Exhibit 10.1

 

Execution Version

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

This Amendment No. 1 to Credit Agreement dated as of July 12, 2018 (this
“Amendment”) is among Kimbell Royalty Partners, LP, a Delaware limited
partnership (the “Borrower”), each of the Guarantors party hereto, the
undersigned Lenders (as defined below), and Frost Bank, a Texas state bank, as
Administrative Agent for the Lenders (in such capacity, the “Administrative
Agent”).

 

INTRODUCTION

 

A.                                    The Borrower, the financial institutions
party thereto as Lenders (the “Existing Lenders”), and the Administrative Agent
have entered into the Credit Agreement dated as of January 11, 2017 (as amended,
restated, or otherwise modified from time to time, the “Credit Agreement” and,
as amended by this Amendment, the “Amended Credit Agreement”).

 

B.                                    Certain of the Guarantors (the “Existing
Guarantors”) are party to that certain Guarantee, dated as of February 8, 2017
(as amended, restated, supplemented or otherwise modified from time to time,
including by this Amendment, the “Guarantee”), in favor of the Administrative
Agent for the benefit of the Secured Parties (as defined in the Guarantee).

 

C.                                    The Borrower and the Existing Guarantors
are party to that certain Pledge and Security Agreement, dated as of February 8,
2017 (as amended, restated, supplemented or otherwise modified from time to
time, including by this Amendment, the “Pledge and Security Agreement”), in
favor of the Administrative Agent for the benefit of the Secured Parties.

 

D.                                    The Borrower proposes to acquire through
certain Existing Guarantors from Haymaker Resources, LP, a Delaware limited
partnership ( “Haymaker Resources”), (i) all of the issued and outstanding
limited partner interests (the “Haymaker Resources Limited Partner Interests”)
of Haymaker Properties, LP, a Delaware limited partnership (“Haymaker
Properties”) and (ii) all of the issued and outstanding membership interests
(the “Haymaker GP Membership Interests”) of Haymaker Properties GP, LLC, a
Delaware limited liability company and the sole general partner of Haymaker
Properties (“Haymaker GP”), pursuant to that certain Securities Purchase
Agreement, dated as of May 28, 2018 (the “Haymaker Resources Purchase
Agreement”), among Haymaker Resources, as seller, the Borrower, as buyer, and
Haymaker Services, LLC, a Delaware limited liability company.

 

E.                                     The Borrower proposes to acquire from
Haymaker Minerals & Royalties, LLC (“Haymaker M&R”) all of the issued and
outstanding membership interests (the “Haymaker M&R Membership Interests” and,
together with the Haymaker Resources Limited Partner Interests and the Haymaker
GP Membership Interests, the “Haymaker Acquired Interests”) of Haymaker Holding
Company, LLC, a Delaware limited liability company (“Haymaker Holding”), and
Haymaker Greenfield, LLC, a Delaware limited liability company (“Haymaker
Greenfield” and, together with Haymaker Holding, Haymaker Properties and
Haymaker GP, the “Haymaker Acquired Companies”), pursuant to that certain
Securities Purchase Agreement, dated as of May 28, 2018 (the “Haymaker M&R
Purchase Agreement,” and, together with the Haymaker Resources Purchase
Agreement, the “Haymaker Acquisition Agreements” and, the

 

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transactions to be consummated pursuant thereto, the “Haymaker Acquisition”),
among Haymaker M&R, as seller, the Borrower, as buyer, and Haymaker Services,
LLC.

 

F.                                      The Borrower proposes to (i) issue and
sell for a purchase price of $110,000,000, 110,000 Series A Cumulative
Convertible Preferred Units of the Borrower (the “Apollo Preferred Equity
Units”) to AP KRP Holdings, L.P., AA Direct, L.P., AIE III Investments, L.P.,
Apollo Kings Alley Credit SPV, L.P., Apollo SPN Investments I (Credit), LLC,
Apollo Thunder Partners, L.P., ATCF Subsidiary (DC), LLC, Apollo Union Street
SP, L.P., Zeus Strategic US Holdings, L.P. and Apollo Lincoln Fixed Income Fund,
L.P. (collectively, the “Apollo Group”) and (ii) amend the limited partnership
agreement of the Borrower in connection with the issuance of the Apollo
Preferred Equity Units, in each case pursuant to that certain Series A Preferred
Unit Purchase Agreement, dated as of May 28, 2018 (the “Preferred Equity
Purchase Agreement” and, the transactions to be consummated pursuant thereto,
the “Preferred Equity Transaction”) among the Borrower and the Apollo Group.

 

G.                                    The Borrower has requested an increase in
the Total Commitment, and in connection therewith, and an allocation of
Commitments pursuant to this Amendment, each of Wells Fargo Bank, National
Association, Credit Suisse AG, Cayman Islands Branch and JP Morgan Chase Bank,
N.A., Fifth Third Bank, Royal Bank of Canada and BOKF, NA dba Bank of Texas
(each a “New Lender” and collectively the “New Lenders,” and, together with the
Existing Lenders, the “Lenders”) will become a Lender under the Amended Credit
Agreement such that after giving effect to the increase in the Total Commitment
and the allocation of Commitments, the Commitments of the Existing Lenders and
the New Lenders shall be as set forth on Schedule 13.2 attached hereto as
Exhibit B.

 

H.                                   The Borrower intends to change its U.S.
federal income tax status from a pass-through partnership to an entity taxable
as a corporation by means of a “check-the-box” election and to effect an “up-C”
structure, as well as cause MergerSub (as defined in the Amended Credit
Agreement) to merge with certain members or Affiliates of the Apollo Group
(collectively, the “Blocker Mergers”), in each case as described (i) in the
“steps” set forth in the Transaction Steps for Kimbell Up-C Conversion
Memorandum, dated as of July 6, 2018 and disclosed to the Lenders on or about
such date (the “Tax Change Memorandum”) and (ii) the draft Information Statement
intended to be filed by the Borrower in connection with the change in tax
status, dated as of July 9, 2018 and disclosed to the Lenders on or about such
date (the “Information Statement” and, the transactions contemplated by the Tax
Change Memorandum and the Information Statement, together with such immaterial
ancillary or incidental transactions necessary or advisable in connection
therewith that are not adverse to the Lenders, the “Tax Change Transactions”).

 

I.                                        The Borrower has requested that the
Lenders consent to the Haymaker Acquisition, the Preferred Equity Transaction
and the Tax Change Transactions and amend certain terms of the Credit Agreement
to, among other things, finance in part the Borrower’s acquisition of the
Haymaker Acquired Companies pursuant to the Haymaker Acquisition Agreements.
Subject to the terms of this Amendment, the Administrative Agent and the
undersigned Lenders have agreed to provide the consent and amendments set forth
herein.

 

THEREFORE, in fulfillment of the foregoing, the Borrower, the Administrative
Agent,

 

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and the undersigned Lenders hereby agree as follows:

 

Section 1.                                           Definitions; References. 
Unless otherwise defined in this Amendment, each term used in this Amendment
which is defined in the Credit Agreement has the meaning assigned to such term
in the Credit Agreement.

 

Section 2.                                           Consent.  The
Administrative Agent and the undersigned Lenders hereby consent to the Haymaker
Acquisition, the Preferred Equity Transaction and the Tax Change Transactions,
in each case subject to (i) the Borrower’s compliance with the requirements of
Section 9.11 of the Amended Credit Agreement in connection with the Haymaker
Acquisition and the creation of Kimbell Royalty Operating, LLC, a Delaware
limited liability company (“OpCo”), and Kimbell Merger Sub, LLC, a Delaware
limited liability company (“MergerSub”) on the terms and conditions, as the
requirements of Section 9.11 of the Amended Credit Agreement are modified, as
set forth in Sections 6, 9 and 10 of this Amendment (the “Consent”) and (ii) the
other terms and conditions of this Amendment.  The Consent is contingent solely
upon the satisfaction of the conditions specified in Section 9 of this
Amendment.  Such Consent is limited to the extent described herein and shall not
be construed to be a consent to any other acquisition, or a waiver of any terms,
provisions, covenants, warranties or agreements contained in the Credit
Agreement or in any of the other Credit Documents.

 

Section 3.                                           Co-Syndication Agents. 
Wells Fargo Bank, National Association, and Credit Suisse Loan Funding LLC will
become Co-Syndication Agents under the Credit Agreement.

 

Section 4.                                           Amendments to Credit
Agreement.  Upon the satisfaction of the conditions specified in Section 9 of
this Amendment and, unless otherwise specified, effective as of the Amendment
Effective Date:

 

(a)                                 the Credit Agreement is hereby amended to
read in its entirety as set forth in Annex A attached hereto;

 

(b)                                 Exhibit D (Compliance Certificate) to the
Credit Agreement is hereby amended and restated and replaced in its entirety
with the exhibit attached hereto as Exhibit A; and

 

(c)                                  Schedule 13.2 (Notice Addresses and
Commitments) to the Credit Agreement is hereby amended and restated and replaced
in its entirety with the schedule attached hereto as Exhibit B.

 

Section 5.                                           New Lenders and Allocation
of the Commitments.

 

(a)                                 Each New Lender is hereby added to the
Credit Agreement as a Lender and agrees to be bound by all the terms and
provisions of the Credit Agreement binding on a Lender.  Each New Lender
(i) confirms that it has received a copy of the Credit Agreement and the other
Credit Documents, together with copies of the financial statements referred to
therein and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Amendment;
(ii) agrees that it will, independently and without reliance upon the
Administrative Agent or any other Lender or agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own

 

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credit decisions in taking or not taking action under the Credit Agreement;
(iii) appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under the Credit Agreement and
the other Credit Documents as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
and (iv) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender.  By its execution of this Amendment, the Borrower
and the Administrative Agent hereby consent to the addition of the New Lenders,
as and to the extent required under Section 13.6 of the Credit Agreement.

 

(b)                                 Simultaneously with the effectiveness of
this Amendment (but after giving effect to clause (a) above), (i) Schedule 13.2
of the Credit Agreement is hereby replaced in its entirety with the schedule
attached hereto as Exhibit B, which reflects the Commitment of each Existing
Lender and each New Lender as of the date of, and after giving effect to, this
Amendment and (ii) the Commitment of each of the Lenders and the amount of all
outstanding Advances shall be allocated among the Lenders in accordance with
their respective Commitments, and to effect such allocations, each Lender whose
Commitment upon the effectiveness of this Amendment exceeds its Commitment
immediately prior to the effectiveness of this Amendment (each an “Assignee
Lender”) shall be deemed to have purchased all right, title and interest in, and
all obligations in respect of, the appropriate portion of the Commitments of the
Lenders whose Commitments are less than their respective Commitments immediately
prior to the effectiveness of this Amendment (each an “Assignor Lender”), so
that the Commitments of each Lender will be as set forth on the schedule
attached hereto as Exhibit B. Such purchases shall be deemed to have been
effected by way of, and subject to the terms and conditions of, an Assignment
and Acceptance in the form of Exhibit E attached to the Credit Agreement and,
except for replacement Notes to be provided to the Lenders in the principal
amount of their respective Commitments (after giving effect to this Amendment),
no other documents or instruments shall be, or shall be required to be, executed
or paid in connection with such assignments (all of which are hereby waived). 
The Assignor Lenders and the Assignee Lenders shall make such cash settlements
among themselves, through the Administrative Agent, as the Administrative Agent
may direct (after giving effect to any netting effected by the Administrative
Agent) with respect to such allocations and assignments.

 

(c)                                  The increase to the Total Commitment made
under this Amendment is made pursuant to Section 4.4 of the Credit Agreement.
This Amendment is made and executed by the Borrower, the Administrative Agent,
the Existing Lenders and the New Lenders in lieu of their execution of a Total
Commitment Increase Agreement (as set forth in Exhibit G-1 to the Credit
Agreement) and an Additional Lender Agreement as set forth in Exhibit G-2 to the
Credit Agreement as provided for in Section 4.4 of the Credit Agreement (both of
which are hereby waived).

 

Section 6.                                           Joinder to Guarantee and
Pledge and Security Agreement.  The Guarantee provides that additional parties
may become Guarantors under the Guarantee, and the Pledge and Security Agreement
provides that additional parties may become Grantors (as defined in the Pledge
and Security Agreement) under the Pledge and Security Agreement.  Each Haymaker
Acquired Company and each of OpCo and MergerSub desires to become a Guarantor
under the Guarantee and a Grantor under the Pledge and Security Agreement in
order to induce the

 

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Secured Parties to continue to make credit extensions and accommodations under
the Credit Documents, the agreements with respect to Cash Management Services
provided by any Lender or an Affiliate of any Lender, any Letter of Credit
issued by an Issuing Bank, and the applicable Hedge Transactions with swap
counterparties.

 

(a)                     Joinder to Guarantee.  In accordance with
Section 9.11(a) of the Amended Credit Agreement and Section 15 of the Guarantee,
each Haymaker Acquired Company and each of OpCo and MergerSub hereby becomes a
Guarantor under the Guarantee with the same force and effect as if it were an
original signatory thereto as a Guarantor, and OpCo, MergerSub and each Haymaker
Acquired Company hereby (a) agrees to all the terms and provisions of the
Guarantee applicable to it as a Guarantor thereunder and guarantees the
Guaranteed Obligations pursuant to Section 2 of the Guarantee and (b) represents
and warrants that the representations and warranties made by it as a Guarantor
thereunder are true and correct on and as of the date hereof, except for any
such representations and warranties that were made as of a specified date.  Each
reference to a “Guarantor” or an “Additional Guarantor” in the Guarantee shall
be deemed to include each Haymaker Acquired Company and each of OpCo and
MergerSub (the “New Guarantors”).  Section 15 of the Guarantee is hereby deemed
to be amended to permit the joinder pursuant to this clause (a) of this
Section 6. The New Guarantors’ execution of this Agreement is deemed to be an
execution of the Guarantee Supplement (as defined in the Guarantee), and this
Section 6(a) of this Agreement hereby constitutes the “Guarantee Supplement” to
the Guarantee referred to in Section 15 thereof.

 

(b)                     Joinder to Pledge and Security Agreement.  In accordance
with Section 9.11(a) of the Amended Credit Agreement and Section 5.8 of the
Pledge and Security Agreement, each Haymaker Acquired Company and each of OpCo
and MergerSubs hereby becomes a Grantor under the Pledge and Security Agreement
with the same force and effect as if it were an original signatory thereto as a
Grantor, and each Haymaker Acquired Company and each of OpCo and MergerSub
hereby (a) agrees to all the terms and provisions of the Pledge and Security
Agreement applicable to it as a Grantor thereunder, (b) grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in such Haymaker Acquired Company’s, OpCo’s and MergerSub’s right,
title and interest in and to the Collateral (as defined in the Pledge and
Security Agreement, wherever located and whether now owned or at any time
hereafter acquired by such Haymaker Acquired Company or in which such Haymaker
Acquired Company, OpCo or MergerSub now has or at any time in the future may
acquire any right, title or interest, as security for the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of such Haymaker Acquired Company’s, OpCo’s or such MergerSub’s
Secured Obligations (as defined in the Pledge and Security Agreement) and
(c) represents and warrants that the representations and warranties made by it
as a Grantor thereunder are true and correct on and as of the date hereof,
except for any such representations and warranties that were made as of a
specified date.  Each reference to a “Grantor” in the Pledge and Security
Agreement shall be deemed to include each Haymaker Acquired Company, OpCo and
Mergersub. The Pledge and Security Agreement is hereby deemed to be amended to
permit the joinder pursuant to this Section 6(b), and this Section 6(b) of this
Agreement hereby constitutes the “supplement” to the Pledge and Security
Agreement referred to in Section 5.8 thereof.  Annexes 1 and 2 and Schedules
2.1(n) and 5.6 of the Pledge and Security Agreement are hereby supplemented by
the information set forth in Exhibit C attached hereto.

 

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(c)                      The Borrower hereby confirms that notwithstanding the
definition of “Excluded Subsidiary” and the fact that OpCo will not be a wholly
owned Subsidiary of the Borrower after giving effect to the Tax Change
Transactions, OpCo will not be released as a Guarantor or a Grantor as a result
of the Tax Change Transactions.

 

Section 7.                                           Reaffirmation of Liens and
Guarantee.

 

(a)                                 The Borrower and the Existing Guarantors
(i) are parties to certain Security Documents securing and supporting the
Obligations under the Credit Documents, (ii) represent and warrant that they
have no defenses to the enforcement of the Security Documents and that according
to their terms the Security Documents will continue in full force and effect to
secure the Obligations under the Credit Documents, as the same may be amended,
supplemented, or otherwise modified, and (iii) acknowledge, represent, and
warrant that the liens and security interests created by the Security Documents
are valid and subsisting and create a Lien in the Collateral to secure the
Obligations under the Credit Documents, as the same may be amended,
supplemented, or otherwise modified.

 

(b)                                 Each Existing Guarantor hereby ratifies,
confirms, and acknowledges that its obligations under the Guarantee are in full
force and effect and that such Guarantor continues to unconditionally and
irrevocably guarantee the full and punctual payment, when due, whether the
stated maturity or earlier by acceleration or otherwise, of all of the
Guaranteed Obligations (as defined in the Guarantee), as such Guaranteed
Obligations may have been amended by this Amendment. Each such Guarantor hereby
acknowledges that its execution and delivery of this Amendment does not indicate
or establish an approval or consent requirement by such Guarantor under the
Guarantee in connection with the execution and delivery of amendments,
modifications or waivers to the Credit Agreement, the Notes or any of the other
Credit Documents.

 

Section 8.                                           Representations and
Warranties.  The Borrower and the Guarantors represents and warrants to the
Administrative Agent and the Lenders that:

 

(a)                                 the representations and warranties set forth
in the Credit Agreement and in the other Credit Documents are true and correct
in all material respects (except to the extent any such representation is
qualified by materiality or “material adverse effect”, in which case such
representation shall be true and correct in all respects) on and as of the date
of this Amendment (except for any such representations and warranties that were
made as of a specified date, in which case such representations and warranties
were true and correct in all material respects as of such earlier date (except
to the extent any such representation is qualified by materiality or “material
adverse effect”, in which case such representation shall be true and correct in
all respects as of such earlier date));

 

(b)                                 (i) the execution, delivery, and performance
of this Amendment are within the limited partnership or limited liability
company power, as appropriate, and the authority of the Borrower and the
Guarantors and have been duly authorized by appropriate proceedings and
(ii) this Amendment constitutes a legal, valid and binding obligation of the
Borrower and the Guarantors, enforceable against the Borrower and the Guarantors
in accordance with its terms,

 

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except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally and
general principles of equity; and

 

(c)                                  as of the effectiveness of this Amendment
and after giving effect thereto, no Default or Event of Default has occurred and
is continuing.

 

Section 9.                                           Effectiveness.  Subject to
the last paragraph of this Section, and notwithstanding anything to the contrary
in this Amendment (including the representations and warranties set forth in
Section 6 and Section 8 hereof), this Amendment shall become effective (the date
of effectiveness being, the “Amendment Effective Date”) solely upon the
occurrence of, and the obligation of the Lenders to make any Loan requested to
be made by them on the Amendment Effective Date, shall solely be subject to, the
satisfaction of the following:

 

(a)                     Documentation. The Administrative Agent shall have
received the following:

 

(1)                                 this Amendment, duly and validly executed by
the Lenders and the Borrower;

 

(2)                                 account control agreements, duly and validly
executed by the Credit Parties, the Administrative Agent, and Frost Bank, as
depositary bank, with respect to each Deposit Account of a Credit Party at Frost
Bank in existence on the Amendment Effective Date;

 

(3)                                 copies, certified as of the Amendment
Effective Date, by an Authorized Officer or the secretary or an assistant
secretary of each of the Credit Parties of (A) the resolutions of the applicable
governing body of each such Credit Party or approving this Amendment and the
other Credit Documents to which each such Credit Party is a party, and (B) the
articles or certificate (as applicable) of incorporation (or organization or
formation) and bylaws (or partnership or company agreement) of each such Credit
Party;

 

(4)                                 certificates of an Authorized Officer or the
secretary or assistant secretary of each of the Credit Parties certifying the
names and true signatures of the officers of the Credit Parties authorized to
sign this Amendment and the other Credit Documents to such the Credit Party is a
party;

 

(5)                                 certificates of good standing and existence
for each of the Credit Parties in the state, province or territory in which each
such Credit Party is organized, which certificates shall be dated a date not
earlier than 30 days prior to the date of this Amendment;

 

(6)                                 certificate of an Authorized Officer of the
Borrower (A) certifying that the condition set forth in Section 9(b) of this
Amendment has been satisfied and (B) attaching an executed copy of the Haymaker
Acquisition Agreements and the Preferred Equity Purchase Agreement, together
with all executed copies of amendments thereto;

 

(7)                                 favorable opinions of (i) Baker Botts
L.L.P., counsel to the Credit Parties and (ii) the local counsel of the Credit
Parties listed on Part I of Exhibit D attached hereto, in each case addressed to
the Administrative Agent and each Lender and covering such

 

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customary matters concerning the Credit Parties and the Credit Documents as the
Administrative Agent may reasonably request;

 

(8)                                 a certificate of an Authorized Officer of
the Borrower, substantially in the form attached hereto as Exhibit E certifying
that the Borrower and the Restricted Subsidiaries, and immediately after giving
effect to the consummation of the Haymaker Acquisition, the Preferred Equity
Transaction and the other transactions to occur upon the Amendment Effective
Date are, as of the Amendment Effective Date, solvent; and

 

(9)                                 counterparts of the Intercompany Note
(together with an executed undated allonge) executed by the Borrower and the
Restricted Subsidiaries.

 

(b)                                       Representations and Warranties.  The
Acquisition Agreement Representations and the Specified Representations (each as
defined in that certain Commitment Letter, dated as of May 28, 2018, among the
Borrower, Frost Bank, Wells Fargo Bank, National Association, Wells Fargo
Securities LLC and Credit Suisse AG, Cayman Islands) shall be true and correct
in all material respects (except to the extent any such representation is
qualified by materiality or “material adverse effect”, in which case such
representation shall be true and correct in all respects).

 

(c)                                              Security Documents.   The
Security Documents listed on Part II of Exhibit D shall have been duly executed
and delivered by the Credit Parties party thereto, and such Security Documents,
including UCC or other applicable personal property and financing statements,
reasonably requested by the Administrative Agent to be filed, registered or
recorded to create the Liens intended to be created by such Security Documents
or the Pledge and Security Agreement shall have been delivered to the
Administrative Agent for filing, registration or recording.

 

(d)                                             Title Diligence. The Borrower
shall have used commercially reasonable efforts to provide title information as
the Administrative Agent may reasonably request setting forth satisfactory title
to the Oil and Gas Properties (including the Oil and Gas Properties of the
Haymaker Acquired Companies) evaluated in the June 2018 Reserve Report (as
defined below) constituting not less than sixty percent (60%) of the PV-9 of
Proved Reserves by value; provided that to the extent such title delivery
requirement has not been satisfied after the Borrower’s provision of
commercially reasonable efforts, the delivery of such title information shall
not constitute a condition precedent to effectiveness of this Amendment on the
Amendment Effective Date but such title information as provided above to achieve
compliance with the sixty percent (60%) coverage requirement shall be required
to be provided within sixty (60) days after the Amendment Effective Date (or
such longer period as the Administrative Agent may agree in its sole discretion,
as set forth in Section 10(b) of this Amendment).

 

(e)                            Haymaker Acquisition.  The Haymaker Acquisition
shall be consummated in all material respects substantially concurrently with
the initial funding of the Loans under the Amended Credit Agreement on the
Amendment Effective Date in accordance with the terms of the Haymaker
Acquisition Agreements, in each case after giving effect to any amendments,
waivers or modifications thereto or consents thereunder, other than any such
amendments, waivers or modifications thereto or consents thereunder that are
materially adverse to the

 

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Lenders (in each case in their capacity as such), it being understood that
(a) any change to the definition of “Company Material Adverse Effect” contained
in any Haymaker Acquisition Agreement, (b) any (i) increase in the amount of the
purchase price which is not funded by an increase in the Unadjusted Common Unit
Consideration (as defined in the relevant Haymaker Acquisition Agreement) or by
cash equity contributions or (ii) any decrease in the combined purchase price in
an amount exceeding 10% of the combined initial purchase price under the
Haymaker Acquisition Agreements, (c) any change in the third party beneficiary
rights in any Haymaker Acquisition Agreement applicable to the Joint Lead
Arrangers and the Lenders, (d) any change in the governing law of any Haymaker
Acquisition Agreement or (e) any amendment to any Haymaker Acquisition Agreement
that would exclude Oil and Gas Properties from the Haymaker Acquisition (or any
exercise by the Borrower of any right to exclude Oil and Gas Properties from the
Haymaker Acquisition) with an aggregate allocated value (as set forth in the
Haymaker Acquisition Agreements) in excess of 10% of the combined initial
purchase price under the Haymaker Acquisition Agreements shall, in each case, be
deemed to be materially adverse to the interests of the Lenders unless approved
by the Joint Lead Arrangers in writing.

 

(f)                                   Preferred Equity. The Preferred Equity
Transaction shall have been consummated substantially concurrently with the
initial funding of the Loans under the Amended Credit Agreement on the Amendment
Effective Date in accordance with the terms of the Preferred Equity Purchase
Agreement after giving effect to any amendments, waivers or modifications
thereto or consents thereunder, other than any such amendments, waivers or
modifications thereto or consents thereunder that are materially adverse to the
Lenders (in each case in their capacity as such), it being understood that
(i) any increase in the distribution rate (whether in cash or paid in kind),
(ii) any change to any mandatory redemption provision or put rights (or the
addition of other mandatory redemption provisions or put rights), (iii) any
change to the terms of the Apollo Preferred Equity Units which results in the
Apollo Preferred Equity Units constituting indebtedness under GAAP and (iv) any
modification of any covenant included in the Apollo Preferred Equity Units that
makes such covenant materially more restrictive as to the Borrower or any of its
Restricted Subsidiaries (or any modification that adds a covenant that results
in the Apollo Preferred Equity Units being materially more restrictive as to the
Borrower or any of its Restricted Subsidiaries), in each case, shall be deemed
to be materially adverse to the interests of the Lenders unless approved by the
Joint Lead Arrangers in writing.

 

(g)                                  Company Material Adverse Effect. No Company
Material Adverse Effect (as defined in the Haymaker Acquisition Agreements)
shall have occurred nor shall any event or events have occurred that,
individually or in the aggregate, with or without the lapse of time, could
reasonably be expected to result in a Company Material Adverse Effect.  Subject
to Section 2.5 of the Haymaker Acquisition Agreements, the Walk-Right Amounts
(as defined in the Haymaker Acquisition Agreements) are not, in the aggregate,
more than the Walk-Right Threshold (as defined in the Haymaker Acquisition
Agreements).

 

(h)                                 Haymaker Indebtedness. The existing
indebtedness of the Haymaker Acquired Companies pursuant to (i) that certain
Credit Agreement, dated as of January 29, 2016, among Haymaker Resources,
Haymaker Properties, GP, LLC, Haymaker Properties, the lenders party thereto and
Wells Fargo Bank, National Association, as administrative agent and (ii) that
certain Credit Agreement, dated as of November 10, 2014, among Haymaker Holding,
Haymaker

 

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Greenfield, the lenders party thereto and Wells Fargo Bank, National
Association, as administrative agent, shall in each case have been repaid in
full prior to, or shall be repaid in full substantially simultaneously with the
initial borrowing under the Credit Agreement at or after the Amendment Effective
Date, pursuant to the payoff letters in connection therewith confirming that all
indebtedness with respect thereto shall have been fully repaid (except to the
extent being so repaid with the proceeds of the initial borrowings under the
Credit Agreement at or after the Amendment Effective Date), all commitments
thereunder shall have been terminated and cancelled and all liens in connection
therewith shall have been terminated and released, in each case prior to or
substantially concurrently with the initial funding of the Loans under the
Amended Credit Agreement or the Amendment Effective Date.

 

(i)                                     Financial Statements.  The
Administrative Agent shall have received:

 

(a)                                 with respect to the Borrower and the
Subsidiaries (not including the Haymaker Acquired Companies), (i) audited
consolidated Financial Statements for the three most recently completed fiscal
years (provided, that such Financial Statements comprised of a balance sheet
shall only be required for the two most recently completed fiscal years) ended
at least 90 days prior to the Amendment Effective Date and (ii)  unaudited
Financial Statements for each interim fiscal quarter ended since the last
audited Financial Statements and at least 45 days prior to the Amendment
Effective Date;

 

(b)                                 with respect to the Haymaker Acquired
Companies, (i) audited consolidated Financial Statements for the two most
recently completed fiscal years ended at least 90 days prior to the Amendment
Effective Date and (ii) unaudited consolidated Financial Statements for each
interim fiscal quarter ended since the last audited Financial Statements and at
least 45 days prior to the Amendment Effective Date;

 

(c)                                  a pro forma consolidated balance sheet for
the Borrower prepared as of December 31, 2017 that is prepared so as to give
effect to the Haymaker Acquisition as if the Haymaker Acquisition had occurred
on such date, which need not be prepared in compliance with Regulation S-X of
the Securities Act of 1933, or include adjustments for purchase accounting; and

 

(d)                                 customary projections of the Borrower and
the Restricted Subsidiaries in form and substance reasonably satisfactory to the
Administrative Agent on a quarterly basis from the fiscal year ended 2018
through the fiscal year ended 2020.

 

(j)                                    PATRIOT Act. The Administrative Agent
shall have received, at least 5 Business Days prior to the Amendment Effective
Date (to the extent requested at least 10 Business Days prior thereto), all
documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including, without limitation, the PATRIOT Act and the requirements of 31 C.F.R.
§1010.230.

 

(k)                                 Reserve Report. The Administrative Agent
shall have received (a) the reserve report prepared by the Borrower (or at the
Borrower’s option, an Approved Petroleum Engineer) evaluating the PDP Reserves
of the Borrower, the Restricted Subsidiaries and the

 

10

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

 

Haymaker Acquired Companies as of June 30, 2018 (the “June 2018 Reserve Report”)
accompanied by a certificate from an Authorized Officer of the Borrower that the
information contained therein is true and correct in all material respects and
(b) a certificate from an Authorized Officer of the Borrower, dated as of the
Amendment Effective Date, certifying, immediately after giving effect to the
Haymaker Acquisition, the percentage of the aggregate PV-9 of the PDP Reserves
attributable to the Oil and Gas Properties of the Haymaker Acquired Companies
included in the June 2018 Reserve Report that the Borrower will acquire as a
result of the Haymaker Acquisition (and identifying a maximum percentage of such
Oil and Gas Properties on a PV-9 basis that were included in the June 2018
Reserve Report, but which will not be acquired).

 

(l)                                     Available Commitment. Immediately after
giving pro forma effect to the Haymaker Acquisition and such initial funding of
the Loans under the Amended Credit Agreement on the Amendment Effective Date,
the Available Commitment shall be greater than or equal to $50,000,000.

 

(m)                             Fees and Expenses.  All fees and expenses due to
the Commitment Parties (as defined in the Commitment Letter), the Administrative
Agent and the Lenders required to be paid pursuant to the Commitment Letter and
the Fee Letter (as defined in the Commitment Letter) on the Amendment Effective
Date (including the fees and expenses of counsel for the Joint Lead Arrangers
and the Administrative Agent to the extent invoiced at least 2 Business Days
prior to the anticipated Amendment Effective Date) shall have been, or
substantially concurrently with the initial funding of the Loans under the
Amended Credit Agreement on the Amendment Effective Date shall be, paid.

 

Notwithstanding anything to the contrary in this Amendment, the Credit Agreement
or in any other Credit Document, to the extent that any security interest in the
Collateral (other than any Collateral the security interest in which may be
perfected by (x) the filing of a UCC financing statement under the Uniform
Commercial Code or (y) the delivery of certificated equity interests
constituting Collateral), is not or cannot be perfected on the Amendment
Effective Date after the Borrower’s use of commercially reasonable efforts to do
so (without undue burden or cost), then the perfection of such security interest
will not constitute a condition precedent to the effectiveness of this Amendment
and the availability of the Loans under the Amended Credit Agreement on the
Amendment Effective Date, but such security interest will be required to be
perfected in accordance with Section 10 of this Amendment.

 

Section 10.                                    Post-Closing Requirement.

 

(a)                                 Within sixty (60) days after the Amendment
Effective Date (or such later date as the Administrative Agent may agree in its
sole discretion), the Restricted Subsidiaries shall have executed and delivered
to the Administrative Agent such additional Security Documents that, together
with existing Security Documents granting a Lien on the Borrower’s and
Restricted Subsidiaries’ Oil and Gas Properties and after giving effect to the
Haymaker Acquisition, will cause the Borrower to be in compliance with the
Minimum Collateral Coverage.

 

11

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

 

(b)                                 Within sixty (60) days after the Amendment
Effective Date (or such later date as the Administrative Agent may agree in its
sole discretion), the Borrower shall have provided to Administrative Agent such
additional title information as the Administrative Agent may reasonably request
setting forth satisfactory title to the Oil and Gas Properties (including Oil
and Gas Properties of the Haymaker Acquired Companies) evaluated in the
June 2018 Reserve Report (as defined below), that, together with the title
information provided by Borrower under Section 9(d) of this Amendment, 
constitute not less than sixty percent (60%) of the PV-9 of Proved Reserves by
value.

 

(c)                      Within thirty (30) days after the Amendment Effective
Date (or such later date as the Administrative Agent may agree in its sole
discretion), the Credit Parties shall have delivered account control agreements,
duly and validly executed by the Credit Parties, the Administrative Agent, and
the applicable depositary bank or securities intermediary, and reflecting
compliance with Section 9.17 of the Credit Agreement.

 

Section 11.                                    Amendment to Pledge and Security
Agreement.  The Pledge and Security Agreement is hereby amended as follows:

 

(a)                     The definition of “Excluded Property” is hereby amended
by (i) replacing the reference to “Section 10.7(e)” in clause (g) thereof with a
reference to “Section 10.7(d)” and (ii) amending and restating clause (b) of the
definition of “Excluded Property” as follows:

 

(b)                                 (i) any property to the extent the grant or
maintenance of a Lien on such property (A) is prohibited by any Requirement of
Law, (B) could reasonably be expected to result in material adverse tax
consequences to the Borrower or any Restricted subsidiary of the Borrower or
(C) requires a consent not obtained of any Governmental Authority pursuant to
applicable law or (ii) any permit, contract, lease, license or agreement, if and
to the extent that and for so long as, the grant of a security interest therein
is prohibited thereby or would constitute or result in a breach, termination or
default thereunder by the terms of such permit, contract, lease, license or
agreement, or requires a consent (that has not been obtained) of a Person (other
than a Grantor) to, the creation, attachment or perfection of the security
interest granted herein, and any such restriction, prohibition and/or
requirement of consent is effective and enforceable under applicable law and is
not rendered ineffective by applicable law (including, without limitation,
pursuant to Sections 9.406, 9.407, 9.408 or 9.409 of the UCC) (or any successor
provision or provisions) or any other applicable law;

 

(b)                     The proviso at the end of Section 2.1 is hereby amended
and restated to read as follows:

 

provided, however, that notwithstanding any of the other provisions set forth
herein or in any other Credit Document, this Agreement shall not constitute a
grant of a security interest in any Excluded Property.  Notwithstanding anything
to the contrary contained in the definition of “Excluded Property”, the term
“Collateral” shall include the following to the

 

12

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

 

extent the same otherwise constitutes Collateral (and therefore, the following
shall not constitute Excluded Property): (i) As-Extracted Collateral and
Fixtures, (ii) Hydrocarbon Interests, (iii) Hydrocarbons, (iv) all Equity
Interests in (A) OpCo and (B) any Subsidiaries (other than, in the case of this
clause (B), Excluded Equity Interests), (v) the right to any distributions
(whether periodic or in liquidation or dissolution) with respect to any Equity
Interests, (vi) rights under and in respect of Hedge Transactions, (vii) Payment
Intangibles and any right to payment for Goods sold or leased or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel
Paper and whether or not it has been earned by performance (including, without
limitation, any account) and (viii) all rights of a Grantor under any contract
or agreement between such grantor and any Affiliate thereof.

 

Section 12.                                    Effect on Credit Documents. 
Except as amended or modified herein, the Credit Agreement and the other Credit
Documents remain in full force and effect as originally executed and are hereby
in all respects ratified and confirmed, and nothing herein shall act as a waiver
of any of the Administrative Agent’s or the Lenders’ rights under the Credit
Documents, as amended.  On and after the effectiveness of this Amendment, any
reference to the Credit Agreement in any Credit Document shall be deemed to be a
reference to the Credit Agreement as amended by this Amendment.  This Amendment
is a Credit Document for the purposes of the provisions of the other Credit
Documents.  Without limiting the foregoing, any breach of representations,
warranties, and covenants under this Amendment may be a Default or Event of
Default under the other Credit Documents.

 

Section 13.                                    Choice of Law.  This Amendment
and any claim, controversy, dispute or cause of action (whether in contract or
tort or otherwise) based upon, arising out of or relating to this Amendment and
the transactions contemplated hereby shall be governed by, and construed in
accordance with, the law of the State of Texas.

 

Section 14.                                    Counterparts.  This Amendment may
be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract.  Delivery of an executed
counterpart of a signature page of this Amendment by facsimile or in electronic
(i.e., “pdf” or “tif” format) shall be effective as delivery of a manually
executed counterpart of this Amendment.

 

THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT
AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.

 

13

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

 

[The remainder of this page has been left blank intentionally.]

 

14

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

 

EXECUTED as of the date first set forth above.

 

 

BORROWER:

 

 

 

KIMBELL ROYALTY PARTNERS, LP

 

 

 

By:

Kimbell Royalty GP, LLC, its

 

 

general partner

 

 

 

 

 

 

 

 

By:

/s/ Matthew S. Daly

 

 

Name: Matthew S. Daly

 

 

Title: Chief Operating Officer and Secretary

 

 

 

 

 

 

 

EXISTING GUARANTORS:

 

 

 

KIMBELL INTERMEDIATE HOLDINGS, LLC

 

KIMBELL INTERMEDIATE GP, LLC

 

KIMBELL ROYALTY HOLDINGS, LLC

 

RIVERCREST ROYALTIES, LLC

 

 

 

 

 

 

 

By:

/s/ Matthew S. Daly

 

Name: Matthew S. Daly

 

Title: Chief Operating Officer and Secretary

 

 

 

 

ROCHESTER MINERALS, L.P.

 

 

 

By:

Kimbell Intermediate GP, LLC, its general partner

 

 

 

 

 

 

 

 

By:

/s/ Matthew S. Daly

 

 

Name: Matthew S. Daly

 

 

Title: Chief Operating Officer and Secretary

 

 

 

HOCHSTETTER, L.P.

 

 

 

By:

Kimbell Intermediate GP, LLC, its general partner

 

 

 

 

 

 

 

 

By:

/s/ Matthew S. Daly

 

 

Name: Matthew S. Daly

 

 

Title: Chief Operating Officer and Secretary

 

[SIGNATURE PAGE TO AMENDMENT NO. 1 TO CREDIT AGREEMENT – KIMBELL]

 

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

 

 

ADDITIONAL GUARANTORS:

 

 

 

HAYMAKER GREENFIELD, LLC,

 

HAYMAKER HOLDING COMPANY, LLC

 

HAYMAKER PROPERTIES GP, LLC

 

KIMBELL ROYALTY OPERATING, LLC

 

KIMBELL MERGER SUB, LLC

 

 

 

 

 

By:

/s/ Matthew S. Daly

 

Name: Matthew S. Daly

 

Title: Chief Operating Officer and Secretary

 

 

 

HAYMAKER PROPERTIES, LP,

 

 

 

By:

Haymaker Properties GP, LLC, its general partner

 

 

 

 

 

 

 

 

By:

/s/ Matthew S. Daly

 

 

Name: Matthew S. Daly

 

 

Title: Chief Operating Officer and Secretary

 

[SIGNATURE PAGE TO AMENDMENT NO. 1 TO CREDIT AGREEMENT – KIMBELL]

 

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

 

 

ADMINISTRATIVE AGENT /LENDER:

 

 

 

FROST BANK, a Texas State Bank,

 

as Administrative Agent, Issuing Bank and a Lender

 

 

 

 

 

By:

/s/ Alex Zemkoski

 

 

Alex Zemkoski, Senior Vice President

 

[SIGNATURE PAGE TO AMENDMENT NO. 1 TO CREDIT AGREEMENT – KIMBELL]

 

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

 

 

LENDERS:

 

 

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

 

 

 

 

 

By:

/s/ Jay Buckman

 

Name:

Jay Buckman

 

Title:

Director

 

[SIGNATURE PAGE TO AMENDMENT NO. 1 TO CREDIT AGREEMENT – KIMBELL]

 

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

 

 

CREDIT SUISSE AG, CAYMAN ISLAND BRANCH, as a Lender

 

 

 

 

 

By:

/s/ Nupur Kumar

 

Name:

Nupur Kumar

 

Title:

Authorized Signatory

 

 

 

 

 

 

 

By:

/s/ Christopher Zybrick

 

Name:

Christopher Zybrick

 

Title:

Authorized Signatory

 

[SIGNATURE PAGE TO AMENDMENT NO. 1 TO CREDIT AGREEMENT – KIMBELL]

 

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

 

 

JPMORGAN CHASE BANK, N.A., as a Lender

 

 

 

 

 

By:

/s/ Kody J. Nerios

 

Name: Kody J. Nerios

 

Title: Authorized Officer

 

[SIGNATURE PAGE TO AMENDMENT NO. 1 TO CREDIT AGREEMENT – KIMBELL]

 

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

 

 

FIFTH THIRD BANK, as a Lender

 

 

 

 

 

By:

/s/ Jonathan H. Lee

 

Name: Jonathan H. Lee

 

Title: Director

 

[SIGNATURE PAGE TO AMENDMENT NO. 1 TO CREDIT AGREEMENT – KIMBELL]

 

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

 

 

ROYAL BANK OF CANADA, as a Lender

 

 

 

 

 

By:

/s/ Katy Berkeymeyer

 

Name: Katy Berkeymeyer

 

Title: Authorized Signatory

 

[SIGNATURE PAGE TO AMENDMENT NO. 1 TO CREDIT AGREEMENT – KIMBELL]

 

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

 

 

BOKF, NA dba BANK OF TEXAS, as a Lender

 

 

 

 

 

By:

/s/ Blair Schrodel

 

Name: Blair Schrodel

 

Title: Vice President

 

[SIGNATURE PAGE TO AMENDMENT NO. 1 TO CREDIT AGREEMENT – KIMBELL]

 

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

 

Annex A

 

Conformed Credit Agreement

 

[Attached.]

 

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

 

Annex A to Amendment No. 1

to Credit Agreement

CREDIT AGREEMENT

 

 

dated as of January 11, 2017,

 

as amended through July 12, 2018

 

among

 

KIMBELL ROYALTY PARTNERS, LP,
as the Borrower,

 

AND

 

The Several Lenders

from Time to Time Parties Hereto,

 

AND

 

FROST BANK,
as Administrative Agent

 

AND

 

FROST BANK, WELLS FARGO SECURITIES, LLC

and CREDIT SUISSE LOAN FUNDING, LLC,

as Joint Lead Arrangers

 

AND

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

and CREDIT SUISSE LOAN FUNDING, LLC,

as Co-Syndication Agents

 

$500,000,000 Senior Secured Facility

 

 

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

 

TABLE OF CONTENTS

 

 

 

Page No.

 

 

ARTICLE I DEFINITIONS

1

 

 

Section 1.1

Defined Terms

1

Section 1.2

Other Interpretive Provisions

38

Section 1.3

Accounting Terms

39

Section 1.4

References to Agreements, Laws, Etc.

40

Section 1.5

Times of Day

40

 

 

 

ARTICLE II AMOUNT AND TERMS OF CREDIT

40

 

 

Section 2.1

The Facility and Commitments

40

Section 2.2

Maximum Number of Advances

42

Section 2.3

Disbursement of Funds

42

Section 2.4

Repayment of Loans; Evidence of Debt

43

Section 2.5

Conversions and Continuations

44

Section 2.6

Pro Rata Borrowings

44

Section 2.7

Interest

45

Section 2.8

Interest Periods

46

Section 2.9

Increased Costs, Illegality, Etc.

46

Section 2.10

Compensation

49

Section 2.12

Notice of Certain Costs

49

Section 2.13

The Borrowing Base

49

Section 2.14

Scheduled Determinations of Borrowing Base

50

Section 2.15

Unscheduled Redeterminations of the Borrowing Base

50

Section 2.16

Procedure

51

Section 2.17

Reduction of Borrowing Base upon Sale of Borrowing Base Properties or Equity
Interests in Restricted Subsidiaries, Hedge Terminations and Issuance of
Permitted Additional Debt

52

Section 2.18

Defaulting Lenders

53

 

 

 

ARTICLE III LETTERS OF CREDIT

55

 

 

Section 3.1

Letters of Credit

55

Section 3.2

Letter of Credit Applications

57

Section 3.3

Letter of Credit Participations

58

Section 3.4

Agreement to Repay Letter of Credit Drawings

60

Section 3.5

Increased Costs

62

Section 3.6

New or Successor Issuing Bank

63

Section 3.7

Role of Issuing Bank

64

Section 3.8

Cash Collateral

65

Section 3.9

Applicability of ISP and UCP

65

 

i

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Section 3.10

Conflict with Issuer Documents

65

 

 

 

ARTICLE IV FEES; COMMITMENTS

66

 

 

Section 4.1

Fees

66

Section 4.2

Voluntary Reduction of Commitment Amount

66

Section 4.3

Mandatory Termination of Commitments

67

Section 4.4

Optional Increase in Total Commitment

67

 

 

 

ARTICLE V PAYMENTS

69

 

 

Section 5.1

Voluntary Prepayments

69

Section 5.2

Mandatory Prepayments

70

Section 5.3

Method and Place of Payment

72

Section 5.4

Net Payments

72

Section 5.5

Computations of Interest and Fees

77

Section 5.6

Limit on Rate of Interest

77

 

 

 

ARTICLE VI CONDITIONS PRECEDENT TO EFFECTIVE DATE

78

 

 

Section 6.1

Effective Date

78

 

 

ARTICLE VII CONDITIONS PRECEDENT TO THE FUNDING DATE AND ALL SUBSEQUENT CREDIT
EVENTS

80

 

 

Section 7.1

Funding Date

80

Section 7.2

All Credit Events

82

 

 

 

ARTICLE VIII REPRESENTATIONS, WARRANTIES AND AGREEMENTS

83

 

 

Section 8.1

Organizational Status

83

Section 8.2

Organizational Power and Authority; Enforceability

83

Section 8.3

No Violation

83

Section 8.4

Litigation

84

Section 8.5

Margin Regulations

84

Section 8.6

Governmental Approvals

84

Section 8.7

Investment Company Act

84

Section 8.8

True and Complete Disclosure

84

Section 8.9

Financial Condition; Financial Statements

85

Section 8.10

Tax Matters

85

Section 8.11

Compliance with ERISA

85

Section 8.12

Subsidiaries

86

Section 8.13

Intellectual Property

86

Section 8.14

Environmental Laws

86

Section 8.15

Properties

87

 

ii

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

 

Section 8.16

Solvency

87

Section 8.17

Insurance

87

Section 8.18

Hedge Transactions

87

Section 8.19

Patriot Act; OFAC

88

Section 8.20

No Material Adverse Effect

88

Section 8.21

Foreign Corrupt Practices Act

88

Section 8.22

Security Interests

88

Section 8.23

Accounts

89

Section 8.24

Gas Imbalances; Prepayments

89

Section 8.25

Marketing of Production

89

 

 

 

ARTICLE IX AFFIRMATIVE COVENANTS

89

 

 

Section 9.1

Information Covenants

89

Section 9.2

Books, Records and Inspections

92

Section 9.3

Maintenance of Insurance

93

Section 9.4

Payment of Taxes

94

Section 9.5

Maintenance of Existence

94

Section 9.6

Compliance with Statutes, Regulations, Etc.

94

Section 9.7

ERISA

94

Section 9.8

Maintenance of Properties

95

Section 9.9

Transactions with Affiliates

96

Section 9.10

End of Fiscal Years; Fiscal Quarters

97

Section 9.12

Use of Proceeds

99

Section 9.13

Further Assurances

99

Section 9.14

Reserve Reports

100

Section 9.15

Title Information

101

Section 9.16

Consolidated Cash Balance Information

101

Section 9.17

Control Agreements

101

Section 9.18

Unrestricted Subsidiaries

102

Section 9.19

Compliance with Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions

102

 

 

 

ARTICLE X NEGATIVE COVENANTS

102

 

 

Section 10.1

Liens

102

Section 10.2

Sale of Assets

103

Section 10.3

Debt to EBITDAX Ratio

104

Section 10.4

Current Ratio

104

Section 10.5

Consolidations and Mergers

104

Section 10.6

[Intentionally Omitted]

105

Section 10.7

Indebtedness

105

Section 10.8

Restricted Payments

106

Section 10.9

Preferred Equity Units

107

Section 10.10

Hedge Transactions

108

Section 10.11

Passive Status of Borrower/OpCo

109

Section 10.12

Amendment of Organizational Documents

110

 

iii

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Section 10.13

Sanctions

110

Section 10.14

New Accounts

111

Section 10.15

Limitation on Investments

111

Section 10.16

Change in Business

113

Section 10.17

Designation of Restricted and Unrestricted Subsidiaries

113

 

 

 

ARTICLE XI EVENTS OF DEFAULT

114

 

 

Section 11.1

Payments

114

Section 11.2

Representations, Etc.

114

Section 11.3

Covenants

114

Section 11.4

Default Under Other Agreements

115

Section 11.5

Bankruptcy, Etc.

115

Section 11.6

ERISA

115

Section 11.7

Guarantee

116

Section 11.8

Security Documents

116

Section 11.9

Judgments

116

Section 11.10

Change of Control

116

Section 11.11

Application of Proceeds

117

 

 

 

ARTICLE XII THE ADMINISTRATIVE AGENT

118

 

 

Section 12.1

Appointment

118

Section 12.2

Exculpatory Provisions

119

Section 12.3

Reliance by the Administrative Agent

119

Section 12.4

Notice of Default

120

Section 12.5

Non-Reliance on the Administrative Agent and Other Lenders

120

Section 12.6

Indemnification

121

Section 12.7

The Administrative Agent in Its Individual Capacity

122

Section 12.8

Successor Agents

122

Section 12.9

Withholding Tax

123

Section 12.10

Security Documents and Guarantee

123

Section 12.11

Right to Realize on Collateral and Enforce Guarantee

124

Section 12.12

The Administrative Agent May File Proofs of Claim

124

 

 

 

ARTICLE XIII MISCELLANEOUS

125

 

 

Section 13.1

Amendments, Waivers and Releases

125

Section 13.2

Notices

126

Section 13.3

No Waiver; Cumulative Remedies

127

Section 13.4

Survival of Representations and Warranties

127

Section 13.5

Payment of Expenses; Indemnification

127

 

iv

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Section 13.6

Successors and Assigns; Participations and Assignments

129

Section 13.7

Replacements of Lenders under Certain Circumstances

134

Section 13.8

Adjustments; Set-off

134

Section 13.9

Counterparts

135

Section 13.10

Severability

135

Section 13.11

Integration

136

Section 13.12

GOVERNING LAW

136

Section 13.13

Submission to Jurisdiction; Waivers

136

Section 13.14

Acknowledgments

137

Section 13.15

WAIVERS OF JURY TRIAL

138

Section 13.16

Confidentiality

138

Section 13.17

Release of Collateral and Guarantee Obligations

139

Section 13.18

USA PATRIOT Act

140

Section 13.19

Payments Set Aside

140

Section 13.20

Reinstatement

140

Section 13.21

Disposition of Proceeds

140

Section 13.22

Collateral Matters; Hedge Transactions

141

Section 13.23

Agency of the Borrower for the Other Credit Parties

141

Section 13.24

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

141

 

v

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EXHIBITS

 

Exhibit A

 

Form of Notice of Borrowing

Exhibit B

 

Form of Guarantee

Exhibit C

 

Form of Promissory Note

Exhibit D

 

Form of Compliance Certificate

Exhibit E

 

Form of Assignment and Acceptance

Exhibit F-1

 

Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not
Partnerships For U.S. Federal Income Tax Purposes)

Exhibit F-2

 

Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not
Partnerships For U.S. Federal Income Tax Purposes)

Exhibit F-3

 

Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are
Partnerships For U.S. Federal Income Tax Purposes)

Exhibit F-4

 

Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are
Partnerships For U.S. Federal Income Tax Purposes)

Exhibit G-1

 

Form of Total Commitment Increase Agreement

Exhibit G-2

 

Form of Additional Lender Agreement

Exhibit H

 

Form of Intercompany Note

 

SCHEDULES

 

Schedule 8.4

 

Litigation

Schedule 8.9

 

Financial Disclosures

Schedule 8.12

 

Subsidiaries

Schedule 8.18

 

Effective Date Hedge Transactions

Schedule 8.23

 

Effective Date Accounts

Schedule 10.15

 

Investments

Schedule 13.2

 

Notice Addresses and Commitments

 

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THIS CREDIT AGREEMENT is dated as of January 11, 2017, as amended through
July 12, 2018, among KIMBELL ROYALTY PARTNERS, LP, a Delaware limited
partnership (the “Borrower”), FROST BANK and each of the banks, financial
institutions and other lending institutions from time to time parties as lenders
hereto (each a “Lender” and, collectively, the “Lenders”), and FROST BANK, as
administrative agent for the Lenders (the “Administrative Agent”).

 

WHEREAS, the Borrower has requested that the Lenders provide revolving credit
and letter of credit facilities; and

 

WHEREAS, the Lenders are willing to make available to the Borrower such
revolving credit and letter of credit facilities upon the terms and subject to
the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:

 

ARTICLE I
DEFINITIONS

 

Section 1.1                                   Defined Terms.

 

As used herein, the following terms shall have the meanings specified below:

 

“ABR” shall mean for any day a fluctuating rate per annum equal to the Prime
Rate, with said rate to be adjusted to reflect any change in said Prime Rate at
the time of any such change.

 

“ABR Loan” shall mean each Loan bearing interest based on the ABR.

 

“Additional Lender” has the meaning assigned to such term in Section 4.4(a).

 

“Additional Lender Agreement” has the meaning assigned to such term in
Section 4.4(b)(8).

 

“Adjusted ABR Rate” shall mean, with respect to any ABR Advance and interest
rate per annum equal to the ABR for any day, plus the Applicable Margin.

 

“Adjusted LIBOR Rate” shall mean, with respect to any LIBOR Advance for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal to the LIBOR for such Interest Period, plus the
Applicable Margin.

 

“Adjusted Total Commitment” shall mean, at any time, the Total Commitment less
the aggregate amount of Commitments of all Defaulting Lenders.

 

“Administrative Agent” shall mean Frost Bank, as the administrative agent for
the Lenders under this Agreement and the other Credit Documents, or any
successor administrative agent appointed in accordance with the provisions of
Section 12.8

 

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“Administrative Agent’s Office” shall mean the Administrative Agent’s address
and, as appropriate, account as set forth on Schedule 13.2, or such other
address or account as the Administrative Agent may from time to time notify in
writing to the Borrower and the Lenders.

 

“Administrative Questionnaire” shall mean, for each Lender, an administrative
questionnaire in a form approved by the Administrative Agent.

 

“Advance” shall mean a borrowing hereunder (i) made by the Lenders on the same
Borrowing Date or (ii) converted or continued by Lenders on the same date of
continuation or conversion of a previous Advance consisting in either case, of
the aggregate amount of the several Loans of the same type and, in the case of
LIBOR Loans, for the same Interest Period.  For purposes of this Agreement,
Loans may be classified and referred to by Type (e.g., a “LIBOR Loan” for Loans
that bear interest at the Adjusted LIBOR Rate or an “ABR Loan” for Loans that
bear interest at the Adjusted ABR Rate) and Advances may also be classified and
referred to by Type (e.g., a “LIBOR Advance” for Advances that bear interest at
the Adjusted LIBOR Rate or an “ABR Advance” for Advances that bear interest at
the Adjusted ABR Rate).

 

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

 

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

 

“Amendment No. 1” shall mean that certain Amendment No.1 to Credit Agreement,
dated as of July 12, 2018, by and among, the Borrower, the Guarantors party
thereto, the Lenders party thereto and the Administrative Agent.

 

“Amendment No. 1 Effective Date” shall have the meaning assigned to the term
“Amendment Effective Date” as defined in Amendment No. 1.

 

“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any
jurisdiction applicable to the Borrower or any of its Subsidiaries from time to
time concerning or relating to bribery or corruption, including without
limitation the United Kingdom Bribery Act of 2010, as amended, and the FCPA.

 

“Anti-Money Laundering Laws” shall mean any Requirements of Law relating to
money laundering or terrorist financing, including, without limitation, the Bank
Secrecy Act, 31 U.S.C. sections 5301 et seq.; the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Pub. L. 107-56 (a/k/a the USA Patriot Act); Laundering of
Monetary Instruments, 18 U.S.C. section 1956; Engaging in Monetary Transactions
in Property Derived from Specified Unlawful Activity, 18 U.S.C. section 1957;
the

 

2

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Financial Recordkeeping and Reporting of Currency and Foreign Transactions
Regulations, 31 C.F.R. Part 103.

 

“Apollo Group” shall mean Apollo Group AP KRP Holdings, L.P., AA Direct, L.P.,
AIE III Investments, L.P., Apollo Kings Alley Credit SPV, L.P., Apollo SPN
Investments I (Credit), LLC, Apollo Thunder Partners, L.P., ATCF Subsidiary
(DC), LLC, Apollo Union Street SP, L.P., Zeus Strategic US Holdings, L.P. ,
Apollo Lincoln Fixed Income Fund, L.P. or Affiliates thereof.

 

“Apollo Group Preferred Units” shall mean, collectively, (i) the 110,000
Series A Cumulative Convertible Preferred Units of the Borrower purchased and
acquired by the Apollo Group pursuant to the Preferred Equity Purchase Agreement
and (ii) preferred units in the Borrower with terms identical to the Series A
Cumulative Convertible Preferred Units referenced in clause (i) of this
definition issued in connection with the Blocker Mergers.

 

“Applicable Margin” shall mean, for any day, with respect to any ABR Loan or
LIBOR Loan, or with respect to the Unused Commitment Fees payable hereunder, as
the case may be, the applicable rate per annum set forth in the grid below based
upon the Borrowing Base Utilization Percentage in effect on such day:

 

Borrowing Base Utilization Grid

 

Borrowing Base 
Utilization

 

LIBOR 
Margin

 

ABR
Margin

 

Unused
Commitment Fee

>90% < 100%

 

300 bps

 

200 bps

 

50 bps

>75% < 90%

 

275 bps

 

175 bps

 

50 bps

>50% < 75%

 

250 bps

 

150 bps

 

50 bps

>25% < 50%

 

225 bps

 

125 bps

 

50 bps

< 25%

 

200 bps

 

100 bps

 

50 bps

 

Each change in the Unused Commitment Fee Rate or Applicable Margin shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change.
Notwithstanding the rates per annum set forth opposite each tier of Borrowing
Base Utilization as set forth above, Lenders have no obligation to make any
Advances or issue any Letters of Credit if, after giving effect to such Advance
or Letter of Credit, the Total Outstandings would exceed the Borrowing Base then
in effect.

 

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

 

“Approved Petroleum Engineer” shall mean (a) Netherland, Sewell &
Associates, Inc., (b) W. D. Van Gonten & Co. Petroleum Engineering, (c) Ryder
Scott Company, L.P., (d) DeGolyer and MacNaughton, and (e) at the Borrower’s
option, any other independent petroleum engineers selected by the Borrower and
approved by the Administrative Agent.

 

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“Assignment and Acceptance” shall mean an assignment and acceptance
substantially in the form of Exhibit E or such other form as may be approved by
the Administrative Agent and the Borrower.

 

“Authorized Officer” shall mean as to any Person, the President, the Chief
Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the
Treasurer, the Assistant or Vice Treasurer, the Vice President-Finance and any
manager, managing member or general partner, in each case, of such Person, and
any other senior officer designated as such in writing to the Administrative
Agent by such Person. Any document delivered hereunder that is signed by an
Authorized Officer shall be conclusively presumed to have been authorized by all
necessary corporate, limited liability company, partnership and/or other action
on the part of the Borrower or any other Credit Party and such Authorized
Officer shall be conclusively presumed to have acted on behalf of such Person.

 

“Available Commitment” shall mean, at any time, (a) the Loan Limit in effect at
such time minus (b) the Total Outstandings at such time.

 

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

 

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

 

“Bankruptcy Code” shall have the meaning provided in Section 11.5.

 

“Beneficial Ownership Certification” means a certification regarding beneficial
ownership as required by the Beneficial Ownership Regulation.

 

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

 

“Benefited Lender” shall have the meaning provided in Section 13.8.

 

“Blocker Mergers” shall mean the merger of Merger Sub with certain holders of
the Apollo Group Preferred Units.

 

“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States (or any successor).

 

“Borrower” shall have the meaning provided in the introductory paragraph hereto.

 

“Borrowing Base” shall mean, as of any date, the value assigned by the Lenders
from time to time to the Borrowing Base Properties, which as of the Amendment
No. 1 Effective Date, is $200,000,000, and which shall be maintained, reduced or
increased from time to time pursuant to Sections 2.14, 2.15, 2.16 and 2.17
hereof.

 

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“Borrowing Base Deficiency” shall mean, at any time, the amount by which the
Total Outstandings exceed the Borrowing Base then in effect.

 

“Borrowing Base Properties” shall mean the Oil and Gas Properties of the Credit
Parties to which PDP Reserves are attributed as evaluated by the Administrative
Agent and the Lenders for purposes of establishing the Borrowing Base.

 

“Borrowing Base Utilization Percentage” shall mean, as of any day, the fraction
expressed as a percentage, the numerator of which is the Total Outstandings on
such day, and the denominator of which is the Borrowing Base in effect on such
day.

 

“Borrowing Date” shall mean the date elected by Borrower pursuant to Section 2.1
for the making of a Loan.

 

“Business Day” shall mean any day excluding Saturday, Sunday and any other day
on which banking institutions in Fort Worth, Texas are authorized by law or
other governmental actions to close, and, if such day relates to (a) any
interest rate settings as to a LIBOR Loan, (b) any fundings, disbursements,
settlements and payments in respect of any such LIBOR Loan, or (c) any other
dealings pursuant to this Agreement in respect of any such LIBOR Loan, such day
shall be a day on which dealings in deposits in Dollars are conducted by and
between banks in the London interbank eurodollar market.

 

“Capital Lease” shall mean any lease of property, real or personal, which would
be capitalized on a balance sheet of the lessee prepared in accordance with
GAAP.

 

“Cash Balance” shall mean, at any time, the aggregate amount of cash and Liquid
Investments, in each case, held and owned by (whether directly or indirectly),
credited to the account of, or otherwise reflected as an asset on the balance
sheet of, the Credit Parties; provided that any Liquid Investments consisting of
Equity Interests issued by an unaffiliated third party received by any Credit
Party as consideration for any disposition of assets or property permitted
hereunder shall not constitute a portion of the Cash Balance.

 

“Cash Balance Threshold” shall mean $20,000,000; provided that, to the extent
that the Borrowing Base exceeds $150,000,000 at any time, the Cash Balance
Threshold shall be deemed to equal $30,000,000.

 

“Cash Collateralize” shall have the meaning provided in Section 3.8(c).

 

“Cash Management Agreement” shall mean any agreement related to Cash Management
Services by and between the Borrower, any Restricted Subsidiary and any Cash
Management Bank.

 

“Cash Management Bank” shall mean any Person that either (a) at the time it
provides Cash Management Services, (b) on the Effective Date or (c) at any time
after it has provided any Cash Management Services, is a Lender or the
Administrative Agent or an Affiliate of a Lender or the Administrative Agent. 
For the avoidance of doubt, if any Cash Management Bank ceases

 

5

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to be a Lender or an Affiliate of a Lender, such Person shall not be a Cash
Management Bank in respect of any Cash Management Services provided after the
date it ceases to be a Lender or Affiliate of a Lender.

 

“Cash Management Obligations” shall mean the obligations of Borrower or any
Restricted Subsidiary to any Lender (or Affiliate of any Lender) in connection
with cash management services for collections, other Cash Management Services
and for operating, payroll and trust accounts of such Person, including
automatic clearing house services, controlled disbursement services, electronic
funds transfer services, lockbox services, stop payment services and wire
transfer services.

 

“Cash Management Services” shall mean (a) commercial credit cards, merchant card
services, purchase or debit cards, including non-card e-payables services,
(b) treasury management services (including controlled disbursement, overdraft,
automated clearing house fund transfer services, return items and interstate
depository network services) and (c) any other demand deposit or operating
account relationships or other cash management services.

 

“Cash Receipts” shall mean all cash received by or on behalf of the Credit
Parties, including without limitation: (a) amounts payable under or in
connection with any Oil and Gas Properties; (b) proceeds from Loans; and (c) any
other cash received by the Credit Parties from whatever source (including
amounts received in respect of the liquidation of any Hedge Transaction and
amounts received in respect of any disposition of assets), other than amounts
described in the definition of “Excluded Accounts” which are deposited in
Excluded Accounts.

 

“Change in Law” shall mean (a) the adoption or implementation of any law,
treaty, order, policy, rule or regulation after the Effective Date, (b) any
change in any law, treaty, order, policy, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
Effective Date or (c) compliance by any Lender with any guideline, request,
directive or order enacted or promulgated after the Effective Date by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law); provided that notwithstanding anything herein to
the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the
Basel Committee on Banking Regulations and Supervisory Practices (or any
successor or similar authority) and all guidelines, requests, directives,
orders, rules and regulations adopted, implemented, enacted or promulgated in
connection therewith shall be deemed to have gone into effect after the
Effective Date regardless of the date adopted, implemented, enacted or
promulgated and shall be included as a Change in Law but only to the extent a
Lender is imposing applicable increased costs or costs in connection with
capital adequacy or liquidity requirements similar to those described in clauses
(a)(ii) and (c) of Section 2.9 generally on other borrowers of loans under
United States reserve-based credit facilities.

 

“Change of Control” shall mean (a) the acquisition of ownership, directly or
indirectly, by any Person or group (within the meaning of the Exchange Act as in
effect on the date hereof) other than a Permitted Holder (or any intermediate
companies owned directly or indirectly by one or more Permitted Holders), of
Equity Interests representing more than 50% of the aggregate ordinary voting
power represented by the issued and outstanding Equity Interests of the General
Partner; (b) the General Partner shall cease to be the general partner of the
Borrower; and (c) the

 

6

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Borrower shall cease to possess, directly or indirectly, the power to direct or
cause the direction of the management or policies of OpCo, whether through the
ability to exercise voting power, by contract or otherwise.

 

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

 

“Collateral” shall have the meaning provided for such term in each of the
Security Documents and shall include any and all assets securing any or all of
the Obligations; provided that with respect to any mortgages, “Collateral,” as
defined herein, shall include the “Mortgaged Properties” as defined therein.

 

“Collateral Coverage Minimum” shall mean that the Mortgaged Properties shall
represent, (a) if no Permitted Additional Debt is outstanding, at least 60% of
the PV-9 of the Credit Parties’ total PDP Reserves, in each case, included
either in the Initial Reserve Report or in the most recent Reserve Report
delivered to the Administrative Agent hereunder; provided, that the Credit
Parties shall use their best efforts for Mortgaged Properties to represent at
least 70% of the PV-9 of the Credit Parties’ total PDP Reserves and (b) at all
times that any Permitted Additional Debt is outstanding, at least 80% of the
PV-9 of the Credit Parties’ total PDP Reserves.

 

“Commitment” shall mean, with respect to each Lender, the amount set forth
opposite such Lender’s name on Schedule 13.2 (as such Schedule 13.2 may be
amended from time to time in connection with any modification to any Commitment
or Total Commitment pursuant to this Agreement) under the caption “Commitment”,
as the same may be (a) reduced or terminated from time to time in connection
with a reduction or termination of the Total Commitment pursuant to Section 4.2
or Section 4.3, (b) increased from time to time in connection with an increase
of the Total Commitment pursuant to Section 4.4 or (c) modified from time to
time pursuant to any assignment permitted by Section 13.2.

 

“Commitment Percentage” shall mean, at any time, for each Lender, the percentage
obtained by dividing (a) such Lender’s Commitment at such time by (b) the amount
of the Total Commitment at such time; provided that at any time when the Total
Commitment shall have been terminated, each Lender’s Commitment Percentage shall
be the percentage obtained by dividing (i) such Lender’s Total Exposure at such
time by (ii) the Total Outstandings at such time.  The Commitment Percentage of
each Lender as of the Effective Date is set forth opposite such Lender’s name on
Schedule 13.2 hereto.

 

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

 

“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute, or any rule,
regulation or order of the U.S. Commodity Futures Trading Commission (or the
application or official interpretation of any thereof).

 

“Compliance Certificate” shall mean a compliance certificate substantially in
the form of attached Exhibit “D” signed by an Authorized Officer of Borrower.

 

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“Confidential Information” shall have the meaning provided in Section 13.16.

 

“Contractual Requirement” shall have the meaning provided in Section 8.3.

 

“Co-Syndication Agents” shall mean Wells Fargo Bank, National Association and
Credit Suisse Loan Funding, LLC.

 

“Credit Documents” shall mean this Agreement, the Guarantee, the Security
Documents, each Letter of Credit, any promissory notes issued by the Borrower
under this Agreement, and any intercreditor agreement with respect to the
Facility entered into on or after the Effective Date to which the Administrative
Agent and the Borrower are parties.

 

“Credit Event” shall mean and include the making (but not the conversion or
continuation) of a Loan and the issuance of a Letter of Credit.

 

“Credit Party” shall mean each of the Borrower and the Guarantors.

 

“Current Assets” shall mean, as of any date, the current assets which would be
reflected on the consolidated balance sheet of Borrower and the Restricted
Subsidiaries prepared as of such date in accordance with GAAP; provided that the
Borrower’s Current Assets shall include an amount equal to the Available
Commitment, and Current Assets shall not include the amount of any non-cash
items as a result of the application of FASB ASC 815 and any subsequent
amendments thereto or the fair value of any Hedge Transaction or any non-hedge
derivative contract (whether deemed effective or non-effective).

 

“Current Liabilities” shall mean, as of any date of determination, the current
liabilities which would be reflected on the consolidated balance sheet of the
Borrower and the Restricted Subsidiaries prepared as of such date in accordance
with GAAP, but excluding any liabilities as a result of the application of FASB
ASC 815 and any subsequent amendments thereto or the fair value of any Hedge
Transaction or any non-hedge derivative contract (whether deemed effective or
non-effective) and excluding the current portion of long-term Indebtedness
outstanding under this Agreement.

 

“Debt to EBITDAX Ratio” shall mean, as of the last day of any fiscal quarter,
the ratio of (i) the Total Debt of the Borrower and the Restricted Subsidiaries
on a consolidated basis at such date to (ii) EBITDAX for the four fiscal quarter
period ended on such date, provided however that, for purposes of the
calculation of EBITDAX as of any date after the Amendment No. 1 Effective Date
and on or prior to March 31, 2019:

 

(w) EBITDAX for the four fiscal quarters ending September 30, 2018 shall be
deemed to be the sum of (i) EBITDAX attributable to the Haymaker Acquired
Entities for the fiscal quarter ending September 30, 2018 multiplied by 92/82
(the product of such calculation, “Haymaker Q3 2018 EBITDAX”) multiplied by
four, plus (ii) EBITDAX (excluding any such EBITDAX attributable to the Haymaker
Acquired Entities) for the four fiscal quarters ending on such date,

 

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(x) EBITDAX for the four fiscal quarters ending December 31, 2018 shall be
deemed to be the sum of (i) (a) the sum of (x) Haymaker Q3 2018 EBITDAX plus
(y) EBITDAX attributable to the Haymaker Acquired Entities for the fiscal
quarter ending December 31, 2018 (“Haymaker Q4 2018 EBITDAX”) multiplied by
(b) two, plus (ii) EBITDAX (excluding any such EBITDAX attributable to the
Haymaker Acquired Entities) for the four fiscal quarters ending on such date,

 

(y) EBITDAX for the four fiscal quarters ending March 31, 2019 shall be deemed
to be the sum of (i) (a) the sum of (x) Haymaker Q3 2018 EBITDAX plus
(y) Haymaker Q4 2018 EBITDAX plus (z) EBITDAX attributable to the Haymaker
Acquired Entities for the fiscal quarter ending March 31, 2019, multiplied by
(b) 4/3, plus (ii) EBITDAX (excluding any such EBITDAX attributable to the
Haymaker Acquired Entities) for the four fiscal quarters ending on such date;
and

 

(z) with respect to any calculation of the Debt to EBITDAX Ratio during the
third quarter of 2018 on a Pro Forma Basis, EBITDAX shall be deemed to be the
sum of (i) EBITDAX attributable to the Haymaker Acquired Entities, which shall
be deemed $9,300,000, plus (ii) EBITDAX of the Borrower on a consolidated basis
(excluding any such EBITDAX attributable to the Haymaker Acquired Entities) for
the four fiscal quarters ending on June 30, 2018.

 

For purposes of calculating EBITDAX attributable to the Haymaker Acquired
Entities for the purpose of this definition, each reference to the Borrower and
the Restricted Subsidiaries in the definition of “EBITDAX” shall be deemed to be
a reference to the Haymaker Acquired Entities.

 

“Debtor Relief Laws” shall mean the United States Bankruptcy Code and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization
or similar debtor relief laws of the United States or other applicable
jurisdiction from time to time in effect.

 

“Default” shall mean any event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.

 

“Default Rate” shall have the meaning provided in Section 2.7(c).

 

“Defaulting Lender” shall mean any Lender whose acts or failures to act, whether
directly or indirectly, cause it to meet any part of the definition of “Lender
Default”.

 

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

 

“Designated Jurisdiction” shall mean any country, region or territory to the
extent that such country, region or territory itself is the subject of any
Sanction.

 

“Designated Person” shall mean a person or entity:

 

(i)            listed in the annex to, or otherwise the subject of the
provisions of any executive order (including but not limited to the Executive
Order);

 

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(ii)           named as a “Specially Designated National and Blocked Person”
(“SDN”) on the most current list published by OFAC at its official website or
any replacement website or other replacement official publication of such list;
or is otherwise the subject of any Sanctions Laws and Regulations; or

 

(iii)          in which an entity or person on the SDN List has 50% or greater
ownership interest or that is otherwise controlled by an SDN.

 

“Determination Date” shall have the meaning provided in Section 2.15.

 

“Disposition” shall have the meaning provided in Section 10.2.

 

“Dispose” or “Disposed of” shall have a correlative meaning to the defined term
of “Disposition”.

 

“Disqualified Capital Stock” shall mean any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Indebtedness or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is 91 days after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, Letter of
Credit Exposure or other Obligations hereunder outstanding and all of the
Commitments are terminated. Notwithstanding the foregoing, any Equity Interest
that would constitute Disqualified Capital Stock solely because the holders of
the Equity Interest have the right to require the Borrower to repurchase or
redeem such Equity Interest upon or following the occurrence of a change of
control or an asset sale will not constitute Disqualified Capital Stock if the
terms of such Equity Interest provide that the Borrower may not repurchase or
redeem any such Equity Interest pursuant to such provisions unless such
repurchase or redemption complies with Section 10.8 hereof.

 

“Distressed Person” shall have the meaning provided in the definition of
“Lender-Related Distress Event”.

 

“Dollars” and “$” shall mean dollars in lawful currency of the United States.

 

“Drawing” shall have the meaning provided in Section 3.4(b).

 

“Drop-Down Acquisition” shall mean the acquisition by the Borrower or one or
more of its Restricted Subsidiaries, in a single transaction or in a series of
related transactions, of property or assets from another Person (other than the
Borrower or any of its Restricted Subsidiaries), so long as the property or
assets being acquired is Oil and Gas Properties (or Equity Interests in Persons
owning Oil and Gas Properties) which are used (or intended to be used), as
applicable, primarily in its business as a master limited partnership.

 

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“EBITDAX” shall mean, for any period, the Net Income of the Borrower and the
Restricted Subsidiaries on a consolidated basis for such period plus,
(X) without duplication and to the extent deducted in the calculation of Net
Income for such period, (1) income, franchise and similar taxes for such period,
(2) interest expense for such period, (3) depletion, depreciation, amortization
and other non-cash charges for such period, (4) workover expense for such
period, (5) oil and gas exploration expense, including intangible drilling costs
and dry hole and abandonment expense, for such period, (6) non-cash losses and
charges for such period, (7) extraordinary or non-recurring losses for such
period, (8) costs associated with the Borrower’s initial public offering, the
Transactions and public company compliance and (9) any reasonable expenses and
charges related to any Investment, acquisition, disposition, offering of Equity
Interests and any issuance or incurrence of Indebtedness not prohibited
hereunder and minus to the extent included in the calculation of Net Income for
such period (Y) non-cash gains and extraordinary or non-recurring gains for such
period. EBITDAX for any period of measurement may be calculated by the Borrower
on a Pro Forma Basis, giving effect to, without duplication, any acquisition of
oil and gas properties as if such acquisition occurred on the first day of such
period.

 

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

 

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

 

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

 

“Effective Date” shall mean the date on which the conditions set forth in
Section 6.1 are satisfied (or waived by the Administrative Agent).

 

“Eligible Assignee” shall mean any of (i) a Lender or any Affiliate of a Lender;
(ii) a commercial bank organized under the laws of the United States, or any
state thereof, and having a combined capital and surplus of at least
$100,000,000.00; (iii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000.00, provided that such
bank is acting through a branch or agency located in the United States; (iv) a
Person that is primarily engaged in the business of commercial lending and that
(A) is a subsidiary of a Lender, (B) a subsidiary of a Person of which a Lender
is a subsidiary, or (C) a Person of which a Lender is a subsidiary; (v) any
other entity (other than a natural person) which is an “accredited investor” (as
defined in Regulation D under the Securities Act) which extends credit or buys
loans as one of its businesses, including, but not limited to, insurance
companies, mutual funds, investments funds and lease financing companies; and
(vi) with respect to any Lender that is a fund that invests in loans, any other
fund that invests

 

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in loans and is managed by the same investment advisor of such Lender or by an
Affiliate of such investment advisor (and treating all such funds so managed as
a single Eligible Assignee); provided, however, that no Affiliate of Borrower
shall be an Eligible Assignee.

 

“Environmental Claims” shall mean any and all actions, suits, orders, decrees,
demands, demand letters, claims, liens, notices of noncompliance, restrictions
on use, operations or transferability, violation or potential responsibility or
investigation (other than internal reports prepared by or on behalf of the
Borrower or any of the Restricted Subsidiaries (a) in the ordinary course of
such Person’s business or (b) as required in connection with a financing
transaction or an acquisition or disposition of real estate) or proceedings
arising under or based upon any Environmental Law or any permit issued, or any
approval given, under any such Environmental Law (hereinafter, “Claims”),
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law and
(ii) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief relating to
the presence, release or threatened release of Hazardous Materials or arising
from alleged injury or threat of injury to health or safety (to the extent
relating to human exposure to Hazardous Materials) or the environment including,
without limitation, ambient air, surface water, groundwater, land surface and
subsurface strata and natural resources such as wetlands.

 

“Environmental Law” shall mean any applicable Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code and rule of common law now or
hereafter in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, including any binding judicial or
administrative order, consent decree or judgment, relating to the protection of
the environment, including, without limitation, ambient air, surface water,
groundwater, land surface and subsurface strata and natural resources such as
wetlands, or human health or safety (to the extent relating to human exposure to
Hazardous Materials), or Hazardous Materials.

 

“Equity Interests” of any Person shall mean any and all shares, interests,
rights to purchase or otherwise acquire, warrants, options, participations or
other equivalents of or interests in (however designated) equity or ownership of
such Person, including any preferred stock, any limited or general partnership
interest and any limited liability company membership interest, and any
securities or other rights or interests convertible into or exchangeable for any
of the foregoing.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in effect
on the Effective Date and any subsequent provisions of ERISA amendatory thereof,
supplemental thereto or substituted therefor.

 

“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA)
that together with the Borrower would be deemed to be a “single employer” within
the meaning of Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.

 

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

 

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“Event of Default” shall have the meaning provided in Article XI.

 

“Excess Cash” shall mean, at any time, the amount of the Cash Balance in excess
of the Cash Balance Threshold (other than (i) any cash set aside to pay royalty
obligations, working interest obligations, production payments, severance taxes
and similar obligations of any Credit Party then due and owing to third parties
and for which any Credit Party has issued checks or has initiated wires or ACH
transfers (or will issue checks or initiate wires or ACH transfers within three
(3) Business Days) in order to pay such obligations, (ii) any cash set aside to
pay in the ordinary course of business amounts (other than obligations described
in clause (i) above) of any Credit Party then due and owing to unaffiliated
third parties and for which such Credit Party has issued checks or has initiated
wires or ACH transfers in order to pay such amounts), (iii) any cash or
Permitted Investments of any Credit Party constituting purchase price deposits
held in escrow by an unaffiliated third party pursuant to a binding and
enforceable purchase and sale agreement with an unaffiliated third party
containing customary provisions regarding the payment and refunding of such
deposits, (iv) cash of any Credit Party to be used by any Credit Party within
three (3) Business Days to pay the purchase price for any acquisition of any
assets or property by any Credit Party pursuant to (A) a binding and enforceable
purchase and sale agreement, (B) a signed letter of intent or (C) any unsigned
“purchase agreement” or similar documentation which is then being negotiated and
will be executed prior to or simultaneously with the closing of such
acquisition, (v) any Excluded Equity Proceeds or Excluded Asset Disposition
Proceeds held in the Excluded Proceeds Account, (vi) the amount of any Cash
Collateral and (vi) the amount of cash set aside to pay any dividend or
distribution that has been declared and is unpaid by the Borrower and permitted
to be paid under Section 10.8.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

 

“Excluded Accounts” shall mean (i) segregated Deposit Accounts consisting of
(and the balance of which consists solely of funds set aside in connection with)
payroll accounts and accounts dedicated to the payment of accrued employee
benefits, medical, dental and employee benefits claims to employees of the
Borrower or its Restricted Subsidiaries, (ii) Deposit Accounts and Securities
Accounts containing cash or other property with an aggregate value of less than
$2,000,000, (iii) Deposit Accounts and Securities Accounts containing cash or
other property with an aggregate value of greater than $2,000,000 and less than
$5,000,000 for a continuous period of up to 60 days and (iv) Deposit Accounts
which are used solely as an escrow account or as a fiduciary or trust account or
other account that is contractually obligated to be segregated from the other
assets of the Borrower and its Restricted Subsidiaries, in each case, for the
benefit of unaffiliated third parties.

 

“Excluded Asset Disposition Proceeds” shall mean cash proceeds and/or marketable
securities received by any Credit Party pursuant to a Disposition permitted
hereunder, less the amount of any unpaid Borrowing Base Deficiency that results
from such Disposition pursuant to the terms hereof.

 

“Excluded Equity Interests” shall mean (a) any Equity Interests with respect to
which, in the reasonable judgment of the Administrative Agent and the Borrower
evidenced in writing delivered to the Administrative Agent, the cost or other
consequences of pledging such Equity

 

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Interests in favor of the Secured Parties under the Security Documents shall be
excessive in view of the benefits to be obtained by the Secured Parties
therefrom, (b) any Equity Interests to the extent the pledge thereof would be
prohibited by any Requirement of Law, (c) any Equity Interests of any
Unrestricted Subsidiary, (d) any Equity Interests of any Subsidiary that is not
a wholly-owned Subsidiary at the time such Subsidiary becomes a Subsidiary to
the extent (A) that a pledge thereof to secure the Obligations is prohibited by
any applicable Contractual Requirement (other than customary non-assignment
provisions which are ineffective under the UCC or other applicable Requirements
of Law), (B) any Contractual Requirement prohibits such a pledge without the
consent of any other party; provided that this clause (B) shall not apply if
(1) such other party is a Credit Party or a wholly-owned Subsidiary or
(2) consent has been obtained to consummate such pledge (it being understood
that the foregoing shall not be deemed to obligate the Borrower or any
Subsidiary to obtain any such consent) and for so long as such Contractual
Requirement or replacement or renewal thereof is in effect, or (C) a pledge
thereof to secure the Obligations would give any other party (other than a
Credit Party or a wholly-owned Subsidiary) to any Contractual Requirement
governing such Equity Interests the right to terminate its obligations
thereunder (other than customary non-assignment provisions that are ineffective
under the UCC or other applicable Requirement of Law), (e) any Equity Interests
of any Subsidiary to the extent that the pledge of such Equity Interests would
result in material adverse tax consequences to the Borrower or any Subsidiary as
reasonably determined by the Borrower in a writing delivered to the
Administrative Agent, and (f) any “Margin Stock” as defined in Regulation U.;
provided that, notwithstanding the foregoing, in no event shall the Equity
Interests in any Subsidiary that owns any Borrowing Base Properties be Excluded
Equity Interests.

 

“Excluded Equity Proceeds” shall mean cash proceeds from an equity contribution
made to, and received by, the Borrower.

 

“Excluded Proceeds Account” shall mean a segregated Deposit Account established
and maintained with the Administrative Agent, which Deposit Account contains
only Excluded Equity Proceeds and/or Excluded Asset Disposition Proceeds.
Notwithstanding anything herein to the contrary, any use of funds held in the
Excluded Proceeds Account: (a) in the case of any such funds that are used,
directly or indirectly, to fund a Restricted Payment, shall be deemed to be a
utilization of Excluded Equity Proceeds until no Excluded Equity Proceeds remain
in such Excluded Proceeds Account, and thereafter shall be deemed to be a
utilization of Excluded Asset Disposition Proceeds and (b) in the case of any
such funds that are used, directly or indirectly, for any purpose other than to
fund a Restricted Payment, shall be deemed to be a utilization of Excluded Asset
Disposition Proceeds until no Excluded Asset Disposition Proceeds remain in such
Excluded Proceeds Account, and thereafter shall be deemed to be a utilization of
Excluded Equity Proceeds.

 

“Excluded Subsidiary” shall mean (a) each Restricted Subsidiary that does not
constitute a Material Subsidiary (but only for so long as such Subsidiary does
not constitute a Material Subsidiary), (b) each Restricted Subsidiary that is
not a wholly owned Subsidiary (other than OpCo and any of its Subsidiaries) on
any date such Subsidiary would otherwise be required to become a Guarantor
pursuant to the requirements of Section 9.11 (for so long as such Subsidiary
remains a non-wholly owned Restricted Subsidiary), (c) each Restricted
Subsidiary that is prohibited by any applicable Contractual Requirement or
Requirement of Law from guaranteeing or granting Liens to secure the Obligations
at the time such Subsidiary becomes a Restricted Subsidiary (and for so long as
such restriction or any replacement or renewal thereof is in effect) or that
would require

 

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consent, approval, license or authorization of a Governmental Authority to
guarantee or grant Liens to secure the Obligations at the time such Subsidiary
becomes a Restricted Subsidiary (unless such consent, approval, license or
authorization has been received), (d) any Unrestricted Subsidiary and (e) any
other Restricted Subsidiary with respect to which in the reasonable judgment of
the Administrative Agent and the Borrower, the cost or other consequences of
providing a Guarantee of the Obligations shall be excessive in view of the
benefits to be obtained by the Lenders therefrom.  Notwithstanding anything
herein to the contrary, in no event shall OpCo or any Restricted Subsidiary
owning Borrowing Base Properties be an Excluded Subsidiary.

 

“Excluded Swap Obligation” shall mean, with respect to any Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the guarantee of such
Guarantor of, or the grant by such Guarantor of a security interest to secure,
such Swap Obligation (or any guarantee thereof) is or becomes illegal under the
Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any
thereof) by virtue of such Guarantor’s failure for any reason to constitute an
“eligible contract participant” as defined in the Commodity Exchange Act and the
regulations thereunder at the time the guarantee of such Guarantor, or the grant
of such security interest by such Guarantor, becomes effective with respect to
such Swap Obligation. If a Swap Obligation arises under a master agreement
governing more than one swap, such exclusion shall apply only to the portion of
such Swap Obligation that is attributable to swaps for which such guarantee or
security interest is or becomes illegal.

 

“Excluded Taxes” shall mean any of the following Taxes imposed on or with
respect to, or required to be withheld or deducted from a payment to, the
Administrative Agent, any Lender or any other recipient of any payment to be
made by or on account of any obligation of any Credit Party hereunder or under
any other Credit Document, (i) Taxes imposed on or measured by net income or
branch profits (however denominated, and including (for the avoidance of doubt)
any backup withholding in respect thereof under Section 3406 of the Code or any
similar provision of state, local or foreign law), and franchise (or similar)
Taxes imposed, in each case, by a jurisdiction (including any political
subdivision thereof) as a result of such recipient being organized under the
laws of, having its principal office in, or in the case of any Lender, having
its applicable lending office in, such jurisdiction, or as a result of any other
present or former connection with such jurisdiction (other than any such
connection arising solely from this Agreement or any other Credit Documents or
any transactions contemplated thereunder), (ii) in the case of a Lender, U.S.
federal withholding Tax imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan or Commitment pursuant
to a law in effect on the date on which (a) such Lender acquires such interest
in the Loan or Commitment (other than to the extent such Lender is an assignee
of such interest pursuant to a request by the Borrower under Section 13.7) or
(b) such Lender designates a new lending office, except in each case to the
extent that, pursuant to Section 5.4, amounts with respect to such Taxes were
payable either to such Lender’s assignor immediately before such Lender became a
party hereto or to such Lender immediately before it changed its lending office,
(iii) any withholding Tax imposed on any payment by or on account of any
obligation of any Credit Party hereunder or under any other Credit Document that
is attributable to the Administrative Agent’s, any Lender’s or any other
recipient’s failure to comply with Section 5.4(d) or (iv) any Tax imposed under
FATCA.

 

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“Executive Order” shall mean Executive Order No. 13224 on Terrorist Financings:
— Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten To Commit, or Support Terrorism issued on September 23, 2001, as
amended by Executive Order No. 13268 and as further amended after the date
hereof.

 

“Facility” shall mean this Agreement and the Commitments and the extensions of
credit made hereunder.

 

“Fair Market Value” shall mean, with respect to any asset or group of assets on
any date of determination, the value of the consideration obtainable in a
Disposition of such asset at such date of determination assuming a Disposition
by a willing seller to a willing purchaser dealing at arm’s length and arranged
in an orderly manner over a reasonable period of time having regard to the
nature and characteristics of such asset, as determined by the Borrower in good
faith.

 

“FATCA” shall mean 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), or any Treasury
regulations promulgated thereunder or official administrative interpretations
thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code,
any intergovernmental agreements entered into in connection with the
implementation of such Sections of the Code and any fiscal or regulatory
legislation, rules or practices adopted pursuant to such intergovernmental
agreements.

 

“FCPA” shall mean the Foreign Corrupt Practices Act of 1977, as amended.

 

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of
the per annum rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers on such day, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York or, if such rate is not so published for any date that is a Business Day,
the Federal Funds Effective Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal Funds brokers of recognized standing selected by it; provided that, if
the Federal Funds Effective Rate shall be less than zero, such rate shall be
deemed to be zero for the purposes of this Agreement.

 

“Fee Letter” shall mean that certain letter agreement of even date herewith
between the Borrower and the Administrative Agent.

 

“Financial Officer” of any Person shall mean the Chief Financial Officer,
principal accounting officer, Treasurer or Assistant Treasurer of such Person.

 

“Financial Statements” shall mean balance sheets, income statements, statements
of cash flows, owners’ equity and appropriate footnotes (for audited financial
statements) and schedules, prepared in accordance with GAAP.

 

“Flood Insurance Regulations” shall mean (i) the National Flood Insurance Act of
1968 as now or hereafter in effect or any successor statute thereto, (ii) the
Flood Disaster Protection Act

 

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of 1973 as now or hereafter in effect or any successor statute thereto,
(iii) the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001 et
seq.), as the same may be amended or recodified from time to time, and (iv) the
Flood Insurance Reform Act of 2004 and any regulations promulgated thereunder.

 

“Foreign Lender” shall mean a Lender that is not a U.S. Person.

 

“Form S-1” shall mean the Registration Statement on Form S-1 of the Borrower
filed with the SEC on January 6, 2017, as may be amended on or prior to the
Funding Date.

 

“Fronting Fee” shall have the meaning provided in Section 4.1((b).

 

“Funding Date” shall mean the date on which the conditions set forth in Sections
7.1 and 7.2 are satisfied (or waived by the Administrative Agent).

 

“GAAP” shall mean generally accepted accounting principles in the United States,
as in effect from time to time.

 

“General Partner” shall mean Kimbell Royalty GP, LLC, a Delaware limited
liability company.

 

“Governmental Authority” shall mean any nation, sovereign or government, any
state, province, territory or other political subdivision thereof, and any
entity or authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including a central
bank or stock exchange.

 

“Guarantee” shall mean the Guarantee made by any Guarantor in favor of the
Administrative Agent for the benefit of the Secured Parties substantially in the
form of Exhibit B hereto.

 

“Guarantee Obligations” shall mean, as to any Person, any obligation of such
Person guaranteeing or intended to guarantee any Indebtedness of any other
Person (the “primary obligor”) in any manner, whether directly or indirectly,
including any obligation of such Person, whether or not contingent, (a) to
purchase any such Indebtedness or any property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such Indebtedness or (c) otherwise to assure or hold harmless the
owner of such Indebtedness against loss in respect thereof.  The amount of any
Guarantee Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the Indebtedness in respect of which such Guarantee
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith.

 

“Guarantors” shall mean each Restricted Subsidiary of Borrower that becomes
party to the Guarantee.

 

“Haymaker Acquired Entities” shall mean Haymaker Greenfield, LLC, a Delaware
limited liability company, Haymaker Holding Company, LLC, a Delaware limited
liability

 

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company, Haymaker Properties, LP, a Delaware limited partnership, and Haymaker
Properties GP, LLC, a Delaware limited liability company, each being a
Restricted Subsidiary effective as of the Amendment No. 1 Effective Date.

 

“Haymaker Oil and Gas Properties” shall mean the Oil and Gas Properties of the
Haymaker Acquired Entities.

 

“Hazardous Materials” shall mean (a) any petroleum or petroleum products,
natural gas or natural gas liquids, radioactive materials, friable asbestos or
asbestos containing materials, urea formaldehyde foam insulation, transformers
or other equipment that contain dielectric fluid containing regulated levels of
polychlorinated biphenyls, and radon gas, (b) any chemicals, materials or
substances defined as or included in the definition of “hazardous substances”,
“hazardous waste”, “hazardous materials”, “extremely hazardous waste”,
“restricted hazardous waste”, “toxic substances”, “toxic pollutants”,
“contaminants”, or “pollutants”, or words of similar import, under any
applicable Environmental Law and (c) any other chemical, material or substance
which is prohibited, limited or regulated by any Environmental Law.

 

“Hedge Bank” shall mean (a) any Person (other than the Borrower or any of its
Subsidiaries) that (x) at the time it enters into a Hedge Transaction is a
Lender or an Affiliate of a Lender or (y) at any time after it enters into a
Hedge Transaction becomes a Lender or an Affiliate of a Lender or (b) with
respect to any Hedge Transaction that is in effect on the Effective Date, any
Person (other than the Borrower or any of its Subsidiaries) that is a Lender or
an Affiliate of a Lender on the Effective Date.  For the avoidance of doubt, if
any Hedge Bank ceases to be a Lender or an Affiliate of a Lender, such Person
shall not be a Hedge Bank in respect of any Hedge Transaction entered into after
the date it ceases to be a Lender or Affiliate of a Lender.

 

“Hedge Termination” shall mean with respect to any Hedge Transaction, any
termination (other than a termination that occurs on the date scheduled for such
termination and not as a result of any event of default or other event which
permits a party to such Hedge Transaction to early terminate such Hedge
Transaction, in each case however defined or described), cancellation, novation
or other disposition of such Hedge Transaction or the entry into one or more
offsetting Hedge Transactions in respect of such Hedge Transaction.

 

“Hedge Termination Date” shall mean, with respect to any Hedge Transaction, the
date of expiration of that particular Hedge Transaction.

 

“Hedge Transactions” shall mean (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, future contracts, equity
or equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, total
return swaps, credit spread transactions, repurchase transactions, reserve
repurchase transactions, securities lending transactions, weather index
transactions, spot contracts, fixed-price physical delivery contracts, whether
or not exchange traded, or any other similar transactions or any combination of
any of the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or

 

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subject to any master agreement, and (b) any and all transactions of any kind,
and the related confirmations, which are subject to the terms and conditions of,
or governed by, any form of master agreement published by the International
Swaps and Derivatives Association, Inc., any International Foreign Exchange
Master Agreement or any other master agreement (any such master agreement,
together with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement. Notwithstanding the
foregoing, agreements or obligations to physically sell any commodity at any
index-based price shall not be considered Hedge Transaction.

 

“Hedging Obligations” shall mean, with respect to any Person, the obligations of
such Person under Hedge Transactions.

 

“Hydrocarbon Interests” shall mean all rights, titles, interests and estates now
or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases,
or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.

 

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

 

“Increasing Lender” has the meaning assigned to such term in Section 4.4(b)(7).

 

“Indebtedness” of any Person shall mean, if and to the extent (other than with
respect to clause (e) below) the same would constitute indebtedness or a
liability in accordance with GAAP, without duplication, (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes, loan agreements or other similar instruments, (c) the
deferred purchase price of assets or services that in accordance with GAAP would
be required to be shown as a liability on the balance sheet of such Person
(other than (i) any earn-out obligation until such obligation becomes a
liability on the balance sheet of such Person in accordance with GAAP and
(ii) obligations resulting under firm transportation contracts or take or pay
contracts entered into in the ordinary course of business), (d) the face amount
of all letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (e) all Indebtedness (excluding
prepaid interest thereon) described in the other clauses of this definition of
any other Person secured by any Lien on any property owned by such Person,
whether or not such Indebtedness has been assumed by such Person (but if such
Indebtedness has not been assumed, limited to the lesser of the amount of such
Indebtedness and the Fair Market Value of the property securing such
Indebtedness), (f) the undischarged balance of any production payment created by
such Person or for the creation of which such Person directly or indirectly
received payment, (g) Capital Lease obligations, and (h) without duplication,
all Guarantee Obligations of such Person in respect of Indebtedness of another
Person of the types described in the other clauses of this definition); provided
that Indebtedness shall not include (i) trade and other ordinary-course payables
and accrued expenses arising in the ordinary course of business, (ii) deferred
or prepaid revenues, (iii) purchase price holdbacks in respect of a portion of
the purchase price of an asset to satisfy warranty or other unperformed
obligations of the respective seller, (iv)

 

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in the case of the Borrower and its Subsidiaries, (A) all intercompany
Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or
extensions of terms) and made in the ordinary course of business and
(B) intercompany liabilities in connection with the cash management, tax and
accounting operations of the Borrower and its Subsidiaries, (v) production
payments and reserve sales, (vi) in-kind obligations relating to net oil,
natural gas liquids or natural gas balancing positions arising in the ordinary
course of business and (vii) any obligation in respect of a farm-in agreement or
similar arrangement whereby such Person agrees to pay all or a share of the
drilling, completion or other expenses of an exploratory or development well
(which agreement may be subject to a maximum payment obligation, after which
expenses are shared in accordance with the working or participation interest
therein or in accordance with the agreement of the parties) or perform the
drilling, completion or other operation on such well in exchange for an
ownership interest in an oil or gas property.

 

“Indemnified Liabilities” shall have the meaning provided in Section 13.5.

 

“Indemnified Taxes” shall mean all Taxes imposed on or with respect to or
measured by, any payment by or on account of any obligation of any Credit Party
hereunder or under any other Credit Document other than (a) Excluded Taxes and
(b) Other Taxes.

 

“Information” shall have the meaning provided in Section 8.8(a).

 

“Initial Borrowing Base” shall mean the Borrowing Base in effect on the
Effective Date, which shall be $100,000,000.

 

“Initial Reserve Report” shall mean the reserve engineers’ report used to
determine the Initial Borrowing Base, prepared as of December 31, 2016, prepared
by an Approved Petroleum Engineer, with respect to the Oil and Gas Properties of
the Credit Parties expected to be owned by the Credit Parties upon consummation
of the IPO.

 

“Intercompany Note” means a promissory note substantially in the form of
Exhibit H.

 

“Interest Expense” shall mean, with respect to any Person for any period, the
sum of (a) gross interest expense of such Person for such period on a
consolidated basis (including (i) the amortization of debt discounts, (ii) the
amortization of all fees (including fees with respect to Hedge Transactions)
payable in connection with the incurrence of Indebtedness to the extent included
in interest expense and (iii) the portion of any payments or accruals with
respect to capitalized lease obligations allocable to interest expense) and
(b) capitalized interest of such Person. For purposes of the foregoing, gross
interest expense shall be determined after giving effect to any net payments
made or received and costs incurred by the Borrower with respect to any interest
rate Hedge Transactions, and interest on a capitalized lease obligation shall be
deemed to accrue at an interest rate reasonably determined by the Borrower to be
the rate of interest implicit in such capitalized lease obligation in accordance
with GAAP.

 

“Interest Period” shall mean, with respect to any Loan, the interest period
applicable thereto, as determined pursuant to Section 2.8.

 

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“Investment” shall have the meaning provided in Section 10.15.

 

“IPO” shall mean the initial public offering of common units of the Borrower, as
described in the Form S-1.

 

“ISP” shall mean, with respect to any Letter of Credit, the “International
Standby Practices 1998” published by the Institute of International Banking
Law & Practice (or such later version thereof as may be in effect at the time of
issuance).

 

“Issuer Documents” shall mean, with respect to any Letter of Credit, the Letter
of Credit Application, and any other document, agreement and instrument entered
into by the applicable Issuing Bank and the Borrower or in favor of the
applicable Issuing Bank and relating to such Letter of Credit.

 

“Issuing Bank” shall mean (a) the Administrative Agent, any of its Affiliates or
any replacement or successor appointed pursuant to Section 3.6, and (b) if
requested by the Borrower and reasonably acceptable to the Administrative Agent,
any other Person who is a Lender at the time of such request and who accepts
such appointment (it being understood that, if any such Person ceases to be a
Lender hereunder, such Person will remain an Issuing Bank with respect to any
Letter of Credit issued by such Person that remained outstanding as of the date
such Person ceased to be a Lender). References herein and in the other Credit
Documents to an Issuing Bank shall be deemed to refer to the Issuing Bank in
respect of the applicable Letter of Credit or to all Issuing Banks, as the
context requires.

 

“Joint Lead Arrangers” shall mean Wells Fargo Bank, National Association and
Credit Suisse Loan Funding, LLC.

 

“June 2018 Reserve Report” has the meaning assigned to such term in Amendment
No. 1.

 

“Kimbell Class B Units” shall mean the Class B Units in the Borrower.

 

“Kimbell Class B/OpCo Unit for Kimbell Common Unit Exchange” shall mean a
transaction whereby a holder of both a Kimbell Class B Unit and a OpCo Common
Unit exchanges such Equity Interests for (i) a Kimbell Common Unit and (ii) cash
in respect of the dividend and liquidation preferences of the Kimbell Class B
Units; provided that the aggregate amount of cash exchanged in connection with
Kimbell Class B/OpCo Unit for Kimbell Common Unit Exchanges shall not exceed the
aggregate amount of cash contributed to the Borrower by the holders of Kimbell
Class B Units in respect of such Kimbell Class B Units.

 

“Kimbell Common Units” shall mean the Common Units in the Borrower.

 

“L/C Borrowing” shall mean an extension of credit resulting from a Drawing under
any Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Borrowing.

 

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“L/C Maturity Date” shall mean the date that is five (5) Business Days prior to
the Maturity Date.

 

“L/C Obligations” shall mean, as at any date of determination, the aggregate
amount available to be drawn under all outstanding Letters of Credit plus the
aggregate amount of all Reimbursement Obligations, including all L/C Borrowings.
For all purposes of this Agreement, if on any date of determination a Letter of
Credit has expired by its terms but any amount may still be drawn thereunder by
reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be
deemed to be “outstanding” in the amount so remaining available to be drawn.

 

“L/C Participant” shall have the meaning provided in Section 3.3(a).

 

“L/C Participation” shall have the meaning provided in Section 3.3(a).

 

“Lender” shall have the meaning provided in the introductory paragraph hereto.

 

“Lender Default” shall mean (i) the refusal or failure of any Lender to make
available its portion of any incurrence of Loans or participations in Letters of
Credit, which refusal or failure is not cured within two (2) Business Days after
the date of such refusal or failure; (ii) the failure of any Lender to pay over
to the Administrative Agent, any Issuing Bank, or any other Lender any other
amount required to be paid by it hereunder within two (2) Business Days of the
date when due, unless the subject of a good faith dispute; (iii) a Lender has
notified the Borrower or the Administrative Agent that it does not intend or
expect to comply with any of its funding obligations or has made a public
statement to that effect with respect to its funding obligations under the
Facility; (iv) the failure by a Lender to confirm in a manner reasonably
satisfactory to the Administrative Agent that it will comply with its
obligations under the Facility, which failure is not cured after the date of
such failure; (v) a Distressed Person has admitted in writing that it is
insolvent or such Distressed Person becomes subject to a Lender-Related Distress
Event or (vi) any Lender that has, or has a direct or indirect parent company
that has, become the subject of a Bail-in Action.

 

“Lender Joinder Agreement” means a joinder agreement in form and substance
reasonably satisfactory to the Administrative Agent delivered in connection with
Section 4.4.

 

“Lender-Related Distress Event” shall mean, with respect to any Lender, that
such Lender or any Person that directly or indirectly controls such Lender
(each, a “Distressed Person”), as the case may be, is or becomes subject to a
voluntary or involuntary case with respect to such Distressed Person under any
Debtor Relief Law, or a custodian, conservator, receiver or similar official is
appointed for such Distressed Person or any substantial part of such Distressed
Person’s assets, or such Distressed Person or any Person that directly or
indirectly controls such Distressed Person is subject to a forced liquidation,
or such Distressed Person makes a general assignment for the benefit of
creditors or is otherwise adjudicated as, or determined by any Governmental
Authority having regulatory authority over such Distressed Person or its assets
to be, insolvent or bankrupt; provided that a Lender-Related Distress Event
shall not be deemed to have occurred solely by virtue of the ownership or
acquisition of any equity interests in any Lender or any Person that directly or
indirectly controls such Lender by a Governmental Authority or an

 

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instrumentality thereof so long as such ownership interest does not result in or
provide such Lender with immunity from the jurisdiction of courts within the
United States or from the enforcement of judgments or writs of attachment on its
assets or permit such Lender (or such Governmental Authority) to reject,
repudiate, disavow or disaffirm any contracts or agreements made with such
Lender.

 

“Letter of Credit” shall have the meaning provided in Section 3.1(a).

 

“Letter of Credit Application” shall have the meaning provided in Section 3.2.

 

“Letter of Credit Commitment” shall mean (i) 10% of the Borrowing Base then in
effect or (ii) such greater amount agreed to by the Administrative Agent and the
Issuing Banks; provided that in no event shall the Letter of Credit Commitment
exceed the Borrowing Base then in effect.

 

“Letter of Credit Exposure” shall mean, with respect to any Lender, at any time,
the sum of (a) the principal amount of any Unpaid Drawings in respect of which
such Lender has made (or is required to have made) payments to the applicable
Issuing Bank pursuant to Section 3.4(a) at such time and (b) such Lender’s
Commitment Percentage of the Letters of Credit Outstanding at such time
(excluding the portion thereof consisting of Unpaid Drawings in respect of which
the Lenders have made (or are required to have made) payments to the applicable
Issuing Bank pursuant to Section 3.4(a)) minus the amount of cash or deposit
account balances held by the Administrative Agent to Cash Collateralize
outstanding Letters of Credit and Unpaid Drawings under Section 3.8.

 

“Letters of Credit Outstanding” shall mean, at any time, the sum of, without
duplication, (a) the aggregate Stated Amount of all outstanding Letters of
Credit and (b) the aggregate principal amount of all Unpaid Drawings in respect
of all Letters of Credit.

 

“LIBOR Loan” shall mean any Loan bearing interest at a rate determined by
reference to the LIBOR Rate.

 

“LIBOR Rate” shall mean, for any Interest Period with respect to any Borrowing
of a LIBOR Loan, the interest rate per annum appearing on Reuters Screen LIBOR01
Page (or on any successor page or any successor service, or any substitute
page or substitute for such service, providing rate quotations comparable to
those currently provided on Reuters Screen LIBOR01 Page, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to Dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period, as the rate for Dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the “LIBOR Rate” with respect to
such Borrowing of such LIBOR Loan for such Interest Period shall be determined
by the Administrative Agent by reference to such other comparable publicly
available service for displaying the offered rate for Dollar deposits in the
London interbank market as may be selected by the Administrative Agent and, in
the absence of availability, then such rate shall be the rate at which Dollar
deposits of an amount comparable to the Advance of such LIBOR Loan and for a
maturity comparable to such Interest Period are offered by the principal office
of the

 

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Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two (2) Business Days prior to
the commencement of such Interest Period; provided that, notwithstanding the
foregoing, if the LIBOR Rate shall be less than zero, such rate shall be deemed
to be zero for the purposes of this Agreement.

 

“Lien” shall mean, with respect to any asset, any mortgage, deed of trust, lien,
notice of claim of lien, hypothecation, pledge, collateral assignment, security
interest or similar encumbrance of any kind or character.

 

“Liquid Investments” shall mean:

 

direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States maturing within 270 days from
the date of any acquisition thereof;

 

(i) negotiable or nonnegotiable certificates of deposit, time deposits, or other
similar banking arrangements maturing within 270 days from the date of
acquisition thereof or which may be liquidated for the full amount thereof
without penalty or premium (“bank debt securities”), issued by (A) any Lender
(or any Affiliate of any Lender), or (B) any other bank or trust company so long
as either (x) such certificate of deposit is not pledged to secure the
Borrower’s or any Subsidiaries’ ordinary course of business bonding
requirements, and (y) the amount thereof is less than or equal to $100,000, or
any other bank or trust company, if at the time of deposit or purchase, such
bank debt securities are rated A or A2 or better by either S&P or Moody’s, and
(ii) commercial paper issued by (A) any Lender (or any Affiliate of any Lender)
or (B) any other Person if at the time of purchase such commercial paper is
rated at the highest credit rating given by either S&P or Moody’s, or upon the
discontinuance of both of such services, such other nationally recognized rating
service or services, as the case may be, as shall be selected by the Borrower
with the consent of the Majority Lenders;

 

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

 

repurchase agreements relating to investments described in clauses (a) and
(b) above with a market value at least equal to the consideration paid in
connection therewith, with any Person who regularly engages in the business of
entering into repurchase agreements and has a combined capital and surplus and
undivided profit of not less than $500,000,000, if at the time of entering into
such agreement such Person is a Lender (or an Affiliate of any Lender) or the
debt securities of such Person is rated at the highest credit rating given by
either S&P or Moody’s.

 

“Liquidity” shall mean the sum of (a) the Available Commitment, (b) all
unrestricted cash held in deposit accounts of the Borrower or any Restricted
Subsidiary and (c) Liquid Investments of the Borrower or any Restricted
Subsidiary, and in the case of clauses (b) and (c), which are subject to a Lien
in favor of the Administrative Agent securing the Obligations, perfected by an
account control agreement with the Administrative Agent or held in a deposit
account or securities account maintained with the Administrative Agent and
otherwise free and clear of all Liens (other than Permitted Liens).

 

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“Loan” shall mean the loans made to the Borrower pursuant to Section 2.1 of this
Agreement.

 

“Loan Limit” shall mean, at any time, the lesser of (i) the Total Commitment at
such time and (ii) the Borrowing Base at such time (including as it may be
reduced pursuant to Sections 2.14, 2.15 or 2.17).

 

“Majority Lenders” shall mean, at any date, (a) if there are two or fewer
Lenders, all Lenders, (b) if there are three Lenders, Required Lenders and
(c) if there are more than three Lenders, (i) Non-Defaulting Lenders (including
Administrative Agent as a Lender) having or holding more than 50% of the
Adjusted Total Commitment at such date or (ii) if the Total Commitment has been
terminated, Non-Defaulting Lenders (including Administrative Agent as a Lender)
having or holding more than 50% of the Total Outstandings (excluding the Loans
and Letter of Credit Exposure of Defaulting Lenders) in the aggregate at such
date.

 

“Management Services Agreement” shall mean the management services agreement,
dated as of the Funding Date, among the Borrower, Kimbell Operating Company, LLC
and the other parties thereto.

 

“Material Adverse Effect” shall mean a circumstance or condition affecting the
business, assets, operations, properties or financial condition of the Borrower
and the Restricted Subsidiaries, taken as a whole, that would, individually or
in the aggregate, materially adversely affect (a) the ability of the Borrower
and the other Credit Parties, taken as a whole, to perform their payment
obligations under this Agreement or any of the other Credit Documents or (b) the
rights and remedies of the Administrative Agent and the Lenders under this
Agreement or under any of the other Credit Documents.

 

“Material Indebtedness” shall mean Indebtedness (other than Loans and Letters of
Credit) of any one or more of the Borrower or any Restricted Subsidiary in an
aggregate principal amount exceeding $10,000,000.

 

“Material Subsidiary” shall mean, as of the date of each Compliance Certificate
delivered under Section 9.1(c), each Restricted Subsidiary of the Borrower whose
Total Assets (when combined with the assets of such Restricted Subsidiary’s
Restricted Subsidiaries, after eliminating intercompany obligations) as at the
last day of the four consecutive fiscal quarter period then ended for which the
financial statements required pursuant to Section 9.1 (a) or (b) have been
delivered (or required to be delivered) were equal to or greater than 2% of the
Consolidated Total Assets of the Borrower and the Restricted Subsidiaries at
such date, determined in accordance with GAAP.

 

“Maturity Date” shall mean February 8, 2022.

 

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“Maximum Rate” shall mean the maximum rate of interest that the Administrative
Agent is permitted to charge to Borrower in compliance with all applicable laws.

 

“Merger Sub” shall mean Kimbell Merger Sub, LLC, a Delaware limited liability
company.

 

“Moody’s” shall mean Moody’s Investors Service, Inc. or any successor by merger
or consolidation to its business.

 

“Mortgaged Property” shall mean each of the Oil and Gas Properties of the Credit
Parties with respect to which a Mortgage has been granted.

 

“Multiemployer Plan” shall mean a Plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.

 

“Net Income” shall mean, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP; provided that in calculating
Net Income of the Borrower for any period, there shall be excluded the net
income of any Unrestricted Subsidiary or any other Person in which the Borrower
or any Restricted Subsidiary has an interest (which interest does not cause the
net income of such other Person to be consolidated with the net income of the
Borrower and the Restricted Subsidiaries in accordance with GAAP), except, to
the extent of the amount of dividends or distributions actually paid in cash
during such period by such Unrestricted Subsidiary or such other Person to the
Borrower or to a Restricted Subsidiary.

 

“Non-Consenting Lender” shall have the meaning provided in Section 13.7(b).

 

“Non-Defaulting Lender” shall mean and include each Lender other than a
Defaulting Lender.

 

“Note” means a promissory note of the Borrower payable to any Lender or its
Affiliates in an amount not to exceed the Commitment of such Lender, in
substantially the form of attached Exhibit C evidencing indebtedness of the
Borrower to such Lender resulting from Advances owing to such Lender.

 

“Notice of Borrowing” shall mean a request of the Borrower in accordance with
the terms of Section 2.1(b) and substantially in the form of Exhibit A or such
other form as shall be approved by the Administrative Agent and the Borrower.

 

“Notice of Conversion or Continuation” shall have the meaning provided in
Section 2.5(a).

 

“Obligations” shall mean all Advances to, and all other obligations of, any
Credit Party arising under any Credit Document to pay principal and interest on
any Loan and all Reimbursement Obligations in respect of any Letter of Credit
and to pay all costs and expenses under the Credit Documents and all Cash
Management Obligations and Hedging Obligations, in each case, entered into with
the Borrower or any Restricted Subsidiary, whether direct or indirect

 

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(including those acquired by assumption pursuant to this Agreement), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against any
Credit Party or any Affiliate thereof in any proceeding under any bankruptcy or
insolvency law naming such Person as the debtor in such proceeding, regardless
of whether such interest and fees are allowed claims in such proceeding. Without
limiting the generality of the foregoing, the Obligations of the Credit Parties
under the Credit Documents (and any of their Restricted Subsidiaries to the
extent they have obligations under the Credit Documents) include the obligation
(including Guarantee Obligations) to pay principal, interest, charges, expenses,
fees, attorney costs, indemnities and other amounts payable by any Credit Party
under any Credit Document. Notwithstanding the foregoing, (a) the obligations of
the Borrower or any Restricted Subsidiary under any Hedge Transaction and under
any Cash Management Agreement that has been secured at the option of the
Borrower (such option shall be deemed exercised as reflected in the documents
related to any such Hedge Transaction or Cash Management Agreement among the
Borrower or any Restricted Subsidiary and the applicable Hedge Bank or Cash
Management Bank) shall be secured and guaranteed pursuant to the Security
Documents and the Guarantee only to the extent that, and for so long as, the
other Obligations are so secured and guaranteed; (b) any release of Collateral
or Guarantors effected in the manner permitted by this Agreement and the other
Credit Documents shall not require the consent of the holders of Hedge
Obligations under Hedge Transactions or of the holders of Cash Management
Obligations under Cash Management Agreements; and (c) “Obligations” of a
Guarantor shall exclude any Excluded Swap Obligations of such Guarantor.

 

“OFAC” shall have the meaning provided in Section 8.19(b).

 

“Oil and Gas Properties” shall mean all of the following in which Borrower or
any Restricted Subsidiary owns an interest: (i) all oil, gas and/or mineral
leases, oil, gas or mineral properties, mineral servitudes and/or mineral rights
of any kind (including, without limitation, mineral fee interests, lease
interests, farmout interests, overriding royalty and royalty interests, net
profits interests, oil payment interests, production payment interests and other
types of mineral interests), and all oil and gas gathering, treating, storage,
processing and handling assets, (ii) all oil and gas gathering, treating,
storage, processing and handling plants and assets,  (iii) all oil or gas
pipelines, and (iv) all platforms, wells, wellhead equipment, pumping units,
flowlines, tanks, buildings, injection facilities, saltwater disposal
facilities, compression facilities, gathering systems, and other equipment.

 

“OpCo” shall mean Kimbell Royalty Operating, LLC, a Delaware limited liability
company.

 

“OpCo Common Units” shall mean the common units in OpCo.

 

“OpCo Preferred Units” shall mean, collectively, the convertible preferred units
in OpCo in the same number of issued and outstanding units as the Apollo Group
Preferred Units and containing terms substantially similar to the Apollo Group
Preferred Units, including, with an aggregate liquidation preference equal to
the liquidation preference of the Apollo Group Preferred Units.

 

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“Other Taxes” shall mean any and all present or future stamp, registration,
documentary, intangible, recording, filing or any other excise, property or
similar Taxes (including related reasonable out-of-pocket expenses with regard
thereto) arising from any payment made hereunder or made under any other Credit
Document or from the execution or delivery of, registration or enforcement of,
consummation or administration of, or otherwise with respect to, this Agreement
or any other Credit Document; provided that such term shall not include any of
the foregoing Taxes (i) that result from an assignment, grant of a participation
pursuant to Section 13.6(c) or transfer or assignment to or designation of a new
lending office or other office for receiving payments under any Credit Document
(“Assignment Taxes”) to the extent such Assignment Taxes are imposed as a result
of a connection between the assignor/participating Lender and/or the
assignee/Participant and the taxing jurisdiction (other than a connection
arising solely from any Credit Documents or any transactions contemplated
thereunder), except to the extent that any such action described in this proviso
is requested or required by the Borrower, or (ii) Excluded Taxes.

 

“Overnight Rate” shall mean, for any day, the greater of (a) the Federal Funds
Effective Rate and (b) an overnight rate determined by the Administrative Agent
or the applicable Issuing Bank, as the case may be, in accordance with banking
industry rules on interbank compensation.

 

“Participant” shall have the meaning provided in Section 13.6(c).

 

“Participant Register” shall have the meaning provided in Section 13.6(c).

 

“Patriot Act” shall have the meaning provided in Section 13.18.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Section 4002 of ERISA, or any successor thereto.

 

“PDP Reserves” shall mean oil and gas reserves that, in accordance with
Petroleum Industry Standards, are classified as “Proved Developed Producing
Reserves”.

 

“Pension Act” shall mean the Pension Protection Act of 2006, as it presently
exists or as it may be amended from time to time.

 

“Permitted Acquisition” shall mean the acquisition, by merger or otherwise, by
the Borrower of assets (including any assets constituting a business unit, line
of business or division) or Equity Interests, so long as (a) such acquisition
and all transactions related thereto shall be consummated in all material
respects in accordance with Requirements of Law; (b) if such acquisition
involves the acquisition of Equity Interests of a Person that upon such
acquisition would become a Restricted Subsidiary, such acquisition shall result
in the issuer of such Equity Interests becoming, to the extent required by
Section 9.11, a Guarantor; (c) such acquisition shall result in the
Administrative Agent, for the benefit of the Secured Parties, being granted a
security interest in any Equity Interests or any assets so acquired to the
extent required by Section 9.11; (d) after giving effect to such acquisition, no
Default or Event of Default shall have occurred and be continuing; (e) after
giving effect to such acquisition, the Borrower shall be in compliance with
Section 9.16; (f) the Borrower shall be in Pro Forma Compliance after giving
effect to such

 

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acquisition and (g) no existing Indebtedness for borrowed money of a Person
acquired in connection with such acquisition shall be assumed as a direct result
of such acquisition.

 

“Permitted Additional Debt” shall mean unsecured senior, unsecured senior
subordinated or unsecured subordinated Indebtedness issued by the Borrower or a
Guarantor, (a) the terms of which do not provide for any scheduled repayment,
mandatory redemption or sinking fund obligation prior to the 91st day after the
Maturity Date (other than customary offers to purchase upon a change of control,
asset sale or casualty or condemnation event and customary acceleration rights
after an event of default), (b) the covenants (other than financial covenants),
events of default, guarantees and other terms of which (other than interest
rate, fees, funding discounts and redemption or prepayment premiums determined
by the Borrower to be “market” rates, fees, discounts and premiums at the time
of issuance or incurrence of any such Indebtedness), taken as a whole, are
determined by the Borrower to be “market” terms on the date of issuance or
incurrence and in any event are not, in the aggregate, materially more
restrictive on the Borrower and its Restricted Subsidiaries than the terms of
this Agreement as in effect at the time of such issuance or incurrence, (c) the
financial covenants of which are not, individually or in the aggregate, more
restrictive than the financial covenants contained in this Agreement as in
effect at the time of such issuance or incurrence, (d) the terms of which do not
contain maintenance financial covenants or require the achievement of any
financial performance standards other than as a condition to taking specified
actions or as permitted by clause (c) above, (e) if such Indebtedness is senior
subordinated or subordinated Indebtedness, the terms of such Indebtedness
provide for customary subordination of such Indebtedness to the Obligations and
(f) no Restricted Subsidiary of the Borrower (other than a Guarantor or a
corporate finance subsidiary who has no operations or assets other than those
incidental to the issuance of the Indebtedness) is an obligor under such
Indebtedness; provided that a certificate of an Authorized Officer of the
Borrower is delivered to the Administrative Agent at least three (3) Business
Days prior to the incurrence of such Additional Indebtedness, together with 
drafts of the indenture, credit agreement or similar document and any security
agreements and guaranty agreements related thereto, stating that the Borrower
has determined in good faith that the terms and conditions contained in such
documentation satisfy the criteria set forth above.

 

“Permitted Holders” shall mean each of (a) Kimbell GP Holdings, LLC,
(b) Rochelle Royalties, LLC, (c) BGT Investments LLC, (d) Double Eagle
Interests, LLC, (e) Robert D. Ravnaas, (f) Brett G. Taylor, (g) Mitch S. Wynne
and (h) Ben J. Fortson.

 

“Permitted Liens” shall mean:

 

(a)                                 royalties, overriding royalties,
reversionary interests, production payments and similar burdens;

 

(b)                                 sales contracts or other arrangements for
the sale of production of oil, gas or associated liquid or gaseous hydrocarbons
which would not (when considered cumulatively with the matters discussed in
clause (a) above) deprive the Borrower or the Restricted Subsidiaries, taken as
a whole, of any material right with respect to their assets or properties
(except for rights customarily granted with respect to such contracts and
arrangements);

 

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(c)                                  statutory Liens for taxes or other
assessments that are not yet delinquent (or that, if delinquent, are being
contested in good faith by appropriate proceedings, levy and execution thereon
having been stayed and continue to be stayed and for which the Borrower has set
aside on its books adequate reserves in accordance with GAAP);

 

(d)                                 easements, rights-of-way, servitudes,
permits, surface leases and other rights with respect to surface operations,
pipelines, grazing, logging, canals, ditches, reservoirs or the like,
conditions, covenants and other restrictions, and easements of streets, alleys,
highways, pipelines, telephone lines, power lines, railways and other easements
and rights of way on, over or with respect to the Borrower’s or its Restricted
Subsidiaries’ assets or properties and that do not individually or in the
aggregate cause a Material Adverse Effect;

 

(e)                                  materialman’s, mechanic’s, repairman’s,
employee’s, vendor’s, laborer’s, warehouseman’s, carrier’s, pipeline’s,
contractor’s, sub-contractor’s, operator’s, non-operator’s (arising under
operating or joint operating agreements), and other like Liens (including any
financing statements filed in respect thereof) incidental to obligations
incurred by the Borrower in connection with the construction, maintenance,
development, transportation, processing, storage or operation of the Borrower’s
or a Restricted Subsidiary’s assets or properties to the extent not delinquent
(or which, if delinquent, are being contested in good faith by appropriate
proceedings and for which the Borrower has set aside on its books adequate
reserves in accordance with GAAP);

 

(f)                                   all contracts, agreements and instruments,
and all defects and irregularities and other matters affecting the Borrower’s or
its Restricted Subsidiaries’ assets and properties which were in existence at
the time Borrower’s or its Restricted Subsidiaries’ assets and properties were
originally acquired by the Borrower or such Restricted Subsidiaries and all
routine operational agreements entered into in the ordinary course of business,
which contracts, agreements, instruments, defects, irregularities and other
matters and routine operational agreements are not such as to, individually or
in the aggregate, interfere materially with the operation, value or use of the
Borrower’s and its Restricted Subsidiaries’ assets and properties, considered in
the aggregate;

 

(g)                               liens in connection with workmen’s
compensation, unemployment insurance or other social security, old age pension
or public liability obligations;

 

(h)                              legal or equitable encumbrances deemed to exist
by reason of the existence of any litigation or other legal proceeding or
arising out of a judgment or award with respect to which an appeal is being
prosecuted in good faith and levy and execution thereon have been stayed and
continue to be stayed;

 

(i)                                     rights reserved to or vested in any
municipality, governmental, statutory or other public authority to control or
regulate the Borrower’s or any Restricted Subsidiary’s assets and properties in
any manner, and all applicable laws, rules and orders from any Governmental
Authority;

 

(j)                                    landlord’s liens or Liens to secure
performance of tenders, surety bonds, appeal bonds, government contracts,
performance and return of money bonds, bids, trade contracts, leases, statutory
obligations, regulatory obligations and other obligations of a like nature
incurred in the ordinary course of business;

 

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(k)                                 Liens incurred pursuant to the Security
Documents;

 

(l)                                     contractual Liens which arise in the
ordinary course of business under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-in and
farm-out agreements, division orders, contracts for the sale, transportation or
exchange of Oil and Gas Properties, unitization and pooling declarations and
agreements, area of mutual interest agreements, saltwater or other disposal
agreements, seismic or other geophysical permits or agreements, and other
agreements which are customary in the oil and gas business;

 

(m)                             judgment and attachment Liens not giving rise to
an Event of Default;

 

(n)                                 Liens securing Indebtedness permitted under
Section 10.7(d), but only on the Property under lease or the Property purchased
with such Indebtedness, as applicable;

 

(o)                                 other Liens securing obligations that in the
aggregate do not exceed $5,000,000 in principal amount at any one time.

 

(p)                                 banker’s liens and rights of setoff or
similar rights and remedies under statutory or common law or customary account
documentation in the ordinary course of business in favor of banks and other
financial institutions over any bank accounts of the Borrower and the Restricted
Subsidiaries;

 

(q)                                 Liens on Equity Interests of Unrestricted
Subsidiaries;

 

(r)                                    Liens on insurance policies and the
proceeds thereof securing the financing of the premiums with respect thereto;

 

(s)                                   any inconsequential, insignificant or
immaterial Liens against any of the Oil and Gas Properties that are of a type
that would be customarily accepted in the oil and gas industry; and

 

(t)                                    Liens on Property, other than Oil and Gas
Properties, not constituting Collateral securing Indebtedness or other
obligations of the Borrower or any Restricted Subsidiary in an aggregate amount
not to exceed $3,000,000 at any time.

 

“Person” shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any Governmental Authority.

 

“Petroleum Industry Standards” shall mean the definitions for Oil and Gas
Reserves promulgated by the Society of Petroleum Engineers (or any generally
recognized successor) as in effect at the time in question.

 

“Plan” shall mean any multiemployer or single-employer plan, as defined in
Section 4001 of ERISA and subject to Title IV of ERISA, that is or was within
any of the preceding six plan years maintained or contributed to by (or to which
there is or was an obligation to contribute or to make payments to) the Borrower
or an ERISA Affiliate.

 

“Preferred Equity” shall mean Equity Interests of the Borrower that is preferred
stock or preferred units, including without limitation the Apollo Group
Preferred Units.

 

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“Preferred Equity Purchase Agreement” shall mean that certain Series A Preferred
Unit Purchase Agreement, as dated May 28, 2018 among the Borrower and the Apollo
Group, pursuant to which the Apollo Group purchased the Apollo Group Series A
Units from the Borrower, as such agreement may be amended, restated,
supplemented or otherwise modified from time to time.

 

“Prime Rate,” shall mean the maximum “Latest” “U.S.” prime rate of interest per
annum published from time to time in the Money Rates section of The Wall Street
Journal (U.S. Edition) or in any successor publication to The Wall Street
Journal.   If more than one U.S. prime rate is published at any time by The Wall
Street Journal, the highest of such prime rates shall constitute the Prime Rate
hereunder, and (ii) if at any time The Wall Street Journal ceases to publish a
U.S. prime rate, the Administrative Agent shall have the right to select a
substitute rate that the Administrative Agent determines, in the exercise of its
reasonable commercial discretion, to be comparable to such prime rate, and the
substituted rate as so selected, upon the sending of written notice thereof to
Borrower, shall constitute the Prime Rate hereunder.

 

“Pro Forma Basis” shall mean, as to any Person, for any events as described
below that occur subsequent to the commencement of a period for which the
financial effect of such events is being calculated, and giving effect to the
events for which such calculation is being made, such calculation as will give
pro forma effect to such events as if such events occurred on the first day of
the four consecutive fiscal quarter period ended on or before the occurrence of
such event (the “Reference Period”): (i) in making any determination of EBITDAX,
effect shall be given to any Disposition, any acquisition, Investment, capital
expenditure, construction, repair, replacement, improvement, development,
disposition, merger, amalgamation, consolidation, any dividend, distribution or
other similar payment, and any restructurings of the business of the Borrower
that the Borrower has determined to make and/or made and are expected to have a
continuing impact and are factually supportable, which would include cost
savings resulting from head count reduction, closure of facilities and similar
operational and other cost savings, which adjustments the Borrower determines
are reasonable as set forth in a certificate of a Financial Officer of the
Borrower (the foregoing, together with any transactions related thereto or in
connection therewith, the “relevant transactions”), in each case that occurred
during the Reference Period (or, in the case of determinations made pursuant to
the definition of the term “Pro Forma Compliance” or pursuant to Sections 10.2,
10.7 and 10.8 occurring during the Reference Period or thereafter and through
and including the date upon which the respective Permitted Acquisition or
relevant transaction is consummated), and (ii) in making any determination on a
Pro Forma Basis, (y) all Indebtedness (including Indebtedness issued, incurred
or assumed as a result of, or to finance, any relevant transactions and for
which the financial effect is being calculated, whether incurred under this
Agreement or otherwise, but excluding normal fluctuations in revolving
Indebtedness incurred for working capital purposes) issued, incurred, assumed or
permanently repaid during the Reference Period (or, in the case of
determinations made pursuant to the definition of the term “Pro Forma
Compliance” or pursuant to Sections 10.2, 10.7 and 10.8 occurring during the
Reference Period or thereafter and through and including the date upon which the
respective Permitted Acquisition or relevant transaction is consummated) shall
be deemed to have been issued, incurred, assumed or permanently repaid at the
beginning of such period and (z) Interest Expense of such Person attributable to
interest on any Indebtedness, for which pro forma effect is being given as
provided in preceding clause (y), bearing floating interest rates shall be
computed on a pro forma basis as if the rates that would have been in effect
during the period for which pro

 

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forma effect is being given had been actually in effect during such periods. 
Calculations made pursuant to the definition of the term “Pro Forma Basis” shall
be determined in good faith by a Financial Officer of the Borrower and approved
by the Administrative Agent and may include, for any fiscal period ending on or
prior to the third anniversary of any relevant pro forma event (but not for any
fiscal period ending after such third anniversary), adjustments to reflect
operating expense reductions and other operating improvements, synergies or cost
savings reasonably expected to result from such relevant pro forma event
(including, to the extent applicable, the Transactions).

 

“Pro Forma Compliance” shall mean, at any date of determination, that the
Borrower shall be in compliance, on a Pro Forma Basis after giving effect on a
Pro Forma Basis to the relevant transactions (including the assumption,
issuance, incurrence and permanent repayment of Indebtedness), with the Debt to
EBITDAX Ratio recomputed as at the last day of the most recently ended fiscal
quarter of the Borrower for which the financial statements and certificates
required pursuant to Section 9.1(a) or Section 9.1(b) have been or were required
to have been delivered; provided that, calculation of “Pro Forma Compliance”
shall employ the same annualized EBITDAX calculations as used in the definition
of Debt to EBITDAX Ratio for the fiscal quarters therein in which annualized
EBITDAX numbers are used and provided further, that “Pro Forma Compliance” shall
include the Debt to EBITDAX Ratio tested without regard to whether or not the
Debt to EBITDAX Ratio was or was required to be tested on the applicable
quarter-end date pursuant to Section 10.3.  Notwithstanding the above, if any
changes or modifications are made to the Form S-1 between the Effective Date and
the Funding Date that would affect EBITDAX as of the Funding Date, within three
(3) Business Days following the request of the Administrative Agent, the
Borrower shall provide the Administrative Agent a certificate reflecting the
EBITDAX calculation after giving effect to such changes or modifications to the
Form S-1.

 

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

 

“Proved Reserves” shall mean, collectively, oil and gas reserves that, in
accordance with Petroleum Industry Standards, are classified as “Proved
Developed Producing Reserves”, “Proved Developed Non-Producing Reserves”, and
“Proved Undeveloped Reserves”.

 

“PV-9” shall mean, with respect to any PDP Reserves expected to be produced from
any Borrowing Base Properties, the net present value, discounted at 9% per
annum, of the future net revenues expected to accrue to the Borrower’s and the
Credit Parties’ collective interests in such reserves during the remaining
expected economic lives of such reserves, calculated in accordance with the most
recent price deck and other pricing parameters provided to the Borrower by the
Administrative Agent pursuant to Sections 2.14 and 2.15.

 

“Qualified ECP Counterparty” shall mean, in respect of any Swap Obligation, each
Credit Party that has total assets exceeding $10,000,000 at the time the
relevant guarantee or grant of the relevant security interest becomes effective
with respect to such Swap Obligation or such other person as constitutes an
“eligible contract participant” under the Commodity Exchange Act or any
regulations promulgated thereunder and can cause another person to qualify as an
“eligible

 

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contract participant” at such time by entering into a keepwell under
Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

“Redetermination Date” shall mean, the date that the redetermined Borrowing Base
becomes effective pursuant to Section 2.14.

 

“Register” shall have the meaning provided in Section 13.6(b)(iv).

 

“Regulation D” shall mean Regulation D of the Board as from time to time in
effect and any successor thereto and other regulation or official interpretation
of the Board relating to reserve requirements applicable to member banks of the
Federal Reserve System.

 

“Regulation T” shall mean Regulation T of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

 

“Regulation U” shall mean Regulation U of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

 

“Regulation X” shall mean Regulation X of the Board as from time to time in
effect and any successor to all or a portion thereof establishing margin
requirements.

 

“Reimbursement Date” shall have the meaning provided in Section 3.4(a).

 

“Reimbursement Obligations” shall mean, at any time, the obligations of the
Borrower with respect to all Letters of Credit then outstanding to reimburse
amounts paid by the Issuing Bank with respect to any drawing or drawings under a
Letter of Credit.

 

“Related Parties” shall mean, with respect to any specified Person, such
Person’s partners, Affiliates and the partners, managers, directors, officers,
employees, agents and members of such Person or such Person’s Affiliates and any
Person that possesses, directly or indirectly, the power to direct or cause the
direction of the management or policies of such Person, whether through the
ability to exercise voting power, by contract or otherwise.

 

“Reportable Event” shall mean an event described in Section 4043 of ERISA and
the regulations thereunder, other than any event as to which the 30-day notice
period has been waived.

 

“Required Cash Collateral Amount” shall have the meaning provided in
Section 3.8(c).

 

“Required Lenders” shall mean, at any date, (a) Non-Defaulting Lenders having or
holding at least 66-2/3% of the Adjusted Total Commitment at such date or (b) if
the Total Commitment has been terminated, Non-Defaulting Lenders having or
holding at least 66-2/3% of the Total Outstandings (excluding the Loans and
Letter of Credit Exposure of Defaulting Lenders) in the aggregate at such date;
provided that, at any time there are only two Lenders under this Agreement,
“Required Lenders” means all Lenders (other than Defaulting Lenders).

 

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“Requirement of Law” shall mean, as to any Person, any law, treaty, rule,
regulation, statute, order, ordinance, decree, judgment, consent decree, writ,
injunction, settlement agreement or governmental requirement enacted,
promulgated or imposed or entered into or agreed by any Governmental Authority,
in each case applicable to or binding upon such Person or any of its property or
assets or to which such Person or any of its property or assets is subject.

 

“Reserve Report” shall have the meaning provided in Section 2.14 hereof.

 

“Reserve Report Certificate” shall mean a certificate of an Authorized Officer
in certifying as to the matters set forth in Section 9.14(c) in such form
reasonably acceptable to the Administrative Agent.

 

“Restricted Payments” shall have the meaning provided in Section 10.8.

 

“Restricted Subsidiary” shall mean any Subsidiary of the Borrower that is not an
Unrestricted Subsidiary.

 

“S&P” shall mean Standard & Poor’s Ratings Services or any successor by merger
or consolidation to its business.

 

“Sanction(s)” shall mean any international economic sanction administered or
enforced by the United States government (including without limitation, OFAC),
the United Nations Security Council, the Norwegian State, the European Union,
the Member States of the European Union, Her Majesty’s Treasury or any other
relevant sanctions authority.

 

“SEC” shall mean the Securities and Exchange Commission or any successor
thereto.

 

“Secured Parties” shall mean, collectively, the Administrative Agent, each
Issuing Bank, each Lender, each Hedge Bank that is party to any Hedge
Transaction and each Cash Management Bank that is a party to any Cash Management
Agreement.

 

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

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

 

“Security Documents” shall mean, collectively, all deeds of trust, mortgages,
security agreements, collateral assignments of production, deposit account
control agreements and other instruments granting Liens on any assets of the
Borrower or any of its Restricted Subsidiaries that are executed by the Borrower
or any of its Restricted Subsidiaries pursuant to Section 9.11 or 9.13 to secure
the Obligations of the Borrower or any of its Restricted Subsidiaries under the
Credit Documents.

 

“Sole Arranger” shall mean, prior to the Amendment No. 1 Effective Date, Frost
Bank.

 

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“Solvent” shall mean, with respect to any Person on any date of determination,
that on such date (i) the fair value of the assets of such Person, at a fair
valuation, exceeds the debts and liabilities, direct, subordinated, contingent
or otherwise, of such Person; (ii) the present fair saleable value of the
property of such Person is greater than the amount that will be required to pay
the probable liability of such Person on its debts and other liabilities,
direct, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (iii) such Person does not intend to,
and such Person does not believe that it will incur debts beyond such Person’s
ability to pay such debts as they mature, taking into account the timing and
amounts of cash to be received by such Person and the timing and amounts of cash
to be payable on or in respect of their debt; (iv) such Person is able to pay
its debts and liabilities, direct, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (v) such Person does
not have unreasonably small capital with which to conduct the businesses in
which it is engaged as such businesses are now conducted and are proposed to be
conducted.

 

“Stated Amount” of any Letter of Credit shall mean the maximum amount from time
to time available to be drawn thereunder, determined without regard to whether
any conditions to drawing could then be met.

 

“Subsidiary” of any Person shall mean and include (a) any corporation more than
50% of whose Equity Interests of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time Equity Interests of any
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such Person
directly or indirectly through Subsidiaries, (b) any limited liability company,
partnership, association, joint venture or other entity of which such Person
directly or indirectly through Subsidiaries has more than a 50% equity interest
at the time and (c) any partnership, the general partner of which meets the
description set forth in either clause (a) or (b) above. Unless otherwise
expressly provided, all references herein to a “Subsidiary” shall mean a
Subsidiary of the Borrower. OpCo will at all times constitute a “Subsidiary” of
the Borrower.

 

“Subsidiary Guarantor” shall mean each Restricted Subsidiary that is a
Guarantor.

 

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

 

“Swap Termination Value” shall mean, in respect of any one or more Hedge
Transactions after taking into account the effect of any legally enforceable
netting agreement relating to such Hedge Transactions, (a) for any date on or
after the date such Hedge Transactions have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and
(b) for any date prior to the date referenced in clause (a), the
amount(s) determined as the mark-to-market value(s) for such Hedge Transactions,
as determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Hedge Transactions (which
may include a Lender or any Affiliate of a Lender).

 

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“Taxes” shall mean any and all present or future taxes, duties, levies, imposts,
assessments, deductions, withholdings or other similar charges imposed by any
Governmental Authority whether computed on a separate, consolidated, unitary,
combined or other basis and any interest, fines, penalties or additions to tax
with respect to the foregoing.

 

“Total Assets” shall mean, as of any date of determination with respect to any
Person, the amount that would, in conformity with GAAP, be set forth opposite
the caption “total assets” (or any like caption) on a balance sheet of such
Person at such date.

 

“Total Commitment” shall mean the sum of the Commitments of all of the Lenders. 
The Total Commitment as of the Amendment No. 1 Effective Date is $200,000,000.

 

“Total Commitment Increase Agreement” has the meaning assigned to such term in
Section 4.4(b)(7).

 

“Total Debt” shall mean, as of any date of determination, the sum of (without
duplication) all Indebtedness (other than letters of credit or bank guarantees,
to the extent undrawn) consisting of Capital Lease obligations and Indebtedness
for borrowed money of the Borrower and its Restricted Subsidiaries on such date
determined on a consolidated basis and in accordance with GAAP (provided that
the amount of any Capital Lease obligations or any such Indebtedness issued at a
discount to its face value shall be determined in accordance with GAAP).

 

“Total Exposure” shall mean, with respect to any Lender at any time, the sum of
(a) the aggregate principal amount of the Loans of such Lender then outstanding
and (b) such Lender’s Letter of Credit Exposure at such time.

 

“Total Outstandings” shall mean, at any time, the total principal balance
outstanding on the Loans at any time plus the aggregate Letter of Credit
Exposure at such time.

 

“Transaction Expenses” shall mean any fees or expenses incurred or paid by the
Borrower or any of its Restricted Subsidiaries or any of their Affiliates in
connection with the Transactions, this Agreement and the other Credit Documents
and the transactions contemplated hereby and thereby.

 

“Transactions” shall mean, collectively, the consummation of the transactions
contemplated by this Agreement, the Credit Documents and the Form S-1 and the
payment of Transaction Expenses.

 

“Transferee” shall have the meaning provided in Section 13.6(e).

 

“Type” shall mean, as to any Loan, its nature as an ABR Loan or a LIBOR Loan.

 

“UCC” shall mean the Uniform Commercial Code as in effect in the State of Texas
or of any other state the laws of which are required to be applied in connection
with the creation or perfection of any security interests in any Collateral.

 

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“Unfunded Current Liability” of any Plan shall mean the amount, if any, by which
the Accumulated Benefit Obligation (as defined under Statement of Financial
Accounting Standards No. 87 (“SFAS 87”)) under the Plan as of the close of its
most recent plan year, determined in accordance with SFAS 87 as in effect on the
date hereof, exceeds the Fair Market Value of the assets allocable thereto.

 

“United States” or “U.S.” shall mean the United States of America.

 

“Unpaid Drawing” shall have the meaning provided in Section 3.4(a).

 

“Unrestricted Subsidiary” shall mean any Subsidiary of the Borrower designated
as such on Schedule 8.12 from time to time or which the Borrower has designated
in writing to the Administrative Agent to be an Unrestricted Subsidiary pursuant
to Section 10.17, until such time as the Borrower redesignates such Unrestricted
Subsidiary as a Restricted Subsidiary in accordance with this Agreement.

 

“Unscheduled Redetermination” shall mean a redetermination of the Borrowing Base
made at any time other than on the date set for the regular semi-annual
redetermination of the Borrowing Base which is made (A) at the request of the
Borrower (but only once between successive Redetermination Dates) or (B) at the
request of the Required Lenders (only once between successive Redetermination
Dates).

 

“Unused Commitment Fee” shall have the meaning provided in Section 4.1(a).

 

“Unused Commitment Fee Rate” shall mean, for any day, with respect to the
Available Commitment on such day, the applicable rate per annum set forth next
to the row heading “Commitment Fee Rate” in the definition of “Applicable
Margin” and based upon the Borrowing Base Utilization Percentage in effect on
such day.

 

“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.

 

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

 

Section 1.2                                    Other Interpretive Provisions. 
With reference to this Agreement and each other Credit Document, unless
otherwise specified herein or in such other Credit Document:

 

(a)                                 The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.

 

(b)                                 The words “herein”, “hereto”, “hereof” and
“hereunder” and words of similar import when used in any Credit Document shall
refer to such Credit Document as a whole and not to any particular provision
thereof.

 

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(c)                                  Article, Section, Exhibit and Schedule
references are to the Credit Document in which such reference appears.

 

(d)                                 The term “including” is by way of example
and not limitation.

 

(e)                                  The term “documents” includes any and all
instruments, documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical or
electronic form.

 

(f)                                   In the computation of periods of time from
a specified date to a later specified date, the word “from” means “from and
including”; the words “to” and “until” each mean “to but excluding”; and the
word “through” means “to and including”.

 

(g)                                  Section headings herein and in the other
Credit Documents are included for convenience of reference only and shall not
affect the interpretation of this Agreement or any other Credit Document.

 

(h)                                 Any reference to any Person shall be
constructed to include such Person’s successors or assigns (subject to any
restrictions on assignment set forth herein) and, in the case of any
Governmental Authority, any other Governmental Authority that shall have
succeeded to any or all of the functions thereof.

 

(i)                                     Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.

 

(j)                                    The word “will” shall be construed to
have the same meaning as the word “shall”.

 

(k)                                 The words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

 

Section 1.3                                              Accounting Terms.  All
accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial ratios
and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP, applied in a manner
consistent with the Credit Parties’ past practices, except as otherwise
specifically prescribed herein; provided, however, that if the Borrower notifies
the Administrative Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the
Effective Date in GAAP or in the application thereof on the operation of such
provision (or if the Administrative Agent notifies the Borrower that the
Majority Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith. Notwithstanding any other provision
contained herein, all terms of an accounting or financial nature used herein

 

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shall be construed, and all computations of amounts and ratios referred to
herein shall be made (i) without giving effect to any election under Accounting
Standards Codification 825-10-25 (or any other Accounting Standards Codification
or Financial Accounting Standard having a similar result or effect) to value any
Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair
value”, as defined therein, and (ii) without giving effect to any treatment of
Indebtedness in respect of convertible debt instruments under Accounting
Standards Codification 470-20 (or any other Accounting Standards Codification or
Financial Accounting Standard having a similar result or effect) to value any
such Indebtedness in a reduced or bifurcated manner as described therein, and
such Indebtedness shall at all times be valued at the full stated principal
amount thereof. Notwithstanding anything to the contrary in this Agreement or
any other Credit Document, for purposes of calculations made pursuant to the
terms of this Agreement or any other Credit Document, GAAP will be deemed to
treat leases that would have been classified as operating leases in accordance
with generally accepted accounting principles in the United States as in effect
on December 31, 2015 in a manner consistent with the treatment of such leases
under generally accepted accounting principles in the United States as in effect
on December 31, 2015, notwithstanding any modifications or interpretive changes
thereto that may occur thereafter.

 

Section 1.4                                    References to Agreements, Laws,
Etc. Unless otherwise expressly provided herein, (a) references to
organizational documents, agreements (including the Credit Documents) and other
Contractual Requirements shall be deemed to include all subsequent amendments,
restatements, amendment and restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, amendment and restatements, extensions, supplements and other
modifications are permitted by any Credit Document and (b) references to any
Requirement of Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such
Requirement of Law.

 

Section 1.5                                    Times of Day. Unless otherwise
specified, all references herein to times of day shall be references to Fort
Worth, Texas (daylight saving or standard, as applicable).

 

ARTICLE II

AMOUNT AND TERMS OF CREDIT

 

Section 2.1                                    The Facility and Commitments.

 

(a)                                 Subject to, and upon the terms and
conditions set forth herein, each Lender severally, but not jointly, agrees to
make Loans to the Borrower, which Loans (i) shall be made to the Borrower from
time to time on and after the Funding Date and prior to the Maturity Date,
(ii) may, at the option of the Borrower, be incurred and maintained as, and/or
converted into, ABR Loans or LIBOR Loans, (iii) may be repaid and reborrowed in
accordance with the provisions hereof at any time prior to the Maturity Date,
(iv) shall not, for any Lender at any time, after giving effect thereto and to
the application of the proceeds thereof, result in such Lender’s Total Exposure
at such time exceeding such Lender’s Commitment Percentage at such time of the
Loan Limit and (v) shall not, after giving effect thereto and to the application
of the proceeds thereof, result in the Total Outstandings at such time exceeding
the Loan Limit.  The Obligations of the Borrower hereunder shall be

 

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evidenced by this Agreement and the other Credit Documents.  Notwithstanding any
other provision of this Agreement, no Loan shall be required to be made
hereunder if any Default or Event of Default (as hereinafter defined) has
occurred and is continuing.  The aggregate principal amount of each Advance of
Loans shall be at least $500,000 or any whole multiples of $100,000 in excess
thereof (except for any such Advance in an aggregate amount that is equal to the
entire unused balance of the Loan Limit and except for Loans to reimburse the
Issuing Bank with respect to any Unpaid Drawing which shall be made in the
amounts required by Sections 3.3 or 3.4, as applicable), and in each case shall
consist of Loans of the same Type made on the same day by each Lender ratably
according to its Commitment Percentage.

 

(b)                                 Whenever the Borrower desires an Advance of
a Loan (other than Loans used to reimburse Unpaid Drawings), it shall give the
Administrative Agent telegraphic, telex, facsimile or telephone notice of such
requested Advance in the form of a Notice of Borrowing, which in the case of
telephonic notice, shall be promptly confirmed in writing. Each Notice of
Borrowing shall be substantially in the form of Exhibit A attached hereto and
shall be received by the Administrative Agent not later than noon (Fort Worth,
Texas time) (i) on the Borrowing Date in the case of an ABR Loan or (ii) three
(3) Business Days prior to any proposed Borrowing Date in the case of LIBOR
Loans.  Each Notice of Borrowing shall specify (i) the Borrowing Date (which
shall be a Business Day), (ii) the principal amount to be borrowed, (iii) the
portion of such Advance constituting ABR Loans and/or LIBOR Loans, (iv) if any
portion of the proposed Advance is to constitute LIBOR Loans, the Interest
Period applicable thereto (if no Interest Period is selected, the Borrower shall
be deemed to have selected an Interest Period of one month) and (v) the Cash
Balance (without regard to the requested Advance) as of the close of business on
the date of the Notice of Borrowing and the reasonably estimated pro forma Cash
Balance on the close of business on the Borrowing Date (giving effect to the
requested Advance).  Each Notice of Borrowing shall constitute a representation
by the Borrower that (a) the amount of the requested Advances shall not cause
the Total Outstandings to exceed the Available Commitment (after giving effect
to the making of such Loans) and (b) as of the end of the third Business Day on
which such requested Advances will be funded, after giving pro forma effect to
the requested Advances, the Credit Parties shall not have any Excess Cash. 
Neither the Administrative Agent nor any Lender shall incur any liability to the
Borrower in acting upon any Notice of Borrowing referred to above which the
Administrative Agent or such Lender believes in good faith to have been given by
a duly authorized officer or other person authorized to borrow on behalf of the
Borrower. Upon funding of Advances by the Lenders under Section 2.3 below and
such funds being made available to the Borrower in accordance with this
Agreement pursuant to any such Notice of Borrowing, the amount so funded and
made available to the Borrower shall constitute a part of the Obligations
hereunder.  Loans made to reimburse Unpaid Drawings shall be made upon the
notice specified in Section 3.4(a).

 

(c)                                  Without in any way limiting the obligation
of the Borrower to confirm in writing any notice it may give hereunder by
telephone, the Administrative Agent may act prior to receipt of written
confirmation without liability upon the basis of such telephonic

 

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notice believed by the Administrative Agent in good faith to be from an
Authorized Officer of the Borrower.

 

Section 2.2                                    Maximum Number of Advances.  More
than one Advance may be incurred on any date; provided that at no time shall
there be outstanding more than) five (5) Advances of LIBOR Loans under this
Agreement.

 

Section 2.3                                    Disbursement of Funds.

 

(a)                                 No later than 2:00 p.m. (Fort Worth, Texas
time) on the date specified in each Notice of Borrowing, each Lender will make
available its Commitment Percentage of each Advance requested to be made on such
date in the manner provided below; provided that on the Funding Date, such funds
shall be made available by 10:00 a.m. (Fort Worth, Texas time) or such earlier
time as may be agreed among the Lenders, the Borrower and the Administrative
Agent for the purpose of consummating the Transactions.  The Borrower hereby
irrevocably authorizes the Administrative Agent to disburse the proceeds of each
Advance in immediately available funds by crediting or wiring such proceeds to
the deposit account of the Borrower identified in the most recent Notice of
Borrowing delivered by the Borrower to the Administrative Agent or as may be
otherwise agreed upon by the Borrower and the Administrative Agent from time to
time.

 

(b)                                 Each Lender shall make available all amounts
it is to fund to the Borrower under any Advance in immediately available funds
in Dollars to the Administrative Agent at the Administrative Agent’s Office, and
the Administrative Agent will (except in the case of Advances to repay Unpaid
Drawings) make available to the Borrower the aggregate of such amounts. Unless
the Administrative Agent shall have been notified by any Lender prior to the
date of any such Advance (or, with respect to an ABR Loan, the date of such
Borrowing prior to 1:00 p.m. (Fort Worth, Texas time)) that such Lender does not
intend to make available to the Administrative Agent its portion of the Advance
or Advances to be made on such date, the Administrative Agent may assume that
such Lender has made such amount available to the Administrative Agent on such
Borrowing Date, and the Administrative Agent, in reliance upon such assumption,
may (in its sole discretion and without any obligation to do so) make available
to the Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Administrative Agent by such Lender and the
Administrative Agent has made available such amount to the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount from
such Lender. If such Lender does not pay such corresponding amount forthwith
upon the Administrative Agent’s demand therefor the Administrative Agent shall
promptly notify the Borrower and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent shall
also be entitled to recover from such Lender or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (i) if paid by such Lender,
the Overnight Rate plus any administrative, processing or similar fees
customarily charged by the Administrative Agent or (ii) if paid by the Borrower,
the then-

 

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applicable rate of interest or fees, calculated in accordance with Section 2.7,
for the respective Loans.

 

(c)                                  Nothing in this Section 2.3 shall be deemed
to relieve any Lender from its obligation to fulfill its commitments hereunder
or to prejudice any rights that the Borrower may have against any Lender as a
result of any default by such Lender hereunder (it being understood, however,
that no Lender shall be responsible for the failure of any other Lender to
fulfill its commitments hereunder).

 

Section 2.4                                    Repayment of Loans; Evidence of
Debt.

 

(a)                                 The Borrower agrees to repay to the
Administrative Agent, for the benefit of the applicable Lenders on the Maturity
Date, the then outstanding principal amount of all Loans.

 

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

 

(c)                                  The Administrative Agent, on behalf of the
Borrower, shall maintain the Register pursuant to Section 13.6(b), and a
subaccount for each Lender, in which Register and subaccounts (taken together)
shall be recorded (i) the amount of each Loan made hereunder, the Type of each
Loan made and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from the Borrower and each Lender’s share
thereof.

 

(d)                                 The entries made in the Register and
accounts and subaccounts maintained pursuant to clauses (b) and (c) of this
Section 2.4 shall, absent manifest error and to the extent permitted by
applicable Requirements of Law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of any Lender or the Administrative Agent to maintain such
account, such Register or such subaccount, as applicable, or any error therein,
shall not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Loans made to the Borrower by such Lender in accordance
with the terms of this Agreement.

 

(e)                                  Upon the request of any Lender to Borrower
made through the Administrative Agent, the Borrower shall execute and deliver to
such Lender (through the Administrative Agent) a Note, which shall evidence the
obligation of the Borrower to repay to such Lender its Advances to Borrower in
addition to such records maintained by the Administrative Agent.  Each Lender
may attach schedules to a Note and endorse thereon the date, Type, amount,
currency and maturity of its Advances and payments with respect

 

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thereto, but such action or the failure to do so shall not control over the
records thereof maintained by the Administrative Agent.

 

Section 2.5                                    Conversions and Continuations.

 

(a)                                 Subject to the penultimate sentence of this
clause (a), (i) the Borrower shall have the option on any Business Day to
convert all or a portion of the outstanding principal amount of Loans of one
Type into an Advance or Advances of another Type and (ii) the Borrower shall
have the option on any Business Day to continue the outstanding principal amount
of any LIBOR Loans as LIBOR Loans for an additional Interest Period; provided
that (A) ABR Loans may not be converted into LIBOR Loans if an Event of Default
is in existence on the date of the conversion and the Administrative Agent has
or the Majority Lenders have determined in its or their sole discretion not to
permit such conversion, (B) LIBOR Loans may not be continued as LIBOR Loans for
an additional Interest Period if an Event of Default is in existence on the date
of the proposed continuation and the Administrative Agent has or the Majority
Lenders have determined in its or their sole discretion not to permit such
continuation, and (C) Borrowings resulting from conversions pursuant to this
Section 2.5 shall be limited in number as provided in Section 2.2. Each such
conversion or continuation shall be effected by the Borrower by giving the
Administrative Agent at the Administrative Agent’s Office prior to 1:00
p.m. (Fort Worth, Texas time) at least (i) three (3) Business Days’, in the case
of a continuation of or conversion to LIBOR Loans or (ii) the date of
conversion, in the case of a conversion into ABR Loans, prior written notice (or
telephonic notice promptly confirmed in writing) (each, a “Notice of Conversion
or Continuation”) specifying the Loans to be so converted or continued, the Type
of Loans to be converted into or continued and, if such Loans are to be
converted into or continued as LIBOR Loans, the Interest Period to be initially
applicable thereto (if no Interest Period is selected, the Borrower shall be
deemed to have selected an Interest Period of one month). The Administrative
Agent shall give each applicable Lender notice as promptly as practicable of any
such proposed conversion or continuation affecting any of its Loans.

 

(b)                                 If any Event of Default is in existence at
the time of any proposed continuation of any LIBOR Loans and the Administrative
Agent has or the Majority Lenders have determined in its or their sole
discretion not to permit such continuation, such LIBOR Loans shall be
automatically converted on the last day of the current Interest Period into ABR
Loans. If upon the expiration of any Interest Period in respect of LIBOR Loans,
the Borrower has failed to elect a new Interest Period to be applicable thereto
as provided in clause (a) above, the Borrower shall be deemed to have elected to
convert such Borrowing of LIBOR Loans into a Borrowing of LIBOR Loans with an
Interest Period of one month unless a Default or Event of Default is then in
existence in which case the Borrower shall be deemed to have elected to convert
such Borrowing of LIBOR Loans into a Borrowing of ABR Loans, in each case,
effective as of the expiration date of such current Interest Period.

 

Section 2.6                                    Pro Rata Borrowings. Each
Borrowing under this Agreement shall be made by the Lenders pro rata on the
basis of their applicable Commitment Percentages. It is

 

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understood that (a) no Lender shall be responsible for any default by any other
Lender in its obligation to make Loans hereunder and that each Lender severally
but not jointly shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to fulfill its
commitments hereunder and (b) failure by a Lender to perform any of its
obligations under any of the Credit Documents shall not release any Person from
performance of its obligation under any Credit Document.

 

Section 2.7                                    Interest.

 

(a)                                 The unpaid principal amount of each ABR Loan
shall bear interest from the date of the Advance thereof until maturity thereof
(whether by acceleration or otherwise) or conversion thereof to a LIBOR Loan, at
a rate per annum that shall at all times be the Adjusted ABR Rate in effect from
time to time.

 

(b)                                 The unpaid principal amount of each LIBOR
Loan shall bear interest from the date of the Advance thereof until maturity
thereof (whether by acceleration or otherwise) or conversion thereof to an ABR
Loan, at a rate per annum that shall at all times be the Adjusted LIBOR Rate in
effect from time to time.

 

(c)                                  If (x) all or a portion of (i) the
principal amount of any Loan or (ii) any interest payable thereon shall not be
paid when due (whether at stated maturity, by acceleration or otherwise) and
(y) an Event of Default has occurred and is continuing, such overdue amount
shall bear interest at a rate per annum that is (the “Default Rate”) (A) in the
case of overdue principal, the rate that would otherwise be applicable thereto
plus 2% or (B) in the case of any overdue interest, to the extent permitted by
applicable Requirements of Law, the rate described in Section 2.7(a) plus 2%, in
each case from the date of such non-payment to the date on which such amount is
paid in full (after as well as before judgment).

 

(d)                                 Interest on each Loan shall accrue from and
including the date of any Advance to but excluding the date of any repayment
thereof and shall be payable in Dollars; provided that any Loan that is repaid
on the same date on which it is made shall bear interest for one day. Except as
provided below, interest shall be payable (i) in respect of each ABR Loan,
quarterly in arrears on the last Business Day of each March, June, September and
December (ii) in respect of each LIBOR Loan, on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three-month intervals after the first
day of such Interest Period, (iii) in respect of each Loan, (A) on any
prepayment (on the amount prepaid), (B) at maturity (whether by acceleration or
otherwise) and (C) after such maturity, on demand.

 

(e)                                  All computations of interest hereunder
shall be made in accordance with Section 5.5.

 

(f)                                   The Administrative Agent, upon determining
the interest rate for any Advance of LIBOR Loans, shall promptly notify the
Borrower and the relevant Lenders

 

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thereof. Each such determination shall, absent clearly demonstrable error, be
final and conclusive and binding on all parties hereto.

 

Section 2.8                                    Interest Periods.  At the time
the Borrower gives a Notice of Borrowing or Notice of Conversion or Continuation
in respect of the making of, or conversion into or continuation as, an Advance
of LIBOR Loans in accordance with Section 2.1(b) or 2.5(a), the Borrower shall
give the Administrative Agent written notice (or telephonic notice promptly
confirmed in writing) of the Interest Period applicable to such Borrowing, which
Interest Period shall, at the option of the Borrower be (i) a one, two, three or
six-month period, as requested by the Borrower.

 

Notwithstanding anything to the contrary contained above:

 

(a)                                 the initial Interest Period for any
Borrowing of LIBOR Loans shall commence on the date of such Borrowing (including
the date of any conversion from a Borrowing of ABR Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on the
day on which the next preceding Interest Period expires;

 

(b)                                 if any Interest Period relating to a
Borrowing of LIBOR Loans begins on the last Business Day of a calendar month or
begins on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest Period shall
end on the last Business Day of the calendar month at the end of such Interest
Period;

 

(c)                                  if any Interest Period would otherwise
expire on a day that is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day; provided that, if any Interest Period in
respect of a LIBOR Loan would otherwise expire on a day that is not a Business
Day, but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding Business
Day; and

 

(d)                                 the Borrower shall not be entitled to elect
any Interest Period in respect of any LIBOR Loan if such Interest Period would
extend beyond the Maturity Date.

 

Section 2.9                                    Increased Costs, Illegality, Etc.

 

(a)                                 In the event that (x) in the case of clause
(i) below, the Administrative Agent or (y) in the case of clauses (ii) and
(iii) below, any Lender, shall have reasonably determined (which determination
shall, absent clearly demonstrable error, be final and conclusive and binding
upon all parties hereto):

 

(i)                                     on any date for determining the LIBOR
Rate for any Interest Period that (A) deposits in the principal amounts of the
Loans comprising such LIBOR Advances are not generally available in the relevant
market or (B) by reason of any changes arising on or after the Effective Date
affecting the interbank LIBOR market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of LIBOR Rate; or

 

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(ii)                                  that, due to a Change in Law occurring at
any time after the Effective Date, which Change in Law shall (A) impose, modify
or deem applicable any reserve, special deposit, compulsory loan, insurance
charge or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender, (B) subject any Lender to any Tax
with respect to any Credit Document or any LIBOR Loan made by it (other than
(1) Taxes indemnifiable under Section 5.4, or (2) Excluded Taxes), or (C) impose
on any Lender or the London interbank market any other condition, cost or
expense affecting this Agreement or LIBOR Loans made by such Lender, which
results in the cost to such Lender of making, converting into, continuing or
maintaining LIBOR Loans or participating in Letters of Credit (in each case
hereunder) increasing by an amount which such Lender reasonably deems material
or the amounts received or receivable by such Lender hereunder with respect to
the foregoing shall be reduced; or

 

(iii)                               at any time, that the making or continuance
of any LIBOR Loan has become unlawful as a result of compliance by such Lender
in good faith with any Requirement of Law (or would conflict with any such
Requirement of Law not having the force of law even though the failure to comply
therewith would not be unlawful);

 

then, and in any such event, such Lender (or the Administrative Agent, in the
case of clause (i) above) shall within a reasonable time thereafter give notice
(if by telephone, confirmed in writing) to the Borrower and to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in
the case of clause (i) above, LIBOR Loans shall no longer be available until
such time as the Administrative Agent notifies the Borrower and the Lenders that
the circumstances giving rise to such notice by the Administrative Agent no
longer exist (which notice the Administrative Agent agrees to give at such time
when such circumstances no longer exist), and any Notice of Borrowing or Notice
of Conversion or Continuation given by the Borrower with respect to LIBOR Loans
that have not yet been incurred shall be deemed rescinded by the Borrower,
(y) in the case of clause (ii) above, the Borrower shall pay to such Lender,
promptly (but no later than thirty (30) days) after receipt of written demand
therefor such additional amounts as shall be required to compensate such Lender
for such increased costs or reductions in amounts receivable hereunder (it being
agreed that a written notice as to the additional amounts owed to such Lender,
showing in reasonable detail the basis for the calculation thereof, submitted to
the Borrower by such Lender shall, absent clearly demonstrable error, be final
and conclusive and binding upon all parties hereto) and (z) in the case of
clause (iii) above, the Borrower shall take one of the actions specified in
Section 2.9(b) as promptly as possible and, in any event, within the time period
required by applicable Requirements of Law.

 

(b)                                 At any time that any LIBOR Loan is affected
by the circumstances described in Section 2.9(a)(ii) or (iii), the Borrower may
(and in the case of a LIBOR Loan affected pursuant to Section 2.9(a)(iii) shall)
either (i) if the affected LIBOR Loan is then being made pursuant to an Advance,
cancel such Advance by giving the Administrative

 

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Agent telephonic notice (confirmed promptly in writing) thereof on the same date
that the Borrower was notified by a Lender pursuant to Section 2.9(a)(ii) or
(iii) or (ii) if the affected LIBOR Loan is then outstanding, upon at least
three (3) Business Days’ notice to the Administrative Agent, require the
affected Lender to convert each such LIBOR Loan into an ABR Loan; provided that
if more than one Lender is affected at any time, then all affected Lenders must
be treated in the same manner pursuant to this Section 2.9(b).

 

(c)                                  If, after the Effective Date, any Change in
Law relating to capital adequacy or liquidity requirements of any Lender or
compliance by any Lender or its parent with any Change in Law relating to
capital adequacy or liquidity requirements occurring after the Effective Date
has or would have the effect of reducing the rate of return on such Lender’s or
its parent’s capital or assets as a consequence of such Lender’s commitments or
obligations hereunder to a level below that which such Lender or its parent
could have achieved but for such Change in Law (taking into consideration such
Lender’s or its parent’s policies with respect to capital adequacy or liquidity
requirements), then from time to time, promptly (but in any event no later than
fifteen (15) days) after written demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or its parent for such
reduction, it being understood and agreed, however, that a Lender shall not be
entitled to such compensation as a result of such Lender’s compliance with, or
pursuant to any request or directive to comply with, any applicable Requirement
of Law as in effect on the Effective Date. Each Lender, upon determining in good
faith that any additional amounts will be payable pursuant to this
Section 2.9(c), will give prompt written notice thereof to the Borrower, which
notice shall set forth in reasonable detail the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not,
subject to Section 2.12, release or diminish the Borrower’s obligations to pay
additional amounts pursuant to this Section 2.9(c) upon receipt of such notice.

 

(d)                                 In addition, if at any time the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that (i) the circumstances set forth in Section 2.9 (a)(i) have
arisen and such circumstances are unlikely to be temporary or (ii) the
circumstances set forth in this Section 2.9 (a)(i) have not arisen but the
supervisor for the administrator of the LIBOR Rate or a Governmental Authority
having jurisdiction over the Administrative Agent has made a public statement
identifying a specific date after which the LIBOR Rate shall no longer be used
for determining interest rates for loans, then the Administrative Agent and the
Borrower shall endeavor to establish an alternate rate of interest to the LIBOR
Rate that gives due consideration to the then prevailing market convention for
determining a rate of interest for syndicated loans in the United States at such
time, and shall enter into an amendment to this Agreement to reflect such
alternate rate of interest and such other related changes to this Agreement as
may be applicable (but for the avoidance of doubt, such related changes shall
not include a reduction of the Applicable Margin). Notwithstanding anything to
the contrary in Section 13.1, such amendment shall become effective without any
further action or consent of any other party to this Agreement so long as the
Administrative Agent shall not have received, within five (5) Business Days of
the date notice of such alternate rate of interest is provided to the Lenders, a
written notice from the Required Lenders stating that such Required Lenders
object to such amendment. Until an alternate rate of interest shall be

 

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determined in accordance with this paragraph, (x) any request to convert any
Loan to, or continue any Loan as, a LIBOR Loan shall be ineffective, and (y) if
any Notice of Borrowing requests a LIBOR Loan, such Loan shall be made as an ABR
Loan; provided that, if such alternate rate of interest shall be less than zero,
such rate shall be deemed to be zero for the purposes of this Agreement.

 

Section 2.10                             Compensation. If (a) any payment of
principal of any LIBOR Loan is made by the Borrower to or for the account of a
Lender other than on the last day of the Interest Period for such LIBOR Loan as
a result of a payment or conversion pursuant to Section 2.4, 2.5, 2.9, 5.1, 5.2
or 13.5, as a result of acceleration of the maturity of the Loans pursuant to
Article XI or for any other reason, (b) any Borrowing of LIBOR Loans is not made
on the date specified in a Notice of Borrowing, (c) any ABR Loan is not
converted into a LIBOR Loan on the date specified in a Notice of Conversion or
Continuation, (d) any LIBOR Loan is not continued as a LIBOR Loan on the date
specified in a Notice of Conversion or Continuation or (e) any prepayment of
principal of any LIBOR Loan is not made as a result of a withdrawn notice of
prepayment pursuant to Section 5.1 or 5.2, the Borrower shall after the
Borrower’s receipt of a written request by such Lender (which request shall set
forth in reasonable detail the basis for requesting such amount) pay to the
Administrative Agent (within fifteen days after such request) for the account of
such Lender any amounts required to compensate such Lender for any additional
losses, costs or expenses that such Lender may reasonably incur as a result of
such payment, failure to convert, failure to continue or failure to prepay,
including any loss, cost or expense (excluding loss of anticipated profits)
actually incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such LIBOR Loan.

 

Section 2.11                             Change of Lending Office. Each Lender
agrees that, upon the occurrence of any event giving rise to the operation of
Section 2.9(a)(ii), 2.9(a)(iii), 2.9(c), 3.5 or 5.4 with respect to such Lender,
it will, if requested by the Borrower use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another lending office for
any Loans affected by such event; provided that such designation does not cause
such Lender or its lending office to suffer any economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this Section 2.11 shall
affect or postpone any of the obligations of the Borrower or the right of any
Lender provided in Section 2.9, 3.5 or 5.4.

 

Section 2.12                             Notice of Certain Costs.
Notwithstanding anything in this Agreement to the contrary, to the extent any
notice required by Section 2.9, 2.10, 3.5 or 5.4 is given by any Lender more
than 180 days after such Lender has knowledge (or should have had knowledge) of
the occurrence of the event giving rise to the additional cost, reduction in
amounts, loss, tax or other additional amounts described in such Sections, such
Lender shall not be entitled to compensation under Section 2.9, 2.10, 3.5 or
5.4, as the case may be, for any such amounts incurred or accruing prior to the
181st day prior to the giving of such notice to the Borrower; provided that if
the circumstance giving rise to such claim is retroactive, then such 180-day
period referred to above shall be extended to include the period of retroactive
effect thereof.

 

Section 2.13                             The Borrowing Base.  At the Amendment
No. 1 Effective Date, the Borrowing Base shall be $200,000,000 (subject to
adjustment on the Amendment No. 1 Effective

 

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Date pursuant to Section 2.17(d)).  The Borrowing Base may be adjusted from time
to time pursuant to Sections 2.14, 2.15, 2.16 and 2.17 hereof.

 

Section 2.14                             Scheduled Determinations of Borrowing
Base. Subsequent determinations of the Borrowing Base shall be made by Lenders
semi-annually effective on or about November 1 and May 1 of each year, beginning
November 1, 2018, or such earlier date requested by the Required Lenders or
Borrower (each a “Redetermination Date”) or as Unscheduled Redeterminations,
each based on an engineering report (each a “Reserve Report”) delivered to the
Administrative Agent in form and substance reasonably satisfactory to the
Administrative Agent, and prepared with respect to the reserve report for the
November 1 redetermination, by an Approved Petroleum Engineer, and prepared with
respect to the May 1 redetermination, by the Borrower (or by such Approved
Petroleum Engineer), said Reserve Reports (i) to utilize economic, price deck
and other pricing parameters used by the Administrative Agent in good faith in
accordance with its usual and customary oil and gas lending criteria as it
exists at the particular time, together with such other information, reports and
data concerning the value of the Borrowing Base Properties as the Administrative
Agent or any Lender shall deem reasonably necessary to determine the value of
such Borrowing Base Properties.  Borrower shall deliver the Reserve Report to
the Administrative Agent (i) on or about (but not after) October 1 of each year,
beginning October 1, 2018, for the November 1 Redetermination Date, (ii) on or
about (but not after) April 1 of each year, beginning April 1, 2019 for the
May 1 Redetermination Date and (iii) within forty-five (45) days after either
(a) receipt of notice that Required Lenders require an Unscheduled
Redetermination, or (b) Borrower gives notice to the Administrative Agent that
the Borrower wishes to have an Unscheduled Redetermination performed. The
Reserve Report prepared for the November 1 Redetermination Date shall be dated
effective as of August 1 of such year and the Reserve Report prepared for the
May 1 Redetermination Date shall be dated effective as of February 1 of each
year. Upon receipt of each such Reserve Report, the Lenders shall make a
Redetermination of the Borrowing Base in accordance with standard practices at
the time for reserve based loans.  It is expressly understood that the Lenders
have no obligation to designate the Borrowing Base at any particular amount,
except in the exercise of their discretion, whether in relation to the
Commitment or otherwise.

 

Section 2.15                             Unscheduled Redeterminations of the
Borrowing Base.  Within thirty (30) days after either (i) receipt of notice from
the Administrative Agent that the Required Lenders require an Unscheduled
Redetermination, or (ii) the Borrower gives notice to the Administrative Agent
of its desire to have an Unscheduled Redetermination performed, in each case the
Borrower shall furnish to the Administrative Agent a Reserve Report prepared by
petroleum engineers employed by the Borrower (or by an Approved Petroleum
Engineer) in form and substance reasonably satisfactory to the Administrative
Agent, said engineering report to utilize economic, price deck and other pricing
parameters used by the Administrative Agent or any Lender as established from
time to time, together with such other information, reports and data concerning
the value of the Borrowing Base Properties.  The Administrative Agent shall by
written notice to the Borrower within a reasonable time after the provision of
all such information, reports and data (the date of such notice being herein
called the “Determination Date”) notify the Borrower of the designation of the
new Borrowing Base for the period beginning on such Determination Date and
continuing until, but not including, the next Redetermination Date or
Determination Date.  If the Borrower does not furnish all such information,
reports and data by any date specified in this Section 2.15, unless such failure
is of no fault of the Borrower, the Lenders nonetheless shall

 

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designate the Borrowing Base at any amount which the Lenders in their sole
discretion determine and redesignate the Borrowing Base from time to time
thereafter until the Administrative Agent receives all such information, reports
and data, whereupon the Lenders shall designate a new Borrowing Base, as
described above. In addition to, and not including and/or limited by the
Unscheduled Redeterminations allowed above, (a) if any changes or modifications
are made to the Form S-1 after the Initial Borrowing Base is established that
negatively affect the value of the Oil and Gas Properties to be owned by the
Credit Parties upon consummation of the IPO, then upon request of the Required
Lenders, the Borrowing Base shall be reduced by the Borrowing Base value
attributable to the Oil and Gas Properties included in the Initial Reserve
Report that will no longer be Borrowing Base Properties of the Credit Parties on
the Funding Date and (b) the Borrower may, by notifying the Administrative Agent
thereof, at any time between Scheduled Redeterminations, request additional
Redeterminations of the Borrowing Base in the event the Borrower or any other
Credit Party acquires in one or more transactions Oil and Gas Properties with
PDP Reserves that are to be Borrowing Base Properties having, in the aggregate,
a PV-9 (calculated at the time of such acquisitions) in excess of 20% of the
Borrowing Base in effect immediately prior to such acquisitions.

 

Section 2.16                            
Procedure.                                  The procedure for determining the
Initial Borrowing Base and at each redetermination shall be that the
Administrative Agent shall determine the Borrowing Base and submit the same to
the Lenders. Increases in the Borrowing Base will require approval of all the
Lenders, but other reaffirmations or changes in the Borrowing Base will be
subject to the approval of Required Lenders. The  Lenders (in the case of a
proposed increase to the Borrowing Base) or Required Lenders (in the case of a
proposed reaffirmation or reduction to the Borrowing Base) shall approve or
reject the Administrative Agent’s initial determination of the proposed
Borrowing Base by written notice to the Administrative Agent on or about fifteen
(15) days after the Administrative Agent’s notification of its initial
determination; provided, however that, the failure by any Lender to confirm or
reject in writing the Administrative Agent’s determination of the proposed
Borrowing Base within such period shall be deemed an approval of the such
proposed Borrowing Base by such Lender.  If Lenders (in the case of a proposed
increase to the Borrowing Base) or Required Lenders (in the case of a proposed
reaffirmation or reduction to the Borrowing Base) fail to approve any such
proposed Borrowing Base determined by the Administrative Agent hereunder in such
period, then the Administrative Agent shall poll the Lenders to ascertain the
highest proposed Borrowing Base then acceptable to Lenders (in the case of a
proposed increase to the Borrowing Base) or Required Lenders (in the case of a
proposed reaffirmation or reduction to the Borrowing Base) for purposes of this
Section 2.16, such amounts shall become the new Borrowing Base, effective on the
date specified in this Section 2.16.  Until such approval or deemed approval,
the Borrowing Base in effect before the proposed Borrowing Base shall remain in
effect.  Upon agreement by the Administrative Agent and the Lenders (in the case
of a proposed increase to the Borrowing Base) or Required Lenders (in the case
of a proposed reaffirmation or reduction to the Borrowing Base) of the new
Borrowing Base, the Administrative Agent shall, by written notice to the
Borrower and the Lenders, designate the new Borrowing Base available to the
Borrower.  Such designation shall be effective as of the Business Day specified
in such written notice (or, if no effective date is specified in such written
notice, the next Business Day following delivery of such written notice) and
such new Borrowing Base shall remain in effect until the next determination or
redetermination of the Borrowing Base in accordance with this Agreement.

 

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Section 2.17                                   Reduction of Borrowing Base upon
Sale of Borrowing Base Properties or Equity Interests in Restricted
Subsidiaries, Hedge Terminations and Issuance of Permitted Additional Debt.

 

(a)                                 Sale of Borrowing Base Properties.  If
(i) the Borrower or a Credit Party Disposes of Borrowing Base Properties
included in the most recently delivered Reserve Report or Disposes of any Equity
Interests in any Restricted Subsidiary owning any Borrowing Base Properties
included in the most recently delivered Reserve Report and (ii) the aggregate
value attributed in the most recent Reserve Report to all such Borrowing Base
Properties Disposed of, when combined with the aggregate Borrowing Base value
(as determined by the Administrative Agent) of all Hedge Terminations, in each
case since the latest of (A) the Amendment No. 1 Effective Date, (B) the most
recent scheduled Redetermination Date or Determination Date and (C) the last
adjustment of the Borrower Base made pursuant to this Section 2.17(a), exceeds
ten percent (10%) of the then-effective Borrowing Base, individually or in the
aggregate, then the Required Lenders shall have the right to adjust the
Borrowing Base in an amount equal to the Borrowing Base value, if any,
attributable to such Disposed of Borrowing Base Properties in the calculation of
the then-effective Borrowing Base and, if the Required Lenders in fact make any
such adjustment, the Administrative Agent shall promptly notify the Borrower in
writing of the Borrowing Base value, if any, attributable to such Disposed of
Borrowing Base Properties in the calculation of the then-effective Borrowing
Base and upon receipt of such notice, the Borrowing Base shall be simultaneously
reduced by such amount; and

 

(b)                                 Hedge Terminations.  If the Borrower or a
Credit Party effects any Hedge Termination and the Borrowing Base value (as
determined in good faith by the Administrative Agent) of all such Hedge
Terminations, when combined with the aggregate value attributed in the most
recent Reserve Report to all Borrowing Base Properties Disposed of (and
Dispositions of Equity Interests in any Restricted Subsidiary owning any
Borrowing Base Properties), in each case since the latest of (A) the Amendment
No. 1 Effective Date, (B) the most recent scheduled Redetermination Date or
Determination Date and (C) the last adjustment of the Borrower Base made
pursuant to Section 2.17(a) above, exceeds ten percent (10%) of the
then-effective Borrowing Base, individually or in the aggregate, the Borrowing
Base will then be reduced by the Borrowing Base value (as determined in good
faith by the Administrative Agent and confirmed in writing by the Required
Lenders) of such Hedge Termination.

 

(c)                                  Reduction of Borrowing Base Upon Issuance
of Permitted Additional Debt.  Upon the issuance or incurrence of any Permitted
Additional Debt (other than any Permitted Additional Debt to the extent the
proceeds thereof are used to refinance any other Permitted Additional Debt) in
accordance with Section 10.7(g), the Borrowing Base then in effect shall be
reduced by an amount equal to the product of 0.25 multiplied by the stated
principal amount of such Permitted Additional Debt (without regard to any
original issue discount), and the Borrowing Base as so reduced shall become the
new Borrowing Base immediately upon the date of such issuance or incurrence,
effective and applicable to the Borrower, the Administrative Agent, the Issuing
Bank and the Lenders on such date until the next redetermination or modification
thereof hereunder.

 

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(d)                                 Reduction of Borrowing Base Related to
Acquisition of Haymaker Acquired Entities.  Notwithstanding anything to the
contrary contained in this Agreement, if on the Amendment No. 1 Effective Date
the Borrower and its Restricted Subsidiaries have not acquired at least 95% of
the PV-9 of the Haymaker Oil and Gas Properties evaluated in the June 2018
Reserve Report, the Borrowing Base shall be reduced by an amount equal to the
Borrowing Base value attributable to such Oil and Gas Properties not acquired by
the Borrower or its Restricted Subsidiaries on the Amendment No. 1 Effective
Date, as determined by the Joint Lead Arrangers in their sole discretion and
consistent with their normal oil and gas lending criteria as it exists on the
Amendment No. 1 Effective Date.

 

Section 2.18                             Defaulting Lenders. Notwithstanding any
provision of this Agreement to the contrary, if any Lender becomes a Defaulting
Lender, then the following provisions shall apply for so long as such Lender is
a Defaulting Lender:

 

(a)                                 Commitment Fees shall cease to accrue on the
unfunded portion of the Commitment of such Defaulting Lender pursuant to
Section 4.1(a);

 

(b)                                 The Commitment and Total Exposure of such
Defaulting Lender shall not be included in determining whether all Lenders or
the Majority Lenders have taken or may take any action hereunder (including any
consent to any amendment or waiver pursuant to Section 13.1); provided that
(i) any waiver, amendment or modification requiring the consent of all Lenders
pursuant to Section 13.1 (other than Section 13.1(a)(J)) or requiring the
consent of each affected Lender pursuant to Section 13.1(a)(A) shall require the
consent of such Defaulting Lender (which for the avoidance of doubt would
include any change to the Maturity Date applicable to such Defaulting Lender,
decreasing or forgiving any principal or interest due to such Defaulting Lender,
any decrease of any interest rate applicable to Loans made by such Defaulting
Lender (other than the waiving of post-default interest rates) and any increase
in such Defaulting Lender’s Commitment) and (ii) any redetermination, whether an
increase, decrease or affirmation, of the Borrowing Base shall occur without the
participation of a Defaulting Lender, but the Commitment (i.e., the Commitment
Percentage of the Borrowing Base) of a Defaulting Lender may not be increased
without the consent of such Defaulting Lender;

 

(c)                                  If any Letter of Credit Exposure exists at
the time a Lender becomes a Defaulting Lender, then all or any part of such
Letter of Credit Exposure of such Defaulting Lender will, subject to the
limitation in the first proviso below, automatically be reallocated (effective
on the day such Lender becomes a Defaulting Lender) among the Non-Defaulting
Lenders pro rata in accordance with their respective Commitment Percentages;
provided that (i) each Non-Defaulting Lender’s Total Exposure may not in any
event exceed the Commitment of such Non-Defaulting Lender as in effect at the
time of such reallocation and (ii) neither such reallocation nor any payment by
a Non-Defaulting Lender pursuant thereto will constitute a waiver or release of
any claim the Borrower, the Administrative Agent, the Issuing Banks or any other
Lender may have against such Defaulting Lender or cause such Defaulting Lender
to be a Non-Defaulting Lender, to the extent that all or any portion (the
“unreallocated portion”) of the Defaulting Lender’s Letter

 

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of Credit Exposure cannot, or can only partially, be so reallocated to
Non-Defaulting Lenders, whether by reason of the first proviso in
Section 2.18(c)(i) or otherwise, the Borrower shall within two Business Days
following notice by the Administrative Agent, Cash Collateralize for the benefit
of the applicable Issuing Bank only the Borrower’s obligations corresponding to
such Defaulting Lender’s Letter of Credit Exposure (after giving effect to any
partial reallocation pursuant to clause (i) above), in accordance with the
procedures set forth in Section 3.8 for so long as such Letter of Credit
Exposure is outstanding, if the Borrower Cash Collateralizes any portion of such
Defaulting Lender’s Letter of Credit Exposure pursuant to this Section 2.18(c),
the Borrower shall not be required to pay any fees to such Defaulting Lender
pursuant to Section 4.1(b) with respect to such Defaulting Lender’s Letter of
Credit Exposure during the period such Defaulting Lender’s Letter of Credit
Exposure is Cash Collateralized, if the Letter of Credit Exposure of the
Non-Defaulting Lenders is reallocated pursuant to this Section 2.18(c), then the
Letter of Credit Fees payable for the account of the Lenders pursuant to
Section 4.1(b) shall be adjusted in accordance with such Non-Defaulting Lenders’
Commitment Percentages and the Borrower shall not be required to pay any Letter
of Credit Fees to the Defaulting Lender pursuant to Section 4.1(b) with respect
to such Defaulting Lender’s Letter of Credit Exposure during the period that
such Defaulting Lender’s Letter of Credit Exposure is reallocated, or if any
Defaulting Lender’s Letter of Credit Exposure is neither Cash Collateralized nor
reallocated pursuant to this Section 2.18(c), then, without prejudice to any
rights or remedies of any Issuing Bank or any Lender hereunder, all Letter of
Credit Fees payable under Section 4.1(b) with respect to such Defaulting
Lender’s Letter of Credit Exposure shall be payable to such Issuing Bank until
such Letter of Credit Exposure is Cash Collateralized and/or reallocated;

 

(d)                                 So long as any Lender is a Defaulting
Lender, no Issuing Bank will be required to issue any new Letter of Credit or
amend any outstanding Letter of Credit to increase the Face Amount thereof,
alter the drawing terms thereunder or extend the expiration date thereof, unless
each Issuing Bank is reasonably satisfied that any exposure that would result
from the exposure to such Defaulting Lender is eliminated or fully covered by
the Commitments of the Non-Defaulting Lenders or by Cash Collateralization or a
combination thereof in accordance with clause (c) above or otherwise in a manner
reasonably satisfactory to such Issuing Bank, and participating interests in any
such newly issued or increased Letter of Credit shall be allocated among
Non-Defaulting Lenders in a manner consistent with Section 2.18(c)(i) (and
Defaulting Lenders shall not participate therein);

 

(e)                                  If the Borrower, the Administrative Agent
and each Issuing Bank agree in writing in their discretion that a Lender that is
a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the
Administrative Agent will so notify the parties hereto, whereupon, as of the
effective date specified in such notice and subject to any conditions set forth
therein, such Lender will cease to be a Defaulting Lender and will be a
Non-Defaulting Lender and any applicable Cash Collateral shall be promptly
returned to the Borrower and any Letter of Credit Exposure of such Lender
reallocated pursuant to Section 2.18(c) shall be reallocated back to such
Lender; provided that, except to the extent otherwise expressly agreed by the
affected parties, no change hereunder from Defaulting

 

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Lender to Non-Defaulting Lender will constitute a waiver or release of any claim
of any party hereunder arising from such Lender’s having been a Defaulting
Lender; and

 

(f)                                   Any payment of principal, interest, fees
or other amounts received by the Administrative Agent for the account of that
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article XI or otherwise), shall be applied at such time or times as may be
determined by the Administrative Agent as follows: first, to the payment of any
amounts owing by that Defaulting Lender to the Administrative Agent hereunder;
second, to the payment on a pro rata basis of any amounts owing by that
Defaulting Lender to each Issuing Bank hereunder; third, as the Borrower may
request (so long as no Default or Event of Default exists), to the funding of
any Loan in respect of which that Defaulting Lender has failed to fund its
portion thereof as required by this Agreement, as determined by the
Administrative Agent; fourth, if so determined by the Administrative Agent and
the Borrower, to be held in a non-interest bearing deposit account and released
in order to satisfy obligations of that Defaulting Lender to fund Loans under
this Agreement; fifth, to the payment of any amounts owing to the Lenders and
each Issuing Bank as a result of any judgment of a court of competent
jurisdiction obtained by any Lender, such Issuing Bank against that Defaulting
Lender as a result of that Defaulting Lender’s breach of its obligations under
this Agreement; sixth, so long as no Default or Event of Default exists, to the
payment of any amounts owing to the Borrower as a result of any judgment of a
court of competent jurisdiction obtained by the Borrower against that Defaulting
Lender as a result of that Defaulting Lender’s breach of its obligations under
this Agreement; and seventh, to that Defaulting Lender or as otherwise directed
by a court of competent jurisdiction; provided that if such payment is a payment
of the principal amount of any Loans or Unpaid Drawings, such payment shall be
applied solely to pay the relevant Loans of, and Unpaid Drawings owed to, the
relevant non-Defaulting Lenders on a pro rata basis prior to being applied in
the manner set forth in this Section 2.18(f). Any payments, prepayments or other
amounts paid or payable to a Defaulting Lender that are applied (or held) to pay
amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to
Section 3.8 shall be deemed paid to and redirected by that Defaulting Lender,
and each Lender irrevocably consents hereto.

 

ARTICLE III

LETTERS OF CREDIT

 

Section 3.1                                    Letters of Credit.

 

(a)                                 Subject to and upon the terms and conditions
herein set forth, at any time and from time to time on and after the Effective
Date and prior to the L/C Maturity Date, each Issuing Bank agrees, in reliance
upon the agreements of the Lenders set forth in this Section 3.1, to issue upon
the request of the Borrower and for the direct or indirect benefit of the
Borrower or its Restricted Subsidiaries, a Letter of Credit or Letters of Credit
in such form and with such Issuer Documents as may be approved by the applicable
Issuing Bank in its reasonable discretion.

 

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(b)                                 Notwithstanding the foregoing, (i) no Letter
of Credit shall be issued the Stated Amount of which, when added to the Letters
of Credit outstanding at such time, would exceed the Letter of Credit Commitment
then in effect, (ii) no Letter of Credit shall be issued the Stated Amount of
which would cause the Total Outstandings at such time to exceed the Borrowing
Base then in effect, (iii) each Letter of Credit shall have an expiration date
occurring no later than eighteen (18) months after the date of issuance or such
longer period of time as may be agreed by the applicable Issuing Bank, unless
otherwise agreed upon by the Administrative Agent and the applicable Issuing
Bank or as provided under Section 3.2(b); provided that any Letter of Credit may
provide for automatic renewal thereof for additional periods of up to eighteen
(18) months or such longer period of time as may be agreed upon by the
applicable Issuing Bank, subject to the provisions of Section 3.2(b); provided,
further, that in no event shall such expiration date occur later than the L/C
Maturity Date unless arrangements which are reasonably satisfactory to the
applicable Issuing Bank to Cash Collateralize (or backstop) such Letter of
Credit have been made, (iv) no Letter of Credit shall be issued if (A) it would
be illegal under any applicable Requirement of Law for the beneficiary of the
Letter of Credit to have a Letter of Credit issued in its favor, (B) any order,
judgment or decree of any Governmental Authority or arbitrator shall by its
terms purport to enjoin or restrain the Issuing Bank from issuing the Letter of
Credit, or any Requirement of Law applicable to the Issuing Bank or any request
or directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the Issuing Bank shall prohibit, or request
that the Issuing Bank refrain from, the issuance of letters of credit generally
or the Letter of Credit in particular or shall impose upon Issuing Bank with
respect to the Letter of Credit any restriction, reserve or capital requirement
(for which the Issuing Bank is not otherwise compensated hereunder) not in
effect on the Effective Date, or shall impose upon Issuing Bank any unreimbursed
loss, cost or expense which was not applicable on the Effective Date and which,
in each case, the Issuing Bank in good faith deems material to it or (C) the
issuance of the Letter of Credit would violate one or more policies of the
Issuing Bank applicable to letters of credit generally as certified to the
Borrower in writing by such Issuing Bank and (v) no Letter of Credit shall be
issued by an Issuing Bank after it has received a written notice from any Credit
Party or the Administrative Agent or the Majority Lenders stating that a Default
or Event of Default has occurred and is continuing until such time as such
Issuing Bank shall have received a written notice (A) of rescission of such
notice from the party or parties originally delivering such notice, (B) of the
waiver of such Default or Event of Default in accordance with the provisions of
Section 13.1 or (C) that such Default or Event of Default is no longer
continuing.

 

(c)                                  Upon at least one Business Day’s prior
written notice (or telephonic notice promptly confirmed in writing) to the
Administrative Agent and the applicable Issuing Bank (which notice the
Administrative Agent shall promptly transmit to each of the applicable Lenders),
the Borrower shall have the right, on any day, permanently to terminate or
reduce the Letter of Credit Commitment in whole or in part; provided that, after
giving effect to such termination or reduction, the outstanding Reimbursement
Obligations shall not exceed the Letter of Credit Commitment.

 

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Section 3.2                                    Letter of Credit Applications.

 

(a)                                 Whenever the Borrower desires that a Letter
of Credit be issued, amended or renewed for its account, the Borrower shall hand
deliver or telecopy (or transmit by electronic communication, if arrangements
for doing so have been approved by the applicable Issuing Bank) to the
applicable Issuing Bank and the Administrative Agent a Letter of Credit
Application, amendment request or any such document as may be approved by the
applicable Issuing Bank. Upon receipt of any Letter of Credit Application or
amendment request, the applicable Issuing Bank will use its best efforts to
process such Letter of Credit Application on (i) the Business Day on which such
Letter of Credit Application is received, provided that such Letter of Credit
Application is received no later than 12:00 p.m. (Fort Worth, Texas time) on
such Business Day, or (ii) otherwise, the first Business Day next succeeding
receipt of such Letter of Credit Application. No Issuing Bank shall issue any
Letters of Credit unless such Issuing Bank shall have received notice from the
Administrative Agent that the conditions to such issuance have been met, which
notice shall be deemed given (A) if the Letter of Credit Issuer has not received
notice from the Administrative Agent that the conditions to such issuance have
been met within one Business Day after the date of receipt of the Letter of
Credit Application or (B) if the aggregate amount of Letters of Credit
Outstanding issued by such Issuing Bank then outstanding does not exceed the
amount theretofore agreed to by the Borrower, the Administrative Agent and such
Issuing Bank, and the Administrative Agent has not otherwise notified such
Issuing Bank that it may no longer rely on subclauses (A) or (B).

 

(b)                                 If the Borrower so requests in any Letter of
Credit Application, the Issuing Bank may, in its sole and absolute discretion,
agree to issue a Letter of Credit that has automatic extension provisions (each,
an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension
Letter of Credit must permit the Issuing Bank to prevent any such extension at
least once in each 18-month period (commencing with the date of issuance of such
Letter of Credit) by giving prior notice to the beneficiary thereof not later
than a day (the “Non-Extension Notice Date”) in each such 18-month period to be
agreed upon at the time such Letter of Credit is issued.  Unless otherwise
directed by the Issuing Bank, the Borrower shall not be required to make a
specific request to the Issuing Bank for any such extension.  Once an
Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to
have authorized (but may not require) the Issuing Bank to permit the extension
of such Letter of Credit at any time to an expiry date not later than the L/C
Maturity Date unless arrangements which are reasonably satisfactory to the
Issuing Bank to Cash Collateralize (or satisfactory to the Issuing Bank in its
sole discretion to otherwise backstop) such Letter of Credit have been made (but
no Lenders shall be obligated to fund participations in respect of any Letter of
Credit after the Maturity Date); provided, however, that the Issuing Bank shall
not permit any such extension if (i) the Issuing Bank has determined that it
would not be permitted, or would have no obligation, at such time to issue such
Letter of Credit in its revised form (as extended) under the terms hereof (by
reason of the provisions of clause (b) of Section 3.1 or otherwise), or (ii) it
has received notice (which may be by telephone or in writing) on or before the
day that is five (5) Business Days before the Non-Extension Notice Date (A) from
the Administrative Agent

 

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that the Majority Lenders have elected not to permit such extension or (B) from
the Administrative Agent, any Lender or the Borrower that one or more of the
applicable conditions specified in Section 7 are not then satisfied, and in each
such case directing the Issuing Bank not to permit such extension.

 

(c)                                  Each Issuing Bank (other than the
Administrative Agent or any of its Affiliates) shall, at least once each week,
provide the Administrative Agent with a list of all Letters of Credit issued by
it that are outstanding at such time; provided that, upon written request from
the Administrative Agent, such Issuing Bank shall thereafter notify the
Administrative Agent in writing on each Business Day of all Letters of Credit
issued on the prior Business Day by such Issuing Bank.

 

(d)                                 The making of each Letter of Credit
Application shall be deemed to be a representation and warranty by the Borrower
that the Letter of Credit may be issued in accordance with, and will not violate
the requirements of, Section 3.1(b).

 

Section 3.3                                    Letter of Credit Participations.

 

(a)                                 Immediately upon the issuance by an Issuing
Bank of any Letter of Credit, such Issuing Bank shall be deemed to have sold and
transferred to each Lender (each such Lender, in its capacity under this
Section 3.3, an “L/C Participant”), and each such L/C Participant shall be
deemed irrevocably and unconditionally to have purchased and received from such
Issuing Bank, without recourse or warranty, an undivided interest and
participation (each an “L/C Participation”), to the extent of such L/C
Participant’s Commitment Percentage, in each Letter of Credit, each substitute
therefor, each drawing made thereunder and the obligations of the Borrower under
this Agreement with respect thereto, and any security therefor or guaranty
pertaining thereto.

 

(b)                                 In determining whether to pay under any
Letter of Credit, the relevant Issuing Bank shall have no obligation relative to
the L/C Participants other than to confirm that

 

(i)                                     any documents required to be delivered
under such Letter of Credit have been delivered,

 

(ii)                                  such Issuing Bank has examined the
documents with reasonable care and

 

(iii)                               the documents appear to comply on their face
with the requirements of such Letter of Credit. Any action taken or omitted to
be taken by the relevant Issuing Bank under or in connection with any Letter of
Credit issued by it, if taken or omitted in the absence of gross negligence, bad
faith or willful misconduct, shall not create for such Issuing Bank any
resulting liability.

 

(c)                                  In the event that an Issuing Bank makes any
payment under any Letter of Credit issued by it and the Borrower shall not have
repaid such amount in full to such

 

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Issuing Bank pursuant to Section 3.4(a), or if any reimbursement payment is
required to be refunded to the Borrower, such Issuing Bank shall promptly notify
the Administrative Agent and each L/C Participant of such failure, and each such
L/C Participant shall promptly and unconditionally pay to the Administrative
Agent for the account of such Issuing Bank the amount of such L/C Participant’s
Commitment Percentage of such unreimbursed payment in Dollars and in immediately
available funds; provided, however, that no L/C Participant shall be obligated
to pay to the Administrative Agent for the account of such Issuing Bank its
Commitment Percentage of such unreimbursed amount arising from any wrongful
payment made by such Issuing Bank under any such Letter of Credit as a result of
acts or omissions constituting willful misconduct, bad faith or gross negligence
on the part of such Issuing Bank. Each L/C Participant shall make available to
the Administrative Agent for the account of the relevant Issuing Bank such L/C
Participant’s Commitment Percentage of the amount of such payment no later than
1:00 p.m. (Fort Worth, Texas time) on the first Business Day after the date
notified by such Issuing Bank in immediately available funds. If and to the
extent such L/C Participant shall not have so made its Commitment Percentage of
the amount of such payment available to the Administrative Agent for the account
of the relevant Issuing Bank, such L/C Participant agrees to pay to the
Administrative Agent for the account of such Issuing Bank, forthwith on demand,
such amount, together with interest thereon for each day from such date until
the date such amount is paid to the Administrative Agent for the account of such
Issuing Bank at a rate per annum equal to the Overnight Rate from time to time
then in effect, plus any administrative, processing or similar fees customarily
charged by such Issuing Bank in connection with the foregoing. The failure of
any L/C Participant to make available to the Administrative Agent for the
account of any Issuing Bank its Commitment Percentage of any payment under any
Letter of Credit shall not relieve any other L/C Participant of its obligation
hereunder to make available to the Administrative Agent for the account of such
Issuing Bank its Commitment Percentage of any payment under such Letter of
Credit on the date required, as specified above, but no L/C Participant shall be
responsible for the failure of any other L/C Participant to make available to
the Administrative Agent such other L/C Participant’s Commitment Percentage of
any such payment.

 

(d)                                 Whenever an Issuing Bank receives a payment
in respect of an unpaid Reimbursement Obligation as to which the Administrative
Agent has received for the account of such Issuing Bank any payments from the
L/C Participants pursuant to clause (c) above, such Issuing Bank shall pay to
the Administrative Agent and the Administrative Agent shall promptly pay to each
L/C Participant that has paid its Commitment Percentage of such Reimbursement
Obligation, in Dollars and in immediately available funds, an amount equal to
such L/C Participant’s share (based upon the proportionate aggregate amount
originally funded by such L/C Participant to the aggregate amount funded by all
L/C Participants) of the principal amount so paid in respect of such
Reimbursement Obligation and interest thereon accruing after the purchase of the
respective L/C Participations at the Overnight Rate.

 

(e)                                  The obligations of the L/C Participants to
make payments to the Administrative Agent for the account of an Issuing Bank
with respect to Letters of Credit shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other

 

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qualification or exception whatsoever and shall be made in accordance with the
terms and conditions of this Agreement under all circumstances, including under
any of the following circumstances:

 

(i)                                     any lack of validity or enforceability
of this Agreement or any of the other Credit Documents;

 

(ii)                                  the existence of any claim, set-off,
defense or other right that the Borrower may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), the Administrative
Agent, any Issuing Bank, any Lender or other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transaction between the
Borrower and the beneficiary named in any such Letter of Credit);

 

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

 

(iv)                              the surrender or impairment of any security
for the performance or observance of any of the terms of any of the Credit
Documents; or

 

(v)                                 the occurrence of any Default or Event of
Default;

 

provided, however, that no L/C Participant shall be obligated to pay to the
Administrative Agent for the account of any Issuing Bank its Commitment
Percentage of any unreimbursed amount arising from any wrongful payment made by
such Issuing Bank under a Letter of Credit as a result of acts or omissions
constituting willful misconduct, bad faith or gross negligence on the part of
such Issuing Bank.

 

Section 3.4                                    Agreement to Repay Letter of
Credit Drawings.

 

(a)                                 The Borrower hereby agrees to reimburse the
relevant Issuing Bank by making payment in Dollars to such Issuing Bank or to
the Administrative Agent for the account of such Issuing Bank (whether with its
own funds or with proceeds of the Loans) in immediately available funds, for any
payment or disbursement made by such Issuing Bank under any Letter of Credit
issued by it (each such amount so paid until reimbursed, an “Unpaid Drawing”)
(i) within one Business Day of the date of such payment or disbursement if such
Issuing Bank provides notice to the Borrower of such payment or disbursement
prior to 11:00 a.m. (Fort Worth, Texas time) on such next succeeding Business
Day (from the date of such payment or disbursement) or (ii) if such notice is
received after such time, on the next Business Day following the date of receipt
of such notice (such required date for reimbursement under clause (i) or (ii),
as applicable, the “Reimbursement Date”), with interest on the amount so paid or
disbursed by such Issuing Bank, from and including the date of such payment or
disbursement to but excluding the

 

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Reimbursement Date, at the per annum rate for each day equal to the rate
described in Section 2.7(a); provided that, notwithstanding anything contained
in this Agreement to the contrary, with respect to any Letter of Credit,
(A) unless the Borrower shall have notified the Administrative Agent and such
Issuing Bank prior to 11:00 a.m. (Fort Worth, Texas time) on the Reimbursement
Date that the Borrower intends to reimburse such Issuing Bank for the amount of
such drawing with funds other than the proceeds of Loans, the Borrower shall be
deemed to have given a Notice of Borrowing requesting that the Lenders make
Loans (which shall be ABR Loans) on the Reimbursement Date in an amount equal to
the amount of such drawing, and (B) the Administrative Agent shall promptly
notify each L/C Participant of such drawing and the amount of its Loan to be
made in respect thereof, and each L/C Participant shall be irrevocably obligated
to make a Loan to the Borrower in the manner deemed to have been requested in
the amount of its Commitment Percentage of the applicable Unpaid Drawing by
12:00 noon (Fort Worth, Texas time) on such Reimbursement Date by making the
amount of such Loan available to the Administrative Agent. Such Loans made in
respect of such Unpaid Drawing on such Reimbursement Date shall be made without
regard to the satisfaction of the conditions set forth in Article VII. The
Administrative Agent shall use the proceeds of such Loans solely for purpose of
reimbursing the relevant Issuing Bank for the related Unpaid Drawing. In the
event that the Borrower fails to Cash Collateralize any Letter of Credit that is
outstanding on the L/C Maturity Date, the full amount of the Letters of Credit
Outstanding in respect of such Letter of Credit shall be deemed to be an Unpaid
Drawing subject to the provisions of this Section 3.4 except that such Issuing
Bank shall hold the proceeds received from the Lenders as contemplated above as
cash collateral for such Letter of Credit to reimburse any Drawing under such
Letter of Credit and shall use such proceeds first, to reimburse itself for any
Drawings made in respect of such Letter of Credit following the L/C Maturity
Date, second, to the extent such Letter of Credit expires or is returned undrawn
while any such cash collateral remains, to the repayment of obligations in
respect of any Loans that have not paid at such time and third, to the Borrower
or as otherwise directed by a court of competent jurisdiction. Nothing in this
Section 3.4(a) shall affect the Borrower’s obligation to repay all outstanding
Loans when due in accordance with the terms of this Agreement.

 

(b)                                 The obligations of the Borrower under this
Section 3.4 to reimburse the relevant Issuing Bank with respect to Unpaid
Drawings (including, in each case, interest thereon) shall be absolute,
unconditional and irrevocable under any and all circumstances and irrespective
of any set-off, counterclaim or defense to payment that the Borrower or any
other Person may have or have had against such Issuing Bank, the Administrative
Agent or any Lender (including in its capacity as an L/C Participant), including
any defense based upon (i) the failure of any drawing under a Letter of Credit
(each a “Drawing”) to conform to the terms of the Letter of Credit, (ii) any
non-application or misapplication by the beneficiary of the proceeds of such
Drawing, (iii) any lack of validity or enforceability of any Letter of Credit or
this Agreement, or any term or provision therein, (iv) any draft or other
document presented under a Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue or inaccurate in
any respect or (v) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section 3.4(b), constitute a legal or

 

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equitable discharge of, or provide a right of setoff against, the Borrower’s
obligations hereunder; provided that the foregoing shall not be construed to
excuse the relevant Issuing Bank from liability to the Borrower to the extent of
any direct damages (as opposed to special, indirect, consequential or punitive
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
such Issuing Bank’s failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof. The Borrower agrees that any action taken or omitted to be taken by an
Issuing Bank under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct (as finally determined by a court of competent jurisdiction), shall
be binding on the Borrower and shall not result in any liability of such Issuing
Bank to the Borrower; provided that the foregoing shall not be construed to
excuse such Issuing Bank from liability to the Borrower to the extent of any
direct damages suffered by the Borrower that are caused by such Issuing Bank’s
failure to exercise care, when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. In furtherance
of the foregoing, the parties hereto agree that, with respect to documents
presented which appear on their face to be in compliance with the terms of a
Letter of Credit, the Issuing Bank that issued such Letter of Credit may in its
sole discretion either accept or make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit (unless the Borrower shall consent to payment thereon
notwithstanding such lack of strict compliance).

 

Section 3.5                                    Increased Costs. If, after the
Effective Date, the adoption of any Change in Law shall either (a) impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against Letters of Credit issued by any Issuing Bank, or any L/C
Participant’s L/C Participation therein, or (b) impose on any Issuing Bank or
any L/C Participant any other conditions, costs or expenses affecting its
obligations under this Agreement in respect of Letters of Credit or L/C
Participations therein or any Letter of Credit or such L/C Participant’s L/C
Participation therein, and the result of any of the foregoing is to increase the
cost to such Issuing Bank or such L/C Participant of issuing, maintaining or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Issuing Bank or such L/C Participant hereunder
(other than (i) Taxes indemnifiable under Section 5.4, or (ii) Excluded Taxes)
in respect of Letters of Credit or L/C Participations therein, then, promptly
(and in any event no later than 15 days) after receipt of written demand to the
Borrower by such Issuing Bank or such L/C Participant, as the case may be (a
copy of which notice shall be sent by such Issuing Bank or such L/C Participant
to the Administrative Agent), the Borrower shall pay to such Issuing Bank or
such L/C Participant such additional amount or amounts as will compensate such
Issuing Bank or such L/C Participant for such increased cost or reduction, it
being understood and agreed, however, that no Issuing Bank or L/C Participant
shall be entitled to such compensation as a result of such Person’s compliance
with, or pursuant to any request or directive to comply with, any such
Requirement of Law as in effect on the Effective Date. A certificate submitted
to the Borrower by the relevant Issuing Bank or an L/C Participant, as the case
may be (a copy of which certificate shall be sent by such Issuing Bank or such
L/C Participant to the Administrative Agent), setting forth in reasonable detail
the basis for the determination of such additional amount or amounts

 

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necessary to compensate such Issuing Bank or such L/C Participant as aforesaid
shall be conclusive and binding on the Borrower absent clearly demonstrable
error.

 

Section 3.6                                    New or Successor Issuing Bank.

 

(a)                                 Any Issuing Bank may resign as an Issuing
Bank upon thirty (30) days’ prior written notice to the Administrative Agent,
the Lenders and the Borrower; provided that no Issuing Bank may resign without
the prior consent of the Borrower so long as such Issuing Bank (or one of its
Affiliates) is also a Lender hereunder. The Borrower may replace any Issuing
Bank for any reason upon written notice to such Issuing Bank and the
Administrative Agent and may add Issuing Banks at any time upon notice by the
Borrower to the Administrative Agent. If an Issuing Bank shall resign or be
replaced, or if the Borrower shall decide to add a new Issuing Bank under this
Agreement, then the Borrower may appoint from among the Lenders a successor
issuer of Letters of Credit or a new Issuing Bank, as the case may be, or, with
the consent of the Administrative Agent (such consent not to be unreasonably
withheld) and such new Issuing Bank, another successor or new issuer of Letters
of Credit, whereupon such successor issuer shall succeed to the rights, powers
and duties of the replaced or resigning Issuing Bank under this Agreement and
the other Credit Documents, or such new issuer of Letters of Credit shall be
granted the rights, powers and duties of an Issuing Bank hereunder, and the term
“Issuing Bank” shall mean such successor or such new issuer of Letters of Credit
effective upon such appointment. The acceptance of any appointment as an Issuing
Bank hereunder, whether as a successor issuer or new issuer of Letters of Credit
in accordance with this Agreement, shall be evidenced by an agreement entered
into by such new or successor issuer of Letters of Credit, in a form reasonably
satisfactory to the Borrower and the Administrative Agent and, from and after
the effective date of such agreement, such new or successor issuer of Letters of
Credit shall become an “Issuing Bank” hereunder. After the resignation or
replacement of an Issuing Bank hereunder, the resigning or replaced Issuing Bank
shall remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement and the other Credit
Documents with respect to Letters of Credit issued by it prior to such
resignation or replacement, but shall not be required to issue additional
Letters of Credit. In connection with any resignation or replacement pursuant to
this clause (a) (but, in case of any such resignation, only to the extent that a
successor issuer of Letters of Credit shall have been appointed), either

 

(i)                                     the Borrower, the resigning or replaced
Issuing Bank and the successor Issuing Bank shall arrange to have any
outstanding Letters of Credit issued by the resigning or replaced Issuing Bank
replaced with Letters of Credit issued by the successor Issuing Bank or

 

(ii)                                  the Borrower shall cause the successor
Issuing Bank, if such successor issuer is reasonably satisfactory to the
replaced or resigning Issuing Bank, to issue “back-stop” Letters of Credit
naming the resigning or replaced Issuing Bank as beneficiary for each
outstanding Letter of Credit issued by the resigning or replaced Issuing Bank,
which new Letters of Credit shall have a Stated Amount equal to the Letters of
Credit being back-stopped and the sole requirement

 

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for drawing on such new Letters of Credit shall be a drawing on the
corresponding back-stopped Letters of Credit. After any resigning or replaced
Issuing Bank’s resignation or replacement as Issuing Bank, the provisions of
this Agreement relating to an Issuing Bank shall inure to its benefit as to any
actions taken or omitted to be taken by it (A) while it was an Issuing Bank
under this Agreement or (B) at any time with respect to Letters of Credit issued
by such Issuing Bank.

 

(b)                                 To the extent that there are, at the time of
any resignation or replacement as set forth in clause (a) above, any outstanding
Letters of Credit, nothing herein shall be deemed to impact or impair any rights
and obligations of any of the parties hereto with respect to such outstanding
Letters of Credit (including any obligations related to the payment of fees or
the reimbursement or funding of amounts drawn), except that the Borrower, the
resigning or replaced Issuing Bank and the successor Issuing Bank shall have the
obligations regarding outstanding Letters of Credit described in clause
(a) above.

 

Section 3.7                                    Role of Issuing Bank. Each Lender
and the Borrower agree that, in paying any drawing under a Letter of Credit, no
Issuing Bank shall have any responsibility to obtain any document (other than
any sight draft, certificates and documents expressly required by the Letter of
Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such
document. None of the Issuing Banks, the Administrative Agent, any of their
respective affiliates nor any correspondent, participant or assignee of any
Issuing Bank shall be liable to any Lender for (a) any action taken or omitted
in connection herewith at the request or with the approval of the Majority
Lenders, (b) any action taken or omitted in the absence of gross negligence or
willful misconduct or (c) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Issuer Document. The Borrower hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided that this assumption is not intended to, and shall not,
preclude the Borrower’s pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. None of the
Issuing Banks, the Administrative Agent, any of their respective affiliates nor
any correspondent, participant or assignee of any Issuing Bank shall be liable
or responsible for any of the matters described in Section 3.3(e); provided that
anything in such Section to the contrary notwithstanding, the Borrower may have
a claim against an Issuing Bank, and such Issuing Bank may be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the Borrower
proves were caused by such Issuing Bank’s willful misconduct or gross negligence
or such Issuing Bank’s unlawful failure to pay under any Letter of Credit after
the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing, any Issuing Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and no Issuing Bank shall be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

 

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Section 3.8                                    Cash Collateral.

 

(a)                                 Upon the request of the Majority Lenders if,
as of the L/C Maturity Date, there are any Letters of Credit outstanding, the
Borrower shall immediately Cash Collateralize the then Letters of Credit
outstanding.

 

(b)                                 If any Event of Default shall occur and be
continuing, the Majority Lenders may require that the L/C Obligations be Cash
Collateralized; provided that, upon the occurrence of an Event of Default
referred to in Section 11.5 with respect to the Borrower, the Borrower shall
immediately Cash Collateralize the Letters of Credit then outstanding and no
notice or request by or consent from the Majority Lenders shall be required.

 

(c)                                  For purposes of this Agreement, “Cash
Collateralize” shall mean (i) to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the Issuing Banks and the Lenders, as
collateral for the L/C Obligations, cash or deposit account balances in an
amount equal to the amount of the Letters of Credit outstanding required to be
Cash Collateralized (the “Required Cash Collateral Amount”) or (ii) if the
relevant Issuing Bank benefiting from such collateral shall agree in its
reasonable discretion, to provide other forms of credit support (including any
backstop letter of credit) in a face amount equal to 103% of the Required Cash
Collateral Amount from an issuer reasonably satisfactory to such Issuing Bank,
in each case under clause (i) and (ii) above pursuant to documentation in form
and substance reasonably satisfactory to the Administrative Agent and the
relevant Issuing Bank (which documents are hereby consented to by the Lenders).
The Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Banks and the L/C Participants, a security interest in all such cash,
deposit accounts and all balances therein and all proceeds of the foregoing.
Such cash Collateral shall be maintained in blocked, interest bearing deposit
accounts established by and in the name of the Borrower, but under the “control”
(as defined in Section 9-104 of the UCC) of the Administrative Agent.

 

Section 3.9                                    Applicability of ISP and UCP.
Unless otherwise expressly agreed to by the relevant Issuing Bank and the
Borrower when a Letter of Credit is issued, (a) the rules of the ISP or the
Uniform Customs and Practice for Documentary Credits shall apply to each standby
Letter of Credit and (b) the rules of the Uniform Customs and Practice for
Documentary Credits, as most recently published by the International Chamber of
Commerce at the time of issuance, shall apply to each commercial Letter of
Credit.

 

Section 3.10                             Conflict with Issuer Documents. In the
event of any conflict between the terms hereof and the terms of any Issuer
Document, the terms hereof shall control.

 

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ARTICLE IV

FEES; COMMITMENTS

 

Section 4.1                                    Fees.

 

(a)                                 The Borrower agrees to pay to the
Administrative Agent in Dollars, for the account of each Lender (in each case
pro rata according to the respective Commitment Percentages of the Lenders), a
commitment fee (the “Unused Commitment Fee”) for each day from the Effective
Date until but excluding the Maturity Date. Each Unused Commitment Fee shall be
payable by the Borrower (i) quarterly in arrears on the last Business Day of
each March, June, September and December (for the three-month period (or portion
thereof) ended on such day for which no payment has been received) and (ii) on
the Maturity Date (for the period ended on such date for which no payment has
been received pursuant to clause (i) above), and shall be computed for each day
during such period at a rate per annum equal to the Unused Commitment Fee Rate
in effect on such day on the Available Commitment in effect on such day.

 

(b)                                 The Borrower agrees to pay to each Issuing
Bank a fee in respect of each Letter of Credit issued by it (the “Fronting
Fee”), for the period from the date of issuance of such Letter of Credit to the
termination or expiration date of such Letter of Credit, computed at the rate
for each day equal to 0.125% per annum (or such other amount as may be agreed in
a separate writing between the Borrower and the relevant Issuing Bank) on the
average daily Stated Amount of such Letter of Credit (or at such other rate per
annum as agreed in writing between the Borrower and the relevant Issuing Bank).
Such Fronting Fees shall be due and payable by the Borrower (i) quarterly in
arrears on the last Business Day of each March, June, September and December and
(ii) on the Termination Date (for the period for which no payment has been
received pursuant to clause (i) above).

 

(c)                                  The Borrower agrees to pay to the
Administrative Agent, for its account and on behalf of the Lenders, as
applicable, the administrative agent fees in the amounts and on the dates as set
forth in writing in a fee letter between the Administrative Agent and the
Borrower.

 

Section 4.2                                    Voluntary Reduction of Commitment
Amount.

 

(a)                                 Upon at least two Business Days’ prior
written notice (or telephonic notice promptly confirmed in writing) to the
Administrative Agent at the Administrative Agent’s Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right, without premium or penalty, on any day,
permanently to terminate or reduce the Total Commitment, as determined by the
Borrower, in whole or in part; provided that (i) any such termination or
reduction shall apply proportionately and permanently to reduce the Commitment
of each Lender, (ii) any partial reduction pursuant to this Section 4.2 shall be
in the amount of at least $500,000 (and increments of $100,000 above that
minimum) and (iii) after giving effect to such termination or reduction and to
any prepayments of Loans or cancellation or Cash Collateralization of Letters of
Credit made on the date thereof in accordance with this

 

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Agreement, the aggregate amount of the Total Outstandings shall not exceed the
Loan Limit.

 

(b)                                 The Borrower may terminate the unused amount
of the Commitment of a Defaulting Lender upon not less than two (2) Business
Days’ prior notice to the Administrative Agent (which will promptly notify the
Lenders thereof), and in such event the provisions of Section 2.18(f) will apply
to all amounts thereafter paid by the Borrower for the account of such
Defaulting Lender under this Agreement (whether on account of principal,
interest, fees, indemnity or other amounts), provided that such termination will
not be deemed to be a waiver or release of any claim the Borrower, the
Administrative Agent, any Issuing Bank or any Lender may have against such
Defaulting Lender.

 

Section 4.3                                    Mandatory Termination of
Commitments. The Total Commitment shall terminate at 5:00 p.m. (Fort Worth,
Texas time) on the Maturity Date. If at any time the Total Commitment or the
Borrowing Base is terminated or reduced to zero, then each Lender’s Commitment
shall terminate on the effective date of such termination or reduction.

 

Section 4.4                                    Optional Increase in Total
Commitment.

 

(a)                                 Subject to the conditions set forth in
Section 4.4(b), the Borrower may increase the Total Commitment then in effect
without the prior consent of the Administrative Agent, any other Lender or any
Issuing Bank (but with the consent of the Administrative Agent with respect to
any Additional Lender an Affiliate of a Lender) by (i) increasing the Commitment
of a Lender or (B) causing a Person that at such time is not a Lender to become
a Lender (an “Additional Lender”).

 

(b)                                 Any increase in the Total Commitment shall
be subject to the following additional conditions:

 

(1)                                 (X) after giving effect to such increase,
the Total Commitment shall not exceed $500,000,000 and (Y) such increase shall
not, unless it is the remaining amount permitted under clause (X) hereof, be
less than $5,000,000 (and increments of $1,000,000 above the minimum) unless the
Administrative Agent otherwise consents; provided, however, that notwithstanding
any such increase in the Total Commitment, any borrowings hereunder are still
subject to the Loan Limit in effect at such time;

 

(2)                                 no Default shall have occurred and be
continuing immediately before or immediately after giving effect to such
increase without the written consent of each Lender that is providing such
increase;

 

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

 

(4)                                 the Borrower shall represent and warrant
that as of the date thereof, immediately after giving effect to the applicable
Total Commitment

 

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Increase Agreement or Additional Lender Agreement, all of the representations
and warranties contained in each Credit Document to which it is a party are true
and correct in all materials respects, except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, such representations and warranties shall continue to be true and
correct as of such specified earlier date;

 

(5)                                 an opinion of counsel to the Borrower, in
form and substance reasonably acceptable to the Administrative Agent, as to such
customary matters regarding the Total Commitment Increase Agreement or
Additional Lender Agreement, as the Administrative Agent may reasonable request;

 

(6)                                 (i) the commitments under such increase
shall be deemed for all purposes part of the Total Commitment, (ii) each
Additional Lender shall become a Lender with respect to the Total Commitment,
this Agreement and all matters relating thereto and (iii) the commitments under
the Total Commitment Increase Agreement and the Additional Lender Agreement
shall have the same terms as the Commitments (including terms relating to
pricing and tenor);

 

(7)                                 if the Borrower elects to increase the Total
Commitment by increasing the Commitment of a Lender (such Lender, an “Increasing
Lender”), the Borrower and such Increasing Lender shall execute and deliver to
the Administrative Agent an agreement substantially in the form of Exhibit G-1
(a “Total Commitment Increase Agreement”) and the Borrower shall deliver a new
or replacement Note to such Increasing Lender to the extent required by
Section 2.4(e); and

 

(8)                                 if the Borrower elects to increase the Total
Commitment by causing an Additional Lender to become a party to this Agreement
as a Lender, then the Borrower and such Additional Lender shall execute and
deliver to the Administrative Agent an agreement substantially in the form of
Exhibit G-2 (an “Additional Lender Agreement”),  together with an Administrative
Questionnaire and, to the extent such Additional Lender requests a Note, the
Borrower shall deliver a Note payable to such Additional Lender in accordance
with Section 2.4(e).

 

(c)                                  Subject to acceptance and recording thereof
pursuant to Section 4.4(d), from and after the effective date specified in the
Total Commitment Increase Agreement or the Additional Lender Agreement (or if
any LIBOR Loans are outstanding, then the last day of the Interest Period in
respect of such LIBOR Loans, unless the Borrower has paid compensation required
by Section 2.10:  (1) the amount of the Total Commitment shall be increased as
set forth therein (and Schedule 13.2 shall automatically be amended and restated
by Schedule 2.06 of the Total Commitment Increase Agreement or the Additional
Lender Agreement, as applicable), and (2) in the case of an Additional Lender
Agreement, any Additional Lender party thereto that is not already a Lender
shall become a party to this Agreement and the other Credit Documents and have
the rights and obligations of a

 

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Lender under this Agreement and the other Credit Documents.  In addition, the
Increasing Lender or the Additional Lender, as applicable, shall purchase a pro
rata portion of the outstanding Loans (and participation interest in Letters of
Credit) of each of the other Lenders (and such Lenders hereby agree to sell and
to take all such further action to effectuate such sale) such that each
Increasing Lender (including any Additional Lender, if applicable) shall hold
its Commitment Percentage of the outstanding Loans (and participation interests)
after giving effect to the increase in the Total Commitment.

 

(d)                                 Upon its receipt of (1) a duly completed
Total Commitment Increase Agreement or an Additional Lender Agreement, executed
by the Borrower and the Increasing Lender or the Additional Lender party
thereto, as applicable, (2) the Administrative Questionnaire referred to in
Section 4.4(b)(8), if applicable, (3) an opinion of counsel to the Borrower, in
form and substance reasonable acceptable to the Administrative Agent, as to such
customary matters regarding the Total Commitment Increase Agreement or
Additional Lender Agreement as the Administrative Agent may reasonable request
and (4) the written consent of the Administrative Agent to such increase to the
extent required by Section 4.4(a), the Administrative Agent shall accept such
Total Commitment Increase Agreement or Additional Lender Agreement and, on the
date that the conditions in this clause (d) and in Section 4.4(b) have been
satisfied, record the information contained therein in the Register required to
be maintained by the Administrative Agent pursuant to Section 13.6(b).  No
increase in the Total Commitment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
Section 4.4(d).  The Administrative Agent shall promptly notify the Borrower,
the Lenders and the Issuing Bank of the effectiveness of any increase in the
Total Commitment and in connection therewith promptly provide such amended and
restated Schedule 13.2 to the Borrower, the Lenders and the Issuing Bank.

 

ARTICLE V
PAYMENTS

 

Section 5.1                                    Voluntary Prepayments. The
Borrower shall have the right to prepay Loans, without premium or penalty, in
whole or in part from time to time on the following terms and conditions:

 

(a)                                 the Borrower shall give the Administrative
Agent at the Administrative Agent’s Office written notice (or telephonic notice
promptly confirmed in writing) of its intent to make such prepayment, the amount
of such prepayment and (in the case of LIBOR Loans) the specific
Advance(s) being prepaid, which notice shall be given by the Borrower no later
than 12:00 p.m. (Fort Worth, Texas time) (or such later time as agreed to by the
Administrative Agent in its reasonable discretion) (i) in the case of LIBOR
Loans, three Business Days prior to and (ii) in the case of ABR Loans on the
date of such prepayment and shall promptly be transmitted by the Administrative
Agent to each of the Lenders;

 

(b)                                 each partial prepayment of (i) LIBOR Loans
shall be in a minimum amount of $100,000 and in multiples of $100,000 in excess
thereof, and (ii) any ABR Loans shall be in a minimum amount of $500,000 and in
multiples of $100,000 in excess thereof; and

 

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(c)                                  any prepayment of LIBOR Loans pursuant to
this Section 5.1 on any day other than the last day of an Interest Period
applicable thereto shall be subject to compliance by the Borrower with the
applicable provisions of Section 2.10.

 

Each such notice shall specify the date and amount of such prepayment and the
Type of Loans to be prepaid; provided that any such notice may state that such
notice is conditioned upon the effectiveness of other credit facilities or any
incurrence or issuance of debt or equity or the occurrence of any other
transaction, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. At the Borrower’s election in connection with any
prepayment pursuant to this Section 5.1, such prepayment shall not be applied to
any Loans of a Defaulting Lender.

 

Section 5.2                                    Mandatory Prepayments.

 

(a)                                 Repayment following Optional Reduction of
Commitments. If, after giving effect to any reduction of the Total Commitment
pursuant to Section 5.1(a), there is a Borrowing Base Deficiency, then the
Borrower shall on the same Business Day, prepay the remaining Loans on the date
of such termination or reduction in an aggregate principal amount equal to such
Borrowing Base Deficiency and (ii) if any Borrowing Base Deficiency remains
after prepaying all of the Loans as a result of any Letter of Credit Exposure,
pay to the Administrative Agent on behalf of the Issuing Banks and the L/C
Participants an amount in cash or otherwise Cash Collateralize an amount equal
to such Borrowing Base Deficiency as provided in Section 3.8.

 

(b)                                 Repayment of Loans Following Redetermination
or Adjustment of Borrowing Base.  Upon any redetermination of the Borrowing Base
in accordance with Section 2.14 or 2.15, if there is a Borrowing Base
Deficiency, then the Borrower shall, within ten (10) Business Days after its
receipt of notice of such Borrowing Base Deficiency, inform the Administrative
Agent of the Borrower’s election to: (A) within 30 days following such election
prepay the Loans in an aggregate principal amount equal to such Borrowing Base
Deficiency, (B) prepay the Loans in six equal monthly installments, commencing
on the 30th day following such election with each payment being equal to l/6th
of the aggregate principal amount of such Borrowing Base Deficiency, (C) within
30 days following such election, provide additional Collateral in the form of
additional Oil and Gas Properties not evaluated in the most recently delivered
Reserve Report or other Collateral reasonably acceptable to the Administrative
Agent having a value (as proposed by the Administrative Agent and approved by
the Required Lenders in good faith in accordance with their respective usual and
customary oil and gas lending criteria as they exist at the particular time)
sufficient, after giving effect to any other actions taken pursuant to this
Section 5.2(b)(i) to eliminate any such Borrowing Base Deficiency or
(D) undertake a combination of clauses (A), (B) and (C); provided that if,
because of Letter of Credit Exposure, a Borrowing Base Deficiency remains after
prepaying all of the Loans, the Borrower shall Cash Collateralize such remaining
Borrowing Base Deficiency as provided in Section 3.8; provided further, that all
payments required to be made pursuant to this Section 5.2(b)(i) must be made on
or prior to the Maturity Date.

 

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(c)                                  Disposition of Oil and Gas Properties or
Equity Interests in Restricted Subsidiaries and Hedge Terminations or Issuance
of Permitted Additional Debt.  Upon any reductions to the Borrowing Base
pursuant to Section 2.17 in connection with a Disposition of Oil and Gas
Properties or a Hedge Termination or issuance of Permitted Additional Debt, if a
Borrowing Base Deficiency exists, then the Borrower shall (A) prepay Loans in an
aggregate principal amount equal to such Borrowing Base Deficiency or (B) if any
Borrowing Base Deficiency remains after prepaying all of the Loans as a result
of any Letter of Credit Exposure, Cash Collateralize an amount equal to such
Borrowing Base Deficiency as provided in Section 3.8.  The Borrower shall be
obligated to make such prepayment or deposit such Cash Collateral not later than
two (2) Business Days after it receives written notice from the Administrative
Agent of the adjustment of the Borrowing Base and the resulting Borrowing Base
Deficiency.

 

(d)                                 Application to Loans. With respect to each
prepayment of Loans elected under Section 5.1 or required by Section 5.2, the
Borrower may designate (i) the Types of Loans that are to be prepaid and the
specific Advance(s) being repaid and (ii) the Loans to be prepaid; provided that
(A) each prepayment of any Loans made pursuant to an Advance shall be applied
pro rata among such Loans and (B) notwithstanding the provisions of the
preceding clause (A), no prepayment of Loans shall be applied to the Loans of
any Defaulting Lender unless otherwise agreed to in writing by the Borrower. In
the absence of a designation by the Borrower as described in the preceding
sentence, the Administrative Agent shall, subject to the above, make such
designation in its reasonable discretion with a view, but no obligation, to
minimize breakage costs owing under Section 2.12.

 

(e)                                  LIBOR Interest Periods. In lieu of making
any payment pursuant to this Section 5.2 in respect of any LIBOR Loan, other
than on the last day of the Interest Period therefor so long as no Event of
Default shall have occurred and be continuing, the Borrower at its option may
deposit, on behalf of the Borrower, with the Administrative Agent an amount
equal to the amount of the LIBOR Loan to be prepaid and such LIBOR Loan shall be
repaid on the last day of the Interest Period therefor in the required amount.
Such deposit shall be held by the Administrative Agent in a corporate time
deposit account established on terms reasonably satisfactory to the
Administrative Agent, earning interest at the then customary rate for accounts
of such type. The Borrower hereby grants to the Administrative Agent, for the
benefit of the Lenders, a security interest in all such cash, deposit accounts
and all balances therein and all proceeds of the foregoing. Such deposit shall
constitute cash collateral for the LIBOR Loans to be so prepaid; provided that
the Borrower may at any time direct that such deposit be applied to make the
applicable payment required pursuant to this Section 5.2.

 

(f)                                   Application of Proceeds. The application
of proceeds pursuant to this Section 5.2 shall not reduce the Commitment under
the Facility and amounts prepaid may be reborrowed subject to the Available
Commitment.

 

(g)                                  Excess Cash. If, on the last Business Day
of any week (or, if a Default, Event of Default or Borrowing Base Deficiency has
occurred and is continuing, on any Business Day), (A) there are any outstanding
Loans and (B) the Borrower has any Excess

 

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Cash as of the date of such determination, then the Borrower shall, within three
(3) Business Days, (1) prepay the Loans in an aggregate principal amount equal
to the amount of such Excess Cash or (2) otherwise reduce the amount of Excess
Cash to zero in a manner permitted by this Agreement.

 

Section 5.3                                    Method and Place of Payment.

 

(a)                                 Except as otherwise specifically provided
herein, all payments under this Agreement shall be made by the Borrower without
set-off, counterclaim or deduction of any kind, to the Administrative Agent for
the ratable account of the Lenders entitled thereto or the Issuing Banks
entitled thereto, as the case may be, not later than 2:00 p.m. (Fort Worth,
Texas time) (or such later time as agreed to by the Administrative Agent in its
reasonable discretion), in each case, on the date when due and shall be made in
immediately available funds at the Administrative Agent’s Office or at such
other office as the Administrative Agent shall specify for such purpose by
notice to the Borrower, it being understood that written or facsimile notice by
the Borrower to the Administrative Agent to make a payment from the funds in the
Borrower’s account at the Administrative Agent’s Office shall constitute the
making of such payment to the extent of such funds held in such account. All
repayments or prepayments of any Loans (whether of principal, interest or
otherwise) hereunder and all other payments under each Credit Document shall be
made in Dollars. The Administrative Agent will thereafter cause to be
distributed on the same day (if payment was actually received by the
Administrative Agent prior to 1:00 p.m. (Fort Worth, Texas time) or, otherwise,
on the next Business Day in the sole discretion of the Administrative Agent)
like funds relating to the payment of principal or interest or fees ratably to
the Lenders or the Issuing Banks, as applicable, entitled thereto.

 

(b)                                 For purposes of computing interest or fees,
any payments under this Agreement that are made later than 2:00 p.m. (Fort
Worth, Texas time) (or such later time as agreed to by the Administrative Agent
in its reasonable discretion) shall be deemed to have been made on the next
succeeding Business Day in the sole discretion of the Administrative Agent.
Whenever any payment to be made hereunder shall be stated to be due on a day
that is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.

 

Section 5.4                                    Net Payments. For purposes of
this Section 5.4, the term “applicable law” includes FATCA.

 

(a)                                 Any and all payments made by or on behalf of
the Borrower or any Guarantor under this Agreement or any other Credit Document
shall be made free and clear of, and without deduction or withholding for or on
account of, any Taxes; provided that if the Borrower, any Guarantor, the
Administrative Agent or any other applicable withholding agent shall be required
by applicable Requirements of Law to deduct or withhold any Taxes from such
payments, then (i) the applicable withholding agent shall make such deductions
or withholdings as are reasonably determined by the applicable

 

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withholding agent to be required by any applicable Requirement of Law, (ii) the
applicable withholding agent shall timely pay the full amount deducted or
withheld to the relevant Governmental Authority within the time allowed and in
accordance with applicable Requirements of Law, and (iii) to the extent
withholding or deduction is required to be made on account of Indemnified Taxes
or Other Taxes, the sum payable by the Borrower or such Guarantor shall be
increased as necessary so that after all required deductions and withholdings
have been made (including deductions or withholdings of Indemnified Taxes or
Other Taxes applicable to additional sums payable under this Section 5.4) the
Administrative Agent or the applicable Issuing Bank or Lender, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions or withholdings been made. Whenever any Indemnified Taxes or Other
Taxes are payable by the Borrower or such Guarantor, as promptly as possible
thereafter, the Borrower or Guarantor shall send to the Administrative Agent for
its own account or for the account of such Issuing Bank or Lender, as the case
may be, a certified copy of an official receipt (or other evidence acceptable to
such Issuing Bank or Lender, acting reasonably) received by the Borrower or such
Guarantor showing payment thereof. Without duplication, after any payment of
Taxes by any Credit Party or the Administrative Agent to a Governmental
Authority as provided in this Section 5.4, the Borrower shall deliver to the
Administrative Agent or the Administrative Agent shall deliver to the Borrower,
as the case may be, a copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of any return required by laws to report such
payment or other evidence of such payment reasonably satisfactory to the
Borrower or the Administrative Agent, as the case may be.

 

(b)                                 The Borrower shall timely pay and shall
indemnify and hold harmless the Administrative Agent and each Lender with regard
to any Other Taxes (whether or not such Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority).

 

(c)                                  The Borrower shall indemnify and hold
harmless the Administrative Agent and each Lender within thirty (30) Business
Days after written demand therefor, for the full amount of any Indemnified Taxes
or Other Taxes imposed on the Administrative Agent or such Lender, as the case
may be (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section 5.4), and any reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate setting forth in
reasonable detail the basis and calculation of the amount of such payment or
liability delivered to the Borrower by a Lender or the Administrative Agent (as
applicable) on its own behalf or on behalf of a Lender shall be conclusive
absent manifest error.

 

(d)                                 (i) Any Lender that is entitled to an
exemption from or reduction of withholding Tax with respect to payments made
under any Credit Document shall deliver to the Borrower and the Administrative
Agent, at the time or times reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
reasonably requested by the Borrower or the Administrative Agent as will permit
such payments to be made without withholding or at a reduced rate of
withholding.

 

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In addition, any Lender, if reasonably requested by the Borrower or the
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Borrower or the Administrative
Agent as will enable the Borrower or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.  Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in
Section 5.4(d) (ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in
the Lender’s reasonable judgment such completion, execution or submission would
subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender.

 

(ii)                                  Without limiting the generality of the
foregoing,

 

(A)                               any Lender that is a U.S. Person shall deliver
to the Borrower and the Administrative Agent on or prior to the date on which
such Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt
from U.S. federal backup withholding tax;

 

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

 

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

 

(2)                                 executed copies of IRS Form W-8ECI;

 

(3)                                 in the case of a Foreign Lender claiming the
benefits of the exemption for portfolio interest under Section 881(c) of the
Code, (x) a certificate substantially in the form of Exhibit F-1 to the

 

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effect that such Foreign Lender is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign
corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax
Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS
Form W-8BEN-E, as applicable; or

 

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

 

(C)                               any Foreign Lender shall, to the extent it is
legally entitled to do so, deliver to the Borrower and the Administrative Agent
(in such number of copies as shall be requested by the recipient) on or prior to
the date on which such Foreign Lender becomes a Lender under this Agreement (and
from time to time thereafter upon the reasonable request of the Borrower or the
Administrative Agent), executed copies of any other form prescribed by
applicable law as a basis for claiming exemption from or a reduction in U.S.
federal withholding Tax, duly completed, together with such supplementary
documentation as may be prescribed by applicable law to permit the Borrower or
the Administrative Agent to determine the withholding or deduction required to
be made; and

 

(D)                               if a payment made to a Lender under any Loan
Document would be subject to U.S. federal withholding Tax imposed by FATCA if
such Lender were to fail to comply with the applicable reporting requirements of
FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), such Lender shall deliver to the Borrower and the Administrative
Agent at the time or times prescribed by law and at such time or times
reasonably requested by the Borrower or the Administrative Agent such
documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Administrative Agent as may be
necessary for the Borrower and the Administrative Agent to comply with their
obligations under FATCA and to determine that such Lender has complied with such
Lender’s obligations under FATCA or to determine the amount to deduct and
withhold from such

 

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payment.  Solely for purposes of this clause (D), “FATCA” shall include any
amendments made to FATCA after the date of this Agreement.

 

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

 

(e)                                  If any Lender or the Administrative Agent,
as applicable, determines, in its sole discretion, that it had received a refund
of an Indemnified Tax or Other Tax for which a payment has been made by the
Borrower or any Guarantor pursuant to this Agreement or any other Credit
Document, which refund in the good faith judgment of such Lender or the
Administrative Agent, as the case may be, is attributable to such payment made
by the Borrower or any Guarantor, then the Lender or the Administrative Agent,
as the case may be, shall reimburse the Borrower or such Guarantor for such
amount (net of all reasonable out-of-pocket expenses of such Lender or the
Administrative Agent, as the case may be, and without interest other than any
interest received thereon from the relevant Governmental Authority with respect
to such refund) as the Lender or Administrative Agent, as the case may be,
determines in its sole discretion to be the proportion of the refund as will
leave it, after such reimbursement, in no better or worse position (taking into
account expenses or any taxes imposed on the refund) than it would have been in
if the payment had not been required; provided that the Borrower or such
Guarantor, upon the request of the Lender or the Administrative Agent, agrees to
repay the amount paid over to the Borrower or such Guarantor (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Lender or the Administrative Agent in the event the Lender or
the Administrative Agent is required to repay such refund to such Governmental
Authority. In such event, such Lender or the Administrative Agent, as the case
may be, shall, at the Borrower’s request, provide the Borrower with a copy of
any notice of assessment or other evidence of the requirement to repay such
refund received from the relevant Governmental Authority (provided that such
Lender or the Administrative Agent may delete any information therein that it
deems confidential). A Lender or the Administrative Agent shall claim any refund
that it determines is available to it, unless it concludes in its sole
discretion that it would be adversely affected by making such a claim. No Lender
nor the Administrative Agent shall be obliged to make available its tax returns
(or any other information relating to its taxes that it deems confidential) to
any Credit Party in connection with this clause (f) or any other provision of
this Section 5.4.

 

(f)                                   If the Borrower determines that a
reasonable basis exists for contesting an Indemnified Tax or Other Tax for which
a Credit Party has paid additional amounts or indemnification payments, each
Lender or the Administrative Agent, as the case may be, shall use reasonable
efforts to cooperate with the Borrower as the Borrower may reasonably request in
challenging such Tax. The Borrower shall indemnify and hold each Lender and the
Administrative Agent harmless against any reasonable out-of-pocket expenses
incurred by such Person in connection with any request made by the Borrower
pursuant to this Section 5.4(f). Nothing in this Section 5.4(f) shall obligate
any Lender or the

 

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Administrative Agent to take any action that such Person, in its sole judgment,
determines may result in a material detriment to such Person.

 

(g)                                  For the avoidance of doubt, for purposes of
this Section 5.4, the term “Lender” includes any Issuing Bank.

 

(h)                                 The agreements in this Section 5.4 shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.

 

Section 5.5                                    Computations of Interest and
Fees.

 

(a)                                 Interest on LIBOR Loans shall be calculated
on the basis of a 360-day year for the actual days elapsed. Interest on ABR
Loans and interest on overdue interest shall be calculated on the basis of a
365- (or 366-, as the case may be) day year for the actual days elapsed.

 

(b)                                 Fees and the average daily Stated Amount of
Letters of Credit shall be calculated on the basis of a 360-day year for the
actual days elapsed.

 

Section 5.6                                    Limit on Rate of Interest.

 

(a)                                 No Payment Shall Exceed Lawful Rate.
Notwithstanding any other term of this Agreement, the Borrower shall not be
obligated to pay any interest or other amounts under or in connection with this
Agreement or otherwise in respect to any of the Obligations in excess of the
amount or rate permitted under or consistent with any applicable law, rule or
regulation.

 

(b)                                 Payment at Maximum Rate. If the Borrower is
not obliged to make a payment that it would otherwise be required to make, as a
result of Section 5.6(a), the Borrower shall make such payment to the maximum
extent permitted by or consistent with applicable laws, rules and regulations.

 

(c)                                  Adjustment if Any Payment Exceeds Lawful
Rate. If any provision of this Agreement or any of the other Credit Documents
would obligate the Borrower or any other Credit Party to make any payment of
interest or other amount payable to any Lender in an amount or calculated at a
rate that would be prohibited by any applicable Requirement of Law, then
notwithstanding such provision, such amount or rate shall be deemed to have been
adjusted with retroactive effect to the Maximum Rate as would not be so
prohibited by applicable Requirements of Law, such adjustment to be effected, to
the extent necessary, by reducing the amount or rate of interest required to be
paid by the Borrower to the affected Lender under Section 2.7.

 

(d)                                 Rebate of Excess Interest. Notwithstanding
the foregoing, and after giving effect to all adjustments contemplated thereby,
if any Lender shall have received from the Borrower an amount in excess of the
maximum permitted by any applicable Requirement of Law, then the Borrower shall
be entitled, by notice in writing to the Administrative

 

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Agent, to obtain reimbursement from that Lender in an amount equal to such
excess, and pending such reimbursement, such amount shall be deemed to be an
amount payable by that Lender to the Borrower.

 

ARTICLE VI

CONDITIONS PRECEDENT TO EFFECTIVE DATE

 

Section 6.1                                    Effective Date. This Agreement
shall be effective upon the satisfaction of the following conditions precedent,
except as otherwise agreed or waived pursuant to Section 13.1.

 

(a)                                 Executed Credit Agreement.  The
Administrative Agent (or its counsel) shall have received from each party hereto
either (i) a counterpart of this Agreement signed on behalf of such party or
(ii) written evidence satisfactory to the Administrative Agent (which may
include electronic transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.

 

(b)                                 Secretary’s Certificate of the Borrower. 
The Administrative Agent shall have received, in the case of the Borrower, each
of the items referred to in subclauses (i), (ii) and (iii) below:

 

(i)                                     a certificate as to the good standing of
the Borrower as of a recent date from the Secretary of State of the State of
Delaware;

 

(ii)                                  a certificate of the Secretary or
Assistant Secretary or similar officer of the Borrower dated the Effective Date
and certifying:

 

(A)                               that attached thereto is a true and complete
copy of the limited partnership agreement of the Borrower as in effect on the
Effective Date and at all times since a date prior to the date of the
resolutions described in clause (B) below,

 

(B)                               that attached thereto is a true and complete
copy of resolutions duly adopted by the general partner of the Borrower
authorizing the execution, delivery and performance of the Credit Documents to
which the Borrower is a party and the Loans hereunder, and that such resolutions
have not been modified, rescinded or amended and are in full force and effect on
the Effective Date, that the certificate of limited partnership of the Borrower
has not been amended since the date of the last amendment thereto disclosed
pursuant to subclause (i) above,

 

(C)                               as to the incumbency and specimen signature of
each officer executing any Credit Document or any other document delivered in
connection herewith on behalf of the Borrower, and

 

(D)                                             as to the absence of any pending
proceeding for the dissolution or liquidation of the Borrower; and

 

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(iii)                               a certificate of a director or an officer as
to the incumbency and specimen signature of the Secretary or Assistant Secretary
or similar officer executing the certificate pursuant to subclause (ii) above.

 

(c)                                  Secretary’s Certificate of the General
Partner. The Administrative Agent shall have received, in the case of the
General Partner, each of the items referred to in subclauses (i), (ii) and
(iii) below:

 

(i)                                     a certificate as to the good standing of
the General Partner as of a recent date from the Secretary of State of the State
of Delaware;

 

(ii)                                  a certificate of the Secretary or
Assistant Secretary or similar officer of the General Partner dated the
Effective Date and certifying:

 

(A)                               that attached thereto is a true and complete
copy of the company agreement of the General Partner as in effect on the
Effective Date and at all times since a date prior to the date of the
resolutions described in clause (B) below,

 

(B)                               that attached thereto is a true and complete
copy of resolutions duly adopted by the general partner of the Borrower
authorizing the execution, delivery and performance of the Credit Documents to
which the General Partner is a party and the Loans hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect on the Effective Date, that the certificate of formation of the
General Partner has not been amended since the date of the last amendment
thereto disclosed pursuant to subclause (i) above,

 

(C)                               as to the incumbency and specimen signature of
each officer executing any Credit Document or any other document delivered in
connection herewith on behalf of the General Partner, and

 

(D)                               as to the absence of any pending proceeding
for the dissolution or liquidation of the General Partner, and

 

(iii)                               a certificate of a director or an officer as
to the incumbency and specimen signature of the Secretary or Assistant Secretary
or similar officer executing the certificate pursuant to subclause (ii) above.

 

(d)                                               The Notes.  The Administrative
Agent shall have received duly executed Notes payable to each Lender in a
principal amount equal to such Lender’s Commitment Percentage of the Commitment.

 

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The Administrative Agent (or at the Administrative Agent’s direction, its
counsel) shall notify the Borrower and the Lenders of the Effective Date, and
such notice shall be conclusive and binding.

 

ARTICLE VII

CONDITIONS PRECEDENT TO THE FUNDING DATE
AND ALL SUBSEQUENT CREDIT EVENTS

 

Section 7.1                                    Funding Date.  The obligation of
each Lender to advance the initial Loan hereunder and of each Issuing Bank to
issue its initial Letter of Credit hereunder, is subject to satisfaction (or
waiver in accordance with Section 13.1) of the following conditions precedent:

 

(a)                                 Legal Opinions.  The Administrative Agent
shall have received, on behalf of itself and the Secured Parties on the Funding
Date, a customary written opinion of Baker Botts L.L.P., counsel to the Credit
Parties, (i) dated the Funding Date, (ii) addressed to the Administrative Agent,
the Lenders and each Issuing Bank and (iii) in form and substance reasonably
satisfactory to the Administrative Agent. The Borrower, the other Credit Parties
and the Administrative Agent hereby instruct such counsel to deliver such legal
opinion.

 

(b)                                 Secretary’s Certificates of the Credit
Parties.  The Administrative Agent shall have received, in the case of each
Credit Party, each of the items referred to in subclauses (i), (ii) and
(iii) below:

 

(i)                                     a certificate as to the good standing
(to the extent such concept or a similar concept exists under the laws of such
jurisdiction) of each such Credit Party as of a recent date from such Secretary
of State (or other similar official) of the jurisdiction of its organization;

 

(ii)                                                a certificate of the
Secretary or Assistant Secretary or similar officer of each Credit Party dated
the Funding Date and certifying:

 

(A)                               that attached thereto is a true and complete
copy of the bylaws (or partnership agreement, limited liability company
agreement or other equivalent governing documents) of such Credit Party as in
effect on the Funding Date and at all times since a date prior to the date of
the resolutions described in clause (B) below,

 

(B)                               that attached thereto is a true and complete
copy of resolutions duly adopted by the board of directors (or managing general
partner, managing member or equivalent) of such Credit Party authorizing the
execution, delivery and performance of the Credit Documents to which such Person
is a party and, in the case of the Borrower, the Loans hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect on the Funding Date, that the certificate or articles of
incorporation, certificate of limited partnership, articles of incorporation or
certificate of formation of such Credit Party has not been amended since

 

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the date of the last amendment thereto disclosed pursuant to subclause
(i) above,

 

(C)                               as to the incumbency and specimen signature of
each officer executing any Credit Document or any other document delivered in
connection herewith on behalf of such Credit Party, and

 

(D)                               as to the absence of any pending proceeding
for the dissolution or liquidation of such Credit Party; and

 

(iii)                               a certificate of a director or an officer as
to the incumbency and specimen signature of the Secretary or Assistant Secretary
or similar officer executing the certificate pursuant to subclause (ii) above.

 

(c)                                  Guarantee.  The Guarantee shall be in full
force and effect.

 

(d)                                 Security Documents.  All of the Security
Documents, including UCC or other applicable personal property and financing
statements, reasonably requested by the Administrative Agent to be filed,
registered or recorded to create the Liens sufficient to comply with the
Collateral Coverage Minimum intended to be created by such Security Document and
perfect such Liens to the extent required by such Security Documents and as
necessary to comply with the Collateral Coverage Minimum shall have been
delivered to the Administrative Agent for filing, registration or recording and
none of the Collateral shall be subject to any other pledges, security interests
or mortgages, except for Permitted Liens.

 

(e)                                  Local Counsel Opinions.  The Administrative
Agent shall have received a favorable opinion of local counsel in those
jurisdictions selected by Administrative Agent where a Security Document will be
filed in such form and covering such matters as the Administrative Agent may
reasonably request.

 

(f)                                   Fees and Expenses.  The Administrative
Agent shall have received all fees payable thereto or to any Lender on or prior
to the Funding Date, including all fees then due pursuant to the Fee Letter, 
and, to the extent invoiced, all other amounts due and payable pursuant to the
Credit Documents on or prior to the Funding Date, including, to the extent
invoiced, reimbursement or payment of all reasonable out-of-pocket expenses
(including reasonable fees, charges and disbursements of outside counsel and
recording fee for the filing of the Security Documents in the appropriate
recording offices) required to be reimbursed or paid by the Credit Parties
hereunder or under any Credit Document.

 

(g)                                  KYC.  The Administrative Agent shall have
received prior to the Effective Date all documentation and other information
required by regulatory authorities under applicable “know your customer” and
anti-money laundering rules and regulations, including without limitation, the
Patriot Act that has been requested not less than five Business Days prior to
the Funding Date.

 

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(h)                                 Notice of Borrowing. The Administrative
Agent shall have received, in the case of an Advance, a Notice of Borrowing as
required by Section 2.1(b) or, in the case of the issuance of a Letter of
Credit, the applicable Issuing Bank and the Administrative Agent shall have
received a Letter of Credit Application as required by Section 3.2(a).

 

(i)                                     IPO.  Prior to or concurrently with the
Funding Date, (i) the Borrower shall consummate the IPO on substantially the
terms set forth in the Form S-1, (ii) all of the assets described in the
Form S-1 to be contributed to the Borrower or a Restricted Subsidiary in
connection with the IPO shall have been contributed, directly or indirectly, to
the Borrower or a Restricted Subsidiary and (iii) Administrative Agent and its
counsel shall be satisfied that items (i) and (ii) have occurred.  If the IPO is
not consummated within sixty (60) days after the Effective Date, this Agreement
shall become null and void and the Commitments will terminate.

 

The Administrative Agent (or at the Administrative Agent’s direction, its
counsel) shall notify the Borrower and the Lenders of the Funding Date, and such
notice shall be conclusive and binding.

 

Section 7.2                                    All Credit Events. The agreement
of each Lender to make any Loan constituting a Credit Event requested to be made
by it on any date from and after the Funding Date (other than on the Amendment
No. 1 Effective Date) (excluding Loans required to be made by the Lenders in
respect of Unpaid Drawings pursuant to Sections 3.3 and 3.4), and the obligation
of any Issuing Bank to issue Letters of Credit on any date on or after the
Funding Date (other than on the Amendment No. 1 Effective Date), is subject to
the satisfaction of the following conditions precedent:

 

(a)                                 At the time of each such Credit Event and
also after giving effect thereto, (a) no Default or Event of Default shall have
occurred and be continuing and (b) all representations and warranties made by
any Credit Party contained herein or in the other Credit Documents shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event (except where such representations and warranties expressly relate
to an earlier date, in which case such representations and warranties shall have
been true and correct in all material respects as of such earlier date).

 

(b)                                 Prior to the making of each Loan (other than
any Loan made pursuant to Section 3.4(a)), the Administrative Agent shall have
received a Notice of Borrowing (whether in writing or by telephone) meeting the
requirements of Section 2.1(b).

 

(c)                                  Prior to the issuance of each Letter of
Credit, the Administrative Agent and the applicable Issuing Bank shall have
received a Letter of Credit Application meeting the requirements of
Section 3.2(a).

 

(d)                                 A representation and warranty made by the
Borrower (which may be included in the Notice of Borrowing) that as of the end
of the third Business Day on which such Borrowing will be funded, the Credit
Parties shall not have any Excess Cash.

 

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The acceptance of the benefits of each Credit Event after the Effective Date
(other than on the Amendment No. 1 Effective Date) shall constitute a
representation and warranty by each Credit Party to each of the Lenders that all
the applicable conditions specified in this Article VII above have been
satisfied as of that time.

 

The agreement of each Lender to make a Loan requested to be made by it on the
Amendment No.1 Effective Date shall be subject solely to the satisfaction of the
condition contained in Section 7.2(b) hereof.

 

ARTICLE VIII

REPRESENTATIONS, WARRANTIES AND AGREEMENTS

 

In order to induce the Lenders to enter into this Agreement, to make the Loans
and issue or participate in Letters of Credit as provided for herein, the
Borrower makes, on the date of each Credit Event, the following representations
and warranties to, and agreements with, the Lenders, all of which shall survive
the execution and delivery of this Agreement and the making of the Loans and the
issuance of the Letters of Credit:

 

Section 8.1                                    Organizational Status. The
Borrower and each of its Restricted Subsidiaries is duly organized and validly
existing and in good standing under the laws of the jurisdiction of such
Person’s organization and has the organizational power and authority to own its
property and assets and to transact its business as now conducted and has duly
qualified and is authorized to do business and is in good standing (if
applicable) in all jurisdictions where it is required to be so qualified, except
where the failure to be so qualified would not reasonably be expected to have a
Material Adverse Effect.

 

Section 8.2                                    Organizational Power and
Authority; Enforceability. The Borrower and each of its Restricted Subsidiaries
has the power and authority to execute, deliver and carry out the terms and
provisions of the Credit Documents to which it is a party and has taken all
necessary partnership or other organizational action to authorize the execution,
delivery and performance by it of the Credit Documents to which it is a party.
Each Credit Party has duly executed and delivered each Credit Document to which
it is a party and each such Credit Document constitutes the legal, valid and
binding obligation of such Credit Party enforceable in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization and other similar laws relating to or affecting creditors’ rights
generally and general principles of equity (whether considered in a proceeding
in equity or law).

 

Section 8.3                                    No Violation. None of the
execution, delivery or performance by any Credit Party of the Credit Documents
to which it is a party or the compliance with the terms and provisions thereof
will (a) contravene any Requirement of Law except to the extent such
contravention would not reasonably be expected to result in a Material Adverse
Effect, (b) result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of the
property or assets of such Credit Party (other than Liens created under the
Credit Documents and Liens permitted hereunder) pursuant to the terms of any
indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement
or other instrument to which such Credit Party

 

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is a party or by which it or any of its property or assets is bound (any such
term, covenant, condition or provision, a “Contractual Requirement”) except to
the extent such breach, default or Lien that would not reasonably be expected to
result in a Material Adverse Effect or (c) violate any provision of the
partnership agreement, certificate of formation or other organizational
documents of such Credit Party.

 

Section 8.4                                    Litigation. Except as set forth
on Schedule 8.4, there are no actions, suits or proceedings (including
Environmental Claims) pending or, to the knowledge of the Borrower, threatened
in writing with respect to the Borrower or any Restricted Subsidiary that would
reasonably be expected to result in a Material Adverse Effect.

 

Section 8.5                                    Margin Regulations. Neither the
making of any Loan hereunder nor the use of the proceeds thereof will violate
the provisions of Regulation T, Regulation U or Regulation X of the Board.

 

Section 8.6                                    Governmental Approvals. The
execution, delivery and performance of each Credit Document by the Credit
Parties do not require any consent or approval of, registration or filing with,
or other action by, any Governmental Authority, except for (a) such as have been
obtained or made and are in full force and effect, (b) filings and recordings in
respect of the Liens created pursuant to the Security Documents and (c) such
consents, approvals, registrations, filings or actions the failure of which to
obtain or make would not reasonably be expected to have a Material Adverse
Effect.

 

Section 8.7                                    Investment Company Act. No Credit
Party is required to be registered as an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.

 

Section 8.8                                    True and Complete Disclosure.

 

(a)                                 All written information (other than
projections, estimates and information of a general economic nature or general
industry nature) (the “Information”) concerning the Borrower or its Restricted
Subsidiaries, the Transactions and any other transactions contemplated hereby
prepared by or on behalf of the foregoing or their representatives and made
available to any Lenders or the Administrative Agent in connection with the
Transactions or the other transactions contemplated hereby, when taken as a
whole, was true and correct in all material respects, as of the date such
Information was furnished to the Lenders and as of the Funding Date (with
respect to Information provided prior to the Funding Date) and did not, taken as
a whole, contain any untrue statement of a material fact as of any such date or
omit to state a material fact necessary in order to make the statements
contained therein, taken as a whole, not materially misleading in light of the
circumstances under which such statements were made.

 

(b)                                 The projections, estimates and information
of a general economic nature or general industry nature prepared by or on behalf
of the Borrower or any of its representatives that have been made available to
any Lenders or the Administrative Agent in connection with the Transactions or
the other transactions contemplated hereby have

 

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been prepared in good faith based upon assumptions believed by the Borrower to
be reasonable as of the date thereof (it being understood that actual results
may vary materially from any such projections), as of the date such projections
and estimates were furnished to the Lenders (with respect to any projections,
estimates or information of a general economic nature or general industry nature
provided prior to the Funding Date) and as of the Funding Date.

 

Section 8.9                                    Financial Condition; Financial
Statements. As of the Funding Date, the Borrower and its Restricted Subsidiaries
do not have any material Indebtedness, any material guarantee obligations,
contingent liabilities, off balance sheet liabilities, partnership liabilities
for taxes or unusual forward or long-term commitments that, in each case, have
not been disclosed on Schedule 8.9 or in the Form S-1, except as would not
reasonably be expected to result in a Material Adverse Effect.

 

Section 8.10                             Tax Matters. Except where the failure
of which would not, individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect, (a) each of the Borrower and the Restricted
Subsidiaries has filed all federal income Tax returns and all other Tax returns,
domestic and foreign, required to be filed by it (including in its capacity as
withholding agent) and has paid all Taxes payable by it that have become due,
other than those (i) not yet delinquent or (ii) being contested in good faith by
appropriate proceedings and as to which adequate reserves have been provided to
the extent required by and in accordance with GAAP and (b) the Borrower and each
of the Restricted Subsidiaries have provided adequate reserves in accordance
with GAAP for all Taxes of the Borrower and the Restricted Subsidiaries not yet
due and payable.

 

Section 8.11                             Compliance with ERISA. Each Plan is in
compliance with ERISA, the Code and any applicable Requirement of Law; no
Reportable Event has occurred (or is reasonably likely to occur) with respect to
any Plan; no Plan is “insolvent” (within the meaning of Section 4245 of ERISA)
or in “reorganization” (within the meaning of Section 4245 of ERISA) (or is
reasonably likely to be insolvent or in reorganization) or is in “endangered” or
“critical” status (within the meaning of Section 432 of the Code or Section 305
of ERISA), and no written notice of any such insolvency, reorganization, or
endangered or critical status has been given to the Borrower or, to the
knowledge of the Borrower, any ERISA Affiliate; each Plan that is subject to
Title IV of ERISA has satisfied the minimum funding standards (within the
meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such
Plan, and there has been no determination that any such Plan is, or is expected
to be, in “at risk” status (within the meaning of Section 303(i)(4) of ERISA);
none of the Borrower or any ERISA Affiliate has incurred (or is reasonably
likely to incur) any liability to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA
or Section 4971 or 4975 of the Code nor has the Borrower or, to the knowledge of
the Borrower, any ERISA Affiliate, been notified in writing that it will incur
any liability under any of the foregoing Sections with respect to any Plan; no
proceedings have been instituted (or are reasonably likely to be instituted) to
terminate or to reorganize any Plan or to appoint a trustee to administer any
Plan, and no written notice of any such proceedings has been given to the
Borrower or, to the knowledge of the Borrower, any ERISA Affiliate; and no lien
imposed under the Code or ERISA on the assets of the Borrower or any ERISA
Affiliate exists (or is reasonably likely to exist) nor has the Borrower or, to
the knowledge of the Borrower, any ERISA Affiliate been notified in writing that
such a lien will be imposed on

 

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the assets of the Borrower or any ERISA Affiliate on account of any Plan, except
to the extent that a breach of any of the representations or warranties in this
Section 8.11 would not result, individually or in the aggregate, in an amount of
liability that would be reasonably likely to have a Material Adverse Effect. No
Plan (other than a Multiemployer Plan) has an Unfunded Current Liability that
would, individually or when taken together with any other liabilities referenced
in this Section 8.11, be reasonably likely to have a Material Adverse Effect.
With respect to Plans that are Multiemployer Plans, the representations and
warranties in this Section 8.11 other than any made with respect to
(i) liability under Section 4201 or 4204 of ERISA or (ii) liability for
“termination” or “reorganization” (within the meaning of Title IV of ERISA) of
such Plans under ERISA, are made to the best knowledge of the Borrower.

 

Section 8.12                             Subsidiaries. As of the Funding Date,
the Subsidiaries of the Borrower are listed on Schedule 8.12 (which Schedule
shall be provided by the Borrower to the Administrative Agent and made part of
this Agreement on the Funding Date) and such Schedule 8.12 shall indicate
whether such Subsidiary is a Restricted Subsidiary or an Unrestricted
Subsidiary.

 

Section 8.13                             Intellectual Property. The Borrower
owns or has obtained valid rights to use all intellectual property, free from
any burdensome restrictions, that is necessary for the operation of its business
as currently conducted and as proposed to be conducted, except where the failure
to obtain any such rights would not reasonably be expected to have a Material
Adverse Effect. The operation of the business of the Borrower, as currently
conducted and as proposed to be conducted, does not infringe, misappropriate,
violate or otherwise conflict with the proprietary rights of any third party,
except as would not reasonably be expected to have a Material Adverse Effect.

 

Section 8.14                             Environmental Laws.  Except as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect:

 

(a)                                 (i) the Borrower and each of the Restricted
Subsidiaries are in compliance with all Environmental Laws; (ii) neither the
Borrower nor any Restricted Subsidiary has received written notice of any
Environmental Claim or any other liability under any Environmental Law;
(iii) neither the Borrower nor any Restricted Subsidiary is conducting any
investigation, removal, remedial or other corrective action pursuant to any
Environmental Law at any location; and (iv) no underground storage tank or
related piping, or any impoundment or disposal area containing Hazardous
Materials has been used by the Borrower or any of its Restricted Subsidiaries
or, to the knowledge of the Borrower, is located at, on or under any Oil and Gas
Properties currently owned or leased by the Borrower or any of its Restricted
Subsidiaries.

 

(b)                                 Neither the Borrower nor any of the
Restricted Subsidiaries has treated, stored, transported, released or disposed
or arranged for disposal or transport for disposal of Hazardous Materials at,
on, under or from any currently or formerly owned or leased Oil and Gas
Properties or facility in a manner that would reasonably be expected to give
rise to liability of the Borrower or any Restricted Subsidiary under
Environmental Law.

 

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Section 8.15                             Properties.

 

(a)                                 Each Credit Party has good and defensible
title to the Borrowing Base Properties evaluated in the most recently delivered
Reserve Report (other than those (i) disposed of in compliance with Section 10.2
since delivery of such Reserve Report, (ii) leases that have expired in
accordance with their terms and (iii) with title defects disclosed in writing to
the Administrative Agent), and valid title to all its material personal
properties, in each case, free and clear of all Liens other than Permitted
Liens, except in each case where the failure to have such title would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. After giving full effect to the Liens permitted by Article X,
the Borrower owns the working interests and net revenue interests attributable
to its Oil and Gas Properties as reflected in the most recently delivered
Reserve Report, and the ownership of such properties shall not in any material
respect obligate the Borrower to bear the costs and expenses relating to the
maintenance, development and operations of each such property in an amount in
excess of the working interest of each property set forth in the most recently
delivered Reserve Report that is not offset by a corresponding proportionate
increase in the Borrower’s net revenue interest in such property.

 

(b)                                 All material leases and agreements necessary
for the conduct of the business of the Borrower are valid and subsisting and are
in full force and effect, except to the extent that any such failure to satisfy
the foregoing would not reasonably be expected to have a Material Adverse
Effect.

 

(c)                                  The rights and properties presently owned,
leased or licensed by the Credit Parties, including all easements and rights of
way, include all rights and properties necessary to permit the Credit Parties to
conduct their respective businesses as currently conducted, except to the extent
any failure to have any such rights or properties would not reasonably be
expected to have a Material Adverse Effect.

 

(d)                                 All of the properties of the Borrower that
are reasonably necessary for the operation of its business are in good working
condition and are maintained in accordance with prudent business standards,
except to the extent any failure to satisfy the foregoing would not reasonably
be expected to have a Material Adverse Effect.

 

Section 8.16                             Solvency. The Borrower is Solvent, and
the Borrower and its Restricted Subsidiaries, on a consolidated basis, are
Solvent.

 

Section 8.17                             Insurance.  The properties of the
Borrower and its Restricted Subsidiaries are insured in the manner contemplated
by Section 9.3.

 

Section 8.18                             Hedge Transactions. Schedule 8.18 sets
forth, as of the Effective Date, a true and complete list of all material
commodity Hedge Transactions of each Credit Party, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark to market value thereof (as of the last Business Day
of the most recent fiscal quarter preceding the Effective Date and for which a
mark to market value is

 

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reasonably available), all credit support agreements relating thereto (including
any margin required or supplied) and the counterparty to each such agreement.

 

Section 8.19                             Patriot Act; OFAC.

 

(a)                                 On the Funding Date, each Credit Party is in
compliance in all material respects with the Patriot Act, and the Borrower has
provided to the Administrative Agent all information related to the Credit
Parties (including but not limited to names, addresses and tax identification
numbers (if applicable)) reasonably requested in writing by the Administrative
Agent and mutually agreed to be required by the Patriot Act to be obtained by
the Administrative Agent or any Lender.

 

(b)                                 None of the Borrower or any of its
Restricted Subsidiaries nor, to the knowledge of Borrower, any partner, manager,
director, officer, agent, employee or Affiliate of the Borrower or any of the
Restricted Subsidiaries is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”); and the Borrower will not directly or indirectly use the proceeds of
the Loans or the Letters of Credit or otherwise make available such proceeds to
any Person, for the purpose of financing the activities of any Person currently
subject to any U.S. sanctions administered by OFAC.

 

(c)                                  As of the Amendment No. 1 Effective Date,
the information included in the Beneficial Ownership Certification is true and
correct in all respects.

 

Section 8.20                             No Material Adverse Effect.  Since the
Funding Date, there has been no event or circumstance that has had or would
reasonably be expected to have a Material Adverse Effect.

 

Section 8.21                             Foreign Corrupt Practices Act.  Neither
the Borrower nor, to the knowledge of the Borrower, any of its partners,
directors, officers, agents or employees has (i) used any partnership funds for
any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity, (ii) made any direct or indirect unlawful
payment to any government official or employee from corporate funds,
(iii) violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977 or (iv) made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.

 

Section 8.22                             Security Interests.  The Obligations
are secured by Liens in the Collateral granted in favor of the Administrative
Agent, for the benefit of the Lenders, and such Liens are or will be perfected
(in each case, to the extent contemplated by this Agreement and the Security
Documents) (i) by the filing of a UCC financing statement in the states in which
each applicable Credit Party is located, (ii) by filing mortgages affecting the
Borrowing Base Properties, as-extracted collateral and/or fixtures (as
applicable) in the real property or other appropriate records of the parish or
county in which the applicable real property or fixtures are located, or
(iii) by possession or control.

 

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Section 8.23                             Accounts.  Schedule 8.23 lists all
Deposit Accounts, Securities Accounts and Commodity Accounts maintained by or
for the benefit of any Credit Party.

 

Section 8.24                             Gas Imbalances; Prepayments. On the
Funding Date, on a net basis, there are no gas imbalances, take or pay or other
prepayments exceeding one-half Bcfe of hydrocarbon volumes (stated on a gas
equivalent basis) in the aggregate, with respect to the Borrower’s and its
Restricted Subsidiaries Oil and Gas Properties that would require the Borrower
or any Restricted Subsidiary to deliver Hydrocarbons either generally or
produced from their Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor.

 

Section 8.25                             Marketing of Production. On the Funding
Date, no material agreements exist (which are not cancelable on 60 days’ notice
or less without penalty or detriment) for the sale of production of the
Borrower’s or its Restricted Subsidiaries’ Hydrocarbons at a fixed non-index
price (including calls on, or other rights to purchase, production, whether or
not the same are currently being exercised) that (i) represent in respect of
such agreements 2.5% or more of the Borrower’s and its Restricted Subsidiaries’
average monthly production of Hydrocarbon volumes and (ii) have a maturity or
expiry date of longer than six months from the Funding Date.

 

ARTICLE IX

AFFIRMATIVE COVENANTS

 

A deviation from the provisions of this Article IX shall not constitute an Event
of Default under this Agreement if such deviation is consented to in writing by
the Administrative Agent and Majority Lenders prior to the date of deviation. 
The Borrower hereby covenants and agrees that on the Funding Date and
thereafter, until the Total Commitment and each Letter of Credit have terminated
(unless such Letters of Credit have been collateralized or other arrangements in
respect thereof have been made on terms and conditions reasonably satisfactory
to each applicable Issuing Bank following the termination of the Total
Commitment)  and the Loans and Unpaid Drawings, together with interest, fees and
all other Obligations incurred hereunder (other than Hedging Obligations, Cash
Management Obligations or contingent indemnification obligations not then due
and payable), are paid in full,  Borrower will comply with the covenants
contained in this Article IX:

 

Section 9.1                                    Information Covenants. The
Borrower will furnish to the Administrative Agent (which shall promptly make
such information available to the Lenders in accordance with its customary
practice):

 

(a)                                 Annual Financial Statements.  Beginning with
financial statements for fiscal year 2016, on or before the date that is 120
days (or such longer period as the Administrative Agent may reasonably agree)
after the end of each such fiscal year, the audited consolidated balance sheets
of the Borrower, in each case as at the end of such fiscal year, and the related
consolidated statements of operations, partners’ equity and cash flows for such
fiscal year, setting forth comparative consolidated figures for the preceding
fiscal years prepared in accordance with GAAP, and certified by independent
certified public accountants reasonably acceptable to the Administrative Agent
whose opinion shall not be materially qualified with a “going concern” or like
qualification or exception with respect to the Borrower or any of its Restricted
Subsidiaries (other than with respect to, or

 

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resulting from, (x) the occurrence of the Maturity Date within one year from the
date such opinion is delivered or (y) any potential inability to satisfy the
financial covenants set out in Sections 10.3 or 10.4 hereof on a future date or
in a future period), together with a certificate of such accounting firm unless
such accounting firm is restricted from providing such a certificate by its
policies or unless the delivery of such certificate increases the costs payable
by the Borrower to such accounting firm, stating that in the course of either
(i) its regular audit of the business of the Borrower and its Subsidiaries,
which audit was conducted in accordance with generally accepted auditing
standards or (ii) performing certain other procedures permitted by professional
standards, such accounting firm has obtained no knowledge of any Event of
Default relating to the financial covenants set forth in Sections 10.3 and 10.4
that has occurred and is continuing or, if in the opinion of such accounting
firm such an Event of Default has occurred and is continuing, a statement as to
the nature thereof.

 

(b)                                 Quarterly Financial Statements. On or before
the date that is 60 days (or such longer period as the Administrative Agent may
reasonably agree) after the end of each of the first three quarterly accounting
periods of each fiscal year, beginning with the quarterly period ending
March 31, 2017, the consolidated balance sheets of the Borrower, in each case as
at the end of such quarterly period and the related statements of operations,
partners’ equity and cash flows for such quarterly accounting period and for the
elapsed portion of the fiscal year ended with the last day of such quarterly
period, and setting forth comparative figures for the related periods in the
prior fiscal year or, in the case of such balance sheet, for the last day of the
prior fiscal year, all of which shall be certified by a Financial Officer of the
Borrower as fairly presenting in all material respects the financial condition,
results of operations, shareholders’ equity and cash flows of the Borrower and
its Restricted Subsidiaries in accordance with GAAP, subject to changes
resulting from audit and normal yearend audit adjustments and the absence of
footnotes .

 

(c)                                  Compliance Certificates. At the time of the
delivery of the financial statements provided for in Section 9.1(a) and
Section 9.1(b), a Compliance Certificate of a Financial Officer of the Borrower
which certificate shall also set forth the calculations required to establish
whether the Borrower and its Restricted Subsidiaries were in compliance with
each of the financial covenants set forth in Section 10.3 and 10.4 as at the end
of such fiscal year or period, as the case may be and listing each Material
Subsidiary as of such date of delivery.

 

(d)                                 Notice of Default; Litigation. Promptly
after an Authorized Officer of the Borrower obtains actual knowledge thereof,
notice of (i) the occurrence of any Default or Event of Default, which notice
shall specify the nature thereof, the period of existence thereof and what
action the Borrower proposes to take with respect thereto and (ii) any
litigation or governmental proceeding pending against the Borrower or any of the
Restricted Subsidiaries that would reasonably be expected to be determined
adversely and, if so determined, to result in a Material Adverse Effect.

 

(e)                                  Environmental Matters. Promptly after
obtaining actual knowledge of any one or more of the following environmental
matters, unless such environmental matters

 

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would not, individually, or when aggregated with all other such matters, be
reasonably expected to result in a Material Adverse Effect, notice of:

 

(i)                                     any pending or threatened Environmental
Claim against any Credit Party or any Oil and Gas Properties;

 

(ii)                                  any condition or occurrence on any Oil and
Gas Properties that (A) would reasonably be expected to result in noncompliance
by any Credit Party with any applicable Environmental Law or (B) would
reasonably be anticipated to form the basis of an Environmental Claim against
any Credit Party or any Oil and Gas Properties;

 

(iii)                               any condition or occurrence on any Oil and
Gas Properties that would reasonably be anticipated to cause such Oil and Gas
Properties to be subject to any restrictions on the ownership, occupancy, use or
transferability of such Oil and Gas Properties under any Environmental Law; and

 

(iv)                              the conduct of any investigation, or any
removal, remedial or other corrective action in response to the actual or
alleged presence, release or threatened release of any Hazardous Material on,
at, under or from any Oil and Gas Properties.

 

All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
response thereto.

 

(f)                                   Certificate of Authorized Officer — Hedge
Transactions.  Concurrently with any delivery of each Reserve Report, setting
forth as of the date of the Reserve Report, a true and complete list of all
material commodity Hedge Transactions of the Borrower and each Credit Party, the
material terms thereof (including the type, term, effective date, termination
date and notional amounts or volumes), the net mark-to-market value thereof (as
of the last Business Day of the most recent date such mark-to-market value is
reasonably available), any new credit support agreements relating thereto not
listed on Schedule 8.18 or on any previously delivered certificate delivered
pursuant to this clause (f), any margin required or supplied under any credit
support document and the counterparty to each such agreement.

 

(g)                                              Form S-1.  Promptly after any
change or modification is made to the Form S-1, a true and correct copy of the
revised Form S-1 that incorporated such change or modification.

 

(h)                                 Production Reports.  On or before the date
that is 60 days (or such longer period as the Administrative Agent may
reasonably agree) after the end of each of the first three quarterly accounting
periods of each fiscal year, beginning with the quarterly period ending
March 31, 2017, a production report of the Borrower and the Restricted
Subsidiaries in form and substance satisfactory to the Administrative Agent
prepared by the Borrower covering each of the Oil and Gas Properties of the
Borrower and its Restricted Subsidiaries (on a net basis to the interest of the
Borrower) and detailing the production, revenue, and price information and
associated operating expenses for each such quarterly period;

 

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(i)                                     Other Information.  (i) Promptly upon
filing thereof, copies of any filings (including on Form 10-K, 10-Q or 8-K) or
registration statements with, and reports to, the SEC or any analogous
Governmental Authority in any relevant jurisdiction by the Borrower or any
Restricted Subsidiaries (other than amendments to any registration statement (to
the extent such registration statement, in the form it becomes effective, is
delivered to the Administrative Agent), exhibits to any registration statement
and, if applicable, any registration statements on Form S-8), (ii) copies of all
financial statements, proxy statements, notices and reports that the Borrower or
any of the Restricted Subsidiaries shall send to the holders of any publicly
issued debt of the Borrower and/or any of its Restricted Subsidiaries, in each
case in their capacity as such holders, lenders or agents, (iii) upon the
request of the Administrative Agent, information and documentation reasonably
requested by the Administrative Agent or any Lender for purposes of compliance
with applicable “know your customer” requirements under the PATRIOT Act or other
applicable Anti-Money Laundering Laws, (iv) promptly after an Authorized Officer
of the Borrower obtains actual knowledge thereof, the Borrower shall provide to
the Administrative Agent written notice of any change in the information
provided in the Beneficial Ownership Certification that would result in a change
to the list of beneficial owners identified in parts (c) or (d) of such
certification and (v) such other information regarding the operations, business
affairs and the financial condition of the Borrower and the Restricted
Subsidiaries as the Administrative Agent on its own behalf or on behalf of any
Lender (acting through the Administrative Agent) may reasonably request in
writing from time to time.

 

(j)                                    Annual Budget.  At the time of the
delivery of the financial statements provided for in Section 9.1(a), the annual
budget of the Borrower for the next fiscal year after the fiscal year covered by
such financial statements, set forth on a monthly basis for such fiscal year
covered by the annual budget.

 

It is understood that documents required to be delivered pursuant to Sections
9.1(a), 9.1(b), 9.1(c), 9.1(f), 9.1(g) and 9.1(j) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (i) on which the Borrower posts such documents, or provides a link
thereto on the Borrower’s website on the Internet at the website address listed
on Schedule 13.2 or (ii) on which such documents are transmitted by electronic
mail to the Administrative Agent; provided that the Borrower shall notify (which
may be by facsimile or electronic mail) the Administrative Agent of the posting
of any such documents. Each Lender shall be solely responsible for timely
accessing posted documents.  Notwithstanding the foregoing, in respect of any
information required to be delivered to the Administrative Agent and/or the
Lenders pursuant to this Section 9.1, to the extent such information has been
published on EDGAR at or prior to the time the information is required to be
delivered under this Agreement, Borrower may send to the Administrative Agent a
notice that such information is available on EDGAR and delivery of such notice
shall satisfy the Borrower’s requirements under this Section 9.1 to deliver to
the Administrative Agent and each Lender such information.

 

Section 9.2                                    Books, Records and Inspections.

 

(a)                                 The Borrower will permit officers and
designated representatives of the Administrative Agent or officers and
designated representatives of the Majority Lenders

 

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(as accompanied by the Administrative Agent) to visit and inspect any of the
properties or assets of the Borrower in whomsoever’s possession to the extent
that it is within such party’s control to permit such inspection (and shall use
commercially reasonable efforts to cause such inspection to be permitted to the
extent that it is not within such party’s control to permit such inspection),
and to examine the financial records of the Borrower and discuss the affairs,
finances, accounts and condition of the Borrower with its officers and
independent accountants therefor, in each case of the foregoing upon reasonable
advance notice to the Borrower, all at such reasonable times and intervals
during normal business hours and to such reasonable extent as the Administrative
Agent or the Majority Lenders may desire (and subject, in the case of any such
meetings or advice from such independent accountants, to such accountants’
customary policies and procedures); provided that, excluding any such visits and
inspections during the continuation of an Event of Default (i) only the
Administrative Agent on behalf of the Majority Lenders may exercise rights of
the Administrative Agent and the Lenders under this Section 9.2, and (ii) only
one such visit per fiscal year shall be at the Borrower’s expense; provided,
further, that when an Event of Default exists, the Administrative Agent (or any
of its representatives or independent contractors) or any representative of the
Majority Lenders may do any of the foregoing at the expense of the Borrower at
any time during normal business hours and upon reasonable advance notice. The
Administrative Agent and the Majority Lenders shall give the Borrower the
opportunity to participate in any discussions with the Borrower’s independent
public accountants. Notwithstanding anything to the contrary in this
Section 9.2, the Borrower will not be required to disclose, permit the
inspection, examination or making copies or abstracts of, or discussion of, any
document, information or other matter (i) that constitutes non-financial trade
secrets or non-financial proprietary information, (ii) in respect of which
disclosure to the Administrative Agent or any Lender (or their respective
representatives or contractors) is prohibited by any Requirement of Law or any
binding agreement or (iii) that is subject to attorney-client or similar
privilege or constitutes attorney work product.

 

(b)                                 The Borrower will maintain financial records
in accordance with GAAP in all material respects.

 

Section 9.3                                    Maintenance of Insurance. The
Borrower will at all times maintain in full force and effect, pursuant to
self-insurance arrangements or with insurance companies that the Borrower
believes (in the good faith judgment of the management of the Borrower) are
financially sound and reputable at the time the relevant coverage is placed or
renewed, insurance in at least such amounts (after giving effect to any
self-insurance which the Borrower believes (in the good faith judgment of
management of the Borrower) is reasonable and prudent in light of the size and
nature of its business) and against at least such risks (and with such risk
retentions) as the Borrower believes (in the good faith judgment of management
of the Borrower) is reasonable and prudent in light of the size and nature of
its business; and will furnish to the Administrative Agent, upon written request
from the Administrative Agent, information presented in reasonable detail as to
the insurance so carried. The Secured Parties shall be the additional insureds
on any such liability insurance as their interests may appear and, if property
insurance is obtained, the Administrative Agent shall be the loss payee under
any such property insurance; provided that, so long as no Event of Default has
occurred and is then continuing, the Secured Parties will provide any proceeds
of such property insurance to the Borrower to the extent that the Borrower
undertakes to apply such

 

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proceeds to the reconstruction, replacement or repair of the property insured
thereby. The Borrower shall deliver to the Administrative Agent within 45
Business Days following the Effective Date (or such later date as the
Administrative Agent may reasonably agree), copies of insurance certificates
evidencing the insurance required to be maintained by the Borrower and the
Restricted Subsidiaries pursuant to this Section 9.3.

 

Section 9.4                                    Payment of Taxes. The Borrower
shall, and shall cause each Restricted Subsidiary to, pay its obligations in
respect of all Tax liabilities, assessments and governmental charges, before the
same shall become delinquent or in default, except where (i) the amount or
validity thereof is being contested in good faith by appropriate proceedings and
the Borrower or such applicable Restricted Subsidiary has set aside on its books
adequate reserves therefor in accordance with GAAP or (ii) the failure to make
payment could not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.

 

Section 9.5                                    Maintenance of Existence. The
Borrower will do or cause to be done, all things necessary to preserve and keep
in full force and effect its existence, partnership rights and authority.

 

Section 9.6                                    Compliance with Statutes,
Regulations, Etc.  The Borrower will, and will cause its Restricted Subsidiaries
to, comply with all Requirements of Law applicable them or their property,
including all governmental approvals or authorizations required to conduct their
business, and to maintain all such governmental approvals or authorizations in
full force and effect, in each case except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect.

 

Section 9.7                                    ERISA.

 

(a)                                 Promptly after the Borrower knows or has
reason to know of the occurrence of any of the following events that,
individually or in the aggregate (including in the aggregate such events
previously disclosed or exempt from disclosure hereunder, to the extent the
liability therefor remains outstanding), would be reasonably likely to have a
Material Adverse Effect, the Borrower will deliver to the Administrative Agent a
certificate of an Authorized Officer setting forth details as to such occurrence
and the action, if any, that the Borrower or such ERISA Affiliate is required or
proposes to take, together with any notices (required, proposed or otherwise)
given to or filed with or by the Borrower, such ERISA Affiliate, the PBGC, a
Plan participant (other than notices relating to an individual participant’s
benefits) or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application is to be made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required installment
payments) or an extension of any amortization period under Section 412 of the
Code with respect to a Plan; that a Plan having an Unfunded Current Liability
has been or is to be terminated, reorganized, partitioned or declared insolvent
under Title IV of ERISA (including the giving of written notice thereof); that a
Plan has an Unfunded Current Liability that has or will result in a lien under
ERISA or the Code; that proceedings will be or have been instituted to terminate
a Plan having an Unfunded Current Liability (including the giving

 

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of written notice thereof); that a proceeding has been instituted against the
Borrower or an ERISA Affiliate pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that the PBGC has notified the Borrower or
any ERISA Affiliate of its intention to appoint a trustee to administer any
Plan; that the Borrower or any ERISA Affiliate has failed to make a required
installment or other payment pursuant to Section 412 of the Code with respect to
a Plan; or that the Borrower or any ERISA Affiliate has incurred or will incur
(or has been notified in writing that it will incur) any liability (including
any contingent or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA
or Section 4971 or 4975 of the Code.

 

(b)                                 Promptly following any request therefor, on
and after the effectiveness of the Pension Act, the Borrower will deliver to the
Administrative Agent copies of (i) any documents described in Section 101(k) of
ERISA that the Borrower and any of its Subsidiaries may request with respect to
any Multiemployer Plan and (ii) any notices described in Section 101(l) of ERISA
that the Borrower and any of its Restricted Subsidiaries may request with
respect to any Multiemployer Plan; provided that if the Borrower or any of its
Restricted Subsidiaries has not requested such documents or notices from the
administrator or sponsor of the applicable Multiemployer Plan, the Borrower or
the applicable Restricted Subsidiaries shall promptly make a request for such
documents or notices from such administrator or sponsor and shall provide copies
of such documents and notices promptly after receipt thereof; and provided
further that if the Borrower or any of its Restricted Subsidiaries has not
requested such documents or notices from the administrator or sponsor of the
applicable Multiemployer Plan, the Borrower or the applicable Restricted
Subsidiaries shall not be required to make a request for such documents or
notices more than once during any one twelve month period.

 

Section 9.8                                    Maintenance of Properties. The
Borrower will, and will cause its Restricted Subsidiaries to, except in each
case where the failure to so comply would not reasonably be expected to result
in a Material Adverse Effect:

 

(a)                                 operate its Oil and Gas Properties and other
material properties or cause such Oil and Gas Properties and other material
properties to be operated in a careful and efficient manner in accordance with
the practices of the industry and in compliance with all applicable Contractual
Requirements and all applicable Requirements of Law, including applicable
proration requirements and Environmental Laws, and all applicable Requirements
of Law of every other Governmental Authority from time to time constituted to
regulate the development and operation of its Oil and Gas Properties and the
production and sale of Hydrocarbons and other minerals therefrom;

 

(b)                                 keep and maintain all property material to
the conduct of its business in good working order and condition, ordinary wear
and tear excepted, and preserve, maintain and keep in good repair, working order
and efficiency (ordinary wear and tear excepted) all of its material Oil and Gas
Properties and other material properties, including all equipment, machinery and
facilities; and

 

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(c)                                  to the extent a Credit Party is not the
operator of any property described in clauses (a) and (b), the Borrower shall
use commercially reasonable efforts to cause the operator to comply with this
Section 9.8.

 

Section 9.9                                    Transactions with Affiliates. The
Borrower will, and will cause its Restricted Subsidiaries to, conduct any
transaction or series of related transactions involving aggregate payments or
consideration in excess of $2,000,000 with any of its Affiliates on terms that
are substantially as favorable to the Borrower or such Restricted Subsidiary as
it would obtain at the time in a comparable arm’s-length transaction with a
Person that is not an Affiliate, as determined by the partners, board of
directors or managers of the Borrower in good faith; provided that the foregoing
restrictions shall not apply to:

 

(a)                                 the consummation of the Transactions,
including the payment of Transaction Expenses;

 

(b)                                 equity issuances, repurchases, retirements,
redemptions or other acquisitions or retirements of Equity Interests by the
Borrower permitted under Article X;

 

(c)                                  loans, advances and other transactions
between or among the Borrower, any Subsidiary or any joint venture (regardless
of the form of legal entity) in which the Borrower or any Subsidiary has
invested (and which Subsidiary or joint venture would not be an Affiliate of the
Borrower or such Subsidiary, but for the Borrower’s or such Subsidiary’s
ownership of Equity Interests in such joint venture or such Subsidiary) to the
extent permitted under Section 10.15;

 

(d)                                 employment and severance arrangements and
health, disability and similar insurance or benefit plans between the Borrower
and the Subsidiaries and their respective directors, officers, employees or
consultants (including management and employee benefit plans or agreements,
subscription agreements or similar agreements pertaining to the repurchase of
Equity Interests pursuant to put/call rights or similar rights with current or
former employees, officers, directors or consultants and equity option or
incentive plans and other compensation arrangements) in the ordinary course of
business or as otherwise approved by the general partner,  board of directors or
managers of the Borrower (or any direct or indirect parent thereof);

 

(e)                                  Restricted Payments, Investments,
Dispositions, redemptions, repurchases and other actions permitted under
Article X;

 

(f)                                   any issuance of Equity Interests or other
payments, awards or grants in cash, securities, Equity Interests or otherwise
pursuant to, or the funding of, employment arrangements, equity options and
equity ownership plans approved by the general partner, board of directors or
board of managers of the Borrower (or any direct or indirect parent thereof);

 

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(g)                                  transactions with joint ventures for the
purchase or sale of goods, equipment and services entered into in the ordinary
course of business and in a manner consistent with prudent business practices
followed by companies in the oil and gas industry;

 

(h)                                 any transaction in respect of which the
Borrower delivers to the Administrative Agent a letter addressed to the general
partner, board of directors or managers of the Borrower from an accounting,
appraisal or investment banking firm, in each case of nationally-recognized
standing that is in the good faith determination of the Borrower qualified to
render such letter, which letter states that such transaction is (i) fair, from
a financial point of view, to the Borrower or the applicable Restricted
Subsidiary or (ii) on terms, taken as a whole, that are no less favorable to the
Borrower or the applicable Restricted Subsidiary than would be obtained in a
comparable arm’s length transaction with a Person that is not an Affiliate;

 

(i)                                     customary agreements and arrangements
with oil and gas royalty trusts and master limited partnership agreements that
comply with the affiliate transaction provisions of such royalty trust or master
limited partnership agreement;

 

(j)                                    transactions pursuant to agreements to be
entered into by various Credit Parties and their Subsidiaries in connection with
any Drop-Down Acquisition and the transactions related thereto,

 

(k)                                 transactions between or among the Borrower
and its Restricted Subsidiaries;

 

(l)                                     transactions pursuant to the Management
Services Agreement and any amendments, restatements, supplements or other
modifications thereto that are not, taken as a whole, materially less favorable
to the Borrower and the Restricted Subsidiaries than such agreement as in effect
on the Funding Date; or

 

(m)                             any transaction with an Affiliate if such
transaction has been approved by the conflicts committee of the General Partner
and, prior to the consummation of such transaction, the Administrative Agent is
advised in writing of such transaction and the conflicts committee of the
General Partner’s approval of such transaction.

 

Section 9.10                             End of Fiscal Years; Fiscal Quarters.
The Borrower will, for financial reporting purposes, cause each of its fiscal
years and fiscal quarters to end on dates consistent with past practice;
provided, however, that the Borrower may, upon written notice to the
Administrative Agent change the financial reporting convention specified above
to any other financial reporting convention reasonably acceptable to the
Administrative Agent, in which case the Borrower and the Administrative Agent
will, and are hereby authorized by the Lenders to, make any adjustments to this
Agreement that are necessary in order to reflect such change in financial
reporting.

 

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Section 9.11                             Additional Guarantors, Grantors and
Collateral.

 

(a)                                 Subject to any applicable limitations set
forth in the Guarantee or the Security Documents, the Borrower will cause
(i) any Restricted Subsidiary (other than any Excluded Subsidiary) formed or
otherwise purchased, designated or acquired after the Effective Date (including
pursuant to a Permitted Acquisition) and (ii) any Restricted Subsidiary of the
Borrower that ceases to be an Excluded Subsidiary, in each case within thirty
(30) days from the date of such formation, acquisition, designation or
cessation, as applicable (or such longer period as the Administrative Agent may
agree in its reasonable discretion) to execute a supplement to each of the
Guarantee and the Pledge Agreement, substantially in the form required by the
respective agreement, in order to become a Guarantor under the Guarantee and a
pledgor under the Pledge Agreement.

 

(b)                                 Subject to any applicable limitations set
forth in the Security Documents, the Borrower will pledge, and, if applicable,
will cause each other Subsidiary Guarantor (or Person required to become a
Subsidiary Guarantor pursuant to Section 9.11(a)) to pledge, to the
Administrative Agent, for the benefit of the Secured Parties, (i) all of the
Equity Interests of each Restricted Subsidiary that is not an Excluded
Subsidiary directly owned by the Borrower or any Subsidiary Guarantor (or Person
required to become a Guarantor pursuant to Section 9.11(a)), in each case,
formed or otherwise purchased or acquired after the Effective Date, pursuant to
a supplement to the Pledge Agreement in substantially the form required by the
Pledge Agreement and (ii) except with respect to intercompany Indebtedness, all
evidences of Indebtedness for borrowed money in a principal amount in excess of
$1,000,000 (individually) that is owing to the Borrower or any Guarantor (or
Person required to become a Guarantor pursuant to Section 9.11(a)) to the extent
such Indebtedness is evidenced by a promissory note, pursuant to a security
agreement in the form reasonably prescribed by the Administrative Agent.

 

(c)                                  The Borrower agrees that all Indebtedness
of (i) the Borrower that is owing to any Credit Party (or a Person required to
become a Subsidiary Guarantor pursuant to Section 9.11(a)) and (ii) any Credit
Party (or a Person required to become a Subsidiary Guarantor pursuant to
Section 9.11(a)) owing to the Borrower shall be evidenced by the Intercompany
Note, which Intercompany Note shall be required to be pledged to the
Administrative Agent, for the benefit of the Secured Parties, pursuant to a
security agreement in the form prescribed by the Administrative Agent.

 

(d)                                 In connection with each redetermination (but
not any adjustment) of the Borrowing Base, the Borrower shall review the
applicable Reserve Report, if any, and the list of current Mortgaged Properties,
to ascertain whether the PV-9 of the Mortgaged Properties (calculated at the
time of redetermination) meets the Collateral Coverage Minimum after giving
effect to exploration and production activities, acquisitions, Dispositions and
production. In the event that the PV-9 of the Mortgaged Properties (calculated
at the time of redetermination) does not meet the Collateral Coverage Minimum
after giving effect to exploration and production activities, acquisitions,
Dispositions and production, then the Borrower shall, and shall cause its Credit
Parties to, grant, within 60 days of delivery of the certificate required under
Section 9.14(b) (or such longer period as

 

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the Administrative Agent may agree in its reasonable discretion), to the
Administrative Agent as security for the Obligations a first-priority Lien
(subject to Liens permitted by Article X) on additional Oil and Gas Properties
not already subject to a Lien of the Security Documents such that, after giving
effect thereto, the PV-9 of the Mortgaged Properties (calculated at the time of
redetermination) meets the Collateral Coverage Minimum. All such Liens will be
created and perfected by and in accordance with the provisions of the Security
Documents, including, if applicable, any additional deeds of trust, mortgages
and security agreements.

 

Section 9.12                             Use of Proceeds.

 

(a)                                 The Borrower and its Restricted Subsidiaries
will use the proceeds of Loans for the acquisition and development of Oil and
Gas Properties, the acquisition of Equity Interests in Restricted Subsidiaries
to the extent permitted by Section 10.15 and for working capital and other
general partnership purposes of the Borrower and its Restricted Subsidiaries
(including Permitted Acquisitions).

 

(b)                                 The Borrower and its Restricted Subsidiaries
will use Letters of Credit for general partnership purposes and to support
deposits required under purchase agreements pursuant to which the Borrower or
its Restricted Subsidiaries may acquire Oil and Gas Properties and other assets.

 

Section 9.13                             Further Assurances.

 

(a)                                 Subject to the applicable limitations set
forth in the Security Documents, the Borrower will, and will cause each other
Credit Party to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements, fixture, filings, assignments of
as-extracted collateral, mortgages, deeds of trust and other documents) that the
Administrative Agent or the Majority Lenders may reasonably request, in order to
grant, preserve, protect and perfect the validity and priority of the security
interests created or intended to be created by the applicable Security
Documents, all at the expense of the Borrower.

 

(b)                                 Notwithstanding anything herein to the
contrary, if the Administrative Agent and the Borrower reasonably determine in
writing that the cost of creating or perfecting any Lien on any property is
excessive in relation to the benefits afforded to the Lenders thereby, then such
property may be excluded from the Collateral for all purposes of the Credit
Documents. In addition, notwithstanding anything to the contrary in this
Agreement, the Security Documents, or any other Credit Document, (i) the
Administrative Agent may grant extensions of time for or waivers of the
requirements of the creation or perfection of security interests in or the
obtaining of title opinions or other title information, legal opinions,
appraisals, flood insurance and surveys with respect to particular assets
(including extensions beyond the Funding Date for the perfection of security
interests in the assets of the Credit Parties on such date) where it reasonably
determines, in consultation with the Borrower, that perfection or obtaining of
such items is not required by law or

 

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cannot be accomplished without undue effort or expense by the time or times at
which it would otherwise be required by this Agreement or the other Credit
Documents, (ii) Liens required to be granted from time to time pursuant to this
Agreement and the Security Documents shall be subject to exceptions and
limitations set forth in the Security Documents and, to the extent appropriate
in any applicable jurisdiction, as otherwise agreed between the Administrative
Agent and the Borrower and (iii) the Administrative Agent and the Borrower may
make such modifications to the Security Documents, and execute and/or consent to
such easements, covenants, rights of way or similar instruments (and
Administrative Agent may agree to subordinate the lien of any mortgage to any
such easement, covenant, right of way or similar instrument or record or may
agree to recognize any tenant pursuant to an agreement in a form and substance
reasonably acceptable to the Administrative Agent), as are reasonable or
necessary and otherwise permitted by this Agreement and the other Credit
Documents.

 

Section 9.14                             Reserve Reports.

 

(a)                                 The Borrower shall deliver to the
Administrative Agent the Reserve Reports required by Sections 2.14, 2.15 and
2.16 hereof at the times specified therein.

 

(b)                                 With the delivery of each Reserve Report,
the Borrower shall provide to the Administrative Agent a Reserve Report
Certificate from an Authorized Officer of the Borrower certifying that in all
material respects:

 

(i)                                     in the case of Reserve Reports prepared
by or under the supervision of the chief engineer of the Borrower (or an
engineer having similar qualifications and responsibilities employed by the
Borrower), such Reserve Report has been prepared, except as otherwise specified
therein, in accordance with the procedures used in the immediately preceding
Reserve Report;

 

(ii)                                  the information contained in the Reserve
Report and any other information delivered in connection therewith is true and
correct in all material respects;

 

(iii)                               except as set forth in an exhibit to such
certificate, the representations and warranties in Section 8.15(a) are true and
correct as of the date of such Reserve Report Certificate;

 

(iv)                              none of the Borrowing Base Properties have
been Disposed of since the date of the last Borrowing Base determination except
those Borrowing Base Properties listed on such certificate as having been
Disposed of; and

 

(v)                                 the certificate shall also attach, as
schedules thereto, a list of all Borrowing Base Properties evaluated by such
Reserve Report that are Collateral and demonstrating that the PV-9 of the
Collateral (calculated at the time of delivery of such Reserve Report) meets the
Collateral Coverage Minimum.

 

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Section 9.15                             Title Information. Within 60 days of
the date of delivery to the Administrative Agent of each Reserve Report required
by Sections 2.14 and 2.15. the Borrower will deliver title information in form
and substance reasonably acceptable to the Administrative Agent so that the
Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, reasonably satisfactory title
information on at least 60% of the PV-9 of the Oil and Gas Properties evaluated
in such Reserve Report.

 

Section 9.16                             Consolidated Cash Balance Information.
If any Loans are outstanding, then (a) upon the request of the Administrative
Agent (within two (2) Business Days of such request) or (b) on the last Business
Day of any week (or, if a Default, Event of Default or Borrowing Base Deficiency
has occurred and is continuing, on any Business Day) on which the Borrower has
any Excess Cash on such Business Day, the Borrower shall provide to the
Administrative Agent, within two (2) Business Days of any such day, summary and
balance statements, in a form provided to the Borrower by the applicable
financial institution or in a form otherwise reasonably acceptable to the
Administrative Agent, for each Deposit Account, Securities Account or other
account in which any Cash Balance is held or to which any Cash Balance is
credited, together with a written statement setting forth a reasonably detailed
calculation of amounts excluded from the definition of Excess Cash pursuant to
the parenthetical set forth in the definition thereof.

 

Section 9.17                             Control Agreements.  For each Deposit
Account or Securities Account that the Borrower or any Credit Party maintains as
of the Effective Date (other than Excluded Accounts) the Borrower and other
Credit Party will, by no later than 30 days after the Effective Date (or such
longer period agreed to by the Administrative Agent), either (a) cause such
account to be subject to a deposit account control agreement or securities
account control agreement, as applicable, in form and substance satisfactory to
the Administrative Agent naming the Administrative Agent as the secured party
thereunder for the benefit of the Lenders, or (b) close such account and
transfer any funds therein to an account that otherwise meets the requirements
of this Section 9.17.  From and after the Effective Date, neither the Borrower
nor any other Credit Party shall deposit any funds or securities or other assets
into any Deposit Account or Securities Account (other than Excluded Accounts)
unless such Deposit Account or Securities Account is subject to a deposit
account control agreement or securities account control agreement, as
applicable, in form and substance satisfactory to the Administrative Agent and
naming the Administrative Agent as the secured party thereunder for the benefit
of the Lenders; provided that, the Borrower shall have thirty (30) days (or such
longer period as Administrative Agent may determine in its sole discretion)
following the Amendment No. 1 Effective Date to execute any such account control
agreement establishing a perfected Lien on such accounts.  Each deposit control
agreement will provide that the depositary bank will comply with instructions
originated by the Administrative Agent directing dispositions of funds in the
Deposit Account without further consent by the applicable Credit Party.  Each
securities account control agreement will provide that the securities
intermediary will comply with entitlement orders originated by the
Administrative Agent without further consent by the applicable Credit Party. 
The Administrative Agent agrees that it will not issue any such instructions or
entitlement orders or otherwise exercise any control right granted under any
such deposit account control agreement or securities account control agreement
unless (a) an Event of Default has occurred or (b) the Notes and the Loans then
outstanding have become due and payable in whole (and not merely in part),
whether at the due date thereof, by acceleration or otherwise.

 

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Section 9.18                             Unrestricted Subsidiaries. The Borrower
will:

 

(a)                                 cause the management, business and affairs
of its Subsidiaries to be conducted in such a manner (including, without
limitation, by keeping separate books of account, furnishing separate financial
statements of Unrestricted Subsidiaries to creditors and potential creditors
thereof and by not permitting properties of the Borrower and the Restricted
Subsidiaries to be commingled) so that each Unrestricted Subsidiary that is a
corporation or limited liability company will be treated as an entity separate
and distinct from the Borrower and the Restricted Subsidiaries;

 

(b)                                 not, and will not permit any of the
Restricted Subsidiaries to, incur, assume, guarantee or be or become liable for
any Indebtedness of any of the Unrestricted Subsidiaries, other than
(i) non-recourse pledges of Equity Interests in Unrestricted Subsidiaries
granted to secure Indebtedness of Unrestricted Subsidiaries and (ii) Investments
permitted under this Agreement; and

 

(c)                                  not permit any Unrestricted Subsidiary to
hold any Equity Interest in, or any Indebtedness of, the Borrower or any
Restricted Subsidiary.

 

Section 9.19                             Compliance with Anti-Corruption Laws,
Anti-Money Laundering Laws and Sanctions.  Borrower and the Restricted
Subsidiaries will comply in all respects with applicable Anti-Corruption Laws,
Anti-Money Laundering Laws and Sanctions.

 

ARTICLE X

NEGATIVE COVENANTS

 

A deviation from the provisions of this Article X shall not constitute an Event
of Default under this Agreement if such deviation is consented to in writing by
the Administrative Agent and Majority Lenders prior to the date of deviation.
The Borrower hereby covenants and agrees that on the Funding Date and
thereafter, until the Total Commitment and each Letter of Credit have terminated
(unless such Letters of Credit have been collateralized or other arrangements in
respect thereof have been made on terms and conditions reasonably satisfactory
to each applicable Issuing Bank following the termination of the Total
Commitment) and the Loans and Unpaid Drawings, together with interest, fees and
all other Obligations incurred hereunder (other than Hedging Obligations, Cash
Management Obligations or contingent indemnification obligations not then due
and payable), are paid in full,  Borrower will comply with the covenants
contained in this Article X.

 

Section 10.1                             Liens.  The Borrower shall not, and
shall not permit any Restricted Subsidiary to, create, incur, assume or permit
to exist any Lien, security interest or other encumbrance on any of its
Properties, except Permitted Liens.

 

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Section 10.2                             Sale of Assets.  The Borrower shall
not, and shall not permit any of its Restricted Subsidiaries to, sell lease,
assign, transfer or otherwise dispose of (each of the foregoing, a
“Disposition”), any of its Property, except that:

 

(a)                                 the Borrower and its Restricted Subsidiaries
may Dispose of inventory and other goods held for sale, including Hydrocarbons,
obsolete, worn out, used or surplus equipment, vehicles and other assets in the
ordinary course of business (including equipment that is no longer necessary for
the business of the Borrower or its Restricted Subsidiaries or is replaced by
equipment of at least comparable value and use);

 

(b)                                 the Borrower and its Restricted Subsidiaries
may Dispose of any Oil and Gas Properties (and including, but without
limitation, Dispositions in respect of production payments, net profits
interests, operating agreements, farm-outs, joint exploration and development
agreements and other agreements customary in the oil and gas industry for the
purpose of developing such Oil and Gas Properties or Equity Interests in
Restricted Subsidiaries owning Borrowing Base Properties); provided that such
Disposition is for Fair Market Value; provided, further, that in connection with
any Disposition of Borrowing Base Properties or Equity Interests in Restricted
Subsidiaries owning Borrowing Base Properties, in each case included in the most
recently delivered Reserve Report, no later than five Business Days prior to the
date of consummation of any such Disposition (or such shorter period as may be
consented to by the Administrative Agent in its sole discretion) the Borrower
shall provide notice to the Administrative Agent of such Disposition and the
Borrowing Base Properties so Disposed, the Borrowing Base shall be adjusted, if
applicable, in accordance with the provisions of Section 2.17(a); provided,
further, that to the extent that the Borrower is notified by the Administrative
Agent that a Borrowing Base Deficiency could result from an adjustment to the
Borrowing Base resulting from such Disposition, after the consummation of such
Disposition(s), the Borrower shall have received net cash proceeds, or shall
have cash on hand, sufficient to eliminate any such potential Borrowing Base
Deficiency;

 

(c)                                  the Borrower and its Restricted
Subsidiaries may Dispose of property or assets to the Borrower or to a
Restricted Subsidiary;

 

(d)                                 the Borrower and its Restricted Subsidiaries
may make Dispositions of Hydrocarbon Interests and related assets to which no
Proved Reserves are attributable and farm-outs of undeveloped acreage to which
no Proved Reserves are attributable and assignments in connection with such
farm-outs;

 

(e)                                  the Borrower and its Restricted
Subsidiaries may effect any transaction permitted by Section 10.1, Section 10.5
(excluding Section 10.5(iv)), Section 10.8 and Section 10.15;

 

(f)                                   the Borrower and its Restricted
Subsidiaries may Dispose of Liquid Investments or cash in the ordinary course;

 

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(g)                                  the Borrower and its Restricted
Subsidiaries may (i) enter into licenses of intellectual property in the
ordinary course of business and (ii) Dispose of or abandon intellectual property
that is no longer used or useful in the operation of the business;

 

(h)                                 the expiration or lapse of leases,
exploration tenement licenses and subleases or sublicenses in the ordinary
course of business shall be permitted;

 

(i)                                     the Borrower and its Restricted
Subsidiaries may make other Dispositions not consisting of Borrowing Base
Properties that have a Fair Market Value not to exceed an aggregate amount of
$5,000,000 in any fiscal year.

 

Upon the Borrower’s request, the Administrative Agent will promptly release its
Liens and security interests on all property that the Borrower is selling,
leasing, transferring or otherwise disposing of in compliance with this
Section 10.2.

 

Section 10.3                             Debt to EBITDAX Ratio.  Commencing with
the fiscal quarter ending March 31, 2017, the Borrower will not allow the Debt
to EBITDAX Ratio to exceed 4.0 to 1.0 as of the end of each fiscal quarter.

 

Section 10.4                             Current Ratio.  The Borrower will not
permit the ratio of Current Assets of the Borrower and its consolidated
Restricted Subsidiaries to the Current Liabilities of the Borrower and its
consolidated Restricted Subsidiaries to be less than 1.0 to 1.0, calculated at
the end of each fiscal quarter, commencing with the fiscal quarter ending
March 31, 2017.

 

Section 10.5                             Consolidations and Mergers.  The
Borrower will not, and will not permit any of the Restricted Subsidiaries to,
consolidate or merge with or into any other Person, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or dispose of all or
substantially all its business, assets or other properties, except that:

 

(i)                                     the Borrower may merge or consolidate
with another Person if the Borrower is the surviving entity in such merger;

 

(ii)                                  any Restricted Subsidiary may consolidate
or merge into or with, or be liquidated into, Borrower (if the Borrower is the
surviving entity in such consolidation merger) or any other Restricted
Subsidiary; provided that if such consolidation or merger involves a Guarantor,
a Guarantor shall be the surviving Person;

 

(iii)                               any Restricted Subsidiary may dispose of all
or substantially all of its assets (upon voluntary liquidation, dissolution,
winding up or otherwise) to the Borrower or any other Restricted Subsidiary;

 

(iv)                              dispositions permitted by Section 10.2
(excluding Section 10.2(e));

 

(v)                                 any Restricted Subsidiary may merge with or
into the Person such Restricted Subsidiary was formed to acquire in connection
with a Permitted Acquisition, provided that (i) a Subsidiary Guarantor shall be
the continuing or surviving entity or (ii) the continuing or surviving

 

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entity shall become a Subsidiary Guarantor in accordance with Section 9.11 in
connection therewith); and

 

(vi)                              any Person may merge into the Borrower or any
of its Restricted Subsidiaries in connection with a Permitted Acquisition;
provided that (i) in the case of a merger involving the Borrower or a Subsidiary
Guarantor, the continuing or surviving Person shall be the Borrower or such
Subsidiary Guarantor and (ii) the continuing or surviving Person shall be the
Borrower or a Restricted Subsidiary; and

 

(iii)                               the Borrower may effectuate the “Formation
Transactions” as set forth in the Form S-1;

 

provided that, in each case, after giving effect thereto, no Event of Default
shall have occurred and be continuing.

 

Section 10.6                             [Intentionally Omitted].

 

Section 10.7                             Indebtedness.  The Borrower will not,
and will not permit any of the Restricted Subsidiaries to, incur, create, assume
or in any manner become or be liable with respect to any Indebtedness, except
that the foregoing restrictions shall not apply to:

 

(a)                                 the Obligations arising under this Agreement
or the other Credit Documents;

 

(b)                                 Indebtedness of (i) the Borrower or any
Guarantor owing to the Borrower or any Subsidiary; provided that any such
Indebtedness owing by a Credit Party to a Subsidiary that is not a Guarantor
shall be subject to subordination terms contained in the Intercompany Note,
(ii) any Subsidiary that is not a Guarantor owing to any other Subsidiary that
is not a Guarantor and (iii) to the extent permitted by Section 10.15, any
Subsidiary that is not a Guarantor owing to the Borrower or any Guarantor;
provided that all such Indebtedness incurred pursuant to this clause (b) shall
be represented by the Intercompany Note and pledged to the Administrative Agent
for the benefit of the Secured Parties as Collateral pursuant to the terms of a
security agreement in the form reasonably prescribed by the Administrative
Agent;

 

(c)                                  Indebtedness which, in the aggregate,
together with all other Indebtedness permitted by this Section 10.7(c), does not
exceed $5,000,000 in principal amount outstanding;

 

(d)                                 Indebtedness in respect of Capital Leases or
purchase money financings in an aggregate principal amount outstanding at any
time not to exceed $5,000,000;

 

(e)                                  Indebtedness consisting of the financing of
insurance premiums in the ordinary course of business;

 

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(f)                                   Indebtedness existing on the Funding Date
that is described in the Form S-1; and

 

(g)                                  Indebtedness in respect of Permitted
Additional Debt; provided that immediately after giving effect to the incurrence
or issuance thereof, (i) the Borrower shall be in Pro Forma Compliance with the
covenants in Section 10.3 and Section 10.4, (ii) the Borrowing Base shall be
adjusted as set forth in Section 2.18(c) and (iii) if the Credit Parties would
not be in compliance with the Collateral Coverage Minimum after giving effect to
the incurrence of such Permitted Additional Debt, the one or more Credit Parties
shall have executed and delivered Security Documents, such that after giving
effect thereto, the Borrower shall be in compliance with the Collateral Coverage
Minimum as of the time of incurrence of such Permitted Additional Debt, and
thereafter, at all times during the period that any Permitted Additional Debt is
outstanding.

 

Section 10.8                             Restricted Payments.  The Borrower will
not, and will not permit any Restricted Subsidiary to, declare or pay any
dividend or distribution (whether in cash, securities or other property) or
purchase, redeem or otherwise acquire for value any of its Equity Interests now
or hereafter outstanding, return any capital to the holders of its Equity
Interests or make any distribution of its assets to the holders of its Equity
Interests (each a “Restricted Payment”), except that:

 

(a)                                 each of the Borrower and OpCo may make
Restricted Payments (excluding redemptions of Preferred Equity and the OpCo
Preferred Units, as applicable) to its respective Equity Holders, if and to the
extent that (i) such Restricted Payment is paid within 60 days after the date of
declaration thereof, (ii) as of the date of such declaration of such Restricted
Payment, no Event of Default or Borrowing Base Deficiency existed, (iii) as of
the date of such declaration, if such dividend or distribution had been made as
of such date of declaration, immediately after giving effect thereto, no Event
of Default or Borrowing Base Deficiency would have existed, (iv) immediately
after such Restricted Payment is made, the Borrower shall have Liquidity in an
amount that is not less than ten percent (10%) of the Loan Limit, (v) Borrower
is in Pro Forma Compliance with Section 10.3 immediately after giving effect to
such Restricted Payment and (vi) solely with respect to Restricted Payments by
OpCo to the holders of OpCo Common Units, such Restricted Payment is made
ratably to all holders of OpCo Common Units;

 

(b)                                 each of the Borrower and OpCo may make
Restricted Payments consisting of redemptions of the Apollo Group Preferred
Units and the OpCo Preferred Units, as applicable:

 

(i)                                     provided that, immediately after giving
effect to such Restricted Payment, (A) no Event of Default or Borrowing Base
Deficiency exists, (B) immediately after giving effect to such Restricted
Payment, the Borrower shall have Liquidity in an amount that is not less than
ten percent (10%) of the Loan Limit and (C) immediately after giving effect to
such Restricted Payment,  the Debt to EBITDAX Ratio of the Borrower, determined
on a basis described

 

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in the definition of “Pro Forma Compliance” shall not exceed 3.25 to 1.0, or

 

(ii)                                  with an amount equal to the net cash
proceeds derived from (A) the issuance of Equity Interests consisting of the
Borrower’s common stock or (B) the issuance of Equity Interests consisting of
Preferred Equity on terms reasonably satisfactory to the Majority Lenders and in
any event on terms and conditions no less favorable to the Borrower than the
Apollo Group Preferred Units, and, when taken as a whole, such Restricted
Payment is made within sixty (60) days after the issuance of the Equity
Interests that is made under sub-clause (A) or sub-clause (B) above.

 

(c)                                  the Borrower and Opco may declare and pay
dividends or distributions with respect to its Equity Interests (including
dividends or distributions with respect to the Apollo Group Preferred Units and
the OpCo Preferred Units, as applicable) payable solely in additional Equity
Interests (including additional Apollo Group Preferred Units and the OpCo
Preferred Units, as applicable, as payment in kind but excluding other
Disqualified Capital Stock);

 

(d)                                 the Borrower and OpCo may consummate any
Kimbell Class B/OpCo Unit for Kimbell Common Unit Exchange;

 

(e)                                  the Borrower may make Restricted Payments
pursuant to and in accordance with equity option plans or other benefit plans
for management, employees, directors and consultants of the Borrower and its
Subsidiaries;

 

(f)                                   OpCo may make Restricted Payments to the
Borrower with respect to its Equity Interests; and

 

(g)                                  Restricted Subsidiaries of the Borrower may
declare and pay dividends or distributions ratably with respect to their Equity
Interests to its direct parent that is the Borrower or a Subsidiary Guarantor.

 

Section 10.9                             Preferred Equity Units. The Borrower
shall not issue any Preferred Equity except for (a) the Apollo Group Preferred
Units (including Apollo Group Preferred Units issued as payment in kind),
(b) Preferred Equity issued to redeem the Apollo Group Preferred Units to the
extent permitted by Section 10.8(b) and (c) the dividend and the liquidation
preferences with respect to the general partner interests in the Borrower and
the Kimbell Class B Units as described in the Tax Change Memorandum (as defined
in Amendment No.1).  The Borrower shall not permit (i) any Restricted Subsidiary
to issue any preferred Equity Interests other than the OpCo Preferred Units or
(ii) OpCo to issue or permit to be held by any Person (other than the Borrower)
any Equity Interests having voting rights more favorable to the holders thereof
than the voting rights applicable to the OpCo Common Units on and as of the date
the Tax Change Transactions are consummated.

 

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Section 10.10                      Hedge Transactions.

 

(a)                                 The Borrower shall not, and shall not permit
any of its Restricted Subsidiaries to, enter into any Hedge Transactions other
than:

 

(i)                                     Hedge Transactions with respect to
interest rates that are entered into in the ordinary course of business and not
for purposes of speculation that (A) result in any Indebtedness of the Borrower
or any of its Restricted Subsidiaries that is subject to a floating interest
rate to be effectively subject to a fixed interest rate or that otherwise
mitigate or minimize the Borrower’s or such Restricted Subsidiary’s exposure to
fluctuations in the applicable floating interest rate, (B) at the time each such
Hedge Transaction is entered into, do not cause the aggregate notional amount of
all outstanding Hedge Transactions with respect to interest rates to exceed one
hundred percent (100%) of the then outstanding principal balance of such
floating rate Indebtedness, (C) do not have a scheduled term that extends beyond
the scheduled maturity date of the floating rate Indebtedness related to such
Hedge Transaction and (D) do not require the Borrower or any Restricted
Subsidiary to post money, assets or any other property as security against the
event of its non-performance, other than to the extent permitted under
Section 10.1; and

 

(ii)                                  Hedge Transactions with respect to
hydrocarbon prices that are entered into in the ordinary course of business for
hedging risk and not for purposes of speculation and that do not (determined
separately for each new Hedge Transaction as of the date such Hedge Transaction
is entered into) (a)  have Hedge Termination Dates longer than thirty six (36)
months from the effective date of the Hedge Transaction, and in no event will
any such Hedge Termination Date exceed one (1) year beyond the Maturity Date and
(b)  cause the aggregate notional volumes of Hydrocarbons under all such Hedge
Transactions then in effect, calculated separately for each of crude oil,
natural gas and natural gas liquids for each month to which such new Hedge
Transaction applies, to exceed (i) 80% of Borrower’s and its Restricted
Subsidiaries’ anticipated production of Proved Reserves that, in accordance with
the Petroleum Industry Standards, are classified as “Proved Developed Producing
Reserves” during any of the 36 months following such date, as determined based
on the most recent Reserve Report delivered pursuant to Sections 2.14 and 2.15
hereof, or (ii) zero thereafter, provided, however, In calculating such 80%
limit, all purchased put options or price floors shall be excluded, so long as
such put options or floors do not require payments by the Borrower and its
Restricted Subsidiaries other than those due at the time of purchase. The limits
in the foregoing sentence shall be calculated separately for Hedge Transactions
that hedge basis risk with respect to anticipated production and those that
hedge price risk with respect to anticipated production.  To the extent, if any,
that Borrower uses crude oil hedges to hedge natural gas liquids, such crude oil
hedges shall be treated as hedges of natural gas liquids rather than hedges of
crude oil.  Any Hedge Transaction permitted under this Section 10.10(b) shall be
with a counterparty that is either (i) the Administrative Agent or any Lender or
an Affiliate of the Administrative Agent or any Lender or (ii) a third party
approved in writing by the Administrative Agent with a credit rating of BBB+ or
better by

 

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S&P, and any successor thereto, or a rating of Baa1 or better by Moody’s and any
successor thereto.

 

(b)                                 The Borrower shall not effect any Hedge
Termination unless (i) the Borrower shall give the Administrative Agent 5 days’
prior written notice of any such Hedge Termination (other than a “Termination
Event” or “Event of Default” under a Hedge Transaction as to which the Borrower
cannot give advance notice, in which case the Borrower shall give prompt written
notice of such Hedge Termination), and (ii) if such Hedge Termination causes a
Borrowing Base Deficiency, the Borrower shall make any mandatory prepayments
required by Section 2.17.

 

(c)                                  The Borrower shall not, and shall not
permit any Restricted Subsidiary to, enter into any Hedge Transaction which
contains any requirement, agreement or covenant for the Borrower or any
Restricted Subsidiary to post collateral or margin to secure their obligations
under such Hedge Transaction or to cover market exposures; provided, however,
that the foregoing shall not prohibit or be deemed to prohibit the Obligations
from being secured by the Security Documents.

 

Section 10.11                      Passive Status of Borrower/OpCo. 
Notwithstanding anything to the contrary contained herein or in any other Credit
Document:

 

(a)                                 OpCo shall not engage in any operating or
business activities or other transactions other than its direct or indirect
ownership of Equity Interest in its Restricted Subsidiaries and shall not
directly hold Equity Interests of any Person other than such Restricted
Subsidiaries; provided that the following shall be permitted activities of OpCo:
(i) the maintenance of its legal existence (including the ability to incur fees,
costs and expenses relating to such maintenance), (ii) the performance of its
obligations with respect to the Credit Documents, (iii) payment of Taxes,
(iv) conduct of financial audits as provided hereunder, (v) providing
indemnification to officers, managers and directors, (vi) making Restricted
Payments to holders of its Equity Interests to the extent permitted by
Section 10.8, (vii) activities related to Hedge Transactions with Hedge Banks
permitted hereunder and Cash Management Agreements, and (viii) transactions
pursuant to the Management Services Agreement.

 

(b)                                 The Borrower shall not engage in any
operating or business activities or other transactions other than its ownership
of Equity Interest in OpCo and Merger Sub and shall not directly hold Equity
Interests of any Person other than OpCo and Merger Sub; provided that the
following shall be permitted activities of the Borrower: (i) the maintenance of
its legal existence (including the ability to incur fees, costs and expenses
relating to such maintenance), (ii) the performance of its obligations with
respect to the Credit Documents, (iii) payment of Taxes, (iv) conduct of
financial audits as provided hereunder, (v) providing indemnification to
officers, managers and directors, (vi) conduct business related to the listing
of its Equity Interests on a national exchange, (vii) making Restricted Payments
to holders of its Equity Interests to the extent permitted by Section 10.8,
(viii) activities related to Hedge Transactions permitted hereunder and Cash
Management Services and (ix) transactions pursuant to the Management Services
Agreement.

 

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Section 10.12                      Amendment of Organizational Documents.

 

(a)                                 The Borrower will not amend or modify its
organizational documents in a manner that would have a Material Adverse Effect
without obtaining the prior written consent of the Administrative Agent;
provided that for purposes of clarity, it is understood and agreed that (a) the
foregoing shall not prohibit changes to the organizational form of the Borrower
to the extent not otherwise prohibited hereunder, (b) the amendment to the
Borrower’s limited partnership agreement is permitted in connection with the
issuance of the Apollo Group Preferred Units as provided for in the Preferred
Unit Purchase Agreement and (c) amendments to the Borrower’s limited partnership
agreement as provided in connection with the Tax Change Transactions (as defined
in Amendment No.1).

 

(b)                                 The Borrower will not, and will not permit
any of its Restricted Subsidiaries, at any time on or after the Amendment No. 1
Effective Date, to amend modify or supplement (or enter into any agreement that
has the effect of amending, modifying or supplementing, other than, for the
avoidance of doubt, in connection with entry into the Preferred Equity
Transaction, as such term is defined in Amendment No. 1) the terms of any
Preferred Equity or the terms of any preferred Equity Interests of any
Restricted Subsidiary to the extent that the same could reasonably be expected
to be materially adverse to the Lenders (it being understood that (i) any
increase in the distribution rate (whether in cash or paid in kind), (ii) any
change to any mandatory redemption provision or put rights (or the addition of
other mandatory redemption provisions or put rights), (iii) any change to the
terms of thereof which results in any such Preferred Equity or preferred Equity
Interests constituting indebtedness under GAAP and (iv) any modification of any
covenant included in any such Preferred Equity or preferred Equity Interests
that makes such covenant materially more restrictive as to the Borrower or any
of its Restricted Subsidiaries (or any modification that adds a covenant that
results in any such Preferred Equity or preferred Equity Interests being
materially more restrictive as to the Borrower or any of its Restricted
Subsidiaries), in each case, shall be deemed to be materially adverse to the
Lenders).

 

(c)                                  The Borrower will not permit OpCo to amend,
modify or supplement (or enter into any agreement that has the effect of
amending, modifying or supplementing) its organizational documents (including
its certificate or articles of incorporation and the bylaws) in a manner that
could reasonably be expected to be materially adverse to the Lenders (it being
understood that (i) changes to the organizational form of OpCo from a limited
liability company or changes to the management of OpCo by the Borrower and
(ii) changes to permit distributions in respect of the OpCo Common Units to be
paid to the Borrower on a less than ratable basis, in each case, shall be deemed
to be materially adverse to the Lenders; provided, however, that the amendments
to OpCo’s organizations documents in connection with the Tax Change Transactions
(as defined in Amendment No.1) shall be deemed not to be materially adverse to
the Lenders.

 

Section 10.13                      Sanctions. The Borrower will not directly or
indirectly, use the proceeds of any Credit Event, or lend, contribute or
otherwise make available such proceeds to any Subsidiary, joint venture partner
or other individual or entity, to fund any activities of or business with any
individual or entity, or in any Designated Jurisdiction that, at the time of
such funding, is the subject of Sanctions, or in any other manner that will
result in a violation by any Lender,

 

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Administrative Agent, or Issuing Bank, of Sanctions or any Anti-Corruption Laws
or Anti-Money Laundering Laws.

 

Section 10.14                      New Accounts. The Borrower will not, and will
not permit any other Credit Party to deposit, credit or otherwise transfer any
Cash Receipts, securities, financial assets or any other property into, any
Deposit Account or Securities Account other than (x) Deposit Accounts and
Securities Accounts maintained with the Administrative Agent, (y) Excluded
Accounts and (z) such Deposit Account or Securities Account in respect of which
the Administrative Agent, for the benefit of the Secured Parties, shall have a
perfected Lien prior to the transfer or other deposit of any Cash Receipts,
securities, financial assets or any other property of any Credit Party therein;
provided that, Borrower shall have thirty (30) days (or such longer period as
Administrative Agent may determine in its sole discretion) following the
Amendment No. 1 Effective Date to execute any such account control agreement
establishing a perfected Lien on such accounts.

 

Section 10.15                      Limitation on Investments. The Borrower shall
not, nor shall it permit any of its Restricted Subsidiaries to, make or permit
to exist any loans, advances, or capital contributions to any other Person, or
purchase any Equity Interests or evidences of indebtedness of any Person (such
loans, advances, capital contributions to, purchases of Equity Interests
(including the making of any acquisition of Equity Interests), or purchase of
any evidences of indebtedness of any Person, collectively, “Investments”),
except:

 

(a)                                 Investments constituting Liquid Investments
at the time initially made;

 

(b)                                 the creation or acquisition of any
Restricted Subsidiaries (or of any Person who by virtue of such Investment
becomes a Restricted Subsidiary) in compliance with Section 9.11;

 

(c)                                  Investments in the direct ownership of Oil
and Gas Properties and Investments made in the ordinary course of business as a
means of actively exploiting, exploring for, acquiring, developing, processing,
gathering, marketing or transporting Hydrocarbons through agreements,
transactions, interests or arrangements which provide for the sharing of risks
or costs, jointly with third parties, including entering into operating
agreements, working interests, royalty interests, mineral leases, processing
agreements, farmouts, farm-in agreements, division orders, contracts for the
sale, transportation or exchange of oil and natural gas, unitization and pooling
declarations and agreements and area of mutual interest agreements, production
sharing agreements or other similar or customary agreement, transactions,
properties, interest and investments and expenditures in connection therewith;
provided that (i) no such Investment includes an Investment in any Equity
Interest in a Person, (ii) any Indebtedness incurred or Lien granted or
permitted to exist pursuant to such Investments is otherwise permitted under
Section 10.1 and Section 10.7, respectively, and (iii) such Investments are
taken into account in computing the net revenue interests and working interests
of the Borrower or any of its Restricted Subsidiaries set forth in the most
recent Reserve Report;

 

(d)                                 Accounts receivable arising in the ordinary
course of business;

 

(e)                                  Permitted Acquisitions;

 

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(f)                                   Investments by the Borrower in any
Guarantor or by any Guarantor in the Borrower or in any other Guarantor;

 

(g)                                  Investments consisting of Hedge
Transactions permitted under Section 10.10;

 

(h)                                 Investments (including, without limitation,
capital contributions) in general or limited partnerships or other types of
entities (each a “venture”) entered into by the Borrower or one of its
Restricted Subsidiaries with others in the ordinary course of business; provided
that (i) no Default or Event of Default exists at the time of, or would exist
after making any such Investment, (ii) any such venture is engaged exclusively
in oil and gas exploration, development, production, processing and related
activities, including transportation, (iii) the interest in such venture is
acquired in the ordinary course of business and on fair and reasonable terms and
(iv) such venture interests acquired and capital contributions made (valued as
of the date such interest was acquired or the contribution made) do not exceed,
in the aggregate at any time outstanding an amount equal to $10,000,000;

 

(i)                                     Investments in stock, obligations or
securities received in settlement of debts arising from Investments permitted
under this Section 10.15 owing to the Borrower or any of its Subsidiaries as a
result of a bankruptcy or other insolvency proceeding of the obligor;

 

(j)                                    Investments in Persons primarily engaged
in the oil and gas business made with cash otherwise permitted to be used for
Restricted Payments in accordance with Section 10.8;

 

(k)                                 loans and advances to officers, directors,
employees and consultants of the Borrower or any of its Restricted Subsidiaries
as permitted by applicable law provided that the aggregate principal amount
thereof outstanding at any time shall not exceed $1,000,000;

 

(l)                                     (i) Investments existing on, or made
pursuant to legally binding written commitments in existence on, the Effective
Date as set forth on Schedule 10.15, (ii) Investments existing on the Effective
Date of the Borrower or any Restricted Subsidiary in any other Subsidiary and
(iii) any extensions, renewals or reinvestments thereof, so long as the amount
of any Investment made pursuant to this clause (l) is not increased at any time
above the amount of such Investment set forth on Schedule 10.15;

 

(m)                             Investments held by a Person acquired (including
by way of merger or consolidation) after the Effective Date otherwise in
accordance with this Section 10.15 to the extent that such Investments were not
made in contemplation of or in connection with such acquisition, merger or
consolidation and were in existence on the date of such acquisition, merger or
consolidation;

 

(n)                                 Investments consisting of Dispositions,
consolidations and mergers, Indebtedness and Restricted Payments permitted under
Sections 10.2 (other than Section 10.2(e)), 10.5, 10.7 and 10.8; and

 

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(o)                                 Investments made to repurchase or retire
Equity Interests of the Borrower owned by any employee or any stock ownership
plan or key employee stock ownership plan of the Borrower (or any direct or
indirect parent thereof);

 

(p)                                 Investments constituting non-cash proceeds
of Dispositions of assets to the extent such Disposition is permitted by
Section 10.2;

 

(q)                                 Investments to the extent that payment for
such Investments is made with Equity Interests (other than Disqualified Capital
Stock) of the Borrower;

 

(r)                                    Investments in Unrestricted Subsidiaries
not to exceed $10,000,000 (measured as of the time made) in the aggregate at any
time; and

 

(s)                                   Investments made by the Borrower and its
Restricted Subsidiaries in any fiscal year and not otherwise permitted under
this Section 10.15 in an aggregate amount not to exceed $10,000,000 (measured as
of the time made) in such fiscal year.

 

Section 10.16                      Change in Business. The Borrower will not
fundamentally and substantively alter the character of its business, taken as a
whole, from the business conducted by it on the Effective Date, and other
business activities incidental, reasonably related or ancillary to any of the
foregoing.

 

Section 10.17                      Designation of Restricted and Unrestricted
Subsidiaries.

 

(a)                                 Unless designated as an Unrestricted
Subsidiary on Schedule 8.12 as of the date hereof or thereafter, in compliance
with Section 10.17(b) or (d), any Person that becomes a Subsidiary of the
Borrower or any of its Restricted Subsidiaries shall be classified as a
Restricted Subsidiary.

 

(b)                                 The Borrower may designate by written
notification thereof to the Administrative Agent, any Restricted Subsidiary
(other than OpCo), including a newly or to be formed or newly or to be acquired
Subsidiary, as an Unrestricted Subsidiary if (i) prior, and immediately after
giving effect, to such designation, neither a Default nor a Borrowing Base
Deficiency would exist, (ii) such designation is deemed to be an Investment in
an Unrestricted Subsidiary in an amount equal to the Fair Market Value as of the
date of such designation of the Borrower’s and its Restricted Subsidiaries’
direct ownership interests in such Subsidiary and such Investment would be
permitted to be made at the time of such designation under Section 10.15 and
(iii) the Borrower shall be in Pro Forma Compliance after giving effect to such
designation. Except as provided in this Section 10.17(b), no Restricted
Subsidiary may be designated as an Unrestricted Subsidiary.

 

(c)                                  The Borrower may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary if immediately after giving effect to
such designation, (i) the representations and warranties of the Borrower and its
Restricted Subsidiaries contained in each of the Loan Documents are true and
correct in all material respects on and as of such date as if made on and as of
the date of such redesignation (or, if stated to have been made expressly

 

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as of an earlier date, were true and correct in all material respects as of such
date), (ii) no Default exists, (iii) the Borrower complies with the requirements
of Section 9.11 and Section 9.18, (iv) the Borrower and/or one or more
Restricted Subsidiaries owns all of the Equity Interests in such Subsidiary and
(v) the Borrower shall be in Pro Forma Compliance after giving effect to such
designation. Any such designation shall be treated as a cash dividend to the
Borrower in an amount equal to the lesser of the fair market value of the
Borrower’s and its Restricted Subsidiaries’ direct ownership interests in such
Subsidiary or the amount of the Borrower’s and its Restricted Subsidiaries’
aggregate investment previously made for purposes of the limitation on
Investments under Section 10.15. Upon the designation of an Unrestricted
Subsidiary as a Restricted Subsidiary, all Investments previously made in such
Unrestricted Subsidiary shall no longer be counted in determining any limitation
on Investments under Section 10.15.

 

(d)                                 Each Subsidiary of an Unrestricted
Subsidiary shall automatically be designated as an Unrestricted Subsidiary.

 

(e)                                  Upon designation of a Restricted Subsidiary
as an Unrestricted Subsidiary in compliance with Section 10.17(b), (i) such
Subsidiary shall be automatically released from all obligations, if any, under
the Loan Documents, including the Guarantee and all other applicable Security
Documents and (ii) all Liens granted pursuant to the Guarantee and all other
applicable Security Documents on the property of, and the Equity Interests in,
such Unrestricted Subsidiary shall be automatically released.

 

ARTICLE XI

EVENTS OF DEFAULT

 

Upon the occurrence of any of the following specified events (each an “Event of
Default”):

 

Section 11.1                             Payments. The Borrower shall
(a) default in the payment when due of any principal of the Loans or (b)
default, and such default shall continue for three (3) Business Days, in the
payment when due of any interest on the Loans or any Unpaid Drawings, fees or of
any other amounts owing hereunder or under any other Credit Document (other than
any amount referred to in clause (a) above).

 

Section 11.2                             Representations, Etc. Any
representation, warranty or statement made or deemed made by any Credit Party
herein or in any other Credit Document or any certificate delivered or required
to be delivered pursuant hereto or thereto shall prove to be untrue in any
material respect on the date as of which made or deemed made.

 

Section 11.3                             Covenants. Any Credit Party shall:

 

(a)                                 default in the due performance or observance
by it of any term, covenant or agreement contained in Section 9.1(d)(i) and 9.5
(solely with respect to the Borrower), Section 9.17 or Article X; or

 

(b)                                 default in the due performance or observance
by it of any term, covenant or agreement (other than those referred to in
Section 11.1 or 11.2 or clause (a) of this

 

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Section 11.3) contained in this Agreement or any Security Document and such
default shall continue unremedied for a period of at least thirty (30) days
after receipt of written notice thereof by the Borrower from the Administrative
Agent.

 

Section 11.4                             Default Under Other Agreements. 
(i) The Borrower or any of its Restricted Subsidiaries shall default in any
payment with respect to any Material Indebtedness (other than the Indebtedness
described in Section 11.1) beyond the period of grace, if any, provided in the
instrument of agreement under which such Indebtedness was created, (ii) the
Borrower or any of its Restricted Subsidiaries shall default in the observance
or performance of any agreement or condition relating (other than a payment
default) to any such Material Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event (other
than a payment default) shall occur or condition exist (other than secured
Indebtedness that becomes due as a result of a Disposition (including as a
result of a casualty event) of the property or assets securing such Indebtedness
permitted under this Agreement), the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Material
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, any such Indebtedness to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, unless, in the case of each of the foregoing or (iii) a default or
other event or condition (other than termination events or equivalent events
pursuant to the terms of such Hedge Transactions) shall occur and be continuing
under any Hedging Transaction between any Credit Party and any Person which
results in a net payment being due by such Credit Party in excess of $10,000,000
and such payment is not paid when due (after giving effect to all grace
periods), unless in the case of each of (i)-(iii) of the foregoing, such holder
or holders shall have (or through its or their trustee or agent on its or their
behalf) waived such default in a writing to the Borrower.

 

Section 11.5                             Bankruptcy, Etc. The Borrower or any
Guarantor shall commence a voluntary case, proceeding or action concerning
itself under Title 11 of the United States Code (the “Bankruptcy Code”) or any
other applicable Debtor Relief Law; or an involuntary case, proceeding or action
is commenced against the Borrower or any Guarantor and the petition is not
dismissed or stayed within 60 days after commencement of the case, proceeding or
action, or the Borrower or the applicable Guarantor consents to the institution
of such case, proceeding or action prior to such 60-day period, or any order of
relief or other order approving any such case, proceeding or action is entered;
or a custodian (as defined in the Bankruptcy Code), receiver, receiver manager,
trustee, conservator, liquidator, examiner, rehabilitator, administrator or
similar Person is appointed for, or takes charge of, the Borrower or all or any
substantial portion of the property or business thereof; or the Borrower suffers
any appointment of any custodian, receiver, receiver manager, trustee,
conservator, liquidator, examiner, rehabilitator, administrator or the like for
it or any substantial part of its property or business to continue undischarged
or unstayed for a period of 60 days; or the Borrower makes a general assignment
for the benefit of creditors.

 

Section 11.6                             ERISA.

 

(a)                                 (i) Any Plan shall fail to satisfy the
minimum funding standard required for any plan year or part thereof or a waiver
of such standard or extension of any amortization

 

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period is sought or granted under Section 412 of the Code; (ii) any Plan is or
shall have been terminated or is the subject of termination proceedings under
ERISA (including the giving of written notice thereof); (iii) an event shall
have occurred or a condition shall exist in either case entitling the PBGC to
terminate any Plan or to appoint a trustee to administer any Plan (including the
giving of written notice thereof); (iv) any Plan shall have an accumulated
funding deficiency (whether or not waived); and (v) the Borrower or any ERISA
Affiliate has incurred or is likely to incur a liability to or on account of a
Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or
4204 of ERISA or Section 4971 or 4975 of the Code (including the giving of
written notice thereof); and

 

(b)                                 there would result from any event or events
set forth in clause (i) of this Section 11.6 the imposition of a lien, the
granting of a security interest, or a liability, or the reasonable likelihood of
incurring a lien, security interest or liability; and

 

(c)                                  such lien, security interest or liability
will or would be reasonably likely to have a Material Adverse Effect.

 

Section 11.7                             Guarantee. The Guarantee or any
material provision thereof shall cease to be in full force or effect (other than
pursuant to the terms hereof and thereof) or any Guarantor or any other Credit
Party shall assert in writing that any such Guarantor’s obligations under the
Guarantee are not to be in effect or are not to be legal, valid and binding
obligations (other than pursuant to the terms hereof or thereof).

 

Section 11.8                             Security Documents. The mortgages,
deeds of trust, security agreements or assignments of production or any other
Security Document pursuant to which assets of the Borrower and the Credit
Parties are pledged as Collateral or any material provision thereof shall cease
to be in full force or effect (other than pursuant to the terms hereof or
thereof) or any grantor thereunder or any other Credit Party shall assert in
writing that any grantor’s obligations under the mortgages, deeds of trust,
security agreements or assignments of production or any other Security Document
are not in effect or not legal, valid and binding obligations (other than
pursuant to the terms hereof or thereof).

 

Section 11.9                             Judgments. One or more monetary
judgments or decrees shall be entered against the Borrower or a Guarantor
involving a liability of an amount exceeding $15,000,000 in the aggregate for
all such judgments and decrees for the Borrower and the Guarantors (to the
extent not paid or covered by insurance provided by a carrier not disputing
coverage), which judgments are not discharged or effectively waived or stayed
for a period of 60 consecutive days.

 

Section 11.10                      Change of Control.  A Change of Control shall
have occurred.

 

Then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent may and, upon the written
request of the Majority Lenders, shall, by written notice to the Borrower, take
any or all of the following actions, without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower or
any other Credit Party, except as otherwise specifically provided for in this
Agreement (provided that, if an Event of Default specified in Section 11.5 shall
occur, the result that would

 

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occur upon the giving of written notice by the Administrative Agent as specified
in clauses (a), (b) and (c) below shall occur automatically without the giving
of any such notice): (a) declare the Total Commitment terminated, whereupon the
Commitment of each Lender shall forthwith terminate immediately and any fees
theretofore accrued shall forthwith become due and payable without any other
notice of any kind; (b) declare the principal of and any accrued interest and
fees in respect of any or all Loans and any or all Obligations owing hereunder
to be, whereupon the same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and/or (c) demand cash collateral in respect of
any outstanding Letter of Credit pursuant to Section 3.8(b) in an amount equal
to the aggregate Stated Amount of all Letters of Credit issued and then
outstanding. In addition, after the occurrence and during the continuance of an
Event of Default, the Administrative Agent and the Lenders will have all other
rights and remedies available at law and equity.

 

Section 11.11                      Application of Proceeds. Any amount received
by the Administrative Agent from any Credit Party (or from proceeds of any
Collateral) following any acceleration of the Obligations under this Agreement
or any Event of Default with respect to the Borrower under Section 11.5 shall be
applied:

 

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, disbursements and other
charges of counsel payable under Section 13.5 and amounts payable under
Article II) payable to the Administrative Agent in such Person’s capacity as
such;

 

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal, interest and Letter of
Credit Fees) payable to the Lenders and the Issuing Banks (including fees,
disbursements and other charges of counsel payable under Section 13.5) arising
under the Credit Documents and amounts payable under Article II, ratably among
them in proportion to the respective amounts described in this clause Second
payable to them;

 

Third, to payment of that portion of the Obligations constituting accrued and
unpaid Letter of Credit Fees and interest on the Loans and Unpaid Drawings,
ratably among the Lenders and the Issuing Banks in proportion to the respective
amounts described in this clause Third payable to them;

 

Fourth, (i) to payment of that portion of the Obligations constituting unpaid
principal of the Loans, the Unpaid Drawings and Obligations then owing under
Hedge Transactions and Cash Management Agreements and (ii) to Cash Collateralize
that portion of Letters of Credit outstanding comprising the aggregate undrawn
amount of Letters of Credit to the extent not otherwise Cash Collateralized by
the Borrower pursuant to Section 3.8, ratably among the Lenders, the Issuing
Banks, the Hedge Banks and the Cash Management Banks in proportion to the
respective amounts described in this clause Fourth held by them; provided that
(x) any such amounts applied pursuant to the foregoing clause (ii) shall be paid
to the Administrative Agent for the ratable account of the applicable Issuing
Bank to Cash Collateralize such Letters of Credit Outstanding, (y) subject to
Section 3.8, amounts used to Cash Collateralize the aggregate undrawn amount of
Letters

 

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of Credit pursuant to this clause Fourth shall be applied to satisfy drawings
under such Letters of Credit as they occur and (z) upon the expiration of any
Letter of Credit, the pro rata share of Cash Collateral attributable to such
expired Letter of Credit shall be distributed in accordance with this clause
Fourth;

 

Fifth, to the payment of all other Obligations of the Credit Parties owing under
or in respect of the Credit Documents that are due and payable to the
Administrative Agent and the other Secured Parties on such date, ratably based
upon the respective aggregate amounts of all such Obligations owing to the
Administrative Agent and the other Secured Parties on such date; and

 

Last, the balance, if any, after all of the Obligations have been paid in full,
to the Borrower or as otherwise required by Requirements of Law.

 

Subject to Section 3.8, amounts used to Cash Collateralize the aggregate undrawn
amount of Letters of Credit pursuant to clause Fourth above shall be applied to
satisfy drawings under such Letters of Credit as they occur. If any amount
remains on deposit as Cash Collateral after all Letters of Credit have either
been fully drawn or expired, such remaining amount shall be applied to the other
Obligations, if any, in the order set forth above.

 

Notwithstanding the foregoing, amounts received from the Borrower or any Credit
Party that is not an “eligible contract participant” under the Commodity
Exchange Act shall not be applied to any Excluded Swap Obligations (it being
understood, that in the event that any amount is applied to Obligations other
than Excluded Swap Obligations as a result of this clause, the Administrative
Agent shall make such adjustments as it determines are appropriate to
distributions pursuant to clause second above from amounts received from
“eligible contract participants” under the Commodity Exchange Act to ensure, as
nearly as possible, that the proportional aggregate recoveries with respect to
Obligations described in clause second above by the holders of any Excluded Swap
Obligations are the same as the proportional aggregate recoveries with respect
to other Obligations pursuant to clause second above).

 

ARTICLE XII
THE ADMINISTRATIVE AGENT

 

Section 12.1                             Appointment.

 

(a)                                 Each Lender hereby irrevocably designates
and appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Credit Documents and irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Credit Documents and to exercise
such powers and perform such duties as are expressly 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 provisions of this Article XII (other than Section 12.1(b) with respect to
the Joint Lead Arrangers and Section 12.9 with respect to the Borrower) are
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Agent and the Lenders, and the Borrower shall not have rights as third party
beneficiary of any such provision. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Credit Document or otherwise exist against the
Administrative Agent.

 

(b)                                 Neither the Joint Lead Arrangers nor the
Co-Syndication Agents, in their capacities as such, shall have any obligations,
duties or responsibilities under this Agreement but shall be entitled to all
benefits of this Article XII.

 

Section 12.2                             Exculpatory Provisions. Neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Credit Document (except for its or such Person’s own
gross negligence or willful misconduct, as determined in the final judgment of a
court of competent jurisdiction, in connection with its duties expressly set
forth herein) or (b) responsible in any manner to any of the Lenders or any
participant for any recitals, statements, representations or warranties made by
any of the Borrower, any other Credit Party or any officer thereof contained in
this Agreement or any other Credit Document or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Credit Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Credit Document,
or, except with respect to any physical certificate or instrument representing
pledged debt securities or pledged stock (in each case, as defined in the
Security Agreement) in the possession of the Administrative Agent, the
perfection or priority of any Lien or security interest created or purported to
be created under the Security Documents or for any failure of the Borrower or
any other Credit Party to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Credit
Document, or to inspect the properties, books or records of any Credit Party or
any Affiliate thereof.

 

Section 12.3                             Reliance by the Administrative Agent.
The Administrative Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order or
other document or instruction believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the Lender specified in the Register
with respect to any amount owing hereunder as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Credit Document unless it shall first receive such advice or
concurrence of the Majority Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
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taking or continuing to take any such action. The Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Credit Documents in accordance with a request of the
Majority Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans; provided that the Administrative Agent shall not be required to take
any action that, in its opinion or in the opinion of its counsel, may expose it
to liability or that is contrary to any Credit Document or applicable
Requirements of Law. For purposes of determining compliance with the conditions
specified in Article VI and Article VII on the Effective Date, each Lender that
has signed this Agreement 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 a
Lender unless the Administrative Agent shall have received notice from such
Lender prior to the proposed Effective Date specifying its objection thereto.

 

Section 12.4                             Notice of Default. The Administrative
Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless the Administrative Agent has
received notice from a Lender or the Borrower referring to this Agreement,
describing 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, it shall give notice thereof to the Lenders. The Administrative Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Majority 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 interests of the Lenders except to the extent that
this Agreement requires that such action be taken only with the approval of the
Majority Lenders or each individual lender, as applicable.

 

Section 12.5                             Non-Reliance on the Administrative
Agent and Other Lenders. Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Borrower or any other Credit Party, shall be deemed
to constitute any representation or warranty by the Administrative Agent to any
Lender or any Issuing Bank. Each Lender and each Issuing Bank represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and each other Credit Party and
made its own decision to make its Advances hereunder and enter into this
Agreement. Each Lender also represents 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 credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Credit Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and any other Credit Party. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, assets, operations, properties, financial

 

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condition, prospects or creditworthiness of the Borrower or any other Credit
Party that may come into the possession of the Administrative Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

 

Section 12.6                             Indemnification. The Lenders severally
agree to indemnify the Administrative Agent in its capacity as such (to the
extent not reimbursed by the Credit Parties and without limiting the obligation
of the Credit Parties to do so), ratably according to their respective portions
of the Commitments or Loans, as applicable, outstanding in effect on the date on
which indemnification is sought (or, if indemnification is sought after the date
upon which the Commitments shall have terminated and the Loans shall have been
paid in full, ratably in accordance with their respective portions of the Total
Outstandings in effect immediately prior to such date), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever that may at any
time occur (including at any time following the payment of the Loans) be imposed
on, incurred by or asserted against the Administrative Agent in any way relating
to or arising out of the Commitments, this Agreement, any of the other Credit
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable to the Administrative Agent for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such Administrative Agent’s gross negligence, bad faith or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction; provided, further, that no action taken in accordance with the
directions of the Majority Lenders shall be deemed to constitute gross
negligence, bad faith or willful misconduct for purposes of this Section 12.6.
In the case of any investigation, litigation or proceeding giving rise to any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
occur (including at any time following the payment of the Loans), this
Section 12.6 applies whether any such investigation, litigation or proceeding is
brought by any Lender or any other Person. Without limitation of the foregoing,
each Lender shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including attorneys’ fees)
incurred by such 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 rendered in respect of rights or responsibilities under, this Agreement,
any other Credit Document, or any document contemplated by or referred to
herein, to the extent that such Agent is not reimbursed for such expenses by or
on behalf of the Borrower; provided that such reimbursement by the Lenders shall
not affect the Borrower’s continuing reimbursement obligations with respect
thereto. If any indemnity furnished to the Administrative Agent for any purpose
shall, in the opinion of the Administrative Agent, be insufficient or become
impaired, the Administrative Agent may call for additional indemnity and cease,
or not commence, to do the acts indemnified against until such additional
indemnity is furnished; provided, in no event shall this sentence require any
Lender to indemnify the Administrative Agent against any liability, obligation,
loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in
excess of such Lender’s pro rata portion thereof; and provided further, this
sentence shall not be deemed to require any Lender to indemnify the
Administrative Agent against any liability, obligation, loss, damage, penalty,
action, judgment, suit, cost, expense or disbursement resulting from the
Administrative Agent’s gross negligence,

 

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bad faith or willful misconduct. The agreements in this Section 12.6 shall
survive the payment of the Loans and all other amounts payable hereunder.

 

Section 12.7                             The Administrative Agent in Its
Individual Capacity. The Administrative Agent and its Affiliates may make loans
to, accept deposits from and generally engage in any kind of business with the
Borrower and any other Credit Party as though the Administrative Agent were not
the Administrative Agent hereunder and under the other Credit Documents. With
respect to the Loans made by it, the Administrative Agent shall have the same
rights and powers under this Agreement and the other Credit Documents as any
Lender and may exercise the same as though it were not the Administrative Agent,
and the terms “Lender” and “Lenders” shall include the Administrative Agent in
its individual capacity.

 

Section 12.8                             Successor Agents. The Administrative
Agent may at any time give notice of its resignation to the Lenders, the Issuing
Banks and the Borrower. If the Administrative Agent becomes a Defaulting Lender,
then such Administrative Agent may be removed as the Administrative Agent, at
the reasonable request of the Borrower and the Majority Lenders. Upon receipt of
any such notice of resignation or removal, as the case may be, the Majority
Lenders shall have the right, subject to the consent of the Borrower (not to be
unreasonably withheld or delayed) so long as no Default under Section 11.1 or
11.5 is continuing, to appoint a successor, which shall be a bank with an office
in the United States, or an Affiliate of any such bank with an office in the
United States. If, in the case of a resignation of a retiring Administrative
Agent, no such successor shall have been so appointed by the Majority Lenders
and shall have accepted such appointment within 30 days after the retiring Agent
gives notice of its resignation, then the retiring Administrative Agent may on
behalf of the Lenders and the Issuing Banks, appoint a successor Agent meeting
the qualifications set forth above. Whether or not a successor has been
appointed, such resignation shall become effective at the end of such 30-day
period. Upon the acceptance of a successor’s appointment as the Administrative
Agent hereunder, and upon the execution and filing or recording of such
financing statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Majority Lenders may
request, in order to continue the perfection of the Liens granted or purported
to be granted by the Security Documents, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent, and the retiring Administrative
Agent shall be discharged from all of its duties and obligations hereunder or
under the other Credit Documents (if not already discharged therefrom as
provided above in this Section 12.8). The fees payable by the Borrower
(following the effectiveness of such appointment) to the Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the retiring Administrative
Agent’s resignation hereunder and under the other Credit Documents, the
provisions of this Article XII (including Section 12.6) and Section 13.5 shall
continue in effect for the benefit of such retiring Administrative Agent, and
its Related Parties in respect of any actions taken or omitted to be taken by
any of them while the retiring Administrative Agent was acting as the
Administrative Agent.

 

Any resignation of any Person as Administrative Agent pursuant to this
Section 12.8 shall also constitute its resignation as Issuing Bank. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder,
(a) such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring Issuing Bank, (b) the retiring
Issuing

 

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Bank shall be discharged from all of its respective duties and obligations
hereunder or under the other Credit Documents, and (c) the successor Issuing
Bank shall issue letters of credit in substitution for the Letters of Credit, if
any, outstanding at the time of such succession or make other arrangements
satisfactory to the retiring Issuing Bank to effectively assume the obligations
of the retiring Issuing Bank with respect to such Letters of Credit.

 

Section 12.9                             Withholding Tax. To the extent required
by any applicable Requirement of Law, the Administrative Agent may withhold from
any payment to any Lender an amount equivalent to any applicable withholding
tax. If the Internal Revenue Service or any authority of the United States or
other jurisdiction asserts a claim that the Administrative Agent did not
properly withhold tax from amounts paid to or for the account of any Lender for
any reason (including because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify the Administrative
Agent of a change in circumstances that rendered the exemption from, or
reduction of, withholding tax ineffective), such Lender shall indemnify the
Administrative Agent (to the extent that the Administrative Agent has not
already been reimbursed by any applicable Credit Party and without limiting the
obligation of any applicable Credit Party to do so) fully for all amounts paid,
directly or indirectly, by the Administrative Agent as Tax or otherwise,
including penalties, additions to Tax and interest, together with all expenses
incurred, including legal expenses, allocated staff costs and any out of pocket
expenses. Each Lender hereby authorizes the Administrative Agent to set off and
apply any and all amounts at any time owing to such Lender under this Agreement
or any other Credit Document against any amount due to the Administrative Agent
under this Section 12.9. For the avoidance of doubt, for purposes of this
Section 12.9, the term “Lender” includes any Issuing Bank.

 

Section 12.10                      Security Documents and Guarantee. Each
Secured Party hereby further authorizes the Administrative Agent, on behalf of
and for the benefit of Secured Parties, to be the agent for and representative
of the Secured Parties with respect to the Collateral and the Security
Documents. Subject to Section 13.1, without further written consent or
authorization from any Secured Party or the Administrative Agent, as applicable,
may (a) execute any documents or instruments necessary in connection with a
Disposition of assets permitted by this Agreement, (b) release any Lien
encumbering any item of Collateral that is the subject of such Disposition of
assets or with respect to which Majority Lenders (or such other Lenders as may
be required to give such consent under Section 13.1) have otherwise consented or
(c) release any applicable Guarantor from the Guarantee in connection with such
Disposition or with respect to which Majority Lenders (or such other Lenders as
may be required to give such consent under Section 13.1) have otherwise
consented. The Lenders and the Issuing Banks (including in their capacities as
potential Cash Management Banks and potential Hedge Banks) irrevocably agree
that (x) the Administrative Agent may, without any further consent of any
Lender, enter into or amend any intercreditor agreement with the representatives
of the holders of Indebtedness that is permitted to be secured by a Lien on the
Collateral that is permitted under this Agreement, (y) the Administrative Agent
may rely exclusively on a certificate of an Authorized Officer of the Borrower
as to whether any such other Liens are permitted and (z) any such intercreditor
agreement referred to in clause (x) above, entered into by the Administrative
Agent, shall be binding on the Secured Parties. Furthermore, the Lenders and the
Issuing Banks (including in their capacities as potential Cash Management Bank
and potential Hedge Banks) hereby authorize the Administrative Agent to
subordinate any Lien on any property granted to or held by the Administrative
Agent under any

 

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Credit Document to the holder of any Lien on such property that is a Permitted
Lien; provided that prior to any such request, the Borrower shall have in each
case delivered to the Administrative Agent a certificate of an Authorized
Officer of the Borrower certifying that such subordination is permitted under
this Agreement.

 

Section 12.11                      Right to Realize on Collateral and Enforce
Guarantee. Anything contained in any of the Credit Documents to the contrary
notwithstanding, the Borrower, the Administrative Agent and each Secured Party
hereby agree that (a) no Secured Party shall have any right individually to
realize upon any of the Collateral or to enforce the Guarantee, it being
understood and agreed that all powers, rights and remedies hereunder may be
exercised solely by the Administrative Agent, on behalf of the Secured Parties
in accordance with the terms hereof and all powers, rights and remedies under
the Security Documents may be exercised solely by the Administrative Agent, and
(b) in the event of a foreclosure by the Administrative Agent on any of the
Collateral pursuant to a public or private sale or other disposition, the
Administrative Agent or any Lender may be the purchaser or licensor of any or
all of such Collateral at any such sale or other disposition and the
Administrative Agent, as agent for and representative of the Secured Parties
(but not any Lender or Lenders in its or their respective individual capacities
unless the Majority Lenders shall otherwise agree in writing) shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any such public sale, to
use and apply any of the Obligations as a credit on account of the purchase
price for any collateral payable by the Administrative Agent at such sale or
other disposition.

 

Section 12.12                      The Administrative Agent May File Proofs of
Claim. In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding, constituting an Event of Default under Section 11.5, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

 

(a)                                 to file and prove a claim for the whole
amount of the principal and interest owing and unpaid in respect of the Loans
and all other Indebtedness that is owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the claims of the
Lenders and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders and the
Administrative Agent and their respective agents and counsel, to the extent due
under Section 13.5) allowed in such judicial proceeding; and

 

(b)                                 to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, to the extent due under
Section 13.5.

 

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

 

ARTICLE XIII

MISCELLANEOUS

 

Section 13.1                             Amendments, Waivers and Releases.

 

(a)                                 Except as expressly set forth in this
Agreement, neither this Agreement nor any other Credit Document, nor any terms
hereof or thereof, may be amended, supplemented or modified except in accordance
with the provisions of this Section 13.1. The Majority Lenders may, or, with the
written consent of the Majority Lenders, the Administrative Agent shall, from
time to time, (i) enter into with the relevant Credit Party or Credit Parties
written amendments, supplements or modifications hereto and to the other Credit
Documents for the purpose of adding any provisions to this Agreement or the
other Credit Documents or changing in any manner the rights of the Lenders or of
the Credit Parties hereunder or thereunder or (ii) waive in writing, on such
terms and conditions as the Majority Lenders or the Administrative Agent may
specify in such instrument, any of the requirements of this Agreement or the
other Credit Documents or any Default or Event of Default and its consequences;
provided, however, that each such waiver and each such amendment, supplement or
modification shall be effective only in the specific instance and for the
specific purpose for which given; provided, further, that no such waiver and no
such amendment, supplement or modification shall (A) forgive or reduce any
portion of any Loan or reduce the stated rate (it being understood that only the
consent of the Majority Lenders shall be necessary to waive any obligation of
the Borrower to pay interest at the Default Rate or amend Section 2.7(e)), or
forgive any portion, or extend the date for the payment, of any interest or fee
payable hereunder (other than as a result of waiving the applicability of any
post-default increase in interest rates and any change due to a change in the
Borrowing Base or Available Commitment), or extend the final expiration date of
any Lender’s Commitment (provided that it is being understood that waivers or
modifications of conditions precedent, covenants, Defaults or Events of Default
shall not constitute an increase of the Commitment of any Lender) or extend the
final expiration date of any Letter of Credit beyond the L/C Maturity Date, or
increase the amount of the Commitment of any Lender, or make any Loan, interest,
fee or other amount payable in any currency other than Dollars, in each case
without the written consent of each Lender directly and adversely affected
thereby, or (B) amend, modify or waive any provision of this Section 13.1 in a
manner that would reduce the voting rights of any Lender, or reduce the
percentages specified in the definitions of the terms “Majority Lenders” or
“Required Lenders,” consent to the assignment or transfer by the Borrower of its
rights and obligations under any Credit Document to which it is a party, in each
case without the written consent of each Lender directly and adversely affected
thereby, or (C) amend the provisions of Section 11.11 or any analogous provision
of any Security Document, in a manner that would by its terms alter the pro rata
sharing of payments required thereby, without the prior written consent of each
Lender directly and adversely affected thereby, or (D) amend,

 

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modify or waive any provision of Article XII without the written consent of the
then-current Administrative Agent, or any other former Administrative Agent to
whom Article XII then applies in a manner that directly and adversely affects
such Person, or (E) amend, modify or waive any provision of Article III with
respect to any Letter of Credit without the written consent of each Issuing Bank
to whom Article III then applies in a manner that directly and adversely affects
such Person, or (F) release all or substantially all of the Guarantors under the
Guarantee (except as expressly permitted by the Guarantee or this Agreement)
without the prior written consent of each Lender, or (G) release all or
substantially all of the Collateral under the Security Documents (except as
expressly permitted by the Security Documents or this Agreement) without the
prior written consent of each Lender, or (H) increase the Borrowing Base without
the written consent of the Lenders (other than Defaulting Lenders), decrease or
maintain the Borrowing Base without the written consent of the Required Lenders
(other than Defaulting Lenders) or otherwise modify Sections 2.14, 2.15, 2.16 or
2.17 if such modification would have the effect of increasing the Borrowing Base
without the written consent of the Lenders (other than Defaulting Lenders);
provided that a scheduled redetermination of the Borrowing Base under
Section 2.14 may be postponed by the Required Lenders, or (J) affect the rights
or duties of, or any fees or other amounts payable to, the Administrative Agent
without the prior written consent of such Agent. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the
affected Lenders and shall be binding upon the Borrower, such Lenders, the
Administrative Agent and all future holders of the affected Loans. In the case
of any waiver, the Borrower, the Lenders and the Administrative Agent shall be
restored to their former positions and rights hereunder and under the other
Credit Documents, and any Default or Event of Default waived shall be deemed to
be cured and not continuing; it being understood that no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereon. In connection with the foregoing provisions, the
Administrative Agent may, but shall have no obligations to, with the concurrence
of any Lender, execute amendments, modifications, waivers or consents on behalf
of such Lender whose consent is required hereunder.

 

(b)                                 Without the consent of any Lender or Issuing
Bank, the Credit Parties and the Administrative Agent may (in their respective
sole discretion, or shall, to the extent required by any Credit Document) enter
into any amendment, modification or waiver of any Credit Document, or enter into
any new agreement or instrument, to effect the granting, perfection, protection,
expansion or enhancement of any security interest in any Collateral or
additional property to become Collateral for the benefit of the Secured Parties,
or as required by local law to give effect to, or protect any security interest
for the benefit of the Secured Parties, in any property or so that the security
interests therein comply with applicable law or this Agreement or in each case
to otherwise enhance the rights or benefits of any Lender under any Credit
Document.

 

Section 13.2                             Notices. Unless otherwise expressly
provided herein, all notices and other communications provided for hereunder or
under any other Credit Document shall be in writing (including by facsimile
transmission). All such written notices shall be mailed, faxed or delivered to
the applicable address, facsimile number or electronic mail address, and all
notices and other

 

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communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:

 

(a)                                 if to the Borrower, the Administrative Agent
or any Issuing Bank, to the address, facsimile number, electronic mail address
or telephone number specified for such Person on Schedule 13.2 or to such other
address, facsimile number, electronic mail address or telephone number as shall
be designated by such party in a notice to the other parties; and

 

(b)                                 if to any other Lender, to the address,
facsimile number, electronic mail address or telephone number specified in its
Administrative Questionnaire or to such other address, facsimile number,
electronic mail address or telephone number as shall be designated by such party
in a notice to the Borrower, the Administrative Agent and the Issuing Banks.

 

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, three Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail, when delivered; provided that notices and other communications to the
Administrative Agent or the Lenders pursuant to Sections 2.1, 2.3, 2.5, 2.8, 4.2
and 5.1 shall not be effective until received.

 

Section 13.3                             No Waiver; Cumulative Remedies. No
failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder or under the other Credit Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by Requirements of Law.

 

Section 13.4                             Survival of Representations and
Warranties. All representations and warranties made hereunder, in the other
Credit Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.

 

Section 13.5                             Payment of Expenses; Indemnification.
The Borrower agrees (a) to pay or reimburse the Administrative Agent for all its
reasonable and documented out-of-pocket costs and expenses incurred in
connection with the preparation and execution and delivery of, and any
amendment, waiver, supplement or modification to, this Agreement and the other
Credit Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including the reasonable fees, disbursements
and other charges of Murphy Mahon Keffler Farrier, LLP, in its capacity as
counsel to the Administrative Agent, and one counsel in each appropriate local
jurisdiction (excluding any allocated costs of in-house counsel), (b) to pay or
reimburse each Issuing Bank and the Administrative Agent for all its reasonable
and documented out-of-pocket

 

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costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Agreement, the other Credit Documents and any such
other documents, including the reasonable fees, disbursements and other charges
of one counsel to the Administrative Agent, (c) to pay, indemnify and hold
harmless each Lender and the Administrative Agent from any and all recording and
filing fees and (d) to pay, indemnify and hold harmless each Lender, Issuing
Bank and the Administrative Agent and their respective Related Parties from and
against any and all other liabilities, obligations, losses, damages, penalties,
claims, demands, actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever, whether or not such proceedings are brought by
the Borrower, any of its Related Parties or any other third Person, including
reasonable and documented fees, disbursements and other charges of one primary
counsel for all such Persons, taken as a whole, and, if necessary, by a single
firm of local counsel in each appropriate jurisdiction for all such Persons,
taken as a whole (unless there is an actual or perceived conflict of interest in
which case each such Person may, with the consent of the Borrower (not to be
unreasonably withheld or delayed), retain its own counsel), with respect to
(i) the execution, delivery, enforcement, performance and administration of this
Agreement, the other Credit Documents and any such other documents and (ii) any
Loan or Letter of Credit or the use of the proceeds therefrom (including any
refusal by any Issuing Bank to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit), including, without limitation,
any of the foregoing relating to the violation of, noncompliance with or
liability under any Environmental Law (other than by such indemnified person or
any of its Related Parties (other than any trustee or advisor)) or to any actual
or alleged presence, release or threatened release of Hazardous Materials
involving or attributable to the Borrower, any of its Restricted Subsidiaries or
any of the Oil and Gas Properties (all the foregoing in this clause (d),
collectively, the “Indemnified Liabilities”); provided that the Borrower shall
have no obligation hereunder to the Administrative Agent or any Lender or any of
their respective Related Parties with respect to Indemnified Liabilities to the
extent that such Indemnified Liabilities have resulted from (i) the gross
negligence, bad faith or willful misconduct of the party to be indemnified or
any of its Related Parties as determined by a final non-appealable judgment of a
court of competent jurisdiction, (ii) any material breach of any Credit Document
by the party to be indemnified or (iii) disputes, claims, demands, actions,
judgments or suits not arising from any act or omission by the Borrower or its
Affiliates, brought by an indemnified Person against any other indemnified
Person (other than disputes, claims, demands, actions, judgments or suits
involving claims against the Administrative Agent in its capacity as such). No
Person entitled to indemnification under clause (d) of this Section 13.5 shall
be liable for any damages arising from the use by others of any information or
other materials obtained through internet, electronic, telecommunications or
other information transmission systems (including IntraLinks or SyndTrak Online)
in connection with this Agreement, except to the extent that such damages have
resulted from the willful misconduct, bad faith or gross negligence of the party
to be indemnified or any of its Related Parties (as determined by a court of
competent jurisdiction in a final and non-appealable decision), nor (except
solely as a result of the indemnification obligations of the Borrower or any of
its Restricted Subsidiaries set forth above) shall any such Person, the Borrower
or any of its Restricted Subsidiaries have any liability for any special,
punitive, indirect or consequential damages (including, without limitation, any
loss of profits, business or anticipated savings) relating to this Agreement or
any other Credit Document or arising out of its activities in connection
herewith or therewith (whether before or after the Effective Date). All amounts
payable under this Section 13.5 shall be paid within ten (10) Business

 

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Days of receipt by the Borrower of an invoice relating thereto setting forth
such expense in reasonable detail, accompanied, if requested by the Borrower, by
reasonable supporting documentation. The agreements in this Section 13.5 shall
survive repayment of the Loans and all other amounts payable hereunder. This
Section 13.5 shall not apply with respect to any Taxes other than Taxes that
represent liabilities, obligations, losses, damages, penalties, claims, demands,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever resulting from a non-Tax claim, which shall be governed
exclusively by Section 5.4 and, to the extent set forth therein, Sections 2.10
and 3.5.

 

Section 13.6                             Successors and Assigns; Participations
and Assignments.

 

(a)                                 The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of each Issuing
Bank that issues any Letter of Credit), except that (i) the Borrower may not
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of the Administrative Agent and each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section 13.6. Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of each Issuing Bank that issues any
Letter of Credit) (the “Participants”) (to the extent provided in clause (c) of
this Section 13.6) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, each Issuing Bank and the Lenders
and each other Person entitled to indemnification under Section 13.5) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)                                 (i) Subject to the conditions set forth in
clause (b)(ii) below, any Lender may at any time assign to one or more assignees
(other than the Borrower, its Subsidiaries, any natural person or any Defaulting
Lender) all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans (including
participations in L/C Obligations) at the time owing to it) with the prior
written consent of:

 

(A)                               the Borrower; provided that no consent of the
Borrower shall be required for an assignment if an Event of Default under
Section 11.1 or Section 11.5 has occurred and is continuing or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund; and

 

(B)                               the Administrative Agent and each Issuing Bank
(in each case, not to be unreasonably withheld or delayed).

 

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

 

(A)                               except in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the
entire remaining

 

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amount of the assigning Lender’s Commitment or Loans, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 and increments of $1,000,000 in excess thereof, unless each of the
Borrower, each Issuing Bank and the Administrative Agent otherwise consents
(which consents shall not be unreasonably withheld or delayed); provided that no
such consent of the Borrower shall be required if an Event of Default under
Section 11.1 or Section 11.5 has occurred and is continuing; provided, further,
that contemporaneous assignments to a single assignee made by Affiliates of
Lenders and related Approved Funds shall be aggregated for purposes of meeting
the minimum assignment amount requirements stated above;

 

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

 

(C)                               the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Acceptance, together
with a processing and recordation fee in the amount of $3,500; provided that the
Administrative Agent may, in its sole discretion, elect to waive such processing
and recordation fee in the case of any assignment; and

 

(D)                               the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire and
applicable Tax forms (including those described in Section 5.4), as applicable.

 

(iii)                               Subject to acceptance and recording thereof
pursuant to clause (b)(iv) of this Section 13.6, from and after the effective
date specified in each Assignment and Acceptance, the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.10, 2.12, 3.5, 5.4 and 13.5). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 13.6 shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with clause (c) of this Section 13.6.

 

(iv)                              The Administrative Agent, acting for this
purpose as an agent of the Borrower, shall maintain at the Administrative
Agent’s Office a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the

 

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names and addresses of the Lenders, and the Commitment of, and principal amount
(and stated interest amounts) of the Loans and L/C Obligations and any payment
made by each Issuing Bank under any applicable Letter of Credit owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”). Further,
the Register shall contain the name and address of the Administrative Agent and
the lending office through which each such Person acts under this Agreement. The
entries in the Register shall be conclusive absent manifest error, and the
Borrower, the Administrative Agent, each Issuing Bank and the Lenders shall
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by the
Borrower, each Issuing Bank, and, solely with respect to itself, each other
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

 

(v)                                 Upon its receipt of a duly completed
Assignment and Acceptance executed by an assigning Lender and an assignee, the
assignee’s completed Administrative Questionnaire (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in clause (b) of this Section 13.6 (unless waived) and any written consent to
such assignment required by clause (b) of this Section 13.6, the Administrative
Agent shall accept such Assignment and Acceptance and record the information
contained therein in the Register.

 

(c)                                  (i) Any Lender may, without the consent of
the Borrower, the Administrative Agent or any Issuing Bank, sell participations
to one or more banks or other entities other than any Defaulting Lender, the
Borrower or any Subsidiary of the Borrower (each, a “Participant”) in all or a
portion of such Lender’s rights and obligations under this Agreement (including
all or a portion of its Commitments and the Loans owing to it); provided that
(A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (C) the Borrower, the Administrative
Agent, each Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement or any other Credit
Document; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in clause (i) or (ii) of the second proviso of
the second sentence of Section 13.1(a) that affects such Participant, provided
that the Participant shall have no right to consent to any modification to the
percentages specified in the definition of the term “Majority Lenders.” Subject
to clause (c)(ii) of this Section 13.6, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.10, 2.12, 3.5 and
5.4 to the same extent as if it were a Lender (subject to the limitations and
requirements of those Sections and Section 13.7) as though it were a Lender and
had acquired its

 

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interest by assignment pursuant to clause (b) of this Section 13.6). To the
extent permitted by Requirements of Law, each Participant also shall be entitled
to the benefits of Section 13.8(b) as though it were a Lender; provided such
Participant agrees to be subject to Section 13.8(a) as though it were a Lender.

 

(ii)                                  A Participant shall not be entitled to
receive any greater payment under Sections 2.10, 2.12, 3.5 or 5.4 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent (which
consent shall not be unreasonably withheld); provided that the Participant shall
be subject to the provisions in Section 2.11 as if it were an assignee under
clauses (a) and (b) of this Section 13.6. Each Lender that sells a participation
shall, acting solely for this purpose as a nonfiduciary agent of the Borrower,
maintain a register on which it enters the name and address of each participant
and the principal amounts (and related interest amounts) of each participant’s
interest in the Loans or other obligations under this Agreement (the
“Participant Register”). The entries in the Participant Register shall be
conclusive, absent manifest error, and each party hereto 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. No Lender shall have any obligation to disclose all or any portion
of the Participant Register to any Person (including the identity of any
Participant or any information relating to a Participant’s interest in any
commitments, loans, letters of credit or its other obligations under any Credit
Document) except to the extent that such disclosure is necessary to establish
that such commitment, loan, letter of credit or other obligation is in
registered form under Section 5f.103-1(c) of the United States Treasury
Regulations.

 

(d)                                 Any Lender may, without the consent of the
Borrower, any Issuing Bank or the Administrative Agent, at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank or any central bank
having jurisdiction over such Lender, and this Section 13.6 shall not apply to
any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto. In order to facilitate such pledge or assignment or
for any other reason, the Borrower hereby agrees that, upon request of any
Lender at any time and from time to time after the Borrower has made its initial
borrowing hereunder, the Borrower shall provide to such Lender, at the
Borrower’s own expense, a promissory note, substantially in the form of
Exhibit C, evidencing the Loans owing to such Lender.

 

(e)                                  Subject to Section 13.16, the Borrower
authorizes each Lender to disclose to any Participant, secured creditor of such
Lender or assignee (each, a “Transferee”) and any prospective Transferee any and
all financial information in such Lender’s possession concerning the Borrower
and its Affiliates that has been delivered to such Lender by or on

 

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behalf of the Borrower and its Affiliates pursuant to this Agreement or that has
been delivered to such Lender by or on behalf of the Borrower and its Affiliates
in connection with such Lender’s credit evaluation of the Borrower and its
Affiliates prior to becoming a party to this Agreement.

 

(f)                                   The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Acceptance shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the Texas Uniform Electronics Transactions Act or any
other similar state laws based on the Uniform Electronic Transactions Act.

 

(g)                                  Notwithstanding anything to the contrary
contained herein, any Lender may, at any time, assign all or a portion of its
rights and obligations under this Agreement in respect of its Loans to an
Affiliated Lender; provided that, by its acquisition of Loans, an Affiliated
Lender shall be deemed to have acknowledged and agreed that:

 

(i)                                     it shall not have any right to
(A) attend (including by telephone) any meeting or discussions (or portion
thereof) among the Administrative Agent or any Lender to which representatives
of the Borrower are not then present, (B) receive any information or material
prepared by the Administrative Agent or any Lender or any communication by or
among Administrative Agent and one or more Lenders, except to the extent such
information or materials have been made available to the Borrower or its
representatives (and in any case, other than the right to receive notices of
prepayments and other administrative notices in respect of its Loans required to
be delivered to Lenders pursuant to Article II), or (C) make or bring (or
participate in, other than as a passive participant in or recipient of its pro
rata benefits of) any claim, in its capacity as a Lender, against the
Administrative Agent or any other Lender with respect to any duties or
obligations or alleged duties or obligations of such Agent or any other such
Lender under the Credit Documents;

 

(ii)                                  except with respect to any amendment,
modification, waiver, consent or other action described in clause (i) of the
second proviso of the second sentence of Section 13.1(a) or that alters an
Affiliated Lender’s pro rata share of any payments given to all Lenders, the
Loans held by an Affiliated Lender shall be disregarded in both the numerator
and denominator in the calculation of any Lender vote (and shall be deemed to
have been voted in the same percentage as all other applicable Lenders that are
not Affiliated Lenders voted if necessary to give legal effect to this
paragraph) under any Credit Document; and

 

(iii)                               the aggregate principal amount of Loans held
at any one time by Affiliated Lenders may not exceed 30% of the aggregate
principal amount of all Loans outstanding at such time under this Agreement.

 

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Section 13.7                             Replacements of Lenders under Certain
Circumstances.

 

(a)                                 The Borrower shall be permitted to replace
any Lender that becomes a Defaulting Lender, with a replacement bank, lending
institution or other financial institution; provided that (A) such replacement
does not conflict with any Requirement of Law, (B) no Event of Default under
Section 11.1 or 11.5 shall have occurred and be continuing at the time of such
replacement, (C) the replacement bank or institution shall purchase, at par, all
Loans and the Borrower shall pay all other amounts (other than any disputed
amounts), pursuant to Section 2.9, 3.5 or 5.4, as the case may be) owing to such
replaced Lender prior to the date of replacement, (D) the replacement bank or
institution, if not already a Lender, and the terms and conditions of such
replacement, shall be reasonably satisfactory to the Administrative Agent,
(E) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 13.6(b) (provided that the Borrower
shall be obligated to pay the registration and processing fee referred to
therein) and (F) any such replacement shall not be deemed to be a waiver of any
rights that the Borrower, the Administrative Agent or any other Lender shall
have against the replaced Lender.

 

(b)                                 If any Lender (such Lender, a
“Non-Consenting Lender”) (x) has failed to consent to a proposed amendment,
determination, waiver, discharge or termination that pursuant to the terms of
Section 13.1 requires the consent of all of the Lenders affected and with
respect to which the Majority Lenders shall have granted their consent or
(y) did not consent to increase the Borrowing Base then in effect when the
Required Lenders provided their consent to such increase pursuant to Sections
2.15 or 2.16,, then, in each case, provided no Event of Default then exists, the
Borrower shall have the right (unless such Non-Consenting Lender grants such
consent) to replace such Non-Consenting Lender by requiring such Non-Consenting
Lender to assign its Loans and its Commitments hereunder to one or more
assignees reasonably acceptable to the Administrative Agent; provided that:
(i) all Obligations of the Borrower owing to such Non-Consenting Lender being
replaced (other than principal and interest) shall be paid in full to such
Non-Consenting Lender concurrently with such assignment, and (ii) the
replacement Lender shall purchase the foregoing by paying to such Non-Consenting
Lender a price equal to the principal amount thereof plus accrued and unpaid
interest thereon. In connection with any such assignment, the Borrower,
Administrative Agent, such Non-Consenting Lender and the replacement Lender
shall otherwise comply with Section 13.6.

 

(c)                                  Notwithstanding anything herein to the
contrary, each party hereto agrees that any assignment pursuant to the terms of
this Section 13.7 may be effected pursuant to an Assignment and Acceptance
executed by the Borrower, the Administrative Agent and the assignee and that the
Lender making such assignment need not be a party thereto.

 

Section 13.8                             Adjustments; Set-off.

 

(a)                                 If any Lender (a “Benefited Lender”) shall
at any time receive any payment in respect of any principal of or interest on
all or part of the Loans made by it, or the participations in Letter of Credit
Obligations held by it, or receive any collateral in respect

 

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thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 11.5, or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender entitled thereto, if any, in respect of such other Lender’s Loans, or
interest thereon, such Benefited Lender shall (i) notify the Administrative
Agent of such fact, and (ii) purchase for cash at face value from the other
Lenders a participating interest in such portion of each such other Lender’s
Loans, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
Benefited Lender to share the excess payment or benefits of such collateral or
proceeds ratably in accordance with the aggregate principal of and accrued
interest on their respective Loans and other amounts owing them; provided,
however, that (A) if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest and (B) the provisions of this paragraph shall
not be construed to apply to (1) any payment made by the Borrower or any other
Credit Party pursuant to and in accordance with the terms of this Agreement and
the other Credit Documents or (2) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans, Commitments or participations in Drawings to any assignee or participant.
Each Credit Party consents to the foregoing and agrees, to the extent it may
effectively do so under Requirements of Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Credit Party rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Credit
Party in the amount of such participation.

 

(b)                                 After the occurrence and during the
continuance of an Event of Default, in addition to any rights and remedies of
the Lenders provided by Requirements of Law, each Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable Requirements of Law, upon any
amount becoming due and payable by the Borrower hereunder or under any Credit
Document (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower (and the Credit Parties, if applicable) and the Administrative Agent
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.

 

Section 13.9                             Counterparts. This Agreement may be
executed by one or more of the parties to this Agreement on any number of
separate counterparts (including by facsimile or other electronic transmission,
i.e. a “pdf” or a “tif”), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

 

Section 13.10                      Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such

 

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prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 13.11                      Integration. This Agreement and the other
Credit Documents represent the agreement of the Borrower, the Guarantors, the
Administrative Agent and the Lenders with respect to the subject matter hereof
and thereof, and there are no promises, undertakings, representations or
warranties by the Borrower, the Guarantors, the Administrative Agent nor any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Credit Documents.

 

Section 13.12                      GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS.

 

Section 13.13                      Submission to Jurisdiction; Waivers. Each
party hereto hereby irrevocably and unconditionally:

 

(a)                                 submits for itself and its property in any
legal action or proceeding relating to this Agreement and the other Credit
Documents to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the exclusive general jurisdiction of the courts
of the State of Texas and the courts of the United States for the Northern
District of Texas, in each case located in Tarrant County, and appellate courts
from any thereof;

 

(b)                                 consents that any such action or proceeding
shall be brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;

 

(c)                                  agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
such Person at its address set forth on Schedule 13.2 at such other address of
which the Administrative Agent shall have been notified pursuant to
Section 13.2;

 

(d)                                 agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by Requirements
of Law or shall limit the right to sue in any other jurisdiction;

 

(e)                                  waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any legal action
or proceeding referred to in this Section 13.13 any special, exemplary, punitive
or consequential damages; and

 

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(f)                                   agrees that a final judgment in any action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.

 

Section 13.14                      Acknowledgments. The Borrower hereby
acknowledges that:

 

(a)                                 it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the other Credit
Documents;

 

(b)                                 (i) the Facility provided for hereunder and
any related arranging or other services in connection therewith (including in
connection with any amendment, waiver or other modification hereof or of any
other Credit Document) are an arm’s-length commercial transaction between the
Borrower and the other Credit Parties, on the one hand, and the Administrative
Agent and the Lenders on the other hand, and the Borrower and the other Credit
Parties are capable of evaluating and understanding and understand and accept
the terms, risks and conditions of the transactions contemplated hereby and by
the other Credit Documents (including any amendment, waiver or other
modification hereof or thereof); (ii) in connection with the process leading to
such transaction, each of the Administrative Agent and the Lenders is and has
been acting solely as a principal and is not the financial advisor, agent or
fiduciary for any of the Borrower, any other Credit Parties or any of their
respective Affiliates, equity holders, creditors or employees or any other
Person; none of the Administrative Agent, the Joint Lead Arrangers nor any
Lender has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Borrower or any other Credit Party with respect
to any of the transactions contemplated hereby or the process leading thereto,
including with respect to any amendment, waiver or other modification hereof or
of any other Credit Document (irrespective of whether the Administrative Agent,
the Joint Lead Arrangers or any Lender has advised or is currently advising any
of the Borrower, the other Credit Parties or their respective Affiliates on
other matters) and none of the Administrative Agent, the Joint Lead Arrangers or
any Lender has any obligation to any of the Borrower, the other Credit Parties
or their respective Affiliates with respect to the transactions contemplated
hereby except those obligations expressly set forth herein and in the other
Credit Documents; (iii) the Administrative Agent and its Affiliates, and each
Lender and its Affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of the Borrower and its respective
Affiliates, and none of the Administrative Agent or any Lender has any
obligation to disclose any of such interests by virtue of any advisory, agency
or fiduciary relationship; and (iv) none of the Administrative Agent or any
Lender has provided and none will provide any legal, accounting, regulatory or
tax advice with respect to any of the transactions contemplated hereby
(including any amendment, waiver or other modification hereof or of any other
Credit Document) and the Borrower has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate. The
Borrower hereby waives and releases, to the fullest extent permitted by law, any
claims that it may have against the Administrative Agent with respect to any
breach or alleged breach of agency or fiduciary duty; and

 

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(c)                                  no joint venture is created hereby or by
the other Credit Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower, on the one hand,
and any Lender, on the other hand.

 

Section 13.15                      WAIVERS OF JURY TRIAL. THE BORROWER, THE
ADMINISTRATIVE AGENT, EACH ISSUING BANK AND EACH LENDER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

Section 13.16                      Confidentiality. The Administrative Agent,
any Issuing Bank and each other Lender shall hold all information not marked as
“public information” and furnished by or on behalf of the Borrower or any of its
Subsidiaries or Affiliates in connection with such Lender’s evaluation of
whether to become a Lender hereunder or obtained by such Lender, the
Administrative Agent or any Issuing Bank pursuant to the requirements of this
Agreement (“Confidential Information”), confidential in accordance with its
customary procedure for handling confidential information of this nature and in
any event may make disclosure (i) as required or requested by any Governmental
Authority, self-regulatory agency or representative thereof or pursuant to legal
process or applicable Requirements of Law, (ii) to such Lender’s or the
Administrative Agent’s, any Issuing Bank’s attorneys, professional advisors,
independent auditors, trustees, agents or Affiliates (and any Affiliate’s
attorneys, professional advisors, independent auditors, trustees or agents), in
each case who need to know such information in connection with the
administration of the Credit Documents and are informed of the confidential
nature of such information, (iii) to an investor or prospective investor in a
securitization that agrees its access to information regarding the Credit
Parties, the Loans and the Credit Documents is solely for purposes of evaluating
an investment in a securitization and who agrees to treat such information as
confidential, (iv) to a trustee, collateral manager, servicer, backup servicer,
noteholder or secured party in connection with the administration, servicing and
reporting on the assets serving as collateral for a securitization and who
agrees to treat such information as confidential, (v) to a nationally recognized
ratings agency that requires access to information regarding the Credit Parties,
the Loans and Credit Documents in connection with ratings issued with respect to
a securitization, and (vi) to the extent such Confidential Information becomes
public other than by reason of disclosure by such Person in breach of this
Agreement; provided that unless specifically prohibited by applicable
Requirements of Law, each Lender, the Administrative Agent, any Issuing Bank
shall endeavor to notify the Borrower (without any liability for a failure to so
notify the Borrower) of any request made to such Lender, the Administrative
Agent or any Issuing Bank, as applicable, by any governmental, regulatory or
self-regulatory agency or representative thereof (other than any such request in
connection with an examination of the financial condition of such Lender by such
governmental agency) for disclosure of any such non-public information prior to
disclosure of such information; provided further that in no event shall any
Lender, the Administrative Agent or any Issuing Bank be obligated or required to
return any materials furnished by the Borrower or any Subsidiary. In addition,
each Lender and the Administrative Agent may provide Confidential Information to
prospective Transferees or to any pledgee referred to in Section 13.6 or to
prospective direct or indirect contractual counterparties in Hedge Transactions
to be entered into in connection with Loans made hereunder as long as such
Person is advised of and agrees to be bound by the provisions of this

 

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Section 13.16 or confidentiality provisions at least as restrictive as those set
forth in this Section 13.16.

 

Section 13.17                      Release of Collateral and Guarantee
Obligations.

 

(a)                                 The Lenders hereby irrevocably agree that
the Liens granted to the Administrative Agent by the Credit Parties on any
Collateral shall be automatically released (i) in full, as set forth in clause
(b) below, (ii) upon the Disposition of such Collateral (including as part of or
in connection with any other Disposition permitted hereunder) to any Person
other than another Credit Party, to the extent such Disposition is made in
compliance with the terms of this Agreement (and the Administrative Agent may
rely conclusively on a certificate to that effect provided to it by any Credit
Party upon its reasonable request without further inquiry), (iii) to the extent
such Collateral is comprised of property leased to a Credit Party, upon
termination or expiration of such lease, (iv) if the release of such Lien is
approved, authorized or ratified in writing by the Majority Lenders (or such
other percentage of the Lenders whose consent may be required in accordance with
Section 13.1), (v) to the extent the property constituting such Collateral is
owned by any Guarantor, upon the release of such Guarantor from its obligations
under the Guarantee, (vi) upon the designation of any Restricted Subsidiary as
an Unrestricted Subsidiary in accordance with the terms of this Agreement, and
(vii) as required by the Administrative Agent to effect any Disposition of
Collateral in connection with any exercise of remedies of the Administrative
Agent pursuant to the Security Documents. Any such release shall not in any
manner discharge, affect or impair the Obligations or any Liens (other than
those being released) upon (or obligations (other than those being released) of
the Credit Parties in respect of) all interests retained by the Credit Parties,
including the proceeds of any Disposition, all of which shall continue to
constitute part of the Collateral except to the extent otherwise released in
accordance with the provisions of the Credit Documents. The Lenders hereby
authorize the Administrative Agent to execute and deliver any instruments,
documents and agreements necessary or desirable to evidence and confirm the
release of any Collateral pursuant to the foregoing provisions of this
paragraph, all without the further consent or joinder of any Lender. In
connection with any release hereunder, the Administrative Agent shall promptly
(and the Lenders hereby authorize the Administrative Agent to) take such action
and execute any such documents as may be reasonably requested by the Borrower
and at the Borrower’s expense in connection with the release of any Liens
created by any Credit Document.

 

(b)                                 Notwithstanding anything to the contrary
contained herein or any other Credit Document, when all Obligations have been
paid in full in cash or equivalents thereof, the Commitments have terminated or,
upon request of the Borrower, the Administrative Agent shall (without notice to,
or vote or consent of, any Secured Party) take such actions as shall be required
to release its security interest in all Collateral, and to release all
obligations under any Credit Document. Any such release of Obligations shall be
deemed subject to the provision that such Obligations shall be reinstated if
after such release any portion of any payment in respect of the Obligations
guaranteed thereby shall be rescinded or must otherwise be restored or returned
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar

 

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officer for, the Borrower or any Guarantor or any substantial part of its
property, or otherwise, all as though such payment had not been made.

 

Section 13.18                      USA PATRIOT Act. The Administrative Agent and
each Lender hereby notify the Borrower that pursuant to the requirements of the
USA PATRIOT Act (Title III of Pub. L. 107¬56 (signed into law October 26, 2001))
(the “Patriot Act”) it is required to obtain, verify and record information that
identifies each Credit Party, which information includes the name and address of
each Credit Party and other information that will allow the Administrative Agent
and such Lender to identify each Credit Party in accordance with the Patriot
Act.

 

Section 13.19                      Payments Set Aside. To the extent that any
payment by or on behalf of the Borrower is made to the Administrative Agent or
any Lender, or the Administrative Agent or any Lender exercises its right of
setoff, and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the
Administrative Agent or such Lender in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any proceeding or
otherwise, then (i) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (ii) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or repaid
by the Administrative Agent, plus interest thereon from the date of such demand
to the date such payment is made at a rate per annum equal to the applicable
Overnight Rate from time to time in effect.

 

Section 13.20                      Reinstatement. This Agreement shall continue
to be effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent or any other Secured Party upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.

 

Section 13.21                      Disposition of Proceeds. The Security
Documents contain an assignment by the Borrower and/or the Guarantors unto and
in favor of the Administrative Agent for the benefit of the Lenders of all of
the Borrower’s or each Guarantor’s interest in and to their as-extracted
collateral in the form of production and all proceeds attributable thereto which
may be produced from or allocated to the Mortgaged Property. The Security
Documents further provide in general for the application of such proceeds to the
satisfaction of the Obligations described therein and secured thereby.
Notwithstanding the assignment contained in such Security Documents, until the
occurrence of an Event of Default, (i) the Administrative Agent and the Lenders
agree that they will neither notify the purchaser or purchasers of such
production nor take any other action to cause such proceeds to be remitted to
the Administrative Agent or the Lenders, but the Lenders will instead permit
such proceeds to be paid to the Borrower and its Restricted Subsidiaries and
(ii) the Lenders hereby authorize the Administrative Agent to take such actions
as may be necessary to cause such proceeds to be paid to the Borrower and/or
such Restricted Subsidiaries.

 

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Section 13.22                      Collateral Matters; Hedge Transactions. The
benefit of the Security Documents and of the provisions of this Agreement
relating to any Collateral securing the Obligations shall also extend to and be
available on a pro rata basis pursuant to terms agreed upon in the Credit
Documents to any Person (i) under any Hedge Transaction in each case, after
giving effect to all netting arrangements relating to such Hedge Transactions or
(ii) under any Cash Management Agreement. No Person shall have any voting rights
under any Credit Document solely as a result of the existence of obligations
owed to it under any such Hedge Transaction or Cash Management Agreement.

 

Section 13.23                      Agency of the Borrower for the Other Credit
Parties. Each of the other Credit Parties hereby appoints the Borrower as its
agent for all purposes relevant to this Agreement and the other Credit
Documents, including the giving and receipt of notices and the execution and
delivery of all documents, instruments and certificates contemplated herein and
therein and all modifications hereto and thereto.

 

Section 13.24                      Acknowledgement and Consent to Bail-In of EEA
Financial Institutions.  Notwithstanding anything to the contrary in any Loan
Document or in any other agreement, arrangement or understanding among any such
parties, each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the Write-Down and Conversion Powers of an EEA
Resolution Authority and agrees and consents to, and acknowledges and agrees to
be bound by:

 

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

 

(b)                                 the effects of any Bail-in Action on any
such liability, including, if applicable:

 

(i)                                     a reduction in full or in part or
cancellation of any such liability;

 

(ii)                                  a conversion of all, or a portion of, such
liability into shares or other instruments of ownership in such EEA Financial
Institution, its parent undertaking, or a bridge institution that may be issued
to it or otherwise conferred on it, and that such shares or other instruments of
ownership will be accepted by it in lieu of any rights with respect to any such
liability under this Agreement or any other Loan Document; or

 

(iii)                               the variation of the terms of such liability
in connection with the exercise of the write-down and conversion powers of any
EEA Resolution Authority.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Agreement to be duly executed and delivered as of the date first above written.

 

 

BORROWER:

 

 

 

KIMBELL ROYALTY PARTNERS, LP,

 

a Delaware limited partnership

 

 

 

 

 

By:

Kimbell Royalty GP, LLC, a Delaware limited liability company, its general
partner

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Matthew S. Daly,

 

 

 

Chief Operating Officer and Secretary

 

[Signature Page]

 

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

 

 

ADMINISTRATIVE AGENT:

 

 

 

FROST BANK,

 

 

 

 

 

 

By:

 

 

 

Alex Zemkoski, Senior Vice President-Energy Finance

 

[Signature Page]

 

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

 

 

LENDERS:

 

[Signature Page]

 

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

 

Exhibit A
to Amendment

 

Exhibit D

 

Form of Compliance Certificate

 

[Attached]

 

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

 

Exhibit B
to Amendment

 

Schedule 13.2

 

Schedule 13.2

 

(a)

Lenders’ Commitment

 

Lender

 

Commitment

 

Commitment Percentage

 

Frost Bank

 

$

50,000,000

 

25.0

%

Wells Fargo Bank, National Association

 

$

45,000,000

 

22.5

%

Credit Suisse AG, Cayman Islands Branch

 

$

25,000,000

 

12.5

%

JP Morgan Chase Bank, N.A.

 

$

20,000,000

 

10.0

%

Fifth Third Bank

 

$

20,000,000

 

10.0

%

Royal Bank of Canada

 

$

20,000,000

 

10.0

%

BOKF, NA dba Bank of Texas

 

$

20,000,000

 

10.0

%

Total:

 

$

200,000,000.00

 

100

%

 

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

 

(b)

Administrative Agent’s and Lenders’ Addresses

 

Lender

 

Lending Office

 

Address for Notice

Frost Bank and Administrative Agent

 

Frost Bank

640 Taylor Street

Fort Worth, Texas 76102

Attention: Alex Zemkoski

Fax No. (817) 420-5090

Email: alex.zemkoski@frostbank.com

 

with a copy to:

Frost Bank

100 West Houston Street, RB-2

San Antonio, Texas 78205

Fax No. (210) 220-4258

 

Frost Bank

640 Taylor Street

Fort Worth, Texas 76102

Attention: Alex Zemkoski

Fax No. (817) 420-5090

Email: alex.zemkoski@frostbank.com

 

with a copy to:

Frost Bank

100 West Houston Street, RB-2

San Antonio, Texas 78205

Fax No. (210) 220-4258

 

 

 

 

 

Wells Fargo

 

Wells Fargo Bank, National Association

1700 Lincoln Street, 4th Floor

Denver, Colorado 80203

Attention: Debra Vigil — Loan Servicing Specialist

Fax No.: (866) 269-8331

E-Mail: DENLNSVMemberNotices@ wellsfargo.com

 

with a copy to:

 

1.              Carroll Cartwright

Wells Fargo Bank

Oil & Gas Division — Houston

1000 Louisiana Street, 8th Floor

Houston, Texas 77002

MAC T0002-090

Direct No.: (713) 202-8234

Office No.: (713) 319-1361

Fax No.: (713) 739-1087

E-Mail: Carroll.Cartwright@wellsfargo.com

 

2.              Jay Buckman

Wells Fargo Energy Group

1000 Louisiana Street, 9th Floor

Houston, Texas 77002

 

Wells Fargo Bank, National Association

1700 Lincoln Street, 4th Floor

Denver, Colorado 80203

Attention: Debra Vigil — Loan Servicing Specialist

Fax No.: (866) 269-8331

E-Mail: DENLNSVMemberNotices@ wellsfargo.com

 

with a copy to:

 

1.              Carroll Cartwright

Wells Fargo Bank

Oil & Gas Division — Houston

1000 Louisiana Street, 8th Floor

Houston, Texas 77002

MAC T0002-090

Direct No.: (713) 202-8234

Office No.: (713) 319-1361

Fax No.: (713) 739-1087

E-Mail: Carroll.Cartwright@wellsfargo.com

 

2.              Jay Buckman

Wells Fargo Energy Group

1000 Louisiana Street, 9th Floor

Houston, Texas 77002

 

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

 

 

 

MAC T0002-090

Phone No.: (713) 319-1849

Mobile No.: (832) 723-8034

Fax No.: (713) 319-1925

E-Mail: Jay.buckman@wellsfargo.com

 

MAC T0002-090

Phone No.: (713) 319-1849

Mobile No.: (832) 723-8034

Fax No.: (713) 319-1925

E-Mail: Jay.buckman@wellsfargo.com

 

 

 

 

 

Credit Suisse

 

Credit Suisse AG,

Cayman Islands Branch

Eleven Madison Avenue

New York, New York 10010

Attention: Nupur Kumar

Fax No.: (212) 538-4244

E-Mail: nupur.kumar@credit-suisse.com

 

with a copy to:

 

Credit Suisse AG,

Cayman Islands Branch

Eleven Madison Avenue

New York, New York 10010

Attention: Christopher Zybrick

E-Mail: christopher.zybrick@credit-suisse.com

 

Credit Suisse AG,

Cayman Islands Branch

Eleven Madison Avenue

New York, New York 10010

Attention: Nupur Kumar

Fax No.: (212) 538-4244

E-Mail: nupur.kumar@credit-suisse.com

 

with a copy to:

 

1.              Credit Suisse AG,

Cayman Islands Branch

Eleven Madison Avenue

New York, New York 10010

Attention: Christopher Zybrick

E-Mail: christopher.zybrick@credit-suisse.com

 

2.              Credit Suisse AG,

Cayman Islands Branch

7033 Louis Stephens Drive

P.O. Box 110047

Research Triangle Park, North Carolina 27709

Attention: Katarzyna Sampien

Corporate Bank Participants

Fax No.: (919) 994-6174

E-Mail: katarzyna.sampien@credit-suisse.com

 

 

 

 

 

JP Morgan Chase Bank

 

JP Morgan Chase Bank

Michele Jones

2200 Ross Ave, 3rd Floor

Dallas, Texas 75201

Phone No.: (214) 965.3274

E-Mail: michele.jones@jpmorgan.com

 

JP Morgan Chase Bank

Michele Jones

2200 Ross Ave, 3rd Floor

Dallas, Texas 75201

Phone No.: (214) 965.3274

E-Mail: michele.jones@jpmorgan.com

 

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

 

Fifth Third Bank

 

Fifth Third Bank

Jonathan Lee

1225 Seventeenth Street, Suite 2850

Denver, Colorado 80202

Phone No.: (303) 218-2419

E-Mail: Jonathan.Lee@53.com

 

with a copy to:

 

Fifth Third Bank

Heather Kiely

1225 Seventeenth Street, Suite 2850

Denver, Colorado 80202

Phone No.: (303) 524-3516

E-Mail: Heather.Kiely@53.com

 

Credit:

 

Fifth Third Bank

Jonathan Lee

1225 Seventeenth Street, Suite 2850

Denver, Colorado 80202

Phone No.: (303) 218-2419

E-Mail: Jonathan.Lee@53.com

 

with a copy to:

 

Fifth Third Bank

Heather Kiely

1225 Seventeenth Street, Suite 2850

Denver, Colorado 80202

Phone No.: (303) 524-3516

E-Mail: Heather.Kiely@53.com

 

Operations/Funding:

 

with a copy to:

 

Fifth Third Bank

DeShone Hope

Commercial Participation Analyst

5050 Kingsley Drive

Cincinnati, OH 45227

Phone No.: (513) 358-1781

Fax No.: N/A

E-Mail: DeShone.Hope@53.com

Boughtparticipations.Bancorp@53.com

 

with a copy to:

 

Fifth Third Bank

Rita Reinfelder

Commercial Participation Analyst

5050 Kingsley Drive

Cincinnati, OH 45227

Phone No.: (513) 358-1173

Fax No.: N/A

E-Mail: Rita.Reinfelder@53.com

Boughtparticipations.Bancorp@53.com

 

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

 

Royal Bank of Canada

 

Royal Bank of Canada

3900 Williams Tower

2800 Post Oak Blvd.

Houston, Texas 77056

Attention: Don J. McKinnerney

Phone No.: (713) 403-5607

Fax No.: (713) 403-5624

E-Mail: Don.McKinnerney@rbccm.com

 

 

Credit:

 

Royal Bank of Canada

3900 Williams Tower

2800 Post Oak Blvd.

Houston, Texas 77056

Attention: Don J. McKinnerney

Phone No.: (713) 403-5607

Fax No.: (713) 403-5624

E-Mail: Don.McKinnerney@rbccm.com

 

Operations:

 

Royal Bank of Canada — WFC Branch

Attention: US Specialized Service Officer

Three World Financial Center

200 Vesey Street

New York, New York 10281-8098

Phone No.: (416) 955-6599

Fax No.: (212) 428-2372

Telex: ROYBAN 62519

 

with a copy to:

 

Royal Bank of Canada

Attention: Don J. McKinnerney

3900 Williams Tower

2800 Post Oak Blvd.

Houston, Texas 77056

Phone No.: (713) 403-5607

Fax No.: (713) 403-5624

 

 

 

 

 

BOKF, NA dba Bank of Texas

 

BOKF, NA dba Bank of Texas

5956 Sherry Lane, Suite 1603

Dallas, Texas 75225

Attention: Blair Schrodel

Fax No.: (214) 987-8866

E-Mail: BSchrodel@bankoftexas.com

 

BOKF, NA dba Bank of Texas

5956 Sherry Lane, Suite 1603

Dallas, Texas 75225

Attention: Blair Schrodel

Fax No.: (214) 987-8866

E-Mail: BSchrodel@bankoftexas.com

 

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(c)

Borrower’s Address

 

Borrower

 

Address for Notice

Kimbell Royalty Partners, LP

 

Kimbell Royalty Partners, LP
777 Taylor Street, Suite 810
Fort Worth, Texas 76102
Attention: Matthew S. Daly
Email: matt@kimbellrp.com

 

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Exhibit D
to Amendment

 

Security Documents

 

Part I

 

Local Counsel Opinions

 

Opinion of Hargrove, Smelley & Strickland with respect to the Properties LA
Mortgage.

 

Opinion of McAfee & Taft with respect to the Properties OK Mortgage and the
Holding OK Mortgage.

 

Opinion of Jackson Kelly PLLC with respect to the Properties PA Mortgage.

 

Opinion of Crowley Fleck PLLP with respect to the Properties ND Mortgage and the
Holding ND Mortgage.

 

Part II

 

Mortgages

 

1.              Multiple Indebtedness Mortgage, Act of Mortgage, Assignment of
Production and Security Agreement, dated the date hereof, by Haymaker Properties
to the Administrative Agent, as mortgagee, to be filed in Louisiana (the
“Properties LA Mortgage”).

 

2.              Mortgage—Collateral Real Estate Mortgage, Security Agreement,
Assignment of Production, and Financing Statement, dated the date hereof, from
Haymaker Holding to the Administrative Agent, as mortgagee, to be filed in North
Dakota (the “Holding ND Mortgage”).

 

3.              Mortgage—Collateral Real Estate Mortgage, Security Agreement,
Assignment of Production, and Financing Statement, dated the date hereof, from
Haymaker Properties to the Administrative Agent, as mortgagee, to be filed in
North Dakota (the “Properties ND Mortgage”).

 

4.              Mortgage, Deed of Trust, Mortgage—Collateral Real Estate
Mortgage, Security Agreement, Assignment of Production, and Financing Statement,
dated the date hereof, from Haymaker Holding to Dan J. Guarino, as trustee, for
the benefit of the Administrative Agent, as mortgagee, to be filed in New
Mexico.

 

5.              Mortgage, Deed of Trust, Mortgage—Collateral Real Estate
Mortgage, Security Agreement, Assignment of Production, and Financing Statement,
dated the date hereof, from Haymaker Properties to Dan J. Guarino, as trustee,
for the benefit of the Administrative Agent, as mortgagee, to be filed in New
Mexico.

 

6.              Deed of Trust, Mortgage, Fixture Filing, Security Agreement,
Assignment of Production, and Financing Statement, dated the date hereof, from
Haymaker Properties to Dan J. Guarino, as trustee, for the benefit of the
Administrative Agent, as mortgagee, to be filed in Ohio.

 

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7.              Mortgage, Security Agreement, Assignment of Production, and
Financing Statement, dated the date hereof, from Haymaker Holding to the
Administrative Agent, as mortgagee, to be filed in Oklahoma (the “Holding OK
Mortgage”).

 

8.              Mortgage, Security Agreement, Assignment of Production, and
Financing Statement, dated the date hereof, from Haymaker Properties to the
Administrative Agent, as mortgagee, to be filed in Oklahoma (the “Properties OK
Mortgage”).

 

9.              Open-Ended Mortgage, Deed of Trust, Mortgage—Collateral Real
Estate Mortgage, Security Agreement, Assignment of Production, and Financing
Statement, dated the date hereof, from Haymaker Properties to the Administrative
Agent, as mortgagee, to be filed in Pennsylvania (the “Properties PA Mortgage”).

 

10.       Mortgage—Collateral Real Estate Mortgage, Security Agreement,
Assignment of Production, and Financing Statement, dated the date hereof, from
Haymaker Holding to the Administrative Agent, as mortgagee, to be filed in South
Dakota

 

11.       Deed of Trust, Mortgage, Fixture Filing, Security Agreement,
Assignment of Production, and Financing Statement, dated the date hereof, from
Haymaker Greenfield to Dan J. Guarino, as trustee, for the benefit of the
Administrative Agent, as mortgagee, to be filed in Texas.

 

12.       Deed of Trust, Mortgage, Fixture Filing, Security Agreement,
Assignment of Production, and Financing Statement, dated the date hereof, from
Haymaker Holding to Dan J. Guarino, as trustee, for the benefit of the
Administrative Agent, as mortgagee, to be filed in Texas.

 

13.       Deed of Trust, Mortgage, Fixture Filing, Security Agreement,
Assignment of Production, and Financing Statement, dated the date hereof, from
Haymaker Properties to Dan J. Guarino, as trustee, for the benefit of the
Administrative Agent, as mortgagee, to be filed in Texas.

 

14.       Deed of Trust, Mortgage, Assignment of Production, Security Agreement,
Fixture Filing and Financing Statement, dated the date hereof, from Haymaker
Holding to Dan J. Guarino, as trustee, for the benefit of the Administrative
Agent, as mortgagee, to be filed in Utah.

 

15.       A Credit Line, Deed of Trust, Mortgage, Leasehold Assignment, Security
Agreement, Financing Statement, Fixture Filing and As-Extracted Collateral
Filing (Oil and Gas), dated the date hereof, by and among Haymaker Properties,
Dan J. Guarino, as grantee, and the Administrative Agent, as mortgagee, to be
filed in West Virginia.

 

16.       Mortgage, Security Agreement, Assignment of Production, and Financing
Statement, dated the date hereof, from Haymaker Holding to Dan J. Guarino, as
trustee, for the benefit of the Administrative Agent, as mortgagee, to be filed
in Wyoming.

 

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Exhibit E
to Amendment

 

Form of Solvency Certificate

 

[Attached.]

 

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