initiated for the review of such judgment shall not have been finally terminated
or the period within which such proceeding may be initiated shall not have
expired and no action to enforce such Lien has been commenced; provided, further
that Liens described in clauses (a) through (e) shall remain "Excepted Liens"
only for so long as no action to enforce such Lien has been commenced and no
intention to subordinate the first priority Lien granted in favor of the
Administrative Agent and the Lenders is to be hereby implied or expressed by the
permitted existence of such Excepted Liens.
 
 
9

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

 
"Excluded Taxes" means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S.
federal  withholding Taxes imposed on amounts payable to or for the account of
such Lender with respect to an applicable interest in a Loan or Commitment
pursuant to a law in effect on the date on which (i) such Lender acquires such
interest in the Loan or Commitment (other than pursuant to an assignment request
by the Borrower under Section 12.18) or (ii) such Lender changes its lending
office, except in each case to the extent that, pursuant to Section 5.03,
amounts with respect to such Taxes were payable either to such Lender's assignor
immediately before such Lender became a party hereto or to such Lender
immediately before it changed its lending office, (c) Taxes attributable to such
Recipient's failure to comply with Section 5.03(f) and (d) any U.S. federal
withholding Taxes imposed under FATCA.
 
"FATCA" means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof.
 
"Federal Funds Effective Rate" means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.
 
"Financial Officer" means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person.  Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.
 
"Financial Statements" means the financial statement or statements of the Parent
and the Subsidiaries referred to in Section 7.04(a).
 
"First Lien Credit Agreement" means the Third Amended and Restated Credit
Agreement among the Borrower, the Administrative Agent and the Lenders which are
parties thereto dated as of September 30, 2011, which creates the First Lien
Credit Facility, as amended by that certain First Amendment to Third Amended and
Restated Credit Agreement dated November 30, 2011.
 
 
10

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

 
"First Lien Credit Facility" means a loan to the Borrower in accordance with the
First Lien Loan Documents.
 
"First Lien Lenders" means the "Lenders" as defined in the First Lien Credit
Agreement.
 
"First Lien Loan Documents" means the "Loan Documents" as defined in the First
Lien Credit Agreement.
 
"Flood Insurance Regulations" has the meaning specified in Section 7.12(b).
 
"Foreign Lender" means a Lender that is resident or organized under the laws of
a jurisdiction other than that in which the Borrower is resident for tax
purposes.
 
"Foreign Subsidiary" means any Subsidiary that is not a Domestic Subsidiary.
 
"Future Acquisition Documents" has the meaning specified in Section 2.09.
 
"GAAP" means generally accepted accounting principles in the United States of
America as in effect from time to time subject to the terms and conditions set
forth in Section 1.05.
 
"Governmental Authority" means the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank) over the Parent, the Borrower, any Subsidiary, any of
their Properties, any Agent or any Lender.
 
"Governmental Requirement" means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereafter in effect, including, without limitation, Environmental
Laws, energy regulations and occupational, safety and health standards or
controls, of any Governmental Authority.
 
"Guarantors" means (a) the Parent, (b) all Subsidiaries of the Borrower, and
(c) each other Person that guarantees the Obligations pursuant to
Sections 8.14(b) and 8.14(d).
 
"Guaranty Agreement" means an agreement executed by the Guarantors in form and
substance satisfactory to the Administrative Agent, unconditionally guarantying
on a joint and several basis, payment of the Obligations, as the same may be
amended, modified or supplemented from time to time.
 
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Obligations under
laws applicable to such Lender which are presently in effect or, to the extent
allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws
allow as of the date hereof.
 
 
11

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

 
"Hydrocarbon Interests" means all rights, titles, interests and estates now or
hereafter acquired in and to oil and gas leases, oil, gas and mineral leases
(excluding coal and timber), or other liquid or gaseous hydrocarbon leases,
mineral fee interests, overriding royalty and royalty interests, net profit
interests and production payment interests, including any reserved or residual
interests of whatever nature.  Unless other indicated herein, each reference to
the term "Hydrocarbon Interests" shall mean Hydrocarbon Interests of the
Borrower and the Subsidiaries.
 
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all
products refined or separated therefrom.  Unless otherwise indicated herein,
each reference to the term "Hydrocarbons" shall mean Hydrocarbons of the
Borrower and the Subsidiaries.
 
"Indemnified Taxes" means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any Loan
Party under any Loan Document and (b) to the extent not otherwise described in
(a), Other Taxes.
 
"Information" has the meaning assigned such term in Section 12.11.
 
“Intercreditor Agreement” means that certain First Lien/Second Lien
Intercreditor Agreement among Citibank, N.A. as Administrative Agent under this
Agreement, and Citibank, N.A. in its capacity as Administrative Agent under the
First Lien Credit Agreement, Citibank, N.A., in its capacity as Collateral
Agent, and Borrower and the Guarantors dated as of November 30, 2011.
 
"Interest Expense" means, for any period, the sum (determined without
duplication) of the aggregate gross interest expense of the Parent, the Borrower
and the Subsidiaries for such period, including to the extent included in
interest expense under GAAP:  (a) amortization of debt discount, (b) capitalized
interest and (c) the portion of any payments or accruals under Capital Leases
allocable to interest expense, minus (i) the portion of any payments or accruals
under Synthetic Leases allocable to interest expense, (ii) any imputed interest
pursuant to asset retirement obligations whether or not the same constitutes
interest expense under GAAP; and (iii) the non-cash amortized portion of
deferred financing costs.
 
"Interest Payment Date" means the last day of each March, June, September and
December.
 
"Interim Test" has the meaning assigned such term in Section 2.07(b).
 
"Investment" means, for any Person:  (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including, without
limitation, any "short sale" or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale) or any
capital contribution to any other Persons; (b) the making of any deposit with,
or advance, loan or capital contribution to, assumption of Debt of, purchase or
other acquisition of any other Debt or equity participation or interest in, or
other extension of credit to, any other Person (including the purchase of
Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person, but excluding
any such advance, loan or extension of credit having a term not exceeding ninety
(90) days representing the purchase price of inventory or supplies sold by such
Person in the ordinary course of business); (c) the purchase or acquisition (in
one or a series of transactions) of Property of another Person that constitutes
a business unit or (d) the entering into of any guarantee of, or other
contingent obligation (including the deposit of any Equity Interests to be sold)
with respect to, Debt or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person.
 
 
12

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

 
"IRS" means the United States Internal Revenue Service.
 
"Lender Insolvency Event" means that (i) a Lender or its Parent Company is
insolvent, or is generally unable to pay its debts as they become due, or admits
in writing its inability to pay its debts as they become due, or makes a general
assignment for the benefit of its creditors, or (ii) such Lender or its Parent
Company is the subject of a bankruptcy, insolvency, reorganization, liquidation
or similar proceeding, or a receiver, trustee, conservator, intervenor or
sequestrator, or a 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, has
been appointed for such Lender or its Parent Company, or such Lender or its
Parent Company has taken any action in furtherance of or indicating its consent
to or acquiescence in any such proceeding or appointment, provided that a Lender
Insolvency Event shall not occur solely by virtue of the ownership or
acquisition of any Equity Interest in that Lender or its Parent Company 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.
 
"Lenders" means the Persons listed on Annex I and any Person that shall have
become a party hereto pursuant to an Assignment and Assumption, other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.
 
"LIBOR Market Index Rate" means, for any day, the rate for 1-month U.S. dollar
deposits as reported on Reuters Screen LIBOR01 as of 12:00 p.m. Eastern time, on
such day, or if such day is not a Business Day, then the immediately preceding
Business Day (or if not so reported, then as reasonably determined by
Administrative Agent from another recognized source or interbank quotation which
is selected in order to produce an interest rate that is substantially the same
as the LIBOR Market Index Rate would have been).  Interest at the LIBOR Market
Index Rate will be calculated daily.
 
"Lien" means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) production payments and the like payable out of Oil
and Gas Properties.  The term "Lien" shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and the Subsidiaries, as applicable,
shall be deemed to be the owner of any Property which they have acquired or hold
subject to a conditional sale agreement, or leases under a financing lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person in a transaction intended to create a financing.
 
 
13

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

 
"Loan Documents" means this Agreement, the Notes and the Security Instruments
and all other agreements, instruments, consents and certificates heretofore or
hereafter executed and delivered by the Parent, the Borrower or any of its
Affiliates in connection with this Agreement (other than Secured Swap Agreements
and Treasury Management Agreements).
 
"Loan Parties" means, collectively, the Borrower, the Parent, each Guarantor and
each other Person (other than the Administrative Agent or any Lender) executing
a Loan Document.
 
"Loans" means the loans made by the Lenders to the Borrower pursuant to this
Agreement.
 
"Material Adverse Effect" means a material adverse change in, or material
adverse effect on (a) the business, operations, Property, condition (financial
or otherwise) or prospects of the Parent, the Borrower and the Subsidiaries
taken as a whole, (b) the ability of the Parent, the Borrower, any Subsidiary or
any Guarantor to perform any of its obligations under any Loan Document, (c) the
validity or enforceability of any Loan Document or (d) the rights and remedies
of or benefits available to the Administrative Agent, any other Agent or any
Lender under any Loan Document.
 
"Material Gas Imbalance" means, with respect to all gas balancing agreements to
which the Borrower or any Subsidiary is a party or by which any mineral interest
owned by the Borrower or any Subsidiary is bound, a net gas imbalance to the
Borrower or any Subsidiary, individually or taken as a whole in excess of
$5,000,000.  Gas imbalances will be determined based on written agreements, if
any, specifying the method of calculation thereof, or, alternatively, if no such
agreements are in existence, gas imbalances will be calculated by multiplying
(x) the volume of gas imbalance as of the date of calculation (expressed in
thousand cubic feet) by (y) the heating value in btu's per thousand cubic feet,
times the Henry Hub average daily spot price for the month immediately preceding
the date of calculation.
 
"Material Indebtedness" means Debt (other than the Loans and Swap Agreements) of
any one or more of the Parent, the Borrower and the Subsidiaries in an aggregate
principal amount exceeding $5,000,000.
 
"Maturity Date" means May 30, 2017.
 
"Merger Agreement" means that certain Agreement and Plan of Merger, by and among
Vanguard Natural Resources, LLC, Vanguard Natural Gas, LLC, Vanguard Acquisition
Company, LLC, Encore Energy Partners GP LLC and Encore Energy Partners LP, dated
as of July 10, 2011, with only such waivers, consents, amendments and
modifications as have been consented to in writing by the Administrative Agent
and the Required Lenders.
 
 
14

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

 
"Moody's" means Moody's Investors Service, Inc. and any successor thereto that
is a nationally recognized rating agency.
 
"Mortgaged Property" and "Mortgaged Properties" mean any Property owned by the
Borrower or any Guarantor which is subject to the Liens existing and to exist
under the terms of the Security Instruments.
 
"Mortgages" means the mortgages, deeds of trust, leasehold mortgages,
assignments of leases and rents, assignments of proceeds of production, security
documents and the like (including all amendments, modifications and supplements
thereto) delivered pursuant to this Agreement in order to grant Liens in Oil and
Gas Properties of the Borrower and the Subsidiaries to the Administrative Agent
for the ratable benefit of the Secured Parties.
 
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined in
Section 3(37) or 4001 (a)(3) of ERISA.
 
"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 12.02 and (ii) has been approved by the
Required Lenders.
 
"Non-Defaulting Lender" means, at any time, a Lender that is not a Defaulting
Lender or a Potential Defaulting Lender.
 
"Notes" means any promissory notes of the Borrower described in Section 2.02(d)
and being substantially in the form of Exhibit A, together with all amendments,
modifications, replacements, extensions and rearrangements thereof.
 
"Obligations" means any and all amounts owing or to be owing by the Parent, the
Borrower, any Subsidiary or any Guarantor or other Loan Party (including without
limitation, all debts, liabilities, obligations, covenants and duties of each
such Person, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising), and including interest and fees that accrue after the
commencement by or against any Loan Party or any Affiliate of any Loan Party of
any proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed claims
in such proceeding:  (a) to the Administrative Agent, any Lender or any other
Secured Party under any Loan Document; (b) to any Swap Lender under any Secured
Swap Agreement (which shall be deemed to be the Swap Termination Value as of the
date the amount of Obligations is being determined), (c) to any Treasury
Management Bank under any Secured Treasury Management Agreement, and (d) all
renewals, extensions and/or rearrangements of any of the above.
 
 
15

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

 
"Oil and Gas Properties" means (a) Hydrocarbon Interests; (b) the Properties now
or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests; (d) all operating
agreements, contracts and other agreements, including production sharing
contracts and agreements, which relate to any of the Hydrocarbon Interests or
the production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under
and which may be produced and saved or attributable to the Hydrocarbon
Interests, including all oil in tanks, and all rents, issues, profits, proceeds,
products, revenues and other incomes from or attributable to the Hydrocarbon
Interests; (f) all tenements, hereditaments, appurtenances and Properties in any
manner appertaining, belonging, affixed or incidental to the Hydrocarbon
Interests and (g) all Properties, rights, titles, interests and estates
described or referred to above, including any and all Property, real or
personal, now owned or hereafter acquired and situated upon, used, held for use
or useful in connection with the operating, working or development of any of
such Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment, rental equipment or other personal Property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil wells, gas wells, injection wells or other wells,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.  Unless otherwise indicated
herein, each reference to the term "Oil and Gas Properties" shall mean Oil and
Gas Properties of the Borrower and the Subsidiaries.
 
"Organizational Documents" mean, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non US jurisdiction); (b)
with respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement; and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.
 
"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 Taxes" means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 5.04 and Section 12.18.).
 
 
16

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

 
 "Outstanding Amount" means with respect to Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any prepayments or
repayments of Loans occurring on such date.
 
"Parent" means Vanguard Natural Resources, LLC, a Delaware limited liability
company, and the holder of 100% of the Equity Interests in the Borrower.
 
"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.
 
"Paribas Term Loan Credit Agreement" means the ParibasTerm Loan Agreement among
the Borrower, BNP Paribas and the Lenders which are parties thereto dated as of
November 16, 2010, which creates the Paribas Term Loan Credit Facility.
 
"Paribas Term Loan Credit Facility" means a loan to the Borrower in accordance
with the Paribas Term Loan Documents.
 
"Paribas Term Loan Documents" means the "Loan Documents" as defined in the
Paribas Term Loan Credit Agreement.
 
"Participant" has the meaning set forth in Section 12.04(d).
 
"Participant Register" has the meaning set forth in Section 12.04(d).
 
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto.
 
"PDP" means those Proved Reserves which are expected to be recovered from
completion intervals which are open and producing at the time of the estimate.
 
"PDNP" means (a) those Proved Reserves expected to be produced from existing
completion intervals in existing wells, but due to pending pipeline connections,
regulatory agency considerations, or other mechanical or contractual
requirements, Hydrocarbon sales have not yet commenced or have been interrupted,
and (b) other non-producing Proved Reserves which exist behind the casing of
existing wells, or at minor depths below the present bottom of such wells, which
are expected to be produced through these wells in the predictable future, where
the cost of making such oil and gas available for production should be moderate
when compared to the cost of a new well.
 
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
 
"Plan" means any employee pension benefit plan, as defined in section 3(2) of
ERISA, which (a) is currently or hereafter sponsored, maintained or contributed
to by the Parent, the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at
any time during the six calendar years preceding the date hereof, sponsored,
maintained or contributed to by the Parent, the Borrower or a Subsidiary or an
ERISA Affiliate.
 
 
17

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

 
"Platform" has the meaning assigned such term in Section 12.01(d).
 
"Potential Defaulting Lender" means, at any time, (i) any Lender with respect to
which an event of the kind referred to in the definition of "Lender Insolvency
Event" has occurred and is continuing in respect of any subsidiary or financial
institution affiliate of such Lender, or (ii) any Lender that has notified, or
whose Parent Company or a subsidiary or financial institution affiliate thereof
has notified, the Administrative Agent or the Borrower in writing, or has stated
publicly, that it does not intend to comply with its funding obligations
generally under other loan agreements or credit agreements or other
similar/other financing agreements, unless such writing or statement states that
such position is based on such Lender’s determination that one or more
conditions precedent to funding cannot be satisfied (which conditions precedent,
together with the applicable default, if any, will be specifically identified in
such writing or public statement).  Any determination by the Administrative
Agent that a Lender is a Potential Defaulting Lender under any of clauses (i)
and (ii) above will be conclusive and binding absent manifest error, and such
Lender will be deemed a Potential Defaulting Lender (subject to Section 2.13(b))
upon notification of such determination by the Administrative Agent to the
Borrower and the Lenders.
 
“Pre-Tax PV10% Value” is the present value of estimated future revenues to be
generated from the production of proved reserves, at least 60% of which must be
PDP, calculated in accordance with Securities and Exchange Commission (“SEC”)
guidelines, net of estimated lease operating expense, production taxes and
future development costs, using price and costs as of the date of estimation
without future escalation, without giving effect to non-property related
expenses such as general and administrative expenses, debt service,
depreciation, depletion and amortization, or Federal income taxes and discounted
using an annual discount rate of 10%. Pre-tax PV10% Value may be considered a
non-GAAP financial measure as defined by the SEC.
 
"Property" means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
cash, securities, accounts and contract rights.
 
"Proved Reserves" means those recoverable Hydrocarbons that have been estimated
with reasonable certainty, as demonstrated by geological and engineering data,
to be economically recoverable from the Oil and Gas Properties by existing
producing methods under existing economic conditions.
 
"Public Lender" has the meaning assigned to such term in Section 8.02.
 
"PUD" means economically recoverable Proved Reserves estimated to exist in
proved reservoirs which will be recovered from wells to be drilled in the
future.  Reserves in undrilled areas are included in proved reserved estimates
if they are considered proved by geologic analysis of the current well
information.
 
"Recipient" means (a) the Administrative Agent and (b) any Lender, as
applicable.
 
 
18

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

 
"Reconciliation Schedules" means all Reconciliation Schedules executed by the
Borrower, the Subsidiaries and their Affiliates to the Administrative Agent.
 
"Redemption" means with respect to any Debt, the repurchase, redemption,
prepayment, repayment, defeasance or any other acquisition or retirement for
value (or the segregation of funds with respect to any of the foregoing) of such
Debt.  "Redeem" has the correlative meaning thereto.
 
"Register" has the meaning assigned such term in Section 12.04(c).
 
"Regulation D" means Regulation D of the Board, as the same may be amended,
supplemented or replaced from time to time.
 
"Related Parties" means, with respect to any specified Person, such Person's
Affiliates and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives of such Person and of
such Person's Affiliates.
 
"Remedial Work" has the meaning assigned such term in Section 8.10(a).
 
"Required Lenders" means, at any time, Lenders having Loans representing more
than 66.67% of the sum of all Loans outstanding at such time (without regard to
any sale by a Lender of a participation in any Loan under Section 12.04(d));
provided that Loans of any Defaulting Lender at that time shall be disregarded
for purposes of making a determination of Required Lenders.
 
"Reserve Definitions" means, at any time, the Definitions for Oil and Gas
Reserves promulgated by the Society of Petroleum Engineers (or any generally
recognized successor) as in effect at such time and acceptable to the
Administrative Agent.
 
"Reserve Report" means each report, in form and substance satisfactory to the
Administrative Agent, setting forth, as of each December 31st or June 30th (or
such other date in the event of an Interim Test) the oil and gas reserves
attributable to the Oil and Gas Properties of the Borrower and the Subsidiaries,
together with a projection of the rate of production and future net income,
taxes, operating expenses and Capital Expenditures with respect thereto as of
such date, based upon the economic and pricing assumptions consistent with the
Administrative Agent's lending requirements at the time.
 
"Responsible Officer" means, as to any Person, the chief executive officer, the
president, any Financial Officer or any vice president of such Person.  Unless
otherwise specified, all references to a Responsible Officer herein shall mean a
Responsible Officer of the Borrower.
 
"Restricted Payment" means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any Equity Interests in the
Borrower or any of the Subsidiaries, or any payment (whether in cash, securities
or other Property), including any sinking fund or similar deposit, on account of
the purchase, Redemption, retirement, acquisition, cancellation or termination
of any such Equity Interests in the Borrower or any of the Subsidiaries or any
option, warrant or other right to acquire any such Equity Interests in the
Borrower or any of the Subsidiaries.
 
 
19

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

 
"S&P" means Standard & Poor's Financial Services LLC, a subsidiary of The
McGraw-Hill Companies, Inc., and any successor thereto that is a nationally
recognized rating agency.
 
"Scheduled Test" has the meaning assigned such term in Section 2.07(b).
 
"SEC" means the Securities and Exchange Commission or any successor Governmental
Authority.
 
"Secured Parties" means the Lenders, the Swap Lenders, the Treasury Management
Banks and any other Person the obligations of which are secured by the Liens and
guaranties granted under the Security Instruments.
 
"Secured Swap Agreement" means any Swap Agreement entered into by the Borrower
or any of the Subsidiaries or any of the Guarantors and any Swap Lender.
 
"Secured Treasury Management Agreement" means any Treasury Management Agreement
entered into by the Borrower or any of the Subsidiaries or any of the Guarantors
and any Treasury Management Bank.
 
"Security Agreement" means (a) an agreement executed by the Parent pledging all
of the Equity Interests of the Borrower to the Administrative Agent for the
ratable benefit of the Secured Parties, which agreement shall be in form and
substance satisfactory to the Administrative Agent, and (b) an agreement
executed by the Borrower and an agreement executed by all Subsidiaries,
including the ENP Entities, each in form and substance satisfactory to the
Administrative Agent, granting to the Administrative Agent for the ratable
benefit of the Secured Parties a Lien on all personal property assets of such
entity (including without limitation the Equity Interests of a Person owned by
such entity).
 
"Security Instruments" means the Guaranty Agreements, the Security Agreements,
the Mortgages, and other agreements, instruments or certificates described or
referred to in Exhibit E, and any and all other agreements, instruments,
consents or certificates now or hereafter executed and delivered by the Borrower
or any other Person (other than Secured Swap Agreements and Secured Treasury
Management Agreements) in connection with, or as security for or to guarantee
the payment or performance of the Obligations, the Notes, or this Agreement,  as
such agreements may be amended, modified, supplemented or restated from time to
time.
 
"Senior Notes" means any unsecured Debt of any Loan Party and any other entity
whose financial statements are consolidated with those of the Parent, and any
guarantees thereof which has terms (including amortization, covenants and events
of default), not more restrictive on the Loan Parties than those contained in
the Loan Documents.
 
“Standard Rate” means for any day a simple rate per annum equal to the sum of
the Applicable Margin plus the LIBOR Market Index Rate.
 
"Subsidiary" means:  (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, board of managers or other
governing body of such Person (irrespective of whether or not at the time Equity
Interests of any other class or classes of such Person shall have or might have
voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by the Parent, the Borrower or one or
more of the Subsidiaries, and (b) any partnership of which the Parent, the
Borrower or any of the Subsidiaries is a general partner.  Unless otherwise
indicated herein, each reference to the term 'Subsidiary' shall mean a
Subsidiary of the Parent.
 
 
20

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

 
"Swap Agreement" means any agreement with respect to any swap, forward, future
or derivative transaction or option (whereby the aggregate position for options
creates an obligation for the Borrower or any of the Subsidiaries or any of the
Guarantors) or similar agreement, whether exchange traded, "over-the-counter" or
otherwise, involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, managers, officers, employees
or consultants of Borrower or the Subsidiaries or the Guarantors shall be a Swap
Agreement.
 
"Swap Lender" means any Person that is a counterparty to a Swap Agreement with
the Borrower or any Subsidiary or any Guarantor that is a Lender or an Affiliate
of a Lender, or was a Lender or an Affiliate of a Lender, at the time such Swap
Agreement was entered into, provided that, so long as any Lender is a Defaulting
Lender, such Lender will not be a Swap Lender with respect to any Swap Agreement
entered into while such Lender was a Defaulting Lender.
 
"Swap Termination Value" means, in respect of any one or more Swap Agreements,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Agreements, (a) for any date on or after the
date such Swap Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Agreements, as determined by the
counterparties to such Swap Agreements.
 
"Synthetic Lease" means, as to any Person, any lease (including a lease that may
be terminated by the lessee at any time) of any Property (whether real, personal
or mixed) (a) that is accounted for as an operating lease under GAAP and (b) in
respect of which the lessee retains or obtains ownership of the Property so
leased for U.S. Federal income tax purposes, other than any such lease under
which such Person is the lessor.
 
"Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments, fees or
other charges imposed by any Governmental Authority, including any interest
additions to tax or penalties applicable thereto.
 
 "Total Outstandings" means the aggregate Outstanding Amount of all Loans.
 
"Total Debt" means, at any date, all Debt of the Parent, the Borrower and the
Subsidiaries on a consolidated basis, excluding (i) non-cash obligations under
ASC 815 and (ii) accounts payable and other accrued liabilities (for the
deferred purchase price of Property or services) from time to time incurred in
the ordinary course of business which are not greater than sixty (60) days past
the date of invoice or delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves are maintained in accordance
with GAAP.
 
 
21

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

 
"Transactions" means, with respect to (a) the Borrower, the execution, delivery
and performance by the Borrower of this Agreement, and each other Loan Document
to which it is a party, the Borrowing of Loans, the use of the proceeds thereof,
and the grant of Liens by the applicable Loan Parties against Mortgaged
Properties, the personal property assets of the Borrower and the Subsidiaries
and the Equity Interests of the Subsidiaries pursuant to the Security
Instruments and (b) each Guarantor, the execution, delivery and performance by
such Guarantor of each Loan Document to which it is a party, the guaranteeing of
the Obligations and the other obligations under the Guaranty Agreement by such
Guarantor and such Guarantor's grant of the security interests and provision of
collateral under the Security Instruments, and the grant of Liens by such
Guarantor on Mortgaged Properties and other Properties pursuant to the Security
Instruments.
 
"Treasury Management Agreement" means any agreement to provide cash management
services, including treasury, depository, overdraft, credit or debit card,
electronic funds transfer and other cash management arrangements.
 
"Treasury Management Bank" means any Person that, at the time it enters into a
Treasury Management Agreement with the Borrower or any Subsidiary or any
Guarantor, is a Lender or an Affiliate of a Lender, or was a Lender or an
Affiliate of a Lender, at the time such Treasury Management Agreement was
entered into; provided that, so long as any Lender is a Defaulting Lender, such
Lender will not be a Treasury Management Bank with respect to any Treasury
Management Agreement entered into while such Lender was a Defaulting Lender.
 
"U.S. Person" means any Person that is a "United States Person" as defined in
Section 7701(a)(30) of the Code.
 
"U.S. Tax Compliance Certificate" has the meaning assigned to such term in
paragraph (f) of Section 5.03(g)(i)(B)(III).
 
"VNR Finance" means VNR Finance Corp., a Delaware corporation and a Wholly-Owned
Subsidiary.
 
"Wholly-Owned Subsidiary" means (a) any Subsidiary of which all of the
outstanding Equity Interests, on a fully-diluted basis, are owned by the Parent,
the Borrower or one or more of the Wholly-Owned Subsidiaries or are owned by the
Parent, the Borrower and one or more of the Wholly-Owned Subsidiaries or (b) if
permitted by this Agreement, any Subsidiary that is organized in a foreign
jurisdiction and is required by the applicable laws and regulations of such
foreign jurisdiction to be partially owned by the government of such foreign
jurisdiction or individual or corporate citizens of such foreign jurisdiction,
provided that the Parent directly or indirectly, owns the remaining Equity
Interests in such Subsidiary and, by contract or otherwise, controls the
management and business of such Subsidiary and derives economic benefits of
ownership of such Subsidiary to substantially the same extent as if such
Subsidiary were a Wholly-Owned Subsidiary.
 
 
22

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

 
"Withholding Agent" means any Loan Party and the Administrative Agent.
 
Section 1.03. General Terms and Headings.
 
(a) Terms Generally; Rules of Construction.  The definitions of terms herein
shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.  The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation".  The word "will" shall be construed to have the same meaning and
effect as the word "shall".  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth in the
Loan Documents), (b) any reference herein to any law shall be construed as
referring to such law as amended, modified, codified or reenacted, in whole or
in part, and in effect from time to time, (c) any reference herein to any Person
shall be construed to include such Person's successors and assigns (subject to
the restrictions contained in the Loan Documents), (d) the words "herein",
"hereof" and "hereunder", and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (e) in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including;" the words "to"
and "until" each mean "to but excluding;" and the word "through" means "to and
including", (f) any reference herein to Articles, Sections, Annexes, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Annexes, Exhibits and Schedules to, this Agreement, (g) any reference to any law
or regulation herein shall, unless otherwise specified, refer to such law or
regulation as amended, modified or supplemented from time to time, and (h) the
words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including, cash, securities, accounts and contract rights.  No
provision of this Agreement or any other Loan Document shall be interpreted or
construed against any Person solely because such Person or its legal
representative drafted such provision.
 
(b) Headings.  Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document.
 
Section 1.04. Accounting Terms and Determinations; GAAP.  Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared for the Parent, the Borrower and the Subsidiaries, on a
consolidated basis, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which the Parent's independent
certified public accountants concur and which are disclosed to Administrative
Agent on the next date on which financial statements are required to be
delivered to the Lenders pursuant to Section 8.01(a); provided that, unless the
Borrower and the Required Lenders shall otherwise agree in writing, no such
change shall modify or affect the manner in which compliance with the covenants
contained herein is computed such that all such computations shall be conducted
utilizing financial information presented consistently with prior periods.
 
 
23

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

 
Section 1.05. Changes in GAAP.  If at any time any change in GAAP would affect
the computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the 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 Required Lenders);
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) the
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 1.06. Calculations: Rounding.  Any financial ratios required to be
maintained by the Borrower pursuant to this Agreement shall be calculated by
dividing the appropriate component by the other component, carrying the result
to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).
 
Section 1.07. Determination of Time of Day.  Unless designated otherwise, all
references herein to times of day shall be references to Central time (daylight
or standard, as applicable).
 
ARTICLE II
 
The Loans
 
Section 2.01. The Term Borrowing.  Subject to the terms and conditions  and
relying upon the representations and warranties herein set forth, each Lender
severally agrees to make a single loan to the Borrower on the Effective Date in
an amount equal to such Lender's Commitment.  Amounts borrowed under this
Section 2.01 and repaid or prepaid may not be reborrowed.
 
Section 2.02. Loans and Borrowing.
 
(a) Borrowing; Several Obligations.  Each Loan shall be made as part of the
Borrowing consisting of Loans made by the Lenders in the amount of their
respective Commitments on the Effective Date.  The failure of any Lender to make
the Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments are several and no Lender
shall be responsible for any other Lender's failure to make a Loan as required.
 
(b) Intentionally Omitted.
 
(c) Intentionally Omitted.
 
 
24

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

 
(d) Loans, Obligations and Notes.  The Obligations and credit extensions made by
each Lender shall be evidenced by one or more accounts or records maintained by
such Lender and by the Administrative Agent in the ordinary course of
business.  The Loan made by each Lender shall be evidenced by a single
promissory note of the Borrower in substantially the form of Exhibit A, dated,
in the case of (i) any Lender party hereto as of the date of this Agreement, as
of the date of this Agreement, or (ii) any Lender that becomes a party hereto
pursuant to an Assignment and Assumption, as of the effective date of the
Assignment and Assumption, payable to the order of such Lender in a principal
amount equal to its Commitment as in effect on such date, and otherwise duly
completed.  In the event that any Lender's Commitment increases or decreases for
any reason, at the request of any such Lender, the Borrower shall deliver or
cause to be delivered on the effective date of such increase or decrease, a new
Note payable to the order of such Lender (or at the option of each Lender, a
modification of the existing Note payable to the order of such Lender) in a
principal amount equal to its Commitment after giving effect to such increase or
decrease, and otherwise duly completed.  The date, amount, and interest rate of
the Loan made by each Lender, and all payments made on account of the principal
thereof, shall be recorded by the Administrative Agent and such Lender, as
applicable, on its books, and, prior to any transfer, may be endorsed by such
Lender on a schedule attached to any Note or any continuation thereof or on any
separate record maintained by the Administrative Agent and such Lender.  Failure
to make any such notation or to attach a schedule shall not affect the
Administrative Agent's or any Lender's, or the Borrower's rights or obligations,
in respect of such Loan or other extensions of credit, or affect the validity of
such transfer by any Lender of its Note.  The accounts or records maintained by
the Administrative Agent and each Lender shall be conclusive absent manifest
error of the amount of the credit extensions made by the Lenders to the Borrower
and the interest and payments thereon.
 
Section 2.03. Requests for Borrowing.  On or before the Effective Date, Borrower
shall deliver to Agent a written Borrowing Request in substantially the form of
Exhibit B and signed by the Borrower.
 
Section 2.04. Intentionally Omitted.
 
Section 2.05. Funding of Borrowing.
 
(a) Funding by Lenders.  Each Lender shall make the Loan to be made by it
hereunder on the Effective Date by wire transfer of immediately available funds
by 1:00 p.m., Houston, Texas time, to the account of the Administrative Agent
most recently designated by it for such purpose by notice to the Lenders.  The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
maintained with the Administrative Agent and designated by the Borrower in the
Borrowing Request.  Nothing herein shall be deemed to obligate any Lender to
obtain the funds for its Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
its Loan in any particular place or manner.
 
(b) Presumption of Funding by the Lenders.  Unless the Administrative Agent
shall have received notice from a Lender prior to the Effective Date that such
Lender will not make available to the Administrative Agent such Lender's share
of the Borrowing, the Administrative Agent may assume that such Lender has made
such share available on such date in accordance with Section 2.05(a) and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount.  In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of a payment to be made by such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation and (ii) in the case of a
payment to be made by the Borrower, the interest rate then applicable to the
Loans.  If the Borrower and such Lender shall pay such interest to the
Administrative Agent for the same or an overlapping period, the Administrative
Agent shall promptly remit to the Borrower the amount of such interest paid by
the Borrower for such period.  If such Lender pays its share of the applicable
Borrowing to the Administrative Agent, then the amount so paid shall constitute
such Lender's Loan included in such Borrowing.  Any payment by the Borrower
shall be without prejudice to any claim the Borrower may have against a Lender
that shall have failed to make such payment to the Administrative Agent.
 
 
25

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

 
(c) Several Obligations of Lenders.  The obligations of the Lenders hereunder to
make Loans and to make payments pursuant to Section 12.03(c) are several and not
joint.  The failure of any Lender to make its respective Loan or to make any
payment under Section 12.03(c) on any date required hereunder shall not relieve
any other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to so make its
Loan or to make its payment under Section 12.03(c).
 
Section 2.06. Scheduled Termination of Aggregate Commitments.  The Aggregate
Commitments shall be automatically and permanently reduced to zero on the date
of the Borrowing.
 
Section 2.07. Collateral Coverage.
 
(a) Intentionally Omitted.
 
(b) Scheduled and Interim Tests.  The Collateral Coverage Ratio shall be tested
semi-annually in accordance with this Section 2.07 (a "Scheduled Test").  The
first such Scheduled Test shall occur on April 1, 2012.  In addition, if
Borrower shall elect to have its Borrowing Base (as defined in the First Lien
Credit Agreement) redetermined in between Scheduled Test dates, Administrative
Agent, shall, in conjunction with such Borrowing Base redetermination, test the
Collateral Coverage Ratio (an "Interim Test") in accordance with
this Section 2.07.  In addition to any Scheduled Test or Interim Test, the
Administrative Agent may, by notifying the Borrower thereof, elect to test the
Collateral Coverage Ratio any time the Administrative Agent (as defined in the
First Lien Credit Agreement) has the right to redetermine the Borrowing Base
under the First Lien Credit Agreement.
 
(c) Scheduled and Interim Test Procedure.
 
 
26

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

 
(i) Each Scheduled Test and each Interim Test shall be effectuated as
follows:  Upon receipt by the Administrative Agent of (A) the Reserve Report, in
the case of a Scheduled Test, pursuant to Section 8.12(a) and (c), and, in the
case of an Interim Test, pursuant to Section 8.12(b) and (c), and (B) such other
reports, data and supplemental information, including, without limitation, the
information provided pursuant to Section 8.12(c), as may, from time to time, be
reasonably requested by the Required Lenders (the Reserve Report, such
certificate and such other reports, data and supplemental information being the
"Engineering Reports"), the Administrative Agent shall evaluate the information
contained in the Engineering Reports and shall, in good faith, determine the
Collateral Coverage Ratio based upon such information and such other information
(including, without limitation, the status of title information with respect to
the Oil and Gas Properties as described in the Engineering Reports and the
existence of any other Debt) as the Administrative Agent deems appropriate in
its sole discretion and consistent with its normal oil and gas lending criteria
as it exists at the particular time.
 
(ii) The Administrative Agent shall notify the Borrower and the Lenders of the
Collateral Coverage Ratio within fifteen (15) days of Administrative Agent’s
receipt of the Engineering Reports required to be delivered by the Borrower
pursuant to Section 2.07(c)(i) and any other documentation reasonably requested
by Administrative Agent to determine Collateral Coverage Ratio.
 
(d) Intentionally Omitted.
 
(e) Intentionally Omitted.
 
Section 2.08. Collateral.
 
(a) Mortgaged Property.  The payment and performance of all of the Obligations
hereunder and under the Loan Documents, and under the Secured Swap Agreements
and Secured Treasury Management Agreements, shall be secured by a second Lien
against the entire interest of the Borrower and each Subsidiary in certain of
their Oil and Gas Properties (in an amount sufficient to comply with the
requirements of Section 8.14), pursuant to the terms of one or more Mortgages in
favor of the Administrative Agent for the ratable benefit of the Secured
Parties, which Mortgages shall be satisfactory in form and substance to the
Administrative Agent.
 
(b) Guarantees and Personal Property Assets.  The payment and performance of all
of the Obligations hereunder, under the Loan Documents, and under the Secured
Swap Agreements and Secured Treasury Management Agreements, (A) shall be
unconditionally guaranteed by each Subsidiary pursuant to one or more Guaranty
Agreements, and (B) shall be secured by a second Lien against all personal
property assets of the Borrower and of each Subsidiary pursuant to a Security
Agreement.  Reference is made to Section 8.14 of this Agreement for further
provisions with respect to additional Guarantors and additional collateral.
 
Section 2.09. Swap Agreements for Properties to be Acquired.  In conjunction
with any future acquisition by Borrower or any Subsidiary (the "Acquiring
Entity") of interests in Oil and Gas Properties, upon entering into a purchase
and sale agreement with respect thereto the Acquiring Entity may enter into a
Swap Agreement with respect to the production from the Properties being acquired
subject to the condition that the Swap Agreement meets the requirements of
Section 9.18.
 
 
27

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

 
If (A) the proposed acquisition described in such purchase and sale agreement
does not close within 90 days from the date of its execution, or (B) at any time
the closing of such acquisition is not being diligently pursued in good faith by
any party thereto, or (C) such purchase and sale agreement is otherwise
terminated for any reason, or (D) the Acquiring Entity has not timely complied
with any of the following provisions with respect to such acquisition:
 
(a) Future Acquisition Documents.  The Administrative Agent shall have received
(i) a true and complete executed copy of each of the acquisition documents for
such transaction (the "Future Acquisition Documents"); (ii) original
counterparts or copies, certified as true and complete, of the assignments,
deeds and leases for all of the Properties subject to the Future Acquisition
Documents; and (iii) such other related documents and information as the
Administrative Agent shall have requested with respect to the transaction
contemplated by the Future Acquisition Documents.
 
(b) Certificates.  The Administrative Agent shall have received a certificate of
a Responsible Officer of the Acquiring Entity certifying (i) that Acquiring
Entity is concurrently consummating the acquisition contemplated by the Future
Acquisition Documents and all material conditions precedent thereto have been
satisfied in all material respects by all of the parties thereto; (ii) as to the
amount of the final purchase price for the Properties subject to the Future
Acquisition Documents after giving effect to all adjustments as of the closing
date as contemplated by the Future Acquisition Documents and specifying, by
category, the amount of such adjustment; (iii) that attached thereto is a true
and complete list of all of the Properties subject to the Future Acquisition
Documents which are being acquired by the Acquiring Entity; (iv) that attached
thereto is a true and complete list of Properties subject to the Future
Acquisition Documents which have been excluded from the acquisition pursuant to
the terms of the Future Acquisition Documents, specifying with respect thereto
the basis of exclusion as (1) title defect, (2) preferential purchase right,
(3) environmental, (4) casualty loss, or (5) other (which is to be explained);
(v) that attached thereto is a true and complete list of all Properties subject
to the Future Acquisition Documents for which any seller has elected to cure a
title defect, specifying the nature of that title defect and the time frame
within which it is expected to be cured, (vi) that attached thereto is a true
and complete list of all Properties subject to the Future Acquisition Documents
for which any seller has elected to remediate an adverse environmental
condition; and (vii) that attached thereto is a true and complete list of all
Properties subject to the Future Acquisition Documents which are currently
pending final decision by a third party regarding purchase of such Property in
accordance with any preferential right.  The Borrower shall cause the Acquiring
Entity to deliver a preliminary draft of such certificate not less than three
(3) days prior to the proposed closing of the acquisition.  In addition, if
requested by the Administrative Agent, the Acquiring Entity shall provide the
Administrative Agent with the names and addresses of the operators of and the
first purchasers of production from the Properties subject to the Future
Acquisition Documents.
 
(c) Mortgage of Acquired Properties.  The Acquiring Entity shall have mortgaged
the Properties acquired by the Future Acquisition Documents to the
Administrative Agent for the ratable benefit of the Secured Parties pursuant to
the terms of one or more oil and gas mortgages.  In connection therewith, the
Administrative Agent shall have received evidence satisfactory to it that all
Liens against such Properties have been released or terminated and that
arrangements satisfactory to the Administrative Agent have been made for
recording and filing of such releases.
 
 
28

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

 
(d) Title Assurances.  The Acquiring Entity shall have delivered to the
Administrative Agent title information and data acceptable to the Administrative
Agent relating to title to the Mineral Interests in the Properties being
acquired pursuant to the Future Acquisition Documents.  These title assurances
shall include such post closing title work as the Administrative Agent may
request.
 
(e) Environmental Matters.  The Acquiring Entity shall have complied with
Section 8.10(c) with respect to environmental matters.
 
then the Acquiring Entity shall promptly, but in any event within 30 days after
the earliest to occur of any event or circumstance described in (A) through (D)
above, unwind or terminate any Swap Agreement entered into pursuant to this
Section 2.09.
 
Section 2.10. Defaulting Lenders.
 
(a) Defaulting Lender Adjustments.  Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then,
until such time as such Lender is no longer a Defaulting Lender, to the extent
permitted by applicable law, if a Lender becomes, and during the period it
remains, a Defaulting Lender, with respect to any Outstanding Amount of such
Defaulting Lender, any amount paid by the Borrower or otherwise received by the
Administrative Agent for the account of a Defaulting Lender under this Agreement
(whether on account of principal, interest, fees, indemnity payments or other
amounts) will not be paid or distributed to such Defaulting Lender, but will
instead be retained by the Administrative Agent in a segregated non-interest
bearing account until (subject to Section 2.10(b)) the termination of the
Aggregate Commitments and payment in full of all obligations of the Borrower
hereunder and will be applied by the Administrative Agent, to the fullest extent
permitted by law, to the making of payments from time to time in the following
order of priority:  first to the payment of any amounts owing by such Defaulting
Lender to the Administrative Agent under this Agreement, second to the payment
of post-default interest and then current interest due and payable to the
Lenders hereunder other than Defaulting Lenders, ratably among them in
accordance with the amounts of such interest then due and payable to them, third
to the payment of fees then due and payable to the Non-Defaulting Lenders
hereunder, ratably among them in accordance with the amounts of such fees then
due and payable to them, fourth to pay principal then due and payable to the
Non-Defaulting Lenders hereunder ratably in accordance with the amounts thereof
then due and payable to them, fifth to the ratable payment of other amounts then
due and payable to the Non-Defaulting Lenders, and sixth after the termination
of the Aggregate Commitments and payment in full of all obligations of the
Borrower hereunder, to pay amounts owing under this Agreement to such Defaulting
Lender or as a court of competent jurisdiction may otherwise direct.
 
 
29

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

 
(b) Defaulting Lender Cure.  If the Borrower and the Administrative Agent agree
in writing in their discretion that a Lender is no longer a Defaulting Lender or
a Potential Defaulting Lender, as the case may be, 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 (which may include
arrangements with respect to any amounts then held in the segregated account
referred to in Section 2.10(a)), such Lender will, to the extent applicable,
purchase at par such portion of outstanding Loans of the other Lenders and/or
make such other adjustments as the Administrative Agent may determine to be
necessary to cause the Outstanding Amounts of the Lenders to be on a pro rata
basis in accordance with their respective Commitments, whereupon such Lender
will cease to be a Defaulting Lender or Potential Defaulting Lender and will be
a Non-Defaulting Lender (and such Outstanding Amount of each Lender will
automatically be adjusted on a prospective basis to reflect the foregoing);
provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of the Borrower while such 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 or Potential Defaulting Lender to Non-Defaulting Lender will constitute a
waiver or release of any claim of any party hereunder arising from such Lender’s
having been a Defaulting Lender or Potential Defaulting Lender.
 
ARTICLE III
 
Payments of Principal and Interest; Prepayments; Fees
 
Section 3.01. Repayment of Loans.  The Borrower hereby unconditionally promises
to pay to the Administrative Agent for the account of each Lender the then
unpaid principal amount of all Loans outstanding on the Maturity Date.
 
Section 3.02. Interest.
 
(a) Standard Rate.  The Loans shall bear interest at the Standard Rate, but in
no event to exceed the Highest Lawful Rate.
 
(b) Post-Default Rate.  Notwithstanding the foregoing,
 
(i) if any principal of or interest on any Loan or any fee or other amount
payable by the Borrower or any Guarantor hereunder or under any other Loan
Document is not paid when due, whether at stated maturity, upon acceleration or
otherwise, then all Loans outstanding shall bear interest, after as well as
before judgment, at a rate per annum equal to three percent (3%) plus the rate
then applicable as provided in Section 3.02(a), but in no event to exceed the
Highest Lawful Rate, and
 
(ii)  if there exists any Event of Default, then all Loans outstanding shall, at
the option of the Administrative Agent or the Required Lenders, bear interest,
after as well as before judgment, at a rate per annum equal to three percent
(3%) plus the rate then applicable as provided in Section 3.02(a), but in no
event to exceed the Highest Lawful Rate.
 
(c) Interest Payment Dates.  Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date and on the Maturity Date; provided that
(i) interest accrued pursuant to Section 3.02(c) 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.
 
 
30

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

 
(d) Interest Rate Computations.  All interest hereunder shall be computed on the
basis of a year of 360 days, unless such computation would exceed the Highest
Lawful Rate, in which case interest shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).  The applicable LIBOR Market Index Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error, and be binding upon the parties hereto.
 
Section 3.03. Intentionally Omitted.
 
Section 3.04. Prepayments.
 
(a) Optional Prepayments.  The Borrower shall have the right at any time and
from time to time to prepay the Loans in whole or in part, subject to prior
notice in accordance with Section 3.04(b); provided, however, that no optional
prepayments shall be allowed until the First Lien Credit Facility is paid in
full.
 
(b) Notice and Terms of Optional Prepayment.  The Borrower shall notify the
Administrative Agent by telephone (confirmed by facsimile) of any prepayment
hereunder not later than 11:00 a.m. Houston, Texas time, one Business Day before
the date of prepayment.  Each such notice shall be irrevocable and shall specify
the prepayment date and the principal amount to be prepaid.  Promptly following
receipt of any such notice relating to a Borrowing, the Administrative Agent
shall advise the Lenders of the contents thereof.  Each partial prepayment shall
be at least $1,000,000.  Each prepayment shall be applied ratably to the
Loans.  Prepayments shall be accompanied by accrued interest to the extent
required by Section 3.02.
 
(c) Mandatory Prepayments.
 
(i) Intentionally Omitted.
 
(ii) Upon the issuance of high yield bonds permitted by this Agreement, the
Borrower shall make a principal prepayment equal to 100% of the net proceeds
from such issuance.
 
(iii) Upon the sale of any assets permitted by this Agreement, after the First
Lien Credit Facility is paid in full, the Borrower shall make a principal
prepayment equal to 100% of the net proceeds from such sale.
 
(iv) Upon any equity issuance in excess of $50 million, the Borrower shall make
a principal prepayment equal to 50% of the net proceeds from such issuance.
 
(v) Intentionally Omitted.
 
(vi) If any Swap Agreement is closed out and the Swap Termination Value
determined in accordance therewith is paid to the Borrower or any Subsidiary and
the First Lien Credit Facility has been paid in full, then (A) the Borrower
shall prepay the Borrowing in an aggregate principal amount equal to such Swap
Termination Value, and (B) if any excess remains after prepaying all the
Borrowing, the Borrower shall then pay to the Administrative Agent on behalf of
all of the Lenders an amount equal to such excess to be held as cash collateral
as provided in Section 2.08(j); provided, however, this Section 3.04(c)(vi)
shall not apply to the extent that, within two (2) Business Days of the date
such Swap Agreement is closed out, the Borrower or any Subsidiary expends
amounts that would be otherwise payable by the Borrower under this
Section 3.04(c)(vi) to enter into Swap Agreements with an aggregate present
value at least equivalent to the closed-out Swap Agreement, with the entry into
such replacement Swap Agreements being deemed a representation by the Borrower
of such equivalent present value.  The Borrower shall be obligated to make such
prepayment on the later of (i) the date it or any Subsidiary receives the cash
payment of the Swap Termination Value for the closed out Swap Agreement, and
(ii) two (2) Business Days after the date such Swap Agreement is closed out.
 
 
31

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

 
(vii) Each prepayment pursuant to this Section 3.04(c) shall be applied ratably
to the Loans.  Prepayments pursuant to this Section 3.04(c) shall be accompanied
by accrued interest to the extent required by Section 3.02.
 
(d) No Premium or Penalty.  Prepayments permitted or required under this
Section 3.04 shall be without premium or penalty, except as required under
Section 5.02.
 
(e) No Effect on Secured Swap Agreements.  Prepayments permitted or required
under this Section 3.04 shall not affect the Borrower's obligation to continue
making payments under any Secured Swap Agreement or Secured Treasury Management
Agreement, each of which shall remain in full force and effect notwithstanding
such prepayment, subject to the terms of such Secured Swap Agreement and/or
Secured Treasury Management Agreement.
 
Section 3.05. Fees.
 
(a) Upfront Fee.  The Borrower shall pay each Lender on the respective dates set
forth below an upfront fee equal to the upfront fee percentage listed below
multiplied by such Lender's Commitment on the date of determination:
 
Date
Fee
Effective Date
0.25%
Six Months After Effective Date
0.25%
Twelve Months After Effective Date
0.50%

 
(b) Administrative Agent Fees.  The Borrower agrees to pay to the Administrative
Agent, for its own account, fees payable in the amounts and at the times
separately agreed upon between the Borrower and the Administrative Agent.
 
 
32

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

 
ARTICLE IV
 
Payments; Pro Rata Treatment; Sharing of Set-offs
 
Section 4.01. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
 
(a) Payments by the Borrower.  The Borrower shall make each payment required to
be made by it hereunder (whether of principal, interest or fees, or of amounts
payable under Section 5.01, Section 5.02, Section 5.03 or otherwise) prior to
12:00 noon, New York City time, on the date when due, in immediately available
funds, without defense, deduction, recoupment, set-off or counterclaim.  Fees,
once paid, shall be fully earned and shall not be refundable under any
circumstances.  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 specified
in Section 12.01, except that payments pursuant to Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 shall be made directly to the Persons entitled
thereto.  The Administrative Agent shall distribute any such payments received
by it for the account of any other Person to the appropriate Recipient promptly
following receipt thereof.  If any payment hereunder shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension.  All
payments hereunder shall be made in dollars.
 
(b) Application of Insufficient Payments.  If at any time insufficient funds are
received by and available to the Administrative Agent to pay fully all amounts
of principal, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of principal then due to such parties.
 
(c) Sharing of Payments by Lenders.  If any Lender shall, by exercising any
right of set-off or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on its Loan or other obligations hereunder resulting in
such Lender receiving payment of a proportion of the aggregate amount of its
Loan and accrued interest thereon or other such obligations greater than its pro
rata share thereof as provided herein, then the Lender receiving such greater
proportion shall
 
(i) notify the Administrative Agent of such fact, and
 
(ii) purchase (for cash at face value) participations in the Loans and such
other obligations of the other Lenders, or make such other adjustments as shall
be equitable, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and other amounts owing them;
provided that
 
 
33

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

 
(A) 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
 
(B) the provisions of this Section 4.01(c) shall not be construed to apply to
(x) any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement (including the application of funds arising from
the existence of a Defaulting Lender), or (y) any payment obtained by a Lender
as consideration for the assignment of or sale of a participation in its Loan to
any assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this Section 4.01(c) shall
apply).
 
Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against each
Loan Party rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of each Loan Party in the
amount of such participation.
 
Section 4.02. Presumption of Payment by the Borrower.  Unless the Administrative
Agent shall have received notice from the Borrower prior to the date on which
any payment is due to the Administrative Agent for the account of the Lenders
that the Borrower will not make such payment, the Administrative Agent may
assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders
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 Administrative Agent in accordance with banking industry
rules on interbank compensation.
 
Section 4.03. Certain Deductions by the Administrative Agent.  If any Lender
shall fail to make any payment required to be made by it pursuant to
Section 2.05(a) or Section 4.02 then the Administrative Agent may, in its
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.
 
Section 4.04. Disposition of Proceeds.  The Security Instruments contain an
assignment by the Borrower and/or the Guarantors unto and in favor of the
Administrative Agent for the benefit of the Secured Parties of all of the
Borrower's or each Guarantor's interest in and to production and all proceeds
attributable thereto which may be produced from or allocated to the Mortgaged
Property.  The Security Instruments further provide in general for the
application of such proceeds to the satisfaction of the Obligations and other
obligations described therein and secured thereby.  Notwithstanding the
assignment contained in such Security Instruments, until the occurrence of an
Event of Default, (a) the Administrative Agent and the Lenders agree that they
will neither notify the purchaser or purchasers of such production nor take any
other action to cause such proceeds to be remitted to the Administrative Agent
or the Lenders, but the Lenders will instead permit such proceeds to be paid to
the Borrower and the Subsidiaries and (b) the Lenders hereby authorize the
Administrative Agent to take such actions as may be necessary to cause such
proceeds to be paid to the Borrower and/or such Subsidiaries.
 
 
34

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

 
ARTICLE V
 
Increased Costs; Taxes; Illegality
 
Section 5.01. Increased Costs.
 
(a) Increased Costs, Generally.  If any Change in Law shall:
 
(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender;
 
(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 loan, 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 the Loan made by
such Lender or participation therein;
 
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 or 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 such
other Recipient hereunder (whether of principal, interest or any other amount),
then 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) Capital Requirements.  If any Lender determines that any Change in Law
affecting such Lender or any lending office of such Lender or such Lender's
holding company, if any, regarding capital or liquidity 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, the Commitments of such Lender or the Loan 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) Certificates for Reimbursement.  A certificate of a Lender setting forth the
amount or amounts necessary to compensate such Lender or its holding company, as
the case may be, as specified in Section 5.01(a) or (b) and delivered to the
Borrower, shall be conclusive absent manifest error.  The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
 
 
35

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

 
(d) Delay in Requests.  Failure or delay on the part of any Lender to demand
compensation pursuant to this Section 5.01 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 5.01 for any
increased costs incurred or reductions suffered more than 270 days prior to the
date that such Lender 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 (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 270 day period referred
to above shall be extended to include the period of retroactive effect thereof).
 
(e) Protection Absolute.  The protection of this Section shall be available to
each Lender regardless of any possible contention of the invalidity or
inapplicability of the Change in Law that shall have occurred or been imposed.
 
Section 5.02. Intentionally Omitted.
 
Section 5.03. Taxes.
 
(a) Payments Free of Taxes.  Any and all payments by or on account of any
obligation of any Loan Party under any Loan Document shall be made without
deduction or withholding for any Taxes, except as required by applicable
law.  If any applicable law (as determined in the good faith discretion of an
applicable Withholding Agent) requires the deduction or withholding of any Tax
from any such payment by a Withholding Agent, then the applicable Withholding
Agent shall be entitled to make such deduction or withholding and shall timely
pay the full amount deducted or withheld to the relevant Governmental Authority
in accordance with applicable law and, if such Tax is an Indemnified Tax, then
the sum payable by the applicable Loan Party shall be increased as necessary so
that after such deduction or withholding has been made (including such
deductions and withholdings applicable to additional sums payable under this
Section) the applicable Recipient receives an amount equal to the sum it would
have received had no such deduction or withholding been made.
 
(b) Payment of Other Taxes by the Borrower.  The Loan Parties shall timely pay
to the relevant Governmental Authority in accordance with applicable law, or at
the option of the Administrative Agent timely reimburse it for the payment of,
any Other Taxes.
 
(c) Indemnification by the Borrower and the Other Loan Parties.  The Loan
Parties shall jointly and severally indemnify each Recipient, within 10 days
after demand therefor, for the full amount of any Indemnified Taxes (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Section) payable or paid by such Recipient or required to be withheld
or deducted from a payment to such Recipient and any 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 as to the amount of such payment or liability
delivered to the Borrower by a Lender (with a copy to the Administrative Agent),
or by the Administrative Agent on its own behalf or on behalf of a Lender, shall
be conclusive absent manifest error.
 
 
36

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

 
(d) Indemnification by the Lenders.  Each Lender shall severally indemnify the
Administrative Agent, within 10 days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that any
Loan Party has not already indemnified the Administrative Agent for such
Indemnified Taxes and without limiting the obligation of the Loan Parties to do
so), (ii) any Taxes attributable to such Lender's failure to comply with the
provisions of Section 12.04 relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by the Administrative Agent in connection with any Loan
Document, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority.  A certificate as to the amount of such payment
or liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error.  Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this paragraph (e).
 
(e) Evidence of Payments.  As soon as practicable after any payment of Taxes by
any Loan Party to a Governmental Authority pursuant to this Section 5.03, such
Loan 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.
 
(f) Status of Lenders.
 
(i) Any Lender that is entitled to an exemption from or reduction of withholding
Tax with respect to payments made under any Loan Document shall deliver to the
Borrower and the Administrative Agent, at the time or times reasonably requested
by the Borrower or the Administrative Agent, such properly completed and
executed documentation reasonably requested by the Borrower or the
Administrative Agent as will permit such payments to be made without withholding
or at a reduced rate of withholding.  In addition, any Lender, if reasonably
requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.  Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Section 5.03(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be
required if in the Lender's reasonable judgment such completion, execution or
submission would subject such Lender to any material unreimbursed cost or
expense or would materially prejudice the legal or commercial position of such
Lender.
 
(ii) Without limiting the generality of the foregoing,
 
 
37

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

 
(A) any Lender that is a U.S. Person shall deliver to the Borrower and the
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Administrative Agent), executed
originals of IRS Form W-9 certifying that such Lender is exempt from U.S.
federal backup withholding tax;
 
(B) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), whichever of the following is applicable:
 
(I) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the "interest" article of such tax treaty and (y) with respect to
any other applicable payments under any Loan Document, IRS Form W-8BEN
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the "business profits" or "other income" article of such tax treaty;
 
(II) executed originals of IRS Form W-8ECI;
 
(III) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit G-1 to the effect that such Foreign Lender
is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, a "10
percent shareholder" of the Borrower within the meaning of Section 881(c)(3)(B)
of the Code, or a "controlled foreign corporation" described in Section
881(c)(3)(C) of the Code (a "U.S. Tax Compliance Certificate") and (y) executed
originals of IRS Form W-8BEN; or
 
(IV) to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a
U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or
Exhibit G-3, IRS Form W-9, and/or other certification documents from each
beneficial owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more direct or indirect partners of such Foreign Lender
are claiming the portfolio interest exemption, such Foreign Lender may provide a
U.S. Tax Compliance Certificate substantially in the form of Exhibit G-4 on
behalf of each such direct and indirect partner;
 
(C) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), executed originals of any other form prescribed by applicable law as a
basis for claiming exemption from or a reduction in U.S. federal withholding
Tax, duly completed, together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower or the Administrative Agent
to determine the withholding or deduction required to be made; and
 
 
38

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

 
(D) if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender's obligations under FATCA or to determine
the amount to deduct and withhold from such payment.  Solely for purposes of
this clause (D), "FATCA" shall include any amendments made to FATCA after the
date of this Agreement.
 
Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the Borrower and the Administrative
Agent in writing of its legal inability to do so.
 
(g) Treatment of Certain Refunds.  If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 5.3 (including by
the payment of additional amounts pursuant to this Section 5.3), it shall pay to
the indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section with respect to the Taxes giving rise
to such refund), net of all out-of-pocket expenses (including Taxes) of such
indemnified party and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund).  Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this paragraph (h) (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority.  Notwithstanding anything to the contrary
in this paragraph (h), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (h) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the indemnification
payments or additional amounts giving rise to such refund had never been
paid.  This paragraph shall not be construed to require any indemnified party to
make available its Tax returns (or any other information relating to its Taxes
that it deems confidential) to the indemnifying party or any other Person.
 
Section 5.04. Mitigation Obligations; Replacement of Lenders.
 
(a) Designation of a Different Lending Office.  If any Lender requests
compensation under Section 5.01, or requires the Borrower to pay any Indemnified
Taxes or additional amounts to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 5.03, then such Lender shall (at the
request of the Borrower) use reasonable efforts to designate a different lending
office for funding or booking its Loan hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 5.01 or 5.03, as the case may be,
in the future, and (ii) would not subject such Lender to any unreimbursed cost
or expense and would not otherwise be disadvantageous to such Lender.  The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.
 
 
39

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

 
(b) Replacement of Lenders.  If any Lender requests compensation under
Section 5.01, or if the Borrower is required to pay any Indemnified Taxes or
additional amounts to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 5.03 and, in each case, such Lender has
declined or is unable to designate a different lending office in accordance with
Section 5.04(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, replace such Lender in accordance with
the terms of Section 12.18.
 
Section 5.05. Intentionally Omitted.
 
ARTICLE VI
 
Conditions Precedent
 
Section 6.01. Intentionally Omitted.
 
Section 6.02. Conditions to Effectiveness.  The effectiveness of this Agreement,
and the obligations of the Lenders to make Loans under the terms of this
Agreement, shall be subject to the satisfaction of each of the conditions in
Section 6.03 and each of the following conditions (unless such condition is
waived in writing in accordance with Section 12.02):
 
(a) The Administrative Agent shall have received (i) all fees, expense
reimbursements and other amounts owed to the Administrative Agent or any other
Lender in connection with this Agreement, and (ii) to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower hereunder (including, without limitation, the fees and
expenses of Winstead PC, counsel to the Administrative Agent and local counsel
for the Administrative Agent in those States in which Mortgaged Property
consisting of Oil and Gas Properties are located).
 
(b) The Administrative Agent shall have received a certificate of the Secretary,
an Assistant Secretary or other duly authorized officer satisfactory to the
Administrative Agent of the Parent, the Borrower (or the managing member
thereof) and of each of the Subsidiaries, including the ENP Entities and
Acquisition Company setting forth (i) resolutions of its board of directors or
board of managers (or equivalent body) or its managing member authorizing the
execution, delivery and performance of the Loan Documents to which each is a
party and, in the case of the Borrower, the Borrowing hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (ii) the officers of the Parent, the Borrower (or any managing
member thereof), such Subsidiaries, (y) who are authorized to sign the Loan
Documents to which the Parent, the Borrower and to which each such Subsidiary is
a party and (z) who will, until replaced by another officer or officers duly
authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection with
this Agreement and the transactions contemplated hereby, (iii) specimen
signatures of such authorized officers, and (iv) the articles or certificate of
incorporation and bylaws or certificate of formation and partnership agreement
or certificate of formation and limited liability company agreement (as the case
may be) of the Parent, the Borrower and such Subsidiaries, certified as being
true and complete.  The Administrative Agent and the Lenders may conclusively
rely on such certificate until the Administrative Agent receives notice in
writing from the Borrower to the contrary.
 
 
40

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

 
(c) The Administrative Agent shall have received certificates of the appropriate
State agencies with respect to the existence, qualification and good standing of
the Parent, the Borrower, and each of the Subsidiaries, including the ENP
Entities and Acquisition Company.
 
(d) The Administrative Agent shall have received from each party hereto
counterparts (in such number as may be requested by the Administrative Agent) of
this Agreement signed on behalf of such party.
 
(e) All Schedules to this Agreement shall have been updated by the Borrower
through the Effective Date, and the Administrative Agent shall have received a
certificate from a Responsible Officer certifying that all Schedules to this
Agreement and the Loan Documents are current, and true, correct and complete,
through the Effective Date after giving effect to the consummation of the ENP
Transaction.
 
(f) The Administrative Agent shall have received duly executed Notes payable to
the order of each Lender requesting a Note in a principal amount equal to its
Commitment dated as of the date hereof.
 
(g) The Administrative Agent shall have received in form and substance
satisfactory to it evidence satisfactory to the Administrative Agent that
(A) all outstanding Debt under the Paribas Term Loan Credit Agreement and the
Paribas Term Loan Documents has been repaid in full and such Paribas Term Loan
Credit Facility has been terminated and extinguished (or is being repaid in full
and terminated and extinguished concurrently on the Effective Date) and (B) all
Liens on all Properties of all of the Loan Parties securing amounts owing under
the Paribas Term Loan Credit Facility are released on the Effective Date
pursuant to releases satisfactory to the Administrative Agent.
 
(h) With respect to the ENP Transaction:
 
(i) the Administrative Agent shall have received in form and substance
satisfactory to it:  (A) a true and complete executed copy of each of the ENP
Transaction Documents in effect as of the Effective Date; (B) original
counterparts or copies, certified as true and complete, of the assignments,
deeds and leases for all of the ENP Oil and Gas Properties; and (C) such other
related documents and information as the Administrative Agent shall have
requested with respect to the transaction contemplated by the ENP Transaction
Documents.
 
 
41

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

 
(ii) the ENP Transaction shall be consummated on the terms and conditions
outlined in the Merger Agreement, provided that any other terms, structure and
manner of the ENP Transaction not specified in the Merger Agreement, including
the acquisition of the ENP Properties by the Borrower through the merger, the
creation of Acquisition Company and any other new acquisition Subsidiary of the
Borrower, shall in each case be satisfactory to the Administrative Agent and the
Lenders.
 
(iii) the Administrative Agent shall have received in form and substance
acceptable to it, a certificate of a Responsible Officer of the Borrower and of
Acquisition Company certifying (A) that Acquisition Company is concurrently
consummating the acquisition contemplated by the ENP Transaction Documents and
all material conditions precedent thereto have been satisfied in all material
respects by all of the parties thereto; and (B) that attached thereto is a true
and complete list of all of the ENP Oil and Gas Properties subject to the ENP
Transaction Documents which are owned by Acquisition Company.
 
(iv) Acquisition Company shall have delivered to the Administrative Agent title
information and data acceptable to the Administrative Agent relating to title to
the mineral interests in the ENP Oil and Gas Properties.  These title assurances
shall include such post closing title work as the Administrative Agent may
request.
 
(v) the ENP Oil and Gas Properties shall comply with Section 8.10(c) with
respect to environmental matters.
 
(vi) the Administrative Agent shall have received evidence satisfactory to the
Administrative Agent that each of the following has occurred pursuant to terms,
conditions and documentation acceptable to the Administrative Agent:  (A) all
outstanding Debt under the ENP Credit Agreement has been assigned by the lenders
under the ENP Credit Agreement to the First Lien Lenders, including delivery of
any promissory notes issued pursuant to the ENP Credit Agreement duly endorsed,
together with an assignment of all Liens and security interests on all ENP
Properties securing such Debt under the ENP Credit Agreement, in each case in a
manner satisfactory to the Administrative Agent, (B) such Debt is being
consolidated and refinanced by the First Lien Credit Agreement and the First
Lien Loan Documents in a manner satisfactory to the Administrative Agent, and
(C) all Liens on all ENP Properties securing amounts owing under the ENP Credit
Agreement are being consolidated, amended and restated by the First Lien Loan
Documents and shall constitute first priority perfected Liens securing the
Obligations (as defined in the First Lien Credit Agreement; subject only to
Excepted Liens identified in clauses (a) through (h) of the definition thereof),
in each case in a manner satisfactory to the Administrative Agent.
 
(vii) The Administrative Agent shall have received from Acquisition Company duly
executed counterparts (in such number as may be requested by the Administrative
Agent) of Mortgages covering the ENP Oil and Gas Properties, which Mortgages
shall be in form and substance satisfactory to the Administrative Agent.  In
connection with the execution and delivery of such Mortgages, the Administrative
Agent shall be satisfied that such Mortgages create first priority, perfected
Liens on the ENP Oil and Gas Properties (subject only to Excepted Liens
identified in clauses (a) through (h) of the definition thereof, but subject to
the provisos at the end of such definition).
 
 
42

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

 
(i) The Administrative Agent shall have received from the Parent, the Borrower
and each Subsidiary, in each case to the extent applicable, duly executed
counterparts (in such number as may be requested by the Administrative Agent) of
such amendments to and/or confirmations of the Security Instruments executed and
delivered prior to the date hereof as may be required by the Administrative
Agent, which amendments and/or confirmations shall be in form and substance
satisfactory to the Administrative Agent.
 
(j) Each of the Loan Documents shall be in full force and effect.
 
(k) Each of the First Lien Loan Documents shall be in full force and effect.
 
(l) The Parent, the Borrower, each of the Subsidiaries, including the ENP
Entities and Acquisition Company shall have executed, acknowledged, delivered,
recorded, re-recorded, filed, re-filed, registered and re-registered any and all
such further acts, deeds, certificates, assurances and other instruments as the
Administrative Agent, or any Lender through the Administrative Agent, may
reasonably require in order to (i) carry out more effectively the purposes of
the Loan Documents, (ii) to the fullest extent permitted by applicable law,
subject the Parent, the Borrower, or any of the Subsidiaries’ (including any ENP
Entities' and Acquisition Company's) Properties, assets, rights or interests to
the Liens now or hereafter intended to be covered by any of the Security
Instruments, (iii) perfect and maintain the validity, effectiveness and priority
of any of the Security Instruments and any of the Liens intended to be created
thereunder and (iv) assure, convey, grant, assign, transfer, preserve, protect
and confirm more effectively unto the Secured Parties the rights granted or now
or hereafter intended to be granted to the Secured Parties under any Loan
Document or under any other instrument executed in connection with any Loan
Document to which any of the Parent, the Borrower or any of the Subsidiaries
(including the ENP Entities and Acquisition Company) is or is to be a party, and
cause each of the Subsidiaries to do so.
 
(m) The Administrative Agent shall have received an opinion of (i) Vinson &
Elkins, counsel to the Parent, the Borrower, and the Subsidiaries, including the
ENP Entities and Acquisition Company, acceptable to the Administrative Agent
covering such matters with respect to the Loan Documents as the Administrative
Agent may reasonably request, including without limitation those matters
described in Sections 7.01 and 7.02, and (ii) with respect to each of the Oil
and Gas Properties and each of the Security Instruments, local counsel opinions
as appropriate or requested by the Administrative Agent, covering such matters
with respect to the Oil and Gas Properties and the Security Instruments as the
Administrative Agent may reasonably request.
 
(n) The Administrative Agent shall have received a certificate of insurance
coverage of the Borrower, Acquisition Company and/or the ENP Entities evidencing
that the Borrower and/or the applicable ENP Entities is carrying insurance in
accordance with Section 7.12 with respect to the ENP Properties.
 
 
43

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

 
(o) The Administrative Agent shall have received satisfactory evidence that no
event, development or circumstance has occurred or shall then exist that has
resulted in, or could reasonably be expected to have, a Material Adverse Effect.
 
(p) The Administrative Agent shall be satisfied that no material disruption or
material adverse change has occurred in conditions in the financial, banking or
capital markets which the Agents and Arrangers, in their discretion, deems
material in connection with the syndication of the credit facility evidenced by
this Agreement.
 
(q) The representations and warranties of the Parent, the Borrower and the
Subsidiaries (including the ENP Entities and Acquisition Company) set forth in
this Agreement and in the other Loan Documents, and the representations and
warranties of the ENP Entities set forth in the ENP Transaction Documents shall
be true and correct in all material respects (except that any representation or
warranty that is qualified as to materiality or by a Material Adverse Effect
clause shall be true and correct in all respects), except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, such representations and warranties shall continue to be true and
correct as of such specified earlier date.
 
(r) Intentionally Omitted.
 
(s) The Effective Date (as defined in the First Lien Credit Agreement) shall
have occurred on or prior to November 30, 2011.
 
(t) The Administrative Agent shall have received a certificate of a Responsible
Officer of the Borrower certifying that the Borrower has received all consents
and approvals required by Section 7.03.
 
(u) The Administrative Agent shall have received (i) such additional information
regarding the business, financial, legal or corporate affairs of the Parent, the
Borrower and the Subsidiaries (including Acquisition Company), and any ENP
Entity, or compliance with the terms of the Loan Documents, as the
Administrative Agent or any Lender may from time to time reasonably request,
(ii) such other certificates, documents, agreements, consents, assurances, or
opinions as the Administrative Agent or any Lender reasonably may require with
respect to the Parent, the Borrower or any of the Subsidiaries (including the
ENP Entities and Acquisition Company), and (iii) such information regarding ENP
Entities, Acquisition Company, the ENP Properties, the Merger Agreement and the
other ENP Transaction Documents and entities, as the Administrative Agent and
any Lender may request.
 
(v) The Administrative Agent shall have received a certificate of a Responsible
Officer of the Borrower dated as of the Effective Date, certifying that:
 
(i) at the time of and immediately after giving effect to such execution, no
Default shall have occurred and be continuing;
 
(ii) at the time of and immediately after giving effect to such execution, no
event, development or circumstance has occurred or shall then exist that has
resulted in, or could reasonably be expected to have, a Material Adverse Effect;
 
 
44

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

 
(iii) the representations and warranties of the Borrower and the Guarantors set
forth in this Agreement shall be true and correct in all material respects
(except that any representation or warranty that is qualified as to materiality
or by a Material Adverse Effect clause shall be true and correct in all
respects) on and as of the date of such execution, except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, on and as of the date of such Borrowing, such representations and
warranties shall continue to be true and correct as of such specified earlier
date;
 
(iv) the execution of this Agreement would not conflict with, or cause any
Lender to violate or exceed, any applicable Governmental Requirement, and no
Change in Law shall have occurred, and no litigation shall be pending or
threatened, which does or, with respect to any threatened litigation, seeks to,
enjoin, prohibit or restrain any of the consummation and/or performance of any
of the transactions contemplated by this Agreement or any other Loan Document;
 
(v) attached thereto is a true, correct and complete copy of the Merger
Agreement, together with all schedules and exhibits and other attachments, as
such agreement is in effect on the Effective Date (including all amendments,
waivers, consents and other modifications prior to the Effective Date);
 
(vi) attached thereto is a true, correct and complete copy of each of the other
ENP Transaction Documents, together with all schedules and exhibits and other
attachments, as each is in effect on the Effective Date (including all
amendments, waivers, consents and other modifications prior to the Effective
Date);
 
(vii) (i) attached thereto is a true, correct and complete copy of each of the
ENP Credit Agreement, any notes executed in connection therewith, each document
or instrument granting a Lien on any of the ENP Properties in connection
therewith, all financing statements in connection with the ENP Credit Agreement
and a recording schedule with respect to the ENP Properties, as each is in
effect on the Effective Date (including all amendments, waivers, consents and
other modifications prior to the Effective Date), and (ii) there exists no
default or breach under the ENP Credit Agreement or any of the loan documents
executed in connection therewith;
 
(viii) there exists no default or breach under the Paribas Term Loan Credit
Agreement or any of the other Paribas Term Loan Documents;
 
(ix) there exists no default or breach under the First Lien Credit Agreement or
any of the other First Lien Loan Documents;
 
(x) attached thereto are resolutions of its board of authorizing the execution,
delivery and performance of this Agreement, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect;
 
(xi) specimen signatures of the officers of the Borrower who are authorized to
sign this Agreement and who will, until replaced by another officer or officers
duly authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection with
this Agreement and the transactions contemplated hereby are set forth thereon;
 
 
45

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

 
(xii) the certificate of formation and the limited liability company agreement
of the Borrower are attached thereto and true and complete as of the date of
execution of this Agreement; and
 
(xiii) all Schedules to this Agreement are true, correct and complete.
 
Section 6.03. Conditions Precedent to Lending.  The obligation of each Lender to
make a Loan on the occasion of the Borrowing, is subject to the satisfaction of
the following conditions:
 
(a) At the time of and immediately after giving effect to such Borrowing, no
Default shall have occurred and be continuing.
 
(b) At the time of and immediately after giving effect to the Borrowing, no
event, development or circumstance has occurred or shall then exist that has
resulted in, or could reasonably be expected to have, a Material Adverse Effect.
 
(c) The representations and warranties of the Borrower and the Guarantors set
forth in this Agreement and in the other Loan Documents shall be true and
correct on and as of the date of such Borrowing, except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, on and as of the date of such Borrowing, such representations and
warranties shall continue to be true and correct as of such specified earlier
date.
 
(d) The making of such Loan, would not conflict with, or cause any Lender to
violate or exceed, any applicable Governmental Requirement, and no Change in Law
shall have occurred, and no litigation shall be pending or threatened, which
does or, with respect to any threatened litigation, seeks to, enjoin, prohibit
or restrain, the making or repayment of any Loan, or any participations therein
or the consummation of the transactions contemplated by this Agreement or any
other Loan Document.
 
(e) The receipt by the Administrative Agent of the Borrowing Request in
accordance with Section 2.03.
 
(f) Intentionally Omitted.
 
ARTICLE VII
 
Representations and Warranties
 
The Borrower represents and warrants to the Administrative Agent and the Lenders
that:
 
Section 7.01. Organization; Powers.  Each of the Parent, the Borrower and the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority, and has all material governmental licenses, authorizations, consents
and approvals necessary, to own its assets and to carry on its business as now
conducted, and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where failure to have
such power, authority, licenses, authorizations, consents, approvals and
qualifications could not reasonably be expected to have a Material Adverse
Effect.
 
 
46

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

 
Section 7.02. Authority; Enforceability.  The Transactions are within the
Borrower's and each Guarantor's limited liability company, partnership, and
corporate powers (as applicable) and have been duly authorized by all necessary
limited liability company and, if required, member action (including, without
limitation, any action required to be taken by any class of managers, directors
or  partners (as applicable) of the Borrower or any other Person, whether
interested or disinterested, in order to ensure the due authorization of the
Transactions).  Each Loan Document to which the Borrower and each Guarantor is a
party has been duly executed and delivered by the Borrower and such Guarantor
and constitutes a legal, valid and binding obligation of the Borrower and such
Guarantor, as applicable, enforceable in accordance with its terms, subject to
applicable Debtor Relief Laws or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
 
Section 7.03. Approvals; No Conflicts.  The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority or any other third Person (including members or any class
of managers, whether interested or disinterested, of the Borrower or any other
Person), nor is any such consent, approval, registration, filing or other action
necessary for the validity or enforceability of any Loan Document or the
consummation of the transactions contemplated thereby, except such as have been
obtained or made and are in full force and effect other than (i) the recording
and filing of the Security Instruments as required by this Agreement, (ii) those
third party approvals or consents which, if not made or obtained, would not
cause a Default hereunder, could not reasonably be expected to have a Material
Adverse Effect or do not have an adverse effect on the enforceability of the
Loan Documents, and (iii) consents by, required notices to, or other actions by
state and federal governmental entities in connection with the assignment of
state and federal oil and gas leases or other interests therein that are
customarily obtained subsequent to such assignments, (b) will not violate any
applicable law or Organizational Documents of the Borrower or any Subsidiary or
any order of any Governmental Authority, (c) will not violate or result in a
default under any indenture, agreement or other instrument binding upon the
Borrower or any Subsidiary or its Properties, or give rise to a right thereunder
to require any payment to be made by the Borrower or such Subsidiary and (d)
will not result in the creation or imposition of any Lien on any Property of the
Borrower or any Subsidiary (other than the Liens created by the Loan Documents).
 
Section 7.04. Financial Condition; No Material Adverse Change.
 
(a) The Borrower has heretofore furnished to the Lenders the Parent's
consolidated balance sheet and statements of income, members' equity and cash
flows (A) as of and for the fiscal year ended December 31, 2010, reported on by
BDO USA, LLP, independent public accountant and (B) as of and for the fiscal
quarter and the portion of the fiscal year ended June 30, 2011, certified by its
chief financial officer.  Such financial statements present fairly, in all
material respects, the financial condition and results of operations and cash
flows of the Parent and the Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the unaudited quarterly financial statements.  Such
balance sheets and the notes thereto disclose all material liabilities, direct
or contingent, of the Parent and the Subsidiaries as of the dates thereof.
 
 
47

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

 
(b) Since December 31, 2010, (i) there has been no event, development or
circumstance that has had or could reasonably be expected to have a Material
Adverse Effect and (ii) the business of the Parent and the Subsidiaries has been
conducted only in the ordinary course consistent with past business practices.
 
(c) Neither the Parent, the Borrower nor any Subsidiary has on the date hereof
any material Debt (including Disqualified Capital Stock) or any contingent
liabilities, off-balance sheet liabilities or partnerships, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments, except as referred to or reflected or
provided for in the Financial Statements.
 
Section 7.05. Litigation.
 
(a) Except as set forth on Schedule 7.05, there are no actions, suits,
investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower or Parent,
threatened against or affecting the Parent, the Borrower or any Subsidiary
(i) not fully covered by insurance (except for normal deductibles) as to which
there is a reasonable possibility of an adverse determination that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect, (ii) that involve any Loan Document or the
Transactions or (iii) that could impair the consummation of the Acquisition on
the time and in the manner contemplated by the Acquisition Documents.
 
(b) Since the date of this Agreement, there has been no change in the status of
the matters disclosed in Schedule 7.05 that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
 
Section 7.06. Environmental Matters.  Except as set forth in Schedule 7.06 and
as could not be reasonably expected to have a Material Adverse Effect (or with
respect to (c), (d) and (e) below, where the failure to take such actions could
not be reasonably expected to have a Material Adverse Effect):
 
(a) neither any Property of the Borrower or any Subsidiary nor the operations
conducted thereon violate any order or requirement of any court or Governmental
Authority or any Environmental Laws.
 
(b) no Property of the Borrower or any Subsidiary nor the operations currently
conducted thereon or, to the knowledge of the Borrower, by any prior owner or
operator of such Property or operation, are in violation of or subject to any
existing, pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or Governmental Authority or to any remedial
obligations under Environmental Laws.
 
(c) all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required to be obtained or filed in connection with the
operation or use of any and all Property of the Borrower and each Subsidiary,
including, without limitation, past or present treatment, storage, disposal or
release of a hazardous substance, oil and gas waste or solid waste into the
environment, have been duly obtained or filed, and the Borrower and each
Subsidiary are in compliance with the terms and conditions of all such notices,
permits, licenses and similar authorizations.
 
 
48

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

 
(d) all hazardous substances, solid waste and oil and gas waste, if any,
generated at any and all Property of the Borrower or any Subsidiary have in the
past been transported, treated and disposed of in accordance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment, and, to the knowledge of the Borrower, all
such transport carriers and treatment and disposal facilities have been and are
operating in compliance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and are not the subject of any existing, pending or threatened
action, investigation or inquiry by any Governmental Authority in connection
with any Environmental Laws.
 
(e) the Borrower has taken all steps reasonably necessary to determine and has
determined that no oil, hazardous substances, solid waste or oil and gas waste,
have been disposed of or otherwise released and there has been no threatened
release of any oil, hazardous substances, solid waste or oil and gas waste on or
to any Property of the Borrower or any Subsidiary except in compliance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment.
 
(f) neither the Borrower nor any Subsidiary has any known contingent liability
or Remedial Work in connection with any release or threatened release of any
oil, hazardous substance, solid waste or oil and gas waste into the environment.
 
Section 7.07. Compliance with the Laws and Agreements; No Defaults.
 
(a) Each of the Parent, the Borrower and each Subsidiary is in compliance with
all Governmental Requirements applicable to it or its Property and all
agreements and other instruments binding upon it or its Property, and possesses
all licenses, permits, franchises, exemptions, approvals and other governmental
authorizations necessary for the ownership of its Property and the conduct of
its business, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
 
(b) None of the Parent, the Borrower or any Subsidiary is in default nor has any
event or circumstance occurred which, but for the expiration of any applicable
grace period or the giving of notice, or both, would constitute a default or
would require the Parent, the Borrower or a Subsidiary to Redeem or make any
offer to Redeem under any indenture, note, credit agreement or instrument
pursuant to which any Material Indebtedness is outstanding or by which the
Parent, the Borrower or any Subsidiary or any of their Properties is bound.
 
(c) No Default has occurred and is continuing.
 
Section 7.08. Investment Company Act.  None of the Parent, the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of, or subject to regulation under, the
Investment Company Act of 1940, as amended.
 
 
49

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

 
Section 7.09. Taxes.  Each of the Parent, the Borrower and the Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Parent, the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate reserves in
accordance with GAAP or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.  The charges,
accruals and reserves on the books of the Parent, the Borrower and the
Subsidiaries in respect of Taxes and other governmental charges are
adequate.  No Tax Lien has been filed and, to the knowledge of the Parent or the
Borrower, no claim is being asserted with respect to any such Tax or other such
governmental charge.
 
Section 7.10. ERISA.
 
(a) The Parent, the Borrower, the Subsidiaries and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the Code
regarding each Plan.
 
(b) Each Plan is, and has been, maintained in substan­tial compliance with ERISA
and, where applicable, the Code.
 
(c) No act, omission or transaction has occurred which could result in
imposition on the Parent, the Borrower, any Subsidiary or any ERISA Affiliate
(whether directly or indirectly) of (i) either a civil penalty assessed pursuant
to subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant
to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty
liability damages under section 409 of ERISA.
 
(d) No Plan (other than a defined contribu­tion plan) or any trust created under
any such Plan has been terminated since September 2, 1974.  No liability to the
PBGC (other than for the payment of current premiums which are not past due) by
the Parent, the Borrower, any Subsidiary or any ERISA Affiliate has been or is
expected by the Parent, the Borrower, any Subsidiary or any ERISA Affiliate to
be incurred with respect to any Plan.  No ERISA Event with respect to any Plan
has occurred.
 
(e) Full payment when due has been made of all amounts which the Parent, the
Borrower, the Subsidiaries or any ERISA Affiliate is required under the terms of
each Plan or applicable law to have paid as contribu­tions to such Plan as of
the date hereof, and no accumulated funding deficiency (as defined in section
302 of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan.
 
(f) The actuarial present value of the benefit liabili­ties under each Plan
which is subject to Title IV of ERISA does not, as of the end of the Parent's
most recently ended fiscal year, exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities.  The term "actuarial present
value of the benefit liabilities" shall have the meaning specified in section
4041 of ERISA.
 
 
50

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

 
(g) None of the Parent, the Borrower, the Subsidiaries or any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by the Parent, the Borrower, a Subsidiary or any ERISA
Affiliate in its sole discretion at any time without any material liability.
 
(h) None of the Parent, the Borrower, the Subsidiaries or any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the six-year period
preceding the date hereof sponsored, maintained or contributed to, any
Multiemployer Plan.
 
(i) None of the Parent, the Borrower, the Subsidiaries or any ERISA Affiliate is
required to provide security under section 401(a)(29) of the Code due to a Plan
amendment that results in an increase in current liability for the Plan.
 
Section 7.11. Disclosure; No Material Misstatements.  The Borrower has disclosed
to the Administrative Agent and the Lenders all agreements, instruments and
corporate or other restrictions to which it, the Parent, or any of the
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.  None of the other reports, financial statements, certificates
or other information furnished by or on behalf of the Parent, the Borrower or
any Subsidiary to the Administrative Agent or any Lender or any of their
Affiliates in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or under any other Loan Document (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.  There
is no fact peculiar to the Parent, the Borrower or any Subsidiary which could
reasonably be expected to have a Material Adverse Effect or in the future is
reasonably likely to have a Material Adverse Effect and which has not been set
forth in this Agreement or the Loan Documents or the other documents,
certificates and statements furnished to the Administrative Agent or the Lenders
by or on behalf of the Parent, the Borrower or any Subsidiary prior to, or on,
the date hereof in connection with the transactions contemplated hereby.
 
Section 7.12. Insurance.
 
(a) Schedule 7.12 sets forth a true, complete and correct description of all
insurance maintained by the Parent, the Borrower or by the Parent or the
Borrower for the Subsidiaries or by each Subsidiary for itself, as the case may
be, as of the date hereof.  The Borrower has, and has caused all of the
Subsidiaries to have, (a) all insurance policies sufficient for the compliance
by each of them with all material Governmental Requirements and all material
agreements and (b) insurance coverage in at least amounts and against such risk
(including, without limitation, public liability) that are commercially
reasonable and usually insured against by companies similarly situated and
engaged in the same or a similar business for the assets and operations of the
Borrower and the Subsidiaries.  The Administrative Agent has been named as an
additional insured in respect of such liability insurance policies, and the
Administrative Agent has been named as loss payee with respect to Property loss
insurance.
 
 
51

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

 
(b) Schedule 7.12 lists the descriptions and street addresses of all Buildings
(as defined in the applicable Flood Insurance Regulations) and Manufactured
(Mobile) Homes (also as defined in the applicable Flood Insurance Regulations)
constituting Collateral.  Except to the extent that flood insurance in form and
substance satisfactory to the Administrative Agent has been obtained with
respect thereto, no such Building or Manufactured (Mobile) Home (each as defined
in the applicable Flood Insurance Regulations) is located on any real property
in a special flood hazard area as designated by any Governmental Authority.  As
used herein, "Flood Insurance Regulations" shall mean (i) the National Flood
Insurance Act of 1968, as now or hereafter in effect or any successor statute
thereto, (ii) the Flood Disaster Protection Act of 1973, as now or hereafter in
effect or any successor statute thereto, (iii) the National Flood Insurance
Reform Act of 1994 (amending 42 U.S.C. 4001 et seq.), as the same may be amended
or recodified from time to time, and (iv) the Flood Insurance Reform Act of 2004
and any regulations promulgated thereunder.
 
Section 7.13. Restriction on Liens.  Neither the Borrower nor any of the
Subsidiaries is a party to any material agreement or arrangement (other than
First Lien Loan Documents, and Capital Leases creating Liens permitted by
Section 9.03(d), but then only on the Property subject of such Capital Lease),
or subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its ability to grant Liens to the Administrative Agent and
the Lenders on or in respect of their Properties to secure the Obligations and
the Loan Documents.
 
Section 7.14. Subsidiaries.  Except as set forth on Schedule 7.14 or as
disclosed in writing to the Administrative Agent (which shall promptly furnish a
copy to the Lenders), which shall be a supplement to Schedule 7.14, the Parent
and the Borrower have no Subsidiaries and the Borrower has no Foreign
Subsidiaries.  Each Subsidiary on such schedule is a Wholly-Owned Subsidiary and
a disregarded entity for federal income tax purposes.
 
Section 7.15. Location of Business and Offices.  The Borrower's jurisdiction of
organization is Kentucky; the name of the Borrower as listed in the public
records of its jurisdiction of organization is Vanguard Natural Gas, LLC; and
the organizational identification number of the Borrower in its jurisdiction of
organization is 0601349 (or, in each case, as set forth in a notice delivered to
the Administrative Agent pursuant to Section 8.01(m) in accordance with
Section 12.01).  The Borrower's principal place of business is located at the
address in London, Kentucky specified in Section 12.01 (or as set forth in a
notice delivered pursuant to Section 8.01(m) and Section 12.01(c)), and its
chief executive offices is located at the San Felipe street address in Houston,
Texas specified in Section 12.01 (or as set forth in a notice delivered pursuant
to Section 8.01(m) and Section 12.01(c)).  Each Subsidiary's jurisdiction of
organization, name as listed in the public records of its jurisdiction of
organization, organizational identification number in its jurisdiction of
organization, and the location of its principal place of business and chief
executive office is stated on Schedule 7.14 (or as set forth in a notice
delivered pursuant to Section 8.01(m)).
 
Section 7.16. Properties; Titles, Etc.
 
(a) Each of the Borrower and the Subsidiaries has good and defensible title to
the Oil and Gas Properties covered by the Mortgages, and each Loan Party has
good title to all its personal Properties, in each case, free and clear of all
Liens except Liens permitted by Section 9.03.  After giving full effect to the
Excepted Liens, the Borrower or the Subsidiary specified as the owner owns the
net interests in production attributable to the Hydrocarbon Interests as
reflected in the most recently delivered Reserve Report, and the ownership of
such Properties shall not in any material respect obligate the Borrower or such
Subsidiary to bear the costs and expenses relating to the maintenance,
development and operations of each such Property in an amount in excess of the
working interest of each Property set forth in the most recently delivered
Reserve Report that is not offset by a corresponding proportionate increase in
the Borrower's or such Subsidiary's net revenue interest in such Property.  The
ownership by the Borrower or any Subsidiary of the Hydrocarbons and the
undivided interests therein specified on the exhibits to the Mortgages are the
same interests reflected in the most recently delivered Reserve Report.
 
 
52

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

 
(b) All material leases and agreements necessary for the conduct of the business
of the Borrower and the Subsidiaries are valid and subsisting, in full force and
effect, and there exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which could reasonably be expected to have a
Material Adverse Effect.
 
(c) The rights and Properties presently owned, leased or licensed by the
Borrower and the Subsidiaries including, without limitation, all easements and
rights of way, include all rights and Properties necessary to permit the
Borrower and the Subsidiaries to conduct their business in all material respects
in the same manner as its business has been conducted prior to the date hereof.
 
(d) All of the Properties of the Borrower and the Subsidiaries which are
reasonably necessary for the operation of their businesses are in good working
condition and are maintained in accordance with prudent business standards.
 
(e) The Borrower and each Subsidiary owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual Property
material to its business, and the use thereof by the Borrower and such
Subsidiary does not infringe upon the rights of any other Person, except for any
such infringements that, in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.  The Borrower and the Subsidiaries either
own or have valid licenses or other rights to use all databases, geological
data, geophysical data, engineering data, seismic data, maps, interpretations
and other technical information used in their businesses as presently conducted,
subject to the limitations contained in the agreements governing the use of the
same, which limitations are customary for companies engaged in the business of
the exploration and production of Hydrocarbons, with such exceptions as could
not reasonably be expected to have a Material Adverse Effect.
 
Section 7.17. Maintenance of Properties.  Except for such acts or failures to
act as could not be reasonably expected to have a Material Adverse Effect, and
subject to the prior rights and limitations of Borrower as an owner of
non-operated working interests, the Oil and Gas Properties (and Properties
unitized therewith) of the Borrower and the Subsidiaries have been maintained,
operated and developed in a good and workmanlike manner and in conformity with
all Governmental Requirements and in conformity with the provisions of all
leases, subleases or other contracts comprising a part of the Hydrocarbon
Interests and other contracts and agreements forming a part of the Oil and Gas
Properties of the Borrower and the Subsidiaries.  Specifically in connection
with the foregoing, except for those as could not be reasonably expected to have
a Material Adverse Effect, (i) no Oil and Gas Property of the Borrower or any
Subsidiary is subject to having allowable production reduced below the full and
regular allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) and (ii)
none of the wells comprising a part of the Oil and Gas Properties (or Properties
unitized therewith) of the Borrower or any Subsidiary is deviated from the
vertical more than the maximum permitted by Governmental Requirements (except
with respect to horizontal wells permitted by Governmental Authority), and such
wells are, in fact, bottomed under and are producing from, and the well bores
are wholly within, the Oil and Gas Properties (or in the case of wells located
on Properties unitized therewith, such unitized Properties) of the Borrower or
such Subsidiary.  All pipelines, wells, gas processing plants, platforms and
other material improvements, fixtures and equipment owned in whole or in part by
the Borrower or any of the Subsidiaries that are necessary to conduct normal
operations are being maintained in a state adequate to conduct normal
operations, and with respect to such of the foregoing which are operated by the
Borrower or any of the Subsidiaries, in a manner consistent with the Borrower's
or the Subsidiaries' past practices (other than those the failure of which to
maintain in accordance with this Section 7.17 could not reasonably be expected
to have a Material Adverse Effect).
 
 
53

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

 
Section 7.18. Gas Imbalances, Prepayments.  Except as set forth on Schedule 7.18
or on the most recent certificate delivered pursuant to Section 8.12(c), on a
net basis there are no Material Gas Imbalances, take or pay or other prepayments
which would require the Borrower or any of the Subsidiaries to deliver
Hydrocarbons produced from the Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor.
 
Section 7.19. Marketing of Production.  Except for contracts listed and in
effect on the date hereof on Schedule 7.19, and thereafter either disclosed in
writing to the Administrative Agent  or included in the most recently delivered
Reserve Report (with respect to all of which contracts the Borrower represents
that it or the Subsidiaries are receiving a price for all production sold
thereunder which is computed substantially in accordance with the terms of the
relevant contract and are not having deliveries curtailed substantially below
the subject Property's delivery capacity), no material agreements exist which
are not cancelable on 60 days' notice or less without penalty or detriment for
the sale of production from the Borrower's or the Subsidiaries' Hydrocarbons
(including, without limitation, calls on or other rights to purchase,
production, whether or not the same are currently being exercised) that (a)
pertain to the sale of production at a fixed price and (b) have a maturity or
expiry date of longer than six (6) months from the date hereof.
 
Section 7.20. Swap Agreements.  Schedule 7.20, as of the date hereof, and after
the date hereof, each report required to be delivered by the Borrower pursuant
to Section 8.01(f), sets forth, a true and complete list of all Swap Agreements
of the Borrower and each Subsidiary, the material terms thereof (including the
type, term, effective date, termination date and notional amounts or volumes),
the net mark to market value thereof, all credit support agreements relating
thereto (including any margin required or supplied) and the counterparty to each
such agreement, including specification as to those Swap Agreements that are
Secured Swap Agreements.
 
 
54

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

 
Section 7.21. Use of Loans.  The proceeds of the Loans shall be used (a) to pay
fees and expenses related to the Transaction, (b) to refinance Debt of the
Borrower under the Paribas Term Loan Credit Facility and (c) for other lawful
corporate purposes.
 
The Parent, the Borrower and the Subsidiaries are not engaged principally, or as
one of its or their important activities, in the business of extending credit
for the purpose, whether immediate, incidental or ultimate, of buying or
carrying margin stock (within the meaning of Regulation T, U or X of the
Board).  No part of the proceeds of any Loan will be used for any purpose which
violates the provisions of Regulations T, U or X of the Board.
 
Section 7.22. Solvency.  After giving effect to the transactions contemplated
hereby, (a) the aggregate assets (after giving effect to amounts that could
reasonably be received by reason of indemnity, offset, insurance or any similar
arrangement), at a fair valuation, of the Borrower and the Guarantors, taken as
a whole, will exceed the aggregate Debt of the Borrower and the Guarantors on a
consolidated basis, as the Debt becomes absolute and matures, (b) each of the
Borrower and the Guarantors will not have incurred or intended to incur, and
will not believe that it will incur, Debt beyond its ability to pay such Debt
(after taking into account the timing and amounts of cash to be received by each
of the Borrower and the Guarantors and the amounts to be payable on or in
respect of its liabilities, and giving effect to amounts that could reasonably
be received by reason of indemnity, offset, insurance or any similar
arrangement) as such Debt becomes absolute and matures and (c) each of the
Borrower and the Guarantors will not have (and will have no reason to believe
that it will have thereafter) unreasonably small capital for the conduct of its
business.
 
Section 7.23. Sanctioned Persons.  None of the Parent, the Borrower or any
Subsidiary or, to the knowledge of the Borrower, any director, officer, agent,
employee or Affiliate of the Parent, the Borrower or any Subsidiary is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department ("OFAC"); and the Borrower will not
directly or indirectly use the proceeds of the Loans or otherwise make available
such proceeds to any Person or entity, for the purpose of financing the
activities of any Person currently subject to any U.S. sanctions administered by
OFAC.
 
Section 7.24. Security Instruments.  The Mortgages are effective to create in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable Lien on all of the Borrower's and each
Guarantor's right, title and interest in and to the Mortgaged Property
thereunder and the proceeds thereof.  The Mortgages (other than the Mortgages
covering the ENP Oil and Gas Properties and the Pipeline Mortgages as defined
and further explained below), having been filed in the offices of the counties
where such properties are located, constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Borrower and each
Guarantor in such Mortgaged Property and the proceeds thereof, in each case
prior and superior in right to any other Person, other than with respect to the
rights of persons pursuant to Liens expressly permitted by Section 9.03.  When
the Mortgages covering the ENP Oil and Gas Properties are filed in the offices
of the counties where such properties are located, such Mortgages shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Borrower and each Guarantor in the Mortgaged Property
thereunder and the proceeds thereof, in each case prior and superior in right to
any other Person, other than with respect to the rights of persons pursuant to
Liens expressly permitted by Section 9.03.  Each Security Agreement is effective
to create in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable Lien on all of the right, title
and interest of each Loan Party executing the same in and to all of the
Collateral described therein.
 
 
55

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

 
(a) The parties acknowledge that the Mortgages exclude “buildings” as defined
under Federal Law.  Borrower agrees to provide Administrative Agent with a list
of all such buildings, together with addresses therefor sufficient to enable
Administrative Agent to confirm that such buildings are not located in Special
Flood Hazard Areas as defined under applicable Federal Law.  When appropriate
confirmations that such buildings are not located in Special Flood Hazard Areas
are received, the Mortgages will be amended to grant Liens against such
buildings.  In addition, if any such building is in fact located within a
Special Flood Hazard Area as defined under applicable Federal Law and if
Administrative Agent determines that any such building is necessary for the
operation  of the Oil and Gas Properties of Borrower or any Subsidiary, then (i)
Borrower shall obtain flood insurance policies which meet the requirements of
the National Flood Insurance Program under applicable Federal Law for such
building, and (ii) then the Mortgages shall be amended to include such building
as additional Collateral.
 
(b) The parties further acknowledge that Administrative Agent has not recorded
the Mortgages against the pipeline systems owned by Encore Clear Fork Pipeline,
L.L.P. (the “Pipeline Mortgages”) because Administrative Agent has not been able
to confirm that any buildings associated therewith are not located in Special
Flood Hazard Areas.  Borrower agrees to provide Administrative Agent within 30
days the location of all buildings associated with the pipeline systems
described in the Pipeline Mortgages which are sufficient to locate such
buildings under Federal flood insurance maps for purposes of determining
compliance with Federal flood insurance Laws.  The parties confirm that the
Pipeline Mortgages will be recorded upon confirmation that any such buildings
either (i) are not located in Special Flood Hazard Areas, or (ii) are insured
under Federal insurance policies which meet the requirements of the National
Flood Insurance Program under applicable Federal Law.
 
Section 7.25. Article 8 of Uniform Commercial Code.  No Equity Interest of
Borrower or any Subsidiary is evidenced by a certificate or other
instrument.  None of the Organizational Documents of Borrower or any Subsidiary
provides that any Equity Interest in Borrower or any Subsidiary is a security
governed by Article 8 of the Uniform Commercial Code.
 
ARTICLE VIII
 
Affirmative Covenants
 
So long as any Lender shall have any Commitment hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied, the Borrower covenants and agrees
with the Lenders that:
 
Section 8.01. Financial Statements; Other Information.  The Borrower will
furnish to the Administrative Agent and each Lender:
 
(a) Annual Financial Statements.  As soon as available, but in any event in
accordance with then applicable law and not later than 90 days after the end of
each fiscal year of the Parent, its audited consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by an independent public
accountant of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Parent and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied.
 
 
56

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

 
(b) Quarterly Financial Statements.  As soon as available, but in any event in
accordance with then applicable law and not later than 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the Parent, its
consolidated balance sheet and related statements of operations, stockholders'
equity and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
one of its Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Parent and the Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes.
 
(c) Certificate of Financial Officer -- Compliance.  Concurrently with any
delivery of financial statements under Section 8.01(a) or Section 8.01(b), a
certificate of a Financial Officer in substantially the form of Exhibit D hereto
or such other form acceptable to the Administrative Agent (i) certifying as to
whether a Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 8.13(b) and Section 9.01 and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of the
audited financial statements referred to in Section 7.04 (or, if later, the most
recently delivered audited financial statements pursuant to Section 8.01(a))
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate.
 
(d) Certificate of Accounting Firm -- Defaults.  Concurrently with any delivery
of financial statements under Section 8.01(a), a certificate of the accounting
firm that reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial statements of
any Default (which certificate may be limited to the extent required by
accounting rules or guidelines).
 
(e) Certificate of Financial Officer -- Consolidating Information.  If, at any
time, all of the Subsidiaries of the Parent are not consolidated Subsidiaries,
then concurrently with any delivery of financial statements under
Section 8.01(a) or Section 8.01(b), a certificate of a Financial Officer setting
forth consolidating spreadsheets that show all consolidated Subsidiaries and the
eliminating entries, in such form as would be presentable to the auditors of the
Parent.
 
(f) Certificate of Financial Officer -- Swap Agreements.  Concurrently with any
delivery of financial statements under Section 8.01(a) and Section 8.01(b), a
certificate of a Financial Officer, in form and substance satisfactory to the
Administrative Agent, setting forth as of the last Business Day of such fiscal
quarter or fiscal year, a true and complete list of all Swap Agreements of the
Borrower and each Subsidiary, designating which such Swap Agreements are Secured
Swap Agreements, the material terms thereof (including the type, term, effective
date, termination date and notional amounts or volumes), the net mark-to-market
value therefor, any new credit support agreements relating thereto, any margin
required or supplied under any credit support document, and the counterparty to
each such agreement.
 
57

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

 
 
(g) Certificate of Insurer -- Insurance Coverage.  Concurrently with any
delivery of financial statements under Section 8.01(a), a certificate of
insurance coverage from each insurer with respect to the insurance required by
Section 8.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, all copies of the
applicable policies.
 
(h) Other Accounting Reports.  Promptly upon receipt thereof, a copy of each
other report or letter submitted to the Parent, the Borrower or any of the
Subsidiaries by independent accountants in connection with any annual, interim
or special audit made by them of the books of the Parent, the Borrower or any
such Subsidiary, and a copy of any response by the Parent, the Borrower or any
such Subsidiary, or the board of managers of the Parent, the Borrower or any
such Subsidiary, to such letter or report.
 
(i) SEC and Other Filings; Reports to Shareholders.  Promptly after the same
become publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by Parent with the SEC, or with any
national securities exchange, or distributed by Parent to its shareholders
generally, as the case may be.
 
(j) Notices Under Material Instruments.  Promptly after the furnishing thereof,
copies of any financial statement, report or notice furnished to or by any
Person pursuant to the terms of any preferred stock designation, indenture, loan
or credit or other similar agreement, other than this Agreement and not
otherwise required to be furnished to the Lenders pursuant to any other
provision of this Section 8.01.
 
(k) Notice of Sales of Oil and Gas Properties.  In the event the Borrower or any
Subsidiary intends to sell, transfer, assign or otherwise dispose of any Oil or
Gas Properties or any Equity Interests in any Subsidiary in accordance with
Section 9.12, prior written notice of such disposition, the price thereof and
the anticipated date of closing and any other details thereof requested by the
Administrative Agent or any Lender.
 
(l) Notice of Casualty Events.  Prompt written notice, and in any event within
three Business Days, of the occurrence of any Casualty Event or the commencement
of any action or proceeding that could reasonably be expected to result in a
Casualty Event.
 
(m) Information Regarding Borrower and Guarantors.  Prompt written notice (and
in any event within thirty (30) days prior thereto) of any change (i) in the
Borrower or any Guarantor's corporate name or in any trade name used to identify
such Person in the conduct of its business or in the ownership of its
Properties, (ii) in the location of the Borrower or any Guarantor's chief
executive office or principal place of business, (iii) in the Borrower or any
Guarantor's identity or corporate structure or in the jurisdiction in which such
Person is incorporated or formed, (iv) in the Borrower or any Guarantor's
jurisdiction of organization or such Person's organizational identification
number in such jurisdiction of organization, and (v) in the Borrower or any
Guarantor's federal taxpayer identification number, if any.
 
 
58

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

 
(n) Intentionally Omitted.
 
(o) Gas Balancing Reports.  Within 45 days after the end of each fiscal quarter,
a report setting forth, for the quarter during the then current fiscal year to
date, the existence of any Material Gas Imbalances listed on a
property-by-property basis.
 
(p) Notices of Certain Changes.  Promptly, but in any event within five (5)
Business Days after the execution thereof, copies of any amendment, modification
or supplement to the Organizational Documents of the Parent, the Borrower or any
Subsidiary.
 
(q) Ratings Change.  Promptly after Moody's or S&P shall have announced a change
in the rating of the Parent, the Borrower or one of their Affiliates, written
notice of such rating change.
 
(r) PATRIOT Act.  Promptly after the request by the Administrative Agent or any
Lender, all documentation and other information that the Administrative Agent or
such Lender requests in order to comply with its ongoing obligations under
applicable "know your customer" and anti-money laundering rules and regulations,
including without limitation the Act.
 
(s) Other Requested Information.  Promptly following any request therefor, such
other information regarding the operations, business affairs and financial
condition of the Parent, the Borrower or any Subsidiary or Affiliates
(including, without limitation, any Plan or Multiemployer Plan and any reports
or other information required to be filed under ERISA), or compliance with the
terms of this Agreement or any other Loan Document, as the Administrative Agent
or any Lender may reasonably request.
 
(t) Notification of Hedging Violation.  Promptly notify Administrative Agent if
the volumes of Hydrocarbons hedged under Swap Agreements ever exceed the actual
daily production of the Hydrocarbons from the Mortgaged Property.
 
Section 8.02. Notices of Material Events.  The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
 
(a) the occurrence of any Default;
 
(b) the filing or commencement of, or the threat in writing of, any action,
suit, proceeding, investigation or arbitration by or before any arbitrator or
Governmental Authority against or affecting the Parent, the Borrower or any
Affiliate thereof not previously disclosed in writing to the Lenders or any
material adverse development in any action, suit, proceeding, investigation or
arbitration (whether or not previously disclosed to the Lenders) that, in either
case, if adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
 
 
59

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

 
(c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Parent, the Borrower and the Subsidiaries in an aggregate
amount exceeding $500,000;
 
(d) promptly after the same are available, copies of each annual report, proxy
or financial statement or other report or communication sent to the stockholders
of the Parent or the Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which Parent or the Borrower may
file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered to
the Administrative Agent pursuant hereto; and
 
(e) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.
 
Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
 
Documents required to be delivered pursuant to Sections 8.01(a) or (b), and
Section 8.02(d), (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower or Parent posts such documents, or provides a link thereto on the
Borrower's website on the Internet at the website address listed in
Section 12.01; or (ii) on which such documents are posted on the Borrower's
behalf or Parent's behalf on an Internet or intranet website, if any, to which
each Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent); provided
that: (i) the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender upon its request to the Borrower to deliver
such paper copies until a written request to cease delivering paper copies is
given by the Administrative Agent or such Lender and (ii) the Borrower shall
notify the Administrative Agent and each Lender (by telecopier or electronic
mail) of the posting of any such documents and provide to the Administrative
Agent by electronic mail electronic versions (i.e., soft copies) of such
documents.  The Administrative Agent shall have no obligation to request the
delivery of or to maintain paper copies of the documents referred to above, and
in any event shall have no responsibility to monitor compliance by the Borrower
with any such request by a Lender for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.
 
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the
Arrangers may, at their option, make available to the Lenders the Communications
by posting the Communications on the Platform and (b) certain of the Lenders
(each, a "Public Lender") may have personnel who do not wish to receive material
non-public information with respect to the Borrower or its Affiliates, or Parent
or any of the other Loan Parties, or the respective securities of any of the
foregoing, and who may be engaged in investment and other market-related
activities with respect to such Persons' securities.  The Borrower hereby agrees
that (w) all Communications 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;
(x) by marking Communications "PUBLIC," the Borrower shall be deemed to have
authorized the Administrative Agent, the other Agents, the Arrangers and the
Lenders to treat such Communications as not containing any material non-public
information with respect to the Borrower, any of the Loan Parties or Parent, or
any of their securities for purposes of United States Federal and state
securities laws (provided, however, that to the extent such Communications
constitute Information, they shall be treated as set forth in Section 12.11);
(y) all Communications marked "PUBLIC" are permitted to be made available
through a portion of the Platform designated "Public Side Information;" and
(z) the Administrative Agent, the other Agents and each of the Arrangers shall
be entitled to treat any Communications that are not marked "PUBLIC" as being
suitable only for posting on a portion of the Platform not designated "Public
Side Information."
 
 
60

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

 
Section 8.03. Existence; Conduct of Business.  The Borrower will, and will cause
each Subsidiary to, do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence and the rights,
licenses, permits, privileges and franchises material to the conduct of its
business and maintain, if necessary, its qualification to do business in each
other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 9.11.
 
Section 8.04. Payment of Obligations.  The Borrower will, and will cause each
Subsidiary to, pay its obligations, including Tax liabilities of the Borrower
and all of the Subsidiaries before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance with
GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect or result in the
seizure or levy of any Property of the Borrower or any Subsidiary.
 
Section 8.05. Performance of Obligations under Loan Documents.  The Borrower
will pay the Obligations according to the reading, tenor and effect of this
Agreement and the Notes, and the Borrower will, and will cause the Parent and
each Subsidiary to, do and perform every act and discharge all of the
obligations to be performed and discharged by them under the Loan Documents,
including, without limitation, this Agreement, at the time or times and in the
manner specified.
 
Section 8.06. Operation and Maintenance of Properties.  The Borrower, at its own
expense, will, and will cause each Subsidiary to:
 
(a) operate its Oil and Gas Properties and other material Properties or cause
such Oil and Gas Properties and other material Properties to be operated in a
careful and efficient manner in accordance with the practices of the industry
and in compliance with all applicable contracts and agreements and in compliance
with all Governmental Requirements, including, without limitation, applicable
pro ration requirements and Environmental Laws, and all applicable laws, rules
and regulations of every other Governmental Authority from time to time
constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, in those circumstances where a reasonably
prudent operator under similar circumstances and in accordance with customary
industry practice would be prudent not to do so, and the failure to comply could
not reasonably be expected to have a Material Adverse Effect.
 
 
61

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

 
(b) operate and maintain in a careful and efficient manner in accordance with
the practices of the industry and in compliance with all applicable contracts
and agreements and in compliance with all Governmental Requirements, including,
without limitation, all applicable laws, rules and regulations of every other
Governmental Authority from time to time constituted to regulate the gathering,
transportation or processing of Hydrocarbons and other minerals therefrom,
except, in each case, in those circumstances where a reasonably prudent operator
under similar circumstances and in accordance with customary industry practice
would be prudent not to do so, and the failure to comply could not reasonably be
expected to have a Material Adverse Effect, all pipelines, compressor stations,
wells, gas or crude oil processing facilities, field gathering systems, tanks,
tank batteries, pumps, pumping units, fixtures, valves, fittings, machinery,
parts, engines, boilers, meters, apparatus, appliances, tools, implements,
casing, tubing, rods, cables, wires, towers, surface and other material
improvements, fixtures and equipment owned in whole or in part by the Borrower
or any of the Subsidiaries that are useful or necessary to conduct normal
operations relating to gathering, transportation, processing or removal of
Hydrocarbons and other minerals or CO2 therefrom.
 
(c) keep and maintain all Property material to the conduct of its business in
good working order and condition, ordinary wear and tear excepted, and preserve,
maintain and keep in good repair, working order and efficiency (ordinary wear
and tear excepted) all of its material Oil and Gas Properties, all gas or crude
oil processing facilities and other material Properties, including, without
limitation, all equipment, machinery and facilities.
 
(d) promptly pay and discharge, or make reasonable and customary efforts to
cause to be paid and discharged, all delay rentals, royalties, expenses and
indebtedness accruing under the leases or other agreements affecting or
pertaining to its Oil and Gas Properties or gas or crude oil processing
facilities and will do all other things necessary to keep unimpaired their
rights with respect thereto and prevent any forfeiture thereof or default
thereunder.
 
(e) promptly perform or make reasonable and customary efforts to cause to be
performed, in accordance with industry standards, the obligations required by
each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its Oil and Gas Properties, all gas or
crude oil processing facilities and other material Properties.
 
(f) operate its Oil and Gas Properties, all gas or crude oil processing
facilities and other material Properties or cause or make reasonable and
customary efforts to cause such Oil and Gas Properties, gas or crude oil
processing facilities and other material Properties to be operated in accordance
with the practices of the industry and in material compliance with all
applicable contracts and agreements and in compliance in all material respects
with all Governmental Requirements.
 
To the extent the Borrower is not the operator of any Property, the Borrower
shall use reasonable efforts to cause the operator to comply with this
Section 8.06.
 
 
62

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

 
Section 8.07. Insurance.  The Borrower will, and will cause each Subsidiary to,
maintain, with financially sound and reputable insurance companies, insurance in
such amounts and against such risks as are customarily maintained by companies
engaged in the same or similar businesses operating in the same or similar
locations.  The loss payable clauses or provisions in said insurance policy or
policies insuring any of the Collateral for the Loans shall be endorsed in favor
of and made payable to the Administrative Agent as its interests may appear and
such policies shall name the Administrative Agent in its capacity as such as
"additional insured" and provide that the insurer will endeavor to give at least
30 days prior notice of any cancellation to the Administrative Agent.
 
Section 8.08. Books and Records; Inspection Rights.  The Borrower will, and will
cause the Parent and each Subsidiary to, keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities.  The Borrower will, and
will cause the Parent and each Subsidiary to, permit any representatives
designated by the Administrative Agent or any Lender, upon reasonable prior
notice, to visit and inspect its Properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and as
often as reasonably requested.
 
Section 8.09. Compliance with Laws.  The Borrower will, and will cause the
Parent and each Subsidiary to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its Property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
 
Section 8.10. Environmental Matters.
 
(a) The Borrower shall at its sole expense:  (i) comply, and shall cause its
Properties and operations and each Subsidiary and each Subsidiary's Properties
and operations to comply, with all applicable Environmental Laws, the breach of
which could be reasonably expected to have a Material Adverse Effect; (ii) not
dispose of or otherwise release, and shall cause each Subsidiary not to dispose
of or otherwise release, any oil, oil and gas waste, hazardous substance, or
solid waste on, under, about or from any of the Borrower's or the Subsidiaries'
Properties or any other Property to the extent caused by the Borrower's or any
of the Subsidiaries' operations except in compliance with applicable
Environmental Laws, the disposal or release of which could reasonably be
expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each Subsidiary to timely obtain or file, all notices, permits,
licenses, exemptions, approvals, registrations or other authorizations, if any,
required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of the Borrower's or the Subsidiaries'
Properties, which failure to obtain or file could reasonably be expected to have
a Material Adverse Effect; (iv) promptly commence and diligently prosecute to
completion, and shall cause each Subsidiary to promptly commence and diligently
prosecute to completion, any assessment, evaluation, investigation, monitoring,
containment, cleanup, removal, repair, restoration, remediation or other
remedial obligations (collectively, the "Remedial Work") in the event any
Remedial Work is required or reasonably necessary under applicable Environmental
Laws because of or in connection with the actual or suspected past, present or
future disposal or other release of any oil, oil and gas waste, hazardous
substance or solid waste on, under, about or from any of the Borrower's or the
Subsidiaries' Properties, which failure to commence and diligently prosecute to
completion could reasonably be expected to have a Material Adverse Effect; and
(v) establish and implement, and shall cause each Subsidiary to establish and
implement, such procedures as may be necessary to continuously determine and
assure that the Borrower's and the Subsidiaries' obligations under this
Section 8.10(a) are timely and fully satisfied, which failure to establish and
implement could reasonably be expected to have a Material Adverse Effect.
 
 
63

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

 
(b) The Borrower will promptly, but in no event later than five days of the
occurrence of a triggering event, notify the Administrative Agent and the
Lenders in writing of any threatened action, investigation or inquiry by any
Governmental Authority or any threatened demand or lawsuit by any landowner or
other third party against the Borrower or the Subsidiaries or their Properties
of which the Borrower has knowledge in connection with any Environmental Laws
(excluding routine testing and corrective action) if the Borrower reasonably
anticipates that such action will result in liability (whether individually or
in the aggregate) in excess of $500,000, not fully covered by insurance, subject
to normal deductibles.
 
(c) The Borrower will, and will cause each Subsidiary to, provide environmental
audits and tests in accordance with American Society of Testing Materials
standards upon request by the Administrative Agent and the Lenders in connection
with any future acquisitions of Oil and Gas Properties or other Properties.
 
Section 8.11. Further Assurances.
 
(a) The Borrower at its sole expense will, and will cause the Parent and each
Subsidiary to, promptly execute and deliver to the Administrative Agent all such
other documents, agreements and instruments reasonably requested by the
Administrative Agent to comply with, cure any defects or accomplish the
conditions precedent, covenants and agreements of the Borrower, the Parent or
any Subsidiary, as the case may be, in the Loan Documents, including Notes (and
to deliver a Note to any Lender at its request), or to further evidence and more
fully describe the collateral intended as security for the Obligations, or to
correct any omissions in this Agreement or the Security Instruments, or to state
more fully the obligations secured therein, or to perfect, protect or preserve
any Liens created pursuant to this Agreement or any of the Security Instruments
or the priority thereof, or to make any recordings, file any notices or obtain
any consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith.
 
(b) The Borrower hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Mortgaged Property , the ENP Pledged Interests or other Property
covered by the Lien of the Security Instruments without the signature of the
Borrower or any other Guarantor where permitted by law.  A carbon, photographic
or other reproduction of the Security Instruments or any financing statement
covering the Mortgaged Property, the ENP Pledged Interests, such other Property
or any part thereof shall be sufficient as a financing statement where permitted
by law.
 
 
64

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

 
Section 8.12. Reserve Reports.
 
(a) On or before November 1, 2011, the Borrower shall furnish to the
Administrative Agent and the Lenders a Reserve Report evaluating the Oil and Gas
Properties of the Borrower and the Subsidiaries as of June 30, 2011.  This
Reserve Report shall include the ENP Oil and Gas Properties regardless of
whether the ENP Transaction has been consummated by such date.  Thereafter, on
or before March 1 and September 1 of each year, the Borrower shall furnish to
the Administrative Agent and the Lenders a Reserve Report evaluating the Oil and
Gas Properties of the Borrower and the Subsidiaries as of the immediately
preceding December 31st and June 30th,
 
(i) the Reserve Report as of December 31 of each year shall be prepared by one
or more Approved Petroleum Engineers and shall use economic parameters
(including but not limited to, hydrocarbon prices, escalation rates, discount
rate assumptions, and other economic assumptions) acceptable to Administrative
Agent, and
 
(ii) the Reserve Report as of June 30 of each year (including as of June 30,
2011) shall be prepared by or under the supervision of the chief operating
officer of the Borrower and shall use economic parameters (including but not
limited to hydrocarbon prices, escalation rates, discount rate assumptions, and
other economic assumptions) acceptable to Administrative Agent.  The chief
operating officer of the Borrower shall certify such Reserve Report to be true
and accurate and to have been prepared in accordance with the procedures used in
the immediately preceding June 30 Reserve Report.
 
(b) In the event of an Interim Test, the Borrower shall furnish to the
Administrative Agent and the Lenders a Reserve Report prepared by or under the
supervision of the chief operating officer of the Borrower who shall certify
such Reserve Report to be true and accurate and to have been prepared in
accordance with the procedures used in the immediately preceding December 31
Reserve Report.  For any Interim Test or other test requested by the
Administrative Agent or the Borrower pursuant to Section 2.07(b), the Borrower
shall provide such Reserve Report with an "as of" date as required by the
Administrative Agent as soon as possible, but in any event no later than thirty
(30) days following the receipt of such request.
 
(c) With the delivery of each Reserve Report, the Borrower shall provide to the
Administrative Agent and the Lenders a certificate from a Responsible Officer
certifying that:  (i) the information contained in the Reserve Report and any
other information delivered in connection therewith is true and correct in all
material respects, (ii) the Borrower or the Subsidiaries own good and defensible
title to the Oil and Gas Properties evaluated in such Reserve Report and such
Properties are free of all Liens except for Liens permitted by Section 9.03,
(iii) except as set forth on an exhibit to the certificate, on a net basis there
are no Material Gas Imbalances, take or pay or other prepayments in excess of
the volume specified in Section 7.19 with respect to its Oil and Gas Properties
evaluated in such Reserve Report which would require the Borrower or any
Subsidiary to deliver Hydrocarbons either generally or produced from such Oil
and Gas Properties at some future time without then or thereafter receiving full
payment therefor, (iv) none of their Oil and Gas Properties have been sold since
the date of the last Reserve Report except as set forth on an exhibit to the
certificate, which certificate shall list all of its Oil and Gas Properties sold
and in such detail as reasonably required by the Administrative Agent, (v)
attached to the certificate is a list of the names and addresses of the
purchasers which accounted for at least 75% of the total natural gas and oil
revenues of the Borrower and the Subsidiaries during the twelve month period
ended as of the immediately preceding December 31st or June 30th, as applicable
and (vi) attached thereto is a schedule of the Oil and Gas Properties evaluated
by such Reserve Report that are Mortgaged Properties and demonstrating the
percentage of the total value of the Oil and Gas Properties that the value of
such Mortgaged Properties represent in compliance with Section 8.14(a).
 
 
65

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

 
Section 8.13. Title Information.
 
(a) On or before January 15, 2012, and thereafter on or before the delivery to
the Administrative Agent and the Lenders of each Reserve Report required by
Section 8.12(a), the Borrower will deliver title information in form and
substance acceptable to the Administrative Agent covering enough of the Oil and
Gas Properties evaluated by such Reserve Report that were not included in the
immediately preceding Reserve Report, so that the Administrative Agent shall
have received together with title information previously delivered to the
Administrative Agent, satisfactory title information on at least 80% of the Oil
and Gas Properties evaluated by such Reserve Report.
 
(b) If the Borrower has provided title information for additional Properties
under Section 8.13(a), the Borrower shall, within 60 days of notice from the
Administrative Agent that title defects or exceptions exist with respect to such
additional Properties, either (i) cure any such title defects or exceptions
(including defects or exceptions as to priority) which are not permitted by
Section 9.03 raised by such information, (ii) substitute acceptable Mortgaged
Properties with no title defects or exceptions except for Excepted Liens (other
than Excepted Liens described in clauses (e), (g) and (h) of such definition)
having an equivalent value or (iii) deliver title information in form and
substance acceptable to the Administrative Agent so that the Administrative
Agent shall have received, together with title information previously delivered
to the Administrative Agent, satisfactory title information on at least 80% of
the Oil and Gas Properties evaluated by such Reserve Report.
 
(c) If the Borrower is unable to cure any title defect requested by the
Administrative Agent or the Lenders to be cured before January 15, 2012 or the
Borrower does not comply with the requirements to provide acceptable title
information covering 80% of the Oil and Gas Properties evaluated in the most
recent Reserve Report, such default shall not be a Default, but instead the
Administrative Agent and/or the Required Lenders shall have the right to
exercise the following remedy in their sole discretion from time to time, and
any failure to so exercise this remedy at any time shall not be a waiver as to
future exercise of the remedy by the Administrative Agent or the Lenders.  To
the extent that the Administrative Agent or the Required Lenders are not
satisfied with title to any Mortgaged Property after January 15, 2012, such
unacceptable Mortgaged Property shall not count towards the 80% requirement, and
the Administrative Agent may send a notice to the Borrower and the Lenders that
the alternative Applicable Margin schedule (as shown in the definition of
Applicable Margin in Section 1.02) is in effect and shall thereafter remain in
effect until such time as the requirements of this Section 8.13 are met.
 
 
66

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

 
Section 8.14. Additional Collateral; Additional Guarantors.
 
(a) Intentionally Omitted.
 
(b) The Borrower shall promptly cause each Domestic Subsidiary to guarantee the
Obligations pursuant to a Guaranty Agreement.  In connection with any such
guaranty, the Borrower shall, or shall cause such Subsidiary to, (A) pledge all
of the Equity Interests of such new Subsidiary pursuant to a Security Agreement
and (B) execute and deliver such other additional closing documents,
certificates and legal opinions as shall reasonably be requested by the
Administrative Agent.
 
(c) Intentionally Omitted.
 
(d) In the event that (i) the Required Lenders waive the provisions of
Section 9.15 to permit the Borrower or any Domestic Subsidiary to become the
owner of a Foreign Subsidiary (such waiver to be granted in the sole discretion
of the Required Lenders), and (ii) such Foreign Subsidiary has total assets in
excess of $1,000,000, then the Borrower shall promptly, or shall cause such
Domestic Subsidiary to promptly, guarantee the Obligations pursuant to the
Guaranty Agreement.  In connection with any such guaranty, the Borrower shall,
or shall cause such Domestic Subsidiary to, (i) execute and deliver a supplement
to the Guaranty Agreement, (ii) pledge 65% of all the Equity Interests of such
Foreign Subsidiary (including, without limitation, delivery of original stock
certificates evidencing such Equity Interests of such Foreign Subsidiary,
together with appropriate stock powers for each certificate duly executed in
blank by the registered owner thereof) and (iii) execute and deliver such other
additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent.
 
Section 8.15. ERISA Compliance.  The Borrower will promptly furnish and will
cause the Parent and the Subsidiaries and any ERISA Affiliate to promptly
furnish to the Administrative Agent (i) promptly after the filing thereof with
the United States Secretary of Labor, the Internal Revenue Service or the PBGC,
copies of each annual and other report with respect to each Plan or any trust
created thereunder, (ii) immediately upon becoming aware of the occurrence of
any ERISA Event or of any "prohibited transaction," as described in section 406
of ERISA or in section 4975 of the Code, in connection with any Plan or any
trust created thereunder, a written notice signed by the President or the
principal Financial Officer, the Subsidiary or the ERISA Affiliate, as the case
may be, specifying the nature thereof, what action the Borrower, the Parent, the
Subsidiary or the ERISA Affiliate is taking or proposes to take with respect
thereto, and, when known, any action taken or proposed by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto, and (iii)
immediately upon receipt thereof, copies of any notice of the PBGC's intention
to terminate or to have a trustee appointed to administer any Plan.  With
respect to each Plan (other than a Multiemployer Plan), the Borrower will, and
will cause the Parent and each Subsidiary and ERISA Affiliate to, (i) satisfy in
full and in a timely manner, without incurring any late payment or underpayment
charge or penalty and without giving rise to any Lien, all of the contribution
and funding requirements of section 412 of the Code (determined without regard
to subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
 

 
 
67

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

 
ARTICLE IX
 
Negative Covenants
 
So long as any Lender shall have any Commitment hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied, the Borrower covenants and agrees
with the Lenders that:
 
Section 9.01. Financial Covenants.
 
(a) Consolidated Leverage Ratio.  The Borrower will not, as of the last day of
any fiscal quarter, permit the Consolidated Leverage Ratio to be greater than
4.00 to 1.00.
 
(b) Consolidated Current Ratio.  The Borrower will not permit, at any time, the
ratio of (i) consolidated current assets (including the Available Funds (under
the First Lien Credit Agreement), but excluding non-cash assets under ASC 815)
to (ii) consolidated current liabilities (excluding non-cash obligations under
ASC 815 and current maturities under this Agreement or the First Lien Credit
Agreement) to be less than 1.0 to 1.0.  This ratio shall be computed for the
Parent, the Borrower and the Subsidiaries on a consolidated basis.
 
(c) Collateral Coverage Ratio.  The Borrower will not permit, at any time, the
Collateral Coverage Ratio to be less than 1.5 to 1.0; provided, however, this
ratio shall be tested only at such times as are described in Section
2.07(c).  This ratio shall be computed for the Parent, the Borrower and the
Subsidiaries on a consolidated basis.
 
Section 9.02. Debt.  The Borrower will not, and will not permit any Subsidiary
to, incur, create, assume or suffer to exist any Debt, except:
 
(a) the Obligations.
 
(b) accounts payable and accrued expenses, liabilities or other obligations to
pay the deferred purchase price of Property or services, from time to time
incurred in the ordinary course of business which are not greater than sixty
(60) days past the date of invoice or delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP.
 
(c) Debt under Capital Leases not to exceed $2,000,000.
 
(d) Debt associated with bonds or surety obligations required by Governmental
Requirements in connection with the operation of the Oil and Gas Properties.
 
(e) intercompany Debt between the Borrower and any Subsidiary or between
Subsidiaries to the extent permitted by Section 9.05(g); provided that such Debt
is not held, assigned, transferred, negotiated or pledged to any Person other
than the Borrower or one of its Wholly-Owned Subsidiaries, and, provided
further, that any such Debt owed by either the Borrower or a Guarantor shall be
subordinated to the Obligations on terms satisfactory to the Administrative
Agent.
 
 
68

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

 
(f) endorsements of negotiable instruments for collection in the ordinary course
of business.
 
(g) other Debt, including purchase-money obligations, not to exceed $2,000,000
in the aggregate at any one time outstanding.
 
(h) Debt arising under Swap Agreements permitted under Section 9.18 hereof.
 
(i) so long there exists no Default before and after giving effect to any such
incurrence, Senior Notes so long as in each case, (i) the maturity date of such
Senior Notes is not less than one year after the Maturity Date, (ii) the
indentures or other agreements under which any Senior Notes are issued and all
other instruments, agreements and other documents evidencing or governing such
Senior Notes or providing for any guarantee or other right in respect thereof
have terms that are not more restrictive on the Parent, the Borrower or any of
the Subsidiaries than the terms of this Agreement and the other Loan Documents,
and (iii) the Senior Notes are unsecured.
 
(j) Debt arising under the First Lien Credit Agreement which may not exceed
$1,500,000,000 in principal amount.
 
Section 9.03. Liens.  The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any of its Properties
(now owned or hereafter acquired), except:
 
(a) Liens securing the payment of any Obligations.
 
(b) Subject to the terms of the Intercreditor Agreement and so long as it is in
force and effect, Liens securing the payment of any Obligations (as defined in
the First Lien Loan Documents).
 
(c) Excepted Liens.
 
(d) Liens securing Capital Leases permitted by Section 9.02(d) but only on the
Property under lease.
 
(e) Liens on any Property of the Borrower and the Subsidiaries existing on the
date hereof and set forth on Schedule 9.03; provided that such Liens shall
secure only those obligations which they secure on the date hereof.
 
(f) Liens on Property not constituting Collateral for the Obligations and not
otherwise permitted by the foregoing clauses of this Section 9.03; provided that
the aggregate principal or face amount of all Debt secured under this
Section 9.03(f) shall not exceed $5,000,000 at any time.
 
 
69

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

 
Section 9.04. Dividends, Distributions and Redemptions.   The Borrower will not,
and will not permit any of the Subsidiaries to, declare or make, or agree to pay
or make, directly or indirectly, any Restricted Payment, return any capital to
its stockholders, members or partners or make any distribution of its Property
to its Equity Interest holders, except
 
(a) the Borrower may declare and pay cash distributions to its Equity Interest
holders to permit such holders to pay federal and state taxes due with respect
to the income of the Borrower;
 
(b) the Borrower may declare and pay dividends with respect to its Equity
Interests payable solely in additional shares of its Equity Interests (other
than Disqualified Capital Stock);
 
(c) Subsidiaries (other than Borrower) may declare and pay dividends ratably
with respect to their Equity Interests;
 
(d) the Borrower may make Restricted Payments pursuant to and in accordance with
stock option plans or other benefit plans for management or employees of the
Borrower and the Subsidiaries; and
 
(e) so long as no Default has occurred and is continuing or would result from
the making of such Restricted Payment, the Borrower may make Restricted Payments
to the Parent, provided that, notwithstanding the foregoing, the Borrower may
only make Restricted Payments that are intended to be used by the Parent to
purchase treasury stock in an aggregate amount of $10,000,000 for all such
Restricted Payments over the term of this Agreement.
 
Section 9.05. Investments, Loans and Advances.  The Borrower will not, and will
not permit any Subsidiary to, make or permit to remain outstanding any
Investments in or to any Person, except that the foregoing restriction shall not
apply to:
 
(a) Investments reflected in the Financial Statements or which are disclosed to
the Lenders in Schedule 9.05.
 
(b) accounts receivable arising in the ordinary course of business.
 
(c) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within one year from the date of creation thereof.
 
(d) commercial paper maturing within one year from the date of creation thereof
rated in the highest grade by S&P or Moody's.
 
(e) deposits maturing within one year from the date of creation thereof with,
including certificates of deposit issued by, any Lender or any office located in
the United States of any other bank or trust company which is organized under
the laws of the United States or any state thereof, has capital, surplus and
undivided profits aggregating at least $100,000,000 (as of the date of such bank
or trust company's most recent financial reports) and has a short term deposit
rating of no lower than A2 or P2, as such rating is set forth from time to time,
by S&P or Moody's, respectively or, in the case of any Foreign Subsidiary, a
bank organized in a jurisdiction in which the Foreign Subsidiary conducts
operations having assets in excess of $500,000,000 (or its equivalent in another
currency).
 
 
70

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

 
(f) deposits in money market funds investing exclusively in Investments
described in Section 9.05(c), Section 9.05(d) or Section 9.05(e).
 
(g) Investments (i) made by the Borrower in or to the Guarantors (other than
Parent), (ii) made by any Subsidiary in or to the Borrower or any Guarantor
(other than Parent) and (iii) made by the Borrower or any Subsidiary in or to
all other Domestic Subsidiaries which are not Guarantors in an aggregate amount
at any one time outstanding not to exceed $5,000,000.
 
(h) Investments (including, without limitation, capital contributions) in
general or limited partnerships or other types of entities (each a "venture")
entered into by the Borrower or a Subsidiary with others in the ordinary course
of business; provided that (i) any such venture is engaged exclusively in oil
and gas exploration, development, production, processing and related activities,
including transportation, (ii) the interest in such venture is acquired in the
ordinary course of business and on fair and reasonable terms and (iii) such
venture interests acquired and capital contributions made (valued as of the date
such interest was acquired or the contribution made) do not exceed, in the
aggregate at any time outstanding an amount equal to $5,000,000.
 
(i) Investments made by the Borrower or a Guarantor 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 (A) the Borrower shall be in compliance, on a
pro forma basis after giving effect to any such Investment, with the financial
covenants set forth in Section 9.01 recomputed as at the last day of the most
recently ended fiscal quarter of the Borrower for which financial statements are
available, and (B) no Default shall have occurred and be continuing or would
result therefrom.
 
(j) Investments in stock, obligations or securities received in settlement of
debts arising from Investments permitted under this Section 9.05 owing to the
Borrower or any Subsidiary as a result of a bankruptcy or other insolvency
proceeding of the obligor in respect of such debts or upon the enforcement of
any Lien in favor of the Borrower or any of the Subsidiaries; provided that the
Borrower shall give the Administrative Agent prompt written notice in the event
that the aggregate amount of all Investments held at any one time under this
Section 9.05(j) exceeds $5,000,000.
 
(k) other Investments not to exceed $1,000,000 in the aggregate at any time.
 
Section 9.06. Nature of Business; International Operations.  The Borrower will
not, and will not permit the Parent or any Subsidiary to, allow any material
change to be made in the character of its business as currently conducted by it
and business activities reasonably incidental thereto as an independent oil and
gas exploration and production company with operations in the continental United
States.  From and after the date hereof, the Borrower and the Subsidiaries will
not acquire or make any other expenditure (whether such expenditure is capital,
operating or otherwise) in or related to, any Oil and Gas Properties not located
within the geographical boundaries of the United States.
 
 
71

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

 
Section 9.07. Limitation on Leases.  The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist any obligation for
the payment of rent or hire of Property of any kind whatsoever (real or personal
but excluding Capital Leases and leases of Hydrocarbon Interests), under leases
or lease agreements which would cause the aggregate amount of all payments made
by the Borrower and the Subsidiaries pursuant to all such leases or lease
agreements, including, without limitation, any residual payments at the end of
any lease, to exceed $10,000,000 in any period of twelve consecutive calendar
months during the life of such leases.
 
Section 9.08. Proceeds of Loans.  The Borrower will not permit the proceeds of
the Loans to be used for any purpose other than those permitted by
Section 7.21.  Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulations T, U or X or any other regulation of the Board
or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereafter be in effect.  If requested by the Administrative Agent, the Borrower
will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1 or such
other form referred to in Regulation U, Regulation T or Regulation X of the
Board, as the case may be.
 
Section 9.09. ERISA Compliance.  The Borrower will not, and will not permit the
Parent or any Subsidiary to, at any time:
 
(a) engage in, or permit any ERISA Affiliate to engage in, any transaction in
connection with which the Borrower, the Parent or a Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by
Chapter 43 of Subtitle D of the Code.
 
(b) terminate, or permit any ERISA Affiliate to terminate, any Plan in a manner,
or take any other action with respect to any Plan, which could result in any
liability of the Borrower, the Parent or a Subsidiary or any ERISA Affiliate to
the PBGC.
 
(c) fail to make, or permit any ERISA Affiliate to fail to make, full payment
when due of all amounts which, under the provisions of any Plan, agreement
relating thereto or applicable law, the Borrower, the Parent or a Subsidiary or
any ERISA Affiliate is required to pay as contributions thereto.
 
(d) permit to exist, or allow any ERISA Affiliate to permit to exist, any
accumulated funding deficiency within the meaning of section 302 of ERISA or
section 412 of the Code, whether or not waived, with respect to any Plan.
 
(e) permit, or allow any ERISA Affiliate to permit, the actuarial present value
of the benefit liabilities under any Plan maintained by the Borrower, the Parent
or a Subsidiary or any ERISA Affiliate which is regulated under Title IV of
ERISA to exceed the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities.  The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA.
 
 
72

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

 
(f) contribute to or assume an obligation to contribute to, or permit any ERISA
Affiliate to contribute to or assume an obligation to contribute to, any
Multiemployer Plan.
 
(g) acquire, or permit any ERISA Affiliate to acquire, an interest in any Person
that causes such Person to become an ERISA Affiliate with respect to the
Borrower, the Parent or a Subsidiary or with respect to any ERISA Affiliate of
the Borrower, the Parent or a Subsidiary 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 under which the actuarial
present value of the benefit liabilities under such Plan exceeds the current
value of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities.
 
(h) incur, or permit any ERISA Affiliate to incur, a liability to or on account
of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA.
 
(i) contribute to or assume an obligation to contribute to, or permit any ERISA
Affiliate to contribute to or assume an obligation to contribute to, any
employee welfare benefit plan, as defined in section 3(1) of ERISA, including,
without limitation, any such plan maintained to provide benefits to former
employees of such entities, that may not be terminated by such entities in their
sole discretion at any time without any material liability.
 
(j) amend, or permit any ERISA Affiliate to amend, a Plan resulting in an
increase in current liability such that the Borrower, the Parent or a Subsidiary
or any ERISA Affiliate is required to provide security to such Plan under
section 401(a)(29) of the Code.
 
Section 9.10. Sale or Discount of Receivables.  Except for receivables obtained
by the Borrower or any Subsidiary out of the ordinary course of business or the
settlement of joint interest billing accounts in the ordinary course of business
or discounts granted to settle collection of accounts receivable or the sale of
defaulted accounts arising in the ordinary course of business in connection with
the compromise or collection thereof and not in connection with any financing
transaction, the Borrower will not, and will not permit any Subsidiary to,
discount or sell (with or without recourse) any of its notes receivable or
accounts receivable.
 
Section 9.11. Mergers, Etc.  Neither the Borrower nor any of the Subsidiaries
will merge into or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property to any other Person, except that (i)
any Wholly-Owned Subsidiary may merge with any other Wholly-Owned Subsidiary,
and (ii) the Borrower may merge with any Wholly-Owned Subsidiary so long as the
Borrower is the survivor.
 
 
73

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

 
Section 9.12. Sale of Properties.  The Borrower will not, and will not permit
any Subsidiary to,  sell, assign, farm-out, convey or otherwise transfer any
Property, including without limitation, Equity Interests of Borrower or any
Subsidiary, except for (a) the sale of Hydrocarbons in the ordinary course of
business; (b) farmouts of undeveloped acreage and assignments in connection with
such farmouts; (c) the sale or transfer of equipment that is no longer necessary
for the business of the Borrower or such Subsidiary or is replaced by equipment
of at least comparable value and use; and (d) so long as the Borrower is in
compliance with Sections 9.01(a), (b) and (c) both before and after giving
effect to any such transaction, sales and other dispositions of Property, and
thereafter is in compliance with the First Lien Credit Agreement.
 
Section 9.13. Environmental Matters.  The Borrower will not, and will not permit
any Subsidiary to, cause or permit any of its Property which it or a Subsidiary
operates to be in violation of, or do anything or permit anything to be done
which will subject any such Property to any Remedial Work under any
Environmental Laws, assuming disclosure to the applicable Governmental Authority
of all relevant facts, conditions and circumstances, if any, pertaining to such
Property where such violations or remedial obligations could reasonably be
expected to have a Material Adverse Effect.  The Borrower will use its
reasonable efforts to cause the operator of Properties which the Borrower or any
Subsidiary does not operate to comply with the terms and provisions of this
Section 9.13.
 
Section 9.14. Transactions with Affiliates.  The Borrower will not, and will not
permit the Parent or any Subsidiary to, enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of Property or the
rendering of any service, with any Affiliate (other than the Guarantors and
Wholly-Owned Subsidiaries of the Borrower) unless such transactions are
otherwise permitted under this Agreement and are upon fair and reasonable terms
no less favorable to it than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate.
 
Section 9.15. Subsidiaries.  The Borrower will not, and will not permit the
Parent or any Subsidiary to, create or acquire any additional Subsidiary unless
the Borrower gives written notice to the Administrative Agent of such creation
or acquisition and complies with Section 8.14(b) and Section 8.14(c); provided
however, that the Borrower and any Wholly-Owned Subsidiary may create a
Subsidiary to be used in connection with the merger by the Borrower or any
Subsidiary with any of their respective Subsidiaries.  The Borrower shall not,
and shall not permit any Subsidiary to, sell, assign or otherwise dispose of any
Equity Interests in any Subsidiary.  None of the Borrower, the Parent or any
Subsidiary shall have any Foreign Subsidiaries.
 
Section 9.16. Negative Pledge Agreements; Dividend Restrictions.  The Borrower
will not, and will not permit any Subsidiary to, create, incur, assume or suffer
to exist any contract, agreement or understanding (other than this Agreement,
the Security Instruments, the First Lien Loan Documents or Capital Leases
creating Liens permitted by Section 9.03(d)) which in any way prohibits or
restricts the granting, conveying, creation or imposition of any Lien on any of
its Property in favor of the Administrative Agent and/or any or all of the
Secured Parties or restricts any Subsidiary from paying dividends or making
distributions to the Borrower or any Guarantor, or which requires the consent of
or notice to other Persons in connection therewith.
 
 
74

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

 
Section 9.17. Gas Imbalances, Take-or-Pay or Other Prepayments.  The Borrower
will not, and will not permit any Subsidiary to, (a) incur, become or remain
liable for, any Material Gas Imbalance, or (b) allow take-or-pay or other
prepayments with respect to the Oil and Gas Properties of the Borrower or any
Subsidiary that would require the Borrower or such Subsidiary to deliver
Hydrocarbons at some future time without then or thereafter receiving full
payment therefor.
 
Section 9.18. Swap Agreements.  The Borrower will not, and will not permit any
Subsidiary to, enter into any Swap Agreements with any Person other than
 
(a) Swap Agreements in respect of commodities (x) with an Approved Counterparty
and (y) the notional volumes for which (when aggregated with other commodity
Swap Agreements then in effect other than basis differential swaps on volumes
already hedged pursuant to other Swap Agreements) do not exceed the greater of,
on any five year period beginning any date of determination (and in connection
with any transaction described in Section 2.09, after giving effect to such
future acquisition on a pro forma basis):
 
(i) 85% of the projected production of Hydrocarbons from Proved Reserves of the
Oil and Gas Properties (as reflected on the most recently delivered Engineering
Reports acceptable to the Administrative Agent) during the period  in effect for
each of crude oil and natural gas, calculated separately, and
 
(ii) for projected production of Hydrocarbons from the Oil and Gas Properties
(as reflected on the most recently delivered Engineering Reports acceptable to
the Administrative Agent) constituting PDP only, (x) for the first 24 months
following such date, 100% of such reasonably anticipated projected production
for each of crude oil and natural gas, calculated separately, and (y) for the
period from the 25th month through the 48th month following such date, 90% of
such reasonably anticipated projected production for each of crude oil and
natural gas, calculated separately, and (z) for such period from the 49th month
through the 60th month following such date, 85% of the reasonably anticipated
projected production for each of crude oil and natural gas, calculated
separately. For purposes of this calculation, the Borrower may, in its
discretion, include natural gas liquids production in natural gas or crude oil
calculations so long as the Borrower is in compliance with the preceding
restrictions.  The Borrower may hedge production associated with new
acquisitions upon the signing of the applicable purchase and sale agreement so
long as it does so in compliance with the First Lien Loan Documents.
 
(iii) do not include more than 35% of the projected production of Hydrocarbons
from Proved Reserves constituting PDNP or PUD, and
 
(b) Swap Agreements in respect of interest rates with an Approved Counterparty
with the purpose and effect of fixing interest rates on a principal amount of
indebtedness of the Borrower that is accruing interest at a variable rate,
provided that (i) the aggregate notional amount of such contracts never exceeds
100% of the anticipated outstanding principal balance of the indebtedness to be
hedged by such contracts or an average of such principal balances calculated by
using a generally accepted method of matching interest rate swap contracts to
declining principal balances, and (ii) the floating rate index of each such
contract generally matches the index used to determine the floating rates of
interest on the corresponding indebtedness to be hedged by such contract.  In no
event shall any Swap Agreement contain any requirement, agreement or covenant
for the Borrower or any Subsidiary to post collateral (other than letters of
credit) or margin to secure their obligations under such Swap Agreement or to
cover market exposures.  Should there be a breach of this Section 9.18, the
Borrower or any Subsidiary, as applicable, shall promptly unwind, modify, assign
or terminate any Swap Agreement as is necessary to cure such breach; provided
that nothing contained herein shall be construed to modify or limit the terms of
Section 10.01(d).
 
 
75

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

 
Section 9.19. Marketing Activities.  The Borrower will not, and will not permit
any of the Subsidiaries to, engage in marketing activities for any Hydrocarbons
or enter into any contracts related thereto other than (i) contracts for the
sale of Hydrocarbons scheduled or reasonably estimated to be produced from their
proved Oil and Gas Properties during the period of such contract, (ii) contracts
for the sale of Hydrocarbons scheduled or reasonably estimated to be produced
from proved Oil and Gas Properties of third parties during the period of such
contract associated with the Oil and Gas Properties of the Borrower and the
Subsidiaries that the Borrower or one of the Subsidiaries has the right to
market pursuant to joint operating agreements, unitization agreements or other
similar contracts that are usual and customary in the oil and gas business and
(iii) other contracts for the purchase and/or sale of Hydrocarbons of third
parties (A) which have generally offsetting provisions (i.e. corresponding
pricing mechanics, delivery dates and points and volumes) such that no
"position" is taken and (B) for which appropriate credit support has been taken
to alleviate the material credit risks of the counterparty thereto.
 
ARTICLE X
 
Events of Default; Remedies
 
Section 10.01. Events of Default.  One or more of the following events shall
constitute an "Event of Default":
 
(a) the Borrower shall fail to pay any principal of any Loan when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof, by acceleration or otherwise.
 
(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in Section 10.01(a)) payable
under any Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of five (5) Business Days.
 
(c) any representation or warranty made or deemed made by or on behalf of the
Parent, the Borrower or any Subsidiary in or in connection with any Loan
Document or any amendment or modification of any Loan Document or waiver under
such Loan Document, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to have been
incorrect when made or deemed made.
 
 
76

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

 
(d) the Parent, the Borrower or any Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in Section 2.13(a)(i)(B),
Section 8.01(j), Section 8.01(m), Section 8.01(p), Section 8.02, Section 8.03,
Section 8.14, Section 8.15 or in ARTICLE IX; provided, that an Event of Default
under clause (a) of Section 9.18 shall not be deemed to have occurred unless the
breach of such provision has continued unremedied for a period of 10 days after
its occurrence.
 
(e) the Parent, the Borrower or any Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in this Agreement (other than
those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or
any other Loan Document, and such failure shall continue unremedied for a period
of 30 days after the earlier to occur of (A) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender) or (B) a Responsible Officer of the Borrower or such Subsidiary
otherwise becoming aware of such default.
 
(f) the Parent, the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness.
 
(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the Redemption
thereof or any offer to Redeem to be made in respect thereof, prior to its
scheduled maturity or require the Parent, the Borrower or any Subsidiary to make
an offer in respect thereof.
 
(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Parent, the Borrower or any Subsidiary, or its debts, or of a
substantial part of its assets, under any  Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Parent, the Borrower or any Subsidiary, or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 30 days or an order or decree approving
or ordering any of the foregoing shall be entered.
 
(i) the Parent, the Borrower or any Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in Section 10.01(h), (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Parent, the Borrower or any Subsidiary, or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing.
 
 
77

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

 
(j) the Parent, the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due.
 
(k) with respect to the Parent, the Borrower or any Subsidiary:  (i) one or more
final judgments for the payment of money in an aggregate amount that results in
an Event of Default under the First Lien Credit Agreement (to the extent not
covered by independent third party insurance provided by insurers of the highest
claims paying rating or financial strength as to which the insurer does not
dispute coverage and is not subject to an insolvency proceeding) or (ii) any one
or more non-monetary judgments that have, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, shall be
rendered against the Parent, the Borrower, any Subsidiary or any combination
thereof, and the same shall remain undischarged for a period of 30 consecutive
days during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to attach or levy upon any assets of the
Parent, the Borrower or any Subsidiary to enforce any such judgment.
 
(l) the Loan Documents after delivery thereof shall for any reason, except to
the extent permitted by the terms thereof, cease to be in full force and effect
and valid, binding and enforceable in accordance with their terms against the
Borrower or a Guarantor party thereto or shall be repudiated by any of them, or
cease to create a valid and perfected Lien of the priority required thereby on
any of the collateral purported to be covered thereby, except to the extent
permitted by the terms of this Agreement, or the Parent, the Borrower or any
Subsidiary or any of their Affiliates shall so state in writing.
 
(m) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of the Parent, the Borrower
and the Subsidiaries in an aggregate amount exceeding $2,000,000 in any year.
 
(n) There occurs under any Swap Agreement an early Termination Date (as defined
in such Swap Agreement) resulting from (i) any event of default under such Swap
Agreement to which the Borrower or any Subsidiary is the Defaulting Party (as
defined in such Swap Agreement), or (ii) any Termination Event (as so defined)
under such Swap Agreement as to which the Borrower or any Subsidiary is an
Affected Party (as so defined) and, in either event, the Swap Termination Value
owed by the Borrower or such Subsidiary as a result thereof results in an Event
of Default under the First Lien Credit Agreement.
 
(o) a Change in Control shall occur, or the Parent shall cease to own (directly
or indirectly) 100% of the Equity Interests in the Borrower or any of the other
Guarantors.
 
(p) any of Scott Smith, Richard Robert or Britt Pence shall cease for any reason
to be actively involved in the full time executive management of the Borrower,
and a successor to such person acceptable to the Administrative Agent has not
been appointed within 90 days.
 
(q) any of the following shall occur:
 
(i) the Parent operates any business, owns any Property (other than the Equity
Interests of the Borrower and certain of the Subsidiaries) or enters into any
transaction of any kind other than (A) to act as a holding company for the
Equity Interests of the Borrower and the other Subsidiaries owned directly by
the Parent and (B) be a co-issuer of the Senior Notes; or
 
 
78

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

 
(ii) the Parent incurs any Debt other than the Senior Notes and pursuant to the
Loan Documents or the First Lien Loan Documents; or
 
(iii) the Parent grants or suffers to exist any Liens other than to secure the
Obligations under this Agreement or under the First Lien Loan Documents; or
 
(iv) the Parent makes any Investment, enters into any lease, employs any Person,
enters into any agreement or otherwise transacts any business of any kind or
nature except those agreements that are (A) Loan Documents, (B) pursuant to the
Senior Notes or (C) necessary to enable the Parent to continue as a holding
company holding the Equity Interests of the Borrower; or
 
(v) the Parent fails to preserve, renew and keep in full force and effect its
legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business as a holding company of the Equity
Interests of the Borrower and certain of the Subsidiaries; or
 
(vi) the Parent fails to comply with all material applicable laws.
 
Section 10.02. Remedies.
 
(a) In the case of an Event of Default other than one described in
Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent may,
and at the request of the Required Lenders, shall, by notice to the Borrower,
take either or both of the following actions, at the same or different
times:  (i) terminate the Aggregate Commitments, and thereupon the Aggregate
Commitments shall terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower and the Guarantors accrued hereunder and the other
Loan Documents (excluding Obligations outstanding under Secured Swap
Agreements), shall become due and payable immediately, without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or other
notice of any kind, all of which are hereby waived by the Borrower and each
Guarantor; and in case of an Event of Default described in Section 10.01(h),
Section 10.01(i) or Section 10.01(j), the Aggregate Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and the other obligations of
the Borrower and the Guarantors accrued hereunder and under the other Loan
Documents (excluding Obligations outstanding under Secured Swap Agreements),
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower and
each Guarantor.
 
 
79

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

 
(b) In the case of the occurrence of an Event of Default, the Administrative
Agent and the Lenders will have all other rights and remedies available at law
and equity.
 
(c) After the exercise of remedies provided for in Section 10.02 (or after
maturity or the Loans have automatically become immediately due and payable as
set forth in Section 10.02), any amounts received on account of the Obligations
shall, subject to the provisions of Section 2.10, be applied by the
Administrative Agent in the following order:
 
First, to payment or reimbursement of that portion of the Obligations
constituting fees, expenses, indemnities and other amounts (including all fees,
costs and disbursements of counsel to the Administrative Agent, and amounts
payable under Article V) payable to the Administrative Agent in its capacity as
such;
 
Second, pro rata to payment or reimbursement of that portion of the Obligations
constituting fees, expenses and indemnities payable to the Lenders;
 
Third, pro rata to payment of (i) accrued and unpaid interest on the Loans and
(ii) other accrued and unpaid interest included in the Obligations;
 
Fourth, pro rata to payment of (i) principal outstanding on the Loans,
(ii) Obligations then owing under any Secured Swap Agreement, and
(iii) Obligations then owing under any Secured Treasury Management Agreement;
 
Fifth, pro rata to any other unpaid Obligations; and
 
Sixth, any excess, after all of the Obligations shall have been indefeasibly
paid in full in cash, shall be paid to the Borrower or as otherwise required by
any Governmental Requirement.
 
Notwithstanding the foregoing, Obligations arising under Secured Swap Agreements
and Secured Treasury Management Agreements shall be excluded from the
application described above if the Administrative Agent has not received written
notice thereof, together with such supporting documentation as the
Administrative Agent may request, from the applicable Swap Lender or Treasury
Management Bank, as the case may be.  Each Swap Lender and Treasury Management
Bank not a party to this Agreement that has given the notice contemplated by the
preceding sentence shall, by such notice, be deemed to have acknowledged and
accepted the appointment of the Administrative Agent pursuant to the terms of
Article XI hereof for itself and its Affiliates as if a "Lender" party hereto.
 
ARTICLE XI
 
The Agents
 
Section 11.01. Appointment; Powers; Removal.
 
(a) Each of the Lenders hereby irrevocably appoints Citibank, N.A. to act on its
behalf as the Administrative Agent hereunder and under the other Loan Documents
and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the
terms hereof or thereof, together with such actions and powers as are reasonably
incidental thereto.  The provisions of this Article are solely for the benefit
of the Administrative Agent, the Lenders, and neither the Borrower nor any other
Loan Party shall have rights as a third-party beneficiary of any of such
provisions.  It is understood and agreed that the use of the term "agent" herein
or in any other Loan Documents (or any other similar term) 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 as a matter of market custom, and is intended to
create or reflect only an administrative relationship between contracting
parties.
 
 
80

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

 
(b) The Administrative Agent shall also act as the "collateral agent" under the
Loan Documents, and each of the Lenders (including in its capacities as a
potential Swap Lender and/or Treasury Management Bank) hereby irrevocably
appoints and authorizes the Administrative Agent to act as the agent of such
Lender for purposes of acquiring, holding and enforcing any and all Liens on
Collateral granted by any of the Loan Parties to secure any of the Obligations,
together with such powers and discretion as are reasonably incidental
thereto.  In this connection, the Administrative Agent, as "collateral agent"
and any co-agents, sub-agents and attorneys-in-fact appointed by the
Administrative Agent pursuant to Section 11.05 for purposes of holding or
enforcing any Lien on the Collateral (or any portion thereof) granted under the
Security Instruments, or for exercising any rights and remedies thereunder at
the direction of the Administrative Agent, shall be entitled to the benefits of
all provisions of this Article XI and Article XII (including Section 12.03(c),
as though such co-agents, sub-agents and attorneys-in-fact were the "collateral
agent" under the Loan Documents) as if set forth in full herein with respect
thereto.
 
(c) Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this Section 11.01, the Administrative Agent may be removed
at any time upon written notice of such removal by the Required Lenders to the
Administrative Agent and the Borrower.  In connection with any such removal, the
Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor; provided that no consultation with the Borrower shall be
necessary if an Event of Default has occurred and is continuing.  If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after notice of removal has been
delivered to the Agent, then the removed Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent meeting all required
qualifications of Administrative Agent set forth in this Agreement, if any;
provided that if the removed Administrative Agent shall notify the Borrower and
Lenders that no qualifying Person has accepted such appointment, then such
removal shall nonetheless become effective in accordance with such notice and
(1) the removed Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents and (2) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender directly, until
such time as the Required Lenders appoint a successor Administrative Agent as
provided for above in this paragraph.  Upon the acceptance of its appointment as
Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the removed
Administrative Agent, and the removed Administrative Agent shall be discharged
from its duties and obligations hereunder (if not already discharged as provided
for above in this paragraph).  The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor.  After the
Administrative Agent’s removal hereunder, the provisions of this ARTICLE XI and
Section 12.03 shall continue in effect for the benefit of such removed
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
 
 
81

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

 
Section 11.02. Rights as a Lender.  The Person serving as the Administrative
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent, and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity.  Such
Person and its Affiliates may accept deposits from, lend money to, own
securities of, act as the financial advisor or in any other advisory capacity
for, and generally engage in any kind of business with, the Borrower or any
Subsidiary or other Affiliate thereof as if such Person were not the
Administrative Agent hereunder and without any duty to account therefor to the
Lenders.
 
Section 11.03. Exculpatory Provisions.
 
(a) The Administrative Agent shall not have any duties or obligations except
those expressly set forth herein and in the other Loan Documents, and its duties
hereunder shall be administrative in nature.  Without limiting the generality of
the foregoing, the Administrative Agent:
 
(i) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;
 
(ii) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents); provided that the Administrative Agent
will not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable law, including for the avoidance of
doubt, any action that may be in violation of the automatic stay under any
Debtor Relief Law or that may effect a forfeiture, modification or termination
of property of a Defaulting Lender in violation of any Debtor Relief Law; and
 
(iii) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower 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.
 
(b) The Administrative Agent shall not be liable for any action taken or not
taken by it (i) with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 12.02 and 10.02)), or (ii) in the absence
of its own gross negligence or willful misconduct as determined by a court of
competent jurisdiction by final and nonappealable judgment.  The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
notice describing such Default is given to the Administrative Agent in writing
by the Borrower or a Lender.
 
 
82

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

 
(c) The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, or the creation,
perfection or priority of any Lien purported to be created by the Security
Instruments, (v) the value or sufficiency of any of the Collateral, or (vi) the
satisfaction of any condition set forth in Article VI or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
 
Section 11.04. Reliance by Administrative Agent.  The Administrative Agent shall
be entitled to rely upon, and shall not incur any liability for relying upon,
any notice, request, certificate, consent, statement, instrument, document or
other writing (including any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper Person.  The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to have been made by the proper Person, and shall
not incur any liability for relying thereon.  In determining compliance with any
condition hereunder to the making of a Loan that by its terms must be fulfilled
to the satisfaction of a Lender, the Administrative Agent may presume that such
condition is satisfactory to such Lender unless the Administrative Agent shall
have received notice to the contrary from such Lender prior to the making of
such Loan.  The Administrative Agent may consult with legal counsel (who may be
counsel for the Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
 
Section 11.05.  Delegation of Duties.  The Administrative Agent may perform any
and all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub agents appointed by the
Administrative Agent.  The Administrative Agent and any such sub agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties.  The exculpatory provisions of this
Article shall apply to any such sub agent and to the Related Parties of the
Administrative Agent and any such sub agent, and shall apply to their respective
activities in connection with the syndication of the Loans as well as activities
as Administrative Agent.  The Administrative Agent shall not be responsible for
the negligence or misconduct of any sub-agents except to the extent that a court
of competent jurisdiction determines in a final and nonappealable judgment that
the Administrative Agent acted with gross negligence or willful misconduct in
the selection of such sub agents.
 
 
83

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

 
Section 11.06. Resignation of Administrative Agent.  The Administrative Agent
may at any time give notice of its resignation to the Lenders and the
Borrower.  Upon receipt of any such notice of resignation, the Required Lenders
shall have the right, in consultation with the Borrower, to appoint a successor,
which shall be a bank with an office in the United States, or an Affiliate of
any such bank with an office in the United States.  If no such successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may on behalf of the
Lenders, appoint a successor Administrative Agent meeting the qualifications set
forth above; provided that if the Administrative Agent shall notify the Borrower
and the Lenders that no qualifying Person has accepted such appointment, then
such resignation shall nonetheless become effective in accordance with such
notice and (1) the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder and under the other Loan Documents and (2) all
payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender
directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section.  Upon the acceptance
of a successor's appointment as Administrative Agent hereunder, such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring (or retired) Administrative Agent, and the retiring
Administrative Agent shall be discharged from all of its duties and obligations
hereunder or under the other Loan Documents (if not already discharged therefrom
as provided above in this Section) .  The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the retiring Administrative Agent's resignation hereunder and
under the other Loan Documents, the provisions of this Article and Section 12.03
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring Administrative
Agent was acting as Administrative Agent.
 
Section 11.07. Non-Reliance on Administrative Agent and Other Lenders.  Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.
 
Section 11.08. No Other Duties, etc.  Anything herein to the contrary
notwithstanding, none of the Bookrunners, Arrangers, Documentation Agents or
Syndication Agents listed on the cover page hereof shall have any powers, duties
or responsibilities under this Agreement or any of the other Loan Documents,
except in its capacity, as applicable, as the Administrative Agent or a Lender
hereunder.  No Bookrunner, Arranger, Documentation Agent or Syndication Agent
listed on the cover page hereof shall have or be deemed to have any fiduciary
relationship with any Lender.
 
 
84

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

 
Section 11.09. Administrative Agent May File Proofs of Claim.  In case of the
pendency of any proceeding under any Debtor Relief Law or any other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered (but not obligated) by intervention in such proceeding or
otherwise:
 
(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Sections 3.05 and 12.03) allowed in such judicial
proceeding; and
 
(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;
 
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 12.03.
 
Section 11.10. Collateral and Guaranty Matters.
 
(a) Each of Lenders and the other Secured Parties (including each Lender in its
capacity as a potential Swap Lender and/or Treasury Management Bank),
irrevocably authorize the Administrative Agent, at its option and in its
discretion,
 
(i) to release any Lien on any property granted to or held by the Administrative
Agent under any Loan Document (x) upon termination of all of the Aggregate
Commitments and payment in full of all Obligations (other than contingent
indemnification obligations), (y) that is sold or otherwise disposed of or to be
sold or otherwise disposed of as part of or in connection with any sale or other
disposition permitted under the Loan Documents, or (z) subject to Section 12.02,
if approved, authorized or ratified in writing by the Required Lenders;
 
(ii) to subordinate any Lien on any property granted to or held by the
Administrative Agent under any Loan Document to the holder of any Lien on such
property that is permitted by Section 9.03; and
 
(iii) to release any Guarantor from its obligations under the Guaranty Agreement
if such Person ceases to be a Subsidiary as a result of a transaction permitted
under the Loan Documents.
 
 
85

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

 
Upon request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent's authority to release or
subordinate its interest in particular types or items of property, or to release
any Guarantor from its obligations under the Guaranty Agreement pursuant to this
Article XI.  In each case as specified in this Section 11.10, the Administrative
Agent will, at the Borrower's expense, execute and deliver to the applicable
Loan Party such documents as such Loan Party may reasonably request to evidence
the release of such item of Collateral from the assignment and security interest
granted under the Security Instruments or to subordinate its interest in such
item, or to release such Guarantor from its obligations under the Guaranty
Agreement, in each case in accordance with the terms of the Loan Documents and
this Section 11.10.
 
(b) The Administrative Agent shall not be responsible for or have a duty to
ascertain or inquire into any representation or warranty regarding the
existence, value or collectability of the Collateral, the existence, priority or
perfection of the Administrative Agent's Lien thereon, or any certificate
prepared by any Loan Party in connection therewith, nor shall the Administrative
Agent be responsible or liable to the Lenders for any failure to monitor or
maintain any portion of the Collateral.
 
Section 11.11. Secured Swap Agreements and Secured Treasury Management
Agreements.  No Swap Lender or Treasury Management Bank that obtains the
benefits of Section 10.02(c), any Guaranty Agreement or any Collateral by virtue
of the provisions hereof or of any Guaranty Agreement or any Security Instrument
shall have any right to notice of any action or to consent to, direct or object
to any action hereunder or under any other Loan Document or otherwise in respect
of the Collateral (including the release or impairment of any Collateral) other
than in its capacity as a Lender and, in such case, only to the extent expressly
provided in the Loan Documents.  Notwithstanding any other provision of this
Article XI to the contrary, the Administrative Agent shall not be required to
verify the payment of, or that other satisfactory arrangements have been made
with respect to, Obligations arising under Secured Swap Agreements and/or
Secured Treasury Management Agreements unless the Administrative Agent has
received written notice of such Obligations, together with such supporting
documentation as the Administrative Agent may request, from the applicable Swap
Lender or Treasury Management Bank, as the case may be.
 
ARTICLE XII
 
Miscellaneous
 
Section 12.01. Notices.
 
(a) Except in the case of notices and other communications expressly permitted
to be given by telephone (and subject to Section 12.01(b) except as provided in
Section 12.01(b)), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile, as follows:
 
 
86

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

 
(i) if to the Borrower or any other Loan Party, to it at
 
5847 San Felipe, Suite 3000
 
Houston, Texas  77057-3399
 
Attn:  Mr. Richard Robert
 
Facsimile No:  832-327-2260
 
Telephone:  832-327-2258
 
Electronic Mail Address:  rrobert@vnrllc.com
 
Website Address (for Section 8.02 purposes): www.vnrllc.com
 
(ii) if to the Administrative Agent, to it at
 
Citibank, N.A.
 
811 Main Street, Suite 4000
 
                                           Houston, TX  77002
 
Attention: Ms. Angela McCracken
 
                                Facsimile No:  281-528-4787
 
Telephone:  713-752-5373
 
Electronic Mail Address: Angela.Wilson.McCracken@citi.com
 
(iii) if to any other Lender, to it at its address (or facsimile number), or
electronic mail address set forth in its Administrative Questionnaire.
 
Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient).  Notices delivered through electronic communications to the extent
provided in paragraph (b) below, shall be effective as provided in said
paragraph (b).
 
(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by the Administrative Agent;
provided that the foregoing shall not apply to any Lender pursuant to
ARTICLE II, ARTICLE III, ARTICLE IV and ARTICLE V if such Lender has notified
the Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication.  The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices
or communications.
 
Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available and
identifying the website address therefor; provided that for both clauses (i) and
(ii) above, if such notice or other communication is not sent during the normal
business hours of the recipient, such notice or communication shall be deemed to
have been sent at the opening of business on the next business day for the
recipient.
 
 
87

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

 
(c) Any party hereto may change its address or facsimile number for notices and
other communications hereunder by notice to the other parties hereto.
 
(d) Platform.
 
(i) Each Loan Party agrees that the Administrative Agent and/or the Arrangers
may, but shall not be obligated to, make the Communications (as defined below)
available to the Lenders by posting the Communications on Debt Domain,
Intralinks, Syndtrak or a substantially similar electronic transmission system
(the "Platform").
 
(ii) The Platform is provided "as is" and "as available."  The Agent Parties (as
defined below) do not warrant the adequacy of the Platform and expressly
disclaim liability for errors or omissions in the Communications.  No warranty
of any kind, express, implied or statutory, including, without limitation, any
warranty of merchantability, fitness for a particular purpose, non-infringement
of third-party rights or freedom from viruses or other code defects, is made by
any Agent Party in connection with the Communications or the Platform.  In no
event shall the Administrative Agent or any of its Related Parties
(collectively, the "Agent Parties") have any liability to the Borrower or the
other Loan Parties, any Lender or any other Person or entity for damages of any
kind, including, without limitation, direct or indirect, special, incidental or
consequential damages, losses or expenses (whether in tort, contract or
otherwise) arising out of the Borrower's, any Loan Party's or the Administrative
Agent's transmission of communications through the Platform.  "Communications"
means, collectively, any notice, demand, communication, information, document or
other material provided by or on behalf of the Borrower, any Loan Party nor
Parent pursuant to any Loan Document or the transactions contemplated therein
which is distributed to the Administrative Agent or any Lender by means of
electronic communications, including through the Platform.
 
(iii) 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 Borrower, any of the other Loan Parties, or Parent, or their
securities for purposes of United States Federal or state securities laws.
 
Section 12.02. Waivers; Amendments.
 
(a) No failure on the part of the Administrative Agent, any other Agent or any
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege, or any abandonment or discontinuance
of steps to enforce such right, power or privilege, under any of the Loan
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any of the Loan Documents
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.  The rights and remedies of the Administrative Agent,
any other Agent and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by Section 12.02(b), and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given.  Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any other Agent or any
Lender may have had notice or knowledge of such Default at the time.
 
 
88

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

 
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the authority to enforce rights and remedies hereunder and under the
other Loan Documents against the Loan Parties or any of them shall be vested
exclusively in, and all actions and proceedings at law in connection with such
enforcement shall be instituted and maintained exclusively by, the
Administrative Agent in accordance with Section 10.02 for the benefit of all the
Lenders; provided, however, that the foregoing shall not prohibit (a) the
Administrative Agent from exercising on its own behalf the rights and remedies
that inure to its benefit (solely in its capacity as the Administrative Agent)
hereunder and under the other Loan Documents, (b) any Lender from exercising
setoff rights in accordance with Section 12.08 (subject to the terms of Section
4.01), or (c) any Lender from filing proofs of claim or appearing and filing
pleadings on its own behalf during the pendency of a proceeding relative to any
Loan Party under any debtor relief law; and provided, further, that if at any
time there is no Person acting as the Administrative Agent hereunder and under
the other Loan Documents, then (i) the Required Lenders shall have the rights
otherwise ascribed to the Administrative Agent pursuant to Section 10.02 and
(ii) in addition to the matters set forth in clauses (b), (c) and (d) of the
preceding proviso and subject to Section 4.01, any Lender may, with the consent
of the Required Lenders, enforce any rights and remedies available to it and as
authorized by the Required Lender.
 
(b) Neither this Agreement nor any provision hereof nor any other Loan Document
nor any provision thereof may be waived, amended or modified, except pursuant to
an agreement or agreements in writing entered into by the Borrower and the
Required Lenders or by the Borrower and the Administrative Agent with the
consent of the Required Lenders; provided that no such agreement shall (i)
increase the Commitment of any Lender without the written consent of such
Lender, (ii) decrease the required Collateral Coverage Ratio without the written
consent of the Required Lenders, or modify Section 2.07 in any manner without
the consent of each Lender affected thereby, (iii) reduce the principal amount
of any Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, or reduce any other Obligations hereunder or under any other Loan
Document, without the written consent of each Lender affected thereby, (iv)
postpone the scheduled date of payment or prepayment of the principal amount of
any Loan or any interest thereon, or any fees payable hereunder, or any other
Obligations hereunder or under any other Loan Document, or reduce the amount of,
waive or excuse any such payment, or postpone or extend the Maturity Date
without the written consent of each Lender affected thereby, (v) change Section
2.02(a), Section 3.04(b), Section 4.01(b), Section 4.01(c) or Section 10.02(c)
in a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender affected thereby, (vi) waive or amend
Section 8.14, without the written consent of each Lender affected thereby, (vii)
release all or substantially all of the Guarantors (except in accordance with
the terms of the Guaranty Agreement), release all or substantially all of the
Collateral (other than as provided in Section 11.10), or reduce the percentage
set forth in Section 8.13(a) to less than 80%, without the written consent of
each Lender affected thereby, or (viii) change any of the provisions of this
Section 12.02(b) or the definition of "Determining Lenders", "Required Lenders",
or any other provision hereof specifying the number or percentage of Lenders
required to waive, amend or modify any rights hereunder or under any other Loan
Documents or make any determination or grant any consent hereunder or any other
Loan Documents, without the written consent of each Lender affected thereby;
provided further that notwithstanding the foregoing or any other provision to
the contrary, (A) no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent or any other Agent hereunder or
under any other Loan Document without the prior written consent of the
Administrative Agent or such other Agent, as the case may be, and (B) nothing in
this Section 12.02 shall cause any waiver, amendment, modification or consent to
(I) any fee letter between the Borrower and any Lender, Agent or the
Administrative Agent to require the consent of the Required Lenders, (II) any
Secured Swap Agreement to require the consent of the Required Lenders, or
(III) any Secured Treasury Management Agreement to require the consent of the
Required Lenders.
 
 
89

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

 
(c) Anything herein to the contrary notwithstanding, during such period as a
Lender is a Defaulting Lender, to the fullest extent permitted by applicable
law, such Lender will not be entitled to vote in respect of amendments and
waivers hereunder and the Commitment and the outstanding Loan or other
extensions of credit of such Lender hereunder will not be taken into account in
determining whether the Required Lenders or all of the Lenders, as required,
have approved any such amendment or waiver (and the definition of "Required
Lenders" will automatically be deemed modified accordingly for the duration of
such period); provided, that any such amendment or waiver that would increase or
extend the term of the Commitment of such Defaulting Lender, extend the date
fixed for the payment of principal or interest owing to such Defaulting Lender
hereunder, reduce the principal amount of any obligation owing to such
Defaulting Lender, reduce the amount of or the rate or amount of interest on any
amount owing to such Defaulting Lender or of any fee payable to such Defaulting
Lender hereunder, or alter the terms of this proviso, will require the consent
of such Defaulting Lender.
 
Section 12.03. Expenses, Indemnity; Damage Waiver.
 
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by
the Administrative Agent and its Affiliates, including, without limitation, the
reasonable fees, charges and disbursements of counsel and other outside
consultants for the Administrative Agent, the reasonable travel, photocopy,
mailing, courier, telephone and other similar expenses, and the cost of
environmental audits and surveys and appraisals, in connection with the
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after the
execution hereof and including advice of counsel to the Administrative Agent as
to the rights and duties of the Administrative Agent and the Lenders with
respect thereto) of this Agreement and the other Loan Documents and any
amendments, modifications or waivers of or consents related to the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all costs, expenses, Taxes, assessments and
other charges incurred by any Agent or any Lender in connection with any filing,
registration, recording or perfection of any security interest contemplated by
this Agreement or any Security Instrument or any other document referred to
therein, (iii)  all out-of-pocket expenses incurred by any Agent or any Lender,
including the fees, charges and disbursements of any counsel for any Agent or
any Lender, in connection with the enforcement or protection of its rights
(A) in connection with this Agreement and the other Loan Documents, including
its rights under this Section 12.03, or (B) in connection with the Loans made
hereunder, including, without limitation, all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans.
 
 
90

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

 
(b) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT
THEREOF), EACH LENDER AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS
(EACH SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH
INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES,
PENALTIES AND RELATED EXPENSES (INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF
ANY COUNSEL FOR ANY INDEMNITEE), AND SHALL INDEMNIFY AND HOLD HARMLESS EACH
INDEMNITEE FROM ALL FEES AND TIME CHARGES AND DISBURSEMENTS FOR ATTORNEYS WHO
MAY BE EMPLOYEES OF ANY INDEMNITEE, INCURRED BY ANY INDEMNITEE OR ASSERTED
AGAINST ANY INDEMNITEE BY ANY PERSON OR BY THE BORROWER OR ANY OTHER LOAN PARTY
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR
DELIVERY OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR
INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO
OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (II) ANY LOAN OR THE USE OR
PROPOSED USE OF THE PROCEEDS THEREFROM, (III) ANY ACTUAL OR ALLEGED PRESENCE OR
RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE
BORROWER OR ANY OF THE SUBSIDIARIES OR OTHER LOAN PARTIES, OR ANY ENVIRONMENTAL
LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF THE SUBSIDIARIES OR OTHER
LOAN PARTIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION
OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT
OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY THE BORROWER OR ANY
SUBSIDIARY OR OTHER LOAN PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A
PARTY THERETO, PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE
AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES,
PENALTIES OR RELATED EXPENSES (X) ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (Y) RESULT FROM A CLAIM
BROUGHT BY THE BORROWER OR ANY OTHER LOAN PARTY AGAINST AN INDEMNITEE FOR
MATERIAL BREACH IN BAD FAITH OF SUCH INDEMNITEE'S OBLIGATIONS HEREUNDER OR UNDER
ANY OTHER LOAN DOCUMENT, IF THE BORROWER OR SUCH LOAN PARTY HAS OBTAINED A FINAL
AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT
OF COMPETENT JURISDICTION.  This Section 12.03(b) shall not apply with respect
to Taxes other than any Taxes that represent losses, claims, damages, etc.
arising from any non-Tax claim.
 
 
91

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

 
(c) To the extent that the Borrower for any reason fails to indefeasibly pay any
amount required under paragraph (a) or (b) of this Section to be paid by it to
the Administrative Agent (or any sub-agent thereof) or any Related Party of any
of the foregoing, each Lender severally agrees to pay to the Administrative
Agent (or any such sub-agent) or such Related Party, as the case may be, such
Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought based on each Lender's
Outstanding Amount at such time) of such unpaid amount (including any such
unpaid amount in respect of a claim asserted by such Lender); provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent) or against any Related Party of any
of the foregoing acting for the Administrative Agent (or any such sub-agent) in
connection with such capacity.  The obligations of the Lenders under this
paragraph (c) are subject to the provisions of Section 2.05(c).
 
(d) To the fullest extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the Transactions, any Loan or the use of the
proceeds thereof.  No Indemnitee referred to in paragraph (b) above shall be
liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby.
 
(e) All amounts due under this Section 12.03 shall be payable not later than
three Business Days after written demand therefor.
 
(f) The provisions of this Section 12.03 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans and the Obligations, the expiration or termination of the Aggregate
Commitments, the invalidity, unenforceability or termination of any or all Loan
Documents or term or provision of this Agreement or any other Loan Document, or
any investigation made by or on behalf of the Administrative Agent or any
Lender.
 
Section 12.04. Successors and Assigns Generally.
 
(a) Successors and Assigns Generally.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that neither the Borrower nor
any other Loan Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and each Lender, and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an assignee in accordance with the
provisions of paragraph (b) of this Section, (ii) by way of participation in
accordance with the provisions of paragraph (d) of this Section, or (iii) by way
of pledge or assignment of a security interest subject to the restrictions of
paragraph (f) of this Section (and any other attempted assignment or transfer by
any party hereto shall be null and void).  Nothing in this Agreement, expressed
or implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in paragraph (d) of this Section and, to the extent
expressly contemplated hereby, the Related Parties of each of the Administrative
Agent and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
 
 
92

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

 
(b) Assignments by Lenders.  Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loan at the time owing to
it); provided that any such assignment shall be subject to the following
conditions:
 
(i) Minimum Amounts.
 
(A) in the case of an assignment of the entire remaining amount of the assigning
Lender's Commitment and/or the Loan at the time owing to it or contemporaneous
assignments to related Approved Funds that equal at least the amount specified
in paragraph (b)(i)(B) of this Section in the aggregate or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum
amount need be assigned; and
 
(B) in any case not described in paragraph (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes a Loan
outstanding thereunder) or, if the applicable Commitment is not then in effect,
the principal outstanding balance of the Loan of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or, if
"Trade Date" is specified in the Assignment and Assumption, as of the Trade
Date) shall not be less than $5,000,000, unless each of the Administrative Agent
and, so long as no Default has occurred and is continuing, the Borrower
otherwise consents (each such consent not to be unreasonably withheld or
delayed).
 
(ii) Proportionate Amounts.  Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement with respect to the Loan or the Commitment
assigned.
 
(iii) Required Consents.  No consent shall be required for any assignment except
to the extent required by paragraph (b)(i)(B) of this Section and, in addition:
 
(A) the consent of the Borrower (such consent not to be unreasonably withheld or
delayed) shall be required unless (x) a Default has occurred and is continuing
at the time of such assignment, or (y) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be
deemed to have consented to any such assignment unless it shall object thereto
by written notice to the Administrative Agent within five Business Days after
having received notice thereof and provided, further, that the Borrower's
consent shall not be required during the primary syndication of the Loans for
this Term Loan Agreement;  and
 
 
93

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

 
(B) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments if such assignment is to
a Person that is not a Lender with a Commitment, an Affiliate of such Lender or
an Approved Fund with respect to such Lender;
 
(iv) Assignment and Assumption.  The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500; provided that the
Administrative Agent may, in its sole discretion, elect to waive such processing
and recordation fee in the case of any assignment.  The assignee, if it is not a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.
 
(v) No Assignment to Certain Persons.  No such assignment shall be made to
(A) any Loan Party or any Loan Party's Affiliates and Subsidiaries or (B) any
Defaulting Lender or Potential Defaulting Lender or any of their respective
subsidiaries, or any Person who, upon becoming a Lender hereunder, would
constitute any of the foregoing Persons described in this clause (B).
 
(vi) No Assignment to Natural Persons.  No such assignment shall be made to a
natural Person.
 
(vii) Certain Additional Payments.  In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment will be
effective unless and until, in addition to the other conditions thereto set
forth herein, the parties to the assignment make such additional payments to the
Administrative Agent in an aggregate amount sufficient, upon distribution
thereof as appropriate (which may be outright payment, purchases by the assignee
of participations or subparticipations, or other compensating actions, including
funding, with the consent of the Borrower and the Administrative Agent, the
applicable pro rata share of the Loan previously requested but not funded by the
Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (x) pay and satisfy in full all payment liabilities
then owed by such Defaulting Lender to the Administrative Agent and each other
Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as
appropriate) its full pro rata share of all Loans in accordance with its
Applicable Percentage.  Notwithstanding the foregoing, in the event that any
assignment of rights and obligations of any Defaulting Lender hereunder becomes
effective under applicable law without compliance with the provisions of this
paragraph, then the assignee of such interest will be deemed to be a Defaulting
Lender for all purposes of this Agreement until such compliance occurs.
 
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to paragraph (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 5.01 and 5.03 and Section 12.03 with respect to facts
and circumstances occurring prior to the effective date of such assignment;
provided, that except to the extent otherwise expressly agreed by the affected
parties, no assignment by a Defaulting Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lender's having
been a Defaulting Lender.  Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (d) of
this Section.
 
 
94

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

 
(c) Register.  The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at its office located at 1615 Brett Road,
New Castle, DE 19720 a copy of each Assignment and Assumption delivered to it
and a register for the recordation of the names and addresses of the Lenders,
and the Commitments of, and principal amounts of the Loan owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"), and upon the
determination by the Administrative Agent of (i) the satisfaction of all
conditions precedent to the effectiveness of such Assignment and Assumption
(including, without limitation, the receipt of all requisite consents, payment
of fees and transfer of money) and (ii) the expiration of any trading freeze or
trading holds due to any amendment, consent or waiver, or any other interruption
in, or hold on, trading as determined by the Administrative Agent, the
Administrative Agent will accept such Assignment and Assumption and record the
appropriate information contained therein in the Register.  The entries in the
Register shall be conclusive absent manifest error, and the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement.  The Register shall be available for inspection
by the Borrower and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
 
(d) Participations.  Any Lender may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell participations to any
Person (other than a natural Person or the Borrower or any of the Borrower's
Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such
Lender's rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loan owing to it); provided that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, and (iii) the Borrower, the Administrative
Agent and Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement.  For
the avoidance of doubt, each Lender shall be responsible for the indemnity under
Section 2.08(c), Section 12.03(c) and otherwise with respect to any payments
made by such Lender to its Participant(s).
 
 
95

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

 
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver which requires the consent of each
Lender affected thereby under Section 12.02 to the extent if affects such
Participant.  The Borrower agrees that each Participant shall be entitled to the
benefits of Sections 5.01, 5.02 and 5.03 (subject to the requirements and
limitations therein, including the requirements under Section 5.03(f) (it being
understood that the documentation required under Section 5.03(f) shall be
delivered to the participating Lender)) to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section; provided that such Participant (A) agrees to be subject to the
provisions of Sections 5.04 and 12.18 as if it were an assignee under paragraph
(b) of this Section; and (B) shall not be entitled to receive any greater
payment under Sections 5.01 or 5.03, with respect to any participation, than its
participating Lender would have been entitled to receive, except to the extent
such entitlement to receive a greater payment results from a Change in Law that
occurs after the Participant acquired the applicable participation.  Each Lender
that sells a participation agrees, at the Borrower's request and expense, to use
reasonable efforts to cooperate with the Borrower to effectuate the provisions
of Section 12.18 with respect to any Participant.  To the extent permitted by
law, each Participant shall also be entitled to the benefits of Section 12.08 as
though it were a Lender; provided that such Participant agrees to be subject to
Section 4.01 as though it were a Lender.  Each Lender that sells a participation
shall, acting solely for this purpose as an agent of the Borrower, maintain a
register on which it enters the name and address of each Participant and the
principal amounts (and stated interest) of each Participant's interest in the
Loans or other obligations under the Loan Documents (the "Participant
Register"); provided that no Lender shall have any obligation to disclose all or
any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant's interest in any
commitments, loans, letters of credit or its other obligations under any Loan
Document) to any Person except to the extent that such disclosure is necessary
to establish that such commitment, loan or other obligation is in registered
form under Section 5f.103-1(c) of the United States Treasury Regulations.  The
entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary.  For the avoidance of
doubt, the Administrative Agent (in its capacity as Administrative Agent) shall
have no responsibility for maintaining a Participant Register.
 
(e) 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 12.05. Survival; Revival; Reinstatement.
 
(a) All covenants, agreements, representations and warranties made by the
Borrower and the other Loan Parties herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of this Agreement
and the making of any Loans, regardless of any investigation made by any such
other party or on its behalf and notwithstanding that the Administrative Agent,
any other Agent or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other Obligation or
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid and so long as the Aggregate Commitments have not expired or
terminated.  The provisions of Section 5.01, Section 5.02, Section 5.03 and
Section 12.03 and ARTICLE XI shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans or any other Obligation, the expiration or termination of
the Aggregate Commitments or the termination of this Agreement, any other Loan
Document or any provision hereof or thereof.
 
 
96

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

 
(b) To the extent that any payments on the Obligations or proceeds of any
Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent's and the Lenders' Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect.  In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.
 
Section 12.06. Counterparts; Integration; Effectiveness; Electronic Signatures.
 
(a) This Agreement may be executed in counterparts (and by different parties
hereto in different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract.
 
(b) This Agreement, the other Loan Documents and any separate letter agreements
with respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and thereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof and thereof.  THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND
THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.  
 
(c) Except as provided in Section 6.02, this Agreement shall become effective
when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.  Delivery of an executed
counterpart of a signature page of this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.
 
 
97

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

 
(d) The words "execution," "signed," "signature," and words of like import in
any Assignment and Assumption or in any amendment or other modification hereof
(including waivers and consents) shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be,
to the extent and as provided for in any applicable law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.
 
Section 12.07. Severability.  Any provision of this Agreement or any other Loan
Document held to be invalid, illegal or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
 
Section 12.08. Right of Setoff.  If an Event of Default shall have occurred and
be continuing, each Lender and each of its respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held,
and other obligations (in whatever currency) at any time owing, by such Lender
or any such Affiliate, to or for the credit or the account of the Borrower or
any other Loan Party against any and all of the obligations of the Borrower or
such Loan Party now or hereafter existing under this Agreement or any other Loan
Document to such Lender or its Affiliates, irrespective of whether or not such
Lender or Affiliate shall have made any demand under this Agreement or any other
Loan Document and although such obligations of the Borrower or such Loan Party
may be contingent or unmatured or are owed to a branch, office or Affiliate of
such Lender different from the branch, office or Affiliate holding such deposit
or obligated on such indebtedness; provided that in the event that any
Defaulting Lender exercises any such right of setoff, (x) all amounts so set off
will be paid over immediately to the Administrative Agent for further
application in accordance with the provisions of Section 2.13(a)(i) and, pending
such payment, will be segregated by such Defaulting Lender from its other funds
and deemed held in trust for the benefit of the Administrative Agent and the
Lenders and (y) the Defaulting Lender will provide promptly to the
Administrative Agent a statement describing in reasonable detail the Obligations
owing to such Defaulting Lender as to which it exercised such right of
setoff.  The rights of each Lender and its Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that
such Lender or its Affiliates may have.  Each Lender agrees to notify the
Borrower and the Administrative Agent promptly after any such setoff and
application; provided that the failure to give such notice shall not affect the
validity of such setoff and application.
 
 
98

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

 
Section 12.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS;
WAIVER OF JURY TRIAL.
 
(a) Governing Law.  This Agreement and the other Loan Documents and any claims,
controversy, dispute or cause of action (whether in contract or tort or
otherwise) based upon, arising out of or relating to this Agreement or any other
Loan Document (except, as to any other Loan Document, as expressly set forth
therein) and the transactions contemplated hereby and thereby shall be governed
by, and construed in accordance with, the law of the State of New York.
 
(b) Submission to Jurisdiction.  The Borrower and each other Loan Party
irrevocably and unconditionally agrees that it will not commence any action,
litigation or proceeding of any kind or description, whether in law or equity,
whether in contract or in tort or otherwise, against the Administrative Agent,
any Lender or any Related Party of the foregoing in any way relating to this
Agreement or any other Loan Document or the transactions relating hereto or
thereto, in any forum other than the courts of the State of New York sitting in
New York County, and of the United States District Court of the Southern
District of New York in the Borough of Manhattan, and any appellate court from
any thereof, and each of the parties hereto irrevocably and unconditionally
submits to the jurisdiction of such  courts and agrees that all claims in
respect of any such action, litigation or proceeding may be heard and determined
in such New York State court or, to the fullest extent permitted by applicable
law, in such federal court.  Each of the parties hereto agrees that a final
judgment in any such action, litigation or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.  Nothing in this Agreement or in any other Loan Document
shall affect any right that the Administrative Agent or any Lender may otherwise
have to bring any action or proceeding relating to this Agreement or any other
Loan Document against the Borrower or any other Loan Party or its properties in
the courts of any jurisdiction.
 
(c) Waiver of Venue.  The Borrower and each other Loan Party irrevocably and
unconditionally waives, to the fullest extent permitted by applicable law, any
objection that it may now or hereafter have to the laying of venue of any action
or proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section.  Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
 
(d) Service of Process.  Each party hereto irrevocably consents to service of
process in the manner provided for notices in Section 12.01.  Nothing in this
Agreement will affect the right of any party hereto to serve process in any
other manner permitted by applicable law.
 
(e) WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY.  EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
 
99

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

 
Section 12.10. Headings.  Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
 
Section 12.11. Confidentiality.  Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its Affiliates and to
its Related Parties (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent required or requested by any regulatory authority purporting to have
jurisdiction over such Person or its Related Parties (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) to any other party to this
Agreement or any other Loan Document, (e) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 12.11, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights and obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any Swap Agreement
or any of its Related Parties relating to the Borrower, any other Loan Party and
their obligations, (g) with the consent of the Borrower, (h) to any credit
insurance provider relating to the Borrower and its obligations, this Agreement
or payments hereunder, (i) on a confidential basis (i) to any rating agency in
connection with the rating the Parent, the Borrower or the Subsidiaries or the
Loans or (ii) the CUSIP Service Bureau or any similar agency in connection with
the issuance and monitoring of CUSIP numbers with respect to the Loans; or
(j) to the extent such Information (1) becomes publicly available other than as
a result of a breach of this Section 12.11 or (2) becomes available to the
Administrative Agent or any Lender or any of their Affiliates on a
nonconfidential basis from a source other than the Borrower.
 
For the purposes of this Section 12.11, "Information" means all information
received from the Borrower, the Parent or any of the Subsidiaries relating to
the Parent, the Borrower or any of the Subsidiaries and their respective
businesses, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Parent, the Borrower or any of the Subsidiaries; provided
that, in the case of information received from the Parent, the Borrower or any
Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
 
 
100

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

 
Each of the Administrative Agent and the Lenders acknowledges that (a) the
Information may include material non-public information concerning the Parent,
the Borrower or a Subsidiary, as the case may be, (b) it has developed
compliance procedures regarding the use of material non-public information and
(c) it will handle such material non-public information in accordance with
applicable Law, including United States Federal and state securities Laws.
 
Section 12.12. Interest Rate Limitation.  It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to
it.  Accordingly, if the transactions contemplated hereby would be usurious as
to any Lender under laws applicable to it (including the laws of the United
States of America and the States of New York and Texas, or any other
jurisdiction whose laws may be mandatorily applicable to such Lender
notwithstanding the other provisions of this Agreement), then, in that event,
notwithstanding anything to the contrary in any of the Loan Documents or any
agreement entered into in connection with or as security for the Obligations, it
is agreed as follows:  (i) the aggregate of all consideration which constitutes
interest under law applicable to any Lender that is contracted for, taken,
reserved, charged or received by such Lender under any of the Loan Documents or
agreements or otherwise in connection with the Loans shall under no
circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be canceled automatically and if theretofore paid shall be credited
by such Lender on the principal amount of the Obligations (or, to the extent
that the principal amount of the Obligations shall have been or would thereby be
paid in full, refunded by such Lender to the Borrower); and (ii) in the event
that the maturity of the Loans is accelerated by reason of an election of the
holder thereof resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
canceled automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of the Obligations (or, to the extent that the principal amount
of the Obligations shall have been or would thereby be paid in full, refunded by
such Lender to the Borrower).  All sums paid or agreed to be paid to any Lender
for the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the stated term of the Loans until payment in full so that
the rate or amount of interest on account of any Loans hereunder does not exceed
the maximum amount allowed by such applicable law.  If at any time and from time
to time (i) the amount of interest payable to any Lender on any date shall be
computed at the Highest Lawful Rate applicable to such Lender pursuant to this
Section 12.12 and (ii) in respect of any subsequent interest computation period
the amount of interest otherwise payable to such Lender would be less than the
amount of interest payable to such Lender computed at the Highest Lawful Rate
applicable to such Lender, then the amount of interest payable to such Lender in
respect of such subsequent interest computation period shall continue to be
computed at the Highest Lawful Rate applicable to such Lender until the total
amount of interest payable to such Lender shall equal the total amount of
interest which would have been payable to such Lender if the total amount of
interest had been computed without giving effect to this Section 12.12.  To the
extent that Chapter 303 of the Texas Finance Code is relevant for the purpose of
determining the Highest Lawful Rate applicable to a Lender, such Lender elects
to determine the applicable rate ceiling under such Chapter by the weekly
ceiling from time to time in effect.  Chapter 346 of the Texas Finance Code does
not apply to the Borrower's obligations hereunder.
 
 
101

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

 
Section 12.13. EXCULPATION PROVISIONS.  EACH OF THE PARTIES HERETO SPECIFICALLY
AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT
AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS
AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL
COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS
ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT
IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF
THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
LIABILITY.  EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE
VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE
OF SUCH PROVISION OR THAT THE PROVISION IS NOT "CONSPICUOUS."
 
Section 12.14. Collateral Matters; Swap Agreements; Treasury Management
Agreements.  The benefit of the Security Instruments and of the provisions of
this Agreement relating to any Collateral securing the Obligations shall also
extend to and be available to (a) any Swap Lender with respect to amounts
payable by the Borrower, any Subsidiary, and any Guarantor under any Secured
Swap Agreement, and (b) any Treasury Management Bank with respect to amounts
payable by the Borrower, any Subsidiary, and any Guarantor under any Secured
Treasury Management Agreement, in each case on a pari passu basis with respect
to repayment of principal outstanding on Loans due under this Agreement.  All
Secured Swap Agreements and Secured Treasury Management Agreements are
independent agreements governed by the terms thereof and will remain in full
force and effect, unaffected by any repayment, prepayment, acceleration,
reduction, increase or change in the terms of the Loans created under this
Agreement except as otherwise provided in such Secured Swap Agreements and
Secured Treasury Management Agreements, and any payoff statement from any Lender
relating to this Agreement shall not apply to Secured Swap Agreements and
Secured Treasury Management Agreements, except as otherwise expressly provided
in such payoff statement.
 
Section 12.15. No Third Party Beneficiaries.  This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans hereunder are solely
for the benefit of the Borrower, and no other Person (including, without
limitation, the Parent, any Subsidiary, any obligor, contractor, subcontractor,
supplier or materialman) shall have any rights, claims, remedies or privileges
hereunder or under any other Loan Document against the Administrative Agent, any
other Agent or any Lender for any reason whatsoever.  There are no third party
beneficiaries.
 
 
102

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

 
Section 12.16. USA Patriot Act Notice.  Each Lender that is subject to the Act
(as hereinafter defined) and the Administrative Agent (for itself and not on
behalf of any Lender) hereby notifies the Borrower that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Act"), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender or
the Administrative Agent, as applicable, to identify the Borrower in accordance
with the Act.
 
Section 12.17. Release.  THE BORROWER REPRESENTS AND WARRANTS THAT AS OF THE
DATE HEREOF THERE ARE NO CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS
TO ITS OR ANY GUARANTORS OBLIGATIONS UNDER THE OTHER LOAN DOCUMENTS.  TO INDUCE
THE ADMINISTRATIVE AGENT AND THE LENDERS TO ENTER INTO THIS AGREEMENT, THE
BORROWER AND, BY THE EXECUTION OF THE LOAN DOCUMENTS TO WHICH IT IS A PARTY,
EACH GUARANTOR WAIVES ANY AND ALL CLAIMS, OFFSETS, DEFENSES OR COUNTERCLAIMS,
WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE DATE HEREOF AND HEREBY RELEASES
THE ADMINISTRATIVE AGENT, THE LENDERS, AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS AND ATTORNEYS (COLLECTIVELY, THE "RELEASED PARTIES") FROM ANY
AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITY, CLAIMS, RIGHTS, CAUSES OF ACTION
OR DEMANDS WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED WHICH
BORROWER OR ANY GUARANTOR EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST
ANY RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF OR FROM OR IN CONNECTION
WITH THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
 
Section 12.18. Replacement of Lenders.   If any Lender requests compensation
under Section 5.01, or if the Borrower is required to pay any Indemnified Taxes
or additional amounts to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 5.03 and, in each case, such Lender
has declined or is unable to designate a different lending office in accordance
with Section 5.04(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, and consents required by, Section 12.04), all of its
interests, rights (other than its existing rights to payments pursuant to
Section 5.01 or Section 5.03) and obligations under this Agreement and the
related Loan Documents to an Eligible Assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that:
 
(a) the Borrower shall have paid to the Administrative Agent the assignment fee
(if any) specified in Section 12.04;
 
 
103

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

 
(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loan, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 5.02) 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);
 
(c) in the case of any such assignment resulting from a claim for compensation
under Section 5.01 or payments required to be made pursuant to Section 5.03,
such assignment will result in a reduction in such compensation or payments
thereafter;
 
(d) such assignment does not conflict with applicable law; and
 
(e) 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.
 
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
 
Section 12.19. Time of the Essence.  Time is of the essence of the Loan
Documents.
 
Section 12.20. No Advisory or Fiduciary Responsibility.  The Borrower and each
other Loan Party acknowledges and agrees, and acknowledges its Affiliates'
understanding, that in connection with all aspects of (1) the transaction
evidenced by this Agreement and the other Loan Documents, (2) the Transactions
and (3) each other transaction contemplated hereby and by the other Loan
Documents (including in connection with any amendment, waiver or other
modification hereof or of any other Loan Document) that:
 
(a) 
 
(i) the arranging and other services regarding this Agreement and the other Loan
Documents provided by the Agents and the Arrangers, are arm's-length commercial
transactions between the Borrower, each other Loan Party and their respective
Affiliates, on the one hand, and the Administrative Agent, the other Agents and
each of the Arrangers, on the other hand,
 
(ii) each of the Borrower and the other Loan Parties has consulted its own
legal, accounting, regulatory and tax advisors to the extent it has deemed
appropriate, and
 
(iii) the Borrower and each other Loan Party is capable of evaluating, and
understands and accepts, the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents;
 
(b) 
 
(i) each of the Administrative Agent, the other Agents and each of the
Arrangers, is, and has been, acting solely as a principal and, except as
expressly agreed in writing by the relevant parties, has not been, is not, and
will not be acting as an advisor, agent or fiduciary for the Borrower, any other
Loan Party or any of their respective Affiliates, or any other Person;
 
 
104

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

 
(ii) none of the Administrative Agent, the other Agents nor any of the Arrangers
has any obligation to the Borrower, any other Loan Party or any of their
respective Affiliates with respect to the transactions contemplated hereby
except those obligations expressly set forth herein and in the other Loan
Documents;
 
(iii) any of the Administrative Agent, the other Agents and the Arrangers, and
any of their respective Affiliates, may be engaged in a broad range of
transactions that involve interests that differ from those of the Borrower, the
other Loan Parties and their respective Affiliates, and none of the
Administrative Agent, the other Agents nor any of the Arrangers has any
obligation to disclose any of such interests to the Borrower, any other Loan
Party or any of their respective Affiliates.
 
To the fullest extent permitted by law, each of the Borrower and the other Loan
Parties hereby waives and releases any claims that it may have against the
Administrative Agent, any of the other Agents or any of the Arrangers with
respect to any breach or alleged breach of agency or fiduciary duty in
connection with any aspect of any transaction contemplated hereby and by the
other Loan Documents.
 
Section 12.21. The Parent.  It is specifically agreed among the parties hereto
that the Parent will be a co-issuer of the Senior Notes but otherwise act solely
as a holding company for the Equity Interests of the Borrower and certain of the
Subsidiaries.
 
Section 12.22. Concerning the Intercreditor Agreement.  Each Lender (a) consents
to the Lien priorities provided for in the Intercreditor Agreement, (b) agrees
that it will be bound by and will take no actions contrary to the provisions of
the Intercreditor Agreement, and (c) authorizes and instructs the Administrative
Agent to enter into the Intercreditor Agreement as Second Lien Agent and
Collateral Agent, and hereby consents to Citibank, N.A. acting in its capacity
as Administrative Agent under the First Lien Credit Agreement and as First Lien
Agent under the Intercreditor Agreement. The foregoing provisions are intended
as an inducement to the Lenders to extend credit and such Lenders are intended
third party beneficiaries of such provisions and the provisions of the
Intercreditor Agreement.
 

 

 

 
[This space is left intentionally blank.  Signature Pages follow.]
 
 
 
105

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

 
 
 
The parties hereto have caused this Agreement to be duly executed as of the day
and year first above written.
 
BORROWER:                                                                VANGUARD
NATURAL GAS, LLC

By:         /s/ Richard Robert 
Richard Robert
Executive Vice President
and Chief Financial Officer
 
 
 
 

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

 
ADMINISTRATIVE
AGENT:                                                                CITIBANK,
N.A.
as Administrative Agent

By:          /s/ Angela McCracken 
Angela McCracken
Vice President

LENDERS:                                                                CITIBANK,
N.A.

By:         /s/ Angela McCracken 
Angela McCracken
Vice President
 
 
 
 

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

 
LENDER:                                                                CAPITAL
ONE, NATIONAL ASSOCIATION

By:        /s/ Scott L. Joyce 
Name:  Scott L. Joyce 
Title:    Senior Vice President 

 
 

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

 

LENDER:                                                                COMERICA
BANK

By:        /s/ Justin Crawford 
Name:  Justin Crawford 
Title:    Vice President 
 

 
 
 

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

 

LENDER:
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK

By:        /s/ Tom Byargeon 
Name:  Tom Byargeon 
Title:    Managing Director 

By:       /s/ Michael D. Willis 
Name:  Michael D. Willis 
Title:    Managing Director 

 
 

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

 
LENDER:                                                                ROYAL
BANK OF CANADA

By:       /s/ Don J. McKinnerney 
Name:  Don J. McKinnerney 
Title:    Authorized Signatory 

 
 

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

 
LENDER:                                                                UBS LOAN
FINANCE LLC

By:        /s/ Iria R. Otsa 
Name:  Iria R. Otsa 
Title:   Associate Director 
Banking Products Services, US 

By:        /s/ Mary E. Evans 
Name:  Mary E. Evans 
Title:    Associate Director 
 Banking Products Services, US 

 
 

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

 
LENDER:
WELLS FARGO BANK, N.A.

By:       /s/ Ryan Sauer 
Name:  Ryan Sauer 
Title:    Vice President 
 
 
 
 
 

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

 
 
 
ANNEX I
 

 
LIST OF COMMITMENTS
 
AND APPLICABLE PERCENTAGES
 

 
Commitments and Applicable Percentages
 
Name of Lender
Applicable Percentage
 
Commitment
Citibank, N.A.
16%
$16,000,000
Capital One, National Association
14%
$14,000,000
Comerica Bank
14%
$14,000,000
Credit Agricole Corporate and Investment Bank
14%
$14,000,000
Royal Bank of Canada
14%
$14,000,000
UBS Loan Finance LLC
14%
$14,000,000
Wells Fargo Bank, N.A.
14%
$14,000,000
TOTAL
100%
Aggregate Commitments: $100,000,000

 
 
 

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

 

EXHIBIT A
 
FORM OF NOTE
 
$[_____________] _____________, 201__

FOR VALUE RECEIVED, VANGUARD NATURAL GAS, LLC, a Kentucky limited liability
company (the "Borrower") hereby promises to pay to the order of
_____________________ (the "Lender"), at the principal office of CITIBANK,
N.A. (the "Administrative Agent"), the principal sum of
_________________ Dollars ($_________) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by the Lender to the
Borrower under the Term Loan Agreement, as hereinafter defined), in lawful money
of the United States of America and in immediately available funds, on the dates
and in the principal amounts provided in the Term Loan Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at such office, in
like money and funds, for the period commencing on the date of such Loan until
such Loan shall be paid in full, at the rates per annum and on the dates
provided in the Term Loan Agreement.
 
The date, amount, interest rate, and maturity of each Loan made by the Lender to
the Borrower, and each payment made on account of the principal thereof, shall
be recorded by the Lender on its books and, prior to any transfer of this Note,
may be endorsed by the Lender on the schedules attached hereto or any
continuation thereof or on any separate record maintained by the
Lender.  Failure to make any such notation or to attach a schedule shall not
affect any Lender's or the Borrower's rights or obligations in respect of such
Loans or affect the validity of such transfer by any Lender of this Note.
 
This Note is one of the Notes referred to in the Term Loan Agreement dated as of
November ___, 2011 among the Borrower, the Administrative Agent, and the other
agents and lenders signatory thereto (including the Lender), and evidences Loans
made by the Lender thereunder (such Term Loan Agreement as the same may be
amended, supplemented or restated from time to time, the "Term Loan
Agreement").  Capitalized terms used in this Note have the respective meanings
assigned to them in the Term Loan Agreement.
 
This Note is issued pursuant to, and is subject to the terms and conditions set
forth in, the Term Loan Agreement and is entitled to the benefits provided for
in the Term Loan Agreement and the other Loan Documents.  The Term Loan
Agreement provides for the acceleration of the maturity of this Note upon the
occurrence of certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this Note.
 
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
 
 
 

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

 
VANGUARD NATURAL GAS, LLC

By:                                                                           
Name:______________________________
Title:_______________________________
 
 
 

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

 
EXHIBIT B
 
FORM OF BORROWING REQUEST
 
November _____, 2011
 
VANGUARD NATURAL GAS, LLC, a Kentucky limited liability company (the
"Borrower"), pursuant to Section 2.03 of the Term Loan Agreement dated as of
November 30, 2011 (together with all amendments, restatements, supplements or
other modifications thereto, the "Term Loan Agreement") among the Borrower,
CITIBANK, N.A., as Administrative Agent and the other agents and lenders (the
"Lenders") which are or become parties thereto (unless otherwise defined herein,
each capitalized term used herein is defined in the Term Loan Agreement), hereby
requests a Borrowing as follows:
 
(i) Aggregate amount of the requested Borrowing is $100,000,000;
 
(ii) Date of such Borrowing is November ____, 2011;
 
(iii) Location and number of the Borrower's account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05 of the Term
Loan Agreement, is as follows:
 
 
The undersigned certifies that he/she is the _____________ of the Borrower, and
that as such he/she is authorized to execute this certificate on behalf of the
Borrower.  The undersigned further certifies, represents and warrants on behalf
of the Borrower that the Borrower is entitled to receive the requested Borrowing
under the terms and conditions of the Term Loan Agreement.
 
VANGUARD NATURAL GAS, LLC

By:                                                                           
Name:                                                                           
Title:
 
 
 

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

 
EXHIBIT C
 
NOT APPLICABLE
 
 
 

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

 

 
EXHIBIT D
 
FORM OF COMPLIANCE CERTIFICATE
 
The undersigned hereby certifies that he/she is the _______________ of VANGUARD
NATURAL GAS, LLC, a Kentucky limited liability company (the "Borrower"), and
that as such he/she is authorized to execute this certificate on behalf of the
Borrower.  With reference to the Term Loan Agreement dated as of November ___,
2011 (together with all amendments, restatements, supplements or other
modifications thereto being the "Agreement") among the Borrower, CITIBANK, N.A.,
as Administrative Agent, and the other agents and lenders (the "Lenders") which
are or become a party thereto, and such Lenders, the undersigned represents and
warrants as follows (each capitalized term used herein having the same meaning
given to it in the Agreement unless otherwise specified):
 
(a)           The representations and warranties of the Borrower contained in
Article VII of the Agreement and in the Loan Documents and otherwise made in
writing by or on behalf of the Borrower pursuant to the Agreement and the Loan
Documents were true and correct in all material respects when made, and are
repeated at and as of the time of delivery hereof and are true and correct in
all material respects at and as of the time of delivery hereof, except to the
extent such representations and warranties are expressly limited to an earlier
date or the Required Lenders have expressly consented in writing to the
contrary.
 
(b)           The Borrower has performed and complied with all agreements and
conditions contained in the Agreement and in the Loan Documents required to be
performed or complied with by it prior to or at the time of delivery hereof [or
specify default and describe].
 
(c)           Since _________________, 201__, no change has occurred, either in
any case or in the aggregate, in the condition, financial or otherwise, of the
Borrower or any Subsidiary which could reasonably be expected to have a Material
Adverse Effect [or specify event].
 
(d)           There exists no Default or Event of Default [or specify Default
and describe].
 
(e)           The aggregate amount of cash used to date by Parent to repurchase
treasury stock is $_________________.
 
(f)           Attached hereto are the detailed computations necessary to
determine whether the Borrower is in compliance with Section 9.01 as of the end
of the [fiscal quarter][fiscal year] ending [                              ].
 
EXECUTED AND DELIVERED this _________ day of __________, 201__.
 
VANGUARD NATURAL GAS, LLC

By:                                                                           
Name:                                                                           
Title:
 
 
 
 

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

 
For the Quarter/Year ended ___________________("Statement Date")
 
SCHEDULE 2
 
to the Compliance Certificate
 
($ in 000's)
 

I.           Section 9.01(a) – Consolidated Leverage Ratio.
 
A.Total Debt
 
1.Debt, less
$_______________
2.Non-cash obligations under ASC 815, less
($______________)
3.Accounts payable and other accrued liabilities not greater than 60 days past
due or which are being contested in good faith
 
 
 
($______________)
4.Total Debt
$_______________
B.EBITDA
 
1.consolidated net income, less
$______________
2.non-cash revenue or expense associated with Swap Agreements resulting from ASC
815, less
($______________)
 
3.income or plus loss from discontinued operations and extraordinary items, plus
($______________)
 
4.income taxes, plus
$______________
5.Interest Expense, plus
$______________
6.depreciation, plus
$______________
7.depletion, plus
$______________
8.amortization, plus
$______________
9.non-cash and extraordinary items
$______________
10.Total EBITDA
$______________
C.Ratio (Line I.A.4 ÷ Line I.B.10)
__________ to 1.0
Maximum Permitted:
4.00 to 1.00
   
II.Section 9.01(b) – Current Ratio.
 
A.Current Assets (including Borrowing Base availability)
$______________
B. Current Liabilities (excluding current maturities of Obligations owed to
Lenders)
 
 
$______________
C.Ratio (Line II.A ÷ Line II.B):
_________ to 1.0
Minimum Required:  1.0 to 1.0
 
III.      Section 9.01(c) – Collateral Coverage Ratio
 
A.       Pre-Tax PV 10% (as defined in the Term Loan Agreement)
$______________
B.       Total Debt (from Line I.A.4. above)
$______________
C.       Ratio (Line III.A ÷ Line III.B.)
_____ to 1.0
           Minimum Required:  1.5 to 1.0
 

 
 
 

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

 
EXHIBIT E
 
SECURITY INSTRUMENTS
 
1.  
Pledge and Security Agreement executed by Vanguard Natural Gas, LLC dated as of
November 30, 2011

 
2.  
Limited Liability Company Interest Security Agreement executed by Vanguard
Natural Resources, LLC dated as of November 30, 2011

 
3.  
Guaranty of Vanguard Natural Resources, LLC dated as of November 30, 2011

 
4.  
Subsidiary Pledge and Security Agreement dated as of November 30, 2011 executed
by VNR Holdings, LLC, Vanguard Permian, LLC, Trust Energy Company, LLC, Ariana
Energy, LLC, Encore Energy Partners GP LLC, Encore Energy Partners LP, Encore
Energy Partners Finance Corporation, Encore Energy Partners Operating LLC, and
Encore Clear Fork Pipeline LLC

 
5.  
Subsidiary Guaranty Agreement dated as of November 30, 2011 executed by VNR
Holdings, LLC, Vanguard Permian, LLC, Trust Energy Company, LLC, Ariana Energy,
LLC, Encore Energy Partners GP LLC, Encore Energy Partners LP, Encore Energy
Partners Finance Corporation, Encore Energy Partners Operating LLC, and Encore
Clear Fork Pipeline LLC

 
6.  
Second Lien Mortgage, Security Agreement, Assignment of Production and Financing
Statement dated as of November 30, 2011 from Trust Energy Company, LLC (Bell,
Clay, Harlan, Knox, Leslie, McCreary, and Whitley Counties, Kentucky), as
amended

 
7.  
Second Lien Deed of Trust, Mortgage, Security Agreement, Assignment of
Production and Financing Statement dated as of November 30, 2011 from Trust
Energy Company, LLC (Campbell County, Tennessee), as amended

 
8.  
Second Lien Deed of Trust, Mortgage, Security Agreement, Assignment of
Production and Financing Statement dated as of November 30, 2011 from Ariana
Energy, LLC (Anderson, Campbell, Morgan and Scott Counties, Tennessee), as
amended

 
9.  
Second Lien Mortgage, Security Agreement, Assignment of Production and Financing
Statement dated February 14, 2008 from Vanguard Permian, LLC (Lea County, New
Mexico), as amended

 
10.  
Second Lien Deed of Trust, Mortgage, Security Agreement, Assignment of
Production and Financing Statement dated as of February 14, 2008 from Vanguard
Permian, LLC (Crockett, Gaines, Irion, Reagan, Schleicher, Tom Green, Upton,
Yoakum, LaSalle, Webb, Ward, Coke, Eastland and Runnels Counties, Texas), as
amended

 
11.  
Second Lien Deed of Trust, Mortgage, Security Agreement, Assignment of
Production and Financing Statement dated as of June 1, 2010 from Vanguard
Permian, LLC (Covington, Jasper, Jefferson and Jones Counties, Mississippi)

 
 
 

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

 
12.  
Second Lien Oil and Gas Mortgages dated as of November __, 2011 from Encore
Energy Partners Operating LLC (Carbon and Richmond Counties, Montana)

 
13.  
Second Lien Oil and Gas Mortgages dated as of November __, 2011 from Encore
Energy Partners Operating LLC (Billings, Bowman, McKenzie and Williams Counties,
North Dakota)

 
14.  
Second Lien Oil and Gas Mortgages dated as of November __, 2011 from Encore
Energy Partners Operating LLC (Andrews, Cochran, Crane, Crockett, Ector, Gaines,
Pecos, Sutton, Coke, Eastland, Hardin and Runnels Counties, Texas)

 
15.  
Second Lien Oil and Gas Mortgage dated as of November __, 2011 from Encore
Energy Partners Operating LLC (Hot Springs, Park and Sweetwater Counties,
Wyoming)

 
16.  
Second Lien Pipeline Mortgage dated as of November __, 2011 from Encore Clear
Fork Pipeline LLC (Carbon County, Montana)

 
17.  
Second Lien Pipeline Mortgage dated as of November __, 2011  from Encore Clear
Fork Pipeline, LLC (Park County, Wyoming)

 
18.  
Second Lien Oil and Gas Mortgage dated as of November __, 2011 from Encore
Energy Partners Operating LLC (Lea County, New Mexico)

 
19.  
Financing Statements

 
A.  
Pledge and Security Agreement – Borrower

 
B.  
Limited Liability Company Interest Security Agreement – Vanguard Natural
Resources, LLC

 
C.  
Subsidiary Pledge and Security Agreement

 
D.  
Oil and Gas Mortgages

 
E.  
Pipeline Mortgages

 
 
 
 

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

 
EXHIBIT F
 
FORM OF ASSIGNMENT AND ASSUMPTION
 
This Assignment and Assumption (the "Assignment and Assumption") is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the "Assignor") and [Insert name of Assignee] (the
"Assignee").  Capitalized terms used but not defined herein shall have the
meanings given to them in the Term Loan Agreement identified below (as amended,
the "Term Loan Agreement"), receipt of a copy of which is hereby acknowledged by
the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part
of this Assignment and Assumption as if set forth herein in full.
 
For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Term Loan Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor's rights and
obligations in its capacity as a Lender under the Term Loan Agreement and any
other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including any letters of credit and guarantees
included in such facilities) and (ii) to the extent permitted to be assigned
under applicable law, all claims, suits, causes of action and any other right of
the Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Term Loan Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the "Assigned Interest").  Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.
 
 
1.Assignor:______________________________

 
2.
Assignee:
______________________________

 
 
[and is an Affiliate/Approved Fund of [identify Lender]1]

 
3.
Borrower:
Vanguard Natural Gas, LLC

 
 
4.
Administrative Agent:
Citibank, N.A., as the administrative agent under the Term Loan Agreement

 
 
 

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

 
 
5.
Term Loan Agreement:
The Term Loan Agreement dated as of November ___, 2011 among Vanguard Natural
Gas, LLC, the Lenders parties thereto, Citibank, N.A., as Administrative Agent,
and the other agents parties thereto

 
6.
Assigned Interest:

 
Commitment Assigned
Aggregate Amount of Commitment/Loans for all Lenders
Amount of Commitment/Loans Assigned
Percentage Assigned of Commitment/Loans2
 
$
$
%
 
$
$
%
 
$
$
%

 
Effective Date:  _____________ ___, 201___ [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]
 
The terms set forth in this Assignment and Assumption are hereby agreed to:
 
ASSIGNOR

[NAME OF ASSIGNOR]

By:                                                                
Name:                                                                           
Title:                                                                           

ASSIGNEE

[NAME OF ASSIGNEE]

By:                                                                
Name:                                                                           
Title:                                                                           

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

 
1 Select as applicable.
 
2 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.
[Consented to and]3 Accepted:
 

 
 

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

 
CITIBANK, N.A.,
as Administrative Agent

By:                                                                
Name:                                                                           
Title:                                                                           

[Consented to:]4

[NAME OF RELEVANT PARTY]

By:                                                                
Name:                                                                           
Title:                                                                           

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

 
3 To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.
 
4 To be added only if the consent of the Borrower and/or other parties (e.g.
Issuing Bank) is required by the terms of the Credit Agreement.
 
 
 

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

 
 ANNEX 1

 
STANDARD TERMS AND CONDITIONS FOR
 
ASSIGNMENT AND ASSUMPTION
 
1.  Representations and Warranties.
 
1.1   Assignor.  The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Term
Loan Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any Collateral thereunder, (iii) the financial condition of the
Borrower, any of the Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of the Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.
 
1.2.  Assignee.  The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Term Loan Agreement, (ii) it satisfies
the requirements, if any, specified in the Term Loan Agreement that are required
to be satisfied by it in order to acquire the Assigned Interest and become a
Lender, (iii) from and after the Effective Date, it shall be bound by the
provisions of the Term Loan Agreement as a Lender thereunder and, to the extent
of the Assigned Interest, shall have the obligations of a Lender thereunder,
(iv) it is sophisticated with respect to decisions to acquire assets of the type
represented by the Assigned Interest and either it, or the person exercising
discretion in making its decision to acquire the Assigned Interest, is
experienced in acquiring assets of such type, (v) it has received a copy of the
Term Loan Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 8.01 thereof, as applicable, and such
other documents and information as it has deemed appropriate D to make its own
credit analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or
any other Lender, and (vi) if it is a Foreign Lender, attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant to
the terms of the Term Loan Agreement, duly completed and executed by the
Assignee; and (b) agrees that (i) it will, independently and without reliance on
the Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
 
 
 

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

 
2.   Payments.    From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignor for amounts
which have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.
 
3.  General Provisions. This Assignment and Assumption shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns.  This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument.  Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
facsimile shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption.  This Assignment and Assumption shall be
governed by, and construed in accordance with, the law of the State of New York.
 
 
 

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

 
EXHIBIT G-1

U.S. TAX COMPLIANCE CERTIFICATE
 
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)
 
Reference is hereby made to the Term Loan Agreement dated as of November ___,
2011 (as amended, supplemented or otherwise modified from time to time, the
"Term Loan Agreement"), among VANGUARD NATURAL GAS, LLC, a limited liability
company duly formed and existing under the laws of the Commonwealth of Kentucky
(the "Borrower"); each of the Lenders from time to time party hereto; and
CITIBANK, N.A. (in its individual capacity, "Citibank"), as administrative agent
for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
 
Pursuant to the provisions of Section 5.03 of the Term Loan Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder
of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv)
it is not a controlled foreign corporation related to the Borrower as described
in Section 881(c)(3)(C) of the Code.
 
The undersigned has furnished the Administrative Agent and the Borrower with a
certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this
certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform the Borrower and
the Administrative Agent, and (2) the undersigned shall have at all times
furnished the Borrower and the Administrative Agent with a properly completed
and currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years
preceding such payments.
 
Unless otherwise defined herein, terms defined in the Term Loan Agreement and
used herein shall have the meanings given to them in the Term Loan Agreement.
 
[NAME OF LENDER]
 

By:           _________________________________
Name: ___________________________
Title:  ____________________________

Date: ________ __, 201[  ]
 
 
 

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

 
EXHIBIT G-2

U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Term Loan Agreement dated as of November ___,
2011 (as amended, supplemented or otherwise modified from time to time, the
"Term Loan Agreement"), among VANGUARD NATURAL GAS, LLC, a limited liability
company duly formed and existing under the laws of the Commonwealth of Kentucky
(the "Borrower"); each of the Lenders from time to time party hereto; and
CITIBANK, N.A. (in its individual capacity, "Citibank"), as administrative agent
for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
 
Pursuant to the provisions of Section 5.03 of the Term Loan Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate, (ii)
it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii)
it is not a ten percent shareholder of the Borrower within the meaning of
Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the
Code].
 
The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform such Lender in writing, and
(2) the undersigned shall have at all times furnished such Lender with a
properly completed and currently effective certificate in either the calendar
year in which each payment is to be made to the undersigned, or in either of the
two calendar years preceding such payments.
 
Unless otherwise defined herein, terms defined in the Term Loan Agreement and
used herein shall have the meanings given to them in the Term Loan Agreement.
 

[NAME OF PARTICIPANT]

By:           _________________________________
Name: ___________________________
Title:  ____________________________

Date: ________ __, 201[  ]

 
 
 

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

 
EXHIBIT G-3

U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Term Loan Agreement dated as of November ___,
2011 (as amended, supplemented or otherwise modified from time to time, the
"Term Loan Agreement"), among VANGUARD NATURAL GAS, LLC, a limited liability
company duly formed and existing under the laws of the Commonwealth of Kentucky
(the "Borrower"); each of the Lenders from time to time party hereto; and
CITIBANK, N.A. (in its individual capacity, "Citibank"), as administrative agent
for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
 
Pursuant to the provisions of Section 5.03 of the Term Loan Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s)
(as well as any Note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (ii) its direct or indirect partners/members are the
sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such
Loan(s)), (iii) with respect to the extension of credit pursuant to this Term
Loan Agreement or any other Loan Document, neither the undersigned nor any of
its direct or indirect partners/members is a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct
or indirect partners/members is a ten percent shareholder of the Borrower within
the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or
indirect partners/members is a controlled foreign corporation related to the
Borrower as described in Section 881(c)(3)(C) of the Code.
 
The undersigned has furnished the Administrative Agent and the Borrower with IRS
Form W-8IMY accompanied by one of the following forms from each of its
partners/members that is claiming the portfolio interest exemption: (i) an IRS
Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from
each of such partner's/member's beneficial owners that is claiming the portfolio
interest exemption.  By executing this certificate, the undersigned agrees that
(1) if the information provided on this certificate changes, the undersigned
shall promptly so inform the Borrower and the Administrative Agent, and (2) the
undersigned shall have at all times furnished the Borrower and the
Administrative Agent with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
 
Unless otherwise defined herein, terms defined in the Term Loan Agreement and
used herein shall have the meanings given to them in the Term Loan Agreement.
 
[NAME OF LENDER]

By:           _________________________________
Name: ___________________________
Title:  ____________________________

Date: ________ __, 201[  ]

 
 

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

 
 
EXHIBIT G-4

U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Term Loan Agreement dated as of November ___,
2011 (as amended, supplemented or otherwise modified from time to time, the
"Term Loan Agreement"), among VANGUARD NATURAL GAS, LLC, a limited liability
company duly formed and existing under the laws of the Commonwealth of Kentucky
(the "Borrower"); each of the Lenders from time to time party hereto; and
CITIBANK, N.A. (in its individual capacity, "Citibank"), as administrative agent
for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
 
Pursuant to the provisions of Section 5.03 of the Term Loan Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect such participation, neither the undersigned
nor any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a ten percent shareholder of the
Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of
its direct or indirect partners/members is a controlled foreign corporation
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
 
The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an
IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such
partner's/member's beneficial owners that is claiming the portfolio interest
exemption.  By executing this certificate, the undersigned agrees that (1) if
the information provided on this certificate changes, the undersigned shall
promptly so inform such Lender and (2) the undersigned shall have at all times
furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
 
Unless otherwise defined herein, terms defined in the Term Loan Agreement and
used herein shall have the meanings given to them in the Term Loan Agreement.
 

 

[NAME OF PARTICIPANT]

By:           _________________________________
Name: ___________________________
Title:  ____________________________

Date: ________ __, 201[  ]

 
 
 

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

 
SCHEDULE 7.05
 
LITIGATION
 

 
[This schedule to be updated]
 

 
 

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

 
 
SCHEDULE 7.06
 
ENVIRONMENTAL
 
[This schedule to be updated]
 
NONE
 
 
 

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

 
 
SCHEDULE 7.12
 
INSURANCE
 
(The insurance certificate follows this page)
 
 
 

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

 
 
SCHEDULE 7.14
 
SUBSIDIARIES AND PARTNERSHIPS
 
[This schedule to be updated]
 
 
 

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

 
 

 
SCHEDULE 7.18
 
GAS IMBALANCES
 
[This schedule to be updated]
 
 
 

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

 
 
NONE
 
SCHEDULE 7.19
 
MARKETING CONTRACTS
 
[This schedule to be updated]
 
 
A.  Marketing Contracts other than those Relating to Lewis Energy Acquisition
 
1.
Transportation Agreement dated April 30, 1986, between Southern Gas Company,
Inc. and Delta Natural Gas Company, Inc., as amended by Amendment to
Transportation Agreement dated April 11, 1996, between Delta Natural Gas
Company, Inc. and Southern Gas Company of Delaware, Inc. re:  transportation of
natural gas from Whitley County, Kentucky to Clay County, Kentucky

 
2.
Letter dated August 19, 1999, from Southern Gas Co. of Delaware, Inc. to Nami
Resources Company L.L.C. re:  conveyance of leases and wells by Southern Gas Co.
of Delaware, Inc. to Nami Resources Company L.L.C.

 
3.
Agreement dated February 1, 2001, between Delta Natural Gas Company, Inc. and
Nami Resources Company L.L.C. re:  transportation of natural gas from southeast
Kentucky to Whitley County, Kentucky

 
4.
Agreement dated August 24, 2004 between Delta Natural Gas Company, Inc. and Nami
Resources Company L.L.C. re:  transportation of natural gas in Knox County,
Kentucky

 
5.
Agreement dated March 10, 2005, between Delta Natural Gas Company, Inc. and Nami
Resources Company L.L.C. re:  transportation of natural gas from Bell, Knox and
Harlan Counties, Kentucky

 
6.
Agreement dated January 5, 2007 between Vinland Energy Gathering, LLC and
Vanguard Natural Gas, LLC re:  gathering and compression of natural gas in
Kentucky

 
7.
Agreement dated January 5, 2007 between Vinland Energy Gathering, LLC and Ariana
Energy, LLC re:  gathering and compression of natural gas in Tennessee

 
8.
Gas Purchase Contract dated October 1, 1999 between DCP Midstream, LP and
Vanguard Permian, LLC relating to the Hobbs and Lovington Fields

 
9.
Gas Purchase Contract dated August 1, 1989 between DCP Midstream, LP and
Vanguard Permian, LLC relating to the Lovington Field

 
10.
Gas Purchase Contract Amendment dated December 1, 2000 between DCP Midstream, LP
and Vanguard Permian, LLC relating to the Robertson Field

 
11.
Gas Purchase Contract dated July 1, 2003 between Targa Texas Field Services and
Vanguard Permian, LLC relating to the Hondo Field

 
12.
Gas Purchase Contract dated August 20, 1996 between Markwest Pinnacle L.P. and
Vanguard Permian, LLC relating to the West Field

 
 
 

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

 
13.
Gas Purchase Contract dated September 8, 2003 between DCP Midstream, LP and
Vanguard Permian, LLC relating to the Lovington Field

 
14.
Gas Purchase Contract dated February 12, 2004 between Belvan Corporation and
Vanguard Permian, LLC relating to the Wyatt Field

 
15.
Gas Purchase Contract dated June 1, 2005 between Davis Gas Processing, Inc. and
Vanguard Permian, LLC relating to the H J Strawn Field

 

 
B.  Marketing Contracts Related to Lewis Energy Acquisition
 
1.
Gas Gathering Agreement dated July 1, 2006 between Enterprise Hydrocarbons, L.P.
and Lewis Petro Properties, Inc.

 
2.
Gas Purchase Agreement dated August 1, 2005, between Houston Pipe Line Company,
L.P. and Lewis Petro Properties, Inc., as amended by that certain First
Amendment to Gas Purchase Agreement effective August 1, 2005, and as amended by
that certain Second Amendment to Gas Purchase Agreement effective August 1,
2005.

 
 
 
 

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

 
SCHEDULE 7.20
 
CURRENT SWAP AGREEMENTS
 

 
[This schedule to be updated]
 
 
 

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

 
 
SCHEDULE 9.03
EXISTING LIENS

[This schedule to be updated]

Liens Granted by Vanguard Natural Gas, LLC
 
None
 

 
Liens Granted by Trust Energy Company, LLC
 
None
 

 
Liens Granted by Ariana Energy, LLC
 
None
 

 
Liens Granted by VNR Holdings, LLC
 
None
 

 
 

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

 
 
SCHEDULE 9.05
 
INVESTMENTS
 

 
[This schedule to be updated]
 
NONE, except for the ownership by the Borrower of 100% of the Equity Interests
of each of Ariana Energy, LLC, Trust Energy Company, LLC, Vanguard Permian, LLC
and VNR Holdings, LLC, and 17,050 units of Vanguard Resources, LLC stock for
purposes of new director and employee compensation, and any described in the
Financial Statements.