Exhibit 10.1

 

Execution Version

 

 

SECOND LIEN CREDIT AGREEMENT

 

dated as of June 27, 2014

 

Among

 

TRIANGLE USA PETROLEUM CORPORATION
as Borrower,

 

WELLS FARGO ENERGY CAPITAL, INC.

as Administrative Agent,

 

and

 

THE LENDERS NAMED HEREIN

as Lenders

 

$150,000,000

 

 

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ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS

1

 

 

 

Section 1.1

Certain Defined Terms

1

 

 

 

Section 1.2

Computation of Time Periods

18

 

 

 

Section 1.3

Accounting Terms; Changes in GAAP

18

 

 

 

Section 1.4

Types of Advances

19

 

 

 

Section 1.5

Miscellaneous

19

 

 

 

ARTICLE 2 CREDIT FACILITIES

19

 

 

 

Section 2.1

Commitment for Advances

19

 

 

 

Section 2.2

Optional Additional Term Loans

20

 

 

 

Section 2.3

[Reserved]

21

 

 

 

Section 2.4

Advances

21

 

 

 

Section 2.5

Prepayments

23

 

 

 

Section 2.6

Repayment

24

 

 

 

Section 2.7

Fees

24

 

 

 

Section 2.8

Interest

24

 

 

 

Section 2.9

Illegality

25

 

 

 

Section 2.10

Breakage Costs

25

 

 

 

Section 2.11

Increased Costs

26

 

 

 

Section 2.12

Payments and Computations

27

 

 

 

Section 2.13

Taxes

28

 

 

 

Section 2.14

Replacement of Lenders

30

 

 

 

ARTICLE 3 CONDITIONS OF LENDING

30

 

 

 

Section 3.1

Conditions Precedent to Borrowing

30

 

 

 

Section 3.2

Additional Conditions Precedent to the Borrowing

33

 

 

 

Section 3.3

Determinations Under Sections 3.1, and 3.2

34

 

 

 

ARTICLE 4 REPRESENTATIONS AND WARRANTIES

34

 

 

 

Section 4.1

Organization

34

 

 

 

Section 4.2

Authorization

34

 

 

 

Section 4.3

Enforceability

35

 

 

 

Section 4.4

Financial Condition

35

 

 

 

Section 4.5

Title; Ownership and Liens; Real Property

35

 

 

 

Section 4.6

True and Complete Disclosure

35

 

 

 

Section 4.7

Litigation

36

 

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Section 4.8

Compliance with Agreements

36

 

 

 

Section 4.9

Pension Plans

36

 

 

 

Section 4.10

Environmental Condition

37

 

 

 

Section 4.11

Subsidiaries

37

 

 

 

Section 4.12

Investment Company Act

37

 

 

 

Section 4.13

Taxes

37

 

 

 

Section 4.14

Permits, Licenses, etc.

38

 

 

 

Section 4.15

Use of Proceeds

38

 

 

 

Section 4.16

Condition of Property; Casualties

38

 

 

 

Section 4.17

Insurance

38

 

 

 

Section 4.18

Security Interest

38

 

 

 

Section 4.19

OFAC; Anti-Terrorism

38

 

 

 

Section 4.20

Solvency

39

 

 

 

Section 4.21

Gas Contracts

39

 

 

 

Section 4.22

Liens, Leases, etc.

39

 

 

 

Section 4.23

Hedging Agreements

39

 

 

 

Section 4.24

Material Agreements

39

 

 

 

ARTICLE 5 AFFIRMATIVE COVENANTS

40

 

 

 

Section 5.1

Organization

40

 

 

 

Section 5.2

Reporting

40

 

 

 

Section 5.3

Insurance

45

 

 

 

Section 5.4

Compliance with Laws

45

 

 

 

Section 5.5

Taxes

46

 

 

 

Section 5.6

New Subsidiaries

46

 

 

 

Section 5.7

Agreement to Pledge; Security

46

 

 

 

Section 5.8

[Reserved]

46

 

 

 

Section 5.9

Records; Inspection

46

 

 

 

Section 5.10

Maintenance of Property

46

 

 

 

Section 5.11

Title Evidence and Opinions

47

 

 

 

Section 5.12

Further Assurances; Cure of Title Defects

47

 

 

 

Section 5.13

Leases; Development and Maintenance

47

 

 

 

ARTICLE 6 NEGATIVE COVENANTS

48

 

 

 

Section 6.1

Debt

48

 

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Section 6.2

Liens

49

 

 

 

Section 6.3

Investments

50

 

 

 

Section 6.4

Acquisitions

51

 

 

 

Section 6.5

Agreements Restricting Liens

51

 

 

 

Section 6.6

Use of Proceeds

51

 

 

 

Section 6.7

Corporate Actions; Accounting Changes

51

 

 

 

Section 6.8

Sale of Assets

52

 

 

 

Section 6.9

Restricted Payments

53

 

 

 

Section 6.10

Affiliate Transactions

53

 

 

 

Section 6.11

Line of Business

54

 

 

 

Section 6.12

Hazardous Materials

54

 

 

 

Section 6.13

Compliance with ERISA

54

 

 

 

Section 6.14

Sale and Leaseback Transactions

55

 

 

 

Section 6.15

Limitation on Hedging

55

 

 

 

Section 6.16

Leverage Ratio

56

 

 

 

Section 6.17

Current Ratio

57

 

 

 

Section 6.18

Operating Leases

57

 

 

 

Section 6.19

Prepayment of Certain Debt and Other Obligations

57

 

 

 

Section 6.20

Gas Imbalances, Take-or-Pay or Other Prepayments

57

 

 

 

Section 6.21

Asset Coverage Test

57

 

 

 

ARTICLE 7 DEFAULT AND REMEDIES

57

 

 

 

Section 7.1

Events of Default

57

 

 

 

Section 7.2

Optional Acceleration of Maturity

59

 

 

 

Section 7.3

Automatic Acceleration of Maturity

60

 

 

 

Section 7.4

Set-off

60

 

 

 

Section 7.5

Remedies Cumulative, No Waiver

60

 

 

 

Section 7.6

Application of Payments

61

 

 

 

ARTICLE 8 THE ADMINISTRATIVE AGENT

61

 

 

 

Section 8.1

Appointment, Powers, and Immunities

61

 

 

 

Section 8.2

Reliance by Administrative Agent

62

 

 

 

Section 8.3

Defaults

62

 

 

 

Section 8.4

Rights as Lender

62

 

 

 

Section 8.5

Indemnification

63

 

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Section 8.6

Non-Reliance on Administrative Agent and Other Lenders

63

 

 

 

Section 8.7

Resignation of Administrative Agent

64

 

 

 

Section 8.8

Collateral Matters

64

 

 

 

ARTICLE 9 MISCELLANEOUS

65

 

 

 

Section 9.1

Costs and Expenses

65

 

 

 

Section 9.2

Indemnification; Waiver of Damages

66

 

 

 

Section 9.3

Waivers and Amendments

67

 

 

 

Section 9.4

Severability

67

 

 

 

Section 9.5

Survival of Representations and Obligations

67

 

 

 

Section 9.6

Binding Effect

68

 

 

 

Section 9.7

Lender Assignments and Participations

68

 

 

 

Section 9.8

Confidentiality

69

 

 

 

Section 9.9

Notices, etc.

70

 

 

 

Section 9.10

Usury Not Intended

70

 

 

 

Section 9.11

Usury Recapture

71

 

 

 

Section 9.12

Governing Law; Service of Process

71

 

 

 

Section 9.13

Submission to Jurisdiction

71

 

 

 

Section 9.14

Execution in Counterparts

72

 

 

 

Section 9.15

Waiver of Jury Trial

72

 

 

 

Section 9.16

USA Patriot Act

72

 

 

 

Section 9.17

[Reserved]

72

 

 

 

Section 9.18

Intercreditor Agreement

72

 

 

 

Section 9.19

No Advisory or Fiduciary Responsibility

73

 

 

 

Section 9.20

Amendment and Restatement

73

 

 

 

Section 9.21

Integration

73

 

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EXHIBITS:

Exhibit A

— Form of Assignment and Acceptance

Exhibit B

— Form of Borrowing Base Certificate

Exhibit C

— Form of Compliance Certificate

Exhibit D

— Form of Guaranty

Exhibit E

— Form of Notice of Borrowing

Exhibit F

— Form of Notice of Continuation or Conversion

Exhibit G

— Form of Pledge and Security Agreement

Exhibit H

— Form of Note

Exhibit I

— Form of Transfer Letter

Exhibit J

— Form of Pledge Agreement

Exhibit K

— Form of Asset Coverage Certificate

Exhibit L

— Form of Intercreditor Agreement

Exhibit M-1

— Form of Additional Term Loan Certificate

Exhibit M-2

— Form of Additional Lender Certificate

 

 

SCHEDULES:

 

 

Schedule I

— Commitments, Contact Information

Schedule II

— Additional Conditions and Requirements for New Subsidiaries

Schedule 4.1

— Organizational Information

Schedule 4.11

— Subsidiaries

Schedule 4.16

— Material Real Property

Schedule 4.23

— Hedging Agreements

Schedule 4.24

— Material Agreements

 

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SECOND LIEN CREDIT AGREEMENT

 

This SECOND LIEN CREDIT AGREEMENT dated as of June 27, 2014 (the “Agreement”) is
among Triangle USA Petroleum Corporation, a Colorado corporation (the
“Borrower”), the Lenders (as defined below) and Wells Fargo Energy Capital, Inc.
as Administrative Agent (as defined below) for the Lenders.

 

RECITALS:

 

In consideration of the mutual covenants and agreements contained herein, in
consideration of the Loans that may hereafter be made by Lenders and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:

 

ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS

 

Section 1.1                                    Certain Defined Terms.  The
following terms shall have the following meanings (unless otherwise indicated,
such meanings to be equally applicable to both the singular and plural forms of
the terms defined):

 

“Acceptable Security Interest” means a security interest which (a) exists in
favor of the Administrative Agent for its benefit and the ratable benefit of the
Secured Parties, (b) is superior to all other security interests (other than the
Permitted Liens), (c) secures the Secured Obligations, (d) is enforceable
against the Credit Party which created such security interest and (e) is
perfected.

 

“Account Control Agreement” shall mean, as to any deposit account of any Credit
Party held with a bank, an agreement or agreements in form and substance
reasonably acceptable to the Administrative Agent, among the Credit Party owning
such deposit account, the Administrative Agent and such other bank governing
such deposit account.

 

“Acquisition” means the purchase by any Credit Party of any business, division
or enterprise, including the purchase of associated assets or operations or the
Equity Interests of a Person; provided that a merger or consolidation solely
among Credit Parties shall not constitute an Acquisition.

 

“Adjusted Base Rate” means, for any day, the fluctuating rate per annum of
interest equal to the greater of (i) greatest of (a) the Prime Rate in effect on
such day, (b) the Federal Funds Rate in effect on such day plus one half of
1.00%, and (c) a rate determined by the Administrative Agent to be the Daily
One-Month LIBOR plus 1.00% and (ii) 3.00%.  Any change in the Adjusted Base Rate
due to a change in the Prime Rate, Daily One-Month LIBOR or the Federal Funds
Rate shall be effective on the effective date of such change in the Prime Rate,
Daily One-Month LIBOR or the Federal Funds Rate.

 

“Administrative Agent” means Wells Fargo Energy Capital, Inc. in its capacity as
agent for the Lenders pursuant to Article 8 and any successor agent pursuant to
Section 8.7.

 

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

 

“Advance” means any advance by a Lender to the Borrower as a part of a
Borrowing.

 

[SIGNATURE PAGE TO SECOND LIEN CREDIT AGREEMENT — TRIANGLE USA PETROLEUM
CORPORATION]

 

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“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person.  The
term “control” (including the terms “controlled by” or “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership, by contract, or otherwise.

 

“Agreement” means this Second Lien Credit Agreement among the Borrower, the
Lenders and the Administrative Agent, as from time to time amended, modified,
supplemented or amended and restated.

 

“Applicable Margin” means, with respect to Base Rate Advances 6.00% and with
respect to Eurodollar Advances 7.00%.

 

“Asset Coverage Ratio” means, as of any date of determination, the ratio of
(a) Total Proved PV-10 as of the most recently delivered Engineering Report to
(b) consolidated Debt of the Borrower and its Subsidiaries as of such date.

 

“Asset Sale” means (a) any sale, lease, transfer, unwind, novation or other
disposition of any Property (including any working interest, overriding royalty
interest, production payments, net profits interest, royalty interest, mineral
fee interest), or Hedging Arrangement by any Credit Party and (b) any issuance
or sale of any Equity Interests of any Subsidiary of the Borrower, in each case,
to any Person other than a Credit Party.

 

“Assignment and Acceptance” means an assignment and acceptance executed by a
Lender and an Eligible Assignee and accepted by the Administrative Agent, in
substantially the same form as Exhibit A.

 

“Banking Services” means each and any of the following bank services provided to
any Credit Party by any First Lien Lender or by any Affiliate of a First Lien
Lender: (a) commercial credit cards, (b) purchase cards, (c) stored value cards
and (d) treasury management services (including, without limitation, controlled
disbursement, automated clearinghouse transactions, return items, overdrafts and
interstate depository network services.

 

“Banking Services Provider” means any Person that provides Banking Services to
any Credit Party.

 

“Base Rate Advance” means an Advance which bears interest based upon the
Adjusted Base Rate.

 

“Borrower” means Triangle USA Petroleum Corporation, a Colorado corporation.

 

“Borrowing” means a borrowing consisting of simultaneous Advances of the same
Type made by the Lenders pursuant to Section 2.1(a) or Converted by each Lender
to Advances of a different Type pursuant to Section 2.4(b).

 

“Borrowing Base” has the meaning provided in the First Lien Credit Agreement.

 

“Borrowing Base Deficiency” has the meaning provided in the First Lien Credit
Agreement.

 

“Borrowing Base Properties” means the Oil and Gas Properties of the Borrower and
its Subsidiaries evaluated by the First Lien Lenders for purposes of
establishing the Borrowing Base then in effect.

 

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“Business Day” means a day (a) other than a Saturday, Sunday, or other day on
which the Administrative Agent is authorized to close under the laws of, or is
in fact closed in, Denver, Colorado, and (b) if the applicable Business Day
relates to any Eurodollar Advances, on which dealings are carried on by
commercial banks in the London interbank market.

 

“Caliber Agreements” means (a) the Midstream Services Agreement (Crude Oil)
dated as of October 1, 2012 among Caliber North Dakota LLC, a Delaware limited
liability company and Borrower, and (b) Midstream Services Agreement dated as of
October 1, 2012 among Caliber North Dakota LLC, a Delaware limited liability
company and Borrower.

 

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

 

“Casualty Event” means the damage, destruction or condemnation, including by
process of eminent domain or any transfer or disposition of property in lieu of
condemnation, as the case may be, of property of any Person or any of its
Subsidiaries, including by process of eminent domain or any transfer or
disposition of property in lieu of condemnation.

 

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

 

“Change in Control” means the occurrence of any of the following events:

 

(a)                                 the Borrower ceases to directly or
indirectly own 100% of the Equity Interest in any Subsidiary other than as a
result of transaction permitted under Section 6.7;

 

(b)                                 the Parent ceases to directly or indirectly
own 100% of the Equity Interest in the Borrower free and clear of any Lien;

 

(c)                                  any Person or group of related Persons
(other than NGP) shall have acquired beneficial ownership of more than 35% of
the outstanding voting shares of the Parent (within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, and
the applicable rules and regulations thereunder); or

 

(d)                                 the NGP Group shall have acquired, in the
aggregate, beneficial ownership of 50% or more of the outstanding voting shares
of the Parent (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended, and the applicable rules and regulations
thereunder); or

 

(e)                                  neither Jonathan Samuels nor Peter Hill
remains in any of the three following positions at the Borrower (unless a
successor reasonably acceptable to the Administrative Agent has been appointed
within three months after such predecessor’s ceasing to hold such position):
Chief Executive Officer, Chief Financial Officer and Chairman of the Board.

 

“Change in Law” means the occurrence, after the date of this Agreement (or with
respect to any Lender, if later, the date on which such Lender becomes a
Lender), 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

 

3

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anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (y) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements,
the Basel Committee on Banking Supervision (or any successor or similar
authority) or the United States or foreign regulatory authorities, in each case
pursuant to Basel III, shall in each case be deemed to be a “Change in Law”,
regardless of the date enacted, adopted or issued.

 

“Closing Date” means June 27, 2014.

 

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations
and published interpretations thereof.

 

“Collateral” means all property of the Credit Parties which is “Collateral” or
“Mortgaged Property” (as defined in each of the Mortgages or the Security
Agreement, as applicable) or similar terms used in the Security Documents.

 

“Commitment” means, for each Lender, the obligation of each Lender to advance to
Borrower the amount set opposite such Lender’s name on Schedule I as its
Commitment, or if such Lender has entered into any Assignment and Acceptance,
set forth for such Lender as its Commitment in the Register.  The initial
aggregate Commitment on the date hereof is $60,000,000.

 

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

 

“Compliance Certificate” means a compliance certificate executed by a
Responsible Officer of the Borrower or such other Person as required by this
Agreement in substantially the same form as Exhibit C.

 

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

 

“Convert,” “Conversion,” and “Converted” each refers to a conversion of Advances
of one Type into Advances of another Type pursuant to Section 2.4(b).

 

“Credit Documents” means this Agreement, the Notes, the Intercreditor Agreement,
the Guaranties, the Notices of Borrowing, the Notices of Conversion, the
Security Documents, the Engagement Letter, and each other agreement, instrument,
or document (other than the First Lien Loan Documents) executed at any time in
connection with this Agreement.

 

“Credit Parties” means the Borrower and the Guarantors.

 

“Daily One-Month LIBOR” means, for any day, the rate of interest equal to the
Eurodollar Rate then in effect for delivery for a one (1) month period.

 

“Debt” means, for any Person, without duplication:  (a) indebtedness of such
Person for borrowed money, including the face amount of any letters of credit
supporting the repayment of indebtedness for borrowed money issued for the
account of such Person; (b) to the extent not covered under clause (a) above,
obligations under letters of credit and agreements relating to the issuance of
letters of credit or acceptance financing; (c) obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, or upon
which interest payments are customarily made; (d) obligations of such

 

4

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Person under conditional sale or other title retention agreements relating to
any Properties purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business); (e) obligations of such Person to pay the deferred purchase
price of property or services (including, without limitation, any contingent
obligations or other similar obligations associated with such purchase, and
including obligations that are non-recourse to the credit of such Person but are
secured by the assets of such Person); (f) obligations of such Person as lessee
under Capital Leases and obligations of such Person in respect of synthetic
leases; (g) obligations of such Person under any Hedging Arrangement except that
such obligations shall not constitute Debt for purposes of the calculations for
compliance under Sections 6.16, 6.17, and 6.21; (h) all obligations of such
Person to mandatorily purchase, redeem, retire, defease or otherwise make any
payment in respect of any Equity Interest in such Person or any other Person on
a date certain or upon the occurrence of certain events or conditions; (i) the
Debt of any partnership or unincorporated joint venture in which such Person is
a general partner or a joint venturer, but only to the extent to which there is
recourse to such Person for the payment of such Debt; (j) any obligations of
such Person owing in connection with any volumetric or production prepayments or
take-or-pay arrangements; (k) obligations of such Person under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) of
such Person to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (a) through (j) above; (l) indebtedness or obligations of
others of the kinds referred to in clauses (a) through (j) secured by any Lien
on or in respect of any Property of such Person, and (m) all liabilities of such
Person in respect of unfunded vested benefits under any Plan.

 

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

 

“Default Rate” means a per annum rate equal to (a) in the case of principal of
any Advance, 2.00% plus the rate otherwise applicable to such Advance as
provided in Sections 2.8(a) or (b), and (b) in the case of any other Obligation,
2.00% plus the non-default rate applicable to Base Rate Advances as provided in
Section 2.8(a).

 

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

 

“EBITDAX” means for the Borrower, on a consolidated basis for any period, the
sum of (a) Net Income for such period, plus (b) without duplication and to the
extent deducted in determining such Net Income (i) Interest Expense for such
period, plus (ii) Income Tax Expense for such period, plus (iii) depreciation,
amortization, depletion and exploration expenses for such period, plus
(iv) non-cash charges resulting from extraordinary, non-recurring events or
circumstances for such period (including any provision for the reduction in the
carrying value of assets recorded in accordance with GAAP and including non-cash
charges resulting from the requirements of ASC 410, 718 and 815), minus (c) to
the extent included in determining Net Income, non-cash income resulting from
extraordinary, non-recurring events or circumstances for such period and all
other non-cash items of income which were included in determining such Net
Income (including non-cash income resulting from the requirements of ASC 410,
718 and 815); provided that such EBITDAX shall be subject to pro forma
adjustments for permitted acquisitions and non-ordinary course asset sales
assuming that such transactions had occurred on the first day of the
determination period, which adjustments shall be made in a manner, and subject
to supporting documentation, set forth by the SEC or otherwise acceptable to the
Administrative Agent.

 

“Effective Date” means the date of this Agreement.

 

“Eligible Assignee” means (a) a Lender, (b) any Affiliate of a Lender approved
by the Administrative Agent, or (c) any other Person (other than a natural
Person) approved by the Administrative Agent and, unless an Event of Default has
occurred and is continuing at the time any

 

5

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assignment is effected in accordance with Section 9.7, the Borrower, such
approval not to be unreasonably withheld or delayed by the Borrower and such
approval to be deemed given by the Borrower if no objection is received by the
Administrative Agent from the Borrower within five Business Days after notice of
such proposed assignment has been provided to the Borrower; provided, however,
that neither the Borrower nor any Affiliate of the Borrower shall qualify as an
Eligible Assignee.

 

“Engagement Letter” means that certain Engagement Letter dated as of May 8,
2014, among the Borrower and Wells Fargo Energy Capital, Inc.

 

“Engineering Report” means either an Independent Engineering Report or an
Internal Engineering Report.

 

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

 

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

 

“Environmental Law” means all federal, state, and local laws, rules,
regulations, ordinances, orders, decisions, agreements, and other requirements,
including common law theories, now or hereafter in effect and relating to, or in
connection with the Environment, health, or safety, including without limitation
CERCLA, relating to (a) pollution, contamination, injury, destruction, loss,
protection, cleanup, reclamation or restoration of the air, surface water,
groundwater, land surface or subsurface strata, or other natural resources;
(b) solid, gaseous or liquid waste generation, treatment, processing, recycling,
reclamation, cleanup, storage, disposal or transportation; (c) exposure to
pollutants, contaminants, hazardous, or toxic substances, materials or wastes;
(d) the safety or health of employees; or (e) the manufacture, processing,
handling, transportation, distribution in commerce, use, storage or disposal of
hazardous, or toxic substances, materials or wastes.

 

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

 

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

 

“Equity Interest” means with respect to any Person, any shares, interests,
participation, or other equivalents (however designated) of corporate stock,
membership interests or partnership interests (or any other ownership interests)
of such Person.

 

“Equity Issuance” means any issuance of equity securities or any other Equity
Interests (including any preferred equity securities) by any Credit Party other
than equity securities issued (i) to a Credit Party, and (ii) pursuant to
employee or director and officer stock option plans in the ordinary course of
business.

 

“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D
of the Federal Reserve Board as in effect from time to time.

 

“Eurodollar Advance” means an Advance that bears interest based upon the
Eurodollar Rate.

 

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“Eurodollar Base Rate” means the rate per annum (rounded upward to the nearest
whole multiple of 1/8th of 1%) equal to the interest rate per annum set forth on
the Reuters Reference LIBOR1 page as the London Interbank Offered Rate, for
deposits in Dollars at 11:00 a.m.  (London, England time) two Business Days
before the first day of the applicable Interest Period and for a period equal to
such Interest Period; provided that, if such quotation is not available for any
reason, then for purposes of this clause (b), Eurodollar Base Rate shall then be
the rate determined by the Administrative Agent to be the rate at which deposits
in Dollars for delivery on the first day of such Interest Period in immediately
available funds in the approximate amount of the Advances being made, continued
or Converted by the Lenders and with a term equivalent to such Interest Period
would be offered by the Administrative Agent’s London Branch (or other branch or
Affiliate of the Administrative Agent, or in the event that the Administrative
Agent does not have a London branch, the London branch of a Lender chosen by the
Administrative Agent) to major banks in the London or other offshore inter-bank
market for Dollars at their request at approximately 11:00 a.m. (London time)
two Business Days prior to the commencement of such Interest Period).

 

“Eurodollar Rate” means a rate per annum equal to the greater of (i) 1.00% and
(ii) the rate per annum determined by the Administrative Agent pursuant to the
following formula:

 

Eurodollar Rate =

Eurodollar Base Rate

1.00 – Eurodollar Reserve Percentage

 

Where,

 

“Eurodollar Reserve Percentage” means, as of any day, the reserve percentage
(expressed as a decimal, carried out to five decimal places) in effect on such
day, whether or not applicable to any Lender, under regulations issued from time
to time by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities.  The Eurodollar Rate for each outstanding Advance
shall be adjusted automatically as of the effective date of any change in the
Eurodollar Reserve Percentage.

 

“Event of Default” has the meaning specified in Section 7.1.

 

“Extraordinary Receipts” means (a) with respect to any Asset Sale, all cash and
Liquid Investments received by a Credit Party from such Asset Sale after payment
of, or provision for, all estimated cash taxes attributable to such Asset Sale
and payable by such Credit Party, and other reasonable out of pocket fees and
expenses actually incurred by such Credit Party directly in connection with such
Asset Sale, (b) with respect to any settlement or litigation proceeding, the
proceeds of such settlement or litigation proceeding after payment of all out of
pocket fees and expenses actually incurred in connection with such settlement or
proceeding, (c) with respect to any Casualty Event, the insurance proceeds or
award or other compensation as a result of a Casualty Event after payment of all
out of pocket fees and expenses actually incurred by the applicable Credit Party
to receive such proceeds, and (d) with respect to any novation, assignment,
unwinding, termination, or amendment of any hedge position or any other Hedging
Arrangement, the sum of the cash and Liquid Investments received by any Credit
Party in connection with such transaction after giving effect to any netting
agreements.

 

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

 

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“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
the Administrative Agent (in its individual capacity) on such day on such
transactions as determined by the Administrative Agent.

 

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

 

“First Lien Agent” means the Administrative Agent under the First Lien Credit
Agreement.

 

“First Lien Credit Agreement” means the Amended and Restated Credit Agreement
dated as of April 11, 2013 among the Borrower, Wells Fargo Bank, National
Association as administrative agent and the lenders party thereto, as so amended
and modified and as may be otherwise amended, restated, supplemented or modified
from time to time.

 

“First Lien Indebtedness” means the “Obligations” as defined in the First Lien
Credit Agreement.

 

“First Lien Lenders” means the “Lenders” from time to time party to the First
Lien Credit Agreement.

 

“First Lien Loan Documents” means the First Lien Credit Agreement and the other
“Credit Documents” as defined in the First Lien Credit Agreement.

 

“First Priority Obligations Payment Date” means the date on which Discharge of
First Lien Obligations (as such term is defined in the Intercreditor Agreement
as in effect on the date hereof) occurs.

 

“GAAP” means United States of America generally accepted accounting principles
as in effect from time to time, applied on a basis consistent with the
requirements of Section 1.3.

 

“Governmental Authority” means, with respect to any Person, any foreign
governmental authority, the United States of America, any state of the United
States of America, the District of Columbia, and any subdivision of any of the
foregoing, and any agency, department, commission, board, authority or
instrumentality, bureau or court having jurisdiction over such Person.

 

“Guarantors” means (a) the Subsidiaries of the Borrower listed on Schedule 4.11,
(b) each other Subsidiary of the Borrower from time to time, and (c) any other
Person that becomes a guarantor of all or a portion of the Obligations and which
has entered into either a joinder agreement substantially in the form attached
to the Guaranty or a new Guaranty.

 

“Guaranty” means the Second Lien Guaranty Agreement executed in substantially
the same form as Exhibit D.

 

“Hazardous Substance” means any substance or material identified as such
pursuant to CERCLA and those regulated under any other Environmental Law,
including without limitation pollutants, contaminants, petroleum, petroleum
products, radionuclides, and radioactive materials.

 

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“Hazardous Waste” means any substance or material regulated or designated as
such pursuant to any Environmental Law, including without limitation,
pollutants, contaminants, flammable substances and materials, explosives,
radioactive materials, oil, petroleum and petroleum products, chemical liquids
and solids, polychlorinated biphenyls, asbestos, toxic substances, and similar
substances and materials.

 

“Hedging Arrangement” means a hedge, call, put, swap, collar, floor, cap,
option, forward sale or purchase or other contract or similar arrangement
(including any obligations to purchase or sell any commodity or security at a
future date for a specific price).

 

“Hydrocarbon Hedge Agreement” means a Hedging Arrangement related to the price
of Hydrocarbons.

 

“Hydrocarbons” means oil, gas, coal seam gas, casinghead gas, drip gasoline,
natural gasoline, condensate, distillate, and all other liquid and gaseous
hydrocarbons produced or to be produced in conjunction therewith from a well
bore and all products, by-products, and other substances derived therefrom or
the processing thereof, and all other minerals and substances produced in
conjunction with such substances, including, but not limited to, sulfur,
geothermal steam, water, carbon dioxide, helium, and any and all minerals, ores,
or substances of value and the products and proceeds therefrom.

 

“Independent Engineer” means Cawley, Gillespie and Associates, Inc. or any other
engineering firm acceptable to the Administrative Agent.

 

“Independent Engineering Report” means a report, in form and substance
satisfactory to the Administrative Agent, prepared, at the sole discretion of
the Borrower, (x) by an Independent Engineer or (y) by or under the supervision
of the engineers of the Borrower; provided that Independent Engineering Reports
that are prepared by or under the supervision of the engineers of the Borrower
shall be accompanied by an audit letter issued by the Independent Engineer that
it has audited at least 90% by value of the Proven Reserves attributable to the
Oil and Gas Properties owned (or to be acquired) by the Credit Parties which are
or are to be included in the Borrowing Base, and addressed to the Administrative
Agent and the Lenders with respect to the Oil and Gas Properties owned by the
Credit Parties (or to be acquired by a Credit Party) which are or are to be
included in the Borrowing Base, which report shall (a) specify the location,
quantity, and type of the estimated Proven Reserves attributable to such Oil and
Gas Properties, (b) contain a projection of the rate of production of such Oil
and Gas Properties, (c) contain an estimate of the net operating revenues to be
derived from the production and sale of Hydrocarbons from such Proven Reserves
based on product price and cost escalation assumptions specified by the
Administrative Agent and the Lenders, and (d) contain such other information as
is customarily obtained from and provided in such reports or is otherwise
reasonably requested by the Administrative Agent or any Lender.

 

“Income Tax Expense” means for Borrower and its Subsidiaries, on a consolidated
basis for any period, all state and federal income taxes paid or due to be paid
during such period.

 

“Intercreditor Agreement” means the Intercreditor Agreement dated as of even
date herewith substantially in the form of Exhibit L hereto by and among the
Administrative Agent, the First Lien Agent and the Borrower, as the same may
from time to time be amended, supplemented, restated or otherwise modified.

 

“Interest Expense” means, for the Borrower and its Subsidiaries, on a
consolidated basis for any period, total cash interest expense, letter of credit
fees and other fees and expenses incurred by such Person in connection with any
Debt (including but not limited to Debt under this Agreement) for such period
(excluding the upfront fees due pursuant to the Engagement Letter to the
Administrative Agent and

 

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the Lenders on or prior to the Closing Date), whether paid or accrued (including
that attributable to obligations which have been or should be, in accordance
with GAAP, recorded as Capital Leases), including, without limitation, all
commissions, discounts, and other fees and charges owed with respect to letters
of credit and bankers’ acceptance financing, fees owed with respect to the
Secured Obligations, and net costs under Hedging Arrangements entered into
addressing interest rates, all as determined in conformity with GAAP.

 

“Interest Hedge Agreement” means a Hedging Arrangement between the Borrower or
another Credit Party and one or more financial institutions providing for the
exchange of nominal interest obligations between the Borrower or such other
Credit Party and such financial institution or the cap of the interest rate on
any Debt of the Borrower.

 

“Interest Period” means for each Eurodollar Advance comprising part of the same
Borrowing, the period commencing on the date of such Eurodollar Advance is made
or deemed made and ending on the last day of the period selected by the Borrower
pursuant to the provisions below and Section 2.4, and thereafter, each
subsequent period commencing on the day following the last day of the
immediately preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and Section 2.4.  The
duration of each such Interest Period shall be one, two, three, or six months,
in each case as the Borrower may select, provided that:

 

(a)                                 Interest Periods commencing on the same date
for Advances comprising part of the same Borrowing shall be of the same
duration;

 

(b)                                 whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding Business Day,
provided that if such extension would cause the last day of such Interest Period
to occur in the next following calendar month, the last day of such Interest
Period shall occur on the next preceding Business Day;

 

(c)                                  any Interest Period which begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month in which it
would have ended if there were a numerically corresponding day in such calendar
month; and

 

(d)                                 the Borrower may not select any Interest
Period for any Advance which ends after the Maturity Date.

 

“Internal Engineering Report” means a report, in form and substance satisfactory
to the Administrative Agent, prepared by the Borrower and certified by a
Responsible Officer of the Borrower, addressed to the Administrative Agent and
the Lenders with respect to the Oil and Gas Properties owned by any Credit Party
(or to be acquired by a Credit Party) which are or are to be included in the
Borrowing Base, which report shall (a) specify the location, quantity, and type
of the estimated Proven Reserves attributable to such Oil and Gas Properties,
(b) contain a projection of the rate of production of such Oil and Gas
Properties, (c) contain an estimate of the net operating revenues to be derived
from the production and sale of Hydrocarbons from such Proven Reserves based on
product prices and cost escalation assumptions specified by the Administrative
Agent, and (d) contain such other information as is customarily obtained from
and provided in such reports or is otherwise reasonably requested by the
Administrative Agent or any Lender.

 

“Leases” means all oil and gas leases, oil, gas and mineral leases, oil, gas and
casinghead gas leases or any other instruments, agreements, or conveyances under
and pursuant to which the owner

 

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thereof has or obtains the right to enter upon lands and explore for, drill, and
develop such lands for the production of Hydrocarbons.

 

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

 

“Lenders” means the Persons listed on the signature pages hereto as Lenders, any
other Person that shall have become a Lender hereto pursuant to Section 2.14,
and any other Person that shall have become a Lender hereto pursuant to an
Assignment and Acceptance, but in any event, excluding any such Person that
ceases to be a party hereto pursuant to an Assignment and Acceptance.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.

 

“Leverage Ratio” means, as of the end of each fiscal quarter, the ratio of
(a) the consolidated Debt of the Borrower (other than obligations under
permitted Hedging Arrangements) as of the last day of such fiscal quarter to
(b) the consolidated EBITDAX of the Borrower for the four-fiscal quarter period
then ended; provided that for the purposes of calculating the Leverage Ratio,
any Debt consisting of take-or-pay obligations under the RockPile Agreement or
the Caliber Agreements shall be excluded from the consolidated Debt of the
Borrower.

 

“Lien” means any mortgage, lien, pledge, charge, deed of trust, security
interest, or encumbrance to secure or provide for the payment of any obligation
of any Person, whether arising by contract, operation of law, or otherwise
(including the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease, or other title retention agreement).

 

“Liquid Investments” means (a) readily marketable direct full faith and credit
obligations of the United States of America or obligations unconditionally
guaranteed by the full faith and credit of the United States of America;
(b) commercial paper issued by (i) any Lender or any Affiliate of any Lender or
(ii) any commercial banking institutions or corporations rated at least P-1 by
Moody’s or A-1 by S&P; (c) certificates of deposit, time deposits, and bankers’
acceptances issued by (i) any of the Lenders or (ii) any other commercial
banking institution which is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than $250,000,000
and rated Aa by Moody’s or AA by S&P; (d) repurchase agreements which are
entered into with any of the Lenders or any major money center banks included in
the commercial banking institutions described in clause (c) and which are
secured by readily marketable direct full faith and credit obligations of the
government of the United States of America or any agency thereof;
(e) investments in any money market fund which holds investments substantially
of the type described in the foregoing clauses (a) through (d); (f) readily and
immediately available cash held in any money market account maintained with any
Lender; provided that, such money market accounts and the funds therein shall be
unencumbered and free and clear of all Liens and other third party rights other
than a Lien in favor of the Administrative Agent pursuant to the Security
Documents; and (g) other investments made through the Administrative Agent or
its Affiliates and approved by the Administrative Agent.  All the Liquid
Investments described in clauses (a) through (d) above shall have maturities of
not more than 365 days from the date of issue.

 

“Management Agreement” means the Management Agreement dated as of April 11, 2013
by and among the Borrower and Parent, as amended or otherwise modified from time
to time in accordance with Section 6.9.

 

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“Material Acquisition” means any acquisition of Property or series of related
acquisitions of Property that involves the payment of consideration by the
Borrower and its Subsidiaries in excess of a dollar amount equal to (a) at any
time prior to the First Priority Obligations Payment Date, five percent (5%) of
the then effective Borrowing Base and (b) at any time thereafter, two and
one-half percent (2.5%) of the Total Proved PV-10 most recently calculated
hereunder for purposes of determining the Borrower’s compliance with
Section 6.21.

 

“Material Adverse Change” means a material adverse change (a) in the business,
assets (including Oil and Gas Properties), condition (financial or otherwise),
or operations of the Borrower, individually or the Credit Parties, taken as a
whole; (b) on any Credit Party’s ability to perform its obligations under this
Agreement, any Note, the Guaranties or any other Credit Document; (c) on the
Credit Parties’ ability, as a whole, to perform their obligations under this
Agreement or any other Credit Document; (d) in any right or remedy of any
Secured Party under any Credit Document; (e) on the validity or enforceability
of this Agreement or any of the other Credit Documents; or (f) on the Acceptable
Security Interest in favor of the Agent with respect to any material portion of
the Collateral.

 

“Material Disposition” means any Disposition of Property or series of related
Dispositions of Property that yields gross proceeds to the Borrower and its
Subsidiaries in excess of a dollar amount equal to (a) at any time prior to the
First Priority Obligations Payment Date, five percent (5%) of the then effective
Borrowing Base and (b) at any time thereafter, two and one-half percent (2.5%)
of the Total Proved PV-10 most recently calculated hereunder for purposes of
determining the Borrower’s compliance with Section 6.21.

 

“Maturity Date” means April 16, 2019.

 

“Maximum Rate” means the maximum nonusurious interest rate under applicable law.

 

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

 

“Mortgage” means each mortgage or deed of trust in form acceptable to the
Administrative Agent executed by any Credit Party to secure all or a portion of
the Obligations.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any member of the
Controlled Group is making or accruing an obligation to make contributions.

 

“Net Income” means, for any period and with respect to any Person, the net
income for such period for such Person after taxes as determined in accordance
with GAAP, including any cash net gain but excluding, however, (a) extraordinary
items, including (i) any net non-cash gain or loss during such period arising
from the sale, exchange, retirement or other disposition of capital assets (such
term to include all fixed assets and all securities) other than in the ordinary
course of business, and (ii) any write-up or write-down of assets and (b) the
cumulative effect of any change in GAAP.

 

“NGP” means, collectively, NGP Triangle Holdings, LLC, NGP Natural Resources X,
L.P., NGP Natural Resources X Parallel Fund, L.P., and any assignee of the
foregoing reasonably acceptable to the Administrative Agent.

 

“NGP Group” means, collectively, NGP and any group of related Persons (within
the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended, and the applicable rules and regulations thereunder).

 

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“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 9.3 and (ii) has been approved by the
Required Lenders.

 

“Note” means a promissory note of the Borrower payable to a Lender or its
registered assigns, in substantially the same form as Exhibit H, evidencing
indebtedness of the Borrower to such Lender resulting from Advances owing to
such Lender.

 

“Notice of Borrowing” means a means a Notice of Borrowing signed by the Borrower
in substantially the same form as Exhibit E.

 

“Notice of Continuation or Conversion” means a notice of continuation or
conversion signed by the Borrower in substantially the same form as Exhibit F.

 

“NYMEX Pricing” means, as of any date of determination with respect to any month
(i) for crude oil, the closing settlement price for the Light, Sweet Crude Oil
futures contract for such month, and (ii) for natural gas, the closing
settlement price for the Henry Hub Natural Gas futures contract for such month,
in each case as published by New York Mercantile Exchange (NYMEX) on its website
currently located at www.nymex.com, or any successor thereto (as such price may
be corrected or revised from time to time by the NYMEX in accordance with its
rules and regulations).

 

“Obligations” means all principal, interest (including post-petition interest),
fees, reimbursements, indemnifications, and other amounts now or hereafter owed
by any of the Credit Parties to the Lenders or the Administrative Agent under
this Agreement and the Credit Documents, and any increases, extensions, and
rearrangements of those obligations under any amendments, supplements, and other
modifications of the documents and agreements creating those obligations. 
Without limitation of the foregoing, the term “Obligations” shall include the
unpaid principal of and interest on the Advances (including, without limitation,
interest accruing at the then applicable rate provided in this Agreement after
the maturity of the Advances and interest accruing at the then applicable rate
provided in this Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, any Subsidiary or any Guarantor, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), and unpaid
amounts, fees, expenses, indemnities, costs, and all other obligations and
liabilities of every nature of the Borrower, any Subsidiary or any Guarantor,
whether absolute or contingent, due or to become due, now existing or hereafter
arising under this Agreement and the other Credit Documents.

 

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

 

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

 

“Other Taxes” has the meaning set forth in Section 2.13(b).

 

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

 

“Parent” means Triangle Petroleum Corporation, a Nevada corporation.

 

“Participant” has the meaning set forth in Section 9.7(d).

 

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“Participant Register” has the meaning set forth in Section 9.7(d).

 

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

 

“PDP Reserves” means the Proven Reserves which are categorized as both
“developed” and “producing” under the definitions for oil and gas reserves
promulgated by the Society of Petroleum Evaluation Engineers (or any generally
recognized successor) as in effect at the time in question and reasonably
acceptable to the Administrative Agent.

 

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

 

“Permitted Asset Sale” means any Asset Sale that is permitted under Section 6.8.

 

“Permitted Debt” has the meaning set forth in Section 6.1.

 

“Permitted Investments” has the meaning set forth in Section 6.3.

 

“Permitted Liens” has the meaning set forth in Section 6.2.

 

“Permitted Notes” has the meaning set forth in Section 6.1(i).

 

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

 

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

 

“Pledge Agreement” means a Pledge Agreement substantially in the form of
Exhibit J.

 

“Pricing Grid” means the pricing information set forth in Schedule II.

 

“Prime Rate” means the per annum rate of interest established from time to time
by the Administrative Agent at its principal office in San Francisco as its
prime rate, which rate may not be the lowest rate of interest charged by such
Lender to its customers.

 

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

 

“Pro Rata Share” means, at any time with respect to any Lender the ratio
(expressed as a percentage) of such Lender’s outstanding Advances at such time
to the aggregate of all outstanding Advances at such time.

 

“Proved Producing Reserves” means Proven Reserves which are categorized as both
“Proved Reserves” and “Producing” in the Definitions for Oil and Gas Reserves
(the “Reserve Definitions”) promulgated by the Society of Petroleum Engineers
(or any generally recognized successor) as in effect at the time in question.

 

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“Proved Developed Producing Reserves” means Proven Reserves which are
categorized as both “Developed” and “Producing” in the Reserve Definitions.

 

“Proven Reserves” means, at any particular time, the estimated quantities of
Hydrocarbons which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs attributable
to Oil and Gas Properties included or to be included in the Borrowing Base under
the then existing economic and operating conditions (i.e., prices and costs as
of the date the estimate is made).

 

“Redetermination Date” means the effective date of each redetermination of the
Borrowing Base pursuant to Section 2.2 of the First Lien Credit Agreement as in
effect on the date hereof.

 

“Register” has the meaning set forth in Section 9.7(b).

 

“Regulations T, U, and X” means Regulations T, U, and X of the Federal Reserve
Board, as each is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.  Each of Regulations T, U, or X may be
referred to individually as Regulation T, Regulation U, or Regulation X herein.

 

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

 

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

 

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA
(other than any such event not subject to the provision for 30-day notice to the
PBGC under the regulations issued under such section).

 

“Required Lenders” means two or more Lenders holding greater than a 66 2/3% Pro
Rata Share unless at any time when there is only one Lender, in which case such
Lender.

 

“Responsible Officer” means (a) with respect to any Person that is a
corporation, such Person’s Chief Executive Officer, President, Chief Financial
Officer, or Vice President, (b) with respect to any Person that is a limited
liability company, if such Person has officers, then such Person’s Chief
Executive Officer, President, Chief Financial Officer, Vice President, and if
such Person is managed by members, then a Responsible Officer of such Person’s
managing member, and if such Person is managed by managers, then a manager (if
such manager is an individual) or a Responsible Officer of such manager (if such
manager is an entity), and (c) with respect to any Person that is a general
partnership, limited partnership or a limited liability partnership, the
Responsible Officer of such Person’s general partner or partners.

 

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

 

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“RockPile” means RockPile Energy Services, LLC, a Delaware limited liability
company.

 

“RockPile Agreement” means the Master Service Agreement by and between RockPile
Energy Services, LLC a Delaware limited liability company and Borrower,
effective as of April 10, 2012.

 

“S&P” means Standard & Poor’s Rating Agency Group, a division of McGraw-Hill
Companies, Inc., or any successor thereof which is a national credit rating
organization.

 

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in a
country, in each case, that is subject to a country sanctions program
administered and enforced by OFAC.

 

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

 

“SEC” means the Securities and Exchange Commission.

 

“Secured Obligations” means the Obligations.

 

“Secured Parties” means the Administrative Agent and the Lenders.

 

“Security Agreement” means the Second Lien Security Agreement among the Credit
Parties and the Administrative Agent in substantially the same form as
Exhibit G.

 

“Security Documents” means, collectively, the Mortgages, Security Agreement, the
Pledge Agreement, the Transfer Letters and any and all other instruments,
documents or agreements, including Account Control Agreements, now or hereafter
executed by any Credit Party or any other Person to secure the Secured
Obligations.

 

“Solvent” means, as to any Person, on the date of any determination (a) the fair
value of the Property of such Person is greater than the total amount of debts
and other liabilities (including without limitation, contingent liabilities) of
such Person, (b) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability of
such Person on its debts and other liabilities (including, without limitation,
contingent liabilities) as they become absolute and matured, (c) such Person is
able to realize upon its assets and pay its debts and other liabilities
(including, without limitation, contingent liabilities) as they mature in the
normal course of business, (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities (including, without limitation,
contingent liabilities) beyond such Person’s ability to pay as such debts and
liabilities mature, (e) such Person is not engaged in, and is not about to
engage in, business or a transaction for which such Person’s Property would
constitute unreasonably small capital, and (f) such Person has not transferred,
concealed or removed any Property with intent to hinder, delay or defraud any
creditor of such Person.

 

“Strip Price” shall mean, at any time, (a) for the remainder of the then-current
calendar year, the average NYMEX Pricing for the remaining months in such
calendar year, (b) for each of the succeeding three complete calendar years, the
average NYMEX Pricing for the twelve months in each such calendar year, and
(c) for the succeeding fourth complete calendar year and each calendar year
thereafter, the average NYMEX pricing for the twelve months in such fourth
calendar year.

 

“Subject Lender” has the meaning set forth in Section 2.14.

 

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“Subsidiary” means, with respect to any Person (the “holder”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the holder in the
holder’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity, a majority of whose outstanding Voting Securities shall at any time be
owned by the holder or one more Subsidiaries of the holder.  Unless expressly
provided otherwise, all references herein and in any other Credit Document to
any “Subsidiary” or “Subsidiaries” means a Subsidiary or Subsidiaries of the
Borrower.

 

“Tax Group” has the meaning assigned to it in Section 4.13 of this Agreement.

 

“Taxes” has the meaning set forth in Section 2.13(a).

 

“Termination Event” means (a) a Reportable Event with respect to a Plan, (b) the
withdrawal of the Borrower or any member of the Controlled Group 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(c) of ERISA, (d) the institution of proceedings to terminate a Plan
by the PBGC, or (e) any other event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.

 

“Test Date” means each date that the production and hedging reports required
pursuant to Section 5.2(d) are delivered, commencing with the reports delivered
for the fiscal quarter ending July 31, 2014.

 

“Total Proved PV-10” means, as of any date of determination thereof with respect
to the Oil and Gas Properties described in the then most recent Engineering
Report delivered to the Administrative Agent, the net present value, discounted
at ten percent (10%) per annum, of the future net revenues expected to accrue to
the Credit Parties’ collective interest in such Oil and Gas Properties during
the remaining expected economic lives of such Oil and Gas Properties. Each
calculation of such expected future net revenues shall be made in accordance
with SEC guidelines for reporting proved oil and gas reserves, provided that in
any event (a) appropriate deductions shall be made for severance and ad valorem
taxes, and for operating, gathering, transportation and marketing costs required
for the production and sale of Hydrocarbons from such Oil and Gas Properties,
(b) the pricing assumptions used in determining Total Proved PV-10 for any Oil
and Gas Properties shall be based upon the Strip Price, adjusted in a manner
reasonably acceptable to Administrative Agent to reflect the Credit Parties’
Hydrocarbon Hedge Agreements in respect of forecasted production from Proved
Developed Producing Reserves then in effect and (c) the cash-flows derived from
the pricing assumptions set forth in clause (b) above shall be further adjusted
to account for the historical basis differential in a manner reasonably
acceptable to the Administrative Agent; provided however, that for purposes of
this calculation, not less than 60% of the Total Proved PV-10 shall be
attributable to Oil and Gas Properties described in the Engineering Report as
Proved Developed Producing Reserves (it being understood that such calculation
of Proved Developed Producing Reserves shall include appropriate adjustments to
give effect to commodity and basis Hedge Agreements covering Proved Developed
Producing Reserves that are in effect at such time and entered into in
Compliance with this Agreement).  The amount of Total Proved PV-10 at any time
shall be calculated on a pro forma basis for Material Dispositions and Material
Acquisitions of Oil and Gas Properties consummated by the Credit Parties since
the date of the Engineering Report most recently delivered hereto (provided
that, in the case of any such Material Acquisition the Administrative Agent
shall have received an Engineering Report evaluating the proved reserves
attributable to the Oil and Gas Properties subject thereto).

 

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“Transactions” means, collectively, (a) the Borrowings and other extensions of
credit under this Agreement and (b) the payment of fees, commissions and
expenses in connection with each of the foregoing.

 

“Transfer Letters” means, collectively, the letters in lieu of transfer orders
in substantially the form of the attached Exhibit I and executed by the
Borrower, any Guarantor or any of their respective Subsidiaries executing a
Mortgage.

 

“Type” has the meaning set forth in Section 1.4.

 

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

 

“Wells Fargo” means Wells Fargo Bank, National Association.

 

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

 

Section 1.3                                    Accounting Terms; Changes in
GAAP.  All accounting terms not specifically defined in this Agreement shall be
construed in accordance with GAAP applied on a consistent basis with those
applied in the preparation of the financial statements of the Parent delivered
to the Administrative Agent for the fiscal year ended January 31, 2011.

 

(a)                                 Unless otherwise indicated, all financial
statements of the Borrower, all calculations for compliance with covenants in
this Agreement, all determinations of the Applicable Margin, and all
calculations of any amounts to be calculated under the definitions in
Section 1.1 shall be based upon the consolidated accounts of the Borrower and
its Subsidiaries in accordance with GAAP and consistent with the principles of
consolidation applied in preparing the financial statements referred to in
Section 4.4.

 

(b)                                 If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Credit 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 1.4                                    Types of Advances.  Advances are
distinguished by “Type”.  The “Type” of an Advance refers to the determination
of whether such Advance is a Base Rate Advance or a Eurodollar Advance.

 

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Section 1.5                                    Miscellaneous.  Article, Section,
Schedule, and Exhibit references are to this Agreement, unless otherwise
specified.  All references to instruments, documents, contracts, and agreements
(including this Agreement) are references to such instruments, documents,
contracts, and agreements as the same may be amended, supplemented, and
otherwise modified from time to time, unless otherwise specified and shall
include all schedules and exhibits thereto unless otherwise specified.  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. The foregoing rule of construction shall only apply with
respect to amendments to or other modifications of the First Lien Loan Documents
to the extent such amendments or other modifications are made in accordance with
the terms of this Agreement and of the Intercreditor Agreement. Any reference
herein to any Person shall be construed to include such Person’s successors and
assigns (subject to the restrictions contained herein).  The words “hereof”,
“herein”, and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  The term “including” means “including, without
limitation,”.  Paragraph headings have been inserted in this Agreement as a
matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.

 

ARTICLE 2
CREDIT FACILITIES

 

Section 2.1                                    Commitment for Advances.

 

(a)                                 Advances.  Each Lender severally agrees, on
the terms and conditions set forth in this Agreement, to make an Advance to the
Borrower on the Closing Date in the amount of its Commitment.  Each Borrowing
shall, (A) if comprised of Base Rate Advances, be in an aggregate amount not
less than $500,000 and in integral multiples of $250,000 in excess thereof,
(B) if comprised of Eurodollar Advances, be in an aggregate amount not less than
$1,000,000 and in integral multiples of $500,000 in excess thereof, and (C) in
each case shall consist of Advances of the same Type made on the same day by the
Lenders ratably according to their respective Commitments.  Advances repaid may
not be reborrowed under any circumstance.  Any portion of the Commitments not
drawn on or before 4:00 p.m. Houston, Texas time on the Closing Date shall be
automatically and permanently cancelled.

 

(b)                                 Notes.  The indebtedness of the Borrower to
each Lender resulting from Advances owing to such Lender shall be evidenced by a
Note payable to such Lender or its registered assigns.

 

Section 2.2                                    Optional Additional Term Loans.

 

(a)                                 Subject to the conditions set forth in
Section 2.2(b), and with the prior written consent of the Administrative Agent,
in addition to the Advances made pursuant to Section 2.1(a), the Borrower may
cause additional Advances (“Additional Advances”) to be made to the Borrower by
the existing Lenders or by causing a Person that at such time is not a Lender to
become a Lender (an “Additional Lender”).

 

(b)                                 Additional Advances shall be subject to the
following additional conditions:

 

(i)                                     such Additional Advance shall not be
less than $5,000,000 unless the Administrative Agent otherwise consents, no more
than three (3) such Additional Advances shall be made on or before September 1,
2014, no such Additional Advance shall be permitted if after giving effect
thereto the total amount of Additional Advances made pursuant to this Agreement
would exceed $40,000,000 and no such Additional Advance shall be made without
the consent of the Administrative Agent in its sole discretion.

 

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(ii)                                  the representations and warranties of the
Borrower and the other Guarantors, if any, set forth in this Agreement and in
the other Credit Documents shall be true and correct on and as of the effective
date of such increase, except to the extent any such representations and
warranties are expressly limited to an earlier date, in which case, on and as of
the effective date of such increase, such representations and warranties shall
continue to be true and correct as of such specified earlier date and no Default
or Event of Default or Borrowing Base Deficiency shall have occurred and be
continuing at the effective date of such increase;

 

(iii)                               if the Borrower elects for the Additional
Advance to be made by an existing Lender, the Borrower and such Lender shall
execute and deliver to the Administrative Agent a certificate substantially in
the form of Exhibit M-1 (a “Additional Term Loan Certificate”), together with a
processing and recordation fee of $5,000, and the Borrower shall deliver a new
Note payable to the order of such Lender in a principal amount equal to such
Lender’s Advances to the Borrower after giving effect to such Additional
Advance, and otherwise duly completed;

 

(iv)                              if the Borrower elects for the Additional
Advance to be made by causing an Additional Lender to become a party to this
Agreement, then the Borrower and such Additional Lender shall execute and
deliver to the Administrative Agent a certificate substantially in the form of
Exhibit M-2 (an “Additional Lender Certificate”), together with an
Administrative Questionnaire and a processing and recordation fee of $5,000, and
the Borrower shall deliver a Note payable to the order of such Additional Lender
in a principal amount equal to such Additional Lender’s Additional Advance to
the Borrower, and otherwise duly completed; and

 

(v)                                 the Borrower shall pay to the Administrative
Agent for the benefit of such Lenders and Additional Lenders an upfront fee
equal to 1.25% of such Additional Advances upon the funding of such Additional
Advances and without the prior written consent of the Administrative Agent no
additional fees, including original issue discount.

 

(c)                                  Subject to acceptance and recording thereof
pursuant to Section 2.2(d), from and after the effective date specified in the
Additional Term Loan Certificate or the Additional Lender Certificate:  (A) the
amount of the Advances outstanding shall be increased by the amount of the
Additional Advance, and (B) in the case of an Additional Lender Certificate, any
Additional Lender party thereto shall be a party to this Agreement and the other
Credit Documents and have the rights and obligations of a Lender under this
Agreement and the other Credit Documents.

 

(d)                                 Upon its receipt of a duly completed
Additional Term Loan Certificate or an Additional Lender Certificate, executed
by the Borrower and the Lender or the Borrower and the Additional Lender party
thereto, as applicable, the processing and recording fee referred to in
Section 2.2(b)(iii), and the written consent of the Administrative Agent to such
increase required by Section 2.2(a), the Administrative Agent shall accept such
Additional Term Loan Certificate or Additional Lender Certificate and record the
information contained therein in the Register required to be maintained by the
Administrative Agent pursuant to Section 9.7(b).  No increase in the amount of
the Advances outstanding shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this Section 2.2(d).

 

Section 2.3                                    [Reserved].

 

Section 2.4                                    Advances.

 

(a)                                 Notice.  The Borrowings to be made on the
Closing Date shall be made pursuant to the applicable Notices of Borrowing given
not later than 10:00 a.m. (Denver, Colorado time) on the Closing

 

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Date by the Borrower to the Administrative Agent, which shall give to each
Lender prompt notice of such proposed Borrowing, by facsimile or telex.  The
Notice of Borrowing shall be by facsimile or telex, confirmed promptly by the
Borrower with a hard copy (other than with respect to notice sent by facsimile),
specifying (i) the requested date of such Borrowing, (ii) the requested Type of
Advances comprising such Borrowing, (iii) the aggregate amount of such
Borrowing, and (iv) if such Borrowing is to be comprised of Eurodollar Advances,
the requested Interest Period for each such Advance.  In the case of a proposed
Borrowing comprised of Eurodollar Advances, the Administrative Agent shall
promptly notify each Lender of the applicable interest rate under
Section 2.8(b).  Each Lender shall, before 11:00 a.m. (Denver, Colorado time) on
the date of such Borrowing, make available for the account of its applicable
Lending Office to the Administrative Agent at its address referred to in
Section 9.9, or such other location as the Administrative Agent may specify by
notice to the Lenders, in same day funds, such Lender’s pro rata share of such
Borrowing.  After the Administrative Agent’s receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article 3, the
Administrative Agent will make such funds available to the Borrower at its
account with the Administrative Agent or as otherwise directed by the Borrower
with written notice to the Administrative Agent.

 

(b)                                 Conversions and Continuations.  In order to
elect to Convert or continue an Advance under this paragraph, the Borrower shall
deliver an irrevocable Notice of Continuation or Conversion to the
Administrative Agent at the Administrative Agent’s office no later than
10:00 a.m. (Denver, Colorado time) (i) on the Business Day before the date of
the proposed conversion date in the case of a Conversion to a Base Rate Advance
and (ii) at least three Business Days in advance of the proposed Conversion or
continuation date in the case of a Conversion to, or a continuation of, a
Eurodollar Advance.  Each such Notice of Conversion or Continuation shall be in
writing or by telex or facsimile confirmed promptly by the Borrower with a hard
copy (other than with respect to notice sent by facsimile), specifying (i) the
requested Conversion or continuation date (which shall be a Business Day),
(ii) the amount and Type of the Advance to be Converted or continued,
(iii) whether a Conversion or continuation is requested and, if a Conversion,
into what Type of Advance, and (iv) in the case of a Conversion to, or a
continuation of, a Eurodollar Advance, the requested Interest Period.  Promptly
after receipt of a Notice of Continuation or Conversion under this paragraph,
the Administrative Agent shall provide each Lender with a copy thereof and, in
the case of a Conversion to or a Continuation of a Eurodollar Advance, notify
each Lender of the applicable interest rate under Section 2.8(b).  The portion
of Advances comprising part of the same Borrowing that are Converted to Advances
of another Type shall constitute a new Borrowing.

 

(c)                                  Certain Limitations.  Notwithstanding
anything in paragraphs (a) and (b) above:

 

(i)                                     at no time shall there be more than five
Interest Periods applicable to outstanding Eurodollar Advances;

 

(ii)                                  the Borrower may not select Eurodollar
Advances for any Borrowing at any time when a Default has occurred and is
continuing;

 

(iii)                               if any Lender shall, at least one Business
Day before the date of any requested Borrowing, notify the Administrative Agent
that the introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or that any central bank or other Governmental
Authority asserts that it is unlawful, for such Lender or its applicable Lending
Office to perform its obligations under this Agreement to make Eurodollar
Advances or to fund or maintain Eurodollar Advances, (A) the obligation of such
Lender to make such Eurodollar Advance as part of the requested Borrowing or for
any subsequent Borrowing shall be suspended until such Lender shall notify the
Borrower that the circumstances causing such suspension no longer exist and such
Lender’s portion of such requested Borrowing or any subsequent Borrowing of
Eurodollar Advances shall be made in the form of a Base Rate Advance, and

 

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(B) such Lender agrees to use commercially reasonable efforts (consistent with
its internal policies and legal and regulatory restrictions) to designate a
different Lending Office if the making of such designation would avoid the
effect of this paragraph and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender;

 

(iv)                              if the Administrative Agent is unable to
determine the Eurodollar Rate for Eurodollar Advances comprising any requested
Borrowing, the right of the Borrower to select Eurodollar Advances for such
Borrowing or for any subsequent Borrowing shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist, and each Advance
comprising such Borrowing shall be a Base Rate Advance;

 

(v)                                 if the Required Lenders shall, at least one
Business Day before the date of any requested Borrowing, notify the
Administrative Agent that the Eurodollar Rate for Eurodollar Advances comprising
such Borrowing will not adequately reflect the cost to such Lenders of making or
funding their respective Eurodollar Advances, as the case may be, for such
Borrowing, the right of the Borrower to select Eurodollar Advances for such
Borrowing or for any subsequent Borrowing shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist, and each Advance
comprising such Borrowing shall be a Base Rate Advance; and

 

(vi)                              if the Borrower shall fail to select the
duration or continuation of any Interest Period for any Eurodollar Advances in
accordance with the provisions contained in the definition of Interest Period in
Section 1.1 and paragraph (b) above, the Administrative Agent will forthwith so
notify the Borrower and the Lenders and such Advances will be made available to
the Borrower on the date of such Borrowing as Base Rate Advances or, if an
existing Advance, Convert into Base Rate Advances.

 

(d)                                 Notices Irrevocable.  Each Notice of
Borrowing and Notice of Continuation or Conversion delivered by the Borrower
hereunder, including its deemed request for borrowing made under Section 2.3(c),
shall be irrevocable and binding on the Borrower.

 

(e)                                  Administrative Agent Reliance.  Unless the
Administrative Agent shall have received notice from a Lender before the date of
any Borrowing that such Lender will not make available to the Administrative
Agent such Lender’s applicable pro rata share of any Borrowing, the
Administrative Agent may assume that such Lender has made its applicable pro
rata share of such Borrowing available to the Administrative Agent on the date
of such Borrowing in accordance with Section 2.4(a), and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower on
such date a corresponding amount.  If and to the extent that such Lender shall
not have so made its applicable pro rata share of such Borrowing available to
the Administrative Agent, such Lender and the Borrower severally agree to
immediately repay to the Administrative Agent on demand such corresponding
amount, together with interest on such amount, for each day from the date such
amount is made available to the Borrower until the date such amount is repaid to
the Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable on such day to Advances comprising such Borrowing and (ii) in the
case of such Lender, the lesser of (A) the Federal Funds Rate for such day and
(B)  the Maximum Rate.  If such Lender shall repay to the Administrative Agent
such corresponding amount and interest as provided above, such corresponding
amount so repaid shall constitute such Lender’s Advance as part of such
Borrowing for purposes of this Agreement even though not made on the same day as
the other Advances comprising such Borrowing.

 

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Section 2.5                                    Prepayments.

 

(a)                                 Right to Prepay; Ratable Prepayment.  The
Borrower shall have no right to prepay any principal amount of any Advance
except as provided in this Section 2.5 and all notices given pursuant to this
Section 2.5 shall be irrevocable and binding upon the Borrower.  Each payment of
any Advance pursuant to this Section 2.5 shall be made in a manner such that all
Advances comprising part of the same Borrowing are paid in whole or ratably in
part.

 

(b)                                 Optional and Mandatory.  The Borrower
(i) may elect to prepay any of the Advances without penalty or premium except as
set forth in the proviso to this sentence and in Section 2.10 and after giving
by 10:00 a.m. (Denver, Colorado time) (x) in the case of Eurodollar Advances, at
least three Business Days’ or (y) in case of Base Rate Advances, one Business
Day’s prior written notice to the Administrative Agent stating the proposed date
and aggregate principal amount of such prepayment; and (ii) in the event of the
sale of Permitted Notes, shall make a mandatory prepayment of outstanding
Advances as provided in Section 6.1(i)(vii) without penalty or premium except as
provided in the proviso to this sentence and in Section 2.10, provided, that
notwithstanding the foregoing, any prepayment made on or after the first
anniversary of the Closing Date but before the second anniversary of the Closing
Date shall be accompanied by a premium of 2% of the principal amount prepaid and
any prepayment made on or after the second anniversary of the Closing Date but
before the third anniversary of the Closing Date shall be accompanied by a
premium of 1% of the principal amount prepaid.  If any such notice is given, the
Borrower shall prepay Advances comprising part of the same Borrowing in whole or
ratably in part in an aggregate principal amount equal to the amount specified
in such notice, together with accrued interest to the date of such prepayment on
the principal amount prepaid and amounts, if any, required to be paid pursuant
to Section 2.10 as a result of such prepayment being made on such date; provided
that (A) each optional prepayment of Eurodollar Advances shall be in a minimum
amount not less than $1,000,000 and in multiple integrals of $500,000 in excess
thereof and (B) each optional prepayment of Base Rate Advances shall be in a
minimum amount not less than $500,000 and in multiple integrals of $100,000 in
excess thereof.

 

(c)                                  Illegality.  If any Lender shall notify the
Administrative Agent and the Borrower that any Change in Law makes it unlawful,
or that any central bank or other Governmental Authority asserts that it is
unlawful for such Lender or its Lending Office to perform its obligations under
this Agreement to maintain any Eurodollar Advances of such Lender then
outstanding hereunder, (i) the Borrower shall, no later than 10:00 a.m. 
(Denver, Colorado time) / 9:00 a.m. (Los Angeles, California time) (A) if not
prohibited by law, on the last day of the Interest Period for each outstanding
Eurodollar Advance made by such Lender or (B) if required by such notice, on the
second Business Day following its receipt of such notice, prepay all of the
Eurodollar Advances made by such Lender then outstanding, together with accrued
interest on the principal amount prepaid to the date of such prepayment and
amounts, if any, required to be paid pursuant to Section 2.10 as a result of
such prepayment being made on such date, (ii) such Lender shall simultaneously
make a Base Rate Advance to the Borrower on such date in an amount equal to the
aggregate principal amount of the Eurodollar Advances prepaid to such Lender,
and (iii) the right of the Borrower to select Eurodollar Advances from such
Lender for any subsequent Borrowing shall be suspended until such Lender gives
notice referred to above shall notify the Administrative Agent that the
circumstances causing such suspension no longer exist.

 

(d)                                 No Additional Right; Ratable Prepayment. 
The Borrower shall have no right to prepay any principal amount of any Advance
except as provided in this Section 2.5, and all notices given pursuant to this
Section 2.5 shall be irrevocable and binding upon the Borrower.  Except as
provided in the preceding sentence, each payment of any Advance pursuant to this
Section 2.5 shall be made in a manner such that all Advances comprising part of
the same Borrowing are paid in whole or ratably in part.

 

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(e)                                  Interest; Costs.  Each prepayment pursuant
to this Section 2.5 shall be accompanied by accrued interest on the amount
prepaid to the date of such prepayment and amounts, if any, required to be paid
pursuant to Section 2.10 as a result of such prepayment being made on such date.

 

Section 2.6                                    Repayment.  The Borrower shall
pay to the Administrative Agent for the ratable benefit of each Lender the
aggregate outstanding principal amount of the Advances on the Maturity Date.

 

Section 2.7                                    Fees.  The Borrower agrees to pay
the fees to the Administrative Agent as set forth in the Engagement Letter.

 

Section 2.8                                    Interest.

 

(a)                                 Base Rate Advances.  Each Base Rate Advance
shall bear interest at the Adjusted Base Rate in effect from time to time plus
the Applicable Margin for Base Rate Advances for such period.  The Borrower
shall pay to Administrative Agent for the ratable account of each Lender all
accrued but unpaid interest on such Lender’s Base Rate Advances on each
March 31, June 30, September 30, and December 31 commencing on June 30, 2014,
and on the Maturity Date.

 

(b)                                 Eurodollar Advances.  Each Eurodollar
Advance shall bear interest during its Interest Period equal to at all times the
Eurodollar Rate for such Interest Period plus the Applicable Margin for
Eurodollar Advances for such period.  The Borrower shall pay to the
Administrative Agent for the ratable account of each Lender all accrued but
unpaid interest on each of such Lender’s Eurodollar Advances on the last day of
the Interest Period therefor (provided that for Eurodollar Advances with
Interest Periods of six months or more, accrued but unpaid interest shall also
be due on the day three months from the first day of such Interest Period), on
the date any Eurodollar Advance is repaid, and on the Maturity Date.

 

(c)                                  Default Rate.  Notwithstanding the
foregoing, upon the occurrence and during the continuance of an Event of
Default, all overdue amounts shall bear interest, after as well as before
judgment, at the Default Rate.  Interest accrued pursuant to this
Section 2.8(c) and all interest accrued but unpaid on or after the Maturity Date
shall be due and payable on demand.

 

Section 2.9                                    Illegality.  If any Lender shall
notify the Borrower that the introduction of or any Change in Law makes it
unlawful, or that any central bank or other Governmental Authority asserts that
it is unlawful, for such Lender or its applicable Lending Office to perform its
obligations under this Agreement to make, maintain, or fund any Eurodollar
Advances of such Lender then outstanding hereunder, (a) the Borrower shall, no
later than 10:00 a.m. (Denver, Colorado time) (i) if not prohibited by law, on
the last day of the Interest Period for each outstanding Eurodollar Advance or
(ii) if required by such notice, on the second Business Day following its
receipt of such notice, prepay all of the Eurodollar Advances of such Lender
then outstanding, together with accrued interest on the principal amount prepaid
to the date of such prepayment and amounts, if any, required to be paid pursuant
to Section 2.10 as a result of such prepayment being made on such date, (b) such
Lender shall simultaneously make a Base Rate Advance to the Borrower on such
date in an amount equal to the aggregate principal amount of the Eurodollar
Advances prepaid to such Lender, and (c) the right of the Borrower to select
Eurodollar Advances from such Lender for any subsequent Borrowing shall be
suspended until such Lender shall notify the Borrower that the circumstances
causing such suspension no longer exist.  Each Lender agrees to use commercially
reasonable efforts (consistent with its internal policies and legal and
regulatory restrictions) to designate a different Lending Office if the making
of such designation would avoid the effect of this paragraph and would not, in
the reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender.

 

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Section 2.10                             Breakage Costs.  Upon demand of any
Lender (with a copy to the Administrative Agent) from time to time, the Borrower
shall promptly compensate such Lender for and hold such Lender harmless from any
loss, cost or expense incurred by it as a result of:

 

(a)                                 any continuation, conversion, payment or
prepayment of any Advance other than a Base Rate Advance on a day other than the
last day of the Interest Period for such Advance (whether voluntary, mandatory,
automatic, by reason of acceleration, or otherwise);

 

(b)                                 any failure by the Borrower (for a reason
other than the failure of such Lender to make an Advance) to prepay, borrow,
continue or Convert any Advance other than a Base Rate Advance on the date or in
the amount notified by the Borrower; or

 

(c)                                  any assignment of an Eurodollar Advance on
a day other than the last day of the Interest Period therefor as a result of a
request by the Borrower pursuant to Section 2.14;

 

including any foreign exchange losses and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Advance,
from fees payable to terminate the deposits from which such funds were obtained
or from the performance of any foreign exchange contract.  The Borrower shall
also pay any customary administrative fees charged by such Lender in connection
with the foregoing.  For purposes of calculating amounts payable by the Borrower
to the Lenders under this Section 2.10, the requesting Lender shall be deemed to
have funded the Eurodollar Advances made by it at the Eurodollar Base Rate used
in determining the Eurodollar Rate for such Advance by a matching deposit or
other borrowing in the offshore interbank market for Dollars for a comparable
amount and for a comparable period, whether or not such Eurodollar Advance was
in fact so funded.

 

Section 2.11                             Increased Costs.

 

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

 

(i)                                     impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement (other than by way
of imposition or increase of reserve requirements included in the Eurodollar
Rate Reserve Percentage) relating to any extensions of credit or other assets
of, or any deposits with or other liabilities or commitments of, financial
institutions generally, including any Lender (or its applicable Lending Office),
including the Commitments of such Lender hereunder; or

 

(ii)                                  impose on financial institutions
generally, including such Lender (or its applicable Lending Office), or on the
London interbank market any other condition affecting this Agreement or its
Notes or any of such extensions of credit or liabilities or commitments;

 

and the result of any of the foregoing is to increase the cost to such Lender
(or its applicable Lending Office) of making, Converting into, continuing, or
maintaining any Eurodollar Advances or to reduce any sum received or receivable
by such Lender (or its applicable Lending Office) under this Agreement or its
Notes with respect to any Eurodollar Advances, then the Borrower shall pay to
such Lender within three Business Days after written demand made by such Lender
such amount or amounts as such Lender determines in good faith to be necessary
to compensate such Lender for such increased cost or reduction.

 

(b)                                 Capital Adequacy.  If, after the Effective
Date, any Lender shall have determined 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 the capital of financial institutions generally,
including such Lender or any corporation

 

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controlling such Lender, as a consequence of such Lender’s obligations
hereunder, to a level below that which such Lender or such corporation could
have achieved but for such Change in Law (taking into consideration its policies
with respect to capital adequacy), then from time to time within three Business
Days after written demand by such Lender, the Borrower shall pay to such Lender
such additional amount or amounts as such Lender determines in good faith to be
necessary to compensate such Lender for such reduction.

 

(c)                                  Mitigation.  Each Lender shall promptly
notify the Borrower and the Administrative Agent of any event of which it has
knowledge, occurring after the Effective Date, which will entitle such Lender to
compensation pursuant to this Section 2.11 and will designate a different
Lending Office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the reasonable judgment of such Lender,
be otherwise disadvantageous to it.  Any Lender claiming compensation under this
Section 2.11 shall furnish to the Borrower and the Administrative Agent a
statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be determined by such Lender in good faith and which shall
be conclusive in the absence of manifest error.  In determining such amount,
such Lender may use any reasonable averaging and attribution methods.

 

(d)                                 Delay in Requests.  Failure or delay on the
part of any Lender to demand compensation pursuant to this Section 2.11 shall
not constitute a waiver of such Lender’s right to demand such compensation,
provided that the Borrower shall not be required to compensate a Lender pursuant
to this Section 2.11 for any increased costs incurred or reductions suffered
more than 180 days prior to the date that such Lender notifies the Borrower and
the Administrative Agent 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 180-day period referred to above shall be
extended to include the period of retroactive effect thereof).

 

Section 2.12                             Payments and Computations.

 

(a)                                 Payments.  All payments of principal,
interest, and other amounts to be made by the Borrower under this Agreement and
other Credit Documents shall be made to the Administrative Agent in Dollars and
in immediately available funds, without setoff, deduction, or counterclaim.

 

(b)                                 Payment Procedures. The Borrower shall make
each payment under this Agreement and under the Notes not later than 10:00 a.m.
(Denver, Colorado time) on the day when due in Dollars to the Administrative
Agent at the location referred to in the Notes (or such other location as the
Administrative Agent shall designate in writing to the Borrower) in same day
funds.  The Administrative Agent will promptly thereafter, and in any event
prior to the close of business on the day any timely payment is made, cause to
be distributed like funds relating to the payment of principal, interest or fees
ratably (other than amounts payable solely to the Administrative Agent or a
specific Lender pursuant to Sections 2.9, 2.10, 2.11, 2.13, 2.14, and 9.2 and
such other provisions herein which expressly provide for payments to a specific
Lender, but after taking into account payments effected pursuant to Section 9.1)
in accordance with each Lender’s applicable pro rata share to the Lenders for
the account of their respective applicable Lending Offices, and like funds
relating to the payment of any other amount payable to any Lender to such Lender
for the account of its applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement.  Upon receipt of other amounts due
solely to the Administrative Agent or a specific Lender, the Administrative
Agent shall distribute such amounts to the appropriate party to be applied in
accordance with the terms of this Agreement.

 

(c)                                  Non-Business Day Payments.  Whenever any
payment shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest or
fees, as the

 

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case may be; provided that if such extension would cause payment of interest on
or principal of Eurodollar Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.

 

(d)                                 Computations.  All computations of interest
for Base Rate Advances shall be made by the Administrative Agent on the basis of
a year of 365/366 days and all computations of all other interest and fees shall
be made by the Administrative Agent on the basis of a year of 360 days, in each
case for the actual number of days (including the first day, but excluding the
last day) occurring in the period for which such interest or fees are payable. 
Each determination by the Administrative Agent of an amount of interest or fees
shall be conclusive and binding for all purposes, absent manifest error.

 

(e)                                  Sharing of Payments, Etc.  If any Lender
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) on account of the Advances made by it in
excess of its ratable share of payments on account of the Advances obtained by
the other Lenders, such Lender shall notify the other Lenders and forthwith
purchase from the other Lenders participations in the Advances made by it as
shall be necessary to cause such purchasing Lender to share the excess payment
ratably with the other Lenders; provided that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender, such
purchase from the other Lenders shall be rescinded and each such Lender shall
repay to the purchasing Lender the purchase price to the extent of such Lender’s
ratable share, but without interest.  The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this
Section 2.12(e) may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.  The provisions of this
Section 2.12(e) shall not be construed to apply to any payment made by the
Borrower pursuant to and in accordance with the express terms of this Agreement
or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Advances to any assignee or participant,
other than to the Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this Section 2.12(e) shall apply).

 

Section 2.13                             Taxes.

 

(a)                                 No Deduction for Certain Taxes.  Any and all
payments by any Credit Party under any of the Credit Documents to the
Administrative Agent or a Lender shall be made, in accordance with Section 2.12,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges, or withholdings, and all liabilities with
respect thereto, excluding, in the case of the Administrative Agent or a Lender,
(i) taxes imposed on its income and franchise (or margin) taxes imposed on it by
the jurisdiction (or any political subdivision thereof) under (A) the laws of
which (or under the laws of a political subdivision of which) the Administrative
Agent or such Lender is organized or in which its principal executive office is
located, and (B) in the case of each Lender, the laws of which (or under the
laws of a political subdivision of which) such Lender’s applicable Lending
Office is located; (ii) any taxes imposed by the United States of America by
means of withholding at the source, if and to the extent such United States
withholding taxes are in effect on the date a Lender becomes a Lender hereunder
and (iii) any taxes imposed by the United States of America by means of
withholding at the source under FATCA (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings, and liabilities being hereinafter
referred to as “Taxes”).  Except as provided in Section 2.13(f), if the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable to the Administrative Agent or any Lender, (i) the sum payable shall be
increased as may be necessary so that, after making all required deductions
(including deductions applicable to additional sums payable under this
Section 2.13), such Lender receives an amount equal to the sum it would have
received had no such deductions been made; (ii) the Borrower shall make such
deductions; and (iii) the Borrower shall pay the

 

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full amount deducted to the relevant Governmental Authority or other authority
in accordance with applicable law.

 

(b)                                 Other Taxes.  In addition, except as
provided in Section 2.13(f), the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges, or
similar levies which arise from any payment made under any Credit Document or
from the execution, delivery, or registration of, or otherwise with respect to,
this Agreement, the Notes, or the other Credit Documents (hereinafter referred
to as “Other Taxes”).

 

(c)                                  Indemnification.  EXCEPT AS PROVIDED IN
SECTION 2.13(F), THE BORROWER INDEMNIFIES EACH LENDER AND THE ADMINISTRATIVE
AGENT FOR THE FULL AMOUNT OF TAXES OR OTHER TAXES (INCLUDING, WITHOUT
LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED ON AMOUNTS PAYABLE UNDER THIS
SECTION 2.13) PAID BY SUCH LENDER OR THE ADMINISTRATIVE AGENT (AS THE CASE
MAY BE) AND ANY LIABILITY (INCLUDING INTEREST AND EXPENSES) ARISING THEREFROM OR
WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR
LEGALLY ASSERTED.

 

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

 

(e)                                  Foreign Lender Withholding Exemption.  Each
Lender that is not incorporated under the laws of the United States of America
or a state thereof and that is entitled to an exemption from United States
withholding tax with respect to payments under this Agreement under applicable
law or any treaty to which the United States is a party shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law, such properly completed and executed documentation
(including Internal Revenue Service Forms W-8BEN or W-8ECI) prescribed by
applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding. In addition, if a payment made to such
a Lender under any Credit 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 the preceding sentence,
“FATCA” shall include any amendments made to FATCA after the date of this
Agreement.

 

(f)                                   Failure to Provide Forms.  For any period
with respect to which a Lender has failed to provide the Borrower or the
Administrative Agent with the appropriate forms referred to in this
Section 2.13(e) (unless such failure is due to a change in treaty, law or
regulation occurring after the date on which such Lender becomes a Lender
hereunder), such Lender shall not be entitled to indemnification or payment
under Section 2.13(a), (b), or (c) with respect to Taxes imposed by the United
States; provided that if a Lender, that is otherwise exempt from or subject to a
reduced rate of withholding tax, becomes subject to Taxes because of its failure
to deliver a form required under Section 2.13(e), the

 

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Borrower shall take such steps as such Lender shall reasonably request, and at
the expense of such Lender, to assist such Lender to recover such Taxes.

 

(g)                                  Mitigation.  Each Lender shall use
reasonable efforts (consistent with its internal policies and legal and
regulatory restrictions) to select a jurisdiction for its applicable Lending
Office or change the jurisdiction of its applicable Lending Office, as the case
may be, so as to avoid the imposition of any Taxes or Other Taxes or to
eliminate or reduce the payment of any additional sums under this Section 2.13;
provided, that no such selection or change of jurisdiction for its applicable
Lending Office shall be made if, in the reasonable judgment of such Lender, such
selection or change would be disadvantageous to such Lender.

 

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

 

(i)                                     Payment.  If the Administrative Agent or
any Lender becomes entitled to receive payment of Taxes, Other Taxes or
additional sums pursuant to this Section, it shall give notice and demand
thereof to the Borrower, and the Borrower (unless the Administrative Agent or
Lender shall withdraw such notice and demand or the Borrower is not obligated to
pay such amounts) shall pay such Taxes, Other Taxes or additional sums within 30
days after the Borrower’s receipt of such notice and demand.

 

Section 2.14                             Replacement of Lenders.  If (a) the
Borrower is required pursuant to Section 2.11 or 2.13 to make any additional
payment to any Lender, (b) any Lender’s obligation to make or continue, or to
Convert Base Rate Advances into, Eurodollar Advances shall be suspended pursuant
to Section 2.4(c)(iii) or 2.9, or (c) any Lender is a Non-Consenting Lender (a
“Subject Lender”), then the Borrower may, upon notice to the Subject Lender and
the Administrative Agent and at the Borrower’s sole cost and expense, require
such Subject Lender to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in, and consents required by,
Section 9.7), all of its interests, rights and obligations under this Agreement
and the related Credit Documents to an Eligible Assignee that shall assume such
obligations (which Eligible Assignee may be another Lender, if a Lender accepts
such assignment), provided that, in any event:

 

(A)                               as to assignments required by the Borrower,
the Borrower shall have paid to the Administrative Agent the assignment fee
specified in Section 9.7;

 

(B)                               such Subject Lender shall have received
payment of an amount equal to the outstanding principal of its applicable
Advances, accrued interest thereon, accrued fees and all other amounts payable
to it hereunder and under the other Credit Documents (including any

 

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amounts under Section 2.10) 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 2.13, such assignment will result in
a reduction in such compensation or payments thereafter; and

 

(D)                               such assignment does not conflict with
applicable Legal Requirements.

 

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 or the Administrative Agent to require such
assignment and delegation cease to apply.

 

ARTICLE 3
CONDITIONS OF LENDING

 

Section 3.1                                    Conditions Precedent to
Borrowing.  The obligations of each Lender to make its Advance pursuant to
Section 2.1(a) shall be subject to the conditions precedent that:

 

(a)                                 Documentation.  The Administrative Agent
shall have received the following, duly executed by all the parties thereto, in
form and substance reasonably satisfactory to the Administrative Agent and the
Lenders:

 

(i)                                     this Agreement and all attached Exhibits
and Schedules and the Notes, if requested by the applicable Lenders, payable to
each applicable Lender or its registered assigns;

 

(ii)                                  the Guaranty executed by all Subsidiaries
of the Borrower existing on the Closing Date;

 

(iii)                               the Security Agreement executed by each
Credit Party, together with appropriate UCC-1 financing statements, if any,
necessary or desirable for filing with the appropriate authorities and any other
documents, agreements, or instruments necessary to create, perfect or maintain
an Acceptable Security Interest in the Collateral described in the Security
Agreement;

 

(iv)                              the Mortgages encumbering at least 80% by
value of the Credit Parties’ Proven Reserves described in the initial
Independent Engineer’s Report;

 

(v)                                 certificates of insurance naming the
Administrative Agent as loss payee with respect to property insurance, or
additional insured with respect to liability insurance, and covering the
Borrower’s or its Subsidiaries Properties with such insurance carriers, for such
amounts and covering such risks that are acceptable to the Administrative Agent;

 

(vi)                              a certificate from an authorized officer of
the Borrower dated as of the Effective Date stating that as of such date (A) all
representations and warranties of the Borrower set forth in this Agreement are
true and correct in all material respects (except that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof) on such
date, except that any representation and warranty which by its terms is made as
of a specified date shall be required to be true and correct only as of such
specified date, (B) no Default has occurred and is continuing, and (C) all
conditions precedent set forth in this Section 3.1 have been met.

 

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(vii)                           a secretary’s certificate from each Credit Party
certifying such Person’s (A) officers’ incumbency, (B) authorizing resolutions,
(C) organizational documents, and (D) governmental approvals, if any, with
respect to the Credit Documents to which such Person is a party;

 

(viii)                        certificates of good standing for each Credit
Party in each state in which each such Person is organized or qualified to do
business, which certificate shall be (A) dated a date not earlier than 30 days
prior to Effective Date or (B) otherwise effective on the Closing Date;

 

(ix)                              a legal opinion of Vinson & Elkins L.L.P. as
outside counsel to the Credit Parties, in form and substance reasonably
acceptable to the Administrative Agent;

 

(x)                                 a legal opinion of Davis Graham & Stubbs as
local Colorado counsel to the Credit Parties, in form and substance reasonably
acceptable to the Administrative Agent;

 

(xi)                              a legal opinion of Beatty & Wozniak, P.C. as
local North Dakota counsel to the Credit Parties, in form and substance
reasonably acceptable to the Administrative Agent;

 

(xii)                           the initial Independent Engineer’s Report dated
effective as of a date acceptable to the Administrative Agent;

 

(xiii)                        a certificate from the Borrower certifying a copy
of each of the First Lien Credit Agreement and the Management Agreement,
including any amendments, modifications or side letters with respect thereto, as
in full force and effect as of the Closing Date;

 

(xiv)                       the Pledge Agreement executed by the Borrower,
together with any pledged stock or membership interest certificates and
instruments of transfer in form and substance acceptable to the Administrative
Agent and granting the Administrative Agent an Acceptable Security Interest in
such certificated Equity Interests; and

 

(xv)                          such other documents, governmental certificates,
agreements, and lien searches as the Administrative Agent or any Lender may
reasonably request.

 

(b)                                 Consents; Authorization; Conflicts.  The
Borrower shall have received any consents, licenses and approvals required in
accordance with applicable law, or in accordance with any document, agreement,
instrument or arrangement to which the Borrower or any Subsidiary is a party, in
connection with the execution, delivery, performance, validity and
enforceability of this Agreement and the other Credit Documents.  In addition,
the Borrower and the Subsidiaries shall have all such material consents,
licenses and approvals required in connection with the continued operation of
the Borrower and the Subsidiaries, and such approvals shall be in full force and
effect, and all applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on this Agreement and the actions
contemplated hereby.

 

(c)                                  Representations and Warranties.  The
representations and warranties contained in Article 4 and in each other Credit
Document shall be true and correct in all material respects (except to the
extent that such representation or warranty is qualified by materiality, in
which case such representation or warranty shall be true and correct in all
respects) on and as of the Closing Date before and after giving effect to the
Borrowings and to the application of the proceeds from such Borrowing, as though
made on and as of such date.

 

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(d)                                 Engagement Letter.  The Borrower shall have
executed and delivered the Engagement Letter.

 

(e)                                  Other Proceedings.  No action, suit,
investigation or other proceeding (including without limitation, the enactment
or promulgation of a statute or rule) by or before any arbitrator or any
Governmental Authority shall be threatened or pending and no preliminary or
permanent injunction or order by a state or federal court shall have been
entered (i) in connection with this Agreement, any other credit agreement, or
any transaction contemplated hereby or thereby or (ii) which in the judgment of
the Administrative Agent could reasonably be expected to result in a Material
Adverse Change.

 

(f)                                   Other Reports.  The Administrative Agent
shall have received, in form and substance reasonably satisfactory to it, all
environmental reports (including all available (i) Phase I Environmental Site
Assessment Reports and (ii) Phase II Environmental Site Assessment Reports), and
such other reports, audits or certifications as it may reasonably request.

 

(g)                                  Material Adverse Change.  Since January 31,
2014, there shall not have occurred any event, development or circumstance that
has or could reasonably be expected to result in a Material Adverse Change.

 

(h)                                 No Default.  No Default shall have occurred
and be continuing.

 

(i)                                     Solvency.  The Administrative Agent
shall have received a certificate in form and substance reasonably satisfactory
to the Administrative Agent from a senior financial officer or such other
officer acceptable to the Administrative Agent of the Borrower and each
Guarantor certifying that, before and after giving effect to the Borrowings made
hereunder on the Closing Date, the Borrower and its Subsidiaries are Solvent
(assuming with respect to each Guarantor, that the fraudulent conveyance savings
language contained in the Guaranty applicable to such Guarantor will be given
full effect).

 

(j)                                    Delivery of Financial Statements.  The
Administrative Agent shall have received true and correct copies of
(i) satisfactory consolidated financial statements for the Borrower and its
Subsidiaries for the fiscal year 2013, and interim unaudited financial
statements for the Borrower and its Subsidiaries for each fiscal quarter ended
since the last audited financial statements, and (ii) projections prepared by
management of balance sheets, income statements and cashflow statements of the
Borrower and its Subsidiaries, covering the first full year after the Closing
Date, on a quarterly basis.

 

(k)                                 Title.  The Administrative Agent shall be
satisfied in its sole discretion with the title to the Oil and Gas Properties
included in the Borrowing Base and that such Oil and Gas Properties constitute
at least 80% of the present value of the Proven Reserves of the Credit Parties
as determined by the Administrative Agent in its sole discretion.

 

(l)                                     Minimum Liquidity.  The Borrowing Base
under the First Lien Credit Agreement shall be at least $355,000,000.  Such
Borrowing Base shall comply with the First Lien Agent’s normal and customary
standards and practices for valuing and determining the value of oil and gas
properties in connection with conforming reserve-based oil and gas borrowing
base loan transactions.

 

(m)                            Notices of Borrowing.  The Administrative Agent
shall have received Notices of Borrowing from the Borrower, with appropriate
insertions and executed by a duly appointed Responsible Officer of the Borrower.

 

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(n)                                 USA Patriot Act.  The Administrative Agent
shall have received all documentation and other information that is required by
regulatory authorities under applicable “know your customer” and
anti-money-laundering rules and regulations, including, without limitation, the
Patriot Act.

 

(o)                                 Capital Structure.  The capital and
ownership structure and the equityholder arrangements of the Borrower and its
Subsidiaries (and all agreements relating thereto) will be reasonably
satisfactory to the Administrative Agent.

 

(p)                                 Due Diligence.  The Administrative Agent
shall have completed and be satisfied in its sole discretion with the corporate
(or other organizational), environmental and financial due diligence of the
Credit Parties and its Affiliates.

 

(q)                                 Liens.  The Administrative Agent shall have
received evidence satisfactory to it that there are no Liens encumbering (i) any
of the Credit Parties’ respective Property other than Permitted Liens, and
(ii) the Equity Interests in the Borrower.

 

(r)                                    Payment of Fees.  The Borrower shall have
paid the fees and expenses required to be paid as of the Closing Date by
Sections 2.7(d) and 9.1 or any other provision of a Credit Document.

 

(s)                                  Commodity Hedges.  The Administrative Agent
shall be satisfied in its sole discretion with the Credit Parties’ Hedging
Arrangements.

 

Section 3.2                                    Additional Conditions Precedent
to Each Advance.  The obligation of each Lender to make its Advance on the
occasion of the Borrowing shall be subject to the further conditions precedent
that on the date of such Borrowing:

 

(a)                                 Representations and Warranties.  As of the
date of the making of any Advance, the representations and warranties made by
each Credit Party or any officer or employee of any Credit Party contained in
the Credit Documents shall be true and correct in all material respects (except
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof) on such date, except that any representation and warranty which by its
terms is made as of a specified date shall be required to be true and correct
only as of such specified date and each request for the making of any Advance
and the making of such Advance shall be deemed to be a reaffirmation of such
representations and warranties.  Each of:  (i) the giving of the applicable
Notice of Borrowing and (ii) the acceptance by the Borrower of the proceeds of
such Borrowing shall constitute a representation and warranty by the Borrower
that on the date of such Borrowing that the foregoing condition precedent has
been met.

 

(b)                                 Event of Default.  As of the date of the
making of any Advance, no Default or Event of Default shall exist, and the
making of such Advance would not cause a Default or Event of Default.  Each of: 
(i) the giving of the applicable Notice of Borrowing and (ii) the acceptance by
the Borrower of the proceeds of such Borrowing shall constitute a representation
and warranty by the Borrower that on the date of such Borrowing that the
foregoing condition precedent has been met.

 

Section 3.3                                    Determinations Under
Sections 3.1, and 3.2.  For purposes of determining compliance with the
conditions specified in Sections 3.1 and 3.2 each Lender shall be deemed to have
consented to, approved or accepted or to be satisfied with each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to the Lenders unless an officer of the Administrative Agent
responsible for the transactions contemplated by the Credit Documents shall have
received written notice from such Lender prior to the Borrowing hereunder
specifying its objection

 

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thereto and such Lender shall not have made available to the Administrative
Agent such Lender’s ratable portion of such Borrowing.

 

ARTICLE 4
REPRESENTATIONS AND WARRANTIES

 

Each Credit Party hereto represents and warrants as follows:

 

Section 4.1                                    Organization.  Each Credit Party
is duly and validly organized and existing and in good standing under the laws
of its jurisdiction of incorporation or formation.  Each Credit Party is
authorized to do business and is in good standing in all jurisdictions in which
such qualifications or authorizations are necessary except where the failure to
be so qualified or authorized could not reasonably be expected to result in a
Material Adverse Change.  As of the Effective Date, each Credit Party’s type of
organization and jurisdiction of incorporation or formation are set forth on
Schedule 4.1.

 

Section 4.2                                    Authorization.  The execution,
delivery, and performance by each Credit Party of each Credit Document to which
such Credit Party is a party and the consummation of the transactions
contemplated thereby (a) are within such Credit Party’s powers, (b) have been
duly authorized by all necessary corporate, limited liability company or
partnership action, (c) do not contravene any articles or certificate of
incorporation or bylaws, partnership or limited liability company agreement
binding on or affecting such Credit Party, (d) do not contravene any law or any
contractual restriction binding on or affecting such Credit Party except where
such contravention could not reasonably be expected to result in a Material
Adverse Change, (e) do not result in or require the creation or imposition of
any Lien prohibited by this Agreement, and (f) do not require any authorization
or approval or other action by, or any notice or filing with, any Governmental
Authority other than those that have been obtained.  At the time of each
Advance, such Advance and the use of the proceeds of such Advance are within the
Borrower’s corporate powers, have been duly authorized by all necessary action
and do not contravene (i) the Borrower’s certificate of incorporation or
by-laws, or (ii) any Legal Requirement or any contractual restriction binding on
or affecting the Borrower, will not result in or require the creation or
imposition of any Lien prohibited by this Agreement, and do not require any
authorization or approval or other action by, or any notice or filing with, any
Governmental Authority other than those that have been obtained or provided.

 

Section 4.3                                    Enforceability.  The Credit
Documents have each been duly executed and delivered by each Credit Party that
is a party thereto and each Credit Document constitutes the legal, valid, and
binding obligation of each Credit Party that is a party thereto enforceable
against such Credit Party in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
at the time in effect affecting the rights of creditors generally and by general
principles of equity whether applied by a court of law or equity.

 

Section 4.4                                    Financial Condition.

 

(a)                                The Borrower has delivered to the
Administrative Agent audited consolidated financial statements for the Parent
and its Subsidiaries dated as of January 31, 2013, for the fiscal year ended
thereon.  The financial statements referred to in the preceding sentence fairly
present, in all material respects, the financial condition of the Parent, the
Borrower and its Subsidiaries on the date thereof and the results of their
operations and cash flows for the periods then ended, have been prepared in
accordance with GAAP and do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.  As of the date of the aforementioned financial statements, there
were no material contingent obligations, liabilities for taxes, unusual forward
or long-term

 

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commitments, or unrealized or anticipated losses of the applicable Persons,
except as disclosed therein and adequate reserves for such items have been made
in accordance with GAAP.

 

(b)                                 Since the Closing Date, after giving pro
forma effect to all Advances made hereunder on the Closing Date, no event or
condition has occurred that could reasonably be expected to result in a Material
Adverse Change.

 

Section 4.5                                    Title; Ownership and Liens; Real
Property.  Each Credit Party (a) has good and defensible title to all of its Oil
and Gas Properties in all material respects, free and clear of all Liens except
for Permitted Liens, and (b) has good and indefeasible title to all of its other
material Properties, free and clear of all Liens except for Permitted Liens.
None of the Property owned by a Credit Party is subject to any Lien except
Permitted Liens.

 

Section 4.6                                    True and Complete Disclosure. 
All written factual information (whether delivered before or after the date of
this Agreement) prepared by or on behalf of the Borrower and its Subsidiaries
and furnished to the Administrative Agent or the Lenders for purposes of or in
connection with this Agreement, any other Credit Document or any transaction
contemplated hereby or thereby does not contain any material misstatement of
fact or omits to state any material fact necessary to make the statements
therein not misleading.  There is no fact known to any officer of any Credit
Party on the date of this Agreement that has not been disclosed to the
Administrative Agent that could reasonably be expected to result in a Material
Adverse Change.  All projections, estimates, budgets, and pro forma financial
information furnished by or on behalf of any Credit Party, were prepared on the
basis of assumptions, data, information, tests, or conditions (including current
and reasonably foreseeable business conditions) believed to be reasonable at the
time such projections, estimates, and pro forma financial information were
furnished.

 

Section 4.7                                    Litigation.  There are no
actions, suits, or proceedings pending or, to any Credit Party’s knowledge,
threatened against any Credit Party, at law, in equity, or in admiralty, or by
or before any Governmental Authority, which could reasonably be expected to
result in a Material Adverse Change.  Additionally, except as disclosed in
writing to the Administrative Agent and the Lenders, there is no pending or, to
the knowledge of any Credit Party, threatened action or proceeding instituted
against any Credit Party which seeks to adjudicate any Credit Party as bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any substantial part of its
Property.

 

Section 4.8                                    Compliance with Agreements.

 

(a)                                 No Credit Party is a party to any indenture,
loan or credit agreement or any lease or any other types of agreement or
instrument or subject to any charter or corporate restriction or provision of
applicable law or governmental regulation the performance of or compliance with
which could reasonably be expected to cause a Material Adverse Change.  No
Credit Party is in default under or with respect to any contract, agreement,
lease or any other types of agreement or instrument to which any Credit Party is
a party and which could reasonably be expected to cause a Material Adverse
Change.  To the best knowledge of the Credit Parties, no Credit Party is in
default under, or has received a notice of default under, any contract,
agreement, lease or any other document or instrument to which the Borrower or
its Subsidiaries is a party which is continuing and which, if not cured, could
reasonably be expected to cause a Material Adverse Change.

 

(b)                                 No Default has occurred and is continuing.

 

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Section 4.9                                    Pension Plans.  (a) Except for
matters that could not reasonably be expected to result in a Material Adverse
Change, all Plans are in compliance with all applicable provisions of ERISA,
(b) no Termination Event has occurred with respect to any Plan that would result
in an Event of Default under Section 7.1(i), and, except for matters that could
not reasonably be expected to result in a Material Adverse Change, each Plan has
complied with and been administered in accordance with applicable provisions of
ERISA and the Code, (c) no “accumulated funding deficiency” (as defined in
Section 302 of ERISA) has occurred with respect to any Plan, and for plan years
after December 31, 2007, no unpaid minimum required contribution exists with
respect to any Plan, and there has been no excise tax imposed under Section 4971
of the Code with respect to any Plan, (d) the present value of all benefits
vested under each Plan (based on the assumptions used to fund such Plan) did
not, as of the last annual valuation date applicable thereto, exceed the value
of the assets of such Plan allocable to such vested benefits in an amount that
could reasonably be expected to result in a Material Adverse Change, (e) no
Credit Party nor any member of the Controlled Group has had a complete or
partial withdrawal from any Multiemployer Plan for which there is any
unsatisfied withdrawal liability that could reasonably be expected to result in
a Material Adverse Change or an Event of Default under Section 7.1(j), and
(f) except for matters that could not reasonably result in a Material Adverse
Change, as of the most recent valuation date applicable thereto, no Credit Party
nor any member of the Controlled Group would become subject to any liability
under ERISA if the Borrower or any Subsidiary has received notice that any
Multiemployer Plan is insolvent or in reorganization.  Based upon GAAP existing
as of the date of this Agreement and current factual circumstances, no Credit
Party has any reason to believe that the annual cost during the term of this
Agreement to the Borrower or any Subsidiary for post-retirement benefits to be
provided to the current and former employees of the Borrower or any Subsidiary
under Plans that are welfare benefit plans (as defined in Section 3(1) of ERISA)
could, in the aggregate, reasonably be expected to cause a Material Adverse
Change.

 

Section 4.10                             Environmental Condition.

 

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

 

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

 

(c)                                  Certain Actions.  Without limiting the
foregoing, (i) all necessary material notices have been properly filed, and no
further action is required under current applicable Environmental Law as to each
Response or other restoration or remedial project undertaken by the Borrower,
any of its Subsidiaries

 

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or any of the Borrower’s or such Subsidiary’s former Subsidiaries on any of
their presently or formerly owned or operated Property, except for (x) such
failure to properly file notices and (y) such failure to take further action
which, in each case (x) and (y), could not be reasonably expected to cause a
Material Adverse Change, and (ii) the present and, to the Credit Parties’ best
knowledge, future liability, if any, of the Borrower or of any Subsidiary which
could reasonably be expected to arise in connection with requirements under
Environmental Laws will not result in a Material Adverse Change.

 

Section 4.11                             Subsidiaries.  As of the Effective
Date, the Borrower has no Subsidiaries other than those listed on Schedule
4.11.  Each Subsidiary of the Borrower (including any such Subsidiary formed or
acquired subsequent to the Effective Date) has complied with the requirements of
Section 5.6.

 

Section 4.12                             Investment Company Act.  No Credit
Party is an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended. 
No Credit Party is subject to regulation under any Federal or state statute,
regulation or other Legal Requirement which limits its ability to incur Debt.

 

Section 4.13                             Taxes.  Proper and accurate (in all
material respects), federal, state, local and foreign tax returns, reports and
statements required to be filed (after giving effect to any extension granted in
the time for filing) by each Credit Party or any member of the Affiliated Group
as defined under Section 1504 of the Code (hereafter collectively called the
“Tax Group”) have been filed with the appropriate Governmental Authorities, and
all taxes (which are material in amount) and other impositions due and payable
have been timely paid prior to the date on which any fine, penalty, interest,
late charge or loss may be added thereto for non-payment thereof except where
contested in good faith by appropriate proceeding and for which adequate
reserves have been established in compliance with GAAP.  Neither the Borrower
nor any member of the Tax Group has given, or been requested to give, a waiver
of the statute of limitations relating to the payment of any federal, state,
local or foreign taxes or other impositions.  None of the Property owned by the
Borrower or any other member of the Tax Group is Property which the Borrower or
any member of the Tax Group is required to treat as being owned by any other
Person pursuant to the provisions of Section 168(f)(8) of the Code.  Proper and
accurate amounts have been withheld by the Borrower and all other members of the
Tax Group from their employees for all periods to comply in all material
respects with the tax, social security and unemployment withholding provisions
of applicable federal, state, local and foreign law.

 

Section 4.14                             Permits, Licenses, etc.  Each Credit
Party possesses all permits, licenses, patents, patent rights or licenses,
trademarks, trademark rights, trade names rights, and copyrights which are
material to the conduct of its business.  Each Credit Party manages and operates
its business in accordance with all applicable Legal Requirements except where
the failure to so manage or operate could not reasonably be expected to result
in a Material Adverse Change; provided that this Section 4.14 does not apply
with respect to Environmental Permits.

 

Section 4.15                             Use of Proceeds.  The proceeds of the
Advances will be used by the Borrower for the purposes described in
Section 6.6.  No Credit Party is engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U).  No proceeds of any Advance will be used to purchase or carry any
margin stock in violation of Regulation T, U or X.

 

Section 4.16                             Condition of Property; Casualties.  The
material Properties used or to be used in the continuing operations of Credit
Parties, are in good working order and condition, normal wear and tear
excepted.  Neither the business nor the Oil and Gas Properties or material
Properties of the Credit Parties has been affected as a result of any fire,
explosion, earthquake, flood, drought, windstorm, accident, strike or other
labor disturbance, embargo, requisition or taking of such Property or
cancellation of contracts, permits or concessions by a Governmental Authority,
riot, activities of armed forces or acts

 

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of God or of any public enemy. The Credit Parties own no real property (other
than Oil and Gas Properties) which either (x) is material to the operations of
the Credit Parties or (y) has a fair market value in excess of $2,000,000,
except as (a) is set forth on Schedule 4.16, (b) is disclosed on a schedule to
the Borrowing Base Certificate delivered pursuant to Section 5.2(c)(vi) of the
First Lien Credit Agreement, or (c) has been acquired since the delivery of the
previous Borrowing Base Certificate delivered pursuant to the First Lien Credit
Agreement.

 

Section 4.17                             Insurance.  Each of the Credit Parties
carries insurance (which may be carried by the Borrower on a consolidated basis)
with reputable insurers in respect of such of their respective Properties, in
such amounts and against such risks as is customarily maintained by other
Persons of similar size engaged in similar businesses.

 

Section 4.18                             Security Interest.  Each Credit Party
has authorized the filing of financing statements sufficient when filed to
perfect the Lien created by the Security Documents.  When such financing
statements are filed in the offices noted therein, the Administrative Agent will
have a valid and perfected security interest in all Collateral that is capable
of being perfected by filing financing statements.

 

Section 4.19                             OFAC; Anti-Terrorism.  No Credit Party
is in violation of any of the country or list based economic and trade sanctions
administered and enforced by OFAC.  No Credit Party (a) is a Sanctioned Person
or a Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or
(c) derives revenues from investments in, or transactions with Sanctioned
Persons or Sanctioned Entities.  No proceeds of any Advance will be used to fund
any operations in, finance any investments or activities in, or make any
payments to, a Sanctioned Person or a Sanctioned Entity.

 

Section 4.20                             Solvency.  Before and after giving
effect to the making of each Advance, the Borrower and its consolidated
Subsidiaries are, when taken as a whole, Solvent.

 

Section 4.21                             Gas Contracts.  No Credit Party, as of
the date hereof or as disclosed to the Administrative Agent in writing, (a) is
obligated in any material respect by virtue of any prepayment made under any
contract containing a “take-or-pay” or “prepayment” provision or under any
similar agreement to deliver Hydrocarbons produced from or allocated to any of
the Borrower’s and its Subsidiaries’ Oil and Gas Properties at some future date
without receiving full payment therefor at the time of delivery or (b) except as
has been disclosed to the Administrative Agent, has produced gas, in any
material amount, subject to balancing rights of third parties or subject to
balancing duties under Legal Requirements.

 

Section 4.22                             Liens, Leases, etc.  None of the
Property of any Credit Party is subject to any Lien other than Permitted Liens. 
On the date of this Agreement, all governmental actions and all other filings,
recordings, registrations, third party consents and other actions which are
necessary to create and perfect the Liens provided for in the Security Documents
will have been made, obtained and taken in all relevant jurisdictions.  Other
than to the extent such could not reasonably be expected to cause a Material
Adverse Change, (i) all leases and agreements for the conduct of business of the
Borrower and its Subsidiaries are valid and subsisting, in full force and effect
and there exists no default or event of default or circumstance which with the
giving of notice or lapse of time or both would give rise to a default by the
Borrower or any Subsidiary, or to the Borrower’s knowledge, by any of the other
parties thereto, under any such leases or agreements.  Neither the Borrower nor
any of its Subsidiaries is a party to any agreement or arrangement (other than
this Agreement and the Security Documents), or subject to any order, judgment,
writ or decree, that either restricts or purports to restrict its ability to
grant Liens to secure the Obligations against their respective Properties.

 

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Section 4.23                             Hedging Agreements.  Schedule 4.23 sets
forth, as of the date hereof, a true and complete list of all Interest Hedge
Agreements, Hydrocarbon Hedge Agreements, and Hedging Arrangements of the Credit
Parties, the material terms thereof (including the type, term, effective date,
termination date and notional amounts or volumes), the net mark to market value
thereof, all credit support agreements relating thereto (including any margin
required or supplied), and the counterparty to each such agreement.

 

Section 4.24                             Material Agreements.  Schedule 4.24
sets forth a complete and correct list of all material agreements, leases,
indentures, purchase agreements, obligations in respect of letters of credit,
guarantees, joint venture agreements, and other instruments in effect or to be
in effect as of the date hereof (other than the agreements set forth in
Schedule 4.23) providing for, evidencing, securing or otherwise relating to any
Debt of the Credit Parties in excess of $250,000 individually or in the
aggregate, and all obligations of the Credit Parties to issuers of surety or
appeal bonds issued for account of any Credit Party, and such list correctly
sets forth the names of the debtor or lessee and creditor or lessor with respect
to the Debt or lease obligations outstanding or to be outstanding and the
Property subject to any Lien securing such Debt or lease obligation.  Also set
forth on Schedule 4.24 hereto is a complete and correct list, as of the date of
this Agreement, of all material agreements and other instruments of the Borrower
and its Subsidiaries relating to the purchase, transportation by pipeline, gas
processing, marketing, sale and supply of natural gas and other Hydrocarbons and
which either (a) has a term longer than 6 months or (b) provides for liabilities
of the Credit Parties in excess of $500,000.  The Borrower has heretofore
delivered to the Administrative Agent a complete and correct copy of all such
material credit agreements, indentures, purchase agreements, contracts, letters
of credit, guarantees, joint venture agreements, or other instruments, including
any modifications or supplements thereto, as in effect on the date hereof.

 

ARTICLE 5
AFFIRMATIVE COVENANTS

 

So long as any Obligation shall remain unpaid, each Credit Party agrees to
comply with the following covenants.

 

Section 5.1                                    Organization.  Each Credit Party
shall, and shall cause each of its respective Subsidiaries to, preserve and
maintain its partnership, limited liability company or corporate existence,
rights, franchises and privileges in the jurisdiction of its organization, and
qualify and remain qualified as a foreign business entity in each jurisdiction
in which qualification is necessary in view of its business and operations or
the ownership of its Properties and where failure to qualify could reasonably be
expected to cause a Material Adverse Change; provided, however, that nothing
herein contained shall prevent any transaction permitted by Section 6.7.

 

Section 5.2                                    Reporting.

 

(a)                                 Annual Financial Reports.  The Borrower
shall provide, or shall cause to be provided, to the Administrative Agent, as
soon as available, but in any event within 90 days after the end of each fiscal
year of the Borrower (commencing with the fiscal year ended January 31, 2013), a
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal year, and the related consolidated and
consolidating statements of income or operations, shareholders’ equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and prepared in
accordance with SEC guidelines and GAAP, such consolidated statements to be
audited and accompanied by a report and opinion of an independent certified
public accountant of nationally recognized standing reasonably acceptable to the
Administrative Agent, which report and opinion shall be prepared in accordance
with generally accepted auditing

 

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standards and shall not be subject to any “going concern” or like qualification
or exception or any qualification or exception as to the scope of such audit,
and such consolidating statements to be certified by the chief executive officer
or chief financial officer of the Borrower, to the effect that (i) such
statements fairly present, in all material respects, the financial condition,
results of operations, shareholders’ equity and cash flows of the Borrower and
its Subsidiaries in accordance with SEC guidelines and GAAP and do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading, and (ii) there were no
material contingent obligations, liabilities for taxes, unusual forward or
long-term commitments, or unrealized or anticipated losses of the Borrower and
its Subsidiaries, except as disclosed therein and adequate reserves for such
items have been made in accordance with SEC guidelines and GAAP;

 

(b)                                 Quarterly Financials.  The Borrower shall
provide, or shall cause to be provided, to the Administrative Agent, as soon as
available, but in any event within 45 days after the end of each fiscal quarter
of each fiscal year of the Borrower (commencing with the fiscal quarter ending
July 31, 2014), (i) consolidated and consolidating balance sheet of the Borrower
and its Subsidiaries as at the end of such fiscal quarter, and the related
consolidated and consolidating statements of income or operations, shareholder’s
equity and cash flows for such fiscal quarter and for the portion of the
Borrower’s fiscal year then ended, setting forth in each case in comparative
form the figures for the corresponding fiscal quarter of the previous fiscal
year and the corresponding portion of the previous fiscal year, all in
reasonable detail, such consolidated statements to be certified by the chief
executive officer or the chief financial officer of the Borrower as (A) fairly
presenting, in all material respects the financial condition, results of
operations, shareholders’ equity and cash flows of the Borrower and its
Subsidiaries in accordance with SEC guidelines and GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes, and do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading, and (B) showing that there were no
material contingent obligations, liabilities for taxes, unusual forward or
long-term commitments, or unrealized or anticipated losses of the Borrower and
its Subsidiaries, except as disclosed therein and adequate reserves for such
items have been made in accordance with SEC guidelines and GAAP, and (ii) a copy
of the management discussion and analysis with respect to such financial
statements;

 

Documents required to be delivered pursuant to Section 5.2(a) or (b) (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 (1) on which the Borrower posts such documents,
or provides a link thereto, on the Borrower’s website on the Internet at
www.trianglepetroleum.com or (2) on which such documents are posted on the
Borrower’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) upon request, the Borrower shall deliver paper copies of such
documents to the Administrative Agent or any Lender 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, upon
request, each Lender (by telecopier or electronic mail) of the posting of any
such documents and, upon request, provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.

 

(c)                                  Oil and Gas Reserve Reports.  The Borrower
shall provide, or shall cause to be provided, to the Administrative Agent:

 

(i)                                     As soon as available but in any event on
or before July 1, 2014, an Internal Engineering Report dated effective as of
June 1, 2014;

 

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(ii)                                  As soon as available but in any event on
or before October 1 of each year, an Internal Engineering Report dated effective
as of the immediately preceding September 1st;

 

(iii)                               [Reserved];

 

(iv)                              As soon as available but in any event on or
before April 1 of each year an Independent Engineering Report dated effective as
of the immediately preceding March 1st;

 

(v)                                 Such other information as may be reasonably
requested by the Administrative Agent or any Lender with respect to the Oil and
Gas Properties included or to be included in the Borrowing Base;

 

(vi)                              With the delivery of each Engineering Report,
a certificate from a Responsible Officer (a “Borrowing Base Certificate”) of the
Borrower certifying that, to the best of his knowledge and in all material
respects:  (A) the information contained in the Engineering Report and any other
information delivered in connection therewith is true and correct, (B) except as
set forth on an exhibit to the certificate, on a net basis there are no gas
imbalances, take-or-pay or other prepayments with respect to its Oil and Gas
Properties evaluated in such Engineering Report which would require the Borrower
or any of its Subsidiaries to deliver Hydrocarbons produced from such Oil and
Gas Properties at some future time without then or thereafter receiving full
payment therefor, (C) none of its Oil and Gas Properties have been sold since
the date of the last Borrowing Base determination except as set forth on an
exhibit to the certificate, which certificate shall list all of its Oil and Gas
Properties sold and in such detail as reasonably required by the Required
Lenders, (D) attached to the certificate is a list of its Oil and Gas Properties
added to and deleted from the immediately prior Engineering Report and a list
showing any change in working interest or net revenue interest in its Oil and
Gas Properties occurring and the reason for such change, (E) attached to the
certificate is a list of all Persons disbursing proceeds to the Borrower or to
its Subsidiary, as applicable, from its Oil and Gas Properties, (F) except as
set forth on a schedule attached to the certificate, all of the Oil and Gas
Properties evaluated by such Engineering Report are pledged as Collateral for
the Obligations, (G) attached to the certificate is a quarterly cash flow budget
for the four quarters following the delivery of such certificate setting forth
the Borrower’s projections for production volumes, revenues, expenses, taxes and
budgeted capital expenditures during such period, and (H) attached to the
certificate is a list of any real property other than Oil and Gas Properties
acquired since the delivery of the previous Engineering Report which is either
(i) material to the operations of the Credit Parties, or (ii) has a fair market
value in excess of $2,000,000.

 

(d)                                 Production and Hedging Reports.  As soon as
available and in any event within 45 days after the end of each quarter,
commencing with the quarter ending July 31, 2014, a report certified by the
chief executive officer or chief financial officer of the Borrower in form and
substance satisfactory to the Administrative Agent prepared by the Borrower
(i) covering each of the Oil and Gas Properties of the Borrower and its
Subsidiaries and detailing on a quarterly basis (A) the production, revenue, and
price information and associated operating expenses for each such quarter,
(B) any changes to any producing reservoir, production equipment, or producing
well during each such quarter, which changes could reasonably be expected to
cause a Material Adverse Change, and (C) any sales of the Borrower’s or any
Subsidiaries’ Oil and Gas Properties during each such quarter, (ii) setting
forth a true and complete list of all Hedging Arrangements of the Borrower and
its Subsidiaries and detailing 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; provided that, such required listing shall, in no

 

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event, be construed as permitting such credit supports which are not permitted
under the terms of this Agreement; and (iii) certifying the Borrower’s
compliance with Section 5.13 hereof;

 

(e)                                  Compliance Certificate.  Concurrently with
the delivery of the financial statements referred to in Section 5.2(a) and
(b) above, the Borrower shall provide to the Administrative Agent a duly
completed Compliance Certificate signed by the chief executive officer or chief
financial officer of the Borrower, commencing with the fiscal year ended
January 31, 2014.

 

(f)                                   Annual Budget.  As soon as available and
in any event within 90 days after the end of each fiscal year of the Borrower,
the Borrower shall provide to the Administrative Agent an annual operating,
capital and cash flow budget for the immediately following fiscal year and
detailed on a quarterly basis;

 

(g)                                  Defaults.  The Credit Parties shall provide
to the Administrative Agent promptly, but in any event within five Business Days
after the occurrence thereof, a notice of (i) each Default or Event of Default
known to the Responsible Officer of the Borrower or to any of its Subsidiaries
and (ii) any “default” or “Event of Default” under the First Lien Credit
Agreement, together in each case with a statement of a Responsible Officer of
the Borrower setting forth the details of such Default or Event of Default and
the actions which the Credit Parties have taken and proposes to take with
respect thereto;

 

(h)                                 Other Creditors.  The Credit Parties shall
provide to the Administrative Agent promptly after the giving or receipt
thereof, copies of any default notices given or received by the Borrower or by
any of its Subsidiaries pursuant to the terms of any indenture, loan agreement,
credit agreement, or similar agreement, including any notice of cancellation or
similar notice under the RockPile Agreement, whether or not a formal notice
default, all demands or material notices in connection with the First Lien
Credit Agreement either received by Borrower or on its behalf and promptly after
the furnishing thereof, copies of any certificate, statement, report or notice
furnished to any Person (other than routine communications and notices, such as
borrowing requests) pursuant to the First Lien Credit Agreement and not
otherwise required to be furnished to Administrative Agent or Lenders pursuant
to any other provision of the Loan Documents;

 

(i)                                     Litigation.  The Credit Parties shall
provide to the Administrative Agent promptly after the commencement thereof, and
in any event no later than 5 days after, notice of all actions, suits, and
proceedings before any Governmental Authority, affecting the Borrower or any of
its Subsidiaries or any of their respective assets that has a claim for damages
in excess of $1,000,000 or that could otherwise result in a cost, expense or
loss to the Borrower or any of its Subsidiaries in excess of $1,000,000;

 

(j)                                    Environmental Notices.  Promptly upon,
and in any event no later than 5 days after, the receipt thereof, or the
acquisition of knowledge thereof, by any Credit Party, the Credit Parties shall
provide the Administrative Agent with a copy of any form of request, claim,
complaint, order, notice, summons or citation received from any Governmental
Authority or any other Person, (i) concerning violations or alleged violations
of Environmental Laws, which seeks to impose liability therefore in excess of
$1,000,000, (ii) concerning any action or omission on the part of any of the
Credit Parties or any of their former Subsidiaries in connection with Hazardous
Waste or Hazardous Substances which could reasonably result in the imposition of
liability in excess of $1,000,000 or requiring that action be taken to respond
to or clean up a Release of Hazardous Substances or Hazardous Waste into the
environment and such action or clean-up could reasonably be expected to exceed
$1,000,000, including without limitation any information request related to, or
notice of, potential responsibility under CERCLA, or (iii) concerning the filing
of a Lien upon, against or in connection with the Borrower, any Subsidiary, or
any of their respective former Subsidiaries, or any of their material leased or
owned Property, wherever located;

 

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(k)                                 Material Adverse Changes.  The Credit
Parties shall provide to the Administrative Agent prompt written notice of any
event, development or circumstance that has had or would reasonably be expected
to give rise to a Material Adverse Change;

 

(l)                                     Termination Events.  As soon as possible
and in any event (i) within 30 days after the Borrower or any member of the
Controlled Group knows or has reason to know that any Termination Event
described in clause (a) of the definition of Termination Event with respect to
any Plan has occurred, and (ii) within 10 days after the Borrower or any member
of the Controlled Group knows or has reason to know that any other Termination
Event with respect to any Plan has occurred, the Credit Parties shall provide to
the Administrative Agent a statement of an authorized officer of the Borrower
describing such Termination Event and the action, if any, which the Borrower or
any Affiliate of the Borrower proposes to take with respect thereto;

 

(m)                             Termination of Plans.  Promptly and in any event
within 10 Business Days after receipt thereof by the Borrower or any member of
the Controlled Group from the PBGC, the Credit Parties shall provide to the
Administrative Agent copies of each notice received by the Borrower or any such
member of the Controlled Group of the PBGC’s intention to terminate any Plan or
to have a trustee appointed to administer any Plan;

 

(n)                                 Other ERISA Notices.  Promptly and in any
event within 10 Business Days after receipt thereof by the Borrower or any
member of the Controlled Group from a Multiemployer Plan sponsor, the Credit
Parties shall provide to the Administrative Agent a copy of each notice received
by the Borrower or any member of the Controlled Group concerning the imposition
or amount of withdrawal liability imposed on the Borrower or any member of the
Controlled Group pursuant to Section 4202 of ERISA;

 

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

 

(p)                                 Disputes; etc.  The Credit Parties shall
provide to the Administrative Agent prompt written notice of (i) any claims,
legal or arbitration proceedings, proceedings before any Governmental Authority,
or disputes, or to the knowledge of any Credit Party, any such actions
threatened, or affecting the Borrower or any Subsidiary, which, if adversely
determined, could reasonably be expected to cause a Material Adverse Change, or
any material labor controversy of which a Credit Party has knowledge resulting
in or reasonably considered to be likely to result in a strike against the
Borrower or any Subsidiary, and (ii) any claim, judgment, Lien or other
encumbrance (other than a Permitted Lien) affecting any Property of the Borrower
or any Subsidiary, if the value of the claim, judgment, Lien, or other
encumbrance affecting such Property shall exceed $1,000,000;

 

(q)                                 Management Letters; Other Accounting
Reports.  Promptly upon receipt thereof, a copy of each other report or letter
submitted to the Borrower or any Subsidiary by independent accountants in
connection with any annual, interim or special audit made by them of the books
of the Borrower and its Subsidiaries, and a copy of any response by the Borrower
or any Subsidiary of the Borrower, or the board of directors or managers (or
other applicable governing body) of the Borrower or any Subsidiary of the
Borrower, to such letter;

 

(r)                                    Certificate of Financial Officer — Asset
Coverage.  On or before the tenth (10th) Business Day after each Asset Coverage
Test Date, a certificate of a financial officer of the Borrower in the form set
forth in Exhibit K setting forth, as of such Asset Coverage Test Date, a
calculation in reasonable detail of the Asset Coverage Ratio as of such Asset
Coverage Test Date;

 

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(s)                                   In the event that the Borrower or any
Subsidiary intends to grant any Lien on any Property to secure any First Lien
Indebtedness, the Borrower will and will cause the Subsidiary to, concurrently
grant to the Administrative Agent to secure the Obligations a second Lien on the
same Property pursuant to Security Documents in form and substance satisfactory
to the Administrative Agent to the extent a second Lien has not already been
granted to the Administrative Agent on such Property.  In connection therewith,
the Borrower shall, or shall cause the Subsidiaries to, execute and deliver such
other additional security documents, closing documents, certificates and legal
opinions as shall reasonably be requested by the Administrative Agent.  The
Borrower will cause any Subsidiary guaranteeing any First Lien Indebtedness to
contemporaneously guarantee the Obligations pursuant to a guaranty satisfactory
to the Administrative Agent;

 

(t)                                    Notices Delivered Under the First Lien
Credit Agreement.  Concurrently with the delivery of any notice, certificate or
other information or documents to the First Lien Agent or the First Lien Lenders
pursuant to the First Lien Loan Documents, the Borrower shall provide a copy of
such notice or other information to the Administrative Agent; and

 

(u)                                 Other Information.  Promptly upon request,
the Credit Parties shall provide to the Administrative Agent such other
information respecting the business, operations, or Property of the Borrower or
any Subsidiary, financial or otherwise, as any Lender through the Administrative
Agent may reasonably request.

 

Section 5.3                                    Insurance.

 

(a)                                 Each Credit Party shall, and shall cause
each of its Subsidiaries to, carry and maintain all such other insurance in such
amounts and against such risks as is customarily maintained by other Persons of
similar size engaged in similar businesses and acceptable to the Administrative
Agent and with reputable insurers acceptable to the Administrative Agent.

 

(b)                                 Copies of all policies of insurance or
certificates thereof covering the property or business of the Credit Parties,
and endorsements and renewals thereof, certified as true and correct copies of
such documents by a Responsible Officer of the Borrower shall be delivered by
Borrower to and retained by the Administrative Agent.  All policies of property
insurance with respect to the Collateral either shall have attached thereto a
lender’s loss payable endorsement in favor of the Administrative Agent for its
benefit and the ratable benefit of the Secured Parties or name the
Administrative Agent as loss payee for its benefit and the ratable benefit of
the Secured Parties, in either case, in form reasonably satisfactory to the
Administrative Agent, and all policies of liability insurance shall name the
Administrative Agent for its benefit and the ratable benefit of the Secured
Parties as an additional insured.  All policies or certificates of insurance
shall set forth the coverage, the limits of liability, the name of the carrier,
the policy number, and the period of coverage.  All such policies shall contain
a provision that notwithstanding any contrary agreements between the Borrower,
its Subsidiaries, and the applicable insurance company, such policies will not
be canceled or allowed to lapse without renewal without at least 30 days’ (or
such shorter period as may be accepted by the Administrative Agent) prior
written notice to the Administrative Agent.

 

(c)                                  If at any time the area in which any
improved real property constituting Collateral is located is designated a “flood
hazard area” in any Flood Insurance Rate Map published by the Federal Emergency
Management Agency (or any successor agency), the Borrower shall, and shall cause
each of its Subsidiaries to, obtain flood insurance in such total amount as
required by Regulation H of the Federal Reserve Board, as from time to time in
effect and all official rulings and interpretations thereunder or thereof, and
otherwise comply with the National Flood Insurance Program as set forth in the
Flood Disaster Protection Act of 1973, as it may be amended from time to time.

 

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(d)                                 Notwithstanding Section 2.5(c)(ii) of this
Agreement and subject to the provisions of the Intercreditor Agreement, after
the occurrence and during the continuance of an Event of Default, all proceeds
of insurance, including any casualty insurance proceeds, property insurance
proceeds, proceeds from actions, and any other proceeds, shall be paid directly
to the Administrative Agent and if necessary, assigned to the Administrative
Agent, to be applied in accordance with Section 7.6 of this Agreement, whether
or not the Secured Obligations are then due and payable.

 

(e)                                  In the event that any insurance proceeds
are paid to any Credit Party in violation of clause (d), such Credit Party shall
hold the proceeds in trust for the Administrative Agent, segregate the proceeds
from the other funds of such Credit Party, and subject to the provisions of the
Intercreditor Agreement promptly pay the proceeds to the Administrative Agent
with any necessary endorsement.  Upon the request of the Administrative Agent,
each of the Borrower and its Subsidiaries shall execute and deliver to the
Administrative Agent any additional assignments and other documents as may be
necessary or desirable to enable the Administrative Agent to directly collect
the proceeds as set forth herein.

 

Section 5.4                                    Compliance with Laws.  Each
Credit Party shall, and shall cause each of its Subsidiaries to, comply with all
federal, state, and local laws and regulations (including Environmental Laws)
which are applicable to the operations and Property of any Credit Party and
maintain all related permits necessary for the ownership and operation of each
Credit Party’s Property and business, except in any case where the failure to so
comply could not reasonably be expected to result in a Material Adverse Change.
Without limitation of the foregoing, the Borrower shall, and shall cause each of
its Subsidiaries to, (a) maintain and possess all authorizations, Permits,
licenses, trademarks, trade names, rights and copyrights which are necessary to
the conduct of its business, except where the failure to so comply could not
reasonably be expected to result in a Material Adverse Change, and (b) obtain,
as soon as practicable, all consents or approvals required from any states of
the United States (or other Governmental Authorities) necessary to grant the
Administrative Agent an Acceptable Security Interest in at least 80% by value
(or if an Event of Default exists and is continuing, 100% by value) of the
Proven reserves attributable to the Borrower’s and its Subsidiaries’ Oil and Gas
Properties.

 

Section 5.5                                    Taxes.  Each Credit Party shall,
and shall cause each of its Subsidiaries to pay and discharge all material
taxes, assessments, and other charges and claims related thereto imposed on the
Borrower or any of its Subsidiaries prior to the date on which penalties attach
other than any tax, assessment, charge, or claims which is being contested in
good faith and for which adequate reserves have been established in compliance
with GAAP.

 

Section 5.6                                    New Subsidiaries.  The Borrower
shall deliver to the Administrative Agent each of the items set forth in Part A
of Schedule III attached hereto with respect to each Subsidiary of the Borrower
created after the Closing Date and within the time requirements set forth in
Schedule III.

 

Section 5.7                                    Agreement to Pledge; Security. 
Each Credit Party agrees that at all times before the termination of this
Agreement, payment in full of the Obligations, the Administrative Agent shall
have an Acceptable Security Interest in the Collateral to secure the performance
and payment of the Secured Obligations.  Each Credit Party shall, and shall
cause each of its Subsidiaries to, grant to the Administrative Agent a Lien in
any Property of such Credit Party or such Subsidiary now owned or hereafter
acquired (other than owned or leased real property unless otherwise requested by
the Administrative Agent) promptly and to take such actions as may be required
under the Security Documents to ensure that the Administrative Agent has an
Acceptable Security Interest in such Property; provided that so long as no
Default or Event of Default has occurred and is continuing, the Administrative
Agent shall not be permitted to request or the Borrower be required to grant an
Acceptable Security Interest in any Oil and Gas Properties that exceeds 80% by
value of all of the Credit Parties’ Proven Reserves.  Notwithstanding the
foregoing, the Borrower shall, and shall cause each Subsidiary to take

 

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such actions, including execution and delivery of any Security Documents
necessary to create, perfect and maintain an Acceptable Security Interest in
favor of the Administrative Agent in 100% of Equity Interests issued by any
Subsidiaries which are owned by the Borrower or any Subsidiary.

 

Section 5.8                                    [Reserved]

 

Section 5.9                                    Records; Inspection.  Each Credit
Party shall, and shall cause each of its Subsidiaries to maintain proper,
complete and consistent books of record with respect to such Person’s
operations, affairs, and financial condition.  From time to time upon reasonable
prior notice, each Credit Party shall permit any Lender and shall cause each of
its Subsidiaries to permit any Lender, at such reasonable times and intervals
and to a reasonable extent and under the reasonable guidance of officers of or
employees delegated by officers of such Credit Party or such Subsidiary, to,
subject to any applicable confidentiality considerations, examine and copy the
books and records of such Credit Party or such Subsidiary, to visit and inspect
the Property of such Credit Party or such Subsidiary, and to discuss the
business operations and Property of such Credit Party or such Subsidiary with
the officers and directors thereof.

 

Section 5.10                             Maintenance of Property.  Each Credit
Party shall, and shall cause each of its Subsidiaries to, maintain their owned,
leased, or operated Property in good condition and repair, normal wear and tear
excepted; and shall abstain from, cause each of its Subsidiaries to abstain
from, and conduct due diligence with respect to any Properties to be acquired to
confirm that the seller has abstained from, knowingly or willfully permitting
the commission of waste or other injury, destruction, or loss of natural
resources, or the occurrence of pollution, contamination, or any other condition
in, on or about the owned or operated Property involving the Environment that
could reasonably be expected to result in Response activities and that could
reasonably be expected to cause a Material Adverse Change.

 

Section 5.11                             Title Evidence and Opinions.  The
Borrower shall from time to time upon the reasonable request of the
Administrative Agent, take such actions and execute and deliver such documents
and instruments as the Administrative Agent shall require to ensure that the
Administrative Agent shall, at all times, have received satisfactory title
evidence, which title evidence shall be in form and substance acceptable to the
Administrative Agent in its sole reasonable discretion and shall include
information regarding the before payout and after payout ownership interests
held by the Borrower and the Borrower’s Subsidiaries, for all wells located on
the Oil and Gas Properties, covering at least 80% of the present value of the
Proven Reserves of the Borrower and its Subsidiaries as determined by the
Administrative Agent.

 

Section 5.12                             Further Assurances; Cure of Title
Defects.  The Borrower shall, and shall cause each Subsidiary to, cure promptly
any defects in the creation and issuance of the Notes and the execution and
delivery of the Security Documents, this Agreement and the other Credit
Documents.  The Borrower hereby authorizes the Administrative Agent to file any
financing statements without the signature of the Borrower or such Subsidiary,
as applicable, to the extent permitted by applicable law in order to perfect or
maintain the perfection of any security interest granted under any of the Credit
Documents.  The Borrower at its expense will, and will cause each Subsidiary to,
promptly execute and deliver to the Administrative Agent upon request all such
other documents, agreements and instruments to comply with or accomplish the
covenants and agreements of the Borrower or any Subsidiary, as the case may be,
in the Security Documents and this Agreement, or to further evidence and more
fully describe the collateral intended as security for the Obligations, or to
correct any omissions in the Security Documents, or to state more fully the
security obligations set out herein or in any of the Security Documents, or to
perfect, protect or preserve any Liens created pursuant to any of the Security
Documents, or to make any recordings, to file any notices or obtain any
consents, all as may be necessary or appropriate in connection therewith or to
enable the Administrative Agent to exercise and enforce its rights and remedies
with

 

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respect to any Collateral.  Within 30 days after (a) a request by the
Administrative Agent or the Lenders to cure any title defects or exceptions
which are not Permitted Liens raised by such information or (b) a notice by the
Administrative Agent that the Borrower has failed to comply with Section 5.11
above, the Borrower shall (i) cure such title defects or exceptions which are
not Permitted Liens or substitute acceptable Oil and Gas Properties with no
title defects or exceptions except for Permitted Liens covering Collateral of an
equivalent value and (ii) deliver to the Administrative Agent satisfactory title
evidence (including supplemental or new title opinions meeting the foregoing
requirements) in form and substance acceptable to the Administrative Agent in
its reasonable business judgment as to the Borrower’s and its Subsidiaries’
ownership of such Oil and Gas Properties and the Administrative Agent’s Liens
and security interests therein as are required to maintain compliance with
Section 5.11.

 

Section 5.13                             Leases; Development and Maintenance. 
The Borrower shall, and shall cause its Subsidiaries to, (a) pay and discharge
promptly, or cause to be paid and discharged promptly, all rentals, delay
rentals, royalties, overriding royalties, payments out of production and other
indebtedness or obligations accruing under, and perform or cause to be performed
each and every act, matter or thing required by each and all of, the oil and gas
leases and all other agreements and contracts constituting or affecting the Oil
and Gas Properties of the Borrower and its Subsidiaries (except where the amount
thereof is being contested in good faith by appropriate proceedings), (b) do all
other things necessary to keep unimpaired its rights thereunder and prevent any
forfeiture thereof or default thereunder, and operate or cause to be operated
such Properties as a prudent operator would in accordance with industry standard
practices and in compliance with all applicable proration and conservation Legal
Requirements and any other Legal Requirements of every Governmental Authority,
whether state, federal, municipal or other jurisdiction, from time to time
constituted to regulate the development and operations of oil and gas properties
and the production and sale of oil, gas and other Hydrocarbons therefrom, and
(c) maintain (or cause to be maintained) the Leases, wells, units and acreage to
which the Oil and Gas Properties of the Borrower and its Subsidiaries pertain in
a prudent manner consistent with industry standard practices.

 

ARTICLE 6
NEGATIVE COVENANTS

 

So long as any Obligation shall remain outstanding, each Credit Party agrees to
comply with the following covenants.

 

Section 6.1                                    Debt.  No Credit Party shall, nor
shall it permit any of its Subsidiaries to, create, assume, incur, suffer to
exist, or in any manner become liable, directly, indirectly, or contingently in
respect of, any Debt other than the following (collectively, the “Permitted
Debt”):

 

(a)                                 the Obligations;

 

(b)                                 intercompany Debt incurred in the ordinary
course of business owed by any Credit Party to any other Credit Party; provided
that, if applicable, such Debt as an investment is also permitted in
Section 6.3;

 

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

 

(d)                                 purchase money indebtedness or Capital
Leases in an aggregate principal amount not to exceed $2,000,000 at any time;
provided no Credit Party may enter into additional indebtedness of the

 

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type described in this clause (d) if a Default is continuing or entering into
the additional indebtedness could reasonably be expected to cause a Default;

 

(e)                                  Hedging Arrangements to the extent not
prohibited under Section 6.15;

 

(f)                                   Debt in the form of (i) accounts payable
to trade creditors for goods or services, (ii) payment obligations to a Banking
Services Provider under commercial cards to the extent that such payment
obligations arise in connection with the payment by such Banking Services
Provider of accounts payable to trade creditors of the Credit Parties for goods
or services and (iii) current operating liabilities (other than for borrowed
money) which in each case is not more than 90 days past due, in each case
incurred in the ordinary course of business, as presently conducted, unless
contested in good faith by appropriate proceedings and adequate reserves for
such items have been made in accordance with GAAP.;

 

(g)                                  Debt consisting of take-or-pay obligations
under the RockPile Agreement; provided that the RockPile Agreement shall not be
amended in any way that adversely affects the Borrower, including (i) to
increase the amount due to RockPile upon a cancellation of the RockPile
Agreement by the Borrower or (ii) to extend the tenor of the RockPile Agreement;

 

(h)                                 Debt consisting of take-or-pay obligations
under the Caliber Agreements; provided that the Caliber Agreements shall not be
amended in any way that adversely affects the Borrower, including increasing any
amounts owed by the Borrower thereunder or any extension of the term thereunder;

 

(i)                                     Debt consisting of senior unsecured
notes issuances (the “Permitted Notes”); provided that:

 

(i)                                     the Borrower is in pro forma compliance
with Sections 6.16 of the First Lien Credit Agreement as in effect on the date
hereof, Section 6.17 hereof and Section 6.21 hereof after giving effect to any
such issuance;

 

(ii)                                  such Debt is not secured by any Lien;

 

(iii)                               no principal amount of such Debt matures
earlier than six months after the Maturity Date;

 

(iv)                              no Default or Event of Default is occurring at
the time of, or would occur as a result of, any such issuance;

 

(v)                                 the agreement or indenture governing any
such Debt shall have covenants and restrictions that are no more restrictive
than those set forth in the Credit Documents;

 

(vi)                              the agreement or indenture governing any such
debt shall not have any restriction on the ability of the Borrower or any of its
Subsidiaries to guarantee the Secured Obligations or to pledge assets as
Collateral for the Secured Obligations; and

 

(vii)                           upon the issuance of any such Debt, the Borrower
shall make a mandatory prepayment on the Advances in an amount equal to the
lesser of the then outstanding Advances or the amount of the net proceeds
received in respect of such Debt;

 

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(j)                                    unsecured Debt not otherwise permitted
under the preceding provisions of this Section 6.1; provided that, the aggregate
principal amount thereof shall not exceed $1,000,000 at any time; and

 

(k)                                 Debt under the First Lien Credit Agreement
to the extent permitted under the Intercreditor Agreement.

 

Section 6.2                                    Liens.  No Credit Party shall,
nor shall it permit any of its Subsidiaries to, create, assume, incur, or suffer
to exist any Lien on the Property of any Credit Party or any Subsidiary, whether
now owned or hereafter acquired, or assign any right to receive any income,
other than the following (collectively, the “Permitted Liens”):

 

(a)                                 Liens securing the Secured Obligations
pursuant to the Security Documents;

 

(b)                                 Liens imposed by law, such as materialmen’s,
mechanics’, carriers’, workmen’s and repairmen’s liens, and other similar liens
arising in the ordinary course of business securing obligations which are not
overdue for a period of more than 30 days or are being contested in good faith
by appropriate procedures or proceedings and for which adequate reserves have
been established;

 

(c)                                  Liens for taxes, assessment, or other
governmental charges which are not yet due and payable or which are being
actively contested in good faith by appropriate proceedings and adequate
reserves for such items have been made in accordance with GAAP;

 

(d)                                 Liens securing purchase money debt or
Capital Lease obligations permitted under Section 6.1(d); provided that each
such Lien encumbers only the Property purchased in connection with the creation
of any such purchase money debt or the subject of any such Capital Lease, and
all proceeds thereof (including insurance proceeds), and the amount secured
thereby is not increased;

 

(e)                                  encumbrances consisting of minor easements,
zoning restrictions, or other restrictions on the use of real property that do
not (individually or in the aggregate) materially affect the value of the assets
encumbered thereby or materially impair the ability of any Credit Party to use
such assets in its business, and none of which is violated in any material
aspect by existing or proposed structures or land use;

 

(f)                                   judgment and attachment Liens not giving
rise to an Event of Default, provided that (i) 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 (ii) no action to enforce such Lien has
been commenced;

 

(g)                                  Liens in favor a banking institution
arising by operation of law encumbering deposits in accounts that are not
subject to Account Control Agreements and that are not required to be subject to
Account Control Agreements in accordance with the terms hereof held by such
banking institution incurred in the ordinary course of business and which are
within the general parameters customary in the banking industry;

 

(h)                                 Liens arising under operating agreements,
unitization and pooling agreements and orders, farmout agreements, gas balancing
agreements, and other agreements, in each case that are customary in the oil,
gas and mineral production business and that are entered into by any Credit
Party in the ordinary course of business provided that (i) such Liens are taken
into account in computing the net revenue interests and working interests of the
Borrower or any of its Subsidiaries warranted in the Security Documents or this
Agreement, (ii) such Liens do not secure borrowed money, (iii) such Liens secure

 

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amounts that are not yet due or are being contested in good faith by appropriate
proceedings, if such reserve as may be required by GAAP shall have been made
therefor and (iv) such Liens are limited to the assets that are the subject of
such agreements;

 

(i)                                     royalties, overriding royalties, net
profits interests, production payments, reversionary interests, calls on
production, preferential purchase rights and other burdens on or deductions from
the proceeds of production, that do not secure Debt for borrowed money and that
are taken into account in computing the net revenue interests and working
interests of the Credit Parties warranted in the Security Documents or in this
Agreement; and

 

(j)                                    Liens that secure the First Lien Loan
Documents, to the extent permitted by the Intercreditor Agreement.

 

Section 6.3                                    Investments.  No Credit Party
shall, nor shall it permit any of its Subsidiaries to, make or hold any direct
or indirect investment in any Person, including capital contributions to the
Person, investments in or the acquisition of the debt or equity securities of
the Person, or any loans, guaranties, trade credit, or other extensions of
credit to any Person, other than the following (collectively, the “Permitted
Investments”):

 

(a)                                 investments in the form of trade credit to
customers of a Credit Party arising in the ordinary course of business and
represented by accounts from such customers;

 

(b)                                 Liquid Investments;

 

(c)                                  loans, advances and equity contributions by
a Credit Party to any other Credit Party;

 

(d)                                 creation of any additional Subsidiaries
domiciled in the U.S. in compliance with Section 5.6 and Schedule III; and

 

(e)                                  investments (i) in direct ownership
interests in additional Oil and Gas Properties and gas gathering systems related
thereto or (ii) related to farm-out, farm-in, joint operating, joint venture or
area of mutual interest agreements, gathering systems, pipelines or other
similar arrangements which are usual and customary in the oil and gas
exploration and production business located within the geographic boundaries of
the United States of America; provided that if requested by the Administrative
Agent, such assets are pledged as Collateral pursuant to Section 5.7.

 

Section 6.4                                    Acquisitions.  No Credit Party
shall, nor shall it permit any of its Subsidiaries to, make any Acquisition
(other than any action that would otherwise be permitted by Section 6.3 to the
extent such action constitutes an Acquisition) without the consent of the
Required Lenders.

 

Section 6.5                                    Agreements Restricting Liens.  No
Credit Party shall, nor shall it permit any of its Subsidiaries to, create,
incur, assume or permit to exist any contract, agreement or understanding (other
than (i) this Agreement, the Security Documents, (ii) agreements governing Debt
permitted by Sections 6.1(d) to the extent such restrictions govern only the
asset financed pursuant to such Debt, (iii) any prohibition or limitation that
exists pursuant to applicable requirements of a Governmental Authority, and
(iv) the First Lien Loan Documents) which in any way prohibits or restricts the
granting, conveying, creation or imposition of any Lien on any of its Property,
whether now owned or hereafter acquired, to secure the Secured Obligations or
restricts any Subsidiary from paying Restricted Payments to the Borrower, or
which requires the consent of or notice to other Persons in connection
therewith.

 

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Section 6.6                                    Use of Proceeds.  No Credit Party
shall, nor shall it permit any of its Subsidiaries to: use the proceeds of the
Advances for any purposes other than (i) working capital purposes of any Credit
Party, (ii) capital expenditures of any Credit Party, or (iii) other general
corporate purposes of any Credit Party.  No Credit Party shall, nor shall it
permit any of its Subsidiaries to, directly or indirectly, use any part of the
proceeds of Advances for any purpose which violates, or is inconsistent with,
Regulations T, U, or X.

 

Section 6.7                                    Corporate Actions; Accounting
Changes.

 

(a)                                 No Credit Party shall, nor shall it permit
any of its Subsidiaries to, merge or consolidate with or into any other Person,
except that the Borrower may merge with any of its wholly-owned Subsidiaries,
and any Credit Party may merge or be consolidated with or into any other Credit
Party; provided that (i) in any merger involving the Borrower, the Borrower
shall be the surviving entity, and (ii) at the time of any such merger or
consolidation and immediately after giving effect thereto, no Default, Event of
Default or Borrowing Base Deficiency shall have occurred and the Administrative
Agent shall continue to have an Acceptable Security Interest in the Collateral.

 

(b)                                 No Credit Party shall, nor shall it permit
any of its Subsidiaries to, (i) without 30 days prior written notice to the
Administrative Agent, change its name, change its state of incorporation,
formation or organization, change its organizational identification number or
reorganize in another jurisdiction, (ii) create or suffer to exist any
Subsidiary not existing on the date of this Agreement, provided that, the
Borrower may create or acquire a new Subsidiary if the Credit Parties and such
new Subsidiary complies with Section 5.6 and Schedule III, and such transactions
otherwise comply with the terms of this Agreement, (iii) sell or otherwise
dispose of any of its ownership interest in any of its Subsidiaries, or in any
manner rearrange its business structure as it exists on the date of this
Agreement (except as would be permitted by Section 6.7(a) or Section 6.8),
(iv) without prior written notice to, and prior consent of, the Administrative
Agent, amend, supplement, modify or restate its articles or certificate of
incorporation or formation, limited partnership agreement, bylaws, limited
liability company agreements, or other equivalent organizational documents, or
(v) change its method of accounting employed in the preparation of the financial
statements referred to in Section 4.4 or change the fiscal year end of the
Borrower unless required to conform to GAAP or approved in writing by the
Administrative Agent.

 

Section 6.8                                    Sale of Assets.  No Credit Party
shall, nor shall it permit any of its Subsidiaries to, sell, convey, or
otherwise transfer any of its Property (including, without limitation, any
working interest, overriding royalty interest, production payments, net profits
interest, royalty interest, or mineral fee interest) other than, so long as no
Default exists or would result therefrom:

 

(i)                                     the sale of Hydrocarbons or Liquid
Investments in the ordinary course of business,

 

(ii)                                  Asset Sales of equipment that is
(A) obsolete, worn out or uneconomic and disposed of in the ordinary course of
business, (B) no longer necessary for the business of such Person or
(C) contemporaneously replaced by equipment of at least comparable value and
use,

 

(iii)                               Asset Sales of Property between or among
Credit Parties;

 

(iv)                              Asset Sales of Oil and Gas Properties which
are not attributable to Proven Reserves and which is not Collateral or which is
not otherwise required pursuant to the terms of this Agreement to be Collateral;

 

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(v)                                 subject to the provisions of the last
paragraph of this Section 6.8, the Asset Sale of Oil and Gas Properties which
are attributable to Proven Reserves; provided that, (A) the consideration
received by the Credit Party in respect of such Asset Sale shall be cash, cash
equivalents, or shall be attributable to Oil and Gas Properties classified as
Proven Reserves, (B) the consideration received in respect of such Asset Sale
shall be equal to or greater than the fair market value of such Oil and Gas
Properties, interest therein or Subsidiary subject of such Asset Sale (as
reasonably determined by the board of directors or the equivalent governing body
of the Borrower and, if requested by the Administrative Agent, the Borrower
shall deliver a certificate of a Responsible Officer of the Borrower certifying
to that effect) and (C) if any such Asset Sale is of a Subsidiary owning Oil and
Gas Properties, such Asset Sale shall include all the Equity Interests of such
Subsidiary;

 

(vi)                              subject to the provisions of the last
paragraph of this Section 6.8, the Asset Sale of Hedging Arrangements; provided
that, (A) 100% of the consideration received in respect of such Asset Sale shall
be cash or cash equivalents or other Hedging Arrangements, (B) the consideration
received in respect of such Asset Sale shall be equal to or greater than the
fair market value of such Hedging Arrangements; and

 

(vii)                           Asset Sales of other Property (other than Oil
and Gas Properties or Hedging Arrangements) not to exceed $1,000,000 during any
fiscal year.

 

Notwithstanding the foregoing, the Borrower will not, and will not permit any
other Credit Party to, consummate any Material Disposition if after giving
effect to such material Disposition, the Borrower would not be in pro forma
compliance with Section 6.21.

 

Section 6.9                                    Restricted Payments.  No Credit
Party shall make, nor shall it permit any of its Subsidiaries to make any
Restricted Payments except that (a) so long as no Default, Event of Default or
Borrowing Base Deficiency exists or would result therefrom (i) the Subsidiaries
of the Borrower may make Restricted Payments to the Borrower or any other Credit
Party that is a Subsidiary of the Borrower, and (ii) the Credit Parties may make
Restricted Payments in respect of subordinated Debt permitted pursuant to
Section 6.1(b) or (h) and (b) the Borrower and any Subsidiary may pay any
management fee or similar fee to any Affiliate of the Borrower or its
Subsidiaries pursuant to the Management Agreement; provided that any amendments,
modifications, or side letters with respect to the Management Agreement after
the Closing Date are acceptable to the Administrative Agent.

 

Section 6.10                             Affiliate Transactions.  No Credit
Party shall, nor shall it permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction or series of
transactions (including, but not limited to, the purchase, sale, lease or
exchange of Property, the making of any investment, the giving of any guaranty,
the assumption of any obligation or the rendering of any service) with any of
its Affiliates which are not Credit Parties unless such transaction or series of
transactions is on terms no less favorable to the Borrower or any Subsidiary, as
applicable, than those that could be obtained in a comparable arm’s length
transaction with a Person that is not such an Affiliate except the restrictions
in this Section 6.10 shall not apply to:  (a) the Restricted Payments permitted
under Section 6.9, if any, (b) Investments by a Credit Party in the form of
Equity Interests of another Credit Party, and (c) reasonable and customary
director, officer and employee compensation (including bonuses), indemnification
and other benefits (including retirement, health, stock option and other benefit
plans).

 

Section 6.11                             Line of Business.  No Credit Party
shall, and shall not permit any of its Subsidiaries to, engage to any material
extent in any business other than businesses of the type conducted by the
Borrower and its Subsidiaries on the Effective Date and businesses reasonably
related thereto.

 

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Section 6.12                             Hazardous Materials.  No Credit Party
(a) shall, nor shall it permit any of its Subsidiaries to, create, handle,
transport, use, or dispose of any Hazardous Substance or Hazardous Waste, except
in the ordinary course of its business and except in compliance with
Environmental Law other than to the extent that such non-compliance could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Change or in any liability to the Lenders or the Administrative Agent,
and (b) shall, nor shall it permit any of its Subsidiaries to, release any
Hazardous Substance or Hazardous Waste into the environment and shall not permit
any Credit Party’s or any Subsidiary’s Property to be subjected to any release
of Hazardous Substance or Hazardous Waste, except in compliance with
Environmental Law other than to the extent that such non-compliance could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Change or in any liability on the Lenders or the Administrative Agent.

 

Section 6.13                             Compliance with ERISA.  Except for
matters that individually or in the aggregate could not reasonably be expected
to cause a Material Adverse Change, no Credit Party shall, nor shall it permit
any of its Subsidiaries to, directly or indirectly:  (a) engage in any
transaction in connection with which the Borrower or any Subsidiary could be
subjected to either a civil penalty assessed pursuant to section 502(c), (i) or
(l) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code;
(b) terminate, or permit any member of the Controlled Group to terminate, any
Plan in a manner, or take any other action with respect to any Plan, which could
result in any liability to the Borrower, any Subsidiary or any member of the
Controlled Group to the PBGC; (c) fail to make, or permit any member of the
Controlled Group to fail to make, full payment when due of all amounts which,
under the provisions of any Plan, agreement relating thereto or applicable law,
the Borrower, a Subsidiary or member of the Controlled Group is required to pay
as contributions thereto; (d) permit to exist, or allow any Subsidiary or any
member of the Controlled Group to permit to exist, any accumulated funding
deficiency (or unpaid minimum required contribution for plan years after
December 31, 2007) 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 member of the Controlled Group to permit, the actuarial present value of the
benefit liabilities (as “actuarial present value of the benefit liabilities”
shall have the meaning specified in section 4041 of ERISA) under any Plan that
is regulated under Title IV of ERISA to exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities; (f) contribute to or assume an
obligation to contribute to, or permit any member of the Controlled Group to
contribute to or assume an obligation to contribute to, any Multiemployer Plan;
(g) acquire, or permit any member of the Controlled Group to acquire, an
interest in any Person that causes such Person to become a member of the
Controlled Group 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 member
of the Controlled Group to incur, a liability to or on account of a Plan under
sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; or (i) contribute to or
assume an obligation to contribute to any employee welfare benefit plan, as
defined in section 3(1) of ERISA, 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 liability.

 

Section 6.14                             Sale and Leaseback Transactions.  No
Credit Party shall, nor shall it permit any of its Subsidiaries to, sell or
transfer to a Person any Property, whether now owned or hereafter acquired, if
at the time or thereafter the Borrower or a Subsidiary shall lease as lessee
such Property or any part thereof or other Property which the Borrower or a
Subsidiary intends to use for substantially the same purpose as the Property
sold or transferred.

 

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Section 6.15                             Limitation on Hedging.  No Credit Party
shall, nor shall it permit any of its Subsidiaries to enter into or maintain a
position in any Hedging Arrangement which,

 

(a)                                 is for speculative purposes or is for any
purpose other than as a part of its normal business operations as a risk
management strategy and/or hedge against changes resulting from market
conditions related to the Borrower’s or its Subsidiaries’ operations;

 

(b)                                 is secured (unless such Hedging Arrangement
is with a Swap Counterparty as defined in the First Lien Credit Agreement) or
obligates any Credit Party to any margin call requirements or otherwise requires
the Borrower or any of its Subsidiaries to put up money, assets, letters of
credit, or other security or includes any deferred premium payment;

 

(c)                                  with respect to Hedging Arrangements
related to commodities, is longer than 60 months in duration from the date such
Hedging Arrangement is entered into;

 

(d)                                 with respect to Hedging Arrangements related
to commodities for the first 36 months following any date of determination:

 

(i)                                     covers notional volumes in excess of 85%
of the anticipated production of gas volumes attributable to Proven Reserves of
the Borrower and its Subsidiaries, as reflected in the most recently delivered
Engineering Report under Section 5.2(c);

 

(ii)                                  covers notional volumes in excess of 85%
of the anticipated production of natural gas liquids volumes attributable to
Proven Reserves of the Borrower and its Subsidiaries, as reflected in the most
recently delivered Engineering Report under Section 5.2(c);

 

(iii)                               covers notional volumes in excess of 85% of
the anticipated production of oil volumes attributable to Proven Reserves of the
Borrower and its Subsidiaries, as reflected in the most recently delivered
Engineering Report under Section 5.2(c);

 

provided, however, that the foregoing volume limitations shall not apply to put
option contracts that are not related to corresponding calls, collars or swaps;

 

(e)                                  with respect to Hedging Arrangements
related to commodities for the 37th through 60th month following any date of
determination:

(i)                                     covers notional volumes in excess of the
greater of (A) 65% of the anticipated production of gas volumes attributable to
Proven Reserves of the Borrower and its Subsidiaries and (B) 90% of the
anticipated production of gas volumes attributable to Proved Developed Producing
of the Borrower and its Subsidiaries, in each case as reflected in the most
recently delivered Engineering Report under Section 5.2(c);

 

(ii)                                  covers notional volumes in excess of the
greater of (A) 65% of the anticipated production of natural gas liquids volumes
attributable to Proven Reserves of the Borrower and its Subsidiaries and (B) 90%
of the anticipated production of natural gas liquids volumes attributable to
Proved Developed Producing Reserves of the Borrower and its Subsidiaries, in
each case as reflected in the most recently delivered Engineering Report under
Section 5.2(c);

 

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(iii)                               covers notional volumes in excess of the
greater of (A) 65% of the anticipated production of oil volumes attributable to
Proven Reserves of the Borrower and its Subsidiaries and (B) 90% of the
anticipated production of oil volumes attributable to Proved Developed Producing
Reserves of the Borrower and its Subsidiaries, in each case as reflected in the
most recently delivered Engineering Report under Section 5.2(c);

 

provided, however, that the foregoing volume limitations shall not apply to put
option contracts that are not related to corresponding calls, collars or swaps;
or

 

(f)                                   with respect to Hedging Arrangements
related to interest rates:

 

(i)                                     relates to payment obligations on Debt
which is not permitted to be incurred under Section 6.1 above;

 

(ii)                                  results in the aggregate notional amount
of all such Hedging Arrangements exceeding 75% of the anticipated outstanding
principal balance of the Debt under this Agreement and the First Lien Credit
Agreement;

 

(iii)                               is with a counterparty or has a guarantor of
the obligation of the counterparty who (unless such counterparty is a Lender or
one of its Affiliates) at the time the Hedging Arrangement is made is rated
lower than A by S & P or A2 by Moody’s;

 

(iv)                              as to any such Hedging Arrangement covering
the Debt incurred under this Agreement, is with a counterparty that is not a
Lender or an Affiliate of a Lender; or

 

(v)                                 has a floating rate index that does not
generally match the index used to determine the floating rates of interest on
the corresponding Debt to be hedged by such Hedging Arrangement;

 

provided that, if, as of any Test Date the aggregate notional volumes of all
Hedging Arrangements covering natural gas, crude oil or natural gas liquids,
respectively, for any month in the fiscal quarter preceding such Test Date
exceed the actual volumes of production for the Borrower and its Subsidiaries
for such commodity for such month, then Borrower shall (A) furnish to
Administrative Agent, no later than 5:00 pm Mountain Time on such Test Date, a
statement setting forth in reasonable detail the calculation of such
determination and (B) no later than 15 days after such Test Date, (1) furnish to
Administrative Agent an updated Engineering Report (the “Updated Report”),
(2) terminate, create off-setting positions or otherwise unwind existing Hedging
Arrangements such that, at such time, future hedging volumes will otherwise
comply with this Section 6.15 on a going forward basis, and (3) furnish to
Administrative Agent a certificate executed by a Responsible Officer certifying
that as of the date of such certificate the Borrower is in compliance with this
Section 6.15.

 

Section 6.16                             Leverage Ratio.  Borrower shall not
permit the Leverage Ratio as of each fiscal quarter end, beginning with the
fiscal quarter ending July 31, 2014, to be more than 4.50 to 1.00.

 

Section 6.17                             Current Ratio.  The Borrower shall not
permit the ratio of, as of the last day of each fiscal quarter of the Borrower,
beginning with the fiscal quarter ending July 31, 2014, the Borrower’s and its
consolidated Subsidiaries’ (a) consolidated current assets to (b) consolidated
current liabilities, to be less than 1.00 to 1.00.  For purposes of this
calculation (i) “current assets” shall include,

 

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as of the date of calculation, the Availability (as defined in the First Lien
Credit Agreement but shall exclude any asset representing a valuation account
arising from the application of ASC 815, and (ii) “current liabilities” shall
exclude, as of the date of calculation, the current portion of long—term Debt
existing under this Agreement and any liabilities representing a valuation
account arising from the application of ASC 815.

 

Section 6.18                             Operating Leases.  No Credit Party
shall, nor shall it permit any of its Subsidiaries to, enter into any lease that
constitutes an operating lease under GAAP if the obligations of a Credit Party
or such Subsidiary as lessee under such lease would cause its lease payments
(excluding payments for taxes, insurance, and other non-rental expenses to the
extent not included within the stated amount of the rental payments under such
lease) in respect of all such leases entered into by the Credit Parties to
exceed $5,000,000 during any fiscal year of the Borrower.

 

Section 6.19                             Prepayment of Certain Debt and Other
Obligations.  No Credit Party shall, nor shall it permit any of its Subsidiaries
to, prepay, redeem, purchase, defease or otherwise satisfy prior to the
scheduled maturity thereof in any manner, or make any payment in violation of
any subordination terms of, any Debt, except (a) the prepayment of the
Obligations in accordance with the terms of this Agreement, (b) regularly
scheduled or required repayments or redemptions of Permitted Debt and
refinancings and refundings of such Permitted Debt so long as such refinancings
and refundings would otherwise comply with Section 6.1, and (c) so long as no
Event of Default exists or would result therefrom, other prepayments of
Permitted Debt not described in the immediately preceding clauses (a) and (b);
provided that the foregoing shall not prohibit the payment of First Lien
Indebtedness.

 

Section 6.20                             Gas Imbalances, Take-or-Pay or Other
Prepayments.  The Borrower shall not, nor shall it permit any of its
Subsidiaries to, allow gas imbalances (other than those imbalances which
(a) occur in the normal course of business and (b) do not exceed 2% of the value
of the Proven Reserves of the Credit Parties), take-or-pay obligations or
prepayments with respect to the Oil and Gas Properties of the Borrower or any
Subsidiary which would require the Borrower or any Subsidiary to deliver their
respective Hydrocarbons produced on a monthly basis from such Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor.

 

Section 6.21                             Asset Coverage Test.  The Borrower will
not permit the Asset Coverage Ratio, as of each fiscal quarter end, to be less
than 1.5 to 1.0.

 

ARTICLE 7
DEFAULT AND REMEDIES

 

Section 7.1                                    Events of Default.  The
occurrence of any of the following events shall constitute an “Event of Default”
under this Agreement and any other Credit Document:

 

(a)                                 Payment Failure.  Any Credit Party (i) fails
to pay any principal when due under this Agreement or (ii) fails to pay, within
three Business Days of when due, any interest or other amount due under this
Agreement or any other Credit Document, including payments of fees,
reimbursements, and indemnifications;

 

(b)                                 False Representation or Warranties.  Any
representation or warranty made or deemed to be made by any Credit Party or any
officer thereof in this Agreement, in any other Credit Document or in any
certificate delivered in connection with this Agreement or any other Credit
Document is incorrect, false or otherwise misleading in any material respect
(except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) at the time it was made or deemed made;

 

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(c)                                  Breach of Covenant.  (i) Any breach by any
Credit Party of any of the covenants in Section 5.1, Section 5.2(g),
Section 5.3(a) or Article 6 of this Agreement or the corresponding covenants in
any Guaranty or (ii) any breach by any Credit Party of any other covenant
contained in this Agreement or any other Credit Document and such breach shall
remain unremedied for a period of thirty days following the earlier of (A) the
date on which Administrative Agent gave notice of such failure to Borrower and
(B) the date any officer of the Borrower or any Subsidiary acquires knowledge of
such failure (such grace period to be applicable only in the event such Default
can be remedied by corrective action of the Borrower or any Subsidiary);

 

(d)                                 Guaranties.  Any provisions in the
Guaranties shall at any time (before its expiration according to its terms) and
for any reason cease to be in full force and effect and valid and binding on the
Guarantors party thereto or shall be contested by any party thereto; any
Guarantor shall deny it has any liability or obligation under such Guaranties;
or any Guarantor shall cease to exist other than as expressly permitted by the
terms of this Agreement;

 

(e)                                  Security Documents.  Any Security Document
shall at any time and for any reason cease to create an Acceptable Security
Interest in the Property purported to be subject to such agreement in accordance
with the terms of such agreement or any material provisions thereof shall cease
to be in full force and effect and valid and binding on the Credit Party that is
a party thereto or any such Person shall so state in writing (unless released or
terminated pursuant to the terms of such Security Document);

 

(f)                                   Cross-Default.  (i) The Borrower or any
Guarantor shall fail to pay any principal of or premium or interest on its Debt
which is outstanding in a principal amount of at least $5,000,000 individually
or when aggregated with all such Debt of the Borrower and the Subsidiaries so in
default (but excluding the Obligations) when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Debt; (ii) any
other event (other than the failure of the Borrower to comply with Section 6.16
of the First Lien Credit Agreement) shall occur or condition shall exist under
any agreement or instrument relating to Debt which is outstanding in a principal
amount of at least $5,000,000 individually or when aggregated with all such Debt
of the Borrower and the Subsidiaries so in default (other than the Obligations),
and shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt prior to
the stated maturity thereof; or (iii) any such Debt shall be declared to be due
and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment); provided that, for purposes of this paragraph (f), the
“principal amount” of the obligations in respect of Hedging Arrangements at any
time shall be the maximum aggregate amount (giving effect to any netting
agreements) that would be required to be paid if such Hedging Arrangements were
terminated at such time;

 

(g)                                  Bankruptcy and Insolvency.  (i) Except as
permitted under Section 6.7 above, any Credit Party or any Subsidiary of the
Borrower shall terminate its existence or dissolve or (ii) any Credit Party or
any Subsidiary of the Borrower (A) admits in writing its inability to pay its
debts generally as they become due; makes an assignment for the benefit of its
creditors; consents to or acquiesces in the appointment of a receiver,
liquidator, fiscal agent, or trustee of itself or any of its Property; files a
petition under bankruptcy or other laws for the relief of debtors; or consents
to any reorganization, arrangement, workout, liquidation, dissolution, or
similar relief or (B) shall have had, without its consent: any court enter an
order appointing a receiver, liquidator, fiscal agent, or trustee of itself or
any of its Property; any petition filed against it seeking reorganization,
arrangement, workout, liquidation, dissolution or similar relief under
bankruptcy or other laws for the relief of debtors and such petition shall not
be dismissed, stayed, or set aside for an aggregate of 60 days, whether or not
consecutive;

 

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(h)                                 Settlements; Adverse Judgment.  The Borrower
or any of its Subsidiaries enters into a settlement of any claim against any of
them when a suit has been filed or suffers final judgments against any of them
since the date of this Agreement in an aggregate amount, less any insurance
proceeds covering such settlements or judgments which are received or as to
which the insurance carriers admit liability, greater than $5,000,000 and, in
the case of final judgments, either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgments or (ii) there shall be any period
of 30 consecutive days during which a stay of enforcement of such judgments, by
reason of a pending appeal or otherwise, shall not be in effect;

 

(i)                                     Termination Events.  Any Termination
Event with respect to a Plan shall have occurred, and, 30 days after notice
thereof shall have been given to the Borrower by the Administrative Agent, such
Termination Event shall not have been corrected and shall have created and
caused to be continuing a material risk of Plan termination or liability for
withdrawal from the Plan as a “substantial employer” (as defined in
Section 4001(a)(2) of ERISA), which termination could reasonably be expect to
result in a liability of, or liability for withdrawal could reasonably be
expected to be, greater than $5,000,000;

 

(j)                                    Plan Withdrawals.  The Borrower or any
member of the Controlled Group as employer under a Multiemployer Plan shall have
made a complete or partial withdrawal from such Multiemployer Plan and such
withdrawing employer shall have incurred a withdrawal liability in an annual
amount exceeding $5,000,000;

 

(k)                                 Credit Documents; Lien.  Any material
provision of any Credit Document shall for any reason cease to be valid and
binding on a Credit Party or any of their respective Subsidiaries or any such
Person shall so state in writing or the Administrative Agent shall fail to have
an Acceptable Security Interest in Property required to be Collateral under the
Credit Documents;

 

(l)                                     Change in Control.  The occurrence of a
Change in Control;

 

(m)                             First Lien Event of Default.  An “Event of
Default” under the First Lien Credit Agreement shall have occurred (other than
an Event of Default as a result of the breach of Section 6.16 of the First Lien
Credit Agreement); or

 

(n)                                 Intercreditor Agreement.  Prior to First
Priority Obligations Payments Date, the Intercreditor Agreement shall cease to
be effective (other than pursuant to the terms provided therein) or otherwise
shall cease to be a legal, valid and binding agreement enforceable against the
holders of any Debt under the First Lien Credit Agreement in any material
respect.

 

Section 7.2                                    Optional Acceleration of
Maturity.  Subject to the Intercreditor Agreement, if any Event of Default shall
have occurred and be continuing, then, and in any such event:

 

(a)                                 the Administrative Agent (i) shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrower, declare that the obligation of each Lender to make Advances shall be
terminated, whereupon the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrower, declare the Obligations, the Notes, all interest thereon, and all
other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Obligations, the Notes, all such interest, and all such amounts
shall become and be forthwith due and payable in full, without presentment,
demand, protest or further notice of any kind (including, without limitation,
any notice of intent to accelerate or notice of acceleration), all of which are
hereby expressly waived by each of the Credit Parties, and

 

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(b)                                 the Administrative Agent shall at the
request of, or may with the consent of, the Required Lenders proceed to enforce
its rights and remedies under the Security Documents, the Guaranties, or any
other Credit Document for the ratable benefit of the Secured Parties by
appropriate proceedings.

 

Section 7.3                                    Automatic Acceleration of
Maturity.  Subject to the Intercreditor Agreement, if any Event of Default
pursuant to Section 7.1(g) shall occur:

 

(a)                                 the obligation of each Lender to make
Advances shall immediately and automatically be terminated and the Obligations,
the Notes, all interest on the Notes, and all other amounts payable under this
Agreement shall immediately and automatically become and be due and payable in
full, without presentment, demand, protest or any notice of any kind (including,
without limitation, any notice of intent to accelerate or notice of
acceleration), all of which are hereby expressly waived by each of the Credit
Parties, and

 

(b)                                 the Administrative Agent shall at the
request of, or may with the consent of, the Required Lenders proceed to enforce
its rights and remedies under the Security Documents, the Guaranties, or any
other Credit Document for the ratable benefit of the Secured Parties by
appropriate proceedings.

 

Section 7.4                                    Set-off.  Upon (a) the occurrence
and during the continuance of any Event of Default and (b) the making of the
request or the granting of the consent, if any, specified by Section 7.2 to
authorize the Administrative Agent to declare the Notes and any other amount
payable hereunder due and payable pursuant to the provisions of Section 7.2 or
the automatic acceleration of the Notes and all amounts payable under this
Agreement pursuant to Section 7.3, subject to the Intercreditor Agreement, the
Administrative Agent and each Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the Administrative
Agent or such Lender to or for the credit or the account of any Credit Party
against any and all of the obligations of the Borrower now or hereafter existing
under this Agreement, the Notes held by the Administrative Agent or such Lender,
and the other Credit Documents, irrespective of whether or not the
Administrative Agent or such Lender shall have made any demand under this
Agreement, such Note, or such other Credit Documents, and although such
obligations may be unmatured.  Each Lender agrees to promptly notify the
Borrower after any such set-off and application made by such Lender, provided
that the failure to give such notice shall not affect the validity of such
set-off and application.  The rights of the Administrative Agent and each Lender
under this Section 7.4 are in addition to any other rights and remedies
(including, without limitation, other rights of set-off) which the
Administrative Agent or such Lender may have.

 

Section 7.5                                    Remedies Cumulative, No Waiver. 
No right, power, or remedy conferred to any Lender in this Agreement or the
Credit Documents, or now or hereafter existing at law, in equity, by statute, or
otherwise shall be exclusive, and each such right, power, or remedy shall to the
full extent permitted by law be cumulative and in addition to every other such
right, power or remedy.  No course of dealing and no delay in exercising any
right, power, or remedy conferred to any Lender in this Agreement and the Credit
Documents or now or hereafter existing at law, in equity, by statute, or
otherwise shall operate as a waiver of or otherwise prejudice any such right,
power, or remedy.  Any Lender may cure any Event of Default without waiving the
Event of Default.  No notice to or demand upon the Borrower or any other Credit
Party shall entitle the Borrower or any other Credit Party to similar notices or
demands in the future.

 

Section 7.6                                    Application of Payments.  Prior
to an Event of Default, subject to the Intercreditor Agreement, all payments
made hereunder shall be applied by the Administrative Agent as directed by the
Borrower, but subject to the terms of this Agreement, including the application
of

 

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prepayments according to Section 2.5 and Section 2.12.  During the existence of
an Event of Default, subject to the Intercreditor Agreement, all payments and
collections received by the Administrative Agent (other than as a result of the
exercise of remedies against Collateral or against the Borrower or any
Subsidiary) shall be applied by the Administrative Agent in its discretion, but
subject to the terms of this Agreement, including the application of prepayments
according to Section 2.5 and Section 2.12.  During the existence of an Event of
Default, subject to the Intercreditor Agreement, all payments and collections
received by the Administrative Agent as a result of the exercise of remedies
against Collateral or against the Borrower or any Subsidiary shall be applied to
the Secured Obligations in accordance with Section 2.12 and otherwise in the
following order:

 

FIRST, to the payment of all costs and expenses incurred by the Administrative
Agent (in its capacity as such hereunder or under any other Credit Document) in
connection with this Agreement or any of the Secured Obligations, including all
court costs and the fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Administrative Agent as secured party
hereunder or under any other Credit Document on behalf of any Credit Party and
any other costs or expenses incurred in connection with the exercise of any
right or remedy hereunder or under any other Credit Document;

 

SECOND, to the payment of all accrued interest constituting part of the Secured
Obligations (the amounts so applied to be distributed ratably among the Secured
Parties in accordance with the amounts of the Secured Obligations described in
this clause “SECOND” owed to them on the date of any such distribution);

 

THIRD, to the payment of any Secured Obligations not addressed in clauses
“FIRST” or “SECOND” of this Section 7.6(c) (including, without limitation, any
principal, fees or expenses), constituting part of the Secured Obligations (the
amounts so applied to be distributed ratably among the Secured Parties in
accordance with the amounts of the Secured Obligations described in this clause
“THIRD” owed to them on the date of any such distribution); and

 

FOURTH, to the Credit Parties, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct or, otherwise, to the Borrower.

 

ARTICLE 8
THE ADMINISTRATIVE AGENT

 

Section 8.1                                    Appointment, Powers, and
Immunities.  Each Lender hereby irrevocably appoints and authorizes the
Administrative Agent to act as its agent under this Agreement and the other
Credit Documents with such powers and discretion as are specifically delegated
to the Administrative Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental
thereto.  The Administrative Agent (which term as used in this sentence and in
Section 8.5 and the first sentence of Section 8.6 shall include its Affiliates
and its own and its Affiliates’ officers, directors, employees, and agents): 
(a) shall not have any duties or responsibilities except those expressly set
forth in this Agreement and shall not be a trustee or fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital, statement,
representation, or warranty (whether written or oral) made in or in connection
with any Credit Document or any certificate or other document referred to or
provided for in, or received by any of them under, any Credit Document, or for
the value, validity, effectiveness, genuineness, enforceability, or sufficiency
of any Credit Document, or any other document referred to or provided for
therein or for any failure by any Credit Party or any other Person to perform
any of its obligations thereunder; (c) shall not be responsible for or have any
duty to ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Credit Party or the

 

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satisfaction of any condition or to inspect the Property (including the books
and records) of any Credit Party or any of its Subsidiaries or Affiliates;
(d) shall not be required to initiate or conduct any litigation or collection
proceedings under any Credit Document unless requested by the Required Lenders
in writing and it receives indemnification satisfactory to it from the Lenders;
and (e) shall not be responsible for any action taken or omitted to be taken by
it under or in connection with any Credit Document, except for its own gross
negligence or willful misconduct.  The Administrative Agent may employ agents
and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by the
Administrative Agent with reasonable care.

 

Section 8.2                                    Reliance by Administrative
Agent.  The Administrative Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telecopy) believed by it to be
genuine and correct and to have been signed, sent or made by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel
(including counsel for any Credit Party), independent accountants, and other
experts selected by the Administrative Agent.  The Administrative Agent may deem
and treat the payee of any Notes as the holder thereof for all purposes hereof
unless and until the Administrative Agent receives and accepts an Assignment and
Acceptance executed in accordance with Section 9.7.  As to any matters not
expressly provided for by this Agreement, the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding on all of the Lenders; provided, however, that the
Administrative Agent shall not be required to take any action that exposes the
Administrative Agent to personal liability or that is contrary to any Credit
Document or applicable law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking any such action.

 

Section 8.3                                    Defaults.  The Administrative
Agent shall not be deemed to have knowledge or notice of the occurrence of a
Default or Event of Default unless the Administrative Agent has received written
notice from a Lender or the Borrower specifying such Default or Event of Default
and stating that such notice is a “Notice of Default”.  In the event that the
Administrative Agent receives such a notice of the occurrence of a Default or
Event of Default, the Administrative Agent shall give prompt notice thereof to
the Lenders.  The Administrative Agent shall (subject to Section 8.2) take such
action with respect to such Default or Event of Default as shall reasonably be
directed by the Required Lenders, provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interest of the Lenders.

 

Section 8.4                                    Rights as Lender.  With respect
to its Commitments and the Advances made by it, Wells Fargo Energy Capital, Inc.
(and any successor acting as Administrative Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Administrative
Agent, and the term “Lender” or “Lenders” shall, unless the context otherwise
indicates, include the Administrative Agent in its individual capacity.  Wells
Fargo Energy Capital, Inc. (and any successor acting as Administrative Agent)
and its Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or Affiliates as if it were not acting
as Administrative Agent, and Wells Fargo Energy Capital, Inc. (and any successor
acting as Administrative Agent) and its Affiliates may accept fees and other
consideration from any Credit Party or any of its Subsidiaries or Affiliates for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.

 

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Section 8.5                                    Indemnification.  THE LENDERS
SEVERALLY AGREE TO INDEMNIFY THE ADMINISTRATIVE AGENT AND EACH OF ITS RESPECTIVE
AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS (TO
THE EXTENT NOT REIMBURSED BY THE BORROWER), RATABLY ACCORDING TO THE RESPECTIVE
PRINCIPAL AMOUNTS OF THE ADVANCES THEN HELD BY EACH OF THEM, (OR IF NO PRINCIPAL
OF THE ADVANCES IS AT THE TIME OUTSTANDING, RATABLY ACCORDING TO THE RESPECTIVE
AMOUNT OF PRINCIPAL HELD BY EACH OF THEM IMMEDIATELY PRIOR TO THE TERMINATION,
EXPIRATION OR FULL REPAYMENT OF SUCH ADVANCES), FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, TAXES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES, OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH
MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN
ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION TAKEN OR
OMITTED BY THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT (IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN
PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE
ADMINISTRATIVE AGENT), AND INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL
LIABILITIES, PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, TAXES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES, OR DISBURSEMENTS RESULTING FROM THE ADMINISTRATIVE
AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.  WITHOUT LIMITATION OF THE
FOREGOING, EACH LENDER AGREES TO REIMBURSE THE ADMINISTRATIVE AGENT PROMPTLY
UPON DEMAND FOR ITS RATABLE SHARE (DETERMINED AS SET FORTH ABOVE IN THIS
PARAGRAPH) OF ANY OUT-OF-POCKET EXPENSES (INCLUDING COUNSEL FEES) INCURRED BY
THE ADMINISTRATIVE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION,
DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT (WHETHER
THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN
RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT, TO THE EXTENT THAT THE ADMINISTRATIVE AGENT IS NOT REIMBURSED FOR SUCH
BY THE BORROWER.

 

Section 8.6                                    Non-Reliance on Administrative
Agent and Other Lenders.  Each Lender agrees that it has, independently and
without reliance on the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of the Borrower and the other Credit Parties and decision to enter into
this Agreement and that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under the Credit
Documents.  Except for notices, reports, and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder and for other information in the Administrative Agent’s possession
which has been requested by a Lender and for which such Lender pays the
Administrative Agent’s expenses in connection therewith, the Administrative
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition, or
business of any Credit Party or any of its Subsidiaries or Affiliates that may
come into the possession of the Administrative Agent or any of its Affiliates. 
The Lenders acknowledge that the Administrative Agent is acting solely in
administrative capacities with respect to the structuring and syndication of
this facility and has no duties, responsibilities or liabilities under this
Agreement and the other Credit Documents other than its administrative duties,
responsibilities and liabilities specifically as set forth in the Credit
Documents and in its capacity as Lender hereunder.  Each Lender (and each person
that becomes a Lender hereunder pursuant to Section 10.5) hereby
(a) acknowledges that Wells Fargo Bank,

 

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N.A. is acting under such Intercreditor Agreement as the First Lien Agent, and
that its Affiliate, Wells Fargo Energy Capital, Inc., is acting under such
Intercreditor Agreement as the Second Lien Administrative Agent and Wells Fargo
Bank, N.A. or Wells Fargo Energy Capital, Inc., or both, is or may be a Lender
hereunder and/or a lender under the First Lien Credit Agreement and (b) waives
any conflict of interest, now contemplated or arising hereafter, in connection
therewith and agrees not to assert against Administrative Agent or the First
Lien Agent any claims, cause of action, damages or liabilities of whatever kind
or nature relating thereto.  Each Lender (and each Person that becomes a Lender
hereunder pursuant to Section 9.7) hereby authorizes and directs Administrative
Agent to enter into such Intercreditor Agreement on behalf of such Lender and
agrees that each of Administrative Agent and the First Lien Agent, in its
various capacities thereunder, may take such actions on its behalf as is
contemplated by the terms of such Intercreditor Agreement.

 

Section 8.7                                    Resignation of Administrative
Agent.  The Administrative Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrower.  Upon receipt of notice of any such
resignation, the Required Lenders shall have the right to appoint a successor
Administrative Agent with, so long as no Event of Default has occurred and is
continuing, the consent of the Borrower, which consent shall not be unreasonably
withheld.  If no successor Administrative Agent shall have been so appointed by
the Required Lenders with the consent of the Borrower, and shall have accepted
such appointment, within 30 days after the retiring Administrative Agent’s
giving of notice of resignation, then the retiring Administrative Agent may, on
behalf of the Lenders and the Borrower, appoint a successor Administrative
Agent, which shall be, in the case of a successor agent, a commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $250,000,000; 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 Credit Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders
under any of the Credit Documents, the retiring Administrative Agent shall
continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (2) all payments, communications and
determinations provided to be made by, to or through the retiring 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 any appointment as
Administrative Agent by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges, and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement and the other Credit Documents.  After any
retiring Administrative Agent’s resignation as Administrative Agent, the
provisions of this Article 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement and the other Credit Documents.

 

Section 8.8                                    Collateral Matters.

 

(a)                                 The Administrative Agent is authorized on
behalf of the Secured Parties, without the necessity of any notice to or further
consent from such Secured Parties, from time to time, to take any actions with
respect to any Collateral or Security Documents which may be necessary to
perfect and maintain the Liens upon the Collateral granted pursuant to the
Security Documents.  The Administrative Agent is further authorized (but not
obligated) on behalf of the Secured Parties, without the necessity of any notice
to or further consent from the Secured Parties, from time to time, to take any
action in exigent circumstances as may be reasonably necessary to preserve any
rights or privileges of the Secured Parties under the Credit Documents or
applicable Legal Requirements.  By accepting the benefit of the Liens

 

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granted pursuant to the Security Documents, each Secured Party hereby agrees to
the terms of this paragraph (a).

 

(b)                                 The Lenders hereby, and any other Secured
Party by accepting the benefit of the Liens granted pursuant to the Security
Documents, irrevocably authorize the Administrative Agent to (i) release any
Lien granted to or held by the Administrative Agent upon any Collateral (a) upon
termination of this Agreement, and the payment in full of all outstanding
Advances and all other Secured Obligations payable under this Agreement and
under any other Credit Document; (b) constituting property sold or to be sold or
disposed of as part of or in connection with any disposition permitted under
this Agreement or any other Credit Document; (c) constituting property in which
no Credit Party owned an interest at the time the Lien was granted or at any
time thereafter; or (d) constituting property leased to any Credit Party under a
lease which has expired or has been terminated in a transaction permitted under
this Agreement or is about to expire and which has not been, and is not intended
by such Credit Party to be, renewed or extended; and (ii) release a Guarantor
from its obligations under a Guaranty and any other applicable Credit Document
if such Person ceases to be a Subsidiary as a result of a transaction permitted
under this Agreement. Upon the request of the Administrative Agent at any time,
the Secured Parties will confirm in writing the Administrative Agent’s authority
to release particular types or items of Collateral pursuant to this Section 8.8.

 

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

 

ARTICLE 9
MISCELLANEOUS

 

Section 9.1                                    Costs and Expenses.  The Borrower
agrees to pay on demand:

 

(a)                                 all reasonable out-of-pocket costs and
expenses of Administrative Agent (but not of other Lenders) in connection with
the preparation, execution, delivery, administration, modification, and
amendment of this Agreement, the Notes, and the other Credit Documents including
the fees and out-of-pocket expenses of outside counsel for Administrative Agent
(but not of other Lenders), with respect to advising the Administrative Agent as
to its rights and responsibilities under this Agreement, and

 

(b)                                 all out-of-pocket costs and expenses, if
any, of the Administrative Agent and each Lender (including outside counsel fees
and expenses of each Lender) in connection with the enforcement (whether through
negotiations, legal proceedings, or otherwise) of this Agreement, the Notes, and
the other Credit Documents.

 

Section 9.2                                    Indemnification; Waiver of
Damages.

 

(a)                                 INDEMNIFICATION.  EACH CREDIT PARTY HERETO
AGREES TO, JOINTLY AND SEVERALLY, INDEMNIFY AND HOLD HARMLESS THE ADMINISTRATIVE
AGENT, AND EACH LENDER AND EACH OF THEIR AFFILIATES AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND ADVISORS (EACH, AN “INDEMNITEE”)
FROM

 

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AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, TAXES, LIABILITIES, COSTS, AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES) THAT MAY BE
INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNITEE, IN EACH CASE ARISING
OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN
CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION OF
DEFENSE IN CONNECTION THEREWITH) THE CREDIT DOCUMENTS, ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE
ADVANCES, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN
PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE APPLICABLE
INDEMNITEE, EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR
EXPENSE IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT
JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNITEE’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.  IN THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO
WHICH THE INDEMNITY IN THIS SECTION 9.2 APPLIES, SUCH INDEMNITY SHALL BE
EFFECTIVE WHETHER OR NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT
BY ANY CREDIT PARTY, ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNITEE
OR ANY OTHER PERSON OR ANY INDEMNITEE IS OTHERWISE A PARTY THERETO.  No Credit
Party shall, without the prior written consent of each Indemnitee affected
thereby (which consent will not be unreasonably withheld), settle any threatened
or pending claim or action that would give rise to the right of any Indemnitee
to claim indemnification hereunder unless such settlement (x) includes a full
and unconditional release of all liabilities arising out of such claim or action
against such Indemnitee and (y) does not include any statement as to or an
admission of fault, culpability or failure to act by or on behalf of any
Indemnitee. THIS SECTION 9.2(a) SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN
ANY TAXES THAT REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM ANY NON-TAX
CLAIM.

 

(b)                                 Waiver of Consequential Damages, etc.  To
the fullest extent permitted by applicable law, no Credit Party shall assert,
agrees not to 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 Credit Document or any agreement or
instrument contemplated hereby, the transactions contemplated hereby or thereby,
any Advance or the use of the proceeds thereof.  No Indemnitee referred to in
subsection (a) above shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed to such
unintended recipients by such Indemnitee through telecommunications, electronic
or other information transmission systems in connection with this Agreement or
the other Credit Documents or the transactions contemplated hereby or thereby
other than for direct or actual damages resulting from the gross negligence or
willful misconduct of such Indemnitee as determined by a final and nonappealable
judgment of a court of competent jurisdiction.

 

(c)                                  Payments.  All payments required to be made
under this Section 9.2 shall be made within 10 days of demand therefor.

 

(d)                                 Survival.  Without prejudice to the survival
of any other agreement of the Credit Parties hereunder, the agreements and
obligations of the Credit Parties contained in this Section 9.2 shall survive
the termination of this Agreement, the termination of all Commitments, and the
payment in full of the Advances and all other amounts payable under this
Agreement.

 

Section 9.3                                    Waivers and Amendments.  No
amendment or waiver of any provision of this Agreement, the Notes, or any other
Credit Document (other than the Engagement Letter), nor consent to

 

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any departure by the Borrower or any Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Required Lenders
and the Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided that:

 

(a)                                 no amendment, waiver, or consent shall,
unless in writing and signed by all the Lenders and the Borrower, do any of the
following:  (i)  reduce the principal of, or interest on, the Notes,
(ii) postpone or extend any date fixed for any payment of principal of, or
interest on, the Notes, including, without limitation, the Maturity Date, or
(iii) change the number of Lenders which shall be required for the Lenders to
take any action hereunder or under any other Credit Document;

 

(b)                                 no amendment, waiver, or consent shall,
unless in writing and signed by all the Lenders and the Borrower, do any of the
following:  (i) waive any of the conditions specified in Section 3.1 or
Section 3.2, (ii) reduce any fees or other amounts payable hereunder or under
any other Credit Document (other than those specifically addressed above in this
Section 9.3), (iii) increase the aggregate Commitments, (iv) postpone or extend
any date fixed for any payment of any fees or other amounts payable hereunder
(other than those otherwise specifically addressed in this Section 9.3),
(v) amend Section 2.12(e), Section 7.6, this Section 9.3 or any other provision
in any Credit Document which expressly requires the consent of, or action or
waiver by, all of the Lenders, (vii) release any Guarantor from its obligation
under any Guaranty or, except as specifically provided in the Credit Documents
and as a result of transactions permitted by the terms of this Agreement,
release all or a material portion of the Collateral except as permitted under
Section 8.8(b); or (viii) amend the definition of “Required Lenders”;

 

(c)                                  no Commitment of a Lender or any
obligations of a Lender may be increased or extended without such Lender’s
written consent; and

 

(d)                                 no amendment, waiver, or consent shall,
unless in writing and signed by the Administrative Agent in addition to the
Lenders required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or any other Credit Document.

 

Section 9.4                                    Severability.  In case one or
more provisions of this Agreement or the other Credit Documents shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality, and enforceability of the remaining provisions contained
herein or therein shall not be affected or impaired thereby.

 

Section 9.5                                    Survival of Representations and
Obligations.  All representations and warranties contained in this Agreement or
made in writing by or on behalf of the Credit Parties in connection herewith
shall survive the execution and delivery of this Agreement and the other Credit
Documents, the making of the Advances and any investigation made by or on behalf
of the Lenders, none of which investigations shall diminish any Lender’s right
to rely on such representations and warranties.  All obligations of the Borrower
or any other Credit Party provided for in Sections 2.10, 2.11, 2.13(c), 9.1 and
9.2 and all of the obligations of the Lenders in Section 8.5 shall survive any
termination of this Agreement and repayment in full of the Obligations.

 

Section 9.6                                    Binding Effect.  This Agreement
shall become effective when it shall have been executed by the Borrower and the
Administrative Agent, and when the Administrative Agent shall have, as to each
Lender, either received a counterpart hereof executed by such Lender or been
notified by such Lender that such Lender has executed it and thereafter shall be
binding upon and inure to the benefit of the Borrower, the Administrative Agent,
and each Lender and their respective successors and assigns, except that neither
the Borrower nor any other Credit Party shall have the right to assign its
rights or delegate its duties under this Agreement or any interest in this
Agreement without the prior written consent of each Lender.

 

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Section 9.7                                    Lender Assignments and
Participations.

 

(a)                                 Each Lender may assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Advances, its
Notes, and its Commitments); provided, however, that (i) each such assignment
shall be to an Eligible Assignee; (ii) except in the case of an assignment to
another Lender or an assignment of all of a Lender’s rights and obligations
under this Agreement, any such partial assignment shall be in an amount at least
equal to $5,000,000 unless the Administrative Agent and, so long as no Default
or Event of Default has occurred and is continuing, the Borrower otherwise
consents to a lower amount (each such consent not to be unreasonably withheld or
delayed); provided that the Borrower shall be deemed to have consented to such
lower amount unless it shall have objected thereto by written notice to the
Administrative Agent within five (5) Business Days after having received notice
thereof; (iii) each assignment of a Lender’s rights and obligations with respect
to Advances and its Commitments shall be of a constant, and not varying,
percentage of all of its rights and obligations under this Agreement as a Lender
and the Notes (other than rights of reimbursement and indemnity arising before
the effective date of such assignment) and shall be of an equal pro rata share
of the Assignor’s interest in the Advances and its Commitment; and (iv) the
parties to such assignment shall execute and deliver to the Administrative Agent
for its acceptance an Assignment and Acceptance, together with any Notes subject
to such assignment and the assignor or assignee Lender shall pay a processing
fee of $3,500; provided that such processing fee shall not be required for the
initial assignments made by Wells Fargo Energy Capital, Inc. as a Lender and
such processing fee may be waived at the sole discretion of the Administrative
Agent.  Upon execution, delivery, and acceptance of such Assignment and
Acceptance and payment of the processing fee, the assignee thereunder shall be a
party hereto and, to the extent of such assignment, have the obligations,
rights, and benefits of a Lender hereunder and the assigning Lender shall, to
the extent of such assignment, relinquish its rights and be released from its
obligations under this Agreement.  Upon the consummation of any assignment
pursuant to this Section 9.7, the assignor, the Administrative Agent and the
Borrower shall make appropriate arrangements so that, if required, new Notes are
issued to the assignor and the assignee.  If the assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall
deliver to the Borrower and the Administrative Agent certification as to
exemption from deduction or withholding of Taxes in accordance with
Section 2.13(e).

 

(b)                                 The Administrative Agent shall maintain at
its address referred to in Section 9.9 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitments of, and principal amount of the
Advances owing to, each Lender from time to time (the “Register”).  The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Credit Parties, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement.

 

(c)                                  Upon its receipt of an Assignment and
Acceptance executed by the parties thereto, together with any Notes subject to
such assignment and payment of the processing fee, the Administrative Agent
shall, if such Assignment and Acceptance has been completed, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register, and (iii) give prompt notice thereof to the parties thereto.

 

(d)                                 Each Lender may sell participations to one
or more Persons (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 its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Commitments or its Advances)
provided, however, 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, (iii) the Participant
shall be entitled to the benefit of the

 

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yield protection provisions contained in Sections 2.10 and 2.11 and the right of
set-off contained in Section 7.4, and (iv) the Borrower shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to its Advances and its Notes
and to approve any amendment, modification, or waiver of any provision of this
Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of or the rate at which interest is payable on such Advances
or Notes, extending any scheduled principal payment date or date fixed for the
payment of interest on such Advances or Notes, or extending its Commitment). 
Each Lender that sells a participation shall, acting solely for this purpose as
a non-fiduciary agent of the Borrower, maintain a register on which it enters
the name and address of each Person it sells a participation to and the
principal amounts (and stated interest) of such Participant’s interest in the
Advances or other obligations under the Credit 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 such
Participant or any information relating to a participant’s interest in any
commitments, loans, letters of credit or its other obligations under any Credit
Document) to any Person except to the extent that such disclosure is necessary
to establish that such commitment, loan, letter of credit or other obligation is
in registered form under Section 5f.103-1(c) of the U.S. 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)                                  Notwithstanding any other provision set
forth in this Agreement, any Lender may at any time assign and pledge all or any
portion of its Advances and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank.  No such assignment shall release the assigning Lender
from its obligations hereunder.

 

(f)                                   Any Lender may furnish any information
concerning the Borrower or any of its Subsidiaries in the possession of such
Lender from time to time to assignees and participants (including prospective
assignees and participants), subject, however, to the provisions of the
following Section 9.8.

 

Section 9.8                                    Confidentiality.  The
Administrative Agent and each Lender (each a “Lending Party”) agree to keep
confidential any information furnished or made available to it by any Credit
Party pursuant to this Agreement and identified by such Credit Party as
proprietary or confidential; provided that nothing herein shall prevent any
Lending Party from disclosing such information (a) to any other Lending Party or
any Affiliate of any Lending Party, or any officer, director, employee, agent,
or advisor of any Lending Party or Affiliate of any Lending Party for purposes
of administering, negotiating, considering, processing, implementing,
syndicating, assigning, or evaluating the credit facilities provided herein and
the transactions contemplated hereby, (b) to any other Person if directly
incidental to the administration of the credit facilities provided herein,
(c) as required by any Legal Requirement, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public or that is or
becomes available to any Lending Party other than as a result of a disclosure by
any other Lending Party prohibited by this Agreement, (g) in connection with any
litigation relating to this Agreement or any other Credit Document to which such
Lending Party or any of its Affiliates may be a party, (h) to the extent
necessary in connection with the exercise of any right or remedy under this
Agreement or any other Credit Document, (i) on a confidential basis to (i) any
rating agency in connection with rating the Borrower or its Subsidiaries or the
credit facilities provided for herein or (ii) the CUSIP Service Bureau or any
similar agency in connection with the issuance and monitoring of CUSIP numbers
with respect to the credit facilities provided for herein, and (j) to any actual
or proposed participant or assignee, in each case, subject to provisions similar
to those contained in this Section 9.8.  NOTWITHSTANDING ANYTHING TO THE
CONTRARY

 

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CONTAINED HEREIN, nothing in this Agreement shall (a) restrict any Lending Party
from providing information to any bank or other regulatory or governmental
authorities, including the Federal Reserve Board and its supervisory staff;
(b) require or permit any Lending Party to disclose to any Credit Party that any
information will be or was provided to the Federal Reserve Board or any of its
supervisory staff; or (c) require or permit any Lending Party to inform any
Credit Party of a current or upcoming Federal Reserve Board examination or any
nonpublic Federal Reserve Board supervisory initiative or action.

 

Section 9.9                                    Notices, etc.

 

(a)                                 Subject to clause (b) below, all notices and
other communications (other than Notices of Borrowing and Notices of
Continuation or Conversion, which are governed by Article 2 of this Agreement)
shall be in writing and hand delivered with written receipt, telecopied, sent by
facsimile (with a hard copy sent as otherwise permitted in this Section 9.9),
sent by a nationally recognized overnight courier, or sent by certified mail,
return receipt requested as follows: if to a Credit Party, as specified on
Schedule I, if to the Administrative Agent, at its credit contact specified
under its name on Schedule I, and if to any Lender at is credit contact
specified in its Administrative Questionnaire.  Each party may change its notice
address by written notification to the other parties.  All such notices and
communications shall be effective when delivered, except that notices and
communications to any Lender pursuant to Article 2 shall not be effective until
received and, in the case of telecopy, such receipt is confirmed by such Lender,
verbally or in writing.

 

(b)                                 Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communications
pursuant to procedures approved by the Administrative Agent; provided that the
foregoing shall not apply to notices pursuant to Article 2 or Section 5.2(g) or
(k) of this Agreement unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or the Borrower may, in their
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.

 

Section 9.10                             Usury Not Intended.  It is the intent
of each Credit Party and each Lender in the execution and performance of this
Agreement and the other Credit Documents to contract in strict compliance with
applicable usury laws, including conflicts of law concepts, governing the
Advances of each Lender including such applicable laws of the State of New York,
if any, and the United States of America from time to time in effect.  In
furtherance thereof, the Lenders and the Credit Parties stipulate and agree that
none of the terms and provisions contained in this Agreement or the other Credit
Documents shall ever be construed to create a contract to pay, as consideration
for the use, forbearance or detention of money, interest at a rate in excess of
the Maximum Rate and that for purposes of this Agreement “interest” shall
include the aggregate of all charges which constitute interest under such laws
that are contracted for, charged or received under this Agreement; and in the
event that, notwithstanding the foregoing, under any circumstances the aggregate
amounts taken, reserved, charged, received or paid on the Advances, include
amounts which by applicable law are deemed interest which would exceed the
Maximum Rate, then such excess shall be deemed to be a mistake and each Lender
receiving same shall credit the same on the principal of its Notes (or if such
Notes shall have been paid in full, refund said excess to the Borrower).  In the
event that the maturity of the Notes are accelerated by reason of any election
of the holder thereof resulting from any Event of Default under this Agreement
or otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest may never include more than the Maximum
Rate, and excess interest, if any, provided for in this Agreement or otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on the applicable Notes
(or, if the applicable Notes shall have been paid in full, refunded to the
Borrower of such interest).  In determining whether or not the interest paid or

 

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payable under any specific contingencies exceeds the Maximum Rate, the Credit
Parties and the Lenders shall to the maximum extent permitted under applicable
law amortize, prorate, allocate and spread in equal parts during the period of
the full stated term of the Notes all amounts considered to be interest under
applicable law at any time contracted for, charged, received or reserved in
connection with the Obligations.  The provisions of this Section shall control
over all other provisions of this Agreement or the other Credit Documents which
may be in apparent conflict herewith.

 

Section 9.11                             Usury Recapture.  In the event the rate
of interest chargeable under this Agreement at any time is greater than the
Maximum Rate, the unpaid principal amount of the Advances shall bear interest at
the Maximum Rate until the total amount of interest paid or accrued on the
Advances equals the amount of interest which would have been paid or accrued on
the Advances if the stated rates of interest set forth in this Agreement had at
all times been in effect. In the event, upon payment in full of the Advances,
the total amount of interest paid or accrued under the terms of this Agreement
and the Advances is less than the total amount of interest which would have been
paid or accrued if the rates of interest set forth in this Agreement had, at all
times, been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay the Administrative Agent for the account of the Lenders an
amount equal to the difference between (i) the lesser of (A) the amount of
interest which would have been charged on its Advances if the Maximum Rate had,
at all times, been in effect and (B) the amount of interest which would have
accrued on its Advances if the rates of interest set forth in this Agreement had
at all times been in effect and (ii) the amount of interest actually paid under
this Agreement on its Advances.  In the event the Lenders ever receive, collect
or apply as interest any sum in excess of the Maximum Rate, such excess amount
shall, to the extent permitted by law, be applied to the reduction of the
principal balance of the Advances, and if no such principal is then outstanding,
such excess or part thereof remaining shall be paid to the Borrower.

 

Section 9.12                             Governing Law; Service of Process. 
This Agreement, the Notes and the other Credit Documents (unless otherwise
expressly provided therein) shall be deemed a contract under, and shall be
governed by, and construed and enforced in accordance with, the laws of the
State of New York without regard to conflicts of laws principles (other than
Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New
York).  The Borrower hereby agrees that service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding may be made by mailing or delivering a copy of such process to the
Borrower at the address set forth for the Borrower in this Agreement.  Nothing
in this Section shall affect the rights of any Lender to serve legal process in
any other manner permitted by the law or affect the right of any Lender to bring
any action or proceeding against the Borrower or its Property in the courts of
any other jurisdiction.

 

Section 9.13                             Submission to Jurisdiction.  The
parties hereto hereby agree that any suit or proceeding arising in respect of
this Agreement or any other Credit Document, or any of the matters contemplated
hereby or thereby will be tried exclusively in the U.S. District Court for the
Southern District of New York or, if such court does not have subject matter
jurisdiction, in any state court located in the City and County of New York, and
the parties hereto hereby agree to submit to the exclusive jurisdiction of, and
venue in, such court.  Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
applicable law.  The parties hereto hereby agree that service of any process,
summons, notice or document by registered mail addressed to the applicable
parties will be effective service of process against such party for any action
or proceeding relating to any such dispute.  Each party hereto hereby
irrevocably and unconditionally waives, to the fullest extent permitted by
applicable Legal Requirement, 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 in any court referred to in this Section.  Each of the parties
hereto irrevocably waives, to the fullest extent permitted by applicable Legal

 

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Requirement, the defense of any inconvenient forum to the maintenance of such
action or proceeding in any such court.

 

Section 9.14                             Execution in Counterparts.  This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.

 

Section 9.15                             Waiver of Jury Trial.  THE BORROWER,
THE LENDERS AND THE ADMINISTRATIVE AGENT HEREBY ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED BY AND HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE, AND HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE ANY AND ALL RIGHT
TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

 

Section 9.16                             USA Patriot Act.  Each Lender that is
subject to the Patriot Act and the Administrative Agent (for itself and not on
behalf of any Lender) hereby notifies each Credit Party that pursuant to the
requirements of the Patriot Act it is required to obtain, verify and record
information that identifies such Credit Party, which information includes the
name and address of such Credit Party and other information that will allow such
Lender or the Administrative Agent, as applicable, to identify such Credit Party
in accordance with the Patriot Act.

 

Section 9.17                             [Reserved].

 

Section 9.18                             Intercreditor Agreement.

 

(a)                                 Each Lender hereby (i) instructs and
authorizes the Administrative Agent to execute and deliver the Intercreditor
Agreement on its behalf, (ii) authorizes and directs the Administrative Agent to
exercise all of the Administrative Agent’s rights and to comply with all of its
obligations under the Intercreditor Agreement, (iii) agrees that the
Administrative Agent may take actions on its behalf as is contemplated by the
terms of the Intercreditor Agreement, and (iv) understands, acknowledges and
agrees that at all times following the execution and delivery of the
Intercreditor Agreement such Lender (and each of its successors and assigns)
shall be bound by the terms thereof.

 

(b)                                 Each Lender acknowledges that it has
reviewed and is satisfied with the terms and provisions of the Intercreditor
Agreement and acknowledges and agrees that such Lender is responsible for making
its own analysis and review of the Intercreditor Agreement and the terms and
provisions thereof, and no agent or any of its affiliates makes any
representation to any Lender as to the sufficiency or advisability of the
provisions contained in the Intercreditor Agreement.

 

(c)                                  Each Lender hereunder (a) acknowledges that
it has received a copy of the Intercreditor Agreement, (b) consents to the
subordination of liens provided for in the Intercreditor Agreement, (c) agrees
that it will be bound by and will take no actions contrary to the provisions of
the Intercreditor Agreement as if it was a signatory thereto and (d) authorizes
and instructs the Administrative Agent to enter into the Intercreditor Agreement
as Administrative Agent and on behalf of such Lender.  The foregoing provisions
are intended as an inducement to the First Lien Lenders (as defined in the
Intercreditor Agreement) to permit the incurrence of obligations under this
Agreement and to extend credit to the Borrower and such Lenders are intended
third party beneficiaries of such provisions.

 

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Section 9.19                             No Advisory or Fiduciary
Responsibility.  In connection with all aspects of each transaction contemplated
hereby (including in connection with any amendment, waiver or other modification
hereof or of any other Credit Document), the Borrower acknowledges and agrees,
and acknowledges its Affiliates’ understanding, that:  (i) (A) the arranging and
other services regarding this Agreement provided by the Administrative Agent,
and the Lenders are arm’s-length commercial transactions between the Borrower
and its Affiliates, on the one hand, and the Administrative Agent, and the
Lenders, on the other hand, (B) the Borrower has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed appropriate,
and (C) the Borrower is capable of evaluating, and understands and accepts, the
terms, risks and conditions of the transactions contemplated hereby and by the
other Credit Documents; (ii) (A) the Administrative Agent and each Lender 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 or any of its Affiliates, or any
other Person and (B) neither the Administrative Agent, the Arranger nor any
Lender has any obligation to the Borrower or any of its Affiliates with respect
to the transactions contemplated hereby except those obligations expressly set
forth herein and in the other Credit Documents; and (iii) the Administrative
Agent and the Lenders and their respective Affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the
Borrower and its Affiliates, and neither the Administrative Agent, nor any
Lender has any obligation to disclose any of such interests to the Borrower or
its Affiliates.  To the fullest extent permitted by law, the Borrower hereby
waives and releases any claims that it may have against the Administrative Agent
or any Lender with respect to any breach or alleged breach of agency or
fiduciary duty in connection with any aspect of any transaction contemplated
hereby.

 

Section 9.20                             Amendment and Restatement.  This
Agreement represents a full and complete amendment and restatement of the
Existing Credit Agreement, and the Existing Credit Agreement is deemed replaced
hereby as of the effectiveness of this Agreement.  The indebtedness under the
Existing Credit Agreement continues under this Agreement and the execution of
this Agreement does not indicate a payment, satisfaction, novation, or discharge
thereof.  All security and support for the indebtedness under the Existing
Credit Agreement continues to secure and support the Obligations hereunder.

 

Section 9.21                             Integration. THIS WRITTEN AGREEMENT AND
THE CREDIT DOCUMENTS, AS DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND SUPERSEDE ALL PRIOR UNDERSTANDINGS AND
AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATING TO THE TRANSACTIONS PROVIDED FOR
HEREIN AND THEREIN.  ADDITIONALLY, THIS AGREEMENT AND THE CREDIT DOCUMENTS
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.

 

In executing this agreement, each Credit Party hereto hereby warrants and
represents it is not relying on any statement or representation other than those
in this Agreement and is relying upon its own judgment and advice of its
attorneys.

 

[Remainder of this page intentionally left blank.  Signature pages follow.]

 

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EXECUTED as of the date first above written.

 

 

 

BORROWER:

 

 

 

 

 

TRIANGLE USA PETROLEUM CORPORATION

 

 

 

 

 

 

 

By:

/s/ Jonathan Samuels

 

Name:

Jonathan Samuels

 

Title:

President

 

[SIGNATURE PAGE TO SECOND LIEN CREDIT AGREEMENT — TRIANGLE USA PETROLEUM
CORPORATION]

 

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ADMINISTRATIVE AGENT/LENDERS:

 

 

 

WELLS FARGO ENERGY CAPITAL, INC., as Administrative Agent

 

 

 

 

 

 

 

By:

/s/ Charles O’Brien III

 

Name:

Charles O’Brien III

 

Title:

Assistant Vice President

 

[SIGNATURE PAGE TO SECOND LIEN CREDIT AGREEMENT — TRIANGLE USA PETROLEUM
CORPORATION]

 

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LENDERS:

 

 

 

WELLS FARGO BANK, N.A., as a Lender

 

 

 

 

 

 

 

By:

/s/ Charles O’Brien III

 

Name:

Charles O’Brien III

 

Title:

Assistant Vice President

 

[SIGNATURE PAGE TO SECOND LIEN CREDIT AGREEMENT — TRIANGLE USA PETROLEUM
CORPORATION]

 

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