Exhibit 10.2

 

Execution Version

  

 

 

 

 

 

CREDIT AGREEMENT

 

Dated as of August 23, 2018

 

among

 

FALCON MINERALS OPERATING PARTNERSHIP, LP
as the Borrower,

 

The Several Lenders
from Time to Time Parties Hereto,

 

and

 

Citibank, N.A.,
as Administrative Agent, Collateral Agent,
Swingline Lender and an Issuing Bank

 

 

 

 

 

 

 

 

Citigroup Global Markets Inc.,
as Lead Arranger and Bookrunner

  

 

 

 

Table of Contents

  

    Page SECTION 1. Definitions. 1 1.1 Defined Terms. 1 1.2 Other Interpretive
Provisions 58 1.3 Accounting Terms 59 1.4 Rounding 60 1.5 References to
Agreements, Laws, Etc 60 1.6 Times of Day 60 1.7 Timing of Payment or
Performance 60 1.8 Currency Equivalents Generally 60 1.9 Classification of Loans
and Borrowings 61 1.10 Hedging Requirements Generally 61 1.11 Certain
Determinations 61 1.12 Pro Forma and Other Calculations 61 SECTION 2. Amount and
Terms of Credit 63 2.1 Commitments 63 2.2 Minimum Amount of Each Borrowing;
Maximum Number of Borrowings 64 2.3 Notice of Borrowing 65 2.4 Disbursement of
Funds 66 2.5 Repayment of Loans; Evidence of Debt 66 2.6 Conversions and
Continuations 67 2.7 Pro Rata Borrowings 68 2.8 Interest 68 2.9 Interest Periods
69 2.10 Increased Costs, Illegality, Etc 70 2.11 Compensation 71 2.12 Change of
Lending Office 72 2.13 Notice of Certain Costs 72 2.14 Borrowing Base 72

  

 

 

 

TABLE OF CONTENTS

(continued)

 

    Page 2.15 Defaulting Lenders 76 2.16 Increase of Total Commitment 78 2.17
Extension Offers 79 SECTION 3. Letters of Credit 80 3.1 Letters of Credit 80 3.2
Letter of Credit Applications 81 3.3 Letter of Credit Participations 82 3.4
Agreement to Repay Letter of Credit Drawings 84 3.5 New or Successor Issuing
Bank 85 3.6 Role of Issuing Bank 86 3.7 Cash Collateral 86 3.8 Applicability of
ISP and UCP 87 3.9 Conflict with Issuer Documents 87 3.10 Letters of Credit
Issued for Restricted Subsidiaries 87 3.11 Increased Costs 87 3.12 Independence
88 SECTION 4. Fees; Commitments. 88 4.1 Fees 88 4.2 Voluntary Reduction of
Commitments 89 4.3 Mandatory Termination of Commitments 90 SECTION 5. Payments.
90 5.1 Voluntary Prepayments 90 5.2 Mandatory Prepayments 91 5.3 Method and
Place of Payment 93 5.4 Net Payments 93 5.5 Computations of Interest and Fees 97
5.6 Limit on Rate of Interest 97 SECTION 6. Conditions Precedent to Initial
Borrowing. 97 SECTION 7. Conditions Precedent to All Subsequent Credit Events.
101 SECTION 8. Representations, Warranties and Agreements 102 8.1 Existence,
Qualification and Power 102

  

 

 

 

TABLE OF CONTENTS

(continued)

 

    Page 8.2 Corporate Power and Authority; Enforceability; Binding Effect 102
8.3 No Violation 102 8.4 Litigation 102 8.5 Margin Regulations 103 8.6
Governmental Authorization 103 8.7 Investment Company Act 103 8.8 True and
Complete Disclosure 103 8.9 Tax Matters 103 8.10 Compliance with ERISA 104 8.11
Subsidiaries 104 8.12 Intellectual Property 104 8.13 Environmental Laws 104 8.14
Properties 105 8.15 Solvency 105 8.16 Security Documents 105 8.17 Gas
Imbalances, Prepayments 106 8.18 Marketing of Production 106 8.19 Financial
Statements 106 8.20 OFAC; USA PATRIOT Act; FCPA 106 8.21 Hedge Agreements 107
8.22 [Reserved] 107 8.23 No Default 107 8.24 Insurance 107 SECTION 9.
Affirmative Covenants 107 9.1 Information Covenants 107 9.2 Books, Records and
Inspections 110 9.3 Maintenance of Insurance 111 9.4 Payment of Taxes 111 9.5
Preservation of Existence, Etc 112 9.6 Compliance with Requirements of Law 112
9.7 [Reserved] 112 9.8 Maintenance of Properties 112 9.9 Transactions with
Affiliates 112

  

 

 

 

TABLE OF CONTENTS

(continued)

 

    Page 9.10 Compliance with Environmental Laws 116 9.11 Additional Guarantors,
Grantors and Collateral 116 9.12 Use of Proceeds 117 9.13 Further Assurances 117
9.14 Reserve Reports 119 9.15 Change in Business 120 9.16 Title Information 120
9.17 Deposit Account, Securities Account and Commodity Account Control
Agreements 121 9.18 Minimum Hedged Volumes 121 9.19 Post-Closing Covenants 122
SECTION 10. Negative Covenants. 122 10.1 Limitation on Indebtedness 122 10.2
Limitation on Liens 127 10.3 Limitation on Fundamental Changes 131 10.4
Limitation on Sale of Assets 133 10.5 Limitation on Investments 135 10.6
Limitation on Restricted Payments 139 10.7 Limitations on Debt Payments and
Amendments 143 10.8 Negative Pledge Agreements 144 10.9 Limitation on Subsidiary
Distributions 146 10.10 Hedge Agreements 148 10.11 Financial Covenants 149 10.12
Accounting Changes 149 10.13 Foreign Operations 149 SECTION 11. Events of
Default 150 11.1 Payments 150 11.2 Representations, Etc 150 11.3 Covenants 150
11.4 Default Under Other Agreements 150 11.5 Bankruptcy, Etc 151 11.6 ERISA 151
11.7 Guarantee 151

  

 

 

  

TABLE OF CONTENTS

(continued)

 

    Page 11.8 Security Documents 151 11.9 Judgments 152 11.10 Change of Control
152 11.11 Intercreditor Agreements 152 11.12 Application of Proceeds 152 11.13
Equity Cure 154 SECTION 12. The Agents 155 12.1 Appointment 155 12.2 Delegation
of Duties 156 12.3 Exculpatory Provisions 156 12.4 Reliance by Agents 157 12.5
Notice of Default 157 12.6 Non-Reliance on Administrative Agent, Collateral
Agent and Other Lenders 157 12.7 Indemnification 158 12.8 Agents in Its
Individual Capacities 159 12.9 Successor Agents 159 12.10 Withholding Tax 160
12.11 Security Documents and Collateral Agent under Security Documents and
Guarantee 160 12.12 Right to Realize on Collateral and Enforce Guarantee 161
12.13 Administrative Agent May File Proofs of Claim 161 12.14 Certain ERISA
Matters 162 SECTION 13. Miscellaneous. 163 13.1 Amendments, Waivers and Releases
163 13.2 Notices 165 13.3 No Waiver; Cumulative Remedies 166 13.4 Survival of
Representations and Warranties 166 13.5 Payment of Expenses; Indemnification 166
13.6 Successors and Assigns; Participations and Assignments 168

  

 

 

 

TABLE OF CONTENTS

(continued)

 

    Page 13.7 Replacements of Lenders under Certain Circumstances 173 13.8
Adjustments; Set-off 174 13.9 Counterparts 175 13.10 Severability 175 13.11
Integration 175 13.12 GOVERNING LAW 176 13.13 Submission to Jurisdiction;
Waivers 176 13.14 Acknowledgments 177 13.15 WAIVERS OF JURY TRIAL 177 13.16
Confidentiality 178 13.17 Release of Collateral and Guarantee Obligations 179
13.18 USA PATRIOT Act 180 13.19 Payments Set Aside 180 13.20 Reinstatement 181
13.21 Disposition of Proceeds 181 13.22 Collateral Matters; Hedge Agreements 181
13.23 Agency of the Borrower for the Other Credit Parties 181 13.24
Acknowledgement and Consent to Bail-In of EEA Financial Institutions 182

 

EXHIBITS       Exhibit A Form of Reserve Report Certificate Exhibit B Form of
Notice of Borrowing Exhibit C Form of Guarantee Exhibit D Form of Mortgage/Deed
of Trust Exhibit E Form of Collateral Agreement Exhibit F Form of Junior Lien
Intercreditor Agreement Exhibit G Form of Assignment and Assumption Exhibit H-1
Form of Promissory Note (Loan) Exhibit H-2 Form of Promissory Note (Swingline
Loan) Exhibit I Form of First Lien Intercreditor Agreement Exhibit J Form of
Solvency Certificate Exhibit K Form of Non-Bank Tax Certificate Exhibit L Form
of Intercompany Note

  

 

 

 

TABLE OF CONTENTS

(continued)

 

SCHEDULES           Schedule 1.1(a) Commitments   Schedule 1.1(b) Excluded
Equity Interests   Schedule 1.1(e) Closing Date Subsidiary Guarantors   Schedule
1.1(f) Unrestricted Subsidiaries   Schedule 8.4 Litigation   Schedule 8.10(a)
Closing Date ERISA Matters   Schedule 8.11 Subsidiaries   Schedule 8.14
Properties   Schedule 8.17 Closing Date Gas Imbalance   Schedule 8.18 Closing
Date Marketing Agreements   Schedule 8.21 Closing Date Hedge Agreements  
Schedule 9.9 Closing Date Affiliate Transactions   Schedule 9.19 Post-Closing
Covenants   Schedule 10.1 Closing Date Indebtedness   Schedule 10.2(d) Closing
Date Liens   Schedule 10.5(d) Closing Date Investments   Schedule 10.8 Closing
Date Negative Pledge Agreements   Schedule 13.2 Notice Addresses  

  

 

 

 

CREDIT AGREEMENT, dated as of August 23, 2018, among Falcon Minerals Operating
Partnership, LP, a Delaware limited partnership (the “Borrower”), the banks,
financial institutions and other lending institutions from time to time parties
as lenders hereto (each a “Lender” and, collectively, the “Lenders”), Citibank,
N.A. (“Citibank”), as administrative agent and collateral agent for the Lenders,
as the swing line lender and an issuer of Letters of Credit, and each other
Issuing Bank from time to time party hereto.

 

WHEREAS, pursuant to the Contribution Agreement, dated as of June 3, 2018
(together with all exhibits and schedules thereto, and as amended, supplemented
or otherwise modified from time to time, the “Contribution Agreement”), among
(i) Osprey Energy Acquisition Corp., a Delaware corporation (“PubCo”), (ii)
Royal Resources L.P., a Delaware limited partnership and Royal Resources GP,
L.L.C., a Delaware limited liability company (collectively, “Royal”), and (iii)
Noble Royalties Acquisition Co., LP, a Delaware limited partnership, Hooks Ranch
Holdings LP, a Delaware limited partnership and DGK ORRI Holdings, LP, a
Delaware limited partnership (collectively with PubCo and Royal, the
“Contributors”), PubCo will acquire (the “Acquisition”) from the Contributors,
and PubCo will contribute to the Borrower, all of the Contributors’ right, title
and interest in the equity interests of entities holding certain oil and gas
properties, rights and related assets (collectively, the “Acquired Assets”);

 

WHEREAS, in connection with the foregoing, (a) the Borrower has requested that
(i) on the Closing Date, the Lenders provide Loans to the Borrower (the “Closing
Date Loans”) in order to fund a portion of the purchase price of the
Acquisition, pay Transaction Expenses, to fund any original issue discount or
upfront fees in connection with the “market flex” provisions previously agreed
with the Lead Arranger and Bookrunner and to finance working capital needs and
other general corporate purposes and (ii) at any time and from time to time
after the Closing Date and prior to the Maturity Date, the Lenders provide Loans
to the Borrower subject to the Available Commitment, (b) the Borrower has
requested that at any time and from time to time after the Closing Date and
prior to the L/C Maturity Date, each Issuing Bank issue Letters of Credit
(subject to the Available Commitment) and (c) the Borrower has requested that
the Swingline Lender extend credit in the form of Swingline Loans (subject to
the Available Commitment) at any time and from time to time prior to the
Swingline Maturity Date, in each case subject to Section 9.12;

 

WHEREAS, the Lenders, the Swingline Lender and the Issuing Banks are willing to
make available to the Borrower such revolving credit, swingline and letter of
credit facilities upon the terms and subject to the conditions set forth herein;
and

 

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

 

SECTION 1. Definitions.

 

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 highest
of (a) the Federal Funds Effective Rate plus ½ of 1.0%, (b) the Prime Rate in
effect on such day and (c) the LIBOR Rate for a one-month Interest Period on
such day (or if such day is not a Business Day, the immediately preceding
Business Day) plus 1.0%, provided that, for the avoidance of doubt, the LIBOR
Rate for any day shall be based on the rate appearing on the Reuters Screen
LIBOR01 Page (or on any successor or substitute page of such page) at
approximately 11:00 a.m. London time on such day. Any change in the ABR due to a
change in the Prime Rate, the Federal Funds Effective Rate or such LIBOR Rate
shall take effect at the opening of business on the day specified in the public
announcement of such change in the Prime Rate, the Federal Funds Effective Rate
or such LIBOR Rate, respectively; provided further that, that if ABR shall be
less than zero, such rate shall be deemed to be zero for purposes of this
Agreement.

 

 1 

 

 

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

 

“Acquired Assets” shall have the meaning provided in the recitals to this
Agreement.

 

“Acquired EBITDAX” shall mean, with respect to any Acquired Entity or Business
or any Converted Restricted Subsidiary for any period, the amount for such
period of Consolidated EBITDAX of such Acquired Entity or Business or Converted
Restricted Subsidiary (determined as if references to the Borrower and the
Restricted Subsidiaries in the definition of Consolidated EBITDAX were
references to such Acquired Entity or Business and its Subsidiaries or to such
Converted Restricted Subsidiary and its Subsidiaries), as applicable, all as
determined on a consolidated basis for such Acquired Entity or Business or
Converted Restricted Subsidiary, as applicable.

 

“Acquired Entity or Business” has the meaning set forth in the definition of the
term “Consolidated EBITDAX”.

 

“Acquisition” shall have the meaning provided in the recitals to this Agreement.

 

“Additional Lender” shall have the meaning provided in Section 2.16(a).

 

“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 Citibank, 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 12.9.

 

“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.

 

“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. “Controlling” and
“controlled” shall have meanings correlative thereto.

 

“AFTAP” shall have the meaning provided in Section 8.10(c).

  

 2 

 

 

“Agents” shall mean the Administrative Agent and the Collateral Agent.

 

“Agent-Related Party” shall mean, with respect to any Agent, its Affiliates and
the officers, directors, employees, agents, attorney-in-fact, partners, trustees
and advisors of such Agent and of such Agent’s Affiliates.

 

“Agreement” shall mean this Credit Agreement, as amended, restated, amended and
restated, replaced, supplemented or otherwise modified from time to time.

 

“All-In Yield” shall mean, as to any Indebtedness, the yield thereof, whether in
the form of interest rate, margin, original issue discount, upfront fees, or any
LIBOR Rate or ABR floor, in each case, incurred or payable by the Credit Parties
generally to all the lenders of such Indebtedness; provided that (a) original
issue discount and upfront fees shall be equated to interest rate assuming a
4-year life to maturity (or, if less, the stated life to maturity at the time of
its incurrence of the applicable Indebtedness), and (b) “All-In Yield” shall not
include amendment fees, arrangement fees, structuring fees, commitment fees,
underwriting fees and similar fees (regardless of whether shared with, or paid
to, in whole or in part, any or all lenders), success fees, consent fees paid to
consenting lenders, ticking fees on undrawn commitments or any other fees not
paid ratably to all lenders in the primary syndication of such Indebtedness.

 

“Applicable Equity Amount” shall mean, at any time (the “Applicable Equity
Amount Reference Time”), an amount equal to, without duplication,

 

(a) the amount of any capital contributions made in cash to, or any cash
proceeds of an equity issuance received by, the Borrower during the period from
and including the Business Day immediately following the Closing Date through
and including the Applicable Equity Amount Reference Time, in each case
including cash proceeds from the issuance of Equity Interests of any direct or
indirect parent of the Borrower, but excluding all proceeds from the issuance of
Disqualified Stock;

 

minus

 

(b) the sum, without duplication, of:

 

(i) the aggregate amount of any Investments made by the Borrower or any
Restricted Subsidiary pursuant to Section 10.5(g)(iii)(B) and Section 10.5(i)(B)
after the Closing Date, and prior to the Applicable Equity Amount Reference
Time;

 

(ii) the aggregate amount of any Restricted Payments made by the Borrower
pursuant to Section 10.6(m) after the Closing Date, and prior to the Applicable
Equity Amount Reference Time; and

 

(iii) the aggregate amount of prepayments, repurchases, redemptions and
defeasances made by the Borrower or any Restricted Subsidiary pursuant to
Section 10.7(a)(iv) after the Closing Date and prior to the Applicable Equity
Amount Reference Time.

 

“Applicable Equity Amount Reference Time” shall have the meaning assigned to
such term in the definition of “Applicable Equity Amount.”

  

 3 

 

 

“Applicable Margin” shall mean, for any day, with respect to any ABR Loan or
LIBOR Loan, as the case may be, the 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 Percentage X < 25%
25% ≤ X<  50% 50% ≤ X <  75% 75% ≤ X<  90% X ≥ 90% LIBOR Loans 2.00% 2.25% 2.50%
2.75% 3.00% ABR Loans 1.00% 1.25% 1.50% 1.75% 2.00% Commitment Fee Rate 0.375%
0.375% 0.50% 0.50% 0.50%

  

Each change in the 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.

 

“Approved Bank” shall have the meaning assigned to such term in the definition
of “Permitted Investments”.

 

“Approved Counterparty” shall mean any Person (other than a Hedge Bank) whose
long term senior unsecured debt rating is A-/A3 by S&P or Moody’s (or their
equivalent) or higher at the time of entering into any Hedge Agreement; provided
that such Person shall have entered into the First Lien Intercreditor Agreement
(including by means of a customary joinder to the First Lien Intercreditor
Agreement); and provided further that the Hedging Obligations owed to all
Persons constituting Approved Counterparties in respect of Secured Hedge
Agreements shall not exceed $5,000,000 in the aggregate.

 

“Approved Petroleum Engineers” shall mean (a) Netherland, Sewell & Associates,
Inc., (b) Ryder Scott Company, L.P., (c) W. D. Von Gonten & Co. Petroleum
Engineering, (d) DeGolyer and MacNaughton, (e) LaRoche Petroleum Consultants,
Ltd., (f) Cawley Gillespie & Associates and (g) at the Borrower’s option, any
other independent petroleum engineers selected by the Borrower and reasonably
acceptable to the Administrative Agent.

 

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

 

“Assignment Taxes” shall have the meaning assigned to such term in the
definition of “Other Taxes”.

 

“Attorney Costs” shall mean all reasonable and documented fees, expenses and
disbursements of any law firm or other external legal counsel.

 

“Authorized Officer” shall mean as to any Person, the President, the Chief
Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the
Chief Accounting Officer, the Controller, the Treasurer, the Assistant or Vice
Treasurer, the Vice President-Finance, the General Counsel 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.

  

 4 

 

 

“Auto-Extension Letter of Credit” shall have the meaning provided in
Section 3.2(b).

 

“Available Commitment” shall mean, at any time, (a) the Loan Limit at such time
minus (b) the aggregate Total Exposures of all Lenders 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.

 

“Bank Price Deck” shall mean the Administrative Agent’s most recent internal
price deck on a forward curve basis for each of oil, natural gas and other
Hydrocarbons, as applicable, furnished to the Borrower by the Administrative
Agent from time to time in accordance with the terms of this Agreement.

 

“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(a).

 

“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA)
that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to
Section 4975 of the Code or (c) any Person whose assets include (for purposes of
ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section
4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

 

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

 

“Board of Directors” shall mean, as to any Person, the board of directors or
other governing body of such Person, or if such Person is owned or managed by a
single entity, the board of directors or other governing body of such entity.

 

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

 

“Borrowing” shall mean the incurrence of one Type of Loan on a given date (or
resulting from conversions on a given date) having, in the case of LIBOR Loans,
the same Interest Period (provided that ABR Loans incurred pursuant to
Section 2.10(b) shall be considered part of any related Borrowing of LIBOR
Loans).

  

 5 

 

 

“Borrowing Base” shall mean, at any time, an amount determined in accordance
with Section 2.14, as may be adjusted from time to time pursuant to the
provisions of Section 2.14(e), (f) and (h), as applicable. As of the Closing
Date, the Borrowing Base shall be $115,000,000.

 

“Borrowing Base Deficiency” occurs if, at any time, the sum of (i) the aggregate
Total Exposure of all Lenders and (ii) the aggregate amount of Pari Debt
outstanding at such time (without giving effect to any payments applied to
reduce such Pari Debt unless the Administrative Agent is notified of such
reduction in Pari Debt at the time of the next Scheduled Redetermination or
Interim Redetermination) exceeds the Borrowing Base then in effect. The amount
of the Borrowing Base Deficiency is the amount by which (x) the sum of (i) the
aggregate Total Exposure of all Lenders and (ii) the aggregate amount of Pari
Debt outstanding at such time (without giving effect to any payments applied to
reduce such Pari Debt unless the Administrative Agent is notified of such
reduction in Pari Debt at the time of the next Scheduled Redetermination or
Interim Redetermination) exceeds (y) the Borrowing Base then in effect.

 

“Borrowing Base Properties” shall mean the Oil and Gas Properties of the Credit
Parties included in the Initial Reserve Report and thereafter in the Reserve
Report most recently delivered pursuant to Section 2.14 or Section 9.14.

 

“Borrowing Base Reduction Debt” shall mean (i) Permitted Additional Debt issued
or incurred in accordance with Section 10.1(q), and (ii) any Indebtedness
incurred under Section 10.1(k) in compliance with subclause (B)(I) of the
proviso thereto.

 

“Borrowing Base Utilization Percentage” shall mean, as of any day, the fraction
expressed as a percentage, the numerator of which is the sum of (i) the
aggregate Total Exposures of all Lenders on such day and (ii) the aggregate
amount of Pari Debt outstanding at such time (without giving effect to any
payments applied to reduce such Pari Debt unless the Administrative Agent is
notified of such reduction in Pari Debt at the time of the next Scheduled
Redetermination or Interim Redetermination), and the denominator of which is the
Borrowing Base in effect on such day.

 

“Borrowing Base Value” shall mean, with respect to any Oil and Gas Property of a
Credit Party or any Hedge Agreement in respect of commodities, the PV-9 value in
the case of any Oil and Gas Property or the Swap PV in the case of any Hedge
Agreement the Administrative Agent attributed to such Oil and Gas Property or
Hedge Agreement, as applicable.

 

“Budget” shall have the meaning provided in Section 9.1(g).

 

“Business Day” shall mean any day excluding Saturday, Sunday and any other day
on which banking institutions in New York City or Houston, 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.

  

 6 

 

 

“Capitalized Lease” shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is, or is required to be, accounted for as a capital lease
on the balance sheet of that Person; provided that for all purposes hereunder
the amount of obligations under any Capitalized Lease shall be the amount
thereof accounted for as a liability on the balance sheet of such Person in
accordance with GAAP; provided, further, that for purposes of calculations made
pursuant to the terms of this Agreement, GAAP will be deemed to treat leases in
a manner consistent with its current treatment under generally accepted
accounting principles as of the Closing Date, notwithstanding any modifications
or interpretative changes thereto that may occur. For the avoidance of doubt,
any lease that would be characterized as an operating lease in accordance with
GAAP on the Closing Date (whether or not such operating lease was in effect on
such date) shall continue to be accounted for as an operating lease (and not as
a Capitalized Lease) for purposes of this Agreement regardless of any change in
GAAP following the Closing Date that would otherwise require such lease to be
re-characterized (on a prospective or retroactive basis or otherwise) as a
Capitalized Lease.

 

“Capitalized Software Expenditures” shall mean, for any period, the aggregate of
all expenditures (whether paid in cash or accrued as liabilities) by a Person
and its Restricted Subsidiaries during such period in respect of licensed or
purchased software or internally developed software and software enhancements
that, in conformity with GAAP, are or are required to be reflected as
capitalized costs on the consolidated balance sheet of such Person and its
Restricted Subsidiaries.

 

“Captive Insurance Subsidiary” shall mean any Subsidiary of the Borrower that is
subject to regulation as an insurance company (or any Subsidiary thereof).

 

“Cash Collateralize” shall have the meaning provided in Section 3.7(b).

 

“Cash Management Agreement” shall mean any agreement entered into from time to
time by the Borrower or any of the Borrower’s Restricted Subsidiaries 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 Bank” shall mean any Person that either (i) at the time it
provides Cash Management Services, (ii) on the Closing Date or (iii) at any time
after it has provided any Cash Management Services, is a Lender or an Agent or
an Affiliate of a Lender or an Agent.

 

“Cash Management Obligations” shall mean obligations owed by the Borrower or any
Restricted Subsidiary to any Cash Management Bank in connection with, or in
respect of, any Cash Management 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, including any Cash
Management Agreement.

 

“Casualty Event” shall mean, with respect to any Collateral, (a) any damage to,
destruction of, or other casualty or loss involving, any property or asset or
(b) any seizure, condemnation, confiscation or taking under the power of eminent
domain of, or any requisition of title or use of, or relating to, or any similar
event in respect of, any property or asset.

 

“CFC” shall mean a “controlled foreign corporation” within the meaning of
Section 957 of the Code.

  

 7 

 

 

“Change in Law” shall mean (a) the adoption of any law, treaty, order, policy,
rule or regulation after the Closing Date, (b) any change in any law, treaty,
order, policy, rule or regulation or in the interpretation, implementation or
application thereof by any Governmental Authority after the Closing Date or
(c) compliance by any Lender with any guideline, request, directive or order
enacted or promulgated after the Closing 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, enacted or promulgated in connection therewith shall be
deemed to have gone into effect after the Closing Date regardless of the date
adopted, enacted or promulgated and shall be included as a Change in Law but
solely for such costs that would have been included if they would have otherwise
been imposed under clauses (a)(ii) and (c) of Section 2.10 or Section 3.11 and
only to the extent a Lender is imposing applicable increased costs or costs in
connection with capital adequacy requirements similar to those described in
clauses (a)(ii) and (c) of Section 2.10 or Section 3.11 generally on other
borrowers of comparable loans under United States reserve based credit
facilities under credit agreements having similar reimbursement provisions.

 

“Change of Control” shall mean and be deemed to have occurred if:

 

(a) any person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act as in effect on the Closing Date), other than (i) any combination
of the Investors and the Permitted Holders or (ii) any “group” including any
Permitted Holders (provided that Permitted Holders beneficially own more than
50% of all voting interests beneficially owned by such “group”), shall have
acquired beneficial ownership of more than 50%, on a fully diluted basis, of the
voting interest in the Borrower’s Equity Interests; or

 

(b) a “change of control” (or similar event) shall occur under any Indebtedness
for borrowed money permitted under ‎Section 10.1 with an outstanding principal
amount in excess of $30,000,000 or any Permitted Refinancing in respect of any
of the foregoing with an outstanding principal amount in excess of $30,000,000.

 

Notwithstanding the preceding or any provision of Section 13d-3 of the Exchange
Act, (i) a Person or group shall not be deemed to beneficially own Equity
Interests subject to a stock or asset purchase agreement, merger agreement,
option agreement, warrant agreement or similar agreement (or voting or option or
similar agreement related thereto) until the consummation of the acquisition of
the Equity Interests in connection with the transactions contemplated by such
agreement, (ii) if any group includes one or more Permitted Holders, the issued
and outstanding Equity Interests of the Borrower owned, directly or indirectly,
by any Permitted Holders that are part of such group shall not be treated as
being beneficially owned by such group or any other member of such group for
purposes of determining whether a Change of Control has occurred and (iii) a
Person or group will not be deemed to beneficially own the Equity Interests of
another Person as a result of its ownership of the Equity Interests or other
securities of such other Person’s parent entity (or related contractual rights)
unless it owns 50% or more of the total voting power of the Equity Interests
entitled to vote for the election of directors of such parent entity having a
majority of the aggregate votes on the board of directors (or similar body) of
such parent entity.

 

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

  

 8 

 

 

“Class” shall mean (i) with respect to Commitments or Loans, those of such
Commitments or Loans that have the same terms and conditions (without regard to
differences in the Type of Loan, Interest Period, original issue discount,
upfront fees or similar fees paid or payable in connection with such Commitments
or Loans, or differences in tax treatment (e.g., “fungibility”)); provided that
such Commitments or Loans may be designated in writing by the Administrative
Agent, the Borrower and Lenders holding such Commitments or Loans as a separate
Class from other Commitments or Loans that have the same terms and conditions
and (ii) with respect to Lenders, those of such Lenders that have Commitments or
Loans of a particular Class.

 

“Closing Date” shall mean August 23, 2018.

 

“Closing Date Financials” shall have the meaning provided in Section 6(i).

 

“Closing Date Loans” shall have the meaning provided in the recitals to this
Agreement.

 

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

 

“Collateral” shall have the meaning provided for such term in each of the
Security Documents and shall include any and all assets securing or intended to
secure any or all of the Obligations; provided that with respect to any
Mortgages, “Collateral,” as defined herein, shall include “Deed of Trust
Property” as defined therein.

 

“Collateral Agent” shall mean Citibank, as collateral agent under the Security
Documents, or any successor collateral agent appointed in accordance with the
provisions of Section 12.9.

 

“Collateral Agreement” shall mean the Collateral Agreement of even date herewith
by and among the Borrower, the other grantors party thereto and the Collateral
Agent, for the benefit of the Secured Parties, substantially in the form of
Exhibit E hereto.

 

“Collateral Coverage Minimum” shall mean that the Mortgaged Properties shall
represent (a) from the date that is thirty (30) days following the Closing Date
up to the date that is sixty (60) days following the Closing Date, at least 50%
of the PV-9 of the Credit Parties’ total Proved Reserves and (b) from the date
that is sixty (60) days following the Closing Date and thereafter, at least 85%
of the PV-9 of the Credit Parties’ total Proved Reserves, in each case, included
either in the Initial Reserve Report or in the most recent Reserve Report
delivered to the Administrative Agent; provided that such timelines set forth in
clauses (a) and/or (b) above may be extended with the consent of the
Administrative Agent (such consent not to be unreasonably withheld or delayed).

 

“Commitment” shall mean, (a) with respect to each Lender that is a Lender on the
Closing Date, the amount set forth opposite such Lender’s name on
Schedule 1.1(a) as such Lender’s “Commitment” and (b) in the case of any Lender
that becomes a Lender after the Closing Date, the amount specified as such
Lender’s “Commitment” in the Assignment and Assumption pursuant to which such
Lender assumed a portion of the Total Commitment, in each case as the same may
be changed from time to time pursuant to the terms of this Agreement. The
aggregate amount of the Commitments as of the Closing Date is $500,000,000.

 

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

 

“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.

  

 9 

 

 

“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 aggregate Total Exposures of all Lenders at such time (with
such Total Exposure, and the components thereof, calculated using (x) any
applicable Lender’s outstanding principal amount of Loans plus (y) such Lender’s
Letter of Credit Exposure and such Lender’s Swingline Exposure based on the
Commitment Percentage of such Lender immediately prior to the termination of the
Total Commitment).

 

“Commodity Account” shall mean any commodity account maintained by the Credit
Parties. All funds in such Commodity Accounts (other than Excluded Accounts)
shall be conclusively presumed to be Collateral and proceeds of Collateral and
the Agents and the Lenders shall have no duty to inquire as to the source of the
amounts on deposit in the Commodity Accounts.

 

“Commodity Account Control Agreement” has the meaning specified in Section 9.17.

 

“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.

 

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

 

“Consolidated Current Assets” shall mean, as at any date of determination,
without duplication, the sum of all amounts that would, in conformity with GAAP,
be set forth opposite the caption “total current assets” (or any like caption)
on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries
at such date, plus the Available Commitment, but excluding any asset
representing a valuation account arising from the application of Accounting
Standards Codification Topic No. 410 and Accounting Standards Codification Topic
No. 815.

 

“Consolidated Current Liabilities” shall mean, as at any date of determination,
without duplication, the sum of all amounts that would, in conformity with GAAP,
be set forth opposite the caption “total current liabilities” (or any like
caption) on a consolidated balance sheet of the Borrower and its Restricted
Subsidiaries on such date, but excluding, without duplication, (a) any
liabilities representing a valuation account arising from the application of
Accounting Standards Codification Topic No. 410 and Accounting Standards
Codification Topic No. 815, (b) the current portion of current and deferred
income taxes or any amounts payable as tax distributions, (c) the current
portion of any Loans and other long-term liabilities (including, without
limitation, Hedging Obligations), (d) the current portion of interest, (e)
liabilities in respect of unpaid earnouts and accrued litigation settlement
costs, (f) current liabilities consisting of deferred revenue, (g) any non-cash
liabilities recorded in connection with stock-based or similar incentive-based
compensation awards or arrangements, and (h) any non-cash liabilities recorded
in connection with the assumption of gathering or firm transportation contracts
under Accounting Standards Codification Topic No. 805.

  

 10 

 

 

“Consolidated Depreciation, Depletion and Amortization Expense” shall mean, with
respect to any Person for any period, the total amount of depreciation,
depletion and amortization expense of such Person and its Restricted
Subsidiaries, including the amortization of intangible assets, deferred
financing fees, debt issuance costs, and commissions, fees and expenses and
amortization of Capitalized Software Expenditures and amortization of
unrecognized prior service costs and actuarial gains and losses to pensions and
other post-employment benefits of such Person and its Restricted Subsidiaries
for such period on a consolidated basis and otherwise determined in accordance
with GAAP.

 

“Consolidated EBITDAX” shall mean, with respect to any Person for any period,
the Consolidated Net Income of such Person and its Restricted Subsidiaries for
such period:

 

(a) increased (without duplication) by the following, in each case (other than
in the case of clauses (a)(vii) and (a)(viii)) to the extent deducted (and not
added back) in determining Consolidated Net Income for such period:

 

(i) provision for taxes based on income or profits or capital gains, including,
without limitation, federal, state, franchise, excise, property and similar
taxes (such as the Delaware franchise tax) and foreign withholding taxes
(including (i) any future taxes or other levies which replace or are intended to
be in lieu of such taxes and any penalties and interest related to such taxes or
arising from tax examinations and (ii) the amount of distributions actually made
to any Parent Entity in respect of such period in accordance with Sections
10.6(f)(i) and 10.6(f)(ii)) and the net tax expense associated with any
adjustments made pursuant to clauses (a) through (u) of the definition of
Consolidated Net Income, plus

 

(ii) Fixed Charges for such period (in addition to, without duplication, (x)
bank fees and other deferred financing fees and (y) costs of surety bonds in
connection with financing activities), plus amounts excluded from Consolidated
Interest Expense as set forth in clauses (i)(s) through (z) in the definition of
Consolidated Interest Expense, plus

 

(iii) Consolidated Depreciation, Depletion and Amortization Expense for such
period, plus

 

(iv) any other non-cash charges, including any write-offs or write-downs
reducing Consolidated Net Income for such period (provided that if any such
non-cash charges represent an accrual or reserve for potential cash items in any
future period, (1) the Borrower may determine not to add back such non-cash
charge in the current period and (2) to the extent the Borrower does decide to
add back such non-cash charge in the current period, the cash payment in respect
thereof in such future period shall be subtracted from Consolidated EBITDAX to
such extent, and excluding amortization of a prepaid cash item that was paid in
a prior period), plus

 

(v) the amount of any reductions in arriving at Net Income resulting from the
application of Accounting Standards Codification Topic No. 810, Consolidation,
plus

 

(vi) the amount of management, monitoring, consulting, transaction, advisory and
other fees (including termination fees) and indemnities and expenses paid or
accrued in such period to the extent permitted under clause (g) or (j) of
Section 9.9, plus

  

 11 

 

 

(vii) the amount of “run rate” cost savings, operating expense reductions and
savings from synergies (x) related to the Transactions projected by the Borrower
in good faith to result from actions that have been taken, or with respect to
which substantial steps have been taken or are expected to be taken (in the good
faith determination of the Borrower), within thirty-six (36) months after the
Closing Date, (y) related to mergers and other business combinations,
acquisitions, divestitures, restructurings, cost savings initiatives and other
similar initiatives consummated after the Closing Date and projected by the
Borrower in good faith to result from actions that have been taken or with
respect to which substantial steps have been taken, or are expected to be taken
(in the good faith determination of the Borrower) within thirty-six (36) months
after consummation of such merger or other business combination, acquisition,
divestiture, restructuring or cost savings initiative or other similar
initiative that have been taken or with respect to which substantial steps have
been taken or are expected to be taken (in the good faith determination of the
Borrower), and projected by the Borrower in good faith to result within
thirty-six (36) months after such actions are taken, in each case, calculated on
a Pro Forma Basis as though such cost savings, operating expense reductions, and
savings from synergies had been realized on the first day of such period, as if
such cost savings, operating expense reductions and savings from synergies were
realized during the entirety of such period, net of the amount of actual
benefits realized during such period from such actions; provided that (A) such
“run rate” cost savings, operating expense reductions and savings from synergies
are reasonably identifiable and factually supportable in the good faith judgment
of the Borrower and (B) no cost savings, operating expense reductions and
savings from synergies shall be added pursuant to this clause (vii) to the
extent duplicative of any expenses or charges otherwise added to Consolidated
EBITDAX, whether through a pro forma adjustment or otherwise, for such period,
plus

 

(viii) cash receipts (or any netting arrangements resulting in reduced cash
expenditures) not representing Consolidated EBITDAX or Consolidated Net Income
in any period to the extent non-cash gains relating to such income were deducted
in the calculation of Consolidated EBITDAX pursuant to paragraph (b) below for
any previous period and not added back, plus

 

(ix) any costs or expenses incurred pursuant to any management equity plan,
stock option plan or any other management or employee benefit plan, agreement or
any stock subscription or stockholders agreement, to the extent that such costs
or expenses are funded with cash proceeds contributed to the capital of such
Person or net cash proceeds of an issuance of Equity Interests of such Person
(other than Disqualified Stock), plus

 

(x) any net loss from disposed, abandoned or discontinued operations, plus

 

(xi) (A) costs and expenses incurred in connection with the Transactions and (B)
costs and expenses incurred in connection with any Investments, acquisitions (or
purchases of assets) after the Closing Date, plus

  

 12 

 

 

(xii) the amount of any restructuring charges or reserves, equity-based or
non-cash compensation charges or expenses including any such charges or expenses
arising from grants of stock appreciation or similar rights, stock options,
restricted stock or other rights, retention charges (including charges or
expenses in respect of incentive plans), severance costs, costs relating to
initiatives aimed at profitability improvement, costs or reserves associated
with improvements to IT and accounting functions and integration and facilities
opening costs or any one-time costs incurred in connection with acquisitions and
investments; plus

 

(xiii) the amount of any non-cash interest expense of non-wholly owned
Subsidiaries attributable to minority equity interests of third parties; plus

 

(xiv) the amount of net cost savings and net cash flow effect of revenue
enhancements related to New Contracts projected by the Borrower in good faith to
be realized as a result of specified actions taken or to be taken prior to or
during such period (which cost savings or revenue enhancements shall be subject
to certification by management of the Borrower and shall be calculated on a Pro
Forma Basis as though such cost savings or revenue enhancements had been
realized on the first day of such period), net of the amount of actual benefits
realized during such period from such actions; provided that (A) such cost
savings or revenue enhancements are reasonably identifiable and factually
supportable, (B) such actions have been taken or are to be taken within 12
months after the date of determination to take such action and (C) no cost
savings or revenue enhancements shall be added pursuant to this clause (xiv) to
the extent duplicative of any expenses or charges relating to such cost savings
or revenue enhancements that are included in clause (xii) above with respect to
such period; plus

 

(xv) exploration expenses or costs (to the extent the Borrower adopts the
successful efforts method of accounting); and

 

(b) decreased (without duplication) by the following, in each case to the extent
included in determining Consolidated Net Income for such period:

 

(i) non-cash gains increasing Consolidated Net Income for such period, excluding
any non-cash gains that represent the reversal of an accrual or reserve for any
anticipated cash charges in any prior period (other than any such accrual or
reserve that has been added back to Consolidated Net Income in calculating
Consolidated EBITDAX in accordance with this definition), plus

 

(ii) any net income from disposed, abandoned or discontinued operations, plus

 

(iii) any non-cash gains with respect to cash actually received in a prior
period unless such cash did not increase Consolidated EBITDAX in such prior
period.

  

 13 

 

 

There shall be included in determining Consolidated EBITDAX for any period,
without duplication, (A) the Acquired EBITDAX of any Person, property, business
or asset acquired by the Borrower or any Restricted Subsidiary during such
period (but not the Acquired EBITDAX of any related Person, property, business
or assets to the extent not so acquired), to the extent not subsequently sold,
transferred or otherwise disposed by the Borrower or such Restricted Subsidiary
during such period (each such Person, property, business or asset acquired and
not subsequently so disposed of, an “Acquired Entity or Business”) and the
Acquired EBITDAX of any Unrestricted Subsidiary that is converted into a
Restricted Subsidiary during such period (each, a “Converted Restricted
Subsidiary”), based on the actual Acquired EBITDAX of such Acquired Entity or
Business or Converted Restricted Subsidiary for such period (including the
portion thereof occurring prior to such acquisition) and (B) for the purposes of
the definition of the term “Permitted Acquisition”, compliance with the covenant
set forth in Section 10.11 and the calculation of the Consolidated Total Net
Leverage Ratio, but without limiting the adjustments included in the definition
of Consolidated EBITDAX, an adjustment in respect of each Acquired Entity or
Business equal to the amount of the Pro Forma Adjustment with respect to such
Acquired Entity or Business for such period (including the portion thereof
occurring prior to such acquisition) as specified in a certificate executed by
an Authorized Officer and delivered to the Lenders and the Administrative Agent.
There shall be excluded in determining Consolidated EBITDAX for any period the
Disposed EBITDAX of any Person, property, business or asset (other than an
Unrestricted Subsidiary) sold, transferred or otherwise disposed of or, closed
or classified as discontinued operations (but if such operations are classified
as discontinued due to the fact that they are subject to an agreement to dispose
of such operations, only when and to the extent such operations are actually
disposed of) by the Borrower or any Restricted Subsidiary during such period
(each such Person, property, business or asset so sold or disposed of, a “Sold
Entity or Business”) and the Disposed EBITDAX of any Restricted Subsidiary that
is converted into an Unrestricted Subsidiary during such period (each a
“Converted Unrestricted Subsidiary”), based on the actual Disposed EBITDAX of
such Sold Entity or Business or Converted Unrestricted Subsidiary for such
period (including the portion thereof occurring prior to such sale, transfer or
disposition).

 

Consolidated EBITDAX shall be calculated for each four-fiscal quarter period
using the Consolidated EBITDAX for the four most recently ended fiscal quarters.
Notwithstanding anything to the contrary contained herein, for purposes of
determining Consolidated EBITDAX under this Agreement for any period that
includes any of the fiscal quarters ended September 30, 2017, December 31, 2017,
March 31, 2018 and June 30, 2018, Consolidated EBITDAX for such fiscal quarters
shall be $10,033,276, $13,295,345, $16,454,419 and $24,912,000, respectively, in
each case, as may be subject to add-backs and adjustments (without duplication)
pursuant to clause (a)(vii) above and Section 1.12(c) for the applicable Test
Period.

 

For the avoidance of doubt, Consolidated EBITDAX shall be calculated, including
Pro Forma Adjustments, in accordance with Section 1.12.

 

“Consolidated Interest Expense” shall mean, with respect to any Person for any
period, without duplication, the sum of:

 

(i) consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, to the extent such expense was deducted (and not added back) in
computing Consolidated Net Income (including (a) amortization of original issue
discount resulting from the issuance of Indebtedness at less than par, (b) all
commissions, discounts and other fees and charges owed with respect to letters
of credit or bankers acceptances, (c) non-cash interest payments (but excluding
any non-cash interest expense attributable to the movement in the mark to market
valuation of Hedging Obligations or other derivative instruments pursuant to
GAAP), (d) the interest component of obligations under any Capitalized Lease,
and (e) net payments, if any, made (less net payments, if any, received),
pursuant to interest rate Hedge Agreements with respect to Indebtedness, and
excluding (s) costs associated with obtaining Hedge Agreements and breakage
costs in respect of Hedge Agreements related to interest rates, (t) any expense
resulting from the discounting of any Indebtedness in connection with the
application of recapitalization accounting or, if applicable, purchase
accounting in connection with the Transactions or any acquisition, (u) penalties
and interest relating to taxes, (v)  any “additional interest” or “liquidated
damages” with respect to other securities for failure to timely comply with
registration rights obligations, (w) amortization or expensing of deferred
financing fees, amendment and consent fees, debt issuance costs, commissions,
fees and expenses and discounted liabilities, (x) any expensing of bridge,
commitment and other financing fees and any other fees related to the
Transactions or any acquisitions after the Closing Date, (y) any accretion of
accrued interest on discounted liabilities and any prepayment premium or penalty
(other than Indebtedness except to the extent arising from the application of
purchase or recapitalization accounting) and (z) annual agency fees paid to the
administrative agents and collateral agents under any credit facilities or other
debt instruments or document); plus

  

 14 

 

 

(ii) consolidated capitalized interest of the Borrower and its Restricted
Subsidiaries for such period, whether paid or accrued; less

 

(iii) interest income of such Person and its Restricted Subsidiaries for such
period.

 

For purposes of this definition, interest on obligations in respect of
Capitalized Leases shall be deemed to accrue at an interest rate reasonably
determined by such Person to be the rate of interest implicit in such
obligations in accordance with GAAP.

 

“Consolidated Net Income” shall mean, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, and otherwise determined in accordance
with GAAP; provided, however, that, without duplication:

 

(a) any net after-tax effect of extraordinary, non-recurring or unusual gains,
losses, charges or expenses or losses, charges or expenses relating to any
strategic initiatives (including relating to any multi-year strategic
initiatives), Transaction Expenses, restructuring costs and reserves,
duplicative running costs, relocation costs, integration costs, expenses related
to any reconstruction, decommissioning, recommissioning or reconfiguration of
fixed assets, Public Company Costs, facility consolidation and closing costs,
severance costs and expenses, one-time compensation charges, costs relating to
pre-opening, opening, closing and consolidation costs for facilities, signing,
retention or completion bonuses, executive recruiting and retention costs, costs
incurred in connection with any strategic initiatives, transition costs, costs
incurred in connection with non-ordinary course product and intellectual
property development, costs incurred in connection with acquisitions (or
purchases of assets) prior to or after the Closing Date (including integration
costs), other business optimization expenses (including costs and expenses
relating to business optimization programs, tax savings and optimization
initiatives, and new systems design, retention charges, system establishment
costs (including information technology systems) and implementation costs and
project start-up costs), operating expenses attributable to the implementation
of cost-savings initiatives, consulting fees and curtailments and modifications
to pension and post-retirement employee benefit plans shall be excluded;

 

(b) the cumulative effect of a change in accounting principles and changes as a
result of the adoption or modification of accounting policies during such period
whether effected through a cumulative effect adjustment or a retroactive
application, in each case in accordance with GAAP, shall be excluded;

  

 15 

 

 

(c) any net after-tax effect of gains or losses on disposal, abandonment
(including asset retirement costs) or discontinuance of disposed, abandoned or
discontinued operations, as applicable, shall be excluded provided that any
exclusion for the discontinuance of discontinued operations held for sale shall
be at the option of the Borrower pending the consummation of such sale;

 

(d) any net after-tax effect of gains or losses (less all fees, expenses and
charges relating thereto) attributable to asset dispositions or abandonments or
the sale or other disposition of any Equity Interests of any Person other than
in the ordinary course of business, shall be excluded;

 

(e) the Net Income for such period of any Person that is an Unrestricted
Subsidiary shall be excluded; provided that Consolidated Net Income of any
Person shall be increased by the amount of dividends or distributions or other
payments that are actually paid in cash or cash equivalents (or to the extent
converted into cash or cash equivalents) to such Person or a Restricted
Subsidiary thereof in respect of such period;

 

(f) [reserved];

 

(g) effects of adjustments (including the effects of such adjustments pushed
down to such Person and its Restricted Subsidiaries) in such Person’s
consolidated financial statements pursuant to GAAP (including any impact of
changes to inventory valuation policy method (including changes in
capitalization of variances), property and equipment, software, goodwill,
intangible assets, in-process research and development, deferred revenue and
debt line items thereof) resulting from the application of recapitalization
accounting or purchase accounting, as the case may be, in relation to the
Transactions or any consummated acquisition, joint venture or similar investment
permitted under this Agreement consummated on, prior to or after the Closing
Date or the amortization or write-off or write-down of any amounts thereof, net
of taxes, shall be excluded;

 

(h) any net after-tax effect of income (loss) from the early extinguishment or
conversion of (a) Indebtedness, (b) Hedge Agreements or (c) other derivative
instruments shall be excluded;

 

(i) any impairment charge or asset write-off or write-down in each case,
pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP
or SEC guidelines, and any impairment charges, asset write-offs or write-down,
including ceiling test write-downs, on Oil and Gas Properties under GAAP or SEC
guidelines shall be excluded;

 

(j) any non-cash equity or phantom equity based or non-cash compensation charge
or expense, including any such charge or expense arising from grants of stock
appreciation rights, equity incentive programs or similar rights, stock options,
restricted stock, profits interests or other rights or equity or equity-based
incentive programs (“equity incentives”), any cash charges associated with
equity incentives or other long-term incentive compensation plans, roll-over,
acceleration, or payout of Equity Interests by management, other employees or
business partners of such Person or of a Restricted Subsidiary or any of its
direct or indirect parent companies, shall be excluded;

  

 16 

 

 

(k) any fees, expenses or charges incurred during such period, or any
amortization thereof for such period, in connection with any acquisition,
recapitalization, Investment, Disposition or other transfer, incurrence or
repayment of Indebtedness (including such fees, expenses or charges related to
the syndication and incurrence of any securities or credit facilities), issuance
of Equity Interests (including by any direct or indirect parent of the
Borrower), recapitalization, refinancing transaction or amendment or
modification of any debt instrument (including any amendment or other
modification of any securities and any credit facilities) and including, in each
case, any such transaction whether consummated on, after or prior to the Closing
Date and any such transaction undertaken but not completed, and any charges or
non-recurring merger costs incurred during such period as a result of any such
transaction, in each case whether or not successful or consummated (including,
for the avoidance of doubt, the effects of expensing all transaction related
expenses in accordance with Accounting Standards Codification Topic No. 805,
Business Combinations), shall be excluded;

 

(l) any fees, expenses or charges incurred during such period, or any
amortization thereof for such period, in connection with the entry into or
termination of any Hedge Agreements shall be excluded;

 

(m) accruals and reserves that are established or adjusted within twelve (12)
months after the Closing Date that are so required to be established or adjusted
as a result of the Transactions (or within twenty-four (24) months after the
closing of any acquisition or Investment that are so required to be established
as a result of such acquisition or Investment) in accordance with GAAP or
changes as a result of modifications of accounting policies shall be excluded;

 

(n) any expenses, charges or losses to the extent covered by insurance or
indemnity and actually reimbursed, or, so long as such Person has made a
determination that there exists reasonable evidence that such amount will in
fact be reimbursed by the insurer or indemnifying party and only to the extent
that such amount is in fact reimbursed within 365 days of the date of such
determination (net of any amount so added back in any prior period to the extent
not so reimbursed within the applicable 365-day period), shall be excluded;

 

(o) the net income for such period of any Restricted Subsidiary (other than any
Guarantor) shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of its net
income is not at the date of determination permitted without any prior
governmental approval (which has not been obtained) or, directly or indirectly,
by the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule, or governmental regulation applicable to
that Restricted Subsidiary or its stockholders (other than restrictions in this
Agreement), unless such restriction with respect to the payment of dividends or
similar distributions has been legally waived; provided that the Consolidated
Net Income of the Borrower and its Restricted Subsidiaries will be increased by
the amount of dividends or other distributions or other payments actually paid
in cash equivalents (or to the extent converted into cash equivalents) to the
Borrower or a Restricted Subsidiary thereof in respect of such period, to the
extent not already included therein;

 

(p) any non-cash compensation expense resulting from the application of (i)
Accounting Standards Codification Topic No. 718, Compensation—Stock
Compensation, (ii) Accounting Standards Codification Topic No. 505-50,
Equity-Based Payments to Non-Employees or (iii) Accounting Standards
Codification Topic No. 710, Compensation - General, shall be excluded;

  

 17 

 

 

(q) non-cash gains, losses, income and expenses resulting from fair value
accounting required by the applicable standard under GAAP and related
interpretations shall be excluded;

 

(r) (i) the non-cash portion of “straight-line” rent expense shall be excluded
and (ii) the cash portion of “straight-line” rent expense which exceeds the
amount expensed in respect of such rent expense shall be included;

 

(s) without duplication, an amount equal to the amount of distributions actually
made to any parent or equity holder of such Person in respect of income taxes
for of such period in accordance with Section 10.6(f)(i) and Section 10.6(f)(ii)
shall be included as though such amounts had been paid as income taxes directly
by such Person for such period;

 

(t) non-cash charges for deferred tax asset valuation allowances shall be
excluded (except to the extent reversing a previously recognized increase to net
income); and

 

(u) the following items shall be excluded:

 

(i) any net unrealized gain or loss (after any offset) resulting in such period
from Hedge Agreements and the application of Accounting Standards Codification
Topic No. 815, Derivatives and Hedging;

 

(ii) any net unrealized gain or loss (after any offset) resulting in such period
from currency transaction or translation gains or losses including those related
to currency remeasurements of Indebtedness (including any net loss or gain
resulting from (A) Hedge Agreements for currency exchange risk and (B) resulting
from intercompany indebtedness) and any other foreign currency transaction or
translation gains and losses, to the extent such gains or losses are non-cash
items;

 

(iii) effects of adjustments to accruals and reserves during a prior period
relating to any change in methodology of calculating reserves, rebates or other
chargebacks;

 

(iv) any adjustments resulting from the application of Accounting Standards
Codification Topic No. 460, Guarantees, or any comparable regulation; and

 

(v) earn-out and contingent consideration obligations (including to the extent
accounted for as bonuses or otherwise) and adjustments thereof and purchase
price adjustments.

 

In addition, to the extent not already included in the Consolidated Net Income
of such Person and its Restricted Subsidiaries, notwithstanding anything to the
contrary in the foregoing, Consolidated Net Income shall include the amount of
proceeds received from business interruption insurance and reimbursements of any
expenses and charges that are covered by indemnification or other reimbursement
provisions in connection with any acquisition, Investment or any sale,
conveyance, transfer or other disposition of assets permitted under this
Agreement.

  

 18 

 

 

“Consolidated Total Assets” shall mean the total assets of the Borrower and its
Restricted Subsidiaries, determined on a consolidated basis in accordance with
GAAP, as shown on the most recent consolidated balance sheet of the Borrower
delivered pursuant to Section 9.1(a) or (b) (and, in the case of any
determination relating to any incurrence of Indebtedness or any Investment or
other acquisition, on a Pro Forma Basis including any property or assets being
acquired in connection therewith).

 

“Consolidated Total Debt” shall mean, as of any date of determination, (a) the
sum of (without duplication) the aggregate principal amount of Indebtedness of
the Borrower and its Restricted Subsidiaries outstanding on such date, in an
amount that would be reflected on a consolidated balance sheet (excluding the
notes thereto) prepared as of such date on a consolidated basis in accordance
with GAAP (but excluding the effects of any discounting of Indebtedness
resulting from the application of recapitalization or purchase accounting in
connection with the Transactions, any Permitted Acquisition, Investment or any
other acquisition permitted hereunder), consisting only of Indebtedness for
borrowed money, purchase money indebtedness, Indebtedness in respect of any
Capitalized Lease, and debt obligations evidenced by promissory notes, bonds,
debentures, loan agreements or similar instruments, minus (b) the aggregate
amount of all Unrestricted Cash and cash equivalents on the balance sheet of the
Borrower and its Restricted Subsidiaries as of such date; provided that (x)
clause (a) above shall not include Indebtedness (i) in respect of Hedging
Obligations (but shall include net unpaid termination payments under Hedge
Agreements), (ii) in respect of letters of credit, bank guarantees and
performance or similar bonds except to the extent of unreimbursed amounts
thereunder and (iii) of Unrestricted Subsidiaries and (y) at any time that there
are any Loans outstanding, the amount of Unrestricted Cash and cash equivalents
deducted pursuant to clause (b) above shall not exceed $62,500,000.

 

“Consolidated Total Net Leverage Ratio” shall mean, as of any date of
determination, the ratio of (a) Consolidated Total Debt as of the last day of
the most recent Test Period to (b) Consolidated EBITDAX for such Test Period.

 

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

 

“Contribution Agreement” shall have the meaning provided in the recitals to this
Agreement.

 

“Contributors” shall have the meaning provided in the recitals to this
Agreement.

 

“Controlled Account” shall mean a Deposit Account, a Securities Account or a
Commodity Account that is subject to a Deposit Account Control Agreement, a
Securities Account Control Agreement or a Commodity Account Control Agreement,
as the case may be.

 

“Controlled Investment Affiliate” shall mean, as to any Person, any other
Person, other than any Sponsor, which directly or indirectly is in control of,
is controlled by, or is under common control with such Person and is organized
by such Person (or any Person controlling such Person) primarily for making
direct or indirect equity or debt investments in the Borrower and/or other
companies.

 

“Converted Restricted Subsidiary” has the meaning set forth in the definition of
“Consolidated EBITDAX.”

 

“Converted Unrestricted Subsidiary” has the meaning set forth in the definition
of “Consolidated EBITDAX.”

  

 19 

 

 

“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, any Extension Amendment, any Incremental Agreement and any
intercreditor agreement with respect to the Facility entered into on or after
the Closing Date to which the Collateral Agent is party.

 

“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.

 

“Cure Amount” shall have the meaning provided in Section 11.13(a).

 

“Cure Deadline” shall have the meaning provided in Section 11.13(a).

 

“Cure Right” shall have the meaning provided in Section 11.13(a).

 

“Current Ratio” shall mean, as of any date of determination, the ratio of (a)
Consolidated Current Assets to (b) Consolidated Current Liabilities.

 

“Customary Intercreditor Agreement” shall mean a First Lien Intercreditor
Agreement or a Junior Lien Intercreditor Agreement, as the context requires.

 

“Debt Fund Affiliate” shall mean any Affiliate of the Sponsor that is a bona
fide diversified debt fund and is not either (a) a natural person or (b) the
Borrower, a Subsidiary of the Borrower.

 

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

 

“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 2.8(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” shall mean any checking or other demand deposit account
maintained by the Credit Parties, including any “deposit accounts” under
Article 9 of the UCC. All funds in such Deposit Accounts (other than Excluded
Accounts) shall be conclusively presumed to be Collateral and proceeds of
Collateral and the Administrative Agents and the Lenders shall have no duty to
inquire as to the source of the amounts on deposit in the Deposit Accounts.

 

“Deposit Account Control Agreement” has the meaning specified in Section 9.17.

 

“DGK Credit Agreement” shall mean that certain First Lien Credit Agreement,
dated as of October 19, 2012 (as amended, supplemented or otherwise modified
prior to the Closing Date), among DGK ORRI Holdings, LP, as borrower, the
lenders party thereto from time to time, and Wells Fargo Bank, National
Association, in its capacity as administrative agent and collateral agent.

  

 20 

 

 

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

 

“Disposed EBITDAX” shall mean, with respect to any Sold Entity or Business or
any Converted Unrestricted Subsidiary for any period, the amount for such period
of Consolidated EBITDAX of such Sold Entity or Business (determined as if
references to the Borrower and the Restricted Subsidiaries in the definition of
Consolidated EBITDAX (and in the component definitions used therein) were
references to such Sold Entity or Business and its Subsidiaries or such
Converted Unrestricted Subsidiary and its Subsidiaries) or such Converted
Unrestricted Subsidiary, all as determined on a consolidated basis for such Sold
Entity or Business or such Converted Unrestricted Subsidiary.

 

“Disposition” shall have the meaning provided in Section 10.4.

 

“Disqualified Institution” shall mean those Persons that have been specified in
writing by the Borrower to the Administrative Agent prior to June 3, 2018 and
any competitor of the Borrower and its Subsidiaries and any Affiliates of such
competitor that are operating companies (or Affiliates of operating companies)
subsequently identified in writing by the Borrower, other than their respective
financial investors that are not operating companies and other than any Debt
Fund Affiliate. The list of Disqualified Institutions shall be specified on a
schedule that is held with the Administrative Agent, which shall be made
available to any Lender upon request to the Administrative Agent, subject to
customary confidentiality requirements.

 

“Disqualified Stock” shall mean any Equity Interest that, by its terms (or by
the terms of any security or other Equity Interests into which it is convertible
or for which it is exchangeable), or upon the happening of any event or
condition (a) matures or is mandatorily redeemable (other than solely for
Qualified Equity Interests), pursuant to a sinking fund obligation, scheduled
redemption or otherwise (except as a result of a change of control or asset sale
so long as any rights of the holders thereof upon the occurrence of a change of
control or asset sale event shall be subject to the prior repayment in full of
the Loans and all other Obligations (other than (i) contingent indemnification
obligations as to which no claim has been asserted and (ii) Obligations under
Secured Hedge Agreements and Secured Cash Management Agreements)) and the
termination of the Commitments and (to the extent not cash collateralized or
backstopped in a manner reasonably acceptable to the Issuing Bank) outstanding
Letters of Credit, (b) is redeemable at the option of the holder thereof (other
than solely for Qualified Equity Interests and other than as a result of a
change of control or asset sale so long as any rights of the holders thereof
upon the occurrence of a change of control or asset sale event shall be subject
to the prior repayment in full of the Loans and all other Obligations (other
than (i) contingent indemnification obligations as to which no claim has been
asserted and (ii) Obligations under Secured Hedge Agreements and Secured Cash
Management Agreements) and the termination of the Commitments and (to the extent
not cash collateralized or backstopped in a manner reasonably acceptable to the
Issuing Bank) outstanding Letters of Credit), (c) provides for the scheduled
payments of dividends in cash, or (d) is or becomes convertible into or
exchangeable for Indebtedness or any other Equity Interests that would
constitute Disqualified Stock, in the case of each of clauses (a), (b), (c) and
(d), prior to the date that is ninety-one (91) days after the Latest Maturity
Date at the time of issuance of such Equity Interests; provided, that if such
Equity Interests are issued pursuant to any plan for the benefit of future,
current or former employees, directors, officers, members of management or
consultants (or their respective Controlled Investment Affiliates or Immediate
Family Members) of the Borrower (or any direct or indirect parent thereof) or
its Subsidiaries or by any such plan to such employees, directors, officers,
members of management or consultants (or their respective Controlled Investment
Affiliates or Immediate Family Members), such Equity Interests shall not
constitute Disqualified Stock solely because they may be required to be
repurchased by the Borrower or its Restricted Subsidiaries in order to satisfy
applicable statutory or regulatory obligations or as a result of such
employee’s, director’s, officer’s, management member’s or consultant’s
termination, death or disability; provided, further, that any Equity Interests
held by any future, current or former employee, director, officer, member of
management or consultant (or their respective Controlled Investment Affiliates
or Immediate Family Members) of the Borrower, any of its Restricted
Subsidiaries, any of its direct or indirect parent companies or any other entity
in which the Borrower or a Restricted Subsidiary has an Investment and is
designated in good faith as an “affiliate” by the Board of Directors (or the
compensation committee thereof), in each case pursuant to any stock subscription
or shareholders’ agreement, management equity plan or stock option plan or any
other management or employee benefit plan or agreement shall not constitute
Disqualified Stock solely because it may be required to be repurchased by the
Borrower or its Restricted Subsidiaries in order to satisfy applicable statutory
or regulatory obligations or as a result of such employee’s, director’s,
officer’s, management member’s or consultant’s termination, death or disability.

  

 21 

 

 

“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 of
America.

 

“Domestic Subsidiary” shall mean each Subsidiary of the Borrower or Falcon GP
that is organized under the laws of the United States or any state thereof, or
the District of Columbia.

 

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

 

“Draw Limit” shall have the meaning provided in Section 2.14(h).

 

“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.

 

“Engineering Reports” shall have the meaning provided in Section 2.14(c)(i).

  

 22 

 

 

“Environmental Claims” shall mean any and all written actions, suits, orders,
decrees, demands, demand letters, claims, liens, notices of liability,
noncompliance, violation or proceedings arising under or based upon any
Environmental Law or any Environmental Permit (hereinafter, “Claims”),
including, without limitation, (i) any and all Claims by any Governmental
Authority 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 regarding 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, 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 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 pollution or
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 any Release or recycling of, or
exposure to, any pollutants, contaminants or chemicals or any toxic or otherwise
hazardous substances, materials or wastes).

 

“Environmental Permit” shall mean any permit, approval, identification number,
license or other authorization required under any applicable Environmental Law.

 

“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, excluding any debt security that is convertible or
exchangeable into any Equity Interests (provided that any instrument evidencing
Indebtedness convertible or exchangeable into Equity Interests, whether or not
such debt securities include any right of participation with Equity Interests,
shall not be deemed to be Equity Interests unless and until such instrument is
so converted or exchanged, except, solely for purposes of a pledge of Equity
Interests in connection with this Agreement, to the extent such instrument could
be treated as “stock” of a CFC for purposes of Treasury Regulation Section
1.956-2(c)(2)).

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder.

 

“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA)
that together with any Credit Party would be deemed to be a “single employer”
within the meaning of Section 4001(b)(1) of ERISA or 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.

  

 23 

 

 

“ERISA Event” shall mean (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) the failure of a Credit Party or any ERISA Affiliate to make by its
due date a required installment under Section 430(j) of the Code with respect to
any Pension Plan; (d) a failure to satisfy the minimum funding standard under
Section 412 of the Code or Section 302 of ERISA, or the filing pursuant to
Section 412(c) of the Code or Section 302(c) of ERISA of an application for a
waiver of the minimum funding standard, in each case with respect to a Pension
Plan, whether or not waived, or a failure to make any required contribution to a
Multiemployer Plan; (e) a complete or partial withdrawal by a Credit Party or
any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is insolvent within the meaning of Title IV of ERISA or is in
endangered or critical status, within the meaning of Section 305 of ERISA; (f)
the filing of a notice of intent to terminate, the treatment of a Pension Plan
amendment as a termination under Section 4041 or 4041A of ERISA, respectively,
or the commencement of proceedings by the PBGC to terminate a Pension Plan;
(g) the appointment of a trustee to administer, any Pension Plan; (h) the
imposition of any liability under Title IV of ERISA, including the imposition of
a lien under Section 412 or 430(k) of the Code or Section 303 or 4068 of ERISA
on any property (or rights to property, whether real or personal) of a Credit
Party or any ERISA Affiliate, but excluding PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon such Credit Party or any ERISA Affiliate; (i)
a determination that any Pension Plan is, or is expected to be, in “at-risk”
status (within the meaning of Section 303(i)(4)(A) of ERISA or Section
430(i)(4)(A) of the Code) or (j) the occurrence of a non-exempt prohibited
transaction with respect to any Pension Plan maintained or contributed to by any
Credit Party (within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be excepted to result in material liability to
such Credit Party, except in each of the foregoing clauses (a) through (j) with
respect to Foreign Plans.

 

“Euro” shall mean the lawful single currency unit of the Participating Member
States.

 

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

 

“Event of Default” shall have the meaning provided in Section 11.

 

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

 

“Exchange Rate” shall mean on any day with respect to any currency (other than
Dollars), the rate at which such currency may be exchanged into any other
currency (including Dollars), as set forth at approximately 12:00 noon (London
time) on such day on the Reuters World Currency Page for such currency. In the
event that such rate does not appear on any Reuters World Currency Page, the
Exchange Rate shall be determined by reference to such other publicly available
service for displaying exchange rates as may be agreed by the Administrative
Agent and the Borrower, or, in the absence of such agreement, such Exchange Rate
shall instead be the arithmetic average of the spot rates of exchange of the
bank acting as Administrative Agent in the market where its foreign currency
exchange operations in respect of such currency are then being conducted, at or
about 12:00 noon, local time, on such date for the purchase of the relevant
currency for delivery two (2) Business Days later.

 

“Excluded Accounts” shall mean (a) each account all or substantially all of the
deposits in which consist of amounts utilized to fund payroll, employee benefit
or tax obligations of the Borrower and its Restricted Subsidiaries, (b)
fiduciary accounts, (c) “zero balance” accounts, (d) trust and suspense accounts
of the Borrower and any Restricted Subsidiary holding royalty obligations owed
to a person other than the Borrower or a Restricted Subsidiary, (e) accounts of
the Borrower and any Restricted Subsidiary constituting cash collateral accounts
permitted under Section 10.2 (provided that any such account subject to control
agreements in favor of the Collateral Agent, for the benefit of the Secured
Parties, or otherwise constituting cash collateral in favor of the Collateral
Agent, for the benefit of the Secured Parties shall not be an Excluded Account)
and (f) other accounts selected by the Borrower and its Restricted Subsidiaries
so long as the average daily maximum balance in any such other account over a
30-day period does not at any time exceed $1,000,000; provided that the
aggregate daily maximum balance for all such bank accounts excluded pursuant to
this clause (f) on any day shall not exceed $7,500,000.

  

 24 

 

 

“Excluded Assets” shall have the meaning assigned to such term in the Collateral
Agreement.

 

“Excluded Equity Interests” shall mean (a) any Equity Interests with respect to
which, in the reasonable judgment of the Administrative Agent and the Borrower,
the cost or other consequences of pledging such Equity 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) solely in the case
of any pledge of Equity Interests of any Subsidiary that is (x) a CFC or (y) a
FSHCO, to secure the Obligations, any Equity Interest that is Voting Stock of
such CFC or FSHCO in excess of 65% of the Voting Stock of such Subsidiary,
(c) any Equity Interests to the extent the pledge thereof would be prohibited by
any Requirement of Law, (d) in the case of (i) any Equity Interests of any
Subsidiary to the extent the pledge of such Equity Interests is prohibited by
Contractual Requirements existing on the Closing Date or at the time such
Subsidiary is acquired (provided that such Contractual Requirements have not
been entered into in contemplation of such Subsidiary being acquired), or
(ii) any Equity Interests of any Subsidiary that is not a Wholly owned
Subsidiary at the time such Subsidiary becomes a Subsidiary, any Equity
Interests of each such Subsidiary described in clause (i) or (ii) 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 Uniform Commercial Code 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 only 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 Uniform Commercial Code or other applicable Requirement of Law), (e)
the Equity Interests of any Immaterial Subsidiary (unless a security interest in
the Equity Interests of such Subsidiary may be perfected by filing an “all
assets” UCC financing statement) and any Unrestricted Subsidiary, (f) the Equity
Interests of any Subsidiary of a CFC or FSHCO, (g) 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, (h) any Equity Interests set forth on
Schedule 1.1(b) which have been identified on or prior to the Closing Date in
writing to the Administrative Agent by an Authorized Officer of the Borrower and
agreed to by the Administrative Agent and (i) Margin Stock.

  

 25 

 

 

“Excluded Subsidiary” shall mean (a) each Immaterial Subsidiary, for so long as
any such Subsidiary constitutes an Immaterial Subsidiary pursuant to the terms
hereof, (b) each Domestic Subsidiary that is not a Wholly owned Subsidiary (for
so long as such Subsidiary remains a non-wholly owned Restricted Subsidiary),
(c) each Domestic Subsidiary that is prohibited by any applicable Contractual
Requirement not entered into in contemplation of such Subsidiary becoming a
Subsidiary or a Restricted Subsidiary or Requirement of Law from guaranteeing or
granting Liens to secure the Obligations on the Closing Date or 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 not entered into in
contemplation of such Subsidiary becoming a Subsidiary or a Restricted
Subsidiary or that would require consent, approval, license or authorization of
a Governmental Authority to guarantee or grant Liens to secure the Obligations
on the Closing Date or at the time such Subsidiary becomes a Restricted
Subsidiary (unless such consent, approval, license or authorization has been
received), (d) any Foreign Subsidiary, (e) any Domestic Subsidiary that is (i) a
FSHCO or (ii) owned directly or indirectly by a CFC or a FSHCO, (f) any other
Domestic Subsidiary with respect to which (x) in the reasonable judgment of the
Administrative Agent and the Borrower, the burden or cost or other consequences
(including any material adverse tax consequences) of providing a Guarantee of or
granting Liens to secure the Obligations shall be excessive in view of the
benefits to be obtained by the Lenders therefrom or (y) providing such a
Guarantee or granting such Liens would result in material adverse tax
consequences to the Borrower, any direct or indirect parent company of the
Borrower or any of the Borrower’s subsidiaries as reasonably determined by the
Borrower, (g) each Unrestricted Subsidiary, (h) each Captive Insurance
Subsidiary and (i) each not-for-profit Subsidiary.

 

“Excluded Swap Obligation” shall mean with respect to any Guarantor, any Hedging
Obligation if, and to the extent that, and only for so long as, all or a portion
of the guarantee of such Guarantor of, or the grant by such Guarantor of a
security interest to secure, as applicable, such Hedging Obligation (or any
guarantee thereof) is or becomes illegal or unlawful 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) or any
other applicable Requirement of Law.

 

“Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of any Credit Party hereunder or under any other Credit Document,
(i) Taxes imposed on or measured by its net income (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), branch profits Taxes and franchise Taxes imposed on it, in each
case by a jurisdiction (including any political subdivision thereof) as a result
of such recipient being organized in, 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 from such recipient having executed,
delivered, become a party to, performed its obligations under, received payments
under, received or perfected a security interest under, engaged in any other
transaction pursuant to or enforced any Credit Document, or sold or assigned an
interest in any Loan or Credit Document), (ii) in the case of a Lender, U.S.
federal withholding Taxes imposed on any payment by or on account of any
obligation of any Credit Party hereunder or under any other Credit Document that
is required to be imposed on amounts payable to or for the account of a Lender
(including any Issuing Bank and any Swingline Lender), other than to the extent
such Lender is an assignee pursuant to a request by the Borrower under
Section 13.7, pursuant to laws in force at the time such Lender acquires an
interest in a Loan, Letter of Credit or Commitment (or designates a new lending
office), except in each case, to the extent that such Lender (or its assignor,
if any) was entitled, immediately prior to the designation of a new lending
office (or assignment), to receive additional amounts or indemnification
payments from any Credit Party with respect to such withholding Taxes pursuant
to Section 5.4, (iii) any Taxes attributable to the Administrative Agent’s, any
Lender’s or any other recipient’s failure to comply with Sections 5.4(d), (e),
(f), (h) or (i), and (iv) any U.S. federal withholding Taxes imposed under
FATCA.

 

“Existing Class” shall mean a Class of Existing Commitments and related Existing
Loans.

  

 26 

 

 

“Existing Commitment” shall mean, with respect to a Class of Commitments, the
Commitments of such Class at the time a Loan Extension Request is made.

 

“Existing Loans” shall mean, with respect to a Class of Loans, the Loans of such
Class at the time a Loan Extension Request is made.

 

“Expected Cure Amount” shall have the meaning provided in Section 11.13(a)(iii).

 

“Extended Class” shall mean a Class of Extended Commitments and related Extended
Loans.

 

“Extended Commitments” shall mean, with respect to a Class of Commitments, all
or the portion of such Class extended pursuant to Section 2.17, as applicable.

 

“Extended Loans” shall mean, with respect to a Class of Loans, all or the
portion of such Class of Loans extended pursuant to Section 2.17, as applicable.

 

“Extending Lender” shall have the meaning provided in Section 2.17(b).

 

“Extension Amendment” shall have the meaning provided in Section 2.17(c).

 

“Extension Election” shall have the meaning provided in Section 2.17(b).

 

“Extension Minimum Condition” shall mean a condition to consummating any
extension that a minimum amount (to be determined and specified in the relevant
Loan Extension Request, in the Borrower’s sole discretion) of any or all
applicable Classes to be submitted for extension.

 

“Extension Series” shall have the meaning provided in Section 2.17(a).

 

“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.

 

“Falcon GP” means Falcon Minerals GP, LLC, a Delaware limited liability company
and the general partner of the Borrower.

 

“Farm-In Agreement” shall mean an agreement whereby a Person agrees, among other
things, to pay all or a share of the drilling, completion or other expenses of
one or more wells or perform the drilling, completion or other operation on such
well or wells as all or a part of the consideration provided in exchange for an
ownership interest in an Oil and Gas Property.

 

“Farm-Out Agreement” shall mean a Farm-In Agreement, viewed from the standpoint
of the party that grants to another party the right to earn an ownership
interest in an Oil and Gas Property.

  

 27 

 

 

“FATCA” shall mean Sections 1471 through 1474 of the Code (including, for the
avoidance of doubt, any agreements entered into pursuant to Section 1471(b)(1)
of the Code), as of the Closing Date (and any amended or successor version
thereof that is substantively comparable and not materially more onerous to
comply with), any current or future Treasury Regulations or other official
administrative guidance promulgated thereunder, any intergovernmental agreements
entered into in connection with the implementation of any of the foregoing, and
any fiscal or regulatory legislation, rules or practices adopted pursuant to any
of the foregoing.

 

“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 1.0%) of the
quotations for such day for such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by it.

 

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

 

“Financial Performance Covenants” shall mean the covenants of the Borrower set
forth in Section 10.11.

 

“First Lien Intercreditor Agreement” shall mean an intercreditor agreement
substantially in the form of Exhibit I (which agreement in such form or with
immaterial changes thereto the Collateral Agent is authorized to enter into)
among the Borrower, the subsidiaries of the Borrower from time to time party
thereto, Approved Counterparties from time to time party thereto, the Collateral
Agent and one or more collateral agents or representatives for the holders of
Indebtedness that is permitted under Section 10.1 to be, and intended to be,
secured on a pari passu basis with the Obligations.

 

“Fixed Charges” shall mean, with respect to any Person for any period, the sum
of, without duplication:

 

(a) Consolidated Interest Expense of such Person for such period;

 

(b) cash dividends or other cash distributions paid (excluding items eliminated
in consolidation) on any series of Preferred Stock during such period; and

 

(c) cash dividends or other cash distributions paid (excluding items eliminated
in consolidation) on any series of Disqualified Stock during such period.

 

“Foreign Plan” shall mean any employee benefit plan, program, policy,
arrangement or agreement maintained or contributed to by the Borrower or any of
its Subsidiaries with respect to employees employed outside the United States.

 

“Foreign Subsidiary” shall mean each Subsidiary of the Borrower that is not a
Domestic Subsidiary.

 

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

 

“FSHCO” shall mean any Domestic Subsidiary (including a disregarded entity for
U.S. federal income tax purposes) substantially all of whose assets consist of
(x) Equity Interests or (y) Equity Interests and Indebtedness, in each case of
one or more Foreign Subsidiaries that are CFCs (held directly or through
Subsidiaries).

  

 28 

 

 

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

 

“GAAP” shall mean generally accepted accounting principles in the United States
of America, as in effect from time to time; provided, however, that (i) 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 Closing Date in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required 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, (ii) GAAP shall be
construed, and all computations of amounts and ratios referred to herein shall
be made, without giving effect to any election under Accounting Standards
Codification Topic No. 825 (or any other Financial Accounting Standard having a
similar result or effect) to value any Indebtedness or other liabilities of the
Borrower or any of its Subsidiaries at “fair value,” as defined therein, and
Indebtedness shall be measured at the aggregate principal amount thereof, and
(iii) the accounting for operating leases and capital leases under GAAP as in
effect on the date hereof (including, without limitation, Accounting Standards
Codification 840) shall apply for the purposes of determining compliance with
the provisions of this Agreement, including the definition of Capitalized Leases
and obligations in respect thereof.

 

“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, taxing,
regulatory or administrative functions of or pertaining to government, including
a central bank or stock exchange.

 

“Granting Lender” shall have the meaning provided in Section 13.6(g).

 

“Guarantee” shall mean the Guarantee made by any Guarantor in favor of the
Collateral Agent for the benefit of the Secured Parties, substantially in the
form of Exhibit C.

 

“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 (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain financial condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such Indebtedness of the ability of the
primary obligor to make payment of such Indebtedness or (d) otherwise to assure
or hold harmless the owner of such Indebtedness against loss in respect thereof;
provided, however, that the term “Guarantee Obligations” shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business or customary and reasonable indemnity obligations in effect on the
Closing Date or entered into in connection with any acquisition or Disposition
of assets permitted under this Agreement (other than such obligations with
respect to Indebtedness). 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.

  

 29 

 

 

“Guarantors” shall mean each Domestic Subsidiary listed on Schedule 1.1(e) that
becomes a party to the Guarantee on the Closing Date (except to the extent
released therefrom in accordance with the terms hereof) and each other Domestic
Subsidiary (other than an Excluded Subsidiary (except to the extent provided
below)) that becomes a party to the Guarantee after the Closing Date pursuant to
Section 9.11 or otherwise; provided that, for the avoidance of doubt, the
Borrower in its sole discretion may cause any Restricted Subsidiary that is not
required to be a Guarantor hereunder or pursuant to the Security Documents to
provide a Guarantee by causing such Restricted Subsidiary to execute a Guarantee
and such Restricted Subsidiary shall be a Guarantor and Credit Party for all
purposes hereunder except to the extent released from such Guarantee in
accordance with the terms hereof.

 

“Hazardous Materials” shall mean (a) any petroleum or petroleum products,
natural gas or natural gas liquids, radioactive materials, friable asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls, and radon gas and
(b) any chemicals, materials or substances defined as or included in the
definition of or otherwise classified or regulated as “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 or that would otherwise reasonably be expected to
result in liability under any Environmental Law.

 

“Hedge Agreements” 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 swap, credit spread transaction, repurchase transaction, reserve
repurchase transaction, securities lending transaction, weather index
transaction, 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 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 Agreements.

 

“Hedge Bank” shall mean any Person (x) that either (i) at the time it entered
into a Secured Hedge Agreement or a Cash Management Agreement, as applicable, in
its capacity as a party thereto, (ii) on the Closing Date or (iii) at any time
after it has entered into a Secured Hedge Agreement or a Cash Management
Agreement, as applicable, in its capacity as a party thereto, is an Agent,
Lender or any Affiliate of an Agent or Lender.

  

 30 

 

 

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

 

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

 

“Hydrocarbon Interests” 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.

 

“ICC” shall have the meaning provided in Section 3.8.

 

“ICC Rule” shall have the meaning provided in Section 3.8.

 

“Immaterial Subsidiary” shall mean any Subsidiary that is not a Material
Subsidiary.

 

“Immediate Family Members” shall mean with respect to any individual, such
individual’s child, stepchild, grandchild or more remote descendant, parent,
stepparent, grandparent, spouse, former spouse, qualified domestic partner,
sibling, mother-in-law, father-in-law, son-in-law and daughter-in-law (including
adoptive relationships) and any trust, partnership or other bona fide
estate-planning vehicle the only beneficiaries of which are any of the foregoing
individuals or any private foundation or fund that is controlled by any of the
foregoing individuals or any donor-advised fund of which any such individual is
the donor.

 

“Impacted Interest Period” shall have the meaning assigned to such term in the
definition of “LIBOR Rate.”

 

“Increasing Lender” shall have the meaning provided in Section 2.16(a).

 

“Incremental Agreement” shall have the meaning provided in Section 2.16(c).

 

“Incremental Increase” shall have the meaning provided in Section 2.16(a).

  

 31 

 

 

“Indebtedness” of any Person shall mean the following, if and only to the extent
(other than with respect to clause (g) 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, (ii) accruals for payroll and other liabilities incurred in the
ordinary course of business and (iii) obligations resulting under firm
transportation contracts, or take or pay contracts or other similar agreements),
(d) the maximum amount (after giving effect to any prior drawings or reductions
which may have been reimbursed) of all outstanding letters of credit (including
standby and commercial), bankers’ acceptances, bank guaranties, surety bonds,
performance bonds and similar instruments issued or created by or for the
account of such Person, (e) the principal component of all obligations in
respect of Capitalized Leases of such Person, (f) net Hedging Obligations of
such Person, (g) all indebtedness (excluding prepaid interest thereon) 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 or is limited in
recourse, (h) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase in respect of Disqualified Stock
(excluding accrued dividends that have not increased the liquidation preference
of such Disqualified Stock), (i) the undischarged balance of any Production
Payment and Reserve Sale created by such Person or for the creation of which
such Person directly or indirectly received payment and (j) without duplication,
all Guarantee Obligations of such Person in respect of the items described in
clauses (a) through (i) above; provided that Indebtedness shall (A) include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, except to the extent such Person’s
liability for such Indebtedness is otherwise expressly limited and only to the
extent such Indebtedness would be included in the calculation of Consolidated
Total Debt and (B) not include (i) trade and other ordinary-course payables and
accrued expenses, (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) in the
case of the Borrower and its Restricted Subsidiaries, (A) all intercompany
Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or
extensions of terms) and (B) intercompany liabilities in connection with the
cash management, tax and accounting operations of the Borrower and the
Restricted Subsidiaries, (v) obligations under the Contribution Agreement and
any other agreements or instruments contemplated thereby, in each case, as
amended, restated supplemented or otherwise modified from time to time, (vi)
[reserved], (vii) in-kind obligations relating to net oil, natural gas liquids
or natural gas balancing positions arising in the ordinary course of business,
(viii) 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, (ix) operating leases or sale and leaseback transactions (except any
resulting obligations under any Capitalized Lease), (x) commitments or
obligations of such Person to make capital contributions in another Person or
fund construction costs of equipment, gathering, transportation, processing,
handling, pipelines and other related systems and facilities which constitute
Industry Investments and (xi) any Guarantee Obligations incurred in the ordinary
course of business to the extent not guaranteeing Indebtedness. The amount of
any net Hedging Obligations on any date shall be deemed to be the Swap
Termination Value thereof as of such date. The amount of Indebtedness of any
Person for purposes of clause (g) above shall be deemed to be equal to the
lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair
market value of the property encumbered thereby as determined by such Person in
good faith. Notwithstanding anything in this definition to the contrary,
Indebtedness shall be calculated without giving effect to the effects of
Financial Accounting Standards Board Accounting Standards Codification 815 and
related interpretations to the extent such effects would otherwise increase or
decrease an amount of Indebtedness for any purpose hereunder as a result of
accounting for any embedded derivatives created by the terms of such
Indebtedness.

 

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

  

 32 

 

 

“Indemnified Taxes” shall mean all Taxes imposed on or with respect to 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.

 

“Indemnities” shall have the meaning provided in Section 13.5(b).

 

“Industry Investment” shall mean Investments and/or expenditures made in the
ordinary course of, and of a nature that is or shall have become customary in,
the Oil and Gas Business as a means of actively engaging therein through
agreements, transactions, interests or arrangements that permit one to share
risks or costs, comply with regulatory requirements regarding local ownership or
satisfy other objectives customarily achieved through the conduct of Oil and Gas
Business jointly with third parties, including: (1) ownership interests
(directly or through equity) in Oil and Gas Properties or gathering,
transportation, processing, or related systems; and (2) Investments and/or
expenditures in the form of or pursuant to operating agreements, processing
agreements, Farm-In Agreements, Farm-Out Agreements, development agreements,
area of mutual interest agreements, unitization agreements, pooling
arrangements, joint bidding agreements, service contracts, joint venture
agreements, partnership agreements (whether general or limited), and other
similar agreements (including for limited liability companies) with third
parties.

 

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

 

“Initial Loans” shall have the meaning provided in Section 2.1(a)(i).

 

“Initial Maturity Date” shall mean the fifth anniversary of the Closing Date,
or, if such anniversary is not a Business Day, the Business Day immediately
following such anniversary.

 

“Initial Reserve Report” shall mean the reserve engineers’ report of Ryder Scott
Company, L.P. as of January 1, 2018 delivered to the Administrative Agent prior
to the date hereof.

 

“Intercompany Note” shall mean a promissory note substantially in the form of
Exhibit L hereto.

 

“Interest Period” shall mean, with respect to any Loan, the interest period
applicable thereto, as determined pursuant to Section 2.9.

 

“Interim Redetermination” shall have the meaning provided in Section 2.14(b).

 

“Interpolated Rate” shall have the meaning assigned to such term in the
definition of “LIBOR Rate.”

 

“Investment” shall have the meaning provided in Section 10.5.

 

“Investment Grade Rating” shall mean a rating equal to or higher than Baa3 (or
the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent
rating by any other rating agency selected by the Borrower.

 

“Investor Management Agreement” shall mean an agreement among the Borrower
(or any direct or indirect parent entity of the Borrower) and Affiliates of (or
management entities associated with) one or more of the Sponsor, as in effect
from time to time and as the same may be amended, supplemented or otherwise
modified in a manner not materially adverse to the Lenders.

  

 33 

 

 

“IRS” shall have the meaning provided in Section 5.4(e).

 

“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).

 

“ISP 98” shall have the meaning provided in Section 3.8.

 

“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 any Restricted
Subsidiary) or in favor of the applicable Issuing Bank and relating to such
Letter of Credit.

 

“Issuing Bank” shall mean (a) Citibank and any of its Affiliates, (b) those
Lenders identified as Issuing Banks on Schedule 1.1(a) hereto and (c) 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. Any Lender may, from time to time, become an Issuing Bank
under this Agreement with the protections and rights afforded to Issuing Banks
hereunder by executing a joinder, in a form reasonably satisfactory to (and
acknowledged and accepted by) the Administrative Agent and the Borrower,
indicating such Lender’s “Letter of Credit Commitment” and upon the execution
and delivery of any such joinder, such Lender shall be an Issuing Bank for all
purposes hereof.

 

“Junior Debt” shall have the meaning provided in Section 10.7(a).

 

“Junior Lien” shall mean a Lien on the Collateral (other than Liens securing the
Obligations) that is subordinated to the Liens granted under the Credit
Documents pursuant to the Junior Lien Intercreditor Agreement (it being
understood that Junior Liens are not required to be pari passu with other Junior
Liens, and that Indebtedness secured by Junior Liens may have Liens that are
senior in priority to, or pari passu with, or junior in priority to, other Liens
constituting Junior Liens).

 

“Junior Lien Intercreditor Agreement” shall mean an intercreditor agreement
substantially in the form of Exhibit F among the Administrative Agent, the
representative on behalf of any Junior Lien Debt holders, the Borrower, the
Guarantors and the other parties party thereto from time to time.

 

“Latest Maturity Date” shall mean, at any date of determination, the latest
Maturity Date applicable to any Class of Commitments or Loans that is
outstanding hereunder on such date of determination.

 

“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. All L/C Borrowings shall be denominated in Dollars.

 

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

  

 34 

 

 

“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 of all Unpaid Drawings, 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).

 

“LCA Election” has the meaning set forth in Section 1.12(a).

 

“LCA Test Date” has the meaning set forth in Section 1.12(a).

 

“Lead Arranger and Bookrunner” shall mean Citigroup Global Markets Inc., in its
capacity as the arranger and bookrunner in respect of the Facility.

 

“Lender” shall have the meaning provided in the preamble to this Agreement.
Unless the context otherwise requires, the term “Lenders” includes the Swingline
Lender. For avoidance of doubt, each Additional Lender shall be deemed a
“Lender” for purposes of this Agreement and each other Credit Document.

 

“Lender Default” shall mean (i) the refusal (which may be given verbally or in
writing and has not been retracted) or failure of any Lender to make available
its portion of any incurrence of Loans or participations in Letters of Credit or
Swingline Loans or reimbursement obligations required to be made by it, which
refusal or failure is not cured within one Business Day after the date of such
refusal or failure; (ii) the failure of any Lender to pay over to the
Administrative Agent, any Issuing Bank, any Swingline Lender or any other Lender
any other amount required to be paid by it hereunder within two (2) Business
Days of the date when due; (iii) a Lender has notified the Borrower, the
Administrative Agent, any Issuing Bank or Swingline Lender 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) a Lender has failed, within three (3) Business Days after
request by the Administrative Agent, to confirm that it will comply with its
funding obligations under the Facility or (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 a Bail-In Action. Any determination by the
Administrative Agent that a Lender Default has occurred under any one or more of
clauses (i) through (v) above shall be conclusive and binding absent manifest
error, and the applicable Lender shall be deemed to be a Defaulting Lender upon
delivery of written notice of such determination to the Borrower, each Issuing
Bank, each Swingline Lender and each Lender.

 

“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
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.

  

 35 

 

 

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

 

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

 

“Letter of Credit Commitment” shall mean the lesser of (x) $15,000,000 (or such
greater amount as agreed to by the Issuing Banks), as the same may be reduced
from time to time pursuant to Section 3.1 and (y) the Loan Limit.

 

“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 3.7.

 

“Letter of Credit Fee” shall have the meaning provided in Section 4.1(b).

 

“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.

 

“Leverage Ratio Covenant” shall mean the covenant of the Borrower set forth in
Section 10.11(a).

 

“LIBOR Loan” shall mean any Loan bearing interest at a rate determined by
reference to the LIBOR Rate (other than an ABR Loan bearing interest by
reference to the LIBOR Rate by virtue of clause (c) of the definition of ABR).

 

“LIBOR Rate” shall mean, for any Interest Period with respect to any Borrowing
of a LIBOR Loan, the London interbank offered rate as administered by the ICE
Benchmark Administration (or any other Person that takes over the administration
of such rate) for Dollars for a period equal in length to such Interest Period
as displayed on pages LIBOR01 or LIBOR02 of the Reuters Screen that displays
such rate (or, in the event that such rate does not appear on a Reuters page or
screen, on any successor or substitute page on such screen that displays such
rate, or on the appropriate page of such other information service that
publishes such rate from time to time as selected by the Administrative Agent in
its reasonable discretion; in each case, the “Screen Rate”) at approximately
12:00 noon London time, two (2) Business Days prior to the commencement of such
Interest Period; provided that if the Screen Rate shall not be available at such
time for such Interest Period (an “Impacted Interest Period”) with respect to
Dollars, then the LIBOR Rate shall be the Interpolated Rate at such time;
provided further that if the Screen Rate shall be less than zero, such rate
shall be deemed to be zero for purposes of this Agreement. “Interpolated Rate”
shall mean, at any time, the rate per annum determined by the Administrative
Agent (which determination shall be conclusive and binding absent manifest
error) to be equal to the rate that results from interpolating on a linear basis
between: (a) the Screen Rate for the longest period (for which that Screen Rate
is available in Dollars) that is shorter than the Impacted Interest Period and
(b) the Screen Rate for the shortest period (for which that Screen Rate is
available in Dollars) that exceeds the Impacted Interest Period, in each case,
at such time; provided that if the Interpolated Rate shall be less than zero,
such rate shall be deemed to be zero for purposes of this Agreement.

  

 36 

 

 

“Lien” shall mean, with respect to any asset, (a) any mortgage, preferred
mortgage, deed of trust, lien, notice of claim of lien, hypothecation, pledge,
charge, security interest or similar encumbrance in or on such asset securing an
obligation or (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset; provided that in no event shall an operating lease be
deemed to be a Lien.

 

“Limited Condition Transaction” shall mean any acquisition or Investment by one
or more of the Borrower and its Restricted Subsidiaries of or in any assets,
business or Person permitted by this Agreement the consummation of which is not
conditioned on the availability of, or on obtaining, third party financing.

 

“Liquidity” shall mean, as of any date of determination, the sum of (a) the
Available Commitment on such date and (b) the aggregate amount of Unrestricted
Cash of the Borrower and the Restricted Subsidiaries at such date.

 

“Loan” shall mean any Initial Loan, Extended Loan or Swingline Loan made by any
Lender hereunder.

 

“Loan Extension Request” shall have the meaning provided in Section 2.17(a).

 

“Loan Limit” shall mean, at any time, the least of (a) the Total Commitment at
such time, (b) the Borrowing Base at such time in accordance with Section 2.14,
as may be adjusted from time to time pursuant to the provisions of Section
2.14(e), (f) and (h), as applicable, minus the aggregate amount of Pari Debt
then outstanding (without giving effect to any payments applied to reduce such
Pari Debt unless the Administrative Agent is notified of such reduction in Pari
Debt at the time of the next Scheduled Redetermination or Interim
Redetermination) and (c) the Draw Limit.

 

“Majority Lenders” shall mean, at any date, (a) Non-Defaulting Lenders having or
holding a majority of the Adjusted Total Commitment at such date, or (b) if the
Total Commitment has been terminated or for the purposes of acceleration
pursuant to Section 11, Non-Defaulting Lenders having or holding a majority of
the outstanding principal amount of the Loans, the Swingline Exposure and Letter
of Credit Exposure (excluding the Loans, Swingline Exposure and Letter of Credit
Exposure of Defaulting Lenders) in the aggregate at such date.

 

“Mandatory Borrowing” shall have the meaning provided in Section 2.1(c).

 

“Margin Stock” shall have the meaning assigned to such terms in Regulation U.

 

 37 

 

 

“Master Agreement” shall have the meaning assigned to such term in the
definition of “Hedge Agreements.”

 

“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, individually or in the
aggregate, would materially adversely affect (a) the ability of the Borrower and
the other Credit Parties, taken as a whole, to perform their payment obligations
under the Credit Documents or (b) the rights and remedies of the Agents and the
Lenders under the 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 $30,000,000.

 

“Material Subsidiary” shall mean, at any date of determination, each Restricted
Subsidiary of the Borrower (a) whose total assets (when combined with the assets
of such Restricted Subsidiary’s Subsidiaries, after eliminating intercompany
obligations) as of such date of determination were equal to or greater than 5.0%
of the Consolidated Total Assets of the Borrower and the Restricted Subsidiaries
at such date or (b) whose revenues (when combined with the revenues of such
Subsidiary’s Subsidiaries, after eliminating intercompany obligations) during
the most recent Test Period were equal to or greater than 5.0% of the
consolidated revenues of the Borrower and the Restricted Subsidiaries for such
period, in each case determined in accordance with GAAP; provided that if, at
any time and from time to time after the Closing Date, Restricted Subsidiaries
that are not Material Subsidiaries have, in the aggregate, (i) total assets
(when combined with the assets of such Subsidiary’s Subsidiaries, after
eliminating intercompany obligations) as of such date of determination were
equal to or greater than 10.0% of the Consolidated Total Assets of the Borrower
and the Restricted Subsidiaries at such date or (ii) revenues (when combined
with the revenues of such Subsidiary’s Subsidiaries, after eliminating
intercompany obligations) during such Test Period equal to or greater than 10.0%
of the consolidated revenues of the Borrower and the Restricted Subsidiaries for
such period, in each case determined in accordance with GAAP, then the Borrower
shall, on such date of determination, designate in writing to the Administrative
Agent one or more of such Restricted Subsidiaries as “Material Subsidiaries.”

 

“Maturity Date” shall mean, as to the applicable Loan, the Initial Maturity
Date, any maturity date related to any Extension Series of Extended Commitments,
or the Swingline Maturity Date, as applicable.

 

“Minimum Borrowing Amount” shall mean, with respect to any Borrowing of Loans,
$500,000 (or, if less, the entire remaining Commitments at the time of such
Borrowing).

 

“Minority Investment” shall mean any Person (other than a Subsidiary) in which
the Borrower or any Restricted Subsidiary owns Equity Interests.

 

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

  

 38 

 

 

“Mortgage” shall mean a mortgage or a deed of trust, deed to secure debt, trust
deed, assignment of as-extracted collateral, fixture filing or other security
document entered into by the owner of a Mortgaged Property and the Collateral
Agent for the benefit of the Secured Parties in respect of that Mortgaged
Property, substantially in the form of Exhibit D (with such changes thereto as
may be necessary to account for local law matters) or otherwise in such form as
agreed between the Borrower and the Collateral Agent.

 

“Mortgaged Property” shall mean, at any time, all Borrowing Base Properties with
respect to which a Mortgage has been granted. However, notwithstanding any
provision in this Agreement, any Mortgage, or any other Security Document to the
contrary, in no event shall any Building (as defined in the applicable Flood
Insurance Regulation) or Manufactured (Mobile) Home (as defined in the
applicable Flood Insurance Regulation) be included in the definition of
“Mortgaged Property” and no Building or Manufactured (Mobile) Home shall be
encumbered by any Mortgage. As used herein, “Flood Insurance Regulations” shall
mean (i) the National Flood Insurance Act of 1968 as now or hereafter in effect
or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973
as now or hereafter in effect or any successor statue 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.

 

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

 

“Necessary Cure Amount” shall have the meaning provided in Section
11.13(a)(iii).

 

“Net Income” shall mean, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends.

 

“New Borrowing Base Notice” shall have the meaning provided in Section 2.14(d).

 

“New Contracts” shall mean binding new agreements or amendments to existing
agreements with customers and/or vendors.

 

“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.

 

“Non-Extension Notice Date” shall have the meaning provided in Section 3.2(b).

 

“Non-U.S. Lender” shall mean any Lender (a) that is not disregarded as separate
from its owner for U.S. federal income tax purposes and that is not a “United
States person” as defined by Section 7701(a)(30) of the Code or (b) that is
disregarded as separate from its owner for U.S. federal income tax purposes and
whose regarded owner is not a “United States person” as defined by
Section 7701(a)(30) of the Code.

 

“Notice of Borrowing” shall mean a request of the Borrower in accordance with
the terms of Section 2.3(a) and substantially in the form of Exhibit B or such
other form as shall be approved by the Administrative Agent (acting reasonably).

 

“Notice of Conversion or Continuation” shall have the meaning provided in
Section 2.6(a).

  

 39 

 

 

“Obligations” shall mean all advances to, and debts, liabilities, obligations,
covenants and duties of, any Credit Party arising under any Credit Document or
otherwise with respect to any Loan or Letter of Credit or under any Secured Cash
Management Agreement or Secured Hedge Agreement, in each case, entered into with
the Borrower or any of its Restricted Subsidiaries, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against any 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) Excluded Swap
Obligations shall not constitute Obligations, (b) the obligations of the
Borrower or any Restricted Subsidiary under any Secured Hedge Agreement and
under any Secured Cash Management Agreement that has been secured at the option
of the Borrower (such option being deemed exercised as reflected in the
documents related to any such Secured Hedge Agreement or Secured Cash Management
Agreement among the Borrower and the applicable Hedge Bank, Approved
Counterparty 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 and (c) 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 Secured Hedge Agreements or of the holders of Cash
Management Obligations under Secured Cash Management Agreements.

 

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

 

“Oil and Gas Business” shall mean:

 

(a) the business of acquiring, exploring, exploiting, developing, producing,
operating and disposing of interests in oil, natural gas, natural gas liquids,
liquefied natural gas and other Hydrocarbons and mineral properties or products
produced in association with any of the foregoing;

 

(b) the business of gathering, marketing, distributing, treating, processing,
storing, refining, selling and transporting of any production from interests in
oil, natural gas, natural gas liquids, liquefied natural gas and other
Hydrocarbons and mineral properties or products produced in association
therewith; and the marketing of oil, natural gas, natural gas liquids, liquefied
natural gas and other Hydrocarbons and minerals obtained from unrelated Persons;
and

 

(c) any business or activity relating to, arising from, or necessary,
appropriate, incidental or ancillary to the activities described in the
foregoing clauses (a) and (b) of this definition.

  

 40 

 

 

“Oil and Gas Properties” shall mean (a) Hydrocarbon Interests, (b) the
properties now or hereafter pooled or unitized with Hydrocarbon Interests,
(c) all presently existing or future unitization agreements, pooling agreements
and declarations of pooled or unitized units and the units created thereby
(including all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of any Hydrocarbon
Interests, (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any
Hydrocarbon Interests or the production, sale, purchase, exchange or processing
of Hydrocarbons from or attributable to such Hydrocarbon Interests, (e) all
Hydrocarbons in and under and which may be produced and saved or attributable to
Hydrocarbon Interests, including all oil in tanks, and all rents, issues,
profits, proceeds, products, revenues and other incomes from or attributable to
Hydrocarbon Interests, (f) all tenements, hereditaments, appurtenances and
properties in any manner appertaining, belonging, affixed or incidental to
Hydrocarbon Interests and (g) all properties, rights, titles, interests and
estates described or referred to above, including any and all property, real or
personal, now owned or hereafter acquired and situated upon, used, held for use
or useful in connection with the operating, working or development of any
Hydrocarbon Interests or property (excluding drilling rigs, automotive
equipment, rental equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil wells, gas wells, injection wells or other wells,
structures, fuel separators, liquid extraction plants, plant compressors, pumps,
pumping units, field gathering systems, gas processing plants and pipeline
systems and any related infrastructure to any thereof, tanks and tank batteries,
fixtures, valves, fittings, machinery and parts, engines, boilers, meters,
equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
and rods, surface leases, rights-of-way, easements and servitudes together with
all additions, substitutions, replacements, accessions and attachments to any
and all of the foregoing.

 

“Ongoing Hedges” shall have the meaning provided in Section 10.10(a).

 

“Organization Documents” shall mean (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

 

“Other Taxes” shall mean any and all present or future stamp, registration,
documentary, intangible, recording, filing 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, from the receipt or perfection of a
security interest under, 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 present or former connection between the
assignor/participating Lender and/or the assignee/Participant and the taxing
jurisdiction (other than a connection arising from such assignee/Participant
having executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Credit Document, or
sold or assigned an interest in any Loan or Credit Document) , unless any action
described in this proviso is requested or required by the Borrower, or (ii)
Excluded Taxes.

  

 41 

 

 

“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.

 

“Parent Entity” shall mean any Person that is a direct or indirect parent
company (which may be organized as a partnership) of the Borrower.

 

“Pari Debt” shall mean any Indebtedness (other than the Obligations) that is
secured by a Lien that is pari passu with the Liens securing the Obligations.

 

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

 

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

 

“Participating Member States” shall mean, together, each member state of the
European Union that adopts or has adopted the Euro as its lawful currency in
accordance with legislation of the European Union relating to the Economic and
Monetary Union (as amended or re-enacted from time to time).

 

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

 

“Payment in Full” shall mean the day the Total Commitment and each Letter of
Credit have terminated (unless such Letters of Credit have been collateralized
on terms and conditions reasonably satisfactory to each applicable Issuing Bank
following the termination of the Total Commitment) and the Loans, the Swingline
Loans and Unpaid Drawings, together with interest, fees and all other
Obligations incurred hereunder (other than Hedging Obligations under Secured
Hedge Agreements, Cash Management Obligations under Secured Cash Management
Agreements or contingent indemnification obligations not then due and payable),
are paid in full.

 

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

 

“Pension Plan” shall mean any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by any Credit Party
or any ERISA Affiliate or to which any Credit Party or any ERISA Affiliate
contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made
contributions at any time during the immediately preceding six (6) years.

 

“Permitted Acquisition” shall mean the acquisition, by merger or otherwise, by
the Borrower or any of the Restricted Subsidiaries of assets (including any
assets constituting a business unit, line of business or division) or Equity
Interests, so long as (a) if such acquisition involves the acquisition of Equity
Interests of a Person that upon such acquisition would become a Subsidiary, such
acquisition shall result in the issuer of such Equity Interests becoming a
Restricted Subsidiary and, to the extent required by Section 9.11, a Guarantor;
(b) such acquisition shall result in the Collateral 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; (c)
immediately after giving effect to such acquisition, no Event of Default shall
have occurred and be continuing; and (d) immediately after giving effect to such
acquisition, the Borrower and its Restricted Subsidiaries shall be in compliance
with Section 9.15.

  

 42 

 

 

“Permitted Additional Debt” shall mean any unsecured senior, senior
subordinated, Junior Lien or subordinated loans or notes issued by the Borrower
or a Guarantor after the Closing Date (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 Latest Maturity Date as in effect on the date of
determination (other than (i) customary offers to purchase upon a change of
control, AHYDO payments, asset sale or casualty or condemnation event
prepayments and customary acceleration rights after an event of default and (ii)
unsecured Indebtedness incurred pursuant to a customary bridge facility if the
Indebtedness pursuant to such customary bridge facility converts at maturity to
Indebtedness which does not provide for any scheduled repayment, mandatory
redemption or sinking fund obligation (except to the extent permitted pursuant
to clause (i)) prior to the 91st day after the Latest Maturity Date as in effect
on the date of determination) and has a Weighted Average Life to Maturity equal
to or greater than the Weighted Average Life to Maturity of the Facility, if
applicable, (b) if such Indebtedness is subordinated in right of payment to the
Obligations, the terms of such Indebtedness provide for customary subordination
of such Indebtedness to the Obligations, (c) no Restricted Subsidiary of the
Borrower (other than a Guarantor) is a borrower or guarantor with respect to
such Indebtedness and (d) if such Indebtedness constitutes Junior Lien
Indebtedness, such Indebtedness is not secured by any assets other than the
Collateral.

 

“Permitted Holders” shall mean any of (i) the Sponsor and (ii) officers,
directors, employees and other members of management of the Borrower (or any of
its Parent Entities) or any of its Restricted Subsidiaries who are or become
holders of Equity Interests of the Borrower (or any Parent Entity) (and their
Controlled Investment Affiliates and Immediate Family Members); provided that
for purposes of the definition of “Change of Control” the Persons described in
clause (ii) above shall not constitute Permitted Holders at any time they hold
voting power equal to or more than 50% of all Equity Interests collectively and
beneficially held by the Persons described in clauses (i) and (ii) above.

 

“Permitted Intercompany Activities” shall mean any transactions between or among
the Borrower and its Subsidiaries (for the avoidance of doubt, including
Unrestricted Subsidiaries) that are entered into in the ordinary course of
business of the Borrower and its Subsidiaries and, in the good faith judgment of
the Borrower, are necessary or advisable in connection with the ownership or
operation of the business of the Borrower and its Subsidiaries, including (i)
payroll, cash management, purchasing, insurance and hedging arrangements (other
than the hedging arrangements of any Unrestricted Subsidiaries) and (ii)
management, technology and licensing arrangements.

 

“Permitted Investments” shall mean:

 

(1) United States dollars;

 

(2) (a) Euros, Yen, Canadian Dollars, Pound Sterling or any national currency of
any Participating Member State of the EMU; or

 

(b) in the case of any Foreign Subsidiary or any jurisdiction in which the
Borrower or its Restricted Subsidiaries conducts business, such local currencies
held by it from time to time in the ordinary course of business and not for
speculation;

 

(3) securities issued or directly and fully and unconditionally guaranteed or
insured by the United States government or any agency or instrumentality thereof
the securities of which are unconditionally guaranteed as a full faith and
credit obligation of such government with maturities of twenty-four (24) months
or less from the date of acquisition;

  

 43 

 

 

(4) certificates of deposit, time deposits and eurodollar time deposits with
maturities of twenty-four (24) months or less from the date of acquisition,
demand deposits, bankers’ acceptances with maturities not exceeding three (3)
years and overnight bank deposits, in each case with any domestic or foreign
commercial bank having capital and surplus of not less than $250,000,000 in the
case of U.S. banks and $100,000,000 (or the United States dollar equivalent as
of the date of determination) in the case of non-U.S. banks (any such bank in
the forgoing an “Approved Bank”);

 

(5) repurchase obligations for underlying securities of the types described in
clauses (3) and (4) above or clauses (7) and (8) below entered into with any
financial institution or recognized securities dealer meeting the qualifications
specified in clause (4) above;

 

(6) commercial paper and variable or fixed rate notes issued by an Approved Bank
(or by the parent company thereof) or any variable or fixed rate note issued by,
or guaranteed by, a corporation by, a corporation (other than structured
investment vehicles and other than corporations used in structured financing
transactions) rated at least A-2 (or the equivalent thereof) by S&P or at least
P-2 (or the equivalent thereof) or better by Moody’s (or, if at any time neither
Moody’s nor S&P shall be rating such obligations, an equivalent rating from
another nationally recognized statistical rating agency selected by the
Borrower) and in each case maturing within thirty-six (36) months after the date
of acquisition thereof;

 

(7) marketable short-term money market and similar liquid funds having a rating
of at least P-2 (or the equivalent thereof) or A-2 (or the equivalent thereof)
from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor
S&P shall be rating such obligations, an equivalent rating from another
nationally recognized statistical rating agency selected by the Borrower);

 

(8) readily marketable direct obligations issued or fully guaranteed by (i) any
state, commonwealth or territory of the United States or any political
subdivision or taxing authority thereof or (ii) any foreign government or any
political subdivision or public instrumentality thereof; provided, that each
such readily marketable direct obligation shall have an Investment Grade Rating
from either Moody’s or S&P or Moody’s (or the equivalent thereof) (or, if at any
time neither Moody’s nor S&P or Moody’s (or the equivalent thereof) shall be
rating such obligations, an equivalent rating from another nationally recognized
statistical rating agency selected by the Borrower) with maturities of
thirty-six (36) months or less from the date of acquisition;

 

(9) Investments with average maturities of thirty-six (36) months or less from
the date of acquisition in money market funds rated AAA- (or the equivalent
thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by
Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such
obligations, an equivalent rating from another nationally recognized statistical
rating agency selected by the Borrower);

 

(10) investment funds investing substantially all of their assets in securities
of the types de-scribed in clauses (1) through (9) above; and

 

(11) solely with respect to any Captive Insurance Subsidiary, any Investment in
connection with its provision of insurance, which Investment is permitted to be
made in accordance with applicable law, rule, regulation or order or that is
required or approved by any regulatory authority having jurisdiction over such
Captive Insurance Subsidiary or its business, as applicable.

  

 44 

 

 

In the case of Investments by any Foreign Subsidiary or Investments made in a
country outside the United States of America, Permitted Investments shall also
include (i) investments of the type and maturity described in clauses (1)
through (7) and clauses (8)(i) and (9) above of foreign obligors, which
Investments or obligors (or the parents of such obligors) have ratings described
in such clauses or equivalent ratings from comparable foreign rating agencies
and (ii) other short-term investments utilized by Foreign Subsidiaries in
accordance with normal investment practices for cash management in investments
analogous to the foregoing investments in clauses (1) through (11) and in this
paragraph.

 

Notwithstanding the foregoing, Permitted Investments shall include amounts
denominated in currencies other than those set forth in clauses (1) and (2)
above; provided that such amounts are converted into any currency listed in
clause (1) or (2) above as promptly as practicable and in any event within ten
(10) Business Days following the receipt of such amounts.

 

“Permitted Liens” shall mean:

 

(a) Liens for taxes, assessments or governmental charges or claims not yet
overdue for a period of more than thirty (30) days or that are being contested
in good faith and by appropriate proceedings for which appropriate reserves have
been established to the extent required by and in accordance with GAAP (or in
the case of any Foreign Subsidiary, the comparable accounting principles in the
relevant jurisdiction), or for property taxes on property that the Borrower or
one of its Subsidiaries has determined to abandon if the sole recourse for such
tax, assessment, charge or claim is to such property if such abandonment is
otherwise permitted by this Agreement;

 

(b) Liens in respect of property or assets of the Borrower or any of the
Restricted Subsidiaries imposed by law, such as landlords’, sublandlords’,
vendors’, suppliers’, carriers’, warehousemen’s, repairmen’s, construction
contractors’, workers’ and mechanics’ Liens and other similar Liens arising in
the ordinary course of business or incident to the exploration, development,
operation or maintenance of Oil and Gas Properties, in each case so long as such
Liens arise in the ordinary course of business and do not individually or in the
aggregate have a Material Adverse Effect;

 

(c) Liens arising from judgments or decrees in circumstances not constituting an
Event of Default under Section 11.9;

 

(d) Liens incurred or pledges or deposits made in connection with workers’
compensation, unemployment insurance and other types of social security, old age
pension, public liability obligations or similar legislation, and deposits
securing liabilities to insurance carriers under insurance or self-insurance
arrangements in respect of such obligations, or to secure (or secure the Liens
securing) liability for reimbursement or indemnification obligations of
(including obligations in respect of letters of credit or bank guarantees for
the benefit of) insurance carriers providing property, casualty or liability
insurance to the Borrower or any Subsidiary;

  

 45 

 

 

(e) deposits and other Liens securing (or securing the bonds or similar
instruments securing) the performance of tenders, statutory obligations,
plugging and abandonment or decommissioning obligations, surety, stay, customs
and appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations (including
letters of credit issued in lieu of such bonds or to support the issuance
thereof) incurred in the ordinary course of business or in a manner consistent
with past practice or industry practice including those incurred to secure
health, safety and environmental obligations in the ordinary course of business,
or otherwise constituting Investments permitted by Section 10.5;

 

(f) ground leases, subleases, licenses or sublicenses in respect of real
property on which facilities owned or leased by the Borrower or any of its
Restricted Subsidiaries are located;

 

(g) easements, rights-of-way, restrictive covenants, licenses, restrictions
(including zoning restrictions), title defects, exceptions, deficiencies or
irregularities in title, encroachments, protrusions, servitudes, permits,
conditions and covenants and other similar charges or encumbrances (including in
any rights-of-way or other property of the Borrower or its Restricted
Subsidiaries for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil or other
minerals or timber, and other like purposes, or for joint or common use of real
estate, rights of way, facilities and equipment) not interfering in any material
respect with the business of the Borrower and its Restricted Subsidiaries, taken
as a whole;

 

(h) (i) any interest or title of a lessor, sublessor, licensor or sublicensor
under any lease, liens reserved in oil, gas or other Hydrocarbons, minerals,
leases for bonus, royalty or rental payments and for compliance with the terms
of such lease and (ii) any interest or title of a lessor, sublessor, licensor or
sublicensor or secured by a lessor’s, sublessor’s, licensor’s or sublicensor’s
interest under any lease, sublease, license or sublicense entered into by the
Borrower or any Restricted Subsidiary in the ordinary course of business or
otherwise permitted by this Agreement and not securing Indebtedness;

 

(i) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods;

 

(j) Liens on goods or inventory the purchase, shipment or storage price of which
is financed by a documentary letter of credit or bankers’ acceptance issued for
the account of the Borrower or any of its Restricted Subsidiaries; provided that
such Lien secures only the obligations of the Borrower or such Restricted
Subsidiaries in respect of such letter of credit or bankers’ acceptance to the
extent permitted under Section 10.1;

 

(k) leases, licenses, subleases or sublicenses granted to others not (i)
interfering in any material respect with the business of the Borrower and its
Restricted Subsidiaries, taken as a whole or (ii) securing any indebtedness;

 

(l) Liens arising from precautionary Uniform Commercial Code financing statement
or similar filings;

 

(m) Liens created in the ordinary course of business in favor of banks and other
financial institutions over credit balances of any bank accounts, commodity
trading accounts or other brokerage accounts of the Borrower and the Restricted
Subsidiaries held at such banks or financial institutions, as the case may be,
in the ordinary course of business;

  

 46 

 

 

(n) Liens which arise in the ordinary course of business under operating
agreements, joint venture agreements, oil and gas partnership agreements, oil
and gas leases, Farm-Out Agreements, Farm-In Agreements, division orders,
contracts for the sale, gathering, transportation or exchange of oil and natural
gas, unitization and pooling declarations and agreements, area of mutual
interest agreements, overriding royalty agreements, marketing agreements,
processing agreements, net profits agreements, development agreements, gas
balancing or deferred production agreements, injection, repressuring and
recycling agreements, salt water or other disposal agreements, seismic or other
geophysical permits or agreements, and other agreements that are usual or
customary in the Oil and Gas Business and are for claims which are not
delinquent or that are being contested in good faith and by appropriate
proceedings for which appropriate reserves have been established to the extent
required by and in accordance with GAAP; provided that any such Lien referred to
in this clause does not materially impair the use of the property covered by
such Lien for the purposes for which such property is held by the Borrower or
any Restricted Subsidiary;

 

(o) Liens on pipelines, pipeline facilities and other midstream assets or
facilities that arise by operation of law or other like Liens arising by
operation of law in the ordinary course of business and incidental to the
exploration, development, operation and maintenance of Oil and Gas Properties;

 

(p) (i) zoning, building, entitlement and other land use regulations by
Governmental Authorities with which the normal operation of the business
complies and (ii) any zoning or similar law or right reserved to or vested in
any Governmental Authority to control or regulate the use of any real property
that does not materially interfere with the ordinary conduct of the business of
the Borrower and its Restricted Subsidiaries, taken as a whole;

 

(q) Liens on equipment of the Borrower or any Restricted Subsidiary granted in
the ordinary course of business to the Borrower’s or such Restricted
Subsidiary’s client at which such equipment is located;

 

(r) security given to a public utility or any municipality or governmental
authority when required by such utility or authority in connection with the
operations of that Person in the ordinary course of business;

 

(s) [reserved];

 

(t) Liens on Permitted Investments that are earmarked to be used to satisfy or
discharge Indebtedness; provided that (x) such Permitted Investments are
deposited into an account from which payment is to be made, directly or
indirectly, to the Person or Persons holding the Indebtedness that is to be
satisfied or discharged, (y) such Liens extend solely to the account in which
such Permitted Investments are deposited and are solely in favor of the Person
or Persons holding the Indebtedness (or any agent or trustee for such Person or
Persons) that is to be satisfied or discharged and (z) the satisfaction or
discharge of such Indebtedness is expressly permitted hereunder; and

  

 47 

 

 

(u) deposits of cash with the owner or lessor of premises leased and operated by
the Borrower or any of its Subsidiaries to secure the performance of the
Borrower’s or such Subsidiary’s obligations under the terms of the lease for
such premises.

 

“Permitted Refinancing Indebtedness” shall mean, with respect to any
Indebtedness (the “Refinanced Indebtedness”), any Indebtedness issued or
incurred in exchange for, or the net proceeds of which are used to modify,
extend, refinance, renew, replace or refund (collectively to “Refinance” or a
“Refinancing” or “Refinanced”), such Refinanced Indebtedness (or previous
refinancing thereof constituting Permitted Refinancing Indebtedness); provided
that (A) the principal amount (or accreted value, if applicable) of any such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Refinanced Indebtedness outstanding
immediately prior to such Refinancing except by an amount equal to the unpaid
accrued interest and premium thereon and other amounts paid in connection with
the defeasance or discharge of such Indebtedness plus other amounts paid
consisting of fees and expenses incurred in connection with such Refinancing
plus an amount equal to any existing commitment unutilized and letters of credit
undrawn thereunder, (B) if the Indebtedness being Refinanced is Indebtedness
incurred pursuant to Sections 10.1(a), (c), (i), (k), (l) or (q), the direct and
contingent obligors with respect to such Permitted Refinancing Indebtedness
immediately prior to such Refinancing are not changed as a result of such
Refinancing (except that a Credit Party may be added as an additional obligor),
(C) other than with respect to a Refinancing in respect of Indebtedness incurred
pursuant to Section 10.1(h), such Permitted Refinancing Indebtedness shall have
a final maturity date equal to or later than the final maturity date of, and has
a Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of, the Refinanced Indebtedness, (D) if the
Indebtedness being Refinanced is Indebtedness incurred pursuant to Sections
10.1(a), (c), (i), (k), (l) or (q), the terms and conditions of any such
Permitted Refinancing Indebtedness, taken as a whole, are not materially less
favorable to the Lenders than the terms and conditions of the Refinanced
Indebtedness being Refinanced (including, if applicable, as to collateral
priority and subordination, but excluding as to interest rates, fees, floors,
funding discounts and redemption or prepayment premiums) or are customary for
similar Indebtedness in light of current market conditions; provided that a
certificate of an Authorized Officer of the Borrower delivered to the
Administrative Agent at least three (3) Business Days prior to the incurrence or
issuance of such Indebtedness, together with a reasonably detailed description
of the material terms and conditions of such Indebtedness or drafts of the
documentation relating thereto, stating that the Borrower has determined in good
faith that such terms and conditions satisfy the foregoing requirement shall be
conclusive evidence that such terms and conditions satisfy the foregoing
requirement, (E) if the Refinanced Indebtedness is subordinated in right of
payment or security to the Obligations, such Permitted Refinancing Indebtedness
shall be subordinated to the Obligations on terms no less favorable to the
Secured Parties than such Refinanced Indebtedness and (F) if the Refinanced
Indebtedness constitutes Junior Lien Indebtedness, such Permitted Refinancing
Indebtedness is not secured by any assets other than the Collateral.
Notwithstanding the foregoing, Permitted Refinancing Indebtedness in respect of
Permitted Additional Debt must constitute Permitted Additional Debt.

 

“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.

  

 48 

 

 

“Post-Acquisition Period” shall mean, with respect to any Permitted Acquisition
or the conversion of any Unrestricted Subsidiary into a Restricted Subsidiary,
the period beginning on the date such Permitted Acquisition or conversion is
consummated and ending on the first anniversary of the date on which such
Permitted Acquisition or conversion is consummated

 

“Preceding Test Period” shall have the meaning provided in Section 9.18.

 

“Preferred Stock” shall mean any Equity Interest with preferential rights of
payment of dividends or upon liquidation, dissolution, or winding up.

 

“Prime Rate” shall mean the rate of interest per annum publicly announced from
time to time by the bank acting as Administrative Agent as its prime rate in
effect at its principal office in New York City (the Prime Rate not being
intended to be the lowest rate of interest charged by such bank in connection
with extensions of credit to debtors).

 

“Proceeding” shall have the meaning provided in Section 13.5(b).

 

“Production Payments and Reserve Sales” shall mean the grant or transfer by the
Borrower or any of its Restricted Subsidiaries to any Person of the right to
receive all or a portion of the production or the proceeds from the sale of
production attributable to such properties where the holder of such interest has
recourse solely to such production or proceeds of production.

 

“Pro Forma Adjustment” shall mean, for any Test Period that includes all or any
part of a fiscal quarter included in any Post-Acquisition Period, with respect
to the Acquired EBITDAX of the applicable Acquired Entity or Business or
Converted Restricted Subsidiary or the Consolidated EBITDAX of the Borrower, the
pro forma increase or decrease in such Acquired EBITDAX or such Consolidated
EBITDAX, as the case may be, projected by the Borrower in good faith as a result
of (a) actions taken during such Post-Acquisition Period for the purposes of
realizing reasonably identifiable and factually supportable cost savings,
operating expense reductions and savings from synergies or (b) any additional
costs incurred during such Post-Acquisition Period, in each case in connection
with the combination of the operations of such Acquired Entity or Business or
Converted Restricted Subsidiary with the operations of the Borrower and the
Restricted Subsidiaries; provided that (i) at the election of the Borrower, such
Pro Forma Adjustment shall not be required to be determined for any Acquired
Entity or Business or Converted Restricted Subsidiary to the extent the
aggregate consideration paid in connection with such acquisition was less than
$7,500,000, and (ii) so long as such actions are taken during such
Post-Acquisition Period or such costs are incurred during such Post-Acquisition
Period, as applicable, for purposes of projecting such pro forma increase or
decrease to such Acquired EBITDAX or such Consolidated EBITDAX, as the case may
be, it may be assumed that such cost savings will be realizable during the
entirety of such Test Period, or such additional costs, as applicable, will be
incurred during the entirety of such Test Period; provided, further, that any
such pro forma increase or decrease to such Acquired EBITDAX or such
Consolidated EBITDAX, as the case may be, shall be without duplication for cost
savings, operating expense reductions, savings from synergies or additional
costs already included in such Acquired EBITDAX or such Consolidated EBITDAX, as
the case may be, for such Test Period.

  

 49 

 

 

“Pro Forma Basis” and “Pro Forma Effect” shall mean, with respect to compliance
with any test or covenant or calculation of any ratio hereunder, that (A) to the
extent applicable, the Pro Forma Adjustment shall have been made and (B) all
Specified Transactions and the following transactions in connection therewith
shall be deemed to have occurred as of the first day of the applicable period of
measurement in such test: (a) income statement items (whether positive or
negative) attributable to the property or Person subject to such Specified
Transaction, which (i) in the case of a Disposition of all or substantially all
Equity Interests in any Subsidiary of the Borrower or any division, product
line, or facility used for operations of the Borrower or any of its
Subsidiaries, shall be excluded, and (ii) in the case of a Permitted Acquisition
or Investment described in the definition of “Specified Transaction”, shall be
included, (b) any retirement, redemption, repayment, discharge, defeasance or
extinguishment of Indebtedness, and (c) any Indebtedness incurred or assumed by
the Borrower or any of the Restricted Subsidiaries in connection therewith (and
if such Indebtedness has a floating or formula rate, such Indebtedness shall
have an implied rate of interest for the applicable period for purposes of this
definition determined by utilizing the rate which is or would be in effect with
respect to such Indebtedness as at the relevant date of determination); provided
that, without limiting the application of the Pro Forma Adjustment pursuant to
(A) above, the foregoing pro forma adjustments may be applied to any such test
solely to the extent that such adjustments are consistent with the definition of
Consolidated EBITDAX and give effect to events (including operating expense
reductions) that are (as determined by the Borrower in good faith)
(i) (x) directly attributable to such transaction, (y) expected to have a
continuing impact on the Borrower and the Restricted Subsidiaries and (z)
factually supportable or (ii) otherwise consistent with the definition of Pro
Forma Adjustment; provided, further, that when calculating the Financial
Performance Covenants for purposes of determining actual compliance (and not
compliance on a Pro Forma Basis) with Section 10.11, any events that occurred
subsequent to the end of the applicable Test Period shall not be given pro forma
effect.

 

“Projections” shall mean financial estimates, forecasts and other
forward-looking information prepared by or on behalf of the Borrower or any of
its representatives and that have been made available to any Lenders or the
Administrative Agent in connection with the Transactions or the other
transactions contemplated hereby.

 

“Proposed Acquisition” shall have the meaning provided in Section 10.10(a).

 

“Proposed Borrowing Base” shall have the meaning provided in Section 2.14(c)(i).

 

“Proposed Borrowing Base Notice” shall have the meaning provided in
Section 2.14(c)(ii).

 

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

 

“Proved Developed Reserves” shall mean oil and gas mineral interests that, in
accordance with Petroleum Industry Standards, are classified as both “Proved
Reserves” and one of the following: (a) “Developed Producing Reserves” or
(b) “Developed Non-Producing Reserves.”

 

“Proved Reserves” shall mean oil and gas mineral interests that, in accordance
with Petroleum Industry Standards, are classified as both “Proved Reserves” and
one of the following: (a) “Developed Producing Reserves”, (b) “Developed
Non-Producing Reserves” or (c) “Undeveloped Reserves”.

 

“PTE” means a prohibited transaction class exemption issued by the U.S.
Department of Labor, as any such exemption may be amended from time to time.

 

“PubCo” shall have the meaning provided in the recitals to this Agreement.

  

 50 

 

 

 

“Public Company Costs” shall mean costs relating to compliance with the
Sarbanes-Oxley Act of 2002, as amended, and other expenses arising out of or
incidental to being a public reporting company, including costs, fees and
expenses (including legal, accounting and other professional fees) relating to
compliance with provisions of the Securities Act and the Exchange Act, the rules
of national securities exchange companies with listed equity securities,
directors’ compensation, fees and expense reimbursement shareholder meetings and
reports to shareholders, directors’ and officers’ insurance and other executive
costs, legal and other professional fees, and listing fees.

 

“PV-9” shall mean, with respect to any Proved 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 Bank
Price Deck.

 

“Qualified Equity Interests” shall mean any Equity Interests of the Borrower or
any Parent Entity other than Disqualified Stock.

 

“Redetermination Date” shall mean, with respect to any Scheduled Redetermination
or any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.14(d).

 

“Refinance” shall have the meaning provided in the definition of “Permitted
Refinancing Indebtedness.”

 

“Refinanced Indebtedness” shall have the meaning assigned to such term in the
definition of “Permitted Refinancing Indebtedness.”

 

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

 

“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).

 

“Related Indemnified Person” shall mean, with respect to an Indemnitee, (1) any
controlling Person or controlled Affiliate of such Indemnitee, (2) the
respective directors, officers, or employees of such Indemnitee or any of its
controlling Persons or controlled Affiliates and (3) the respective agents and
representatives of such Indemnitee or any of its controlling Persons or
controlled Affiliates, in the case of this clause (3), acting at the
instructions of such Indemnitee, controlling Person or such controlled
Affiliate.

 

“Release” shall mean any release, spill, emission, discharge, disposal, leaking,
pumping, pouring, dumping, emptying, injecting or leaching into the air, surface
water, groundwater, land surface and subsurface strata.

 

 51 

 

 

“Replaced Loans” shall have the meaning provided in Section 13.1(f).

 

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

 

“Representatives” shall have the meaning provided in Section 13.16.

 

“Required Cash Collateral Amount” shall have the meaning provided in
Section 3.7(c).

 

“Required Lenders” shall mean, at any date, (a) Non-Defaulting Lenders having or
holding at least 66.67% 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 66.67% of the outstanding principal amount of the Loans, the
Swingline Exposure and Letter of Credit Exposure (excluding the Loans, Swingline
Exposure and Letter of Credit Exposure of Defaulting Lenders) in the aggregate
at such date.

 

“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 mean (a) the Initial Reserve Report, (b) any other
subsequent report, in form reasonably satisfactory to the Administrative Agent,
or (c) any other engineering data reasonably acceptable to the Administrative
Agent, setting forth, as of each June 30th or December 31st (or such other date
as contemplated by this Agreement with respect to Interim Redeterminations or
otherwise reasonably acceptable to the Administrative Agent) the Proved Reserves
and the Proved Developed Reserves of the Borrower and the Credit Parties (or of
Oil and Gas Properties to be acquired, provided that any Oil and Gas Properties
not yet acquired shall be expressly designated as such), together with a
projection of the rate of production and future net revenues, operating expenses
(including production taxes and ad valorem expenses) and capital expenditures
with respect thereto as of such date, based upon the PV-9 of the Proved Reserves
and Proved Developed Reserves set forth therein; provided that in connection
with any Interim Redeterminations of the Borrowing Base pursuant to the last
sentence of Section 2.14(b), the Borrower shall only be required, for purposes
of updating the Reserve Report, to set forth such additional Proved Reserves and
related information as are the subject of such acquisition.

 

“Reserve Report Certificate” shall mean a certificate of an Authorized Officer
in substantially the form of Exhibit A certifying as to the matters set forth in
Section 9.14(c).

 

“Restricted Payments” shall have the meaning provided in Section 10.6.

 

“Restricted Subsidiary” shall mean any Subsidiary of the Borrower other than a
Unrestricted Subsidiary.

 

“Royal” shall have the meaning provided in the recitals to this Agreement.

 

“Sanctions” shall mean economic or financial sanctions or trade embargoes
imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by OFAC or the U.S. Department of State or (b) the
United Nations Security Council, the European Union or Her Majesty’s Treasury of
the United Kingdom.

 

 52 

 

 

“Sanctions Laws” shall mean the following, in each case, to the extent enacted
and in effect: (a) laws, regulations, and rules promulgated or administered by
OFAC to implement U.S. sanctions programs, including any enabling legislation or
Executive Order related thereto, as amended from time to time; (b) the US
Comprehensive Iran Sanctions, Accountability, and Divestment Act and the
regulations and rules promulgated thereunder (“CISADA”), as amended from time to
time; (c) the U.S. Iran Threat Reduction and Syria Human Rights Act and the
regulations and rules promulgated thereunder (“ITRA”), as amended from time to
time; (d) the US Iran Freedom and Counter-Proliferation Act and the regulations
and rules promulgated thereunder (“IFCA”); (e) the sanctions and other
restrictive measures applied by the European Union in pursuit of the Common
Foreign and Security Policy objectives set out in the Treaty on European Union;
and (f) any similar sanctions laws as may be enacted from time to time in the
future by the U.S., the European Union (and its member states), or the U.N.
Security Council or any other legislative body of the United Nations; and any
corresponding laws of jurisdictions in which the Borrower operates or in which
the proceeds of the Loans will be used or from which repayments of the
Obligations will be derived.

 

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

 

“Scheduled Redetermination” shall have the meaning provided in Section 2.14(b).

 

“Scheduled Redetermination Date” shall mean the date on which a Borrowing Base
that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.14.

 

“Screen Rate” shall have the meaning assigned to such term in the definition of
“LIBOR Rate.”

 

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

 

“Secured Cash Management Agreement” shall mean any agreement related to Cash
Management Services by and between the Borrower or any of its Restricted
Subsidiaries and any Cash Management Bank.

 

“Secured Hedge Agreement” shall mean any Hedge Agreement by and between the
Borrower or any of its Restricted Subsidiaries and any Hedge Bank or Approved
Counterparty.

 

“Secured Parties” shall mean, collectively, the Administrative Agent, the
Collateral Agent, each Issuing Bank, each Lender, each Hedge Bank or Approved
Counterparty that is party to any Secured Hedge Agreement, each Cash Management
Bank that is a party to any Secured Cash Management Agreement and each sub-agent
appointed pursuant to Section 12.2 by the Administrative Agent with respect to
matters relating to the Credit Documents or by the Collateral Agent with respect
to matters relating to any Security Document.

 

“Securities Account” shall mean any securities account maintained by the Credit
Parties, including any “security accounts” under Article 9 of the UCC. All funds
in such Securities Accounts (other than Excluded Accounts) shall be conclusively
presumed to be Collateral and proceeds of Collateral and the Agents and the
Lenders shall have no duty to inquire as to the source of the amounts on deposit
in the Securities Accounts.

 

 53 

 

 

“Securities Account Control Agreement” has the meaning specified in Section
9.17.

 

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

 

“Security Documents” shall mean, collectively, (a) the Collateral Agreement,
(b)  the Mortgages and (c) each other security agreement or other instrument or
document executed and delivered pursuant to Section 9.11 or 9.13 or pursuant to
any other such Security Documents or otherwise in order to secure or perfect the
security interest in any or all of the Obligations.

 

“Sold Entity or Business” has the meaning set forth in the definition of the
term “Consolidated EBITDAX.”

 

“Solvent” shall mean, with respect to any Person on any date of determination,
that on such date (a) the fair value of the assets of such Person and its
Subsidiaries, on a consolidated basis, exceeds, on a consolidated basis, their
debts and liabilities, subordinated, contingent or otherwise, (b) the present
fair saleable value of the property of such Person and its Subsidiaries, on a
consolidated basis, is greater than the amount that will be required to pay the
probable liability, on a consolidated basis, of their debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured, (c) such Person and its Subsidiaries,
on a consolidated basis, are able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such liabilities become absolute and
matured and (d) such Person and its Subsidiaries, on a consolidated basis, are
not engaged in, and are not about to engage in, business for which they have
unreasonably small capital. The amount of any contingent liability at any time
shall be computed as the amount that would reasonably be expected to become an
actual and matured liability.

 

“Specified Contribution Agreement Representations” shall mean the
representations and warranties made by the Contributors or with respect to the
Acquired Assets in the Contribution Agreement as are material to the interests
of the Lenders, but only to the extent that the Borrower (or any of its
Affiliates) has the right to terminate the obligations of the Borrower and (or
its Affiliates) pursuant to Section 8.1 of the Contribution Agreement, as a
result of a breach of such representations and warranties in the Contribution
Agreement.

 

“Specified Existing Commitment” shall mean any Existing Commitments belonging to
a Specified Existing Commitment Class.

 

“Specified Existing Commitment Class” shall have the meaning provided in
Section 2.17(a).

 

“Specified Representations” shall mean the representations and warranties with
respect to the Borrower set forth in Sections 8.1 (to the extent relating to the
existence of the Borrower and the Guarantors), 8.2, 8.3(c), 8.5, 8.7, 8.15, 8.16
and 8.20 of this Agreement.

 

“Specified Transaction” shall mean any acquisition, Investment, Disposition,
incurrence or repayment of Indebtedness, Restricted Payment or Subsidiary
designation that by the terms of this Agreement requires a financial ratio or
test to be calculated on a Pro Forma Basis.

 

 54 

 

 

“Sponsor” shall mean (a) Blackstone Capital Partners VI L.P. and (b) Blackstone
Energy Partners I L.P., and each of their respective Affiliates and funds or
partnerships managed or advised by and of them or any of their Affiliates, but
not including their respective portfolio companies.

 

“SPV” shall have the meaning provided in Section 13.6(g).

 

“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.

 

“Subagent” shall have the meaning provided in Section 12.2.

 

“Subsequent Test Period” shall have the meaning provided in Section 9.18.

 

“Subsidiary” shall mean, with respect to any Person: (1) any corporation,
association, or other business entity (other than a partnership, joint venture,
limited liability company or similar entity) of which more than 50.0% of the
total voting power of shares of Equity Interests entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, members of
management or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof; and (2) any partnership,
joint venture, limited liability company or similar entity of which: (a) more
than 50.0% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof whether in the form
of membership, general, special or limited partnership or otherwise, and (b)
such Person or any Restricted Subsidiary of such Person is a controlling general
partner or otherwise controls such entity.

 

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

 

“Subsidiary Redesignation” shall have the meaning provided in the definition of
“Unrestricted Subsidiary” contained in this Section 1.1(a).

 

“Successor Borrower” shall have the meaning provided in Section 10.3(a).

 

“Swap PV” shall mean, with respect to any commodity Hedge Agreement, the present
value, discounted at 9% per annum, of the future receipts expected to be paid to
the Borrower or its Restricted Subsidiaries under such Hedge Agreement netted
against the Administrative Agent’s then current Bank Price Deck; provided, that
the “Swap PV” shall never be less than $0.00.

 

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

 

 55 

 

 

“Swingline Commitment” shall mean the obligation of the Swingline Lender to make
Swingline Loans pursuant to Section 2.1 in an aggregate principal amount at any
one time outstanding not to exceed $5,000,000.

 

“Swingline Exposure” shall mean at any time the aggregate principal amount at
such time of all outstanding Swingline Loans. The Swingline Exposure of any
Lender at any time shall equal its Commitment Percentage of the aggregate
Swingline Exposure at such time.

 

“Swingline Lender” shall mean (a) Citibank in its capacity as the lender of
Swingline Loans hereunder and (b) any other Lender that is reasonably acceptable
to the Borrower and the Administrative Agent that agrees in writing with the
Borrower and the Administrative Agent to provide Swingline Loans on same-day
notice.

 

“Swingline Loan” shall have the meaning provided in Section 2.1(b).

 

“Swingline Maturity Date” shall mean, with respect to any Swingline Loan, the
date that is five (5) Business Days prior to the Maturity Date.

 

“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 and any interest, fines, penalties or additions to tax
with respect to the foregoing.

 

“Termination Date” shall mean the earlier to occur of (a) the Maturity Date and
(b) the date on which the Total Commitment shall have terminated.

 

“Test Period” shall mean, for any date of determination under this Agreement,
the latest four (4) consecutive fiscal quarters of the Borrower for which
financial statements have been delivered to the Administrative Agent on or prior
to the Closing Date and/or for which financial statements are required to be
delivered pursuant to clause (a) or (b) of Section 9.1.

 

“Total Commitment” shall mean the sum of the Commitments of the Lenders.

 

“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,
(b) such Lender’s Letter of Credit Exposure at such time and (c) such Lender’s
Swingline Exposure at such time.

 

“Transaction Expenses” shall mean any fees or expenses incurred or paid by the
Borrower or any of its Subsidiaries (or by the Sponsor or any direct or indirect
Parent Entity and reimbursed by the Borrower or any of its Subsidiaries) in
connection with the Transactions (including expenses in connection with hedging
transactions (including termination or amendment thereof), if any, payments to
officers, employees and directors as change of control payments, severance
payments or special or retention bonuses and payments or charges for payments on
account of phantom stock units, restricted stock, stock appreciation rights,
restricted stock units and options (including the repurchase or rollover of, or
modifications to, the foregoing awards)), this Agreement and the other Credit
Documents and the transactions contemplated hereby and thereby.

 

“Transactions” shall mean, collectively, the Acquisition and the consummation of
the other transactions contemplated by the Contribution Agreement or related
thereto, this Agreement, the payment of Transaction Expenses and the other
transactions contemplated by this Agreement and the Credit Documents (including
the Closing Date Loans).

 

 56 

 

 

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

 

“UCP” shall have the meaning provided in Section 3.8.

 

“Uniform Customs” shall mean, with respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits as approved by the International
Chamber of Commerce, commencing on July 1, 2007 (or such later version thereof
as may be in effect at the time of issuance).

 

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

 

“Unrestricted Cash” shall mean cash or cash equivalents (including Permitted
Investments) of the Borrower or any of its Restricted Subsidiaries that would
not appear as “restricted” on a consolidated balance sheet of the Borrower or
any of its Restricted Subsidiaries; provided that cash or cash equivalents
(including Permitted Investments) that would appear as “restricted” on a
consolidated balance sheet of Borrower or any of its Restricted Subsidiaries
solely because such cash or cash equivalents (including Permitted Investments)
are subject to a Deposit Account Control Agreement or a Securities Account
Control Agreement in favor of the Collateral Agent shall constitute Unrestricted
Cash hereunder.

 

“Unrestricted Subsidiary” shall mean (a) any Subsidiary set forth on Schedule
1.1(f), (b) any Subsidiary of the Borrower that is formed or acquired after the
Closing Date if, at such time or promptly thereafter, the Borrower designates
such Subsidiary as an “Unrestricted Subsidiary” in a written notice to the
Administrative Agent, (c) any Restricted Subsidiary designated as an
Unrestricted Subsidiary by the Borrower in a written notice to the
Administrative Agent; provided that in the case of each of clauses (b) and (c),
(i) such designation shall be deemed to be an Investment (or reduction in an
outstanding Investment, in the case of a designation of an Unrestricted
Subsidiary as a Restricted Subsidiary) on the date of such designation in an
amount equal to the Fair Market Value of the Borrower’s investment therein on
such date and such designation shall be permitted only to the extent such
Investment is permitted under Section 10.5 on the date of such designation, (ii)
in the case of clause (c), such designation shall be deemed to be a Disposition
pursuant to which the provisions of Section 2.14(f) will apply to the extent
contemplated thereby, (iii) no Event of Default or Borrowing Base Deficiency
would result from such designation immediately after giving effect thereto and
(iv) immediately after giving Pro Forma Effect to such designation, the Borrower
shall be in compliance with the Financial Performance Covenants on a Pro Forma
Basis and (d) each Subsidiary of an Unrestricted Subsidiary. No Subsidiary may
be designated as an Unrestricted Subsidiary if, after such designation, it would
be a “Restricted Subsidiary” for the purpose of any Pari Debt, Permitted
Additional Debt, Refinancing Loans, and Credit Agreement or any Permitted
Refinancing Indebtedness in respect of any of the foregoing, in each case, to
the extent applicable. The Borrower may, by written notice to the Administrative
Agent, re-designate any Unrestricted Subsidiary as a Restricted Subsidiary
(each, a “Subsidiary Redesignation”), and thereafter, such Subsidiary shall no
longer constitute an Unrestricted Subsidiary, but only if (i) no Event of
Default would result from such Subsidiary Redesignation, (ii) Liquidity is not
less than 10.0% of the then effective Borrowing Base (on a Pro Forma Basis
immediately after giving effect to such designation) and (iii) the Consolidated
Total Net Leverage Ratio, determined on a Pro Forma Basis, is less than or equal
to 3.00 to 1.00.

 

 57 

 

 

“U.S. Lender” shall mean any Lender that is a “United States person” within the
meaning of Section 7701(a)(30) of the Code.

 

“Voting Stock” shall mean, with respect to any Person, such Person’s Equity
Interests having the right to vote for the election of directors of such Person
under ordinary circumstances.

 

“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness
at any date, the number of years obtained by dividing: (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining scheduled
installment, sinking fund, serial maturity or other required scheduled payments
of principal, including payment at final scheduled maturity, in respect thereof,
by (b) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment; by (ii) the then
outstanding principal amount of such Indebtedness; provided that the effects of
any prepayments made on such Indebtedness shall be disregarded in making such
calculation.

 

“Wholly owned Domestic Subsidiary” of any person shall mean a Domestic
Subsidiary of such person that is a Wholly owned Subsidiary.

 

“Wholly owned Subsidiary” of any person shall mean a subsidiary of such person,
all of the Equity Interests of which (other than directors’ qualifying shares or
nominee or other similar shares required pursuant to applicable law) are owned
by such person or another Wholly owned Subsidiary of such person.

 

“Withdrawal Liability” shall mean the liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

 

“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.

 

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.

 

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

 

(d) The terms “include,” “includes” and “including” are by way of example and
not limitation.

 

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(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” shall mean “from and including”; the words “to”
and “until” each mean “to but excluding”; and the word “through” shall mean “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.

 

(l) The principal amount of any non-interest bearing Indebtedness or other
discount security constituting Indebtedness at any date shall be the principal
amount thereof that would be shown on a balance sheet of the Borrower dated such
date prepared in accordance with GAAP.

 

1.3 Accounting Terms.

 

(a) Generally. 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 on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the first audited financial statements
delivered under Section 9.1(a), except as otherwise specifically prescribed
herein. Notwithstanding any other provision contained herein, all terms of an
accounting or financial nature used herein 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.

 

 59 

 

 

(b) Computation of Certain Financial Covenants. Unless otherwise specified
herein, all defined financial terms (and all other definitions used to determine
such terms) shall be determined and computed in respect of the Borrower and its
Restricted Subsidiaries on a consolidated basis.

 

1.4 Rounding. Any financial ratios required to be maintained or complied with by
the Borrower pursuant to this Agreement (or required to be satisfied in order
for a specific action to be permitted under this Agreement) shall be calculated
by dividing the appropriate component by the other component, carrying the
result to one place more than the number of places by which such ratio is
expressed herein and rounding the result up or down to the nearest number (with
a rounding-up if there is no nearest number).

 

1.5 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.

 

1.6 Times of Day. Unless otherwise specified, all references herein to times of
day shall be references to New York City (daylight saving or standard, as
applicable).

 

1.7 Timing of Payment or Performance. When the payment of any obligation or the
performance of any covenant, duty or obligation is stated to be due or
performance required on a day which is not a Business Day, the date of such
payment (other than as described in Section 2.9) or performance shall extend to
the immediately succeeding Business Day.

 

1.8 Currency Equivalents Generally.

 

(a) For purposes of any determination under Section 9, Section 10 (other than
Section 10.11) or Section 11 or any determination under any other provision of
this Agreement requiring the use of a current exchange rate, all amounts
incurred, outstanding or proposed to be incurred or outstanding in currencies
other than Dollars shall be translated into Dollars at the Exchange Rate then in
effect on the date of such determination; provided, however, that (x) for
purposes of determining compliance with Section 10 with respect to the amount of
any Indebtedness, Investment, Disposition, Restricted Payment or payment under
Section 10.7 in a currency other than Dollars, no Default or Event of Default
shall be deemed to have occurred solely as a result of changes in rates of
exchange occurring after the time such Indebtedness or Investment is incurred or
Disposition, Restricted Payment or payment under Section 10.7 is made, (y) for
purposes of determining compliance with any Dollar-denominated restriction
on the incurrence of Indebtedness, the Dollar-equivalent principal amount of
Indebtedness denominated in a foreign currency shall be calculated based on the
relevant currency exchange rate in effect on the date such Indebtedness was
incurred, in the case of term debt, or first committed or first incurred
(whichever yields the lower Dollar equivalent), in the case of revolving credit
debt, provided that if such Indebtedness is incurred to refinance other
Indebtedness denominated in a foreign currency, and such refinancing would cause
the applicable Dollar-denominated restriction to be exceeded if calculated at
the relevant currency exchange rate in effect on the date of such Refinancing,
such U.S. dollar-denominated restriction shall be deemed not to have been
exceeded so long as the principal amount of such Refinanced Indebtedness does
not exceed (i) the principal amount of such Indebtedness being Refinanced plus
(ii) the aggregate amount of fees, underwriting discounts, premiums (including
tender premiums) and other costs and expenses (including original issue
discount, upfront fees or similar fees) incurred in connection with such
refinancing and (z) for the avoidance of doubt, the foregoing provisions of this
Section 1.8 shall otherwise apply to such Sections, including with respect to
determining whether any Indebtedness or Investment may be incurred or
Disposition, Restricted Payment or payment under Section 10.7 may be made at any
time under such Sections. For purposes of Section 10.11, amounts in currencies
other than Dollars shall be translated into Dollars at the applicable exchange
rates used in preparing the most recently delivered financial statements
pursuant to Section 9.1(a) or (b).

 

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(b) Each provision of this Agreement shall be subject to such reasonable changes
of construction as the Administrative Agent may from time to time specify with
the Borrower’s consent (such consent not to be unreasonably withheld) to
appropriately reflect a change in currency of any country and any relevant
market conventions or practices relating to such change in currency.

 

1.9 Classification of Loans and Borrowings. For purposes of this Agreement,
Loans may be classified and referred to by Class (e.g., an “Extended Loan”) or
by Type (e.g., a “LIBOR Loan”) or by Class and Type (e.g., a “LIBOR Extended
Loan”).

 

1.10 Hedging Requirements Generally. For purposes of any determination with
respect to compliance with Section 10.10 or any other calculation under or
requirement of this Agreement in respect of hedging shall be calculated
separately for crude, gas and natural gas liquid.

 

1.11 Certain Determinations. For purposes of determining compliance with any of
the covenants set forth in Section 9 or Section 10 (including in connection with
the Incremental Increase), but subject to any limitation expressly set forth
therein, as applicable, at any time (whether at the time of incurrence or
thereafter), any Lien, Investment, Indebtedness, Disposition, Restricted
Payment, Affiliate transaction, prepayment, redemption or the consummation of
any other transaction meets the criteria of one, or more than one, of the
categories permitted pursuant to Section 9 or Section 10 (including in
connection with any Incremental Increase), as applicable, the Borrower shall, in
its sole discretion, determine under which category such Lien, Investment,
Indebtedness, Disposition, Restricted Payment, Affiliate transaction,
prepayment, redemption or the consummation of any other transaction (or, in each
case, any portion thereof) is permitted.

 

1.12 Pro Forma and Other Calculations.

 

(a) Notwithstanding anything to the contrary herein, for purposes of determining
compliance with any test or covenant contained in this Agreement with respect to
any period during which any Specified Transaction occurs, the Consolidated Total
Net Leverage Ratio and the Current Ratio shall be calculated with respect to
such period and such Specified Transaction on a Pro Forma Basis and in the
manner prescribed by this Section 1.12; provided that, in connection with any
Specified Transaction that is a Limited Condition Transaction, for purposes of
determining compliance with any test or covenant for any action advisable (as
determined by the Borrower in good faith) for the consummation of a Limited
Condition Transaction contained in this Agreement during any period which
requires the calculation of any of the foregoing ratios or any basket that is
determined by reference to Consolidated EBITDAX or Consolidated Total Assets
and, at the option of the Borrower (the Borrower’s election to exercise such
option in connection with any Limited Condition Transaction, an “LCA Election”)
the date of determination for calculation of any such ratios shall be deemed to
be the date the definitive agreements for such Specified Transaction that is a
Limited Condition Transaction are entered into (the “LCA Test Date”) and if,
after giving Pro Forma Effect to the Limited Condition Transaction and the other
transactions to be entered into in connection therewith (including any
incurrence of Indebtedness and the use of proceeds thereof) as if they had
occurred at the beginning of the most recent date of determination ending prior
to the LCA Test Date, the Borrower could have taken such action on the relevant
LCA Test Date in compliance with such ratio or basket, such ratio or basket
shall be deemed to have been complied with. For the avoidance of doubt, if the
Borrower has made an LCA Election and any of the ratios or baskets for which
compliance was determined or tested as of the LCA Test Date are exceeded as a
result of fluctuations in any such ratio or basket, including due to
fluctuations in Consolidated EBITDAX or Consolidated Total Assets of the
Borrower or the Person subject to such Limited Condition Transaction, at or
prior to the consummation of the relevant transaction or action, such baskets or
ratios will not be deemed to have been exceeded as a result of such fluctuations
solely for purposes of determining whether the relevant transaction or action is
permitted to be consummated or taken. If the Borrower has made an LCA Election
for any Limited Condition Transaction, then in connection with any subsequent
calculation of any ratio with respect to any other Specified Transaction on or
following the relevant LCA Test Date and prior to the earlier of the date on
which such Limited Condition Transaction is consummated or the date that the
definitive agreement for such Limited Condition Transaction is terminated or
expires without consummation of such Limited Condition Transaction, any such
ratio shall be calculated on a Pro Forma Basis assuming such Limited Condition
Transaction and other transactions in connection therewith (including any
incurrence of Indebtedness and any associated Lien and the use of proceeds
thereof) have been consummated.

 

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(b) If since the beginning of any applicable Test Period any Person that
subsequently became a Restricted Subsidiary or was merged, amalgamated or
consolidated with or into the Borrower or any of its Restricted Subsidiaries
since the beginning of such Test Period shall have made any Specified
Transaction that would have required adjustment pursuant to this Section 1.12,
then such financial ratio or test (or Consolidated Total Assets) shall be
calculated to give Pro Forma Effect thereto in accordance with this Section
1.12.

 

(c) Whenever Pro Forma Effect is to be given to a Specified Transaction, the pro
forma calculations shall be made in good faith by a responsible financial or
accounting officer of the Borrower and may include, for the avoidance of doubt,
the amount of “run-rate” cost savings, operating expense reductions and savings
from synergies resulting from or relating to any Specified Transactions
(including the Transaction) which is being given Pro Forma Effect that have been
realized or are expected to be realized and for which the actions necessary to
realize such cost savings, operating expense reductions and savings from
synergies are taken, committed to be taken or with respect to which substantial
steps have been taken or are expected to be taken (in the good faith
determination of the Borrower) (calculated on a Pro Forma Basis as though such
cost savings, operating expense reductions and savings from synergies had been
realized on the first day of such period and as if such cost savings, operating
expense reductions and savings from synergies were realized during the entirety
of such period) and “run-rate” shall mean the full recurring benefit for a
period that is associated with any action taken, committed to be taken or with
respect to which substantial steps have been taken or are expected to be taken
(including any savings expected to result from the elimination of a public
target’s Public Company Costs) net of the amount of actual benefits realized
during such period from such actions; provided that (A) such amounts are
reasonably identifiable and factually supportable in the good faith judgment of
the Borrower, (B) such actions are taken, committed to be taken or with respect
to which substantial steps have been taken or are expected to be taken (in the
good faith determination of the Borrower) no later than thirty-six (36) months
after the date of such Specified Transaction, (C) no amounts shall be added
pursuant to this clause (c) to the extent duplicative of any amounts that are
otherwise added back in computing Consolidated EBITDAX (or any other components
thereof), whether through a pro forma adjustment or otherwise, with respect to
such period and (D) it is understood and agreed that subject to compliance with
the other provisions of this clause (c), amounts to be included in pro forma
calculations pursuant to this Section 1.12 may be included in Test Periods in
which the Specified Transaction to which such amounts related is no longer being
given Pro Forma Effect pursuant to Section 1.12(a).

 

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(d) In the event that (x) the Borrower or any Restricted Subsidiary issues,
repurchases or redeems Disqualified Stock or (y) any Restricted Subsidiary
issues, repurchases or redeems Preferred Stock, (i) during the applicable Test
Period or (ii) subsequent to the end of the applicable Test Period and prior to
or simultaneously with the event for which the calculation of any such ratio is
made, then such financial ratio or test shall be calculated giving Pro Forma
Effect to such issuance, refinancing or redemption of Disqualified Stock or
Preferred Stock to the extent required, as if the same had occurred on the last
day of the applicable Test Period.

 

SECTION 2.        Amount and Terms of Credit

 

2.1 Commitments.

 

(a) (i) Subject to and upon the terms and conditions herein set forth, each
Lender severally, but not jointly, agrees to make a loan or loans denominated in
Dollars (each an “Initial Loan” and, collectively, the “Initial Loans”) to the
Borrower, which Loans (i) shall be made at any time and from time to time on and
after the Closing Date and prior to the Termination Date, (ii) may, at the
option of the Borrower, be incurred and maintained as, and/or converted into,
ABR Loans or LIBOR Loans; provided that all Loans made by each of the Lenders
pursuant to the same Borrowing shall, unless otherwise specifically provided
herein, consist entirely of Loans of the same Type, (iii) may be repaid and
reborrowed in accordance with the provisions hereof, (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, (v) shall
not, after giving effect thereto and to the application of the proceeds thereof,
result in the aggregate amount of all Lenders’ Total Exposures at such time
exceeding the Loan Limit then in effect; and (vi) in the case of the Initial
Loans made on the Closing Date, shall not result in the aggregate amount of all
Lenders’ Total Exposures at such time exceeding $92,000,000.

 

(ii) Each Lender may at its option make any LIBOR Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan, provided that
(i) any exercise of such option shall not affect the obligation of the Borrower
to repay such Loan and (ii) in exercising such option, such Lender shall use its
reasonable efforts to minimize any increased costs to the Borrower resulting
therefrom (which obligation of the Lender shall not require it to take, or
refrain from taking, actions that it determines would result in increased costs
for which it will not be compensated hereunder or that it determines would be
otherwise disadvantageous to it and in the event of such request for costs for
which compensation is provided under this Agreement, the provisions of Section
2.10 shall apply).

 

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(b) Subject to and upon the terms and conditions herein set forth, the Swingline
Lender in its individual capacity agrees, at any time and from time to time on
and after the Closing Date and prior to the Swingline Maturity Date, to make a
loan or loans (each a “Swingline Loan” and, collectively, the “Swingline Loans”)
to the Borrower in Dollars, which Swingline Loans (i) shall be ABR Loans,
(ii) shall have the benefit of the provisions of Section 2.1(c), (iii) shall not
exceed at any time outstanding the Swingline Commitment, (iv) shall not, after
giving effect thereto and to the application of the proceeds thereof, result at
any time in the aggregate amount of the Lenders’ Total Exposure at such time
exceeding the Loan Limit then in effect and (v) may be repaid and reborrowed in
accordance with the provisions hereof. Each outstanding Swingline Loan shall be
repaid in full on the earlier of (a) seven (7) Business Days after such
Swingline Loan is initially borrowed and (b) the Swingline Maturity Date. The
Swingline Lender shall not make any Swingline Loan after receiving a written
notice from the Borrower or the Administrative Agent stating that an Event of
Default exists and is continuing until such time as the Swingline Lender shall
have received written notice of (i) rescission of all such notices from the
party or parties originally delivering such notices or (ii) the waiver of such
Event of Default in accordance with the provisions of Section 13.1.

 

(c) On any Business Day, the Swingline Lender may, in its sole discretion, give
notice to each Lender that all then-outstanding Swingline Loans shall be funded
with a Borrowing of Loans, in which case Loans constituting ABR Loans (each such
Borrowing, a “Mandatory Borrowing”) shall be made on the immediately succeeding
Business Day by each Lender pro rata based on each Lender’s Commitment
Percentage, and the proceeds thereof shall be applied directly to the Swingline
Lender to repay the Swingline Lender for such outstanding Swingline Loans. Each
Lender hereby irrevocably agrees to make such Loans upon one Business Days’
notice pursuant to each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the date specified to it in writing
by the Swingline Lender notwithstanding (i) that the amount of the Mandatory
Borrowing may not comply with the minimum amount for each Borrowing specified in
Section 2.2, (ii) whether any conditions specified in Section 7 are then
satisfied, (iii) whether a Default or an Event of Default has occurred and is
continuing, (iv) the date of such Mandatory Borrowing, (v) any reduction in the
Total Commitment after any such Swingline Loans were made or (vi) any other
event, circumstance or condition whatsoever, whether or not similar to the
foregoing. In the event that, in the sole judgment of each Swingline Lender, any
Mandatory Borrowing cannot for any reason be made on the date otherwise required
above (including as a result of the commencement of a proceeding under the
Bankruptcy Code in respect of the Borrower), each Lender hereby agrees that it
shall forthwith purchase from the Swingline Lender (without recourse or
warranty) such participation of the outstanding Swingline Loans as shall be
necessary to cause the Lenders to share in such Swingline Loans ratably based
upon their respective Commitment Percentages; provided that all principal and
interest payable on such Swingline Loans shall be for the account of the
Swingline Lender until the date the respective participation is purchased and,
to the extent attributable to the purchased participation, shall be payable to
such Lender purchasing same from and after such date of purchase.

 

2.2 Minimum Amount of Each Borrowing; Maximum Number of Borrowings.
The aggregate principal amount of each Borrowing shall be in a minimum amount of
at least the Minimum Borrowing Amount for such Type of Loans and in a multiple
of $100,000 in excess thereof and Swingline Loans shall be in a minimum amount
of $100,000 and in a multiple of $10,000 in excess thereof (except that
Mandatory Borrowings shall be made in the amounts required by Section 2.1(c) and
Loans to reimburse the applicable Issuing Bank with respect to any Unpaid
Drawing shall be made in the amounts required by Section 3.3 or Section 3.4,
as applicable). More than one Borrowing may be incurred on any date; provided,
that at no time shall there be outstanding more than ten Borrowings of LIBOR
Loans under this Agreement.

 

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2.3 Notice of Borrowing.

 

(a) Whenever the Borrower desires to incur Loans (other than Swingline Loans,
Mandatory Borrowings or borrowings to repay Unpaid Drawings), the Borrower shall
give the Administrative Agent at the Administrative Agent’s Office, (i) (A) in
the case of any LIBOR Loans incurred on the Closing Date, prior to 12:00 p.m.
(New York City time) at least two (2) Business Days prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Loans and
(B) in the case of any LIBOR Loans incurred after the Closing Date, prior to
12:00 noon (New York City time) at least three (3) Business Days’ prior written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing of
Loans and (ii) (A) in the case of any ABR Loans incurred on the Closing Date,
prior to 12:00 p.m. (New York City time) at least one Business Day prior written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing of
Loans and (B) in the case of any ABR Loans incurred after the Closing Date,
written notice (or telephonic notice promptly confirmed in writing) prior to
12:00 p.m. (New York City time) on the date of each Borrowing of Loans that are
to be ABR Loans. Such notice (together with each notice of a Borrowing of
Swingline Loans pursuant to Section 2.3(b), a “Notice of Borrowing”) shall
specify (A) the aggregate principal amount of the Loans to be made pursuant to
such Borrowing, (B) the date of the Borrowing (which shall be a Business Day)
and (C) whether the respective Borrowing shall consist of ABR Loans and/or LIBOR
Loans and, if 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’s duration). The Administrative Agent
shall promptly give each Lender written notice (or telephonic notice promptly
confirmed in writing) of each proposed Borrowing of Loans, of such Lender’s
Commitment Percentage thereof and of the other matters covered by the related
Notice of Borrowing.

 

(b) Whenever the Borrower desires to incur Swingline Loans hereunder, it shall
give the Administrative Agent written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of Swingline Loans prior to 3:00 p.m.
(New York City time) on the date of such Borrowing. Each such notice shall
specify (i) the aggregate principal amount of the Swingline Loans to be made
pursuant to such Borrowing and (ii) the date of Borrowing (which shall be a
Business Day). The Administrative Agent shall promptly give the Swingline Lender
written notice (or telephonic notice promptly confirmed in writing) of each
proposed Borrowing of Swingline Loans and of the other matters covered by the
related Notice of Borrowing.

 

(c) Mandatory Borrowings shall be made upon the notice specified in
Section 2.1(c), with the Borrower irrevocably agreeing, by its incurrence of any
Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section.

 

(d) Borrowings to reimburse Unpaid Drawings shall be made upon the notice
specified in Section 3.4(a).

 

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

 

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2.4 Disbursement of Funds.

 

(a) No later than 1:00 p.m. (New York City time) on the date specified in each
Notice of Borrowing (including Mandatory Borrowings), each Lender will make
available its pro rata portion of each Borrowing requested to be made on such
date in the manner provided below; provided that on the Closing Date, such funds
shall be made available by 10:00 a.m. (New York City 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; provided, further, that all
Swingline Loans shall be made available in the full amount thereof by the
Swingline Lender no later than 3:30 p.m. (New York City time) on the date
requested.

 

(b) Each Lender shall make available all amounts it is to fund to the Borrower
under any Borrowing in immediately available funds to the Administrative Agent
at the Administrative Agent’s Office in Dollars, and the Administrative Agent
will (except in the case of Mandatory Borrowings and Borrowings to repay Unpaid
Drawings) make available to the Borrower, by depositing or wiring to an account
as designated by the Borrower in the Notice of Borrowing to the Administrative
Agent the aggregate of the amounts so made available in Dollars. Unless the
Administrative Agent shall have been notified by any Lender prior to the date of
any such Borrowing (or, with respect to an ABR Loan, the date of such Borrowing
prior to 1:00 p.m. (New York City time)) that such Lender does not intend to
make available to the Administrative Agent its portion of the Borrowing or
Borrowings 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
date of Borrowing, 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 in Dollars. 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 or (ii) if paid by the Borrower, the then-applicable rate of
interest or fees, calculated in accordance with Section 2.8, for the respective
Loans.

 

(c) Nothing in this Section 2.4 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).

 

2.5 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 earlier of (X) the Termination Date and (Y)
(i) on the Initial Maturity Date, the then outstanding Initial Loans, (ii) on
the relevant maturity date for any Extended Class, all then outstanding Extended
Loans in respect of such Extension Series and (iii) on the Swingline Maturity
Date, the then outstanding Swingline Loans.

 

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(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, acting solely for this purpose as a non-fiduciary
agent of the Borrower, shall maintain the Register pursuant to
Section 13.6(b)(iv), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount of each Loan made
hereunder (whether such Loan is an Initial Loan, an Extended Loan or Swingline
Loan, as applicable), 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 or the Swingline
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 2.5 shall, 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.

 

2.6 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 equal to
at least the Minimum Borrowing Amount (and in multiples of $100,000 in excess
thereof) of the outstanding principal amount of Loans of one Type into a
Borrowing or Borrowings 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) no partial conversion of LIBOR Loans shall reduce the outstanding principal
amount of LIBOR Loans made pursuant to a single Borrowing to less than the
Minimum Borrowing Amount, (B) 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, (C) 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 (D) Borrowings resulting
from conversions pursuant to this Section 2.6 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 2:00 p.m. (New York City time) at least (1) three (3) Business
Days’, in the case of a continuation of or conversion to LIBOR Loans or (2) 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’s
duration). 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.

 

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(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 continue such Borrowing of LIBOR
Loans into a Borrowing of LIBOR Loans having an interest period of one month,
effective as of the expiration date of such current Interest Period.

 

(c) Notwithstanding anything to the contrary herein, the Borrower may deliver a
Notice of Conversion or Continuation pursuant to which the Borrower elects to
irrevocably continue the outstanding principal amount of any Loan subject to an
interest rate Hedge Agreement as LIBOR Loans for each Interest Period until the
expiration of the term of such applicable Hedge Agreement; provided that any
Notice of Conversion or Continuation delivered pursuant to this Section 2.6(c)
shall include a schedule attaching the relevant interest rate Hedge Agreement or
related trade confirmation.

 

2.7 Pro Rata Borrowings. Each Borrowing of Initial Loans under this Agreement
shall be made by the Lenders pro rata on the basis of their then applicable
Commitment Percentages with respect to the applicable Class. Each Borrowing of
Extended Loans under this Agreement shall be granted by the Lenders of the
relevant Extension Series thereof pro rata on the basis of their then-applicable
Extended Commitments for the applicable Extension Series. It is 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.

 

2.8 Interest.

 

(a) The unpaid principal amount of each ABR Loan shall bear interest from the
date of the Borrowing thereof until maturity (whether by acceleration or
otherwise) at a rate per annum that shall at all times be the Applicable Margin
plus the ABR, in each case, in effect from time to time.

 

(b) The unpaid principal amount of each LIBOR Loan shall bear interest from the
date of the Borrowing thereof until maturity thereof (whether by acceleration or
otherwise) at a rate per annum that shall at all times be the Applicable Margin
plus the relevant LIBOR Rate, in each case, in effect from time to time.

 

(c) If all or a portion of (i) the principal amount of any Loan or (ii) any
other amount payable under the Credit Documents (including, without limitation,
interest payable thereon and premium, if any) shall not be paid when due
(whether at stated maturity, by acceleration or otherwise), 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 2.0%, (B) in the case of any overdue interest, to the extent permitted by
applicable Requirements of Law, the rate described in Section 2.8(a) plus 2.0%
from and including the date of such non-payment to the date on which such amount
is paid in full (after as well as before judgment) and (C) in the case of any
overdue amount not specified in subclause (A) or (B) above, a rate per annum
equal to the rate per annum otherwise payable at such time on ABR Loans.

 

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(d) Interest on each Loan shall accrue from and including the date of any
Borrowing 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 (3) 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
Borrowing of LIBOR Loans, shall promptly notify the Borrower and the relevant
Lenders thereof. Each such determination shall, absent clearly demonstrable
error, be final and conclusive and binding on all parties hereto.

 

2.9 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, a Borrowing of LIBOR Loans in accordance with
Section 2.6(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- or (if available to all the Lenders
making such LIBOR Loans as determined by such Lenders in good faith based on
prevailing market conditions) a twelve-month period or (ii) any period shorter
than one month (if available to all the Lenders making such LIBOR Loans as
determined by such Lenders in good faith based on prevailing market conditions)
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.

 

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2.10 Increased Costs, Illegality, Etc.

 

(a) In the event that (x) in the case of clause (i) below, the Majority Lenders
or (y) in the case of clauses (ii) and (iii) below, any Lender (or the
Administrative Agent, as applicable), 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 Borrowing of
LIBOR Loans are not generally available in the relevant market or (B) by reason
of any changes arising on or after the Closing 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

 

(ii) that a Change in Law occurring at any time after the Closing Date 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
(including any Issuing Bank and any Swingline Lender) and the Administrative
Agent to any Tax (other than (i) Indemnified Taxes or Other Taxes indemnifiable
under Section 5.4, or (ii) Excluded Taxes) on its loans, loan principal, letters
of credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto, or (C) impose on any Lender or the
London interbank market any other condition, cost or expense (other than Taxes)
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 Lenders (or the Administrative Agent, in the
case of clause (i) and (ii)(B) 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 (or
the Administrative Agent, as applicable), promptly (but no later than fifteen
(15) days) after receipt of written demand therefor such additional amounts as
shall be required to compensate such Lender (or the Administrative Agent, as
applicable) 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 (or the Administrative Agent, as applicable), showing in
reasonable detail the basis for the calculation thereof, submitted to the
Borrower by such Lender (or the Administrative Agent, as applicable) 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 2.10(b) as promptly as possible
and, in any event, within the time period required by applicable Requirements of
Law.

 

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(b) At any time that any LIBOR Loan is affected by the circumstances described
in Section 2.10(a)(ii) or (iii), the Borrower may (and in the case of a LIBOR
Loan affected pursuant to Section 2.10(a)(iii) shall) either if the affected
LIBOR Loan is then being made pursuant to a Borrowing, cancel such Borrowing by
giving the Administrative Agent telephonic notice (confirmed promptly in
writing) thereof on the same date that the Borrower was notified by a Lender
pursuant to Section 2.10(a)(ii) or (iii) or 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 are affected at any time, then all
affected Lenders must be treated in the same manner pursuant to this
Section 2.10(b).

 

(c) If, after the Closing 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 Closing 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 Closing
Date. Each Lender, upon determining in good faith that any additional amounts
will be payable pursuant to this Section 2.10(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 2.13, release or
diminish the Borrower’s obligations to pay additional amounts pursuant to this
Section 2.10(c) upon receipt of such notice.

 

2.11 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 2.5, 2.6, 2.10, 5.1, 5.2 or 13.7, as a result of
acceleration of the maturity of the Loans pursuant to Section 11 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 (15)
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.

 

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2.12 Change of Lending Office. Each Lender agrees that, upon the occurrence of
any event giving rise to the operation of Section 2.10(a)(ii), 2.10(a)(iii),
2.10(c), 3.11 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 2.12 shall affect or postpone any of the
obligations of the Borrower or the right of any Lender provided in Section 2.10,
3.11 or 5.4.

 

2.13 Notice of Certain Costs. Notwithstanding anything in this Agreement to the
contrary, to the extent any notice required by Section 2.10, 2.11 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 2.10, 2.11 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.

 

2.14 Borrowing Base.

 

(a) Initial Borrowing Base. For the period from and including the Closing Date
to but excluding the first Redetermination Date, the Borrowing Base shall be
equal to $115,000,000. Notwithstanding the foregoing, the Borrowing Base may be
subject to further adjustments from time to time pursuant to Section 2.14(e),
(f) and (h).

 

(b) Scheduled and Interim Redeterminations. The Borrowing Base shall be
redetermined semi-annually in accordance with this Section 2.14 (a “Scheduled
Redetermination”), and, subject to Section 2.14(d), such redetermined Borrowing
Base shall become effective and applicable to the Borrower, the Administrative
Agent, the Issuing Banks and the Lenders (x) on or about November 1, 2018 and
(y) thereafter on April 1st and October 1st of each year (or as promptly as
possible thereafter), commencing April 1, 2019. In addition, (i) the Borrower
may at any time (including prior to the first Scheduled Redetermination Date of
November 1, 2018), by notifying the Administrative Agent thereof not more than
once during any period between Scheduled Redeterminations and not more than
twice during any fiscal year; and (ii) the Administrative Agent, following the
first Scheduled Redetermination Date of November 1, 2018 may, at the written
direction of the Required Lenders, by written notice to the Borrower thereof,
not more than once during any period between Scheduled Redeterminations and not
more than twice during any fiscal year (provided that such limitation shall not
apply to any redetermination requested by the Borrower in connection with any
Incremental Increase pursuant to Section 2.16), in each case, elect to cause the
Borrowing Base to be redetermined between Scheduled Redeterminations (an
“Interim Redetermination”) in accordance with this Section 2.14. In addition to,
and not including and/or limited by the annual Interim Redeterminations allowed
above, the Borrower may, by notifying the Administrative Agent thereof, at any
time between Scheduled Redeterminations, request additional Interim
Redeterminations of the Borrowing Base in the event that a Credit Party acquires
Oil and Gas Properties which are to be Borrowing Base Properties with Proved
Reserves having a PV-9 value (calculated at the time of acquisition) in excess
of five percent (5.0%) of the Borrowing Base in effect immediately prior to such
acquisition (and for purposes of the foregoing, the designation of an
Unrestricted Subsidiary owning Oil and Gas Properties with Proved Reserves as a
Restricted Subsidiary shall be deemed to constitute an acquisition by a Credit
Party of Oil and Gas Properties with Proved Reserves).

 

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(c) Scheduled and Interim Redetermination Procedure.

 

(i) Each Scheduled Redetermination and each Interim Redetermination shall be
effectuated as follows: Upon receipt by the Administrative Agent of the Reserve
Report, the Reserve Report Certificate, the information provided pursuant to
Section 9.14(c) and such other related reports, data and supplemental
information as the Administrative Agent or the Required Lenders may reasonably
request, including notice of any reduction of Pari Debt (the Reserve Report,
such Reserve Report Certificate and such other related reports, data and
information being the “Engineering Reports”), the Administrative Agent shall
evaluate the information contained in the Engineering Reports and shall in good
faith propose a new Borrowing Base (the “Proposed Borrowing Base”) based upon
such information and such other related information (including the status of
title information with respect to the Borrowing Base Properties as described in
the Engineering Reports and the existence of any Hedge Agreements) in good faith
in accordance with its usual and customary oil and gas lending criteria as they
exist at the particular time.

 

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

 

(A)   in the case of a Scheduled Redetermination, (1) if the Administrative
Agent shall have received the Engineering Reports required to be delivered by
the Borrower pursuant to Sections 9.14(a) and (c) in a timely manner, within ten
(10) Business Days following its receipt of such Engineering Reports or (2) if
the Administrative Agent shall not have received the Engineering Reports
required to be delivered by the Borrower pursuant to Sections 9.14(a) and (c) in
a timely manner, then promptly after the Administrative Agent has received
complete Engineering Reports from the Borrower and has had a reasonable
opportunity to determine the Proposed Borrowing Base in accordance with
Section 2.14(c)(i); and

 

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

 

(iii) [Reserved].

 

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(iv) Any Proposed Borrowing Base that would increase the Borrowing Base then in
effect must be approved or deemed to have been approved by each Lender in each
such Lender’s sole discretion and consistent with each such Lender’s normal and
customary oil and gas lending criteria as they exist at the particular time as
provided in this Section 2.14(c)(iv) and any Proposed Borrowing Base that would
decrease or maintain the Borrowing Base then in effect must be approved or be
deemed to have been approved by Lenders constituting at least the Required
Lenders in each such Lender’s sole discretion and consistent with each such
Lender’s normal and customary oil and gas lending criteria as they exist at the
particular time as provided in this Section 2.14(c)(iv). Upon receipt of the
Proposed Borrowing Base Notice, each Lender shall have, in the case of any
Scheduled Redetermination, fifteen (15) Business Days, and in the case of any
Interim Redetermination, five (5) Business Days, in either case, to agree with
the Proposed Borrowing Base or disagree with the Proposed Borrowing Base by
proposing an alternate Borrowing Base. If at the end of such 15-Business Day
period or 5-Business Day period (as applicable), all of the Lenders, in the case
of a Proposed Borrowing Base that would increase the Borrowing Base then in
effect, or the Required Lenders, in the case of a Proposed Borrowing Base that
would decrease or maintain the Borrowing Base then in effect, have approved,
then the Proposed Borrowing Base shall become the new Borrowing Base, effective
on the date specified in Section 2.14(d). If, however, at the end of such
15-Business Day period or 5-Business Day period (as applicable), all Lenders or
the Required Lenders, as applicable, have not approved, then the Administrative
Agent shall promptly thereafter poll the Lenders to ascertain the highest
Borrowing Base then acceptable to (a) in the case of a decrease or
reaffirmation, a number of Lenders sufficient to constitute the Required Lenders
or (b) in the case of an increase, all of the Lenders, and such amount shall
become the new Borrowing Base, effective on the date specified in
Section 2.14(d).

 

(d) Effectiveness of a Redetermined Borrowing Base. Subject to Section 2.14(h),
after a redetermined Borrowing Base is approved by each Lender or the Required
Lenders, as applicable, pursuant to Section 2.14(c)(iv), the Administrative
Agent shall promptly thereafter notify the Borrower and the Lenders of the
amount of the redetermined Borrowing Base (the “New Borrowing Base Notice”), and
such amount shall become the new Borrowing Base, effective and applicable to the
Borrower, the Administrative Agent, the Issuing Banks and the Lenders:

 

(i) in the case of a Scheduled Redetermination, (A) if the Administrative Agent
shall have received the Engineering Reports required to be delivered by the
Borrower pursuant to Sections 9.14(a) and (c) in a timely and complete manner,
on the April 1 or October 1, as applicable, following such notice, or (B) if the
Administrative Agent shall not have received the Engineering Reports required to
be delivered by the Borrower pursuant to Sections 9.14(a) and (c) in a timely
and complete manner, then on the Business Day next succeeding delivery of such
New Borrowing Base Notice; and

 

(ii) in the case of an Interim Redetermination, on the Business Day next
succeeding delivery of such New Borrowing Base Notice.

 

Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next redetermination or modification thereof
hereunder. Notwithstanding the foregoing, no Scheduled Redetermination or
Interim Redetermination shall become effective until the New Borrowing Base
Notice related thereto delivered to the Borrower in accordance with Section
13.2.

 

(e) Reduction of Borrowing Base Upon Incurrence of Borrowing Base Reduction
Debt. The Borrowing Base shall be reduced upon the issuance or incurrence of any
Borrowing Base Reduction Debt after the Closing Date (other than Borrowing Base
Reduction Debt constituting Permitted Refinancing Indebtedness incurred to
Refinance such Indebtedness) by an amount equal to the product of 0.25
multiplied by the stated principal amount of such Borrowing Base Reduction 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 Banks and the Lenders on such date until the
next redetermination or modification thereof hereunder.

 

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(f) Reduction of Borrowing Base Upon Termination of Hedge Positions and Asset
Dispositions.

 

(i) If the Borrower or any Restricted Subsidiary shall terminate or create any
off-setting positions in respect of any commodity hedge positions (whether
evidenced by a floor, put or Hedge Agreement) upon which the Lenders relied in
determining the Borrowing Base, and/or

 

(ii) If the Borrower or one of the other Credit Parties Disposes of Borrowing
Base Properties or Disposes of any Equity Interests in any Restricted Subsidiary
or Minority Investment owning Borrowing Base Properties, and

 

(iii) the sum of (x) the Swap PV of such terminated and/or offsetting positions
(after taking into account any other Hedge Agreement executed (a)
contemporaneously with the taking of such actions or (b) subsequent to the last
redetermination of the Borrowing Base) plus (y) the aggregate PV-9 value of all
such Borrowing Base Properties Disposed of (after giving effect to any
concurrent acquisitions of and other investments in Oil and Gas Properties by
the Borrower and its Restricted Subsidiaries with respect to which the Borrower
has delivered a Reserve Report in accordance with Section 9.14(b)), in each
case, since the later of (A) the most recent Scheduled Redetermination Date and
(B) the last adjustment of the Borrowing Base made pursuant to this
Section 2.14(f) exceeds 7.5% of the then-effective Borrowing Base, then the
Required Lenders shall have the right to adjust the Borrowing Base in an amount
equal to the sum of (1) the Borrowing Base Value, if any, attributable to such
terminated or off-setting hedge positions in the calculation of the
then-effective Borrowing Base (after taking into account any other Hedge
Agreement executed contemporaneously with the taking of such actions) and (2) an
amount equal to the Borrowing Base Value, if any, attributable to such Disposed
Borrowing Base Properties in the calculation of the then-effective Borrowing
Base (after giving effect to any concurrent acquisitions of and other
investments in Oil and Gas Properties by the Borrower and the Restricted
Subsidiaries with respect to which the Borrower has delivered a Reserve Report
in accordance with Section 9.14(b)) and the Administrative Agent shall promptly
notify the Borrower in writing of the Borrowing Base Value, if any, attributable
to such terminated or offsetting hedge positions and 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.

 

(iv) For the purposes of this Section 2.14(f), a “Disposition” of Oil and Gas
Properties shall include the designation of a Restricted Subsidiary owning Oil
and Gas Properties as an Unrestricted Subsidiary and the Disposition or other
transfer of Oil and Gas Properties or the Equity Interests in any Restricted
Subsidiary or Minority Investment owning Oil and Gas Properties to an
Unrestricted Subsidiary.

 

(g) [Reserved].

 

(h) Borrower’s Right to Elect Reduced Borrowing Base. Within three (3) Business
Days of its receipt of an New Borrowing Base Notice, the Borrower may provide
written notice to the Administrative Agent and the Lenders that specifies for
the period from the effective date of the New Borrowing Base Notice until the
next succeeding Scheduled Redetermination Date, the Borrowing Base will be a
lesser amount than the amount set forth in such New Borrowing Base Notice,
whereupon such specified lesser amount (the “Draw Limit”) will become the new
Borrowing Base. The Borrower’s notice under this Section 2.14(h) shall be
irrevocable, but without prejudice to its rights to initiate Interim
Redeterminations.

 

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(i) Administrative Agent Data. The Administrative Agent hereby agrees to
provide, promptly, and in any event within three (3) Business Days, following
its receipt of a request by the Borrower, an updated Bank Price Deck. In
addition, the Administrative Agent agrees, upon request, to meet with the
Borrower to discuss its evaluation of the reservoir engineering of the Oil and
Gas Properties included in the Reserve Report and their respective methodologies
for valuing such properties and the other factors considered in calculating the
Borrowing Base.

 

(j) [Reserved].

 

(k) [Reserved].

 

(l) [Reserved].

 

2.15 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, the Majority Lenders or the
Required Lenders or each affected Lender 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)(x)) or requiring the consent of each affected Lender pursuant to
Section 13.1(a)(i) or (ix) 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 or extension of 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;

 

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(c) If any Swingline Exposure or Letter of Credit Exposure exists at the time a
Lender becomes a Defaulting Lender, then (i) all or any part of such Swingline
Exposure and 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 (A) each Non-Defaulting Lender’s Total Exposure may
not in any event exceed the Commitment Percentage of the Loan Limit of such
Non-Defaulting Lender as in effect at the time of such reallocation and
(B) 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, (ii) to the extent that all or any portion of the Defaulting Lender’s
Swingline Exposure or Letter of Credit Exposure cannot, or can only partially,
be so reallocated to Non-Defaulting Lenders, whether by reason of the first
proviso in Section 2.15(c)(i) or otherwise, the Borrower shall within two (2)
Business Days following notice by the Administrative Agent (x) first, prepay
such Swingline Exposure and (y) second, 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 3.7 for so long as such Letter of Credit
Exposure is outstanding, (iii) if the Borrower Cash Collateralizes any portion
of such Defaulting Lender’s Letter of Credit Exposure pursuant to this
Section 2.15(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 (and such fees shall be payable
to the Issuing Banks), (iv) if the Letter of Credit Exposure of the
Non-Defaulting Lenders is reallocated pursuant to this Section 2.15(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
Swingline Loan fees (if any) or 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 (v) if any Defaulting Lender’s Letter of Credit
Exposure is neither Cash Collateralized nor reallocated pursuant to this
Section 2.15(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, the Swingline Lender shall not
be required to fund any Swingline Loan and no Issuing Bank will be required to
issue any new Letter of Credit or amend any outstanding Letter of Credit to
increase the Stated Amount thereof, alter the drawing terms thereunder or extend
the expiry 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 or newly made Swingline Loan shall be allocated among Non-Defaulting
Lenders in a manner consistent with Section 2.15(c)(i) (and Defaulting Lenders
shall not participate therein);

 

(e) If the Borrower, the Administrative Agent, the Swingline Lender 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 2.15(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 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

 

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(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 Section 11 or otherwise, and
including any amounts made available to the Administrative Agent by that
Defaulting Lender pursuant to Section 13.8), 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 and the Swingline Lender
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, each Issuing Bank or the Swingline Lender as a result of
any final judgment of a court of competent jurisdiction obtained by any Lender,
such Issuing Bank or the Swingline Lender 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 final 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 2.15(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 3.7 shall be deemed paid to and redirected by
that Defaulting Lender, and each Lender irrevocably consents hereto.

 

2.16 Increase of Total Commitment.

 

(a) Subject to the conditions set forth in Section 2.16(b), the Borrower may
increase the Total Commitment then in effect (any such increase an “Incremental
Increase”) by increasing the Commitment of a Lender (an “Increasing Lender”) or
by 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:

 

(i) such increase shall not be less than $10,000,000 (and increments of
$1,000,000 above that minimum) unless the Administrative Agent otherwise
consents;

 

(ii) no Event of Default shall have occurred and be continuing immediately after
giving effect to such increase;

 

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

 

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(iv) the Administrative Agent, the Swingline Lender and each Issuing Bank must
consent to the increase in Commitments of an Increasing Lender and the addition
of any Additional Lender, in each case, such consent not to be unreasonably
withheld or delayed;

 

(v) the maturity date of such increase shall be the same as the Maturity Date;

 

(vi) for the avoidance of doubt, such increase shall be subject to the Borrowing
Base (which may, subject to and in accordance with Section 2.14(b) (including
the limitations on the number and frequency of Interim Redeterminations), and be
redetermined pursuant to an Interim Redetermination at the Borrower’s option
immediately after giving effect to any acquisition of Borrowing Base
Properties);

 

(vii) the increase shall be on the exact same terms and pursuant to the exact
same documentation applicable to this Agreement (other than with respect to any
arrangement, structuring, upfront or other fees or discounts payable in
connection with such Incremental Increase) (provided that the Applicable Margin
of the Facility shall be increased to be consistent with that for such
Incremental Increases); and

 

(viii) the Borrower may seek commitments in respect of an Incremental Increase,
in its sole discretion, from either existing Lenders (each of which shall be
entitled to agree or decline to participate in its sole discretion) or from
additional banks, financial institutions or other institutional lenders who will
become Lenders hereunder with the consent of the Administrative Agent, each
Swingline Lender and each Issuing Bank (in each case, such consent not to be
unreasonably withheld or delayed).

 

(c) Any increase in the Total Commitment shall be implemented using customary
documentation (any such documentation, an “Incremental Agreement”). Each of the
parties hereto hereby agrees that this Agreement and the other Credit Documents
may be amended pursuant to an Incremental Agreement, without the consent of
Lenders other than the Lenders providing such Incremental Increase, to the
extent necessary to (i) reflect the existence and terms of an Incremental
Increase and (ii) address technical issues relating to funding and payments, and
the Required Lenders hereby expressly authorize the Administrative Agent to
enter into any such Incremental Agreement.

 

2.17 Extension Offers.

 

(a) The Borrower may, at any time and from time to time request that all or a
portion of the Commitments and related Loans of a given Class be amended to
extend the scheduled Maturity Date thereof and to provide for other terms
consistent with this Section 2.17. In order to establish an Extended Class, the
Borrower shall provide a notice to the Administrative Agent (who shall provide a
copy of such notice to each of the Lenders under the applicable Existing Class)
(each, a “Loan Extension Request”) setting forth the proposed terms of the
Extended Class to be established, which shall (x) be identical as offered to
each Lender under such Existing Class (including as to the proposed interest
rates and fees payable, but excluding any arrangement, structuring or other
similar fees payable in connection therewith that are not generally shared with
all relevant Lenders) and offered pro rata to each Lender under such Existing
Class and (y) be identical to the Commitments and Loans under the Existing Class
from which such Extended Class is to be amended (the “Specified Existing
Commitment Class”), except that: (i) the fees with respect to the Extended
Commitments of any Extended Class may be different than the fees for the
Commitments of such Existing Class, in each case to the extent provided in the
applicable Extension Amendment, (ii) the yield with respect to the Extended
Loans of any Extended Class (whether in the form of interest rate margin,
upfront fees, original issue discount or otherwise) may be different than the
yield for the Loans of such Existing Class, in each case, to the extent provided
in the applicable Extension Amendment; (iii) the Extension Amendment may provide
for other covenants and terms that apply solely to any period after the Latest
Maturity Date that is in effect on the effective date of the Extension Amendment
(immediately prior to the establishment of such Extended Class); provided that
(A) in no event shall the final Maturity Date of any Extended Class of a given
Extension Series at the time of establishment thereof be earlier than the
Maturity Date of the Existing Class, (B) all documentation in respect of such
Extension Amendment shall be consistent with the foregoing and (C) any Extended
Loans of an Extended Class may participate on a pro rata basis or less than or
greater than pro rata basis in any voluntary repayments or prepayments of
principal of the Loans hereunder and on a pro rata basis or less than a pro rata
basis (but not greater than a pro rata basis) in any mandatory repayments or
prepayments of Loans hereunder, in each case as specified in the respective Loan
Extension Request. Any Class of Loans and Commitments amended pursuant to any
Loan Extension Request shall be designated a series (each, an “Extension
Series”) of Extended Commitments and Extended Loans for all purposes of this
Agreement; provided that any Extended Commitments and Extended Loans amended
from an Existing Class may, to the extent provided in the applicable Extension
Amendment, be designated as an increase in any previously established Extension
Series with respect to an Existing Class. Each request for an Extension Series
of Extended Commitments and Extended Loans proposed to be incurred under this
Section 2.17 shall be in an aggregate principal amount that is not less than
$5,000,000 (it being understood that the actual principal amount thereof
provided by the applicable Lenders may be lower than such minimum amount) and
the Borrower may impose an Extension Minimum Condition with respect to any Loan
Extension Request, which may be waived by the Borrower in its sole discretion.

 

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(b) The Borrower shall provide the applicable Loan Extension Request at least
five (5) Business Days (or such shorter period as may be agreed by the
Administrative Agent) prior to the date on which Lenders under the Existing
Class are requested to respond, and shall agree to such procedures, if any, as
may be established by, or acceptable to, the Administrative Agent and the
Borrower, in each case acting reasonably to accomplish the purposes of this
Section 2.17. No Lender shall have any obligation to agree to have any of its
Commitments and Loans of any Existing Class amended into an Extended Class
pursuant to any Loan Extension Request. Any Lender holding a Commitment or Loan
under an Existing Class (each, an “Extending Lender”) wishing to have all or a
portion of its Commitments and Loans under the Existing Class subject to such
Loan Extension Request amended into Extended Commitments and Extended Loans
shall notify the Administrative Agent (each, an “Extension Election”) on or
prior to the date specified in such Loan Extension Request of the amount of its
Commitments and Loans under the Existing Class, which it has elected to request
be amended into an Extended Class (subject to any minimum denomination
requirements imposed by the Administrative Agent). In the event that the
aggregate principal amount of Commitments and Loans under the Existing Class in
respect of which applicable Lenders shall have accepted the relevant Loan
Extension Request exceeds the amount of Extended Commitments and Extended Loans
requested to be extended pursuant to the Loan Extension Request, Commitments and
Loans subject to Extension Elections shall be amended to Extended Commitments
and Extended Loans on a pro rata basis (subject to rounding by the
Administrative Agent) based on the aggregate principal amount of Commitments and
Loans included in each such Extension Election. Notwithstanding the conversion
of any Existing Commitment into an Extended Commitment, such Extended Commitment
shall be treated identically to all Existing Commitments of the Specified
Existing Commitment Class for purposes of the obligations of a Lender in respect
of Swingline Loans under Section 2.1(c) and Letters of Credit under Section 3,
except that the applicable Extension Amendment may provide that the Swingline
Maturity Date and/or the last day for issuing Letters of Credit may be extended
and the related obligations to make Swingline Loans and issue Letters of Credit
may be continued (pursuant to mechanics to be specified in the applicable
Extension Amendment) so long as the applicable Swingline Lender and/or the
applicable Issuing Bank, as applicable, have consented to such extensions. For
the avoidance of doubt, neither the Swingline Maturity Date and/or the last day
for issuing Letters of Credit may be extended (and the related obligations to
make Swingline Loans or issue Letters of Credit may not be continued) without
the express consent of the Swingline Lender or applicable Issuing Bank, as
applicable.

 

(c) Extended Commitments and Extended Loans shall be established pursuant to an
amendment (each, a “Extension Amendment”) to this Agreement among the Borrower,
the Administrative Agent and each Extending Lender providing an Extended
Commitment and Extended Loan thereunder (and the Swingline Lender and Issuing
Bank, if applicable), which shall be consistent with the provisions set forth in
Sections 2.17(a) and (b) above (but which shall not require the consent of any
other Lender). The Administrative Agent shall promptly notify each Lender as to
the effectiveness of each Extension Amendment. Each of the parties hereto hereby
agrees that this Agreement and the other Credit Documents may be amended
pursuant to an Extension Amendment, without the consent of any other Lenders, to
the extent (but only to the extent) necessary to (i) reflect the existence and
terms of the Extended Commitment and Extended Loans incurred pursuant thereto,
(ii) modify the prepayments set forth in Section 5.2 to reflect the existence of
the Extended Commitments and Extended Loans and the application of prepayments
with respect thereto, (iii) address technical issues relating to funding and
payments and (iv) effect such other amendments to this Agreement and the other
Credit Documents as may be necessary or appropriate, in the reasonable opinion
of counsel to the Administrative Agent and of the Borrower, to effect the
provisions of this Section 2.17, and the Required Lenders hereby expressly
authorize the Administrative Agent to enter into any such Extension Amendment.
Notwithstanding the other provisions of this Agreement, no Extension Amendment
shall be effective unless (i) all Letter of Credit Exposure will be covered on
terms reasonably acceptable to the Issuing Bank, (ii) all Swingline Exposure
will be covered on terms reasonably acceptable to the Swingline Lender and (iii)
the Available Commitment shall not exceed the Borrowing Base.

 

(d) No conversion of Commitments and Loans pursuant to any extension in
accordance with this Section 2.17 shall constitute a voluntary or mandatory
payment or prepayment for purposes of this Agreement.

 

SECTION 3. Letters of Credit

 

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 Closing Date and prior to the L/C
Maturity Date, each Issuing Bank, severally, and not jointly, agrees, in
reliance upon the agreements of the Lenders set forth in this Section 3, to
issue upon the request of the Borrower and for the direct or indirect benefit of
the Borrower and the Restricted Subsidiaries, a letter of credit or letters of
credit in dollars (the “Letters of Credit” and each, a “Letter of Credit”) in
such form and with such Issuer Documents as may be approved by the applicable
Issuing Bank in its reasonable discretion; provided that the Borrower shall be a
co-applicant of, and jointly and severally liable with respect to, each Letter
of Credit issued for the account of a Restricted Subsidiary.

 

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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
aggregate amount of all Lenders’ Total Exposures at such time to exceed the Loan
Limit then in effect, (iii) each Letter of Credit shall have an expiration date
occurring no later than one year 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 12 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 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, (v) no Letter of Credit shall be issued by an
Issuing Bank after it has received a written notice from 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 and (vi) without the
consent of the applicable Issuing Bank, no Letter of Credit shall be issued in
any currency other than Dollars.

 

(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 Letters of Credit Outstanding shall not exceed the Letter of Credit
Commitment.

 

3.2 Letter of Credit Applications.

 

(a) Whenever the Borrower desires that a Letter of Credit be issued, amended or
renewed for its account on its own behalf, or on behalf of its Restricted
Subsidiaries, 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 in
the Issuing Bank’s customary form or, if the relevant Issuing Bank does not
maintain such a form, in such form as may be approved by the applicable Issuing
Bank (each, a “Letter of Credit Application”). Upon receipt of any Letter of
Credit Application or amendment request, the applicable Issuing Bank will issue
such Letter of Credit or amendment on the second Business Day after the relevant
Letter of Credit Application is received, so long as such Letter of Credit
Application is received no later than 3:00 p.m. (New York City time) on such
Business Day, or if received after such time or on a day that is not a Business
Day, the third 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.

 

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(b) If the Borrower so requests in any applicable Letter of Credit Application,
the applicable 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 such Issuing Bank to prevent any such extension at least
once in each 12-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 12-month period to be
agreed upon at the time such Letter of Credit is issued. Unless otherwise
directed by the applicable Issuing Bank, the Borrower shall not be required to
make a specific request to such 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 applicable 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; provided, however, that such Issuing Bank shall not
permit any such extension if (i) such 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 from the
Administrative Agent that one or more of the applicable conditions specified in
Section 7 are not then satisfied, and in each such case directing such Issuing
Bank not to permit such extension.

 

(c) Each Issuing Bank (other than the Administrative Agent or any of its
Affiliates) shall provide the Administrative Agent with a reasonably detailed
notice upon its issuance or amendment of any Letter of Credit, or upon any
drawing under any Letter of Credit issued by it; provided that, upon written
request from the Administrative Agent, such Issuing Bank shall promptly provide
the Administrative Agent with a list of all Letters of Credit issued by it that
are outstanding at such time.

 

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
or willful misconduct (as finally determined by a court of competent
jurisdiction), shall not create for such Issuing Bank any resulting liability.

 

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(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 Issuing Bank pursuant to Section 3.4(a), such Issuing Bank shall
promptly notify the Administrative Agent (which shall promptly notify 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. 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. (New York City 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 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 or any other Person (including an L/C Participant) 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);

 

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(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; or

 

(vi) any other event, condition of circumstance, whether or not similar to the
foregoing.

 

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 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. (New York City
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, on such Business Day
(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 Reimbursement Date, at the per annum rate for each day
equal to the rate described in Section 2.8(a); provided that, notwithstanding
anything contained in this Agreement to the contrary, with respect to any Letter
of Credit, (i) unless the Borrower shall have notified the Administrative Agent
and such Issuing Bank prior to 11:00 a.m. (New York City 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 at such drawing, and (ii) 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 (New York City 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 Minimum Borrowing Amount and without regard to the
satisfaction of the conditions set forth in Section 7. 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.

 

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(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, constitute a
legal or 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 pursuant to the
applicable ICC Rule or applicable law 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 as determined by a final
and non-appealable judgment of a court of competent jurisdiction. 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 not
withstanding such lack of strict compliance).

 

3.5 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. 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 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 (who have agreed
to act as successor issuer of Letters of Credit or a new Issuing Bank) 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 issuer of Letters of Credit 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 issuer of Letters of Credit or
(ii) the Borrower shall cause the successor issuer of Letters of Credit, 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 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.

 

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(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 issuer of Letters of Credit shall have the obligations
regarding outstanding Letters of Credit described in clause (a) above.

 

3.6 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 (as finally determined by a court
of competent jurisdiction) or such Issuing Bank’s unlawful failure (as finally
determined by a court of competent jurisdiction) 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.

 

3.7 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 Letters of Credit Outstanding.

 

(b) If any Event of Default shall occur and be continuing and the Loans shall
have been accelerated in accordance with Section 11, 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 to (i)
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 (“Cash Collateral”) 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, 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). Derivatives of such term have
corresponding meanings. 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.

 

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3.8 Applicability of ISP and UCP. The Borrower agrees that any Issuing Bank may
issue Letters of Credit hereunder subject to the Uniform Customs and Practice
for Documentary Credits, International Chamber of Commerce (“ICC”) Publication
Nos. 600 (2007 Revision) (“UCP 600”) or, at such Issuing Bank’s option, such
later revision thereof in effect at the time of issuance of the Letter of Credit
or the International Standby Practices 1998, ICC Publication No. 590 or, at such
Issuing Bank’s option, such later revision thereof in effect at the time of
issuance of any such Letter of Credit (“ISP 98”, and each of the UCP 600 and the
ISP 98, an “ICC Rule”). Each Issuing Bank’s privileges, rights and remedies
under such ICC Rules shall be in addition to, and not in limitation of, its
privileges, rights and remedies expressly provided for herein. The Borrower
agrees for matters not addressed by the chosen ICC Rule, each Letter of Credit
shall be subject to and governed by the laws of the State of New York and
applicable United States Federal laws; provided that if at Borrower’s request, a
Letter of Credit chooses a state or country law other than New York State law
and United States Federal law or is silent with respect to the choice of an ICC
Rule or a governing law, the Issuing Bank shall not be liable for any payment,
cost, expense or loss resulting from any action or inaction taken by the Issuing
Bank if such action or inaction is or would be justified under an ICC Rule, New
York law or applicable United States Federal law, and Borrower shall indemnify
Issuing Bank for all such payments, costs, expenses or losses.

 

3.9 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.

 

3.10 Letters of Credit Issued for Restricted Subsidiaries. Notwithstanding that
a Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Restricted Subsidiary, the Borrower
shall be obligated to reimburse the relevant Issuing Bank hereunder for any and
all drawings under such Letter of Credit. The Borrower hereby acknowledges that
the issuance of Letters of Credit for the account of Restricted Subsidiaries
inures to the benefit of the Borrower, and that the Borrower’s business derives
substantial benefits from the businesses of such Restricted Subsidiaries.

 

3.11 Increased Costs. If, after the Closing 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 fifteen (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 Closing 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 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.

 

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3.12 Independence. The Borrower acknowledges that the rights and obligations of
each Issuing Bank under each Letter of Credit issued by it are independent of
the existence, performance or nonperformance of any contract or arrangement
underlying such Letter of Credit, including contracts or arrangements between
such Issuing Bank and the Borrower (other than the Credit Documents and the
Issuer Documents) and between the Borrower and the relevant beneficiary.

 

SECTION 4. Fees; Commitments.

 

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 “Commitment Fee”)
for each day from the Closing Date until but excluding the Termination Date.
Each Commitment Fee shall be payable by the Borrower 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 on the Termination 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 Commitment Fee Rate in effect on such day on the Available Commitment
(assuming for this purpose that there is no reference to “Swingline Exposure” in
the definition of Total Exposure) in effect on such day. It is understood and
agreed that for purposes of calculating the Commitment Fee payable pursuant to
this Section 4.1(a), Swingline Loans made by or deemed made by such Lender shall
not count as utilization for purposes of determining the unutilized Revolving
Commitment of each Lender.

 

(b) The Borrower agrees to pay to the Administrative Agent in Dollars for the
account of the Lenders pro rata on the basis of their respective Letter of
Credit Exposure, a fee in respect of each Letter of Credit (the “Letter of
Credit Fee”), for the period from the date of issuance of such Letter of Credit
until the termination or expiration date of such Letter of Credit computed at
the per annum rate for each day equal to the Applicable Margin for LIBOR Loans
on the average daily Stated Amount of such Letter of Credit. Such Letter of
Credit Fees shall be due and payable (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 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).

 

(d) The Borrower agrees to pay directly to each Issuing Bank upon each issuance
of, drawing under, and/or amendment of, a Letter of Credit issued by it such
amount as the relevant Issuing Bank and the Borrower shall have agreed upon for
issuances of, drawings under or amendments of, letters of credit issued by it.

 

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(e) The Borrower agrees to pay to the Administrative Agent the administrative
agent fees in the amounts and on the dates as set forth in writing from time to
time between the Administrative Agent and the Borrower.

 

4.2 Voluntary Reduction of Commitments.

 

(a) Upon at least two (2) 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
Commitments of any Class, as determined by the Borrower, in whole or in part;
provided that (a) with respect to the Commitments, any such termination or
reduction shall apply proportionately and permanently to reduce the Commitments
of each of the Lenders of such Class, except that, notwithstanding the
foregoing, (1) the Borrower may allocate any termination or reduction of
Commitments among Classes of Commitments either (A) ratably among Classes or
(B) first to the Commitments with respect to any Existing Commitments and second
to any Extended Commitments and (2) in connection with the establishment on any
date of any Extended Commitments pursuant to Section 2.17, (i) the Existing
Commitments of each Lender providing any such Extended Commitments on such date
shall be reduced in an amount equal to the amount of Specified Existing
Commitments so extended on such date by such Lender and (ii) the Existing
Commitments of any Lender not providing such Extended Commitments shall be
reduced, solely to the extent elected to be reduced by the Borrower pursuant to
Section 2.17, among the Class or Classes of Commitments elected by the Borrower
(provided that (x) after giving effect to any such reduction and to the
repayment of any Loans made on such date, the Total Exposure of any such Lender
does not exceed the Commitment of such Lender (such Total Exposure and
Commitment in the case of an Extending Lender being determined for purposes of
this proviso, for the avoidance of doubt, exclusive of such Extending Lender’s
Extended Commitment and any exposure in respect thereof) and (y) for the
avoidance of doubt, any such repayment of Loans contemplated by the preceding
clause (x) shall be made in compliance with the requirements of Section 5.3(a)
with respect to the ratable allocation of payments hereunder, with such
allocation being determined after giving effect to any conversion pursuant to
Section 2.17 of Existing Commitments and Existing Loans into Extended
Commitments and Extended Loans respectively, and prior to any reduction being
made to the Commitment of any other Lender), (b) any partial reduction pursuant
to this Section 4.2 shall be in the amount of at least $1,000,000 and (c) 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 Agreement, the aggregate amount of the Lenders’
Total Exposures 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 2.15(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, the Swingline Lender or any Lender may have against such Defaulting
Lender.

 

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Notwithstanding anything to the contrary contained in this Agreement, any such
notice of commitment termination pursuant to Section 4.2 may state that it is
conditioned upon the occurrence or non-occurrence of any event specified therein
(including the effectiveness of other credit facilities), in which case such
notice may be revoked by the Borrower (by written notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied.

 

4.3 Mandatory Termination of Commitments.

 

(a) The Total Commitment shall terminate at 5:00 p.m. (New York City time) on
the Termination Date.

 

(b) The Swingline Commitment shall terminate at 5:00 p.m. (New York City time)
on the earlier of (x) the Swingline Maturity Date and (y) the Termination Date.

 

SECTION 5.        Payments.

 

5.1 Voluntary Prepayments. The Borrower shall have the right to prepay Loans and
Swingline Loans, in each case, 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 Borrowing(s) being prepaid, which
notice shall be given by the Borrower no later than 1:00 p.m. (New York City
time) (i) in the case of LIBOR Loans, two (2) Business Days prior to the date of
such prepayment 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
$500,000 and in multiples of $100,000 in excess thereof or a lesser amount to
the extent such lesser amount represents the entire aggregate outstanding LIBOR
Loans at such time, and (ii) any ABR Loans shall be in a minimum amount of
$500,000 and in multiples of $100,000 in excess thereof or a lesser amount to
the extent such lesser amount represents the entire aggregate outstanding ABR
Loans at such time; provided that no partial prepayment of LIBOR Loans made
pursuant to a single Borrowing shall reduce the outstanding LIBOR Loans made
pursuant to such Borrowing to an amount less than the applicable Minimum
Borrowing Amount for such LIBOR Loans; and

 

(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, including any
breakage costs as set forth in, Section 2.11.

 

Each such notice shall specify the date and amount of such prepayment and the
Type and Class of Loans to be prepaid. 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.

 

Notwithstanding anything to the contrary contained in this Agreement, any such
notice of prepayment pursuant to Section 5.1 may state that it is conditioned
upon the occurrence or non-occurrence of any event specified therein (including
the effectiveness of other credit facilities), in which case such notice may be
revoked by the Borrower (by written notice to the Administrative Agent on or
prior to the specified effective date) if such condition is not satisfied.

 

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5.2 Mandatory Prepayments.

 

(a) Repayment following Optional Reduction of Commitments. If, after giving
effect to any termination or reduction of the Commitments pursuant to
Section 4.2(a), the aggregate Total Exposures of all Lenders exceeds the Loan
Limit (as reduced), then the Borrower shall on the same Business Day (i) prepay
the Swingline Loans and, after all Swingline Loans have been paid in full, the
remaining Loans on the date of such termination or reduction in an aggregate
principal amount equal to such excess and (ii) if any excess 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 excess
as provided in Section 3.7.

 

(b) Repayment of Loans Following Redetermination or Adjustment of Borrowing
Base.

 

(i) Upon the effectiveness of a redetermination of the Borrowing Base in
accordance with Section 2.14(d), if a Borrowing Base Deficiency exists, then the
Borrower shall, within ten (10) Business Days after its receipt of a New
Borrowing Base Notice indicating such Borrowing Base Deficiency, inform the
Administrative Agent that it intends to take one or more of the following
actions (provided that, if the Borrower fails to inform the Administrative Agent
within ten (10) Business Days after its receipt of a New Borrowing Base Notice,
Borrower shall be deemed to have elected (B) below): (A) within thirty (30) days
following such election prepay the Loans in an aggregate principal amount equal
to such excess, (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 excess, (C) within thirty
(30) days following such election, provide additional Oil and Gas Properties
(accompanied by reasonably acceptable Engineering Reports) not evaluated in the
most recently delivered Reserve Report (which shall become Mortgaged Properties
within the time period prescribed by Section 9.11(d) regardless of whether the
Collateral Coverage Minimum is then satisfied) or other Collateral reasonably
acceptable to the Administrative Agent having a Borrowing Base Value
(as proposed by the Administrative Agent and approved by the Required Lenders)
sufficient, after giving effect to any other actions taken pursuant to this
Section 5.2(b)(i) to eliminate any such excess, 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 3.7; provided further, that any Borrowing Base
Deficiency must be cured on or prior to the Termination Date.

 

(ii) Upon any adjustment to the Borrowing Base pursuant to Section 2.14(e), (f)
or (h), if a Borrowing Base Deficiency exists, as adjusted, then the Borrower
shall (A) prepay the Loans in an aggregate principal amount equal to such excess
and (B) if any excess remains after prepaying all of the Loans as a result of
any Letter of Credit Exposure, Cash Collateralize such excess as provided in
Section 3.7. Upon any Disposition pursuant to Section 10.4(m) when (A) an Event
of Default has occurred and is continuing or (B) a Borrowing Base Deficiency
exists or would result therefrom (unless the net cash proceeds of such
Disposition are sufficient, together with Unrestricted Cash, to eliminate any
Borrowing Base Deficiency that exists or would result therefrom), the Borrower
shall prepay the Loans in an aggregate principal amount equal to the aggregate
net cash proceeds of all such Dispositions in excess of $5,000,000 in any fiscal
year. The Borrower shall be obligated to make any prepayment and/or deposit of
cash collateral under this clause (ii) no later than three (3) Business Days
following the dates of any applicable adjustment of the Borrowing Base; provided
that all payments required to be made pursuant to this clause (ii) must be made
on or prior to the Termination Date.

 

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(iii) If, after the incurrence of any Pari Debt (other than Permitted
Refinancing Indebtedness in respect of Pari Debt), the sum of (x) the aggregate
Total Exposure of all Lenders and (y) the aggregate amount of Pari Debt
outstanding at such time (without giving effect to any payments applied to
reduce such Pari Debt unless the Administrative Agent is notified of such
reduction in Pari Debt at the time of the next Scheduled Redetermination or
Interim Redetermination) exceeds the Borrowing Base then in effect, the Borrower
shall within three (3) Business Days of the date on which such incurrence occurs
(A) prepay the Loans or (B) Cash Collateralize such excess as provided in
Section 3.7, in each case such that after giving effect to such prepayments
and/or such Cash Collateral no Borrowing Base Deficiency exists.

 

(c) 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
and Class of Loans that are to be prepaid and the specific Borrowing(s) being
repaid and (ii) the Loans to be prepaid; provided that (A) each prepayment of
any Loans made pursuant to a Borrowing 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 2.11.

 

(d) 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 thereof 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.

 

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

 

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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 or the Swingline Lender
entitled thereto, as the case may be, not later than 2:00 p.m. (New York City
time), 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 2:00 p.m.
(New York City 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. (New York City time) 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.

 

5.4 Net Payments.

 

(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 or 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 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 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, the Collateral Agent, or the applicable 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. 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, the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of any return required by law to report such
payment or other evidence of such payment reasonably satisfactory to the
Borrower or the Administrative Agent, as the case may be.

 

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(b) The Borrower shall timely pay to the relevant Governmental Authority in
accordance with applicable Requirements of Law, or at the option of the
Administrative Agent timely reimburse it for, 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, the
Collateral Agent and each Lender within fifteen (15) Business Days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
imposed on the Administrative Agent, the Collateral 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, the Administrative Agent or the
Collateral Agent (as applicable) on its own behalf or on behalf of a Lender
shall be conclusive absent manifest error and shall constitute a required notice
for purposes of Section 2.13.

 

(d) Each Lender shall deliver to the Borrower and the Administrative Agent, at
such 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 the Borrower or the
Administrative Agent, as the case may be, to determine (A) whether or not any
payments made hereunder or under any other Credit Document are subject to Taxes,
(B) if applicable, the required rate of withholding or deduction, and (C) such
Lender’s entitlement to any available exemption from, or reduction of,
applicable Taxes in respect of any payments to be made to such Lender by any
Credit Party pursuant to any Credit Document or otherwise to establish such
Lender’s status for withholding tax purposes in the applicable jurisdiction. 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(e)(i)(A),
(B) and (C) and Section 5.4(h) below) shall not be required if in the Lender’s
reasonable judgment such completion, execution or submission would subject such
Lender to any material unreimbursed cost or expense or would materially
prejudice the legal or commercial position of such Lender.

 

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(e) Without limiting the generality of Section 5.4(d), each Non-U.S. Lender with
respect to any Loan made to the Borrower shall, to the extent it is legally
eligible to do so:

 

(i) deliver to the Borrower and the Administrative Agent, on or prior to the
date on which such Lender becomes a Lender under this Agreement, two copies of
(A) in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of “portfolio interest”, United States Internal Revenue Service (“IRS”)
Form W-8BEN or IRS Form W-8BEN-E, as applicable (or any applicable successor
form) (together with a certificate (substantially in the form of Exhibit K
hereto) representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c)(3)(A) of the Code, is not a “10-percent shareholder” (within the
meaning of Section 881(c)(3)(B) of the Code) of the Borrower, and is not a CFC
described in Section 881(c)(3)(C) of the Code), (B) IRS Form W-8BEN or IRS Form
W-8ECI or IRS Form W-8BEN-E, as applicable (or any applicable successor form),
in each case properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from, or reduced rate of, U.S. federal withholding
tax on payments by the Borrower under this Agreement, (C) IRS Form W-8IMY (or
any applicable successor form) and all necessary attachments (including the
forms described in clauses (A) and (B) above, provided that if the Non-U.S.
Lender is a partnership and not a participating Lender, and one or more of the
partners is claiming portfolio interest treatment, a certificate substantially
in the form of Exhibit K hereto may be provided by such Non-U.S. Lender on
behalf of such partners) or (D) 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 to determine the withholding
or deduction required to be made; and

  

(ii) deliver to the Borrower and the Administrative Agent two further copies of
any such form or certification (or any applicable successor form) promptly after
such form or certification expires or becomes obsolete or invalid, after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Borrower and the Administrative Agent, and from time to
time thereafter if reasonably requested by the Borrower or the Administrative
Agent or promptly notify in writing the Borrower and the Administrative Agent of
such Non-U.S. Lender’s inability to do so.

 

(iii) Each Person that shall become a Participant pursuant to Section 13.6 or a
Lender pursuant to Section 13.6 shall, upon the effectiveness of the related
transfer, be required to provide all the forms and statements required pursuant
to this Section 5.4(e); provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Person
from which the related participation shall have been purchased.

 

(f) In addition, to the extent it is legally eligible to do so, each Agent shall
deliver to the Borrower (x)(I) prior to the date on which the first payment by
the Borrower is due hereunder or (II) prior to the first date on or after the
date on which such Agent becomes a successor Agent pursuant to Section 12.9 on
which payment by the Borrower is due hereunder, as applicable, two copies of a
properly completed and executed IRS Form W-9 certifying its exemption from U.S.
Federal backup withholding or a properly completed and executed applicable IRS
Form W-8 certifying its non-U.S. status and its entitlement to any treaty
benefits and its status as a qualified intermediary or withholding foreign
partnership, and (y) on or before the date on which any such previously
delivered documentation expires or becomes obsolete or invalid, after the
occurrence of any event requiring a change in the most recent documentation
previously delivered by it to the Borrower, and from time to time if reasonably
requested by the Borrower, two further copies of such documentation.

 

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(g) If any Lender, the Administrative Agent or the Collateral Agent, as
applicable, determines, in its sole discretion exercised in good faith, that it
has received a refund of an Indemnified Tax or Other Tax for which it has been
indemnified pursuant to this Section 5.4 (including by the payment of additional
amounts pursuant to this Section 5.4), then the Lender, the Administrative Agent
or the Collateral 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, the Administrative Agent or the Collateral 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,
Administrative Agent or the Collateral Agent, as the case may be, determines in
its sole discretion exercised in good faith to be the proportion of the refund
as will leave it, after such reimbursement, not in a less favorable net
after-Tax 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,
the Administrative Agent or the Collateral 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, the
Administrative Agent or the Collateral Agent in the event the Lender, the
Administrative Agent or the Collateral Agent is required to repay such refund to
such Governmental Authority. In such event, such Lender, the Administrative
Agent or the Collateral 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, the Administrative Agent or
the Collateral Agent may delete any information therein that it deems
confidential). No Lender nor the Administrative Agent nor the Collateral 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 (g) or any other provision of this Section 5.4.

 

(h) Each U.S. Lender shall deliver to the Borrower and the Administrative Agent
two IRS Forms W-9 (or substitute or successor form), properly completed and duly
executed, certifying that such U.S. Lender is exempt from United States federal
backup withholding (i) on or prior to the Closing Date (or on or prior to the
date it becomes a party to this Agreement), (ii) on or before the date that such
form expires or becomes obsolete or invalid, (iii) after the occurrence of a
change in the U.S. Lender’s circumstances requiring a change in the most recent
form previously delivered by it to the Borrower and the Administrative Agent,
and (iv) from time to time thereafter if reasonably requested by the Borrower or
the Administrative Agent.

 

(i) If a payment made to any Lender under this Agreement or any other Credit
Document would be subject to U.S. federal withholding tax imposed by FATCA if
such Lender were to fail to comply with the applicable reporting requirements of
FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), such Lender shall deliver to the Borrower and the Administrative
Agent at the time or times prescribed by law and at such time or times
reasonably requested by the Borrower or the Administrative Agent such
documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Administrative Agent as may be
necessary for the Borrower and the Administrative Agent to comply with their
obligations under FATCA, to determine whether such Lender has or has not
complied with such Lender’s obligations under FATCA or to determine the amount,
if any, to deduct and withhold from such payment. Solely for purposes of this
Section 5.4(j), “FATCA” shall include any amendments made to FATCA after the
date of this Agreement.

 

(j) For the avoidance of doubt, for purposes of this Section 5.4, the term
“Lender” includes any Issuing Bank and any Swingline Lender and the term
“applicable law” or “Requirement of Law” includes FATCA.

 

(k) 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.

 

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5.5 Computations of Interest and Fees.

 

(a) Except as provided in the next succeeding sentence, interest on LIBOR Loans
and ABR Loans shall be calculated on the basis of a 360-day year for the actual
days elapsed. Interest on ABR Loans in respect of which the rate of interest is
calculated on the basis of the Administrative Agent’s prime rate 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.

 

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 Highest Lawful 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 amount or rate of interest, as the case may be, 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 2.8.

 

(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 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.

 

SECTION 6.        Conditions Precedent to Initial Borrowing.

 

The initial Borrowing under this Agreement is subject to the satisfaction of the
following conditions precedent, except as otherwise agreed or waived pursuant to
Section 13.1.

 

(a) The Administrative Agent (or its counsel) shall have received from the
Borrower (i) a counterpart of this Agreement signed on behalf of such party or
(ii) written evidence satisfactory to the Administrative Agent (which may
include e-mail transmission of a signed signature page of this Agreement) that
such party has signed a counterpart of this Agreement.

 

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(b) The Administrative Agent (or its counsel) shall have received, on behalf of
itself, the Collateral Agent and the Lenders, written opinions of Kirkland &
Ellis LLP, counsel to the Credit Parties (i) dated the Closing Date, (ii)
addressed to the Administrative Agent, the Collateral Agent, the Lenders and
each Issuing Bank and (iii) in form and substance customary for transactions of
this type. The Borrower, the other Credit Parties and the Administrative Agent
hereby instruct such counsel to deliver such legal opinions.

 

(c) The Administrative Agent shall have received, in the case of each Credit
Party, a certificate of the Secretary or Assistant Secretary or similar officer
of each Credit Party dated the Closing Date and certifying:

 

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

 

(ii) that attached thereto is a true and complete copy of resolutions duly
adopted by the board of directors (or 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
borrowings hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect on the Closing Date,

 

(iii) that attached thereto is a true and complete copy of the certificate or
articles of incorporation or certificate of formation, including all amendments
thereto, of such Credit Party, certified as of a recent date by the Secretary of
State (or other similar official) of the jurisdiction of its organization, and 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), which
has not been amended,

 

(iv) 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

 

(v) 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 Administrative Agent (or its counsel) shall have received executed
copies of the Guarantee, executed by each Person which will be a Guarantor on
the Closing Date.

 

(e) (i) The Administrative Agent (or its counsel) shall have received copies of
the Collateral Agreement, the Mortgages (subject to the final paragraph of this
Section) and each other Security Document that is required to be executed on the
Closing Date, duly executed by each Credit Party party thereto, together with
evidence that all other actions, recordings and filings required by the Security
Documents as of the Closing Date subject to the last paragraph of this Section 6
or that the Collateral Agent may deem reasonably necessary to (A) create the
Liens intended to be created by any Security Document and perfect such Liens to
the extent required by, and with the priority required by, such Security
Document shall have been delivered to the Collateral Agent for filing,
registration or recording and (B) comply with Section 9.11, in each case shall
have been taken, completed or otherwise provided for in a manner reasonably
satisfactory to the Administrative Agent.

 

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(ii) All Equity Interests of each wholly-owned Material Subsidiary directly
owned by the Borrower, Falcon GP or any Subsidiary Guarantor, in each case as of
the Closing Date, shall have been pledged pursuant to Collateral Agreement
(except that such Credit Parties shall not be required to pledge any Excluded
Equity Interests) and the Collateral Agent shall have received all certificates,
if any, representing such securities pledged under the Collateral Agreement,
accompanied by instruments of transfer and/or undated powers endorsed in blank.

 

(iii) The Administrative Agent shall have received customary UCC lien searches
with respect to the Borrower and the Guarantors in their applicable
jurisdictions of organization.

 

(f) The Acquisition shall have been consummated, or shall be consummated
substantially concurrently with the initial Borrowing under this Agreement, in
accordance with the terms of the Contribution Agreement. The Contribution
Agreement shall not have been amended or waived in any material respect by PubCo
and PubCo shall not have granted any material consent under the Contribution
Agreement in a manner materially adverse to the Lenders (in their capacity as
such) without the consent of the Lead Arranger and Bookrunner (not to be
unreasonably withheld or delayed).

 

(g) The Specified Contribution Agreement Representations and the Specified
Representations shall be true and correct in all material respects on the
Closing Date and the Administrative Agent shall have received a certificate of
an authorized officer of the borrower certifying as to the satisfaction of such
condition.

 

(h) The approval of the Stockholder Proposals (other than approval and adoption
of the Falcon Minerals 2018 Long Term Incentive Plan) shall have been duly
obtained in accordance with the DGCL, PubCo’s Organizational Documents and the
rules and regulations of NASDAQ (all such terms in this clause (h) that are not
defined herein as are defined in the Contribution Agreement).

 

(i) The Administrative Agent shall have received (a) the audited consolidated
balance sheet of Royal Resources L.P. and its Subsidiaries as of December 31,
2017, and the related consolidated statements of operations, changes in
partners’ capital (deficit) and cash flows for the fiscal year ended
December 31, 2017 and (b) the unaudited consolidated balance sheet of Royal
Resources L.P. and its Subsidiaries as of March 31, 2018, and the related
consolidated statements of operations, changes in partners’ capital (deficit)
and cash flows for the three-month period then ended (the “Closing Date
Financials”).

 

(j) The Administrative Agent shall have received a pro forma consolidated
balance sheet and related pro forma consolidated statement of income of the
Borrower and its Subsidiaries as of and for the three-month period ending March
31, 2018, prepared after giving effect to the Transactions as if the
Transactions had occurred as of such date (in the case of such balance sheet) or
at the beginning of such period (in the case of such statement of income).

 

(k) [Reserved].

 

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(l) On the Closing Date, the Administrative Agent (or its counsel) shall have
received (i) a solvency certificate substantially in the form of Exhibit J
hereto and signed by a Financial Officer of the Borrower and (ii) a Notice of
Borrowing (whether in writing or by telephone) satisfying the requirements of
Section 2.3(a).

 

(m) The Administrative Agent shall have received evidence that the Borrower has
(i) obtained and effected all insurance required to be maintained pursuant to
the Credit Documents and (ii) made commercially reasonable efforts to cause the
Administrative Agent to be named as loss payee and/or additional insured under
each insurance policy with respect to such insurance, as applicable.

 

(n) All fees and expenses required to be paid hereunder and invoiced at least
three (3) Business Days before the Closing Date (or such shorter period as may
be reasonably agreed by the Borrower) shall have been paid in full in cash or
netted from the proceeds of the initial funding under the Facility, to the
extent applicable.

 

(o) (i) The Administrative Agent (or its counsel) shall have received at least
three (3) Business Days prior to the Closing Date all documentation and other
information required by regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including, the
Patriot Act, that has been requested by the Administrative Agent in writing at
least ten (10) Business Days prior to the Closing Date and (ii) to the extent
the Borrower qualifies as a “legal entity customer” under the Beneficial
Ownership Regulation, at least three (3) Business Days prior to the Closing
Date, any Lender that has requested, in a written notice to the Borrower at
least ten (10) Business Days prior to the Closing Date, a Beneficial Ownership
Certification in relation to the Borrower, shall have received such Beneficial
Ownership Certification (provided that, upon the execution and delivery by such
Lender of its signature page to this Agreement, the condition set forth in this
clause (ii) shall be deemed to be satisfied).

 

(p) On the Closing Date, after giving effect to the Transactions, neither the
Borrower nor any of its Subsidiaries shall have any Disqualified Equity or
Material Indebtedness for borrowed money other than the Facility, with any
existing Indebtedness for borrowed money (including Indebtedness under the DGK
Credit Agreement) having been paid in full and the commitments thereunder having
been terminated and all liens and security interests released.

 

(q) The Administrative Agent (or its counsel) shall have received satisfactory
title information (including customary title opinions, information or reports or
other documents) consistent with usual and customary standards for the
geographic regions in which the Borrowing Base Properties and Oil and Gas
Properties acquired on the Closing Date are located with respect to not less
than 50% of the PV-9 value of the Borrowing Base Properties on the Closing Date;
provided that such timeline may be extended with the consent of the
Administrative Agent (not to be unreasonably withheld or delayed).

 

(r) The Initial Loans made on the Closing Date shall not result in the aggregate
amount of all Lenders’ Total Exposures at such time exceeding $92,000,000.

 

Without limiting the generality of the provisions of Section 12.4, for purposes
of determining compliance with the conditions specified in this Section 6, 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 matters
required under this Section 6 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 Closing Date specifying its objection
thereto.

 

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Notwithstanding the foregoing, to the extent any security interest in any
Collateral (other than any a lien on Collateral that may be perfected solely (A)
by the filing of a financing statement under the Uniform Commercial Code or (B)
by the delivery of stock certificates of the Borrower’s Wholly owned Domestic
Subsidiaries that are Material Subsidiaries) is not or cannot be provided and/or
perfected on the Closing Date (subject to extensions approved by the
Administrative Agent in its reasonable discretion) after the Borrower’s use of
commercially reasonable efforts to do so without undue burden or expense, the
provision and/or perfection of security interests in such Collateral shall not
constitute conditions precedent to the initial Borrowing under this Agreement,
but shall be required to be delivered, provided, and/or perfected within (i) in
the case of Mortgages required to be delivered pursuant to the Collateral
Coverage Minimum, by the dates provided in the definition of “Collateral
Coverage Minimum” and (ii) in the case of all other Collateral not otherwise
described in the preceding clause (i), ninety (90) days following the Closing
Date.

 

SECTION 7. Conditions Precedent to All Subsequent Credit Events.

 

The agreement of each Lender to make any Loan requested to be made by it on any
date after the Closing Date (excluding Mandatory Borrowings and Loans required
to be made by the Lenders in respect of Unpaid Drawings pursuant to Sections 3.3
and 3.4 and subject, in the case of clause (a) below, to the provisions set
forth in Section 1.12(a)), and the obligation of any Issuing Bank to issue
Letters of Credit on any date after the Closing 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,
(i) no Default or Event of Default shall have occurred and be continuing,
(ii) 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 and except that any
representation and warranty that is qualified as to “materiality,” “Material
Adverse Effect” or similar language shall be true and correct (after giving
effect to any qualification therein) in all respects on such respective dates)
and (iii) if the Borrower has delivered a compliance certificate pursuant to
Section 9.1(c) notifying the Administrative Agent of a failure to comply with
the Leverage Ratio Covenant, the Borrower shall have cured such failure pursuant
to Section 11.13(a).

 

(b) Prior to the making of each Loan (other than any Loan made pursuant to
Section 3.4(a)) and each Swingline Loan, the Administrative Agent shall have
received a Notice of Borrowing (whether in writing or by telephone) meeting the
requirements of Section 2.3(a).

 

(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).

 

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The acceptance of the benefits of each Credit Event after the Closing Date shall
constitute a representation and warranty by each Credit Party to each of the
Lenders that all the applicable conditions specified in Section 7 above have
been satisfied as of that time.

 

SECTION 8.   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 (but solely, on the Closing
Date, to the extent such representations and warranties are required to be true
and correct as a condition to Borrowing pursuant to Section 6), 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:

 

8.1 Existence, Qualification and Power. Each of the Borrower and each Restricted
Subsidiary of the Borrower (a) is a duly organized and validly existing under
the laws of the jurisdiction of its organization and has the corporate or other
organizational power and authority to own its property and assets and to
transact its business as now conducted and (b) 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 or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

8.2 Corporate Power and Authority; Enforceability; Binding Effect. Each Credit
Party has the corporate or other organizational 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 corporate or other organizational
action to authorize the execution, delivery and performance 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).

 

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 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 or any of the Restricted Subsidiaries (other than Liens created under the
Credit Documents and Permitted Liens) pursuant to the terms of any indenture,
loan agreement, lease agreement, mortgage, deed of trust, agreement or other
instrument to which such Credit Party or any of the Restricted Subsidiaries 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
Organization Documents of such Credit Party or any of the Restricted
Subsidiaries.

 

8.4 Litigation. Except as set forth on Schedule 8.4, there are no actions,
suits, proceedings, claims or disputes pending or, to the knowledge of the
Borrower, threatened in writing, at law, in equity, in arbitration or before any
Governmental Authority, by or against the Borrower or any of its Restricted
Subsidiaries or against any of their properties or revenues that either
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

 

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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.

 

8.6 Governmental Authorization. The execution, delivery and performance of each
Credit Document do not require any consent or approval of, registration or
filing with, or other action by, any Governmental Authority or any other Person,
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.

 

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.

 

8.8 True and Complete Disclosure.

 

(a) All written factual information delivered on or prior to the Closing Date
(other than the (i) the Projections and (ii) estimates and information of a
general economic nature or general industry nature) (the “Information”)
concerning the Acquired Assets 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 (as modified or supplemented by other information so furnished), when
taken as a whole, was true and correct in all material respects, as of the
Closing Date and did not, taken as a whole, contain any untrue statement of a
material fact as of the Closing 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 (i) have 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 the Projections), as of
the date such Projections were furnished to the Lenders (with respect to any
such Projections provided prior to the Closing Date) and as of the Closing Date
and (ii) as of the Closing Date, have not been modified in any material respect
by the Borrower.

 

(c) As of the Closing Date, to the knowledge of the Borrower, the information
included in the Beneficial Ownership Certification delivered, on or prior to the
Closing Date, to any Lender in connection with this Agreement is true and
correct in all material respects.

 

8.9 Tax Matters. Except as would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect, each of the
Credit Parties and the Restricted Subsidiaries have filed all tax returns
required to be filed, and have paid all Taxes payable by it (including in their
capacity as a withholding agent), except those that are being contested in good
faith by appropriate proceedings.

 

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8.10 Compliance with ERISA.

 

(a) Except as set forth on Schedule 8.10(a) or as would not, either individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect, each Pension Plan maintained by a Credit Party or ERISA Affiliate is in
compliance with the applicable provisions of ERISA and the Code and the
regulations and published interpretations thereunder and other federal or state
laws.

 

(b) (i) No ERISA Event has occurred during the six (6) year period prior to the
date on which this representation is made or deemed made or is reasonably
expected to occur; (ii) neither any Credit Party nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of ERISA
with respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (iii) neither any Credit Party nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Sections 4201 or 4243 of ERISA with
respect to a Multiemployer Plan; and (iv) neither any Credit Party nor any ERISA
Affiliate has engaged in a transaction that could be subject to Sections 4069 or
4212(c) of ERISA, except, with respect to each of the foregoing clauses of this
Section 8.10(b), as would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.

 

(c) With respect to each Pension Plan, the adjusted funding target attainment
percentage as determined by the applicable Pension Plan’s Enrolled Actuary under
Sections 436(j) and 430(d)(2) of the Code and all applicable regulatory guidance
promulgated thereunder (“AFTAP”), would not reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect. Neither any
Credit Party nor any ERISA Affiliate maintains or contributes to a Pension Plan
that is, or is expected to be, in at-risk status (as defined in Section
303(i)(4) of ERISA or Section 430(i)(4) of the Code) in each case, except as
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.

 

8.11 Subsidiaries. Schedule 8.11 lists each Subsidiary of the Borrower (and the
direct and indirect ownership interest of the Borrower therein), in each case
existing on the Closing Date (after giving effect to the Transactions). Each
Guarantor, Material Subsidiary and Unrestricted Subsidiary as of the Closing
Date (after giving effect to the Transactions) has been so designated on
Schedule 8.11.

 

8.12 Intellectual Property. The Borrower and each of the Restricted Subsidiaries
own or have obtained valid rights to use all intellectual property, free from
any burdensome restrictions, that to the knowledge of the Borrower is reasonably
necessary for the operation of their respective businesses 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.

 

8.13 Environmental Laws. Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, (i) the Credit Parties
and each of their respective Subsidiaries are in compliance with all applicable
Environmental Laws; (ii) neither the Credit Parties nor any of their respective
Subsidiaries have received written notice of any Environmental Claim;
(iii) neither the Credit Parties nor any of their respective Subsidiaries are
conducting or have been ordered by a Governmental Authority to conduct any
investigation, removal, remedial or other corrective action pursuant to any
Environmental Law related to Hazardous Materials contamination at any location;
and (iv) neither the Credit Parties nor any of their respective Subsidiaries, to
their knowledge, have 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, leased or operated facility in a
manner that would reasonably be expected to give rise to liability of the Credit
Parties or any of their respective Subsidiaries under Environmental Law.

 

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8.14 Properties.

 

(a) Assuming that all applicable Governmental Authorities have granted
approvals, made recordations and taken such other actions as are necessary in
connection with the Transactions and any assignments made in connection
therewith, except as set forth on Schedule 8.14 hereto or in an exhibit to any
Reserve Report Certificate delivered hereunder, 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 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 Liens permitted by Section 10.2, 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 effect to the Liens permitted by Section 10.2, the Borrower or the
Restricted Subsidiary specified as the owner owns the working interests and net
revenue interests attributable to the Hydrocarbon Interests as such working
interests and net revenue interests are reflected in the most recently delivered
Reserve Report, and the ownership of such properties shall not in any material
respect obligate the Borrower or such Restricted Subsidiary to bear the costs
and expenses relating to the maintenance, development and operations of each
such property in an amount in excess of the working interest of each property
set forth in the most recently delivered Reserve Report that is not offset by a
corresponding proportionate increase in the Borrower’s or such Restricted
Subsidiary’s net revenue interest in such property.

 

(b) All material leases and agreements necessary for the conduct of the business
of the Borrower and the Restricted Subsidiaries are valid and subsisting, in
full force and effect, except to the extent that any such failure to be valid or
subsisting 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 and the Restricted Subsidiaries that
are reasonably necessary for the operation of their businesses 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
reasonably be expected to have a Material Adverse Effect.

 

8.15 Solvency. On the Closing Date, after giving effect to the Transactions,
the Borrower and its Restricted Subsidiaries, on a consolidated basis, are
Solvent.

 

8.16 Security Documents. The Security Documents create in favor of the
Collateral Agent, for the benefit of the Secured Parties, a legal, valid and
enforceable Lien or security interest in the respective Collateral described
therein as security for the Obligations to the extent that a legal, valid,
binding and enforceable Lien or security interest in such Collateral may be
created under any applicable Requirement of Law, which Lien or security
interest, upon the filing of financing statements, recordation of the Mortgages
or the obtaining of possession or “control,” in each case, as applicable, with
respect to the relevant Collateral as required under the applicable UCC or
applicable local law, will constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Borrower and each other Credit
Party thereunder in such Collateral, in each case prior and superior (except as
otherwise provided for in the relevant Security Document) in right to any other
Person (other than Permitted Liens), in each case to the extent that a security
interest may be perfected by the filing of a financing statement under the
applicable UCC, recordation of the Mortgages under applicable local law or by
obtaining possession or “control.”

 

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8.17 Gas Imbalances, Prepayments. On the Closing Date, except as set forth on
Schedule 8.17, on a net basis, there are no gas imbalances, take or pay or other
prepayments exceeding 2.5 Bcfe of Hydrocarbon volumes (stated on a gas
equivalent basis) in the aggregate, with respect to the Credit Parties’ Oil and
Gas Properties that would require any Credit Party to deliver Hydrocarbons
either generally or produced from their Borrowing Base Properties at some future
time without then or thereafter receiving full payment therefor.

 

8.18 Marketing of Production. On the Closing Date, except as set forth on
Schedule 8.18, no material agreements exist (which are not cancelable on sixty
(60) days’ notice or less without penalty or detriment) for the sale of
production of the Credit Parties’ 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 average monthly production of
Hydrocarbon volumes and (ii) have a maturity or expiry date of longer than six
(6) months from the Closing Date.

 

8.19 Financial Statements.

 

(a) The annual financial statements delivered as part of the Closing Date
Financials and, on and after the first date of delivery of financial statements
pursuant to Section 9.1(a), the most recent financial statements delivered
pursuant to Section 9.1(a) fairly present in all material respects the financial
condition of (x) Royal Resources L.P. and its Subsidiaries or, as applicable,
(y) the Borrower and its Subsidiaries, in each case as of the date thereof and
their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except for
customary year-end adjustments and the absence of complete footnotes and as
otherwise expressly noted therein.

 

(b) The interim financial statements delivered as part of the Closing Date
Financials and, on and after the first date of delivery of financial statements
pursuant to Section 9.1(b), the most recent financial statements delivered
pursuant to Section 9.1(b) fairly present in all material respects the financial
condition of (x) Royal Resources L.P. and its Subsidiaries or, as applicable,
(y) the Borrower and its Subsidiaries, in each case as of the date thereof and
their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein.

 

(c) Since the Closing Date, there has been no event or circumstance, either
individually or in the aggregate, that has had or would reasonably be expected
to have a Material Adverse Effect.

 

8.20 OFAC; USA PATRIOT Act; FCPA.

 

(a) To the extent applicable, each of the Borrower and its Subsidiaries is in
compliance, in all material respects, with (i) the Trading with the Enemy Act,
as amended, the International Emergency Economic Powers Act, as amended,
Sanctions Laws, the United States Foreign Corrupt Practices Act of 1977, as
amended and other anti-corruption laws, and (ii) the USA PATRIOT Act. Neither
the Borrower nor any of its Subsidiaries nor, to the knowledge of the Borrower
and the other Credit Parties, any director, officer, employee, agent or
controlled affiliate of the Borrower or any Subsidiary is currently the subject
of any Sanctions, nor is the Borrower or any of its Subsidiaries located,
organized or resident in any country or territory that is the subject of
comprehensive Sanctions.

 

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(b) No part of the proceeds of the Loans will be used, directly or, to the
knowledge of the Borrower, indirectly, by the Borrower (i) in violation of the
United States Foreign Corrupt Practices Act of 1977, as amended or (ii) for the
purpose of financing any activities or business (x) of or with any Person that,
at the time of such financing, is the subject of any Sanctions or (y) in any
country or territory that is the subject of comprehensive Sanctions.

 

8.21 Hedge Agreements. Schedule 8.21 sets forth, as of the Closing Date, a true
and complete list of all material commodity Hedge Agreements of each Credit
Party, the terms thereof relating to the type, term, effective date, termination
date and notional amounts or volumes, the net mark to market value thereof, all
credit support agreements relating thereto (including any margin required or
supplied) and the counterparty to each such agreement.

 

8.22 [Reserved].

 

8.23 No Default. No Default, Event of Default or Borrowing Base Deficiency has
occurred and is continuing.

 

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

 

SECTION 9.   Affirmative Covenants

 

The Borrower hereby covenants and agrees that on the Closing Date and
thereafter, until Payment in Full has occurred:

 

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. Within ninety (90) days after the end of each
such fiscal year (or 120 days in the case of the fiscal year ending
December 31, 2018), the audited consolidated balance sheets of the Borrower and
its Subsidiaries and, if different, the Borrower and the Restricted
Subsidiaries, in each case as at the end of such fiscal year, and the related
consolidated statements of operations, shareholders’ equity and cash flows
(or, in lieu of such audited financial statements of the Borrower and the
Restricted Subsidiaries, a reconciliation, reflecting such financial information
for the Borrower and the Restricted Subsidiaries, on the one hand, and the
Borrower and the Subsidiaries, on the other hand, reflecting adjustments
necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) from
such consolidated financial statements) prepared in accordance with GAAP, and,
except with respect to such reconciliation, certified by independent certified
public accountants whose opinion shall not be materially qualified with a scope
of audit or “going concern” explanatory paragraph or like qualification or
exception (other than an emphasis of matter paragraph) (other than with respect
to, or resulting from, (x) the occurrence of an upcoming maturity date of any
Indebtedness or (y) any prospective or actual default in the Financial
Performance Covenants). Notwithstanding the foregoing, the obligations in this
Section 9.1(a) may be satisfied with respect to financial information of the
Borrower and its consolidated Subsidiaries by furnishing (A) the applicable
financial statements of any direct or indirect parent of the Borrower or (B) the
Borrower’s (or any direct or indirect parent thereof), as applicable, filing of
a Form 10-K with the SEC; provided that, with respect to each of clauses (A) and
(B), (i) to the extent such information relates to a Parent Entity, such
information is accompanied by consolidating information that explains in
reasonable detail the differences between the information relating to such
Parent Entity and its consolidated Subsidiaries, on the one hand, and the
information relating to the Borrower and its consolidated Subsidiaries and the
Borrower and its consolidated Restricted Subsidiaries on a standalone basis, on
the other hand and (ii) to the extent such information is in lieu of information
required to be provided under the first sentence of this Section 9.1(a), such
materials are accompanied by an opinion of independent certified public
accountants whose opinion shall not be materially qualified with a scope of
audit or “going concern” explanatory paragraph or like qualification or
exception (other than an emphasis of matter paragraph) (other than with respect
to, or resulting from, (x) the occurrence of an upcoming maturity date of any
Indebtedness or (y) any prospective or actual default in the Financial
Performance Covenants).

 

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(b) Quarterly Financial Statements. With respect to each of the first three
quarterly accounting periods in each fiscal year of the Borrower, on or before
the date that is sixty (60) days after the end of each such quarterly accounting
period (or, in the case of the fiscal quarters ending on September 30, 2018,
March 31, 2019 and June 30, 2019, ninety (90) days), the consolidated balance
sheets of the Borrower and the Subsidiaries and, if different, the Borrower and
the Restricted Subsidiaries, in each case as at the end of such quarterly period
and the related consolidated statements of operations, shareholders’ equity and
cash flows, and, beginning with the financial statements for the quarterly
period ending September 30, 2019, setting forth comparative consolidated figures
for the related periods in the prior fiscal year or, in the case of such
consolidated balance sheet, for the last day of such periods in the prior fiscal
year (or, in lieu of such unaudited financial statements of the Borrower and the
Restricted Subsidiaries, a reconciliation reflecting such financial information
for the Borrower and the Restricted Subsidiaries, on the one hand, and the
Borrower and the Subsidiaries, on the other hand, reflecting adjustments
necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) from
such consolidated financial statements), 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 consolidated Subsidiaries in accordance with
GAAP, subject to changes resulting from audit and normal year-end audit
adjustments and the absence of footnotes. Notwithstanding the foregoing, the
obligations in this Section 9.1(b) may be satisfied with respect to financial
information of the Borrower and its consolidated Subsidiaries by furnishing
(A) the applicable financial statements of any direct or indirect parent of the
Borrower or (B) the Borrower’s (or any direct or indirect parent thereof), as
applicable, Form 10-Q filed with the SEC; provided that, with respect to each of
clauses (A) and (B), to the extent such information relates to a parent of the
Borrower, such information is accompanied by consolidating information that
explains in reasonable detail the differences between the information relating
to such parent and its consolidated Subsidiaries, on the one hand, and the
information relating to the Borrower and its consolidated Subsidiaries and the
Borrower and its consolidated Restricted Subsidiaries on a standalone basis, on
the other.

 

(c) Officer’s Certificates. Not later than five (5) days after the delivery of
the financial statements provided for in Section 9.1(a) and Section 9.1(b), a
certificate of a Financial Officer of the Borrower to the effect that no Default
or Event of Default exists or, if any Default or Event of Default does exist,
specifying the nature and extent thereof, which certificate shall set forth
(i) beginning with the fiscal quarter ending December 31, 2018, the calculations
required to establish whether the Borrower and its Restricted Subsidiaries were
in compliance with the Financial Performance Covenants as at the end of such
fiscal year or period, as the case may be, and (ii) set forth any change in the
identity of the Restricted Subsidiaries, Guarantors and Unrestricted
Subsidiaries as at the end of such fiscal year or period, as the case may be,
from the Restricted Subsidiaries, Guarantors and Unrestricted Subsidiaries,
respectively, provided to the Lenders on the Closing Date or the most recent
fiscal year or period, as the case may be.

 

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(d) Notices. Promptly after an Authorized Officer of the Borrower or any of the
Restricted Subsidiaries obtains actual knowledge thereof, notice of (i) the
occurrence of any Default or Event of Default, which notice shall specify the
nature thereof and what action the Borrower proposes to take with respect
thereto, (ii) any litigation or governmental proceeding pending against the
Borrower or any of the Subsidiaries that would reasonably be expected to be
determined adversely and, if so determined, to result in a Material Adverse
Effect, (iii) the occurrence of any ERISA Event or similar event with respect to
a Foreign Plan, in each case, that would reasonably be expected to have a
Material Adverse Effect and (iv) the issuance of, or the making of any payment
(other than scheduled amortization or scheduled interest payments) in respect
of, any Pari Debt.

 

(e) Environmental Matters. Promptly after obtaining actual knowledge of any one
or more of the following environmental matters, unless such environmental
matters 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 Environmental Claim brought, filed or threatened in writing against any
Credit Party; and

 

(ii) the actual release or threatened release of any Hazardous Material on, at,
under or from any facility owned or leased by a Credit Party in violation of
Environmental Laws or as would reasonably be expected to result in liability
under Environmental Laws or the conduct of any investigation, or any removal,
remedial or other corrective action under Environmental Laws in response to the
actual or alleged presence, release or threatened release of any Hazardous
Material on, at, under or from any facility owned or leased by a Credit Party.

 

All such notices shall describe in reasonable detail the nature of the claim,
investigation, removal or remedial action.

 

(f) Other Information. With reasonable promptness, but subject to the
limitations set forth in the last sentences of Section 9.2(a) and Section 13.6,
such other information regarding the operations, business affairs and the
financial condition of the Borrower or 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.

 

(g) Budget. Within 105 days after the end of each fiscal year (beginning with
(and 120 days in the case of) the fiscal year ending December 31, 2018) of the
Borrower, a reasonably detailed consolidated budget for the following fiscal
year as customarily prepared by management of the Borrower (including a
projected consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of the following fiscal year, the related consolidated statements of
projected cash flow and projected income and a summary of the material
underlying assumptions applicable thereto) (collectively, the “Budget”), which
Budget shall in each case be accompanied by a certificate of an Authorized
Officer stating that such Budget has been prepared in good faith on the basis of
the assumptions stated therein, which assumptions were believed to be reasonable
at the time of preparation of such Budget, it being understood that actual
results may vary from such Budget and that such variations may be material.

 

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(h) Title. Within thirty (30) days following the Closing Date (provided that
such timeline may be extended with the consent of the Administrative Agent (not
to be unreasonably withheld or delayed)), satisfactory title information
(including customary title opinions, information or reports or other documents)
consistent with usual and customary standards for the geographic regions in
which the Borrowing Base Properties acquired on the Closing Date are located
with respect to not less than 85% of the PV-9 value of the Borrowing Base
Properties. Notwithstanding the foregoing, the Borrower will use commercially
reasonable efforts to deliver such satisfactory title information with respect
to at least 85% of the PV-9 value of the Borrowing Base Properties on the
Closing Date.

 

It is understood that documents required to be delivered pursuant to
Sections 9.1(a) through (h) 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, (ii) on which such
documents are posted on the Borrower’s behalf on IntraLinks, DebtDomain or
another relevant website, if any, to which each Lender and the Administrative
Agent have access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent) or (iii) on which such documents are
transmitted by electronic mail to the Administrative Agent; provided that: (i)
upon written request by the Administrative Agent, the Borrower shall deliver
paper copies of such documents delivered pursuant to Sections 9.1(a), 9.1(b),
9.1(c) and 9.1(f) to the Administrative Agent for further distribution to each
Lender until a written request to cease delivering paper copies is given by the
Administrative Agent and (ii) the Borrower shall notify (which may be by
facsimile or electronic mail) the Administrative Agent of the posting of any
such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents. Each Lender shall be
solely responsible for timely accessing posted documents or requesting delivery
of paper copies of such documents from the Administrative Agent and maintaining
its copies of such documents.

 

9.2 Books, Records and Inspections.

 

(a) The Borrower will, and will cause each Restricted Subsidiary to, maintain
books of record and account that permit the preparation of financial statements
in accordance with GAAP.

 

(b) The Borrower will, and will cause each of the Restricted Subsidiaries to,
permit designated representatives of the Administrative Agent and designated
representatives of the Majority Lenders (as accompanied by the Administrative
Agent) to visit and inspect any of its properties, to examine its financial and
operating records, and to discuss its affairs, finances and accounts with its
officers, and independent public accountants (subject to such accountants’
customary policies and procedures), all at the reasonable expense of the
Borrower and at such reasonable times during normal business hours and as often
as may be reasonably desired, upon reasonable advance notice to the Borrower;
provided that, excluding any such visits and inspections during the continuation
of an Event of Default, only the Administrative Agent on behalf of the Lenders
may exercise rights of the Administrative Agent and the Lenders under this
Section 9.2(b) and the Administrative Agent shall not exercise such rights more
often than two times during any calendar year and only one (1) such time shall
be at the Borrower’s expense; provided, further, that when an Event of Default
exists, the Administrative Agent or any representative of the Majority Lenders
(or any of their respective representatives or independent contractors) 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(b), none of the
Borrower nor any Restricted Subsidiary shall be required to disclose, permit the
inspection, examination or making copies or abstracts of, or discussion of, any
document, information or other matter that (i) 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 (iii)
is subject to attorney-client or similar privilege or constitutes attorney
work-product.

 

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9.3 Maintenance of Insurance.

 

(a) The Borrower will, and will cause each Restricted Subsidiary to, 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 Collateral 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.

 

(b) With respect to each Mortgaged Property, obtain flood insurance in such
total amount as the Administrative Agent or the Required Lenders may from time
to time reasonably require, if at any time the area in which any material
improvements included as Collateral and located on any land subject to a
Mortgage is designated a “flood hazard area” in any Flood Insurance Rate Map
published by the Federal Emergency Management Agency (or any successor agency),
and otherwise comply with the National Flood Insurance Program as set forth in
the Flood Disaster Protection Act of 1973, as amended from time to time.
Following the Closing Date, the Borrower shall deliver to the Administrative
Agent annual renewals of each flood insurance policy or annual renewals of each
force-placed flood insurance policy, as applicable. In connection with any
amendment to this Agreement pursuant to which any increase, extension, or
renewal of Loans is contemplated, the Borrower shall cause to be delivered to
the Administrative Agent for any Mortgaged Property with respect to which
buildings or mobile homes are included as Collateral, a completed “life of the
loan” Federal Emergency Management Agency Standard Flood Hazard Determination,
duly executed and acknowledged by the appropriate Credit Parties, and evidence
of flood insurance, as applicable.

 

9.4 Payment of Taxes. The Borrower shall, and shall cause each Restricted
Subsidiary to, pay, discharge or otherwise satisfy 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
a Subsidiary thereof has set aside on its books adequate reserves therefor in
accordance with GAAP (or in the case of a Foreign Subsidiary, the comparable
accounting principles in the relevant jurisdiction) or (ii) the failure to make
payment could not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect. 

 

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9.5 Preservation of Existence, Etc. The Borrower will do, and will cause each
Restricted Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its legal existence, corporate rights
and authority, except to the extent that the failure to do so would not
reasonably be expected to have a Material Adverse Effect; provided, however,
that the Borrower and its Restricted Subsidiaries may consummate any transaction
permitted under Section 10.3, 10.4 or 10.5.

 

9.6 Compliance with Requirements of Law. The Borrower will, and will cause each
Restricted Subsidiary to, comply with all Requirements of Law applicable to it
or its property, except if the failure to comply therewith could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.

 

9.7 [Reserved].

 

9.8 Maintenance of Properties. The Borrower will, and will cause each of the
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 (it
being understood that this Section 9.8 shall not restrict any transaction
otherwise permitted by Section 10.3, 10.4 or 10.5):

 

(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
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;

 

(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 consisting of
equipment, machinery and facilities; and

 

(c) to the extent a Credit Party is not the operator of any property, the
Borrower shall use commercially reasonable efforts to cause the operator to
operate such property in accordance with customary industry practices.

 

9.9 Transactions with Affiliates. The Borrower will conduct, and cause each of
the Restricted Subsidiaries to conduct, all transactions involving aggregate
payments or consideration in excess of $10,000,000 with any of its Affiliates
(other than the Borrower and the Restricted Subsidiaries or any entity that
becomes a Restricted Subsidiary as a result of such transaction) 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 board of directors or
managers of the Borrower or such Restricted Subsidiary in good faith; provided
that the foregoing restrictions shall not apply to:

 

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

 

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(b) the issuance of Equity Interests of the Borrower (or any Parent Entity
thereof) to any officer, director, employee or consultant of any of the Borrower
or any of its Subsidiaries or the Sponsor (or any Parent Entity thereof) or any
of its Subsidiaries;

 

(c) equity issuances, repurchases, retirements, redemptions or other
acquisitions or retirements of Equity Interests by the Borrower (or any direct
or indirect Parent Entity thereof) permitted under Section 10.6;

 

(d) [reserved];

 

(e) 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;

 

(f) employment and severance arrangements and health, disability and similar
insurance or benefit plans between the Borrower (or any direct or indirect
parent thereof) and the Subsidiaries and their respective future, current or
former 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 future, 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 board of directors or managers of the Borrower (or any direct or
indirect parent thereof);

 

(g) any one or more agreements in respect of payments of monitoring, consulting,
management, transaction, advisory or similar fees to the Sponsor that are
approved by the majority of the members of the board of directors or managers of
the Borrower (or any direct or indirect parent thereof), in good faith, and
payments pursuant thereto which shall consist of (i) so long as no Event of
Default under Sections 11.1, 11.3 (but only as a result of the default in the
due performance of any covenant contained in Section 9.6) or 11.5 has occurred
and is continuing, the payment of management, monitoring, consulting,
transaction, termination and advisory fees pursuant to the Investor Management
Agreement and related indemnities and reasonable expenses; (ii) any deferred
management fees (to the extent such fees were within such amount described in
the foregoing subclause (i) originally); and (iii) transaction fees in an amount
not to exceed 1.0% of the total enterprise value (as determined in good faith by
the Borrower) of any Permitted Acquisition or Investment; provided that, if any
such payment pursuant to subclauses (i) and (ii) is not permitted to be paid as
a result of an Event of Default under Section 11.1, such payment shall accrue
and may be payable when no Event of Default under Section 11.1 is continuing;

 

(h) transactions pursuant to agreements in existence on the Closing Date and to
the extent involving aggregate consideration in excess of $1,000,000
individually, set forth on Schedule 9.9 or any amendment thereto or arrangement
similar thereto to the extent such amendment or arrangement is not adverse,
taken as a whole, to the Lenders in any material respect (as determined by the
Borrower in good faith);

 

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(i) Restricted Payments, redemptions, repurchases and other actions permitted
under Section 10.6;

 

(j) without duplicating any payments made pursuant to Section 9.9(g) above,
payments (including reimbursement of fees and expenses) by the Borrower and any
of its Restricted Subsidiaries to the Sponsor made for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities (including in connection with acquisitions or divestitures,
whether or not consummated), which payments are approved by the majority of the
members of the board of directors or managers or a majority of the disinterested
members of the board of directors or managers of the Borrower (or any direct or
indirect parent thereof), in good faith;

 

(k) 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 board of directors or board of managers of the Borrower (or any direct or
indirect parent thereof);

 

(l) 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 practice followed by companies in the
Oil and Gas Business;

 

(m) sales or conveyances of net profits interests or other royalty interests for
cash at Fair Market Value allowed under Section 10.4;

 

(n) the issuance, sale or transfer of Equity Interests of the Borrower to any
Parent Entity in connection with capital contributions by such Parent Entity to
the Borrower;

 

(o) any transaction in respect of which the Borrower delivers to the
Administrative Agent a letter addressed to the 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 such
Restricted Subsidiary or (ii) on terms, taken as a whole, that are no less
favorable to the Borrower or such Restricted Subsidiary, as applicable, than
would be obtained in a comparable arm’s length transaction with a person that is
not an Affiliate;

 

(p) [reserved];

 

(q) 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;

 

(r) payments and distributions by any Parent Entity (and any direct or indirect
parent thereof) and the Subsidiaries to the extent such payments are permitted
under Sections 10.6(f)(i) and (v);

 

(s) [reserved];

 

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(t) the payment of customary fees and reasonable out-of-pocket costs to, and
indemnities provided on behalf of, future, current or former directors,
officers, employees and consultants of the Borrower and its Restricted
Subsidiaries or any Parent Entity;

 

(u) Investments permitted under Section 10.5 (other than Sections 10.5(h), (k),
(m), (q), (w) and (y) thereof);

 

(v) [reserved];

 

(w)   [reserved];

 

(x) transactions with customers, clients, joint venture partners, suppliers or
purchasers or sellers of goods or services, in each case in the ordinary course
of business and otherwise in compliance with the terms of this Agreement that
are fair to the Borrower and the Restricted Subsidiaries, in the reasonable
determination of the Board of Directors or the senior management of the
Borrower, or are on terms at least as favorable as might reasonably have been
obtained at such time from an unaffiliated party;

 

(y) [reserved];

 

(z) transactions between the Borrower or any of its Restricted Subsidiaries and
any Person that is an Affiliate solely because a director of such Person is also
a director of the Borrower or any direct or indirect parent of the Borrower;
provided, however, that such director abstains from voting as a director of the
Borrower or such direct or indirect parent, as the case may be, on any matter
involving such other Person;

 

(aa)   [reserved];

 

(bb) payments or loans (or cancellation of loans) to officers, directors,
employees or consultants which are approved by a majority of the Board of
Directors of the Borrower in good faith;

 

(cc)   [reserved];

 

(dd) any lease entered into between the Borrower or any Restricted Subsidiary,
as lessee and any Affiliate of the Borrower, as lessor, which is approved by a
majority of the disinterested members of the Board of Directors in good faith
or, any lease entered into between the Borrower or any Restricted Subsidiary, as
lessee, and any Affiliate of the Borrower, as lessor, in the ordinary course of
business;

 

(ee)   [reserved];

 

(ff)   [reserved];

 

(gg) Permitted Intercompany Activities;

 

(hh) the formation and maintenance of any consolidated group or subgroup for
tax, accounting or cash pooling or management purposes in the ordinary course of
business; and

 

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(ii) a joint venture which would constitute a transaction with an Affiliate
solely as a result of the Borrower or any Restricted Subsidiary owning an equity
interest or otherwise controlling such joint venture or similar entity.

 

9.10 Compliance with Environmental Laws. The Borrower will, and will cause each
of the Restricted Subsidiaries to, except, in each case, to the extent that the
failure to do so could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, comply, and take all commercially
reasonable actions to cause all lessees and other Persons operating or occupying
its properties to comply, with all applicable Environmental Laws and
Environmental Permits; obtain, maintain and renew all Environmental Permits
necessary for its operations and properties; and, in each case to the extent the
Credit Parties or Subsidiaries are required by Environmental Laws, conduct any
investigation, remedial or other corrective action necessary to address
Hazardous Materials at any property or facility in accordance with applicable
Environmental Laws.

 

9.11 Additional Guarantors, Grantors and Collateral.

 

(a) Subject to any applicable limitations set forth in the Guarantee or the
Security Documents, the Borrower and Falcon GP, as applicable, will cause
(i) any direct or indirect Domestic Subsidiary (other than any Excluded
Subsidiary) formed or otherwise purchased or acquired after the Closing Date
(including pursuant to a Permitted Acquisition) and (ii) any Domestic Subsidiary
of the Borrower or Falcon GP, as applicable, that ceases to be an Excluded
Subsidiary, in each case within forty-five (45) days from the date of such
formation, acquisition or cessation, as applicable (or such longer period as the
Administrative Agent may agree in its reasonable discretion) to (A) execute
(x) a supplement to the Guarantee, substantially in the form of Exhibit I
thereto, in order to become a Guarantor, (y) a supplement to the Collateral
Agreement, substantially in the form of Exhibit I thereto, in order to become a
grantor and a pledgor thereunder and (z) a counterpart to the Intercompany Note,
(B) if reasonably requested by the Administrative Agent or the Collateral Agent,
within forty-five (45) days after such request (or such longer period as the
Administrative Agent may agree in writing in its discretion), deliver to the
Administrative Agent a signed copy of an opinion, addressed to the
Administrative Agent, the Collateral Agent and the Lenders, of counsel for the
Credit Parties reasonably acceptable to the Administrative Agent as to such
matters set forth in this Section 9.11 as the Administrative Agent or the
Collateral Agent may reasonably request, and (C) as promptly as practicable
after the request therefor by the Administrative Agent or Collateral Agent,
deliver to the Collateral Agent with respect to each Mortgaged Property, (i) any
existing title reports, (ii) abstracts or (iii)environmental assessment reports,
to the extent available and in the possession or control of the Credit Parties
or their respective Subsidiaries; provided, however, that there shall be no
obligation to deliver to the Administrative Agent any existing environmental
assessment report whose disclosure to the Administrative Agent would require the
consent of a Person other than the Credit Parties or one of their respective
Subsidiaries, where, despite the commercially reasonable efforts of the Credit
Parties or their respective Subsidiaries to obtain such consent, such consent
cannot be obtained.

 

(b) Subject to any applicable limitations set forth in the Collateral Agreement,
the Borrower and Falcon GP will pledge, and, if applicable, will cause each
Subsidiary Guarantor (or Person required to become a Subsidiary Guarantor
pursuant to Section 9.11(a)) to pledge, to the Collateral Agent, for the benefit
of the Secured Parties, (i) all of the Equity Interests (other than any Excluded
Equity Interests) of the Borrower and each Restricted Subsidiary directly owned
by the Borrower, Falcon GP or any Credit Party (or Person required to become a
Guarantor pursuant to Section 9.11(a)), in each case, formed or otherwise
purchased or acquired after the Closing Date, pursuant to supplements to the
Collateral Agreement substantially in the form of Exhibit I, thereto and
(ii) except with respect to intercompany Indebtedness, all evidences of
Indebtedness for borrowed money in a principal amount in excess of $7,500,000
(individually) that is owing to the Borrower or any Guarantor (or Person
required to become a Guarantor pursuant to Section 9.11(a)), in each case
pursuant to supplements to the Collateral Agreement substantially in the form of
Exhibit I thereto.

 

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(c) [Reserved].

 

(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 (as described in Section 9.14(c)),
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,
then the Borrower shall, and shall cause the Credit Parties to, grant, within
seventy-five (75) days of delivery of the certificate required under
Section 9.14(c) (or such longer period as the Administrative Agent may agree in
its reasonable discretion), to the Collateral Agent as security for the
Obligations a Lien (subject to Liens permitted by Section 10.2) 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 Mortgages. In order to comply with the foregoing, if any Restricted
Subsidiary places a Lien on its property and such Restricted Subsidiary is not a
Guarantor, then it shall become a Guarantor and comply with the provisions of
Sections 9.11(a) and (b).

 

(e) Without limitation of clause (a), (b) or (d) above, substantially
simultaneously with the delivery of any mortgage or deed of trust on any Oil and
Gas Property for the benefit of any other secured party and securing
Indebtedness that is subject to any Customary Intercreditor Agreement, the
Borrower shall, or shall cause the relevant Credit Party to, grant to the
Collateral Agent as security for the Obligations a Lien on such Oil and Gas
Property. All such Liens will be created and perfected by and in accordance with
the provisions of the Security Documents, including, if applicable, any
additional Mortgages. In order to comply with the foregoing, if any Restricted
Subsidiary places a Lien on its property and such Subsidiary is not a Guarantor,
then it shall become a Guarantor and comply with the provisions of
Sections 9.11(a) and (b).

 

9.12 Use of Proceeds. The Borrower will use the proceeds of the Loans made (i)
on the Closing Date and any Letters of Credit in accordance with the second
recital of this Agreement and (ii) after the Closing Date (a) for the
acquisition, development and exploration of oil and gas properties, (b) to
provide for the working capital needs of the Borrower and its subsidiaries and
(c) for other general corporate purposes (in each case, as permitted by the
Credit Documents).

 

9.13 Further Assurances.

 

(a) Subject to the applicable limitations set forth in the Security Documents,
unless otherwise provided hereunder, the Borrower and Falcon GP 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 arising from the Borrowing Base
Properties, mortgages, deeds of trust and other documents) that the Collateral
Agent or the Required 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 and the Restricted Subsidiaries.

 

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(b) [Reserved].

 

(c) Notwithstanding anything herein to the contrary, if the Collateral 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 Collateral
Agreement, 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 Closing 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 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.

 

(d) Notwithstanding the foregoing provisions of this Section 9.13 or anything in
this Agreement or any other Credit Document to the contrary: (A) Liens required
to be granted from time to time shall be subject to exceptions and limitations
set forth in the Collateral Agreement and the other Credit Documents and, to the
extent appropriate in any applicable jurisdictions, as agreed between the
Administrative Agent and the Borrower; (B) the Collateral shall not include any
Excluded Assets; (C) except as provided in Section 9.17 hereof, no deposit
account control agreement, securities account control agreement, commodity
account control agreement or other control agreements or control arrangements
shall be required with respect to any deposit account, securities account,
commodity account or other asset specifically requiring perfection through
control agreements; and (D) no actions in any jurisdiction outside of the United
States or that are necessary to comply with any Requirement of Law of any
jurisdiction outside of the United States shall be required in order to create
any security interest in assets located, titled, registered or filed outside of
the United States or to perfect such security interests (it being understood
that there shall be no collateral agreements, security agreements, pledge
agreements, or share charge (or mortgage) agreements governed under the laws of
any jurisdiction outside of the United States; provided that nothing in this
Section 9.13 or any other provision of the Credit Documents shall affect or
impair the Borrower’s obligation to meet the Collateral Coverage Minimum).

 

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9.14 Reserve Reports.

 

(a) On or before October 1, 2018 and each March 1 and September 1 of each year
thereafter, the Borrower shall furnish to the Administrative Agent a Reserve
Report evaluating, as of the immediately preceding December 31 and June 30, the
Proved Reserves of the Borrower and the Credit Parties located within the
geographic boundaries of the United States of America and other applicable Oil
and Gas Properties of the Credit Parties that the Borrower desires to have
included in any calculation of the Borrowing Base. Each Reserve Report as of (i)
December 31 shall be prepared by one or more Approved Petroleum Engineers and
(ii) June 30 shall, at the sole election of the Borrower, (x) be audited by one
or more Approved Petroleum Engineers or (y) be prepared by or under the
supervision of the chief engineer of the Borrower or a Restricted Subsidiary.

 

(b) In the event of an Interim Redetermination, the Borrower shall furnish to
the Administrative Agent a Reserve Report prepared by one or more Approved
Petroleum Engineers or prepared under the supervision of the chief engineer of
the Borrower or a Restricted Subsidiary. For any Interim Redetermination
pursuant to Section 2.14(b), the Borrower shall provide such Reserve Report with
an “as of” date as required by the Administrative Agent, as soon as possible,
but in any event no later than forty-five (45) days, in the case of any Interim
Redetermination requested by the Borrower, or sixty (60) days, in the case of
any Interim Redetermination requested by the Administrative Agent or the
Lenders, following the receipt of such request.

 

(c) 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 a Restricted Subsidiary (other than
December 31 Reserve Reports), such Reserve Report has been prepared, except as
otherwise specified therein, in accordance with the procedures used in the
immediately preceding December 31 Reserve Report or the Initial Reserve Report,
if no December 31 Reserve Report has been delivered;

 

(ii) as of the last Business Day of the most recently ended fiscal year or
period, as applicable, a true and complete list of all material commodity Hedge
Agreements of the Borrower and each Credit Party, the material terms thereof (in
respect of 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 such fiscal year or period, as applicable and for which a mark-to-market
value is reasonably available);

 

(iii) for each calendar month during the then current fiscal year to date, the
volume of production of Hydrocarbons and sales attributable to production of
Hydrocarbons (and the prices at which such sales were made and the revenues
derived from such sales) for each such calendar month from the Borrowing Base
Properties, and setting forth the related ad valorem, severance and production
taxes and lease operating expenses attributable thereto for each such calendar
month;

 

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

 

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(v) assuming that all applicable Governmental Authorities have granted
approvals, made recordations and taken such other actions as are necessary in
connection with the Transactions and any assignments made in connection
therewith, except as set forth in an exhibit to such certificate, the Borrower
or another Credit Party has good and defensible title to the Borrowing Base
Properties evaluated in such Reserve Report (other than those (w) to be acquired
in connection with an acquisition, (x) Disposed of since delivery of such
Reserve Report as permitted in accordance with the terms hereof, (y) leases that
have expired in accordance with their terms and (z) with title defects disclosed
in writing to the Administrative Agent) and such Borrowing Base Properties are
free (or will be at the time of the acquisition thereof) of all Liens except for
Liens permitted by Section 10.2;

 

(vi) except as set forth on an exhibit to such certificate, on a net basis there
are no gas imbalances, take or pay or other prepayments in excess of the volume
specified in Section 8.17 with respect to the Credit Parties’ Oil and Gas
Property evaluated in such Reserve Report that would require the Borrower or any
other Credit Party to deliver Hydrocarbons either generally or produced from
such Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor;

 

(vii) 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

 

(viii)    the certificate shall also attach, as schedules thereto, a list of
(1) all material marketing agreements (which are not cancellable on sixty (60)
days’ notice or less without penalty or detriment) entered into subsequent to
the later of the Closing Date and the most recently delivered Reserve Report for
the sale of production of the Credit Parties’ Hydrocarbons at a fixed non-index
price (including calls on, or other parties rights to purchase, production,
whether or not the same are currently being exercised) that represent in respect
of such agreements 2.5% or more of the Credit Parties’ average monthly
production of Hydrocarbon volumes and that have a maturity date or expiry date
of longer than six (6) months from the last day of such fiscal year or period,
as applicable and (2) all Borrowing Base Properties evaluated by such Reserve
Report that are Collateral and demonstrating compliance with (calculated at the
time of delivery of such Reserve Report) the Collateral Coverage Minimum.

 

9.15 Change in Business. The Borrower and its Restricted Subsidiaries, taken as
a whole, will not fundamentally and substantively alter the character of their
business, taken as a whole, from (i) the business conducted by them on the
Closing Date or (ii) any other business reasonably related, complementary,
incidental, synergistic or ancillary thereto (including Industry Investments) or
reasonable extensions thereof.

 

9.16 Title Information. On or before the date of delivery to the Administrative
Agent of each Reserve Report required by Section 9.14(a) following the Closing
Date, the Borrower will deliver title information (in form and substance
reasonably satisfactory to the Administrative Agent) with respect to the
Borrowing Base Properties consistent with usual and customary standards for the
geographic regions in which the Borrowing Base Properties are located, taking
into account the size, scope and number of leases and wells of the Borrower and
its Restricted Subsidiaries as is required to demonstrate satisfactory title on
85% of the PV-9 value of the Borrowing Base Properties included in the most
recent Reserve Report.

 

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9.17 Deposit Account, Securities Account and Commodity Account Control
Agreements. The Borrower will, and will cause each Guarantor to, in connection
with any Deposit Account, Securities Account or Commodity Account, in each case,
other than (x) any Excluded Account for so long as it is an Excluded Account (a)
held or maintained on the Closing Date by the Borrower or any such Guarantor,
promptly but in any event within sixty (60) days of the Closing Date (or such
later date as the Collateral Agent may agree in its sole discretion), enter into
and deliver to the Collateral Agent a deposit account control agreement (a
“Deposit Account Control Agreement”), securities account control agreement (a
“Securities Account Control Agreement”) or commodity account control agreement
(a “Commodity Account Control Agreement”), as applicable, in form and substance
reasonably satisfactory to the Collateral Agent and the account bank, securities
intermediary or commodity intermediary, as applicable, for any such Deposit
Account, Securities Account or Commodity Account and (b) established on or after
the Closing Date by the Borrower or any such Guarantor, promptly but in any
event within sixty (60) days of the establishment of such Deposit Account,
Securities Account or Commodity Account (or such later date as the Collateral
Agent may agree in its sole discretion) enter into and deliver to the Collateral
Agent a Deposit Account Control Agreement, Securities Account Control Agreement
or Commodity Account Control Agreement, as applicable, in form and substance
reasonably satisfactory to the Collateral Agent and the account bank, securities
intermediary or commodity intermediary, as applicable, for any such Deposit
Account, Securities Account or Commodity Account; provided that the aggregate
daily maximum balance for all such bank accounts excluded pursuant to this
clause (b) on any day shall not exceed $10,000,000. After the occurrence and
during the continuance of an Event of Default, the Collateral Agent may give
instructions directing the disposition of funds credited to any Controlled
Account and/or withhold any withdrawal rights from the Borrower or any Guarantor
with respect to funds credited to any Controlled Account.

 

9.18 Minimum Hedged Volumes. At any time that the Consolidated Total Net
Leverage Ratio as of the last day of any Test Period is greater than 2.50 to
1.00, the Borrower and/or other Credit Parties shall, within 45 days subsequent
to the date the compliance certificate for calculating the Leverage Ratio
Covenant is required to be delivered pursuant to Section 9.1(c)), enter into
(and thereafter maintain for so long as the Consolidated Total Net Leverage
Ratio set forth in the most recently delivered compliance certificate
calculating such Consolidated Total Net Leverage Ratio is greater than 2.50 to
1.00) Hedge Agreements in respect of Hydrocarbons entered into not for
speculative purposes the notional volumes for which (when aggregated with other
commodity Hedge Agreements then in effect, other than puts, floors and basis
differential swaps on volumes already hedged pursuant to other Hedge Agreements)
are no less than, as of the date the compliance certificate for calculating the
Leverage Ratio Covenant is required to be delivered pursuant to Section 9.1(c),
for each of the 4 consecutive six-month periods that follow such date of
delivery, 50% of the reasonably anticipated Hydrocarbon production in respect of
crude oil and natural gas from the Credit Parties’ total Proved Developed
Producing Reserves (as forecast based upon the Initial Reserve Report or the
most recent Reserve Report delivered pursuant to Section 9.14(a), as
applicable); provided that with respect to any Test Period (the “Subsequent Test
Period”), if the Borrower and/or the other Credit Parties have entered into
Hedge Agreements pursuant to this Section 9.18 for the immediately preceding
Test Period (the “Preceding Test Period”) and the most recently delivered
Reserve Report available for the Subsequent Test Period is the same one upon
which the Preceding Test Period’s volumes were based, then the Borrower and/or
the other Credit Parties shall not be obligated to enter into additional Hedge
Agreements with respect to such Subsequent Test Period pursuant to this Section
9.18.

 

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9.19 Post-Closing Covenants. Except as otherwise agreed by the Administrative
Agent in its sole discretion, the Borrower shall, and shall cause each of the
other Credit Parties to, deliver each of the documents, instruments and
agreements and take each of the actions set forth on Schedule 9.19 within the
time periods set forth therein (or such longer time periods as determined by the
Administrative Agent in its sole discretion).

 

SECTION 10.    Negative Covenants.

 

The Borrower hereby covenants and agrees that on the Closing Date and
thereafter, until Payment in Full has occurred:

 

10.1 Limitation on Indebtedness. The Borrower will not, and will not permit any
of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness other than the following:

 

(a) Indebtedness arising under the Credit Documents (including pursuant to
Sections 2.16 and 2.17);

 

(b) [reserved];

 

(c) [reserved];

 

(d) Indebtedness of (i) the Borrower or any Guarantor owing to the Borrower or
any Restricted Subsidiary; provided that any such Indebtedness owing by a Credit
Party to a Subsidiary that is not a Guarantor, to the extent permitted by
Requirements of Law and not giving rise to material adverse tax consequences
shall be subordinated to the Obligations pursuant to 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 10.5, any
Subsidiary that is not a Guarantor owing to the Borrower or any Guarantor;

 

(e) Indebtedness in respect of any bankers’ acceptances, bank guarantees,
letters of credit, warehouse receipts or similar instruments entered into in the
ordinary course of business or consistent with past practice or industry
practice (including in respect of workers compensation claims, health,
disability or other employee benefits or property, casualty or liability
insurance or self-insurance or other Indebtedness with respect to
reimbursement-type obligations regarding workers compensation claims); provided
that any reimbursement obligations in respect thereof are reimbursed within
thirty (30) days following the incurrence thereof;

 

(f) subject to compliance with Section 10.5, Guarantee Obligations incurred by
(i) Restricted Subsidiaries in respect of Indebtedness or other obligations of
the Borrower or other Restricted Subsidiaries that is permitted to be incurred
under this Agreement (except that a Restricted Subsidiary that is not a Credit
Party may not, by virtue of this Section 10.1(f), guarantee Indebtedness that
such Restricted Subsidiary could not otherwise itself incur under this
Section 10.1) and (ii) the Borrower in respect of Indebtedness of Restricted
Subsidiaries that is permitted to be incurred under this Agreement; provided
that (A) if the Indebtedness being guaranteed under this Section 10.1(f) is
subordinated to the Obligations, such Guarantee Obligations shall be
subordinated to the Guarantee of the Obligations on terms at least as favorable
to the Lenders as those contained in the subordination of such Indebtedness and
(B) no guarantee by any Restricted Subsidiary of any Indebtedness under clauses
(a), (c), (i), (k), (l) or (q) of this Section 10.1 or other Junior Debt shall
be permitted unless such Restricted Subsidiary shall have also provided a
guarantee of the Obligations substantially on the terms set forth in the
Guarantee;

 

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(g) Guarantee Obligations (i) incurred in the ordinary course of business in
respect of obligations of (or to) suppliers, customers, franchisees, lessors,
licensees or sublicensees or (ii) otherwise constituting Investments permitted
by Sections 10.5(d), (g), (h), (i), (j), (q), (r), (s) and (t);

 

(h) (i) Indebtedness (including Indebtedness arising under Capitalized Leases)
incurred prior to or within 365 days following the acquisition, construction,
lease, repair, replacement, expansion or improvement of assets (real or
personal, and whether through the direct purchase of property or the Equity
Interests of a Person owning such property) to finance the acquisition,
construction, lease, repair, replacement, expansion, or improvement of such
assets (for the avoidance of doubt, the purchase date for any asset shall be the
later of the date of completion of installation and the beginning of the full
productive use of such asset); (ii) Indebtedness arising under Capitalized
Leases, other than (A) Capitalized Leases in effect on the Closing Date and
(B) Capitalized Leases entered into pursuant to subclause (i) above; and
(iii) any Permitted Refinancing Indebtedness issued or incurred to Refinance any
such Indebtedness; provided, that the aggregate principal amount of Indebtedness
permitted by subclauses (i), (ii) and (iii) of this Section 10.1(h) shall not
exceed at any time outstanding the greater of $20,000,000 and 3.5% of
Consolidated Total Assets;

 

(i) Indebtedness outstanding on the date hereof and set forth on Schedule 10.1
and any Permitted Refinancing Indebtedness issued or incurred to Refinance such
Indebtedness;

 

(j) Indebtedness in respect of Hedge Agreements, subject to the limitations set
forth in Section 10.10;

 

(k) Indebtedness of the Borrower (including, for the avoidance of doubt, with
respect to any Permitted Refinancing Indebtedness issued or incurred to
Refinance such Indebtedness) (x) incurred in connection with any Permitted
Acquisition or similar Investment permitted under Section 10.5 or (y) assumed in
connection with any Permitted Acquisition or similar Investment permitted under
Section 10.5 so long as, in the case of Indebtedness assumed pursuant to
clause (y) hereof, such Indebtedness is not incurred in contemplation of such
Permitted Acquisition or similar Investment; provided that (A) immediately after
giving Pro Forma Effect to such Permitted Acquisition or similar Investment and
the incurrence or assumption of such Indebtedness, the Borrower shall be in
compliance with the Financial Performance Covenants on a Pro Forma Basis and (B)
(I) in the case of any such Indebtedness secured by a Lien that is junior to the
Lien securing the Obligations, the Borrowing Base shall be adjusted to the
extent required by Section 2.14(e), (II) in the case of any such Indebtedness
that is Pari Debt, the Borrower shall make any mandatory prepayment required in
connection therewith pursuant to Section 5.2(b)(iii) and (III) in the case of
any such secured Indebtedness assumed pursuant to clause (y) hereof, the holders
of such Indebtedness have no recourse to property other than the property so
acquired and the property so acquired shall not constitute Borrowing Base
Properties; provided, further that in the case of Indebtedness incurred or
assumed pursuant to clauses (x) and (y) hereof or any applicable Permitted
Refinancing Indebtedness, any such Indebtedness shall have a maturity date that
is after the Latest Maturity Date at the time such Indebtedness is incurred or
assumed and have a Weighted Average Life to Maturity not shorter than the
longest remaining Weighted Average Life to Maturity of the Facility; provided
still further, that the requirements of this Section 10.1(k) shall not apply to
any Indebtedness of the type that could have been incurred under Section
10.1(h);

 

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(l) (i) Pari Debt (including, for the avoidance of doubt, with respect to any
Permitted Refinancing Indebtedness issued or incurred to Refinance such
Indebtedness); provided that any such Indebtedness incurred pursuant to this
Section 10.1(l) (x) shall have a maturity date that is after the Latest Maturity
Date at the time such Indebtedness is secured and have a Weighted Average Life
to Maturity not shorter than the longest remaining Weighted Average Life to
Maturity of the Facility and (y) shall not include remedies or defaults which
are based on the Borrowing Base and (ii) Permitted Refinancing Indebtedness with
respect thereto;

 

(m) Indebtedness arising from Permitted Intercompany Activities to the extent
constituting an Investment permitted by Section 10.5;

 

(n) Indebtedness of a Foreign Subsidiary or of a Domestic Subsidiary that is not
a Subsidiary Guarantor; provided that the aggregate principal amount of
Indebtedness outstanding at any time pursuant to this Section 10.1(n) shall not
at the time of incurrence thereof and immediately after giving effect thereto
and the use of proceeds thereof on a Pro Forma Basis exceed the greater of (i)
$15,000,000 and (ii) 3.0% of Consolidated Total Assets (measured as of the date
of incurrence of such Indebtedness based upon internally available financial
statements); provided, further, that no Credit Party’s assets are used to secure
any such Indebtedness and no Credit Party guarantees such Indebtedness;

 

(o) Indebtedness in respect of performance bonds, bid bonds, appeal bonds,
surety bonds and completion guarantees and similar obligations, and obligations
in respect of letters of credit, bank guaranties or instruments related thereto,
in each case provided in the ordinary course of business or consistent with past
practice or industry practice, including those incurred to secure health, safety
and environmental obligations in the ordinary course of business or consistent
with past practice or industry practice;

 

(p) (i) other additional Indebtedness, provided that the aggregate principal
amount of Indebtedness outstanding at any time pursuant to this Section 10.1(p)
shall not at the time of incurrence thereof and immediately after giving effect
thereto and the use of proceeds thereof on a Pro Forma Basis exceed the greater
of $20,000,000 and 3.5% of Consolidated Total Assets (measured as of the date of
incurrence of such Indebtedness based upon the financial statements most
recently available prior to such date) and (ii) any Permitted Refinancing
Indebtedness issued or incurred to Refinance such Indebtedness;

 

(q) Indebtedness in respect of (i) Permitted Additional Debt; provided that (x)
immediately after giving effect to the incurrence or issuance thereof and the
use of proceeds therefrom, (A) the Borrower shall be in compliance with the
Financial Performance Covenants on a Pro Forma Basis, (B) no Event of Default
shall have occurred and be continuing and (C) no Borrowing Base Deficiency shall
result therefrom and (y) the Borrowing Base shall be adjusted to the extent
required by Section 2.14(e), and (ii) any Permitted Refinancing Indebtedness
issued or incurred to Refinance such Indebtedness;

 

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(r) Cash Management Obligations, Cash Management Services and other Indebtedness
in respect of netting services, automatic clearing house arrangements,
employees’ credit or purchase cards, overdraft protections and similar
arrangements;

 

(s) Indebtedness incurred in the ordinary course of business in respect of
obligations of the Borrower or any Restricted Subsidiary to pay the deferred
purchase price of goods or services or progress payments in connection with such
goods and services;

 

(t) Indebtedness arising from agreements of the Borrower or any Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations (including earn-outs), in each case assumed or entered into
in connection with the Transactions, any Permitted Acquisitions, other
Investments permitted by Section 10.5 and the Disposition of any business,
assets or Equity Interests not prohibited hereunder;

 

(u) Indebtedness of the Borrower or any Restricted Subsidiary consisting of
obligations to pay insurance premiums;

 

(v) Indebtedness representing deferred compensation to employees, consultants or
independent contractors of the Borrower or, to the extent attributable to the
ownership or operation of the Borrower and its Subsidiaries any direct or
indirect parent thereof and the Restricted Subsidiaries incurred in the ordinary
course of business or consistent with past practice or industry practice;

 

(w)   Indebtedness consisting of promissory notes issued by the Borrower or any
Guarantor to current or former officers, managers, consultants, directors and
employees (or their respective spouses, former spouses, successors, executors,
administrators, heirs, legatees or distributees) to finance the purchase or
redemption of Equity Interests of the Borrower (or any direct or indirect parent
thereof) permitted by Section 10.6;

 

(x) Indebtedness consisting of obligations of the Borrower and the Restricted
Subsidiaries under deferred compensation or other similar arrangements incurred
by such Person in connection with the Transactions, Permitted Acquisitions or
any other Investment permitted hereunder;

 

(y) Indebtedness associated with bonds or surety obligations required by
Requirements of Law or by Governmental Authorities in connection with the
operation of Oil and Gas Properties in the ordinary course of business;

 

(z) [reserved];

 

(aa)   Indebtedness of the Borrower or any Restricted Subsidiary to any joint
venture (regardless of the form of legal entity) that is not a Subsidiary
arising in the ordinary course of business in connection with the Cash
Management Services (including with respect to intercompany self-insurance
arrangements) of the Borrower and its Restricted Subsidiaries;

 

(bb) Indebtedness incurred on behalf of, or Guarantee Obligations in respect of
the Indebtedness of, joint ventures (regardless of the form of legal entity)
that are not Subsidiaries in principal amount, when aggregated with the
outstanding principal amount of Indebtedness incurred pursuant to clause (aa),
not to exceed, at the time of incurrence thereof, the greater of $10,000,000 and
2.5% of Consolidated Total Assets (measured as of the date of incurrence of such
Indebtedness based on the financial statements most recently available prior to
such date);

 

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(cc)   (i) Indebtedness in an aggregate principal amount not to exceed 100% of
the net cash proceeds received by the Borrower on or after the Closing Date from
the issuance and sale of its Equity Interests or in connection with the
contribution of cash to the capital of the Borrower (other than Disqualified
Stock, Cure Amounts and amounts that serve to increase the Applicable Equity
Amount); provided that such Indebtedness is incurred within 180 days after such
contribution to the Borrower is made; provided further that such net cash
proceeds shall not increase the Applicable Equity Amount and (ii) any Permitted
Refinancing Indebtedness in respect of any such Indebtedness;

 

(dd) Indebtedness supported by a Letter of Credit, in a principal amount not to
exceed the face amount of such Letter of Credit; and

 

(ee)   all premiums (if any), interest (including post-petition interest), fees,
expenses, charges, and additional or contingent interest on obligations
described in clauses (a) through (dd) above.

 

For purposes of determining compliance with Section 10.1, in the event that an
item of Indebtedness (or any portion thereof) at any time, whether at the time
of incurrence or issuance or upon the application of all or a portion of the
proceeds thereof or subsequently, meets the criteria of more than one of the
categories of permitted Indebtedness described in Section 10.1(a) through (ee)
above, the Borrower, in its sole discretion, will classify and may subsequently
reclassify such item of Indebtedness (or any portion thereof) in any one or more
of the types of Indebtedness described in Section 10.1(a) through (ee) and will
only be required to include the amount and type of such Indebtedness in such of
the above clauses as determined by the Borrower at such time. The Borrower will
be entitled to divide and classify an item of Indebtedness in more than one of
the types of Indebtedness described in clauses (a) through (ee) of Section 10.1
above.

 

The accrual of interest or dividends, the accretion of accreted value, the
accretion or amortization of original issue discount, and the payment of
interest or dividends in the form of additional Indebtedness of the same class,
accretion or amortization of original issue discount or liquidation preference
and increases in the amount of Indebtedness outstanding solely as a result of
fluctuations in the exchange rate of currencies, will, in each case, not be
deemed to be an incurrence of Indebtedness for purposes of this Section 10.1.
The principal amount of any Indebtedness incurred to refinance other
Indebtedness, if incurred in a different currency from the Indebtedness or
Disqualified Stock, as applicable, being refinanced, shall be calculated based
on the currency exchange rate applicable to the currencies in which such
respective Indebtedness is denominated that is in effect on the date of such
refinancing. The principal amount of any non-interest bearing Indebtedness or
other discount security constituting Indebtedness at any date shall be the
principal amount thereof that would be shown on a balance sheet of the Borrower
dated such date prepared in accordance with GAAP.

 

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10.2 Limitation on Liens. The Borrower will not, and will not permit any of the
Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any Restricted Subsidiary, whether now owned or
hereafter acquired, except:

 

(a) Liens arising under the Credit Documents to secure the Obligations
(including Liens in respect of any Letter of Credit or Letter of Credit
Application or Liens contemplated by Section 3.7) or permitted in respect of any
Mortgaged Property by the terms of the applicable Mortgage;

 

(b) Permitted Liens;

 

(c) (x) Liens (including liens arising under Capitalized Leases to secure
obligations under any Capitalized Lease) securing Indebtedness permitted
pursuant to Section 10.1(h); provided that (i) such Liens attach concurrently
with or within 365 days after the acquisition, lease, repair, replacement,
construction, expansion or improvement (as applicable) financed thereby,
(ii) other than the property financed by such Indebtedness, such Liens do not at
any time encumber any property, except for replacements thereof and accessions
and additions to such property and the proceeds and the products thereof and
customary security deposits and (iii) with respect to Capitalized Leases, such
Liens do not at any time extend to or cover any assets (except for accessions
and additions to such assets, replacements and products thereof and customary
security deposits) other than the assets subject to, or acquired, constructed,
repaired, replaced or improved with the proceeds of, such Indebtedness; provided
that in each case individual financings provided by one lender may be cross
collateralized to other financings provided by such lender (and its Affiliates)
and (y) Liens on the assets of a Restricted Subsidiary that is not a Credit
Party and which assets do not constitute Collateral securing Indebtedness of a
Restricted Subsidiary that is permitted pursuant to Section 10.1;

 

(d) Liens existing on the date hereof; provided that any Lien securing
Indebtedness in excess of $1,000,000 individually or in the aggregate
(when taken together with all other Liens securing obligations outstanding in
reliance on this clause (d) that are not listed on Schedule 10.2(d)) shall only
be permitted to the extent such Lien is listed on Schedule 10.2(d) or would
otherwise be permitted under this Section 10.2;

 

(e) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
permitted by this Section 10.2; provided, however, that (x) such new Lien shall
be limited to all or part of the same type of property that secured the original
Indebtedness (plus improvements on and accessions to such property) (or upon or
in after-acquired property (i) that is affixed or incorporated into the property
covered by such Lien or (ii) if the terms of such Indebtedness require or
include a pledge of after-acquired property (it being understood that such
requirement shall not be permitted to apply to any property to which such
requirement would not have applied but for such acquisition)), (y) the
Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of (A) the outstanding principal amount or, if greater,
committed amount of the applicable Indebtedness at the time the original Lien
became a Lien permitted hereunder, and (B) an amount necessary to pay any fees
and expenses, including premiums, related to such refinancing, refunding,
extension, renewal or replacement and (z) on the date of the incurrence of the
Indebtedness secured by such Liens, the grantors of any such Liens shall
comprise only the same Persons or a subset of such Persons that were the
grantors of the Liens securing the debt being refinanced, refunded, extended,
renewed or replaced;

 

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(f) Liens existing on the assets of any Person that becomes a Subsidiary,
or existing on assets acquired (other than Liens on the Equity Interests of any
Person that becomes a Restricted Subsidiary), pursuant to a Permitted
Acquisition or other Investment permitted by Section 10.5; provided that (1) if
the Liens on such assets secure Indebtedness, such Indebtedness is permitted
under Section 10.1(k), (2) such Liens attach at all times only to the same
assets (or upon or in after-acquired property that is (i) affixed or
incorporated into the property covered by such Lien, (ii) after-acquired
property subject to a Lien securing Indebtedness permitted under
Section 10.1(k), the terms of which Indebtedness require or include a pledge of
after-acquired property (it being understood that such requirement shall not be
permitted to apply to any property to which such requirement would not have
applied but for such acquisition) and (iii) the proceeds and products thereof)
that such Liens attached to, and to the extent such Liens secure Indebtedness,
secure only the same Indebtedness (or any Permitted Refinancing Indebtedness
incurred to Refinance such Indebtedness) that such Liens secured, immediately
prior to such Permitted Acquisition or other Investment and (3) if the Liens on
such assets secure Indebtedness and attach to any Collateral, such Liens are
Junior Liens and the representative of the holders of such Indebtedness becomes
party to the Junior Lien Intercreditor Agreement as a “Junior Representative”
(as defined in the Junior Lien Intercreditor Agreement);

 

(g) Liens on the Equity Interests of any Person and the assets of such Person,
in each case, that becomes a Restricted Subsidiary pursuant to a Permitted
Acquisition or other Investment permitted by Section 10.5, or the assets of such
a Restricted Subsidiary, in each case, to secure Indebtedness incurred pursuant
to Section 10.1(k); provided that such Liens attach at all times only to the
Equity Interests or assets of such Restricted Subsidiary and its Subsidiaries;

 

(h) Liens securing Indebtedness or other obligations (i) of the Borrower or a
Restricted Subsidiary in favor of a Credit Party and (ii) of any Restricted
Subsidiary that is not a Credit Party in favor of any Restricted Subsidiary that
is not a Credit Party;

 

(i) Liens (i) of a collecting bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection, (ii) attaching to
commodity trading accounts or other commodity brokerage accounts incurred in the
ordinary course of business and (iii) in favor of a banking institution arising
as a matter of law encumbering deposits (including the right of set-off) or
other funds maintained with a financial institution (including the right of
setoff) and that are within the general parameters customary in the banking
industry or arising pursuant to such banking institution’s general terms and
conditions;

 

(j) Liens (i) on cash advances in favor of the seller of any property to be
acquired in an Investment permitted pursuant to Section 10.5 to be applied
against the purchase price for such Investment and (ii) consisting of an
agreement to Dispose of any property in a transaction permitted under
Section 10.4, in each case, solely to the extent such Investment or Disposition,
as the case may be, would have been permitted on the date of the creation of
such Lien;

 

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(k) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale or purchase of goods entered into by the Borrower
or any of the Restricted Subsidiaries in the ordinary course of business
permitted by this Agreement;

 

(l) Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 10.5;

 

(m) Liens encumbering reasonable customary initial deposits and margin deposits
and similar Liens attaching to brokerage accounts incurred in the ordinary
course of business and not for speculative purposes;

 

(n) Liens that are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance or incurrence of Indebtedness, (ii) relating to pooled deposit or
sweep accounts of the Borrower or any Restricted Subsidiary to permit
satisfaction of overdraft or similar obligations incurred in the ordinary course
of business of the Borrower and the Restricted Subsidiaries or (iii) relating to
purchase orders and other agreements entered into with customers of the Borrower
or any Restricted Subsidiary in the ordinary course of business;

 

(o) Liens solely on any cash earnest money deposits made by the Borrower or any
of the Restricted Subsidiaries in connection with any letter of intent or
purchase agreement;

 

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

 

(q) Liens in respect of Production Payments and Reserve Sales; provided that
such Liens attach at all times only to Oil and Gas Properties from which the
Production Payments and Reserve Sales have been conveyed;

 

(r) the prior right of consignees and their lenders under consignment
arrangements entered into in the ordinary course of business;

 

(s) agreements to subordinate any interest of the Borrower or any Restricted
Subsidiary in any accounts receivable or other proceeds arising from inventory
consigned by the Borrower or any Restricted Subsidiary pursuant to an agreement
entered into in the ordinary course of business;

 

(t) [reserved];

 

(u) Liens securing any Indebtedness permitted by Sections 10.1(f) (solely and to
the same extent that the Indebtedness guaranteed by such Guarantee Obligations
is permitted to be subject to a Lien hereunder), (n) (as long as such Liens
attach only to assets of Foreign Subsidiaries and Domestic Subsidiaries that are
not Subsidiary Guarantors), (o), (q) (provided that such Liens are Junior Liens
on the Collateral and subject to the Junior Lien Intercreditor Agreement), (r)
(as long as such Liens attach only to cash and securities and securities held by
the relevant Cash Management Bank) and (y);

 

(v) Liens arising pursuant to Section 107(l) of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. § 9607(l), or other
Environmental Law, unless such Lien (i) by action of the lienholder, or by
operation of law, takes priority over any Liens arising under the Credit
Documents on the property upon which it is a Lien, or (ii) materially impairs
the use of the property covered by such Lien for the purposes for which such
property is held;

 

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(w)   Liens of not more than $15,000,000 on deposits securing Hedging
Obligations in respect of Hedge Agreements with any Persons other than Hedge
Banks that were entered into in compliance with Section 10.10;

 

(x) Liens on Equity Interests in a joint venture securing obligations of such
joint venture so long as the assets of such joint venture do not constitute
Collateral;

 

(y) Liens on cash or Permitted Investments held by a trustee under any indenture
or other debt agreement issued in escrow pursuant to customary escrow
arrangements pending the release thereof, or under any indenture or other debt
agreement pursuant to customary discharge, redemption or defeasance provisions,
in each case solely to the extent the relevant release, discharge, redemption or
defeasance would be permitted hereunder;

 

(z) additional Liens on property not constituting Borrowing Base Properties
securing obligations not in excess of $15,000,000 outstanding at any time;

 

(aa)   Junior Liens on Collateral so long as the outstanding principal amount of
the obligations secured thereby, when aggregated with the outstanding principal
amount of other obligations secured by Liens permitted under this clause (aa),
at the time of the incurrence thereof and immediately after giving effect
thereto and the use of proceeds thereof on a Pro Forma Basis, does not exceed
the greater of $20,000,000 and 1.5% of Consolidated Total Assets (measured as of
the date on which such Lien or the Indebtedness secured is incurred based upon
the financial statements most recently available prior to such date); and

 

(bb) Liens to secure Indebtedness permitted under Section 10.1(l) or, to the
extent constituting Pari Debt, Section 10.1(k); provided that the representative
of the holders of each such Indebtedness becomes party to the First Lien
Intercreditor Agreement and, if any Indebtedness is outstanding that is secured
by a Lien that is not pari passu with the Liens securing the Obligations
(including on a second priority (or other junior priority) basis), the Junior
Lien Intercreditor Agreement as a “Senior Representative” (as defined in the
Junior Lien Intercreditor Agreement).

 

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10.3 Limitation on Fundamental Changes. Except as permitted by Section 10.4
or 10.5, the Borrower will not, and will not permit any of the Restricted
Subsidiaries to, consummate any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or Dispose of, all or substantially all its business units, assets
or other properties, except that:

 

(a) any Subsidiary of the Borrower or any other Person may be merged,
amalgamated or consolidated with or into the Borrower; provided that (i) the
Borrower shall be the continuing or surviving Person (and the Borrower shall
remain an entity organized or existing under the laws of the United States, any
state thereof or the District of Columbia) or, in the case of a merger,
amalgamation or consolidation with or into the Borrower, the Person formed by or
surviving any such merger, amalgamation or consolidation shall be an entity
organized or existing under the laws of the United States, any state thereof or
the District of Columbia (the Borrower or such Person, as the case may be, being
herein referred to as the “Successor Borrower”), (ii) the Successor Borrower
(if other than the Borrower) shall expressly assume all the obligations of the
Borrower under this Agreement and the other Credit Documents pursuant to a
supplement hereto or thereto in form reasonably satisfactory to the
Administrative Agent, (iii) no Event of Default has occurred and is continuing
at the date of such merger, amalgamation or consolidation or would result from
such consummation of such merger, amalgamation or consolidation, (iv) such
merger, amalgamation or consolidation does not adversely affect the Collateral
in any material respect, (v) if such merger, amalgamation or consolidation
involves the Borrower and a Person that, prior to the consummation of such
merger, amalgamation or consolidation, is not a Subsidiary of the Borrower
(A) each Guarantor, unless it is the other party to such merger, amalgamation or
consolidation or unless the Successor Borrower is the Borrower, shall have by a
supplement to the Guarantee confirmed that its Guarantee shall apply to the
Successor Borrower’s obligations under this Agreement, (B) each Subsidiary
grantor and each Subsidiary pledgor, unless it is the other party to such
merger, amalgamation or consolidation or unless the Successor Borrower is the
Borrower, shall have by a supplement to the Credit Documents confirmed that its
obligations thereunder shall apply to the Successor Borrower’s obligations under
this Agreement, (C) if requested by the Administrative Agent, each mortgagor of
a Mortgaged Property, unless it is the other party to such merger, amalgamation
or consolidation or unless the Successor Borrower is the Borrower, shall have by
an amendment to or restatement of the applicable Mortgage confirmed that its
obligations thereunder shall apply to the Successor Borrower’s obligations under
this Agreement, (D) the Borrower shall have delivered to the Administrative
Agent an officer’s certificate stating that such merger, amalgamation or
consolidation and any supplements to the Credit Documents preserve the
enforceability of the Guarantee and the perfection and priority of the Liens
under the Security Documents and as to the matters of the nature referred to in
Section 6(c), (E) if reasonably requested by the Administrative Agent, an
opinion of counsel shall be required to be provided to the effect that such
merger, amalgamation or consolidation does not violate this Agreement or any
other Credit Document and as to such other matters regarding the Successor
Borrower and the Credit Documents as the Administrative Agent or its counsel may
reasonably request; provided, further, that if the foregoing are satisfied, the
Successor Borrower (if other than the Borrower) will succeed to, and be
substituted for, the Borrower under this Agreement and (F) such merger,
amalgamation or consolidation shall comply with all the conditions set forth in
the definition of the term “Permitted Acquisition” or is otherwise permitted
under Section 10.5; (vi) the Administrative Agent shall have received at least
five (5) days prior to the date of such merger, amalgamation or consolidation
all documentation and other information about such Subsidiary or other Person
required under applicable “know your customer” and anti-money laundering rules
and regulations, including the Patriot Act that has been requested by the
Administrative Agent; and (vii) such Subsidiary or other Person shall have
executed a customary joinder to any then-existing Customary Intercreditor
Agreement;

 

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(b) any Subsidiary of the Borrower or any other Person may be merged,
amalgamated or consolidated with or into any one or more Subsidiaries of the
Borrower; provided that (i) in the case of any merger, amalgamation or
consolidation involving one or more Restricted Subsidiaries, (A) a Restricted
Subsidiary shall be the continuing or surviving Person or (B) the Borrower shall
take all steps necessary to cause the Person formed by or surviving any such
merger, amalgamation or consolidation (if other than a Restricted Subsidiary) to
become a Restricted Subsidiary, (ii) in the case of any merger, amalgamation or
consolidation involving one or more Guarantors, unless otherwise permitted by
Section 10.5, a Guarantor shall be the continuing or surviving Person or the
Person formed by or surviving any such merger, amalgamation or consolidation (if
other than a Guarantor) shall execute a supplement to the Guarantee, the
Collateral Agreement and any applicable Mortgage, and a joinder to the
Intercompany Note and any then-existing Customary Intercreditor Agreement, in
form and substance reasonably satisfactory to the Collateral Agent in order for
the surviving Person to become a Guarantor, and pledgor, mortgagor and grantor
of Collateral for the benefit of the Secured Parties and to acknowledge and
agree to the terms of the Intercompany Note and any then-existing Customary
Intercreditor Agreement, (iii) no Default or Event of Default has occurred and
is continuing on the date of such merger, amalgamation or consolidation or would
result from the consummation of such merger, amalgamation or consolidation, (iv)
if such merger, amalgamation or consolidation involves a Subsidiary and a Person
that, prior to the consummation of such merger, amalgamation or consolidation,
is not a Restricted Subsidiary of the Borrower, (A) the Borrower shall be in
compliance with the Leverage Ratio Covenant on a Pro Forma Basis immediately
after giving effect to such merger, amalgamation or consolidation, (B) the
Borrower shall have delivered to the Administrative Agent an officer’s
certificate stating that such merger, amalgamation or consolidation and such
supplements to any Credit Document preserve the enforceability of the Guarantee
and the perfection and priority of the Liens under the Collateral Agreement and
(C) such merger, amalgamation or consolidation shall comply with all the
conditions set forth in the definition of the term “Permitted Acquisition” or is
otherwise permitted under Section 10.5; and (v) the Administrative Agent shall
have received at least five (5) days prior to the date of such merger,
amalgamation or consolidation all documentation and other information about such
Subsidiary or other Person required under applicable “know your customer” and
anti-money laundering rules and regulations, including the Patriot Act that has
been requested by the Administrative Agent or any Lender;

 

(c) any Restricted Subsidiary that is not a Guarantor may (i) merge, amalgamate
or consolidate with or into any other Restricted Subsidiary and (ii) Dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to the
Borrower, a Guarantor or any other Restricted Subsidiary of the Borrower;

 

(d) any Subsidiary Guarantor may (i) merge, amalgamate or consolidate with or
into any other Subsidiary Guarantor, (ii) merge, amalgamate or consolidate with
or into any other Subsidiary which is not a Guarantor or Dispose of any or all
of its assets (upon voluntary liquidation or otherwise) to any other Subsidiary
that is not a Guarantor so long as after giving effect to such transaction the
Collateral Coverage Minimum would be satisfied and the Borrower shall be in
compliance with Section 9.11 on a Pro Forma Basis; provided that if such
Subsidiary Guarantor is not the surviving entity, such merger, amalgamation or
consolidation shall be deemed to be, and any such Disposition shall be, an
“Investment” and subject to the limitations set forth in Section 10.5 and
(iii) Dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or any other Guarantor;

 

(e) any Restricted Subsidiary may liquidate or dissolve if (i) the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the Lenders
and (ii) to the extent such Restricted Subsidiary is a Credit Party, any assets
or business of such Restricted Subsidiary not otherwise Disposed of or
transferred in accordance with Section 10.4 or 10.5, in the case of any such
business, discontinued, shall be transferred to, or otherwise owned or conducted
by, a Credit Party after giving effect to such liquidation or dissolution;

 

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(f) the Borrower and its Restricted Subsidiaries may consummate the
Transactions;

 

(g) the Borrower and the Restricted Subsidiaries may consummate a merger,
dissolution, liquidation, amalgamation, consolidation or Disposition, the
purpose of which is to effect a Disposition permitted pursuant to Section 10.4
or an Investment permitted by Section 10.5; and

 

(h) any merger the sole purpose of which is to reincorporate or reorganize a
Credit Party in another jurisdiction in the United States shall be permitted as
long as such merger does not adversely affect the value of the Collateral in any
material respect and the surviving entity assumes all Obligations of the
applicable Credit Parties under the Credit Documents and delivers any applicable
information requested by the Administrative Agent or any Lender under applicable
“know your customer” and anti-money laundering rules and regulations, including
the Patriot Act.

 

10.4 Limitation on Sale of Assets. The Borrower will not, and will not permit
any of the Restricted Subsidiaries to, (x) convey, sell, lease, sell and
leaseback, assign, transfer (including any Production Payments and Reserve
Sales) or otherwise dispose (each of the foregoing a “Disposition”) of any of
its property, business or assets (including receivables and leasehold
interests), whether now owned or hereafter acquired or (y) sell to any Person
(other than the Borrower or a Guarantor) any shares owned by it of any
Restricted Subsidiary’s Equity Interests, except that:

 

(a) the Borrower and the Restricted Subsidiaries may Dispose of (i) inventory
and other goods held for sale, including Hydrocarbons, obsolete, worn out, used
or surplus equipment, vehicles and other assets (other than accounts receivable)
in the ordinary course of business and (ii) Permitted Investments;

 

(b) the Borrower and the Restricted Subsidiaries may Dispose of any Borrowing
Base Properties (or of any Subsidiary owning Borrowing Base Properties) for Fair
Market Value so long as no Borrowing Base Deficiency would result therefrom
(unless the net cash proceeds of such Disposition are sufficient, together with
Unrestricted Cash, to eliminate any Borrowing Base Deficiency that would result
therefrom); provided, that if the sum of (x) the Swap PV of terminated and/or
off-setting positions in respect of commodity hedge positions (whether evidenced
by a floor, put or Hedge Agreement) upon which the Lenders relied in determining
the Borrowing Base (after taking into account any other Hedge Agreement executed
(a) contemporaneously with the taking of such actions or (b) subsequent to the
last redetermination of the Borrowing Base) plus (y) the aggregate PV-9 value of
all such Borrowing Base Properties Disposed of (after giving effect to any
concurrent acquisitions of and other investments in Oil and Gas Properties by
the Borrower and its Restricted Subsidiaries with respect to which the Borrower
has delivered a Reserve Report in accordance with Section 9.14(b)), in each
case, since the later of (A) the most recent Scheduled Redetermination Date and
(B) the last adjustment of the Borrowing Base made pursuant to Section 2.14(f)
exceeds 7.5%) of the then-effective Borrowing Base, then no later than two (2)
Business Days after the date of consummation of any such Disposition, the
Borrower shall provide notice to the Administrative Agent of such Disposition
and the Borrowing Base Properties so Disposed and the Borrowing Base may be
adjusted in accordance with the provisions of Section 2.14(f);

 

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(c) the Borrower and the Restricted Subsidiaries may Dispose of property or
assets to the Borrower or to a Restricted Subsidiary; provided that if the
transferor of such property is a Credit Party (i) the transferee thereof is a
Credit Party or (ii) such transaction is permitted under Section 10.5;

 

(d) the Borrower and any Restricted Subsidiary may effect any transaction
permitted by Section 10.2, 10.3 (other than Section 10.3(g)), 10.5 (other than
Section 10.5(w)) or 10.6;

 

(e) the Borrower and the Restricted Subsidiaries may lease, sublease, license or
sublicense real, personal or intellectual property in the ordinary course of
business; provided that, with respect to intellectual property, the Borrower or
any of its Restricted Subsidiaries receives (or retains) a license or other
ownership rights to use such intellectual property;

 

(f) Dispositions (including like-kind exchanges) of property (other than
Borrowing Base Properties) to the extent that (i) such property is exchanged for
credit against the purchase price of similar replacement property or (ii) the
proceeds of such Disposition are applied to the purchase price of such
replacement property;

 

(g) Farm-Out Agreements with respect to undeveloped acreage to which no Proved
Reserves are attributable and assignments in connection with such Farm-Out
Agreements;

 

(h) Dispositions of Investments in joint ventures (regardless of the form of
legal entity) to the extent required by, or made pursuant to, customary buy/sell
arrangements between the joint venture parties set forth in joint venture
arrangements and similar binding arrangements;

 

(i) [reserved];

 

(j) transfers of property subject to a Casualty Event or in connection with any
condemnation proceeding with respect to Collateral;

 

(k) Dispositions or discounts without recourse of accounts receivable in true
sale transactions (i) in connection with the collection or compromise thereof or
(ii) to the extent the proceeds thereof are used to prepay any Loans then
outstanding;

 

(l) the unwinding or termination of any Hedge Agreement (subject to the terms of
Section 2.14(f));

 

(m) Dispositions of Oil and Gas Properties or any interest therein, or the
Equity Interests of any Restricted Subsidiary or of any Minority Investment
owning Oil and Gas Properties, that are not Borrowing Base Properties and other
assets not included in the Borrowing Base, in each case, subject to the
mandatory prepayment of the Loans pursuant to Section 5.2(b)(ii);

 

(n) any issuance or sale of Equity Interests in, or sale of Indebtedness or
other securities of, an Unrestricted Subsidiary (or a Restricted Subsidiary
which owns an Unrestricted Subsidiary so long as such Restricted Subsidiary owns
no assets other than the Equity Interests of such Unrestricted Subsidiary);

 

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(o) any swap of assets in exchange for services or assets of the same type in
the ordinary course of business of comparable or greater value or usefulness to
the business of the Borrower and its Subsidiaries as a whole, as determined in
good faith by the management of the Borrower;

 

(p) [reserved];

 

(q) Disposition of any asset between or among the Borrower and/or its Restricted
Subsidiaries as a substantially concurrent interim Disposition in connection
with a transaction permitted by Section 10.3, or in connection with an
Investment otherwise permitted pursuant to Section 10.5 or a Disposition
otherwise permitted pursuant to clauses (a) through (p) above; and

 

(r) the lapse or abandonment in the ordinary course of business of any
registrations or applications for registration of any immaterial intellectual
property rights.

 

To the extent any Collateral is Disposed of as expressly permitted by this
Section 10.4 to any Person other than a Credit Party, such Collateral shall be
sold free and clear of the Liens created by the Credit Documents, and, if
requested by the Administrative Agent, upon the certification by the Borrower
that such Disposition is permitted by this Agreement, the Administrative Agent
shall be authorized to take any actions deemed appropriate in order to effect
the foregoing at Borrower’s sole cost and expense.

 

10.5 Limitation on Investments. The Borrower will not, and will not permit any
of the Restricted Subsidiaries, to (i) purchase or acquire (including pursuant
to any merger, consolidation or amalgamation with a person that is not a Wholly
owned Subsidiary immediately prior to such merger, consolidation or
amalgamation) any Equity Interests, evidences of Indebtedness or other
securities of any other Person, (ii) make any loans or advances to or guarantees
of the Indebtedness of any other Person, or (iii) purchase or otherwise acquire
(in one transaction or a series of related transactions) (x) all or
substantially all of the property and assets or business of another Person or
(y) assets constituting a business unit, line of business or division of such
Person (each, an “Investment”), except:

 

(a) extensions of trade credit and purchases of assets and services (including
purchases of inventory, supplies and materials) in the ordinary course of
business;

 

(b) Investments in assets that constituted Permitted Investments at the time
such Investments were made;

 

(c) loans and advances to officers, directors, employees and consultants of the
Borrower (or any direct or indirect parent thereof) or any of its Restricted
Subsidiaries (i) for reasonable and customary business-related travel,
entertainment, relocation and analogous ordinary business purposes (including
employee payroll advances), (ii) in connection with such Person’s purchase of
Equity Interests of the Borrower (or any direct or indirect parent thereof;
provided that, to the extent such loans and advances are made in cash, the
amount of such loans and advances used to acquire such Equity Interests shall be
contributed to the Borrower in cash) and (iii) for purposes not described in the
foregoing subclauses (i) and (ii); provided that the aggregate principal amount
outstanding pursuant to subclause (iii) shall not exceed $5,000,000;

 

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(d) (i) Investments existing on, or made pursuant to commitments in existence
on, the Closing Date as set forth on Schedule 10.5(d), (ii) Investments existing
on the Closing Date of the Borrower or any Subsidiary in any other Subsidiary
and (iii) any extensions, modifications, replacements, renewals or reinvestments
thereof, so long as the amount of any Investment made pursuant to this clause
(d) is not increased at any time above the amount of such Investment as of the
Closing Date (other than (a) pursuant to an increase as required by the terms of
any such Investment as in existence on the Closing Date or (b) as otherwise
permitted under this Section 10.5);

 

(e) any Investment acquired by the Borrower or any of its Restricted
Subsidiaries: (i) in exchange for any other Investment, accounts receivable or
endorsements for collection or deposit held by the Borrower or any such
Restricted Subsidiary in each case in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of, or settlement of
delinquent accounts and disputes with or judgments against, the issuer of such
other Investment or accounts receivable (including any trade creditor or
customer), (ii) in satisfaction of judgments against other Persons, (iii) as a
result of a foreclosure by the Borrower or any of its Restricted Subsidiaries
with respect to any secured Investment or other transfer of title with respect
to any secured Investment in default or (iv) as a result of the settlement,
compromise or resolution of litigation, arbitration or other disputes with
Persons who are not Affiliates;

 

(f) Investments to the extent that payment for such Investments is made with
Qualified Equity Interests of the Borrower or a Parent Entity;

 

(g) Investments (i) by the Borrower in any Guarantor or by any Guarantor in the
Borrower, (ii) by any Restricted Subsidiary that is not a Guarantor in the
Borrower or any other Restricted Subsidiary; provided, that Investments by any
Restricted Subsidiary that is not a Guarantor in the Borrower or any Guarantor
shall be subordinated in right of payment to the Loans, and (iii) by the
Borrower or any Guarantor in any Restricted Subsidiary that is not a Guarantor;
provided, that the aggregate amount outstanding pursuant to this
Section 10.5(g)(iii) at the time such Investment is made, would not exceed the
sum of (A) the greater of $10,000,000 and 2.5% of Consolidated Total Assets
(measured as of the date such Investment is made based upon the financial
statements most recently available prior to such date), (B) the Applicable
Equity Amount at such time and (C) to the extent not otherwise included in the
determination of the Applicable Equity Amount, an amount equal to any
repayments, interest, returns, profits, distributions, income and similar
amounts actually received in cash in respect of any such Investment described in
this Section 10.5(g)(iii) (it being understood that to the extent any Investment
made pursuant to this Section 10.5(g)(iii) was made by using the Applicable
Equity Amount, then the amounts referred to in clause (C) shall, to the extent
of the original usage of the Applicable Equity Amount, be deemed to reconstitute
such amounts);

 

(h) Investments constituting Permitted Acquisitions;

 

(i) Investments, valued at the Fair Market Value (determined by the Borrower
acting in good faith) of such Investment at the time each such Investment is
made, in an aggregate amount outstanding pursuant to this Section 10.5(i) not to
exceed the sum of (A) the greater of (1) $20,000,000 and (2) 3.5% of
Consolidated Total Assets (measured as of the date such Investment is made based
upon the financial statements most recently available prior to such date) plus
(B) the Applicable Equity Amount at such time plus (C) to the extent not
otherwise included in the determination of the Applicable Equity Amount, an
amount equal to any repayments, interest, returns, profits, distributions,
income and similar amounts actually received in cash in respect of any such
Investment (which amount shall not exceed the amount of such Investment valued
at the Fair Market Value of such Investment at the time such Investment was
made) (it being understood that to the extent any Investment made pursuant to
this Section 10.5(i) was made by using the Applicable Equity Amount, then the
amounts referred to in the clause (C) shall, to the extent of the original usage
of the Applicable Equity Amount, as applicable, be deemed to reconstitute such
amounts);

 

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(j) Investments made at any such time during which, immediately after giving
effect to the making of any such Investment on a Pro Forma Basis, (i) no Event
of Default shall have occurred and be continuing, (ii) Liquidity is not less
than 10.0% of the then effective Borrowing Base, (iii) no Borrowing Base
Deficiency exists and (iv) the Consolidated Total Net Leverage Ratio is less
than or equal to 3.00 to 1.00;

 

(k) Investments constituting promissory notes and other non-cash proceeds of
Dispositions of assets to the extent permitted by Section 10.4 or any other
disposition of assets not constituting a Disposition;

 

(l) Investments made to repurchase or retire Equity Interests of the Borrower or
any direct or indirect parent thereof owned by the Sponsor or its Affiliates or
any employee or any stock ownership plan or key employee stock ownership plan of
the Borrower (or any direct or indirect parent thereof);

 

(m) Investments consisting of Restricted Payments permitted under Section 10.6
(other than Section 10.6(c) and Section 10.6(f)(viii));

 

(n) loans and advances to any direct or indirect parent of the Borrower in lieu
of, and not in excess of the amount of, Restricted Payments to the extent
permitted to be made to such parent in accordance with Section 10.6(b), (f) or
(i);

 

(o) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors and other credits
to suppliers in the ordinary course of business;

 

(p) Investments in the ordinary course of business consisting of endorsements
for collection or deposit and customary trade arrangements with customers
consistent with past practices or industry practice;

 

(q) advances of payroll payments to employees, consultants or independent
contractors or other advances of salaries or compensation to employees,
consultants or independent contractors, in each case in the ordinary course of
business;

 

(r) guarantee obligations of the Borrower or any Restricted Subsidiary of leases
(other than Capitalized Leases) or of other obligations that do not constitute
Indebtedness, in each case entered into in the ordinary course of business;

 

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(s) Investments held by a Person acquired (including by way of merger,
amalgamation or consolidation) after the Closing Date otherwise in accordance
with this Section 10.5 to the extent that such Investments were not made in
contemplation of or in connection with such acquisition, merger, amalgamation or
consolidation and were in existence on the date of such acquisition, merger,
amalgamation or consolidation;

 

(t) Investments in Industry Investments and in interests in additional Oil and
Gas Properties and field gathering systems, gas processing plants and pipeline
systems and any related infrastructure to any thereof related thereto or
Investments related to Farm-Out Agreements, Farm-In Agreements, joint operating,
joint venture, joint development or other area of mutual interest agreements,
other similar industry investments, gathering systems, pipelines or other
similar oil and gas exploration and production business arrangements whether
through direct ownership or ownership through a joint venture or similar
arrangement;

 

(u) to the extent constituting Investments, the Transactions;

 

(v) Investments in Hedge Agreements permitted by each of Section 10.1 and
Section 10.10;

 

(w) Investments (excluding loans and advances made in lieu of Restricted
Payments pursuant to and limited by Section 10.5(n) above) consisting of
Indebtedness, fundamental changes, Dispositions and payments permitted under
Sections 10.1 (other than Sections 10.1(d)(iii) and (g)(ii)), 10.3 (other than
Sections 10.3(a), (c) and (g)), 10.4 (other than Section 10.4(d)) and 10.7;

 

(x) in the case of the Borrower and its Restricted Subsidiaries, Investments
consisting of intercompany Indebtedness having a term not exceeding 364 days
(inclusive of any roll over or extension of terms) and made in the ordinary
course of business; provided that, in the case of any such Indebtedness owing by
the Borrower or a Guarantor to a Restricted Subsidiary that is not a Guarantor,
such Indebtedness shall, to the extent permitted by Requirements of Law and not
giving rise to material adverse tax consequences, be subordinated to the
Obligations pursuant to the Intercompany Note; provided further that in the case
of any such Indebtedness owing by a Restricted Subsidiary that is not a
Guarantor to the Borrower or a Guarantor, such Indebtedness shall be evidenced
by the Intercompany Note pledged in favor of the Collateral Agent for the
benefit of the Secured Parties pursuant to the Collateral Agreement;

 

(y) Investments resulting from pledges and deposits under clauses (d) and (e) of
the definition of “Permitted Liens” and clauses (j), (o), (w) and (y) of Section
10.2;

 

(z) advances in the form of a prepayment of expenses, so long as such expenses
are being paid in accordance with customary trade terms of the Borrower or the
relevant Restricted Subsidiary;

 

(aa)   Investments consisting of licensing of intellectual property pursuant to
joint marketing arrangements with other Persons in the ordinary course of
business;

 

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(bb) Investments made in the ordinary course of business in connection with
obtaining, maintaining or renewing client contacts and loans or advances made to
distributors in the ordinary course of business;

 

(cc)   Investments made by any Restricted Subsidiary that is not a Credit Party
to the extent that such Investments are financed with the proceeds received by
such Restricted Subsidiary from an Investment in such Restricted Subsidiary
permitted by this Agreement;

 

(dd) Investments consisting of the contribution of Equity Interests of any
Foreign Subsidiary or FSHCO to any other Foreign Subsidiary or FSHCO;

 

(ee)   Investments in Unrestricted Subsidiaries having an aggregate fair market
value, taken together with all other Investments made pursuant to this Section
10.2(ee) that are at the time outstanding, without giving effect to the sale of
an Unrestricted Subsidiary to the extent the proceeds of such sale do not
consist of marketable securities (until such proceeds are converted to cash
equivalents) not to exceed the greater of (1) $10,000,000 and (2) 2.0% of
Consolidated Total Assets at the time of such Investment (with the fair market
value of each Investment being measured at the time made and without giving
effect to subsequent changes in value); and

 

(ff)   any Investment constituting a Disposition or transfer of any asset
between or among the Borrower and/or its Restricted Subsidiaries as a
substantially concurrent interim Disposition or transfer in connection with an
Investment otherwise permitted pursuant to clauses (a) through (ee) above or in
connection with a transaction permitted by Section 10.3 or in connection with a
Disposition permitted pursuant to Section 10.4.

 

10.6 Limitation on Restricted Payments. The Borrower will not directly or
indirectly pay any dividend or make any other distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, with respect to any of its Equity Interests (other than dividends and
distributions on Equity Interests payable solely by the issuance of additional
Qualified Equity Interests) or redeem, purchase, retire or otherwise acquire for
value any of its Equity Interests or the Equity Interests of any Parent Entity
(other than through the issuance of additional Qualified Equity Interests), or
permit any Restricted Subsidiary to purchase or otherwise acquire for
consideration (except in connection with an Investment permitted under Section
10.5) any Equity Interests of the Borrower or any Parent Entity, now or
hereafter outstanding (all of the foregoing, “Restricted Payments”); except
that:

 

(a) the Borrower may (or may pay Restricted Payments to permit any Parent Entity
thereof to) redeem in whole or in part any of its or a Parent Entity’s Equity
Interests in exchange for another class of its (or such parent’s) Equity
Interests or with proceeds from substantially concurrent equity contributions or
issuances of new Equity Interests; provided that such new Equity Interests
contain terms and provisions at least as advantageous to the Lenders in all
material respects to their interests as those contained in the Equity Interests
redeemed thereby, and the Borrower may pay Restricted Payments to any Parent
Entity payable solely in the Equity Interests (other than Disqualified Stock not
otherwise permitted by Section 10.1) of the Borrower;

 

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(b) the Borrower may (or may make Restricted Payments to permit any Parent
Entity thereof to) redeem, acquire, retire or repurchase shares of its (or such
Parent Entity’s) Equity Interests held by any future, present or former officer,
manager, consultant, director or employee (or their respective Affiliates,
estates, spouses, former spouses, successors, executors, administrators, heirs,
legatees, distributees or immediate family members) of the Borrower and its
Subsidiaries or any Parent Entity thereof, in connection with the death,
disability, retirement or termination of employment of any such Person or
otherwise in accordance with any equity option or equity appreciation rights
plan, any management, director and/or employee equity ownership, benefit or
incentive plan or agreement, equity subscription plan, employment termination
agreement or any other employment agreements or equity holders’ agreement;
provided that the aggregate amount of Restricted Payments made under this
clause (b) shall not exceed (A) $10,000,000 in any calendar year (with unused
amounts in any calendar year being carried over to succeeding calendar years
subject to a maximum of $20,000,000 in any calendar year), plus (B) all net cash
proceeds obtained by or contributed to the Borrower during such calendar year
from the sales of Equity Interests to other future, present or former officers,
consultants, employees, directors and managers in connection with any permitted
compensation and incentive arrangements plus (C) all net cash proceeds obtained
from any key-man life insurance policies received during such calendar year plus
(D) the amount of any cash bonuses otherwise payable to members of management,
directors or consultants of any Parent Entity, the Borrower or its Subsidiaries
in connection with the Transactions that are foregone in return for the receipt
of Equity Interests; notwithstanding the foregoing, the Borrower may elect to
apply all or any portion of the aggregate increase contemplated by clauses (B),
(C) and (D) above in any calendar year and provided, further, that cancellation
of Indebtedness owing to the Borrower or any of its Restricted Subsidiaries from
any future, present or former employees, directors, officers, members of
management or consultants (or their respective Controlled Investment Affiliates
or Immediate Family Members), of the Borrower, any Restricted Subsidiary, any
direct or indirect parent company of the Borrower or any of the Borrower’s
Restricted Subsidiaries in connection with a repurchase of Equity Interests of
the Borrower or any of its direct or indirect parent companies will not be
deemed to constitute a Restricted Payment for purposes of this covenant or any
other provision of this Agreement;

 

(c) to the extent constituting Restricted Payments, the Borrower may make
Investments permitted by Section 10.5 (other than Sections 10.5(l), 10.5(m), (n)
and (w));

 

(d) to the extent constituting Restricted Payments, the Borrower may consummate
transactions expressly permitted by Section 10.3;

 

(e) the Borrower may repurchase Equity Interests of the Borrower (or any Parent
Entity thereof) upon exercise of stock options or warrants if such Equity
Interests represents all or a portion of the exercise price of such options or
warrants;

 

(f) the Borrower may:

 

(i) with respect to any taxable period (x) for which the Borrower and/or any of
its Subsidiaries are members of a consolidated, combined, affiliated, unitary or
similar income tax group for U.S. federal and/or applicable state or local
income Tax purposes of which any Parent Entity is the common parent, or (y) for
which the Borrower is a partnership or disregarded entity for U.S. federal
income tax purposes that is wholly owned (directly or indirectly) by a Parent
Entity that is classified as a C corporation for U.S. federal and/or applicable
state or local income Tax purposes, make and pay Restricted Payments the
proceeds of which will be used to pay (or to make Restricted Payments to allow
any Parent Entity to pay) any U.S. federal, state and/or local income Taxes in
an amount not to exceed the amount of such Taxes that the Borrower and/or its
Subsidiaries, as applicable, would have paid for such taxable period had the
Borrower and/or its Subsidiaries, as applicable, been a stand-alone corporate
taxpayer or a stand-alone corporate group; provided that distributions pursuant
to this clause (i) in respect of an Unrestricted Subsidiary shall be permitted
only to the extent that cash distributions were made by such Unrestricted
Subsidiary to the Borrower or any of its Restricted Subsidiaries for such
purpose;

 

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(ii) without duplication of any amounts distributed under clause (i) above and
with respect to any taxable period ending after the Closing Date for which the
Borrower is a partnership or disregarded entity for U.S. federal income Tax
purposes (other than a partnership or disregarded entity described in
clause (i)(y) above), make and pay Restricted Payments to any direct or indirect
owners in amounts necessary to permit each such owner to pay its U.S. federal,
state and/or local income Taxes (including any estimated Taxes payable) (as
applicable) attributable to its direct or indirect ownership of the Borrower and
its subsidiaries with respect to such taxable period in an aggregate amount not
to exceed the total U.S. federal net taxable income allocated to the direct or
indirect owners for such taxable period (ignoring (A) any special basis
adjustment under Section 743 of the Code with respect to any such owner and (B)
any income, gain, loss or deduction under Section 704(c) of the Code with
respect to any such owner), multiplied by 50 percent;

 

(iii) the proceeds of which shall be used to allow any Parent Entity to pay its
operating costs and expenses incurred in the ordinary course of business and
other corporate overhead costs and expenses (including administrative, legal,
accounting and other professional costs and expenses) to the extent attributable
to the ownership or operation of the Borrower and its Subsidiaries;

 

(iv) the proceeds of which shall be used by such Parent Entities to pay
Restricted Payments contemplated by Section 10.6(b);

 

(v) the proceeds of which shall be used to make Restricted Payments to allow any
Parent Entity to pay fees and expenses related to any equity issuance or
offering or debt issuance, incurrence or offering, Disposition or acquisition or
investment transaction not relating to any other portfolio company of any Parent
Entity permitted by this Agreement, whether or not consummated;

 

(vi) the proceeds of which shall be used to pay fees and expenses (including
real and personal property Taxes, and franchise, excise or similar taxes)
required to maintain its corporate existence or good standing under applicable
law, customary salary, bonus and other benefits payable to, and indemnities
provided on behalf of, officers, employees and consultants of any Parent Entity,
and any payroll, social security or similar taxes thereof, to the extent such
fees, expenses, salaries, bonuses, other benefits and indemnities are
attributable to the ownership or operation of the Borrower and the Restricted
Subsidiaries;

 

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(vii) in the form of Equity Interests of the Borrower (other than Disqualified
Stock not otherwise permitted by Section 10.1); and

 

(viii)    to finance Permitted Acquisitions and other Investments or other
acquisitions in each case otherwise permitted to be made under Section 10.5
if made by the Borrower; provided, that (A) such Restricted Payment shall be
made substantially concurrently with the closing of such Investment or other
acquisition, (B) such direct or indirect parent company shall, promptly
following the closing thereof, cause (1) all property acquired (whether assets
or Equity Interests) to be contributed to the capital of the Borrower or one or
more of its Restricted Subsidiaries or (2) the merger, amalgamation,
consolidation, or sale of the Person formed or acquired into the Borrower or one
of its Restricted Subsidiaries (to the extent not prohibited by Section 10.3) in
order to consummate such Investment or other acquisition, (C) such direct or
indirect parent company and its Affiliates (other than the Borrower or a
Restricted Subsidiary) receives no consideration or other payment in connection
with such transaction except to the extent the Borrower or a Restricted
Subsidiary could have given such consideration or made such payment in
compliance herewith, (D) any property received by the Borrower shall not
increase the Applicable Equity Amount and (E) to the extent constituting an
Investment, such Investment shall be deemed to be made by Borrower or such
Restricted Subsidiary pursuant to Section 10.5 for the purposes of calculating
compliance with the baskets thereunder;

 

(g) the Borrower or any of the Restricted Subsidiaries may (i) pay cash in lieu
of fractional shares in connection with any dividend, split or combination
thereof or any Permitted Acquisition or other Investment permitted under Section
10.5 and (ii) so long as, immediately after giving effect thereto on a Pro Forma
Basis, (A) no Default or Event of Default shall have occurred and be continuing
and (B) no Borrowing Base Deficiency exists, honor any conversion request by a
holder of convertible Indebtedness and make cash payments in lieu of fractional
shares in connection with any such conversion and may make payments on
convertible Indebtedness in accordance with its terms;

 

(h) the Borrower may pay any dividends or distributions within sixty (60) days
after the date of declaration thereof, if at the date of declaration such
payment would have complied with the other clauses of this Section 10.6;

 

(i) so long as, immediately after giving effect thereto on a Pro Forma Basis,
(i) no Event of Default shall have occurred and be continuing, (ii) Liquidity is
not less than ten percent (10.0%) of the then effective Borrowing Base, (iii) no
Borrowing Base Deficiency exists and (iv) the Consolidated Total Net Leverage
Ratio is less than or equal to 3.00 to 1.00, the Borrower may declare and pay
additional Restricted Payments without limit in cash or otherwise to the holders
of its or any Parent Entity’s Equity Interests; provided, that, in the case of
any Restricted Payment in the form of assets other than cash, no such Restricted
Payment shall be made if a Borrowing Base Deficiency would result from an
adjustment to the Borrowing Base resulting from such Restricted Payment (unless
the Borrower shall have cash on hand sufficient to eliminate any such potential
Borrowing Base Deficiency and shall, in accordance with the terms hereof,
promptly cure such Borrowing Base Deficiency);

 

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(j) the Borrower may consummate the Transactions (and pay fees and expenses in
connection therewith on or following the Closing Date), and make payments
described in Section 9.9(a), (f), (g), (h), (j) and (l) (subject to the
conditions set out therein);

 

(k) payments made or expected to be made by the Borrower or any of the
Restricted Subsidiaries in respect of required withholding or similar non-U.S.
Taxes with respect to any future, present or former employee, director, manager
or consultant and any repurchases of Equity Interests in consideration of such
payments including deemed repurchases in connection with the exercise of stock
options;

 

(l) payments and distributions to dissenting stockholders pursuant to applicable
law, pursuant to or in connection with a consolidation, merger, amalgamation or
transfer of all or substantially all of the assets of the Borrower and its
Restricted Subsidiaries taken as a whole that complies with the terms of this
Agreement;

 

(m) so long as no Event of Default shall have occurred and be continuing or
would result therefrom, the Borrower may declare and pay Restricted Payments in
an aggregate amount not to exceed the Applicable Equity Amount at the time such
Restricted Payment is paid;

 

(n) the distribution, by dividend or otherwise, of Equity Interests of, or
Indebtedness owed to the Borrower or a Restricted Subsidiary by, an Unrestricted
Subsidiary (or a Restricted Subsidiary that owns an Unrestricted Subsidiary);
provided that such Restricted Subsidiary owns no assets other than Equity
Interests of an Unrestricted Subsidiary (other than Unrestricted Subsidiaries
the primary assets of which are cash and/or Permitted Investments); and

 

(o) [reserved]; and

 

(p) to pay interest and/or principal (including AHYDO “catch-up payments”) on
Indebtedness the proceeds of which have been contributed to the Borrower or any
Restricted Subsidiary in cash as common equity (or other equity reasonably
acceptable to the Administrative Agent); provided that (i) the principal amount
of such Indebtedness shall increase Consolidated Total Debt on a
dollar-for-dollar basis, (ii) all interest expense relating to such Indebtedness
shall (x) reduce Consolidated Net Income and (y) increase Consolidated Interest
Expense, in each case on a dollar-for-dollar basis, and (iii) such contribution
of equity shall be disregarded for all purposes hereunder.

 

10.7 Limitations on Debt Payments and Amendments.

 

(a) The Borrower will not, and will not permit any Restricted Subsidiary to,
prepay, repurchase or redeem or otherwise defease prior to its scheduled
maturity any Indebtedness for borrowed money that is expressly subordinated in
right of payment to or payment priority or is secured by a Lien that is junior
to the Liens securing the Obligations (or any Permitted Refinancing Indebtedness
in respect thereof to the extent constituting Junior Debt) (such other
Indebtedness or any Permitted Refinancing Indebtedness in respect thereof,
“Junior Debt”) (for the avoidance of doubt, it being understood that payments of
regularly-scheduled cash interest in respect of Junior Debt and any AHYDO
payments shall be permitted unless expressly prohibited by the terms of the
documents governing such subordination); provided, however, that the Borrower or
any Restricted Subsidiary may prepay, repurchase, redeem or defease prior to its
scheduled maturity any Junior Debt (i) in exchange for or with the proceeds of
any Permitted Refinancing Indebtedness, (ii) by converting or exchanging any
Junior Debt to Qualified Equity Interests of any Parent Entity, (iii) so long
as, immediately after giving effect thereto on a Pro Forma Basis, (A) no Event
of Default has occurred and is continuing, (B) Liquidity is not less than 10.0%
of the then effective Borrowing Base, (C) no Borrowing Base Deficiency exists
and (D) the Consolidated Total Net Leverage Ratio is less than or equal to 3.00
to 1.00, (iv) so long as no Event of Default shall have occurred and be
continuing or would result therefrom, in an aggregate amount not to exceed the
Applicable Equity Amount or (v) owed to the Borrower or any Restricted
Subsidiary to the extent not prohibited by the subordination provisions
contained in the Intercompany Note; provided, further, that, after giving effect
to any adjustment of the Borrowing Base made pursuant to Section 2.14(f) and any
repayment of the Loans required in connection therewith, the Borrower or any
Restricted Subsidiary may make mandatory prepayments in respect of any Junior
Debt with the proceeds of the disposition of any assets that have been pledged
to secure such Junior Debt;

 

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(b) The Borrower will not, without the consent of the Administrative Agent
(which consent shall not be unreasonably withheld, conditioned or delayed),
amend or modify the terms of any Junior Debt, other than amendments or
modifications that (A) would not be materially adverse to the Lenders, taken as
a whole (as determined in good faith by the Borrower), (B) otherwise comply with
the definition of “Permitted Refinancing Indebtedness” that may be incurred to
Refinance any such Indebtedness, (C) would have the effect of converting any
Junior Debt to Qualified Equity Interests of a Parent Entity or (D) to the
extent such amendment or modification would not have been prohibited under this
Agreement at the time such Permitted Refinancing Indebtedness, Junior Debt or
documentation was first issued, incurred or entered into, as applicable; and

 

(c) Notwithstanding the foregoing and for the avoidance of doubt, nothing in
this Section 10.7 shall prohibit (i) the repayment or prepayment of intercompany
subordinated Indebtedness owed among the Borrower and/or the Restricted
Subsidiaries, in either case, unless an Event of Default pursuant to Section
11.1 or 11.5 has occurred and is continuing and the Borrower has received a
notice from the Collateral Agent instructing it not to make or permit the
Borrower and/or the Restricted Subsidiaries to make any such repayment or
prepayment, or (ii) substantially concurrent transfers of credit positions in
connection with intercompany debt restructurings so long as such Indebtedness is
permitted by Section 10.1 after giving effect to such transfer.

 

(d) The Borrower will not, and will not permit any Restricted Subsidiary to,
prepay, repurchase or redeem or otherwise defease prior to its scheduled
maturity any Pari Debt (for the avoidance of doubt, it being understood that
payments of regularly-scheduled cash interest and amortization of principal in
respect of Pari Debt shall be permitted hereunder unless prohibited by the First
Lien Intercreditor Agreement) other than in connection with any Permitted
Refinancing Indebtedness incurred in respect thereof; provided, however, that
the Borrower or any Restricted Subsidiary may prepay, repurchase, redeem or
defease prior to its scheduled maturity any Pari Debt so long as, immediately
after giving effect thereto on a Pro Forma Basis, (A) no Event of Default has
occurred and is continuing and (B) no Borrowing Base Deficiency exists.

 

10.8 Negative Pledge Agreements. The Borrower will not, and will not permit any
of the Guarantors to, enter into or permit to exist any Contractual Requirement
(other than this Agreement or any other Credit Document) that limits the ability
of the Borrower or any Guarantor to create, incur, assume or suffer to exist
Liens on property of such Person for the benefit of the Secured Parties with
respect to the Obligations or under the Credit Documents; provided that the
foregoing shall not apply to each of the following Contractual Requirements
that:

 

(a) (i) exist on the Closing Date and (to the extent not otherwise permitted by
this Section 10.8) are listed on Schedule 10.8 and (ii) to the extent
Contractual Requirements permitted by subclause (i) are set forth in an
agreement evidencing Indebtedness or other obligations, are set forth in any
agreement evidencing any Permitted Refinancing Indebtedness incurred to
Refinance such Indebtedness or obligation so long as such Permitted Refinancing
Indebtedness does not expand the scope of such Contractual Requirement;

 

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(b) are binding on a Restricted Subsidiary at the time such Restricted
Subsidiary first becomes a Restricted Subsidiary of the Borrower, so long as
such Contractual Requirements were not entered into solely in contemplation of
such Person becoming a Restricted Subsidiary of the Borrower;

 

(c) represent Indebtedness permitted under Section 10.1 of a Restricted
Subsidiary of the Borrower that is not a Guarantor so long as such Contractual
Requirement applies only to such Subsidiary and its Subsidiaries;

 

(d) arise pursuant to agreements entered into with respect to any sale,
transfer, lease or other Disposition permitted by Section 10.4 and applicable
solely to assets under such sale, transfer, lease or other Disposition;

 

(e) are customary provisions in joint venture agreements and other similar
agreements permitted by Section 10.5 and applicable to joint ventures or
otherwise arise in agreements which restrict the Disposition or distribution of
assets or property subject to oil and gas leases, joint operating agreements,
joint exploration and/or development agreements, participation agreements and
other similar agreements entered into in the ordinary course of the oil and gas
exploration and development business and customary provisions in any Agreement
of the type described in the definition of “Industry Investments” entered into
in the ordinary course of business;

 

(f) are customary restrictions on leases, subleases, licenses or asset sale
agreements otherwise permitted hereby so long as such restrictions relate to the
assets subject thereto;

 

(g) are customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of the Borrower or any Restricted Subsidiary;

 

(h) are customary provisions restricting assignment of any agreement entered
into in the ordinary course of business;

 

(i) restrict the use of cash or other deposits imposed by customers under
contracts entered into in the ordinary course of business;

 

(j) [reserved];

 

(k) exist under any documentation governing any Permitted Refinancing
Indebtedness incurred to Refinance any Indebtedness but only to the extent such
Contractual Requirement is not materially more restrictive, taken as a whole,
than the Contractual Requirement in the Indebtedness being refinanced;

 

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(l) customary net worth provisions contained in real property leases entered
into by any Restricted Subsidiary of the Borrower, so long as the Borrower has
determined in good faith that such net worth provisions would not reasonably be
expected to impair the ability of the Borrower and the Restricted Subsidiaries
to meet their ongoing obligation;

 

(m) are included in any agreement relating to any Lien, so long as (i) such Lien
is permitted under Section 10.2(b), (c), (f) or, so long as such Lien does not
attach to Collateral, (g) and such restrictions or conditions relate only to the
specific asset subject to such Lien and (ii) such restrictions and conditions
are not created for the purpose of avoiding the restrictions imposed by this
Section 10.8;

 

(n) are restrictions imposed by any agreement relating to Indebtedness incurred
pursuant to Section 10.1 or Permitted Refinancing Indebtedness in respect
thereof, to the extent such restrictions are not materially more restrictive,
taken as a whole, than the restrictions contained in the Credit Documents as
determined by the Borrower in good faith;

 

(o) are restrictions regarding licenses or sublicenses by the Borrower and the
Restricted Subsidiaries of intellectual property in the ordinary course of
business (in which case such restriction shall relate only to such intellectual
property);

 

(p) [reserved];

 

(q) arise in connection with cash or other deposits permitted under
Sections 10.2 and 10.5 and limited to such cash or deposit; and

 

(r) are encumbrances or restrictions imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in
clauses (a) through (q) above; provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Borrower’s board of
directors, no more restrictive in any material respect with respect to such
encumbrance and other restrictions taken as a whole than those prior to such
amendment, modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.

 

10.9 Limitation on Subsidiary Distributions. The Borrower will not, and will not
permit any of its Restricted Subsidiaries that are not Guarantors to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or consensual restriction on the ability of any such
Restricted Subsidiary to pay dividends or make any other distributions to the
Borrower or any Restricted Subsidiary on its Equity Interests or with respect to
any other interest or participation in, or measured by, its profits or transfer
any property to the Borrower or any Restricted Subsidiary except (in each case)
for such encumbrances or restrictions existing under or by reason of:

 

(a) contractual encumbrances or restrictions in effect on the Closing Date,
including pursuant to the Credit Documents and any Hedging Obligations in effect
on the Closing Date;

 

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(b) [reserved];

 

(c) purchase money obligations for property acquired in the ordinary course of
business and obligations under any Capitalized Lease that impose restrictions on
transferring the property so acquired;

 

(d) [reserved];

 

(e) any agreement or other instrument of a Person acquired by or merged or
consolidated with or into the Borrower or any Restricted Subsidiary, or of an
Unrestricted Subsidiary that is designated a Restricted Subsidiary, or that is
assumed in connection with the acquisition of assets from such Person, in each
case that is in existence at the time of such transaction (but not created in
contemplation thereof), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person and
its Subsidiaries, or the property or assets of the Person and its Subsidiaries,
so acquired or designated;

 

(f) [reserved];

 

(g) secured Indebtedness otherwise permitted to be incurred pursuant to
Section 10.1(p) and (q) as it relates to the right of the debtor to dispose of
the assets securing such Indebtedness;

 

(h) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business;

 

(i) other Indebtedness of Borrower and its Restricted Subsidiaries permitted to
be incurred subsequent to the Closing Date pursuant to Sections 10.1(k), (l),
(p) and (q) so long as either (A) the provisions relating to such encumbrance or
restriction contained in such Indebtedness are no less favorable to the
Borrower, taken as a whole, as determined by the board of directors of the
Borrower in good faith, than the provisions contained in this Agreement as in
effect on the Closing Date or (B) any such encumbrance or restriction contained
in such Indebtedness does not prohibit (except upon a default or an event of
default thereunder) the payment of dividends in an amount sufficient, as
determined by the board of directors of the Borrower in good faith, to impair
the ability of the Borrower to make scheduled payments of cash interest on the
Loans when due;

 

(j) customary provisions in joint venture agreements or agreements governing
property held with a common owner and other similar agreements or arrangements
relating solely to such joint venture or property or are otherwise customary
encumbrances or restrictions imposed pursuant to any agreement of the type
described in the definition of “Industry Investments” entered into in the
ordinary course of business;

 

(k) customary provisions contained in leases, sub-leases, licenses, sub-licenses
or similar agreements, in each case, entered into in the ordinary course of
business;

 

(l) any agreements entered into with respect to any sale, transfer, lease or
other Disposition permitted by Section 10.4 and applicable solely to assets
under such sale, transfer, lease or other Disposition; and

 

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(m) any encumbrances or restrictions imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in
clauses (a) through (l) above; provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Borrower’s board of
directors, no more restrictive in any material respect with respect to such
encumbrance and other restrictions taken as a whole than those prior to such
amendment, modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.

 

10.10  Hedge Agreements. The Borrower will not, and will not permit any
Restricted Subsidiary to, enter into any Hedge Agreements with any Person other
than:

 

(a) Hedge Agreements in respect of Hydrocarbons entered into not for speculative
purposes the net notional volumes for which (when aggregated with other
commodity Hedge Agreements then in effect, other than puts, floors and basis
differential swaps on volumes already hedged pursuant to other Hedge Agreements)
do not exceed, as of the date the latest hedging transaction is entered into
under a Hedge Agreement, 85% of the reasonably anticipated Hydrocarbon
production from the Credit Parties’ total Proved Reserves (as forecast based
upon the Initial Reserve Report or the most recent Reserve Report delivered
pursuant to Section 9.14(a), as applicable) for the sixty (60) month period from
the date of creation of such hedging arrangement (the “Ongoing Hedges”). In
addition to the Ongoing Hedges, in connection with a proposed or pending
acquisition of Oil and Gas Properties (a “Proposed Acquisition”), the Credit
Parties may also enter into incremental hedging contracts with respect to the
Credit Parties’ reasonably anticipated projected production from the total
Proved Reserves of the Borrower and its Restricted Subsidiaries as forecast
based upon the most recent Reserve Report having notional volumes not in excess
of 15% of the Credit Parties’ existing projected production prior to the
consummation of such Proposed Acquisition (such that the aggregate shall not be
more than 100% of the reasonably anticipated projected production prior to the
consummation of such Proposed Acquisition) for a period not exceeding thirty-six
(36) months from the date such hedging arrangement is created during the period
between (i) the date on which such Credit Party signs a definitive acquisition
agreement in connection with a Proposed Acquisition and (ii) the earliest of
(A) the date of consummation of such Proposed Acquisition, (B) the date of
termination of such Proposed Acquisition and (C) ninety (90) days after the date
of execution of such definitive acquisition agreement (or such longer period as
the Administrative Agent may agree in its reasonable discretion). However, all
such incremental hedging contracts entered into with respect to a Proposed
Acquisition must be terminated or unwound within ninety (90) days following the
date of termination of such Proposed Acquisition. It is understood that
commodity Hedge Agreements which may, from time to time, “hedge” the same
volumes of commodity risk but different elements of commodity risk thereof,
including where one or more such Hedge Agreements partially offset one or more
other such Hedge Agreements, shall not be aggregated together when calculating
the foregoing limitations on notional volumes.

 

(b) Other Hedge Agreements (other than any Hedge Agreements in respect of 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) entered into not for speculative purposes.

 

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(c) It is understood that for purposes of this Section 10.10, the following
Hedge Agreements shall be deemed not to be speculative or entered into for
speculative purposes: (i) any commodity Hedge Agreement intended, at inception
of execution, to hedge or manage any of the risks related to existing and or
forecasted Hydrocarbon production of the Borrower or its Restricted Subsidiaries
(whether or not contracted) and (ii) any Hedge Agreement intended, at inception
of execution, (A) to hedge or manage the interest rate exposure associated with
any debt securities, debt facilities or leases (existing or forecasted) of the
Borrower or its Restricted Subsidiaries, (B) for foreign exchange or currency
exchange management, (C) to manage commodity portfolio exposure associated with
changes in interest rates or (D) to hedge any exposure that the Borrower or its
Restricted Subsidiaries may have to counterparties under other Hedge Agreements
such that the combination of such Hedge Agreements is not speculative taken as a
whole.

 

(d) For purposes of entering into or maintaining Ongoing Hedges under
Section 10.10(a), forecasts of reasonably projected Hydrocarbon production
volumes and reasonably anticipated Hydrocarbon production from the Credit
Parties’ total Proved Reserves based upon the Initial Reserve Report or the most
recent Reserve Report delivered pursuant to Section 9.14(a), as applicable,
shall be revised to account for any increase or decrease therein anticipated
because of information obtained by Borrower or any other Credit Party subsequent
to the publication of such Reserve Report including the Borrower’s or any other
Credit Party’s internal forecasts of production decline rates for existing wells
and additions to or deletions from anticipated future production from new wells
and acquisitions coming on stream or failing to come on stream.

 

10.11  Financial Covenants.

 

(a) Consolidated Total Net Leverage Ratio. The Borrower will not permit the
Consolidated Total Net Leverage Ratio as of the last day of the Test Period
ending on December 31, 2018 and as of the last day of any Test Period ending
thereafter to be greater than 4.00 to 1.00.

 

(b) Current Ratio. The Borrower will not permit the Current Ratio as of the last
day of the fiscal quarter ending on or after December 31, 2018 to be less than
1.00 to 1.00.

 

10.12  Accounting Changes. The Borrower shall not make any change in its fiscal
year; provided, however, that the Borrower may, upon written notice to the
Administrative Agent, change its fiscal year to any other fiscal year 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 to reflect such change in
fiscal year.

 

10.13  Foreign Operations. From and after the date hereof, the Borrower shall
not, and shall not permit any Restricted Subsidiary to, acquire or make any
other expenditures (whether such expenditure is capital, operating or otherwise)
in or related to any Oil and Gas Properties not located within the geographical
boundaries of the United States or form or acquire any Foreign Subsidiary.

 

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SECTION 11.    Events of Default

 

Upon the occurrence and during the continuation of any of the following
specified events (each an “Event of Default”):

 

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 five
or more 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).

 

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.

 

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), 9.5 (solely with respect to the
Borrower), 9.9, 9.15 or Section 10; 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 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.

 

11.4 Default Under Other Agreements.

 

(a) The Borrower or any of the Restricted Subsidiaries shall (i) 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 or
(ii) default in the observance or performance of any agreement or condition
relating to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist (other than (1) with respect to indebtedness in respect of any
Hedge Agreements, termination events or equivalent events pursuant to the terms
of such Hedge Agreements, (2) any event requiring prepayment pursuant to
customary asset sale or change of control provisions and (3) secured
Indebtedness that becomes due as a result of a Disposition (including as a
result of 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 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, 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, or

 

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(b) Without limiting the provisions of clause (a) above, any such default under
any such Material Indebtedness shall cause such Material Indebtedness to be
declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment or as a mandatory prepayment (and (i)
with respect to Indebtedness consisting of any Hedge Agreements, other than due
to a termination event or equivalent event pursuant to the terms of such Hedge
Agreements, (ii) other than pursuant to customary asset sale or change of
control provisions and (iii) other than secured Indebtedness that becomes due as
a result of a Disposition (including as a result of Casualty Event) of the
property or assets securing such Indebtedness permitted under this Agreement)
prior to the stated maturity thereof.

 

11.5 Bankruptcy, Etc. The Borrower or any Restricted Subsidiary shall commence a
voluntary case, proceeding or action concerning itself under (a) Title 11 of the
United States Code entitled “Bankruptcy” or any other applicable insolvency,
debtor relief, or debt adjustment law; or (b) in the case of any Foreign
Subsidiary that is a Restricted Subsidiary, any domestic or foreign law relating
to bankruptcy, judicial management, insolvency, reorganization, administration
or relief of debtors in effect in its jurisdiction of incorporation, in each
case as now or hereafter in effect, or any successor thereto (collectively, the
“Bankruptcy Code”); or an involuntary case, proceeding or action is commenced
against the Borrower or any Restricted Subsidiary and the petition is not
dismissed or stayed within sixty (60) days after commencement of the case,
proceeding or action, the Borrower or the applicable Restricted Subsidiary
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 any Restricted Subsidiary or all or any substantial
portion of the property or business thereof; or the Borrower or any Restricted
Subsidiary 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 sixty (60) days; or the Borrower or any
Restricted Subsidiary makes a general assignment for the benefit of creditors.

 

11.6 ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which, when taken together with all other ERISA Events, has
resulted or could reasonably be expected to result in liability of any Credit
Party under Title IV of ERISA in an aggregate amount which could reasonably be
expected to result in a Material Adverse Effect, (ii) any Credit Party or any
ERISA Affiliate fails to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its Withdrawal Liability
under Section 4201 of ERISA under a Multiemployer Plan and a Material Adverse
Effect could reasonably be expected to result, or (iii) a termination,
withdrawal or noncompliance with applicable law or plan terms or termination,
withdrawal or other event similar to an ERISA Event occurs with respect to a
Foreign Plan that, when taken together with other such events, could reasonably
be expected to result in a Material Adverse Effect.

 

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).

 

11.8 Security Documents. The Mortgage or any other Security Document 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 under any other
Security Document or any other Credit Party shall assert in writing that any
grantor’s obligations under the Collateral Agreement, the Mortgage 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).

 

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11.9 Judgments. One or more monetary judgments or decrees shall be entered
against the Borrower or any of the Restricted Subsidiaries involving a liability
of $30,000,000 or more in the aggregate for all such judgments and decrees for
the Borrower and the Restricted Subsidiaries (to the extent not paid or covered
by insurance provided by a carrier not disputing coverage), which judgments or
decrees are not discharged or effectively waived or stayed for a period of sixty
(60) consecutive days.

 

11.10  Change of Control. A Change of Control shall have occurred.

 

11.11  Intercreditor Agreements. (i) Any of the Obligations of the Credit
Parties under the Credit Documents for any reason shall cease to be (x) “Senior
Debt,” “Senior Indebtedness,” “Guarantor Senior Debt” or “Senior Secured
Financing” (or any comparable term) under, and as defined in, any document
governing Junior Debt, (y) “Controlling Senior Obligations,” “Initial Credit
Agreement Obligations” or “Senior Obligations” (or any comparable term) under,
and as defined in, any First Lien Intercreditor Agreement or (z) “First Lien
Credit Agreement Obligations” or “Senior Obligations” (or any comparable term)
under, and as defined in, any Junior Lien Intercreditor Agreement or (ii) the
subordination provisions set forth in any Junior Lien Intercreditor Agreement or
other document governing Junior Debt, or the pari passu provisions of any First
Lien Intercreditor Agreement in favor of the Secured Parties shall, in whole or
in part, cease to be effective or cease to be legally valid, binding and
enforceable against the holders of such Junior Debt or parties to (or purported
to be bound by) the First Lien Intercreditor Agreement, in each case, if
applicable.

 

Then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent may with the consent of 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 with respect to the Borrower, the result that would
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 and Swingline Commitment
terminated, whereupon the Commitment of each Lender and the Swingline Lender, as
the case may be, 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 and thereunder 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 3.7(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.

 

11.12  Application of Proceeds. Any amount received by the Administrative Agent
or the Collateral 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,
subject to the terms of any applicable Customary Intercreditor Agreement, 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 12.7 and amounts payable under Article
II) payable to the Administrative Agent and/or Collateral Agent in such Person’s
capacity as such;

 

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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 12.7) 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
Secured Hedge Agreements and the Secured 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 3.7, ratably among the
Lenders, the Issuing Banks, the Hedge Banks, the Approved Counterparties 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 3.7, amounts used to Cash
Collateralize the aggregate undrawn amount of Letters 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 Payment in Full, to the Borrower or as
otherwise required by Requirements of Law.

 

Subject to Section 3.7, 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, no amounts received from any Guarantor shall be applied to any
Excluded Swap Obligations of such Guarantor.

 

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11.13  Equity Cure.

 

(a) Notwithstanding anything to the contrary contained in this Section 11 or in
any Credit Document, in the event that the Borrower fails to comply with the
Leverage Ratio Covenant, then (A) until the expiration of the tenth Business Day
subsequent to the date the compliance certificate for calculating the Leverage
Ratio Covenant is required to be delivered pursuant to Section 9.1(c) (the “Cure
Deadline”), the Borrower shall have the right to cure such failure (the “Cure
Right”) by receiving cash proceeds (which cash proceeds shall be received no
earlier than the first day of the applicable fiscal quarter for which there is a
failure to comply with the Leverage Ratio Covenant) from an issuance of
Qualified Equity Interests (other than Disqualified Stock) for cash as a cash
capital contribution (or from any other contribution of cash to capital or
issuance or sale of any other Equity Interests on terms reasonably acceptable to
the Administrative Agent), and upon receipt by the Borrower of such cash
proceeds (such cash amount being referred to as the “Cure Amount”) pursuant to
the exercise of such Cure Right, the Leverage Ratio Covenant shall be
recalculated giving effect to the following pro forma adjustments:

 

(i) Consolidated EBITDAX shall be increased, solely for the purpose of
determining the existence of an Event of Default resulting from a breach of the
Leverage Ratio Covenant with respect to any Test Period that includes the fiscal
quarter for which the Cure Right was exercised and not for any other purpose
under this Agreement, by an amount equal to the Cure Amount;

 

(ii) Consolidated Total Debt for such Test Period shall be decreased solely to
the extent proceeds of the Cure Amount, if any, are actually applied to prepay
any Indebtedness (provided that any such Indebtedness so prepaid shall be a
permanent repayment of such Indebtedness and termination of commitments
thereunder) included in the calculation of Consolidated Total Debt and any cash
proceeds shall not be “netted” for purposes of ratio calculations with respect
to any four fiscal quarter period in which the fiscal quarter period in which
such equity cure has been made is included; and

 

(iii) if, after giving effect to the foregoing recalculations, the Borrower
shall then be in compliance with the requirements of the Leverage Ratio
Covenant, the Borrower shall be deemed to have satisfied the requirements of the
Leverage Ratio Covenant as of the relevant date of determination with the same
effect as though there had been no failure to comply therewith at such date, and
the applicable breach or default of the Leverage Ratio Covenant that had
occurred shall be deemed cured for the purposes of this Agreement; provided that
(A) in each period of four (4) consecutive fiscal quarters there shall be at
least two (2) fiscal quarters in which no Cure Right is exercised, (B) Cure
Rights shall not be exercised more than five times during the term of this
Agreement, (C) each Cure Amount shall be no greater than the amount required to
cause the Borrower to be in compliance with the Leverage Ratio Covenant above
(such amount, the “Necessary Cure Amount”); provided that if the Cure Right is
exercised prior to the date financial statements are required to be delivered
for such fiscal quarter, then the Cure Amount shall be equal to the amount
reasonably determined by the Borrower in good faith that is required for
purposes of complying with the Leverage Ratio Covenant for such fiscal quarter
(such amount, the “Expected Cure Amount”), (D) in respect of the fiscal quarter
in which such Cure Right was exercised and for each Test Period that includes
such fiscal quarter, all Cure Amounts shall be disregarded for the purposes of
any financial ratio determination under the Credit Documents other than for
determining compliance with the Leverage Ratio Covenant and (E) no Lender or
Issuing Bank shall be required to make any extension of credit hereunder during
the ten (10) Business Day period referred to above, unless the Borrower shall
have received the Cure Amount; and

 

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(iv) upon receipt by the Administrative Agent of written notice, on or prior to
the Cure Deadline, that the Borrower intends to exercise the Cure Right in
respect of a fiscal quarter, the Lenders shall not be permitted to accelerate
Loans held by them or to exercise remedies against the Collateral on the basis
of a failure to comply with the requirements of the Leverage Ratio Covenant,
unless such failure is not cured pursuant to the exercise of the Cure Right on
or prior to the Cure Deadline.

 

(b) Expected Cure Amount. Notwithstanding anything herein to the contrary, to
the extent that the Expected Cure Amount is (i) greater than the Necessary Cure
Amount, then such difference may be used for the purposes of determining the
Applicable Equity Amount and (ii) less than the Necessary Cure Amount, then not
later than the applicable Cure Deadline, the Borrower must receive cash proceeds
from issuance of Equity Interests (other than Disqualified Stock) or a cash
capital contribution, which cash proceeds received by Borrower shall be equal to
the shortfall between such Expected Cure Amount and such Necessary Cure Amount.

 

SECTION 12.    The Agents

 

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 Section 12 (other than
Section 12.1(c) with respect to the Lead Arranger and Bookrunner, and Sections
12.9, 12.11, 12.12 and the last sentence of Section 12.4 with respect to the
Borrower) are solely for the benefit of the Agents 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) The Administrative Agent, the Swingline Lender, each Lender and each Issuing
Bank hereby irrevocably designate and appoint the Collateral Agent as the agent
with respect to the Collateral, and each of the Administrative Agent, each
Swingline Lender, each Lender and each Issuing Bank irrevocably authorizes the
Collateral 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 Collateral
Agent by the terms of this Agreement and the other Credit Documents, together
with such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Collateral Agent
shall not have any duties or responsibilities except those expressly set forth
herein, or any fiduciary relationship with any of the Administrative Agent, the
Swingline Lender, the Lenders or the Issuing Banks, 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
Collateral Agent.

 

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(c) The Lead Arranger and Bookrunner, in its capacity as such, shall not have
any obligations, duties or responsibilities under this Agreement but shall be
entitled to all benefits of this Section 12.

 

12.2 Delegation of Duties. The Administrative Agent and the Collateral Agent may
each execute any of its duties under this Agreement and the other Credit
Documents by or through agents, sub-agents, employees or attorneys-in-fact
(each, a “Subagent”) and shall be entitled to advice of counsel concerning all
matters pertaining to such duties; provided, however, that no such Subagent
shall be authorized to take any action with respect to any Collateral unless and
except to the extent expressly authorized in writing by the Administrative
Agent. If any Subagent, or successor thereto, shall die, become incapable of
acting, resign or be removed, all rights, powers, privileges and duties of such
Subagent, to the extent permitted by law, shall automatically vest in and be
exercised by the Administrative Agent until the appointment of a new Subagent.
Neither the Administrative Agent nor the Collateral Agent shall be responsible
for the negligence or misconduct of any Subagents selected by it.

 

12.3 Exculpatory Provisions. No 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 such 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
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. No
Agent shall 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. The
Collateral Agent shall not be under any obligation to the Administrative Agent,
any Lender, the Swingline Lender or any Issuing Bank 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.

 

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12.4 Reliance by Agents. The Administrative Agent and the Collateral 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 or the Collateral 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 and the Collateral 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 and/or it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Notwithstanding any provision in this
Agreement to the contrary, the Administrative Agent and the Collateral 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 and Collateral Agent shall not
be required to take any action or refuse to take any action where, in its
opinion or in the opinion of its counsel, the taking or refusal to take such
action 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 Section 6 and Section 7 on the Closing 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 Closing Date specifying its objection thereto.

 

12.5 Notice of Default. Neither the Administrative Agent nor the Collateral
Agent shall be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless the Administrative Agent or
Collateral Agent, as applicable, 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 and the Collateral Agent. 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 or
consent of the Majority Lenders, the Required Lenders, each individual lender or
adversely affected Lender, as applicable.

 

12.6 Non-Reliance on Administrative Agent, Collateral Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor the
Collateral Agent nor any of their respective 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 or Collateral 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 or Collateral Agent to any Lender, any Swingline
Lender or any Issuing Bank. Each Lender, each Swingline Lender and each Issuing
Bank represents to the Administrative Agent and the Collateral Agent that it
has, independently and without reliance upon the Administrative Agent,
Collateral 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 Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance
upon the Administrative Agent, Collateral 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, neither the Administrative Agent nor the
Collateral Agent shall have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, assets,
operations, properties, financial condition, prospects or creditworthiness of
the Borrower or any other Credit Party that may come into the possession of the
Administrative Agent or Collateral Agent any of their respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates.

 

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12.7 Indemnification. The Lenders severally agree to indemnify the
Administrative Agent and the Collateral Agent, each 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 Payment in Full, ratably in accordance with their respective
portions of the Total Exposure in effect immediately prior to such date on which
Payment in Full occurred), from and against any and all Indemnified Liabilities;
provided that no Lender shall be liable to the Administrative Agent or the
Collateral 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 or the
Collateral Agent’s, as applicable, 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 (or such other number or percentage of the
Lenders as shall be required by the Credit Documents) shall be deemed to
constitute gross negligence, bad faith or willful misconduct for purposes of
this Section 12.7. 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 12.7 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 and the Collateral Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by such 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
any Agent for any purpose shall, in the opinion of such Agent, be insufficient
or become impaired, such 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 any 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 any Agent against any liability,
obligation, loss, damage, penalty, action, judgment, suit, cost, expense or
disbursement resulting from such Agent’s gross negligence, bad faith or willful
misconduct. The agreements in this Section 12.7 shall survive the payment of the
Loans and all other amounts payable hereunder.

 

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12.8 Agents in Its Individual Capacities. Each 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 such Agent were not an Agent
hereunder and under the other Credit Documents. With respect to the Loans made
by it, each 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 an Agent, and the terms “Lender” and “Lenders” shall include each Agent
in its individual capacity.

 

12.9 Successor Agents. Each of the Administrative Agent and Collateral Agent may
at any time give notice of its resignation to the Lenders, the Swingline Lender,
the Issuing Banks and the Borrower. If the Administrative Agent, any Swingline
Lender and/or Collateral Agent becomes a Defaulting Lender, then such
Administrative Agent, Swingline Lender or Collateral Agent, may be removed as
Administrative Agent, Swingline Lender or Collateral Agent, as the case may be,
at the reasonable request of the Borrower upon ten (10) days’ notice to the
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 New York. If, in the case of a resignation of a
retiring Agent, no such successor shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent gives notice of its resignation, then the retiring Agent may
on behalf of the Lenders, the Swingline Lender and the Issuing Banks, appoint a
successor Agent meeting the qualifications set forth above (provided that if the
Administrative Agent shall notify the Borrower and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (a) the retiring
Agent shall be discharged from its duties and obligations hereunder and under
the other Credit Documents (except that in the case of any collateral security
held by such Agent on behalf of the Lenders or Issuing Banks under and Credit
Documents, the retiring Agent shall continue to hold such collateral security
until such time as a successor Agent is appointed) and (b) all payments,
communications and determinations provided to be made by, to or through the
retiring Agent shall instead be made by or to each Lender and Issuing Bank
directly, until such time as the Majority Lenders appoint a successor Agent as
provided for above in this Section 12.9). Upon the acceptance of a successor’s
appointment as the Administrative Agent or Collateral Agent, as the case may be,
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) Agent,
and the retiring 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 12.9). After the retiring
Agent’s resignation hereunder and under the other Credit Documents, the
provisions of this Section 12 (including Section 12.7) and Section 13.5 shall
continue in effect for the benefit of such retiring Agent, its Subagents and
their respective Agent-Related Parties in respect of any actions taken or
omitted to be taken by any of them while the retiring Agent was acting as an
Agent.

 

Any resignation of any Person as Administrative Agent pursuant to this
Section 12.9 shall also constitute its resignation as Issuing Bank and Swingline
Lender. 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 Bank shall be discharged from all of its duties and obligations
hereunder and 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.

 

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12.10 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 IRS 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. In addition, each Lender shall severally indemnify the
Administrative Agent for (i) any Indemnified Taxes or Other Taxes attributable
to such Lender (but only to the extent that any applicable Credit Party has not
already indemnified the Administrative Agent for such Indemnified Taxes or Other
Taxes and without limiting the obligation of any applicable Credit Party to do
so), (ii) any Taxes attributable to such Lender’s failure to comply with the
provisions relating to the maintenance of a Participant Register and (iii) any
Excluded Taxes attributable to such Lender, in each case, that are payable or
paid by the Administrative Agent in connection with any Credit Document, and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under this Agreement or any other Credit Document against any
amount due to the Administrative Agent under this Section 12.10. For the
avoidance of doubt, for purposes of this Section 12.10, the term “Lender”
includes any Issuing Bank and any Swingline Lender.

 

12.11 Security Documents and Collateral Agent under Security Documents and
Guarantee. Each Secured Party hereby further authorizes the Administrative Agent
or Collateral Agent, as applicable, 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, the
Administrative Agent or Collateral Agent, as applicable, may take such action
and execute and deliver any such instruments, documents and agreements necessary
or desirable to evidence and confirm the release of any Guarantor or Collateral
pursuant to Section 13.17. The Lenders and the Issuing Banks (including in their
capacities as potential Cash Management Banks and potential Hedge Banks)
irrevocably agree that (x) the Collateral Agent is authorized and the Collateral
Agent agrees it shall (for the benefit of Borrower), without any further consent
of any Lender, enter into or amend any Customary Intercreditor Agreement with
the collateral agent or other representatives of the holders of Indebtedness
that is permitted to be secured by a Lien on the Collateral that is permitted
under this Agreement, in each case for the purpose of adding the holders of such
Indebtedness (or their representative) as a party thereto and otherwise causing
such Indebtedness to be subject thereto (it being understood that any such
amendment, amendment and restatement or supplement may make such other changes
to the applicable intercreditor agreement as, in the good faith determination of
the Administrative Agent, are required to effectuate the foregoing and with any
material modifications to be reasonably satisfactory to the Administrative
Agent), (y) the Collateral 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 Customary Intercreditor Agreement referred to in clause
(x) above, entered into by the Collateral 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 and the Collateral Agent to subordinate any
Lien on any property granted to or held by the Administrative Agent or
Collateral Agent under any Credit Document to the holder of any Lien on such
property that is permitted by clause (j) of the definition of “Permitted Liens”
and clauses (c), (g), (j)(i), (o), (p), (w) and (y) of Section 10.2 or otherwise
permitted to be senior to the Liens of Administrative Agent or Collateral Agent
on such property; 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.

 

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12.12  Right to Realize on Collateral and Enforce Guarantee. Anything contained
in any of the Credit Documents to the contrary notwithstanding, the Borrower,
the Agents 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 Collateral Agent, and (b) in the event of a foreclosure by the Collateral
Agent on any of the Collateral pursuant to a public or private sale or other
disposition, the Collateral 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
Collateral 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 Collateral Agent at such sale or other
disposition.

 

12.13  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 hereunder or under any other Credit Document in respect of the
Loans and all other Indebtedness that are owing and unpaid and to file such
other documents as may be necessary or advisable in order to have the claims of
the Lenders and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders and the
Administrative Agent and their respective agents and counsel, to the extent due
under Section 13.5) allowed in such judicial proceeding; and

 

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(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.

 

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.

 

12.14  Certain ERISA Matters.

 

(a) Each Lender (for purposes of this Section 12.14, all references to “Lender”
or “Lenders” shall be deemed to include any Issuing Bank) (x) represents and
warrants, as of the date such Person became a Lender party hereto, to, and (y)
covenants, from the date such Person became a Lender party hereto to the date
such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent, the Collateral Agent and the Lead Arranger and Bookrunner
and their respective Affiliates, and not, for the avoidance of doubt, to or for
the benefit of the Borrower or any other Credit Party, that at least one of the
following is and will be true:

 

(i) such Lender is not using “plan assets” (within the meaning of Section 3(42)
of ERISA or otherwise) of one or more Benefit Plans in connection with the
Loans, the Letters of Credit or the Commitments,

 

(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14
(a class exemption for certain transactions determined by independent qualified
professional asset managers), PTE 95-60 (a class exemption for certain
transactions involving insurance company general accounts), PTE 90-1 (a class
exemption for certain transactions involving insurance company pooled separate
accounts), PTE 91-38 (a class exemption for certain transactions involving bank
collective investment funds) or PTE 96-23 (a class exemption for certain
transactions determined by in-house asset managers), is applicable and the
conditions are satisfied with respect to such Lender’s entrance into,
participation in, administration of and performance of the Loans, the Letters of
Credit, the Commitments and this Agreement,

 

(iii) (A) such Lender is an investment fund managed by a “Qualified Professional
Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified
Professional Asset Manager made the investment decision on behalf of such Lender
to enter into, participate in, administer and perform the Loans, the Letters of
Credit, the Commitments and this Agreement, (C) the entrance into, participation
in, administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement satisfies the requirements of sub-sections (b)
through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender,
the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with
respect to such Lender’s entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this
Agreement, or

 

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(iv) such other representation, warranty and covenant as may be agreed in
writing between the Administrative Agent, in its sole discretion, and such
Lender.

 

(b) In addition, unless either (1) sub-clause (i) in the immediately preceding
clause (a) is true with respect to a Lender or (2) a Lender has provided another
representation, warranty and covenant in accordance with sub-clause (iv) in the
immediately preceding clause (a), such Lender further (x) represents and
warrants, as of the date such Person became a Lender party hereto, to, and (y)
covenants, from the date such Person became a Lender party hereto to the date
such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent, the Collateral Agent and the Lead Arranger and Bookrunner
and their respective Affiliates, and not, for the avoidance of doubt, to or for
the benefit of the Borrower or any other Credit Party, that none of the
Administrative Agent, the Collateral Agent and the Lead Arranger and Bookrunner
and their respective Affiliates, and not, for the avoidance of doubt, to or for
the benefit of the Borrower or any of their respective Affiliates is a fiduciary
with respect to the assets of such Lender involved in the Loans, the Letters of
Credit, the Commitments and this Agreement (including in connection with the
reservation or exercise of any rights by the Administrative Agent under this
Agreement, any Loan Document or any documents related to hereto or thereto).

 

SECTION 13.    Miscellaneous.

 

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 and/or the Collateral Agent shall,
from time to time, (a) 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 (b) waive in writing, on
such terms and conditions as the Majority Lenders or the Administrative Agent
and/or Collateral Agent, as the case may be, 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 (i) 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 2.8(c)), or forgive or reduce any
portion, or extend the date for the payment (including the Maturity Date), of
any principal, 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 (1) any
Lender, upon the request of the Borrower, may extend the final expiration date
of its Commitment without the consent of any other Lender, including the
Majority Lenders, and (2) it is being understood that waivers or modifications
of conditions precedent, covenants, Defaults or Events of Default shall not
constitute an increase of the Commitments 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 (provided that, any Lender,
upon the request of the Borrower, may increase the amount of its Commitment
without the consent of any other Lender, including the Majority Lenders), 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 (ii) 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” (it being understood that, with the consent of
the Majority Lenders, additional extensions of credit pursuant to this Agreement
may be included in the determination of the Majority Lenders and Required
Lenders on substantially the same basis as the Loans and Commitments are
included on the Closing Date), consent to the assignment or transfer by the
Borrower of its rights and obligations under any Credit Document to which it is
a party (except as permitted pursuant to Section 10.3), in each case without the
written consent of each Lender directly and adversely affected thereby, or
(iii) amend the provisions of Section 11.12 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 (iv) amend, modify or waive
any provision of Section 12 without the written consent of the then-current
Administrative Agent and Collateral Agent, as applicable, or any other former or
current Agent to whom Section 12 then applies in a manner that directly and
adversely affects such Person, or (v) amend, modify or waive any provision of
Section 3 with respect to any Letter of Credit without the written consent of
each Issuing Bank to whom Section 3 then applies in a manner that directly and
adversely affects such Person, or (vi) amend, modify or waive any provisions
hereof relating to Swingline Loans without the written consent of the Swingline
Lender, or (vii) release all or substantially all of the aggregate value of the
Guarantees (except as expressly permitted by the Guarantee or this Agreement)
without the prior written consent of each Lender, or (viii) 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 (ix) amend Section 2.9 so as to permit
Interest Period intervals greater than six (6) months without regard to
availability to Lenders, without the written consent of each Lender directly and
adversely affected thereby, or (x) increase the Borrowing Base or waive a
condition in or modify in any manner adverse to a Lender in Section 6.2 without
the written consent of each Lender (subject to Section 13.1(b) in the case of a
Defaulting Lender) or decrease or maintain the Borrowing Base without the
written consent of the Required Lenders or otherwise modify Section 2.14(b),
(c), (d), (e), (f), or (l) if such modification would have the effect of
increasing the Borrowing Base without the written consent of each Lender (other
than Defaulting Lenders); provided that a Scheduled Redetermination may be
postponed by, and an automatic reduction in the Borrowing Base may be waived by,
the Required Lenders; provided, further, that this clause (x) shall not apply
(or be deemed to apply) to any waiver, consent, amendment or other modification
that directly or indirectly reduces the amount of, or waives the implementation
of, any provision that would otherwise reduce the Borrowing Base, or (xi) affect
the rights or duties of, or any fees or other amounts payable to, any Agent
under this Agreement or any other Credit Document 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.

 

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(b) Notwithstanding anything to the contrary herein, no Defaulting Lender shall
have any right to approve or disapprove any amendment, waiver or consent
hereunder (and any amendment, waiver or consent which by its terms requires the
consent of all Lenders or each affected Lender may be effected with the consent
of the applicable Lenders other than Defaulting Lenders), except that the
Commitment of such Defaulting Lender may not be increased or extended without
the consent of such Defaulting Lender and no such amendment, waiver or consent
shall disproportionately adversely affect such Defaulting Lender without its
consent as compared to other Lenders (it being understood that any Commitments
or Loans held or deemed held by any Defaulting Lender shall be excluded for a
vote of the Lenders hereunder requiring any consent of the Lenders).

 

(c) Without the consent of any Lender or Issuing Bank, the Credit Parties and
the Administrative Agent or Collateral 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.

 

(d) Notwithstanding anything to the contrary herein, no Lender consent is
required to effect any amendment, modification or supplement to any Customary
Intercreditor Agreement, any subordination agreement or other intercreditor
agreement or arrangement permitted under this Agreement or in any document
pertaining to any Indebtedness permitted hereby that is permitted to be secured
by the Collateral (i) that is for the purpose of adding the holders of such
secured or subordinated Indebtedness permitted to be incurred under this
Agreement (or, in each case, a representative with respect thereto), as parties
thereto, as expressly contemplated by the terms of such Customary Intercreditor
Agreement, such subordination agreement or such other intercreditor agreement or
arrangement permitted under this Agreement, as applicable (it being understood
that any such amendment or supplement may make such other changes to the
applicable intercreditor agreement as, in the good faith determination of the
Administrative Agent, are required to effectuate the foregoing and provided that
such other changes are not adverse, in any material respect (taken as a whole),
to the interests of the Lenders) or (ii) that is expressly contemplated by any
Customary Intercreditor Agreement, any subordination agreement or other
intercreditor agreement or arrangement permitted under this Agreement or in any
document pertaining to any Indebtedness permitted hereby that is permitted to be
secured by the Collateral or (iii) otherwise, with respect to any material
amendments, modifications or supplements, to the extent such amendment,
modification or supplement is reasonably satisfactory to the Administrative
Agent; provided, further, that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent or Collateral
Agent hereunder or under any other Credit Document without the prior written
consent of the Administrative Agent or Collateral Agent, as applicable.

 

(e) Notwithstanding the foregoing, this Agreement may be amended (or amended and
restated) with the written consent of the Majority Lenders, the Administrative
Agent and the Borrower (a) to add one or more additional credit or debt
facilities to this Agreement and to permit the extensions of credit from time to
time outstanding thereunder and the accrued interest and fees in respect thereof
to share ratably in the benefits of this Agreement and the other Credit
Documents with the Loans and the Commitments and the accrued interest and fees
in respect thereof and (b) to include appropriately the Lenders holding such
credit or debt facilities in any determination of the Majority Lenders and the
Required Lenders on substantially the same basis as the Lenders prior to such
inclusion.

 

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(f) In addition, notwithstanding the foregoing, subject to Section 2.14 hereof,
this Agreement may be amended with the written consent of the Administrative
Agent, the Borrower and the Lenders providing the Replacement Loans (as defined
below) to permit the refinancing of all outstanding Loans of any Class
(“Replaced Loans”) with replacement loans (“Replacement Loans”) hereunder;
provided that (i) the aggregate principal amount of such Replacement Loans shall
not exceed the aggregate principal amount of such Replaced Loans, plus accrued
interest, fees, premiums (if any) and penalties thereon and reasonable fees,
expenses, original issue discount and upfront fees associated with such
Replacement Loans, (ii) the All-In Yield with respect to such Replacement Loans
shall not be higher than the All-In Yield for such Replaced Loans immediately
prior to such refinancing unless the maturity of the Replacement Loans is at
least one year later than the maturity of the Replaced Loans and (iii) all other
terms applicable to such Replacement Loans shall be substantially identical to,
or less favorable to the Lenders providing such Replacement Loans than, those
applicable to such Replaced Loans, except to the extent necessary to provide for
covenants and other terms applicable to any period after the Latest Maturity
Date of the Loans in effect immediately prior to such refinancing. Each
amendment to this Agreement providing for Replacement Loans may, without the
consent of any other Lenders, effect such amendments to this Agreement and the
other Credit Documents as may be necessary or appropriate, in the opinion of the
Administrative Agent and the Borrower to effect the provisions of this
paragraph, and for the avoidance of doubt, this paragraph shall supersede any
other provisions in this Section 13.1 to the contrary.

 

(g) Notwithstanding the foregoing, technical and conforming modifications to the
Credit Documents (including any exhibit, schedule or other attachment) may be
made with the consent of the Borrower and the Administrative Agent (i) if such
modifications are not adverse in any material respect to the Lenders, the
Swingline Lender or the Issuing Banks (in which case, the consent of the
Swingline Lender and Issuing Banks shall be required) or (ii) to the extent
necessary (A) to integrate any Incremental Increase or Extended Commitment
contemplated by Sections 2.16 and 2.17 or (B) to cure any ambiguity, omission,
mistake, defect or inconsistency so long as, in each case with respect to this
clause (B), the Lenders, the Swingline Lender and the Issuing Banks shall have
received at least five (5) Business Days’ prior written notice thereof and the
Administrative Agent shall not have received, within five (5) Business Days of
the date of such notice to the Lenders, a written notice from the Majority
Lenders stating that the Majority Lenders object to such amendment.

 

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 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, the Collateral Agent, any
Swingline Lender 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

 

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(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, the Collateral Agent, the Swingline Lender 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 (3) 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 2.3, 2.6, 2.9,
4.2 and 5.1 shall not be effective until received.

 

13.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent, the Collateral 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.

 

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. Such representations and warranties shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied (other than Obligations under Secured Hedge
Agreements, Secured Cash Management Agreements or contingent indemnification
obligations, in any such case, not then due and payable).

 

13.5 Payment of Expenses; Indemnification.

 

(a) The Borrower agrees (i) if the Closing Date occurs, to pay or reimburse the
Administrative Agent and the other Agents and the Lead Arranger and Bookrunner
for all reasonable and documented out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation, syndication and execution of this
Agreement and the other Credit Documents, and any amendment, waiver, consent or
other modification of the provisions hereof and thereof (whether or not the
transactions contemplated thereby are consummated), and the consummation and
administration of the transactions contemplated hereby and thereby, including
all Attorney Costs, which shall be limited to Vinson & Elkins L.L.P. and one
local counsel as reasonably necessary in any relevant jurisdiction material to
the interests of the Lenders taken as a whole (and solely in the case of an
actual conflict of interest, one additional counsel and (if reasonably
necessary) one local counsel in each relevant jurisdiction to the affected
Indemnitees similarly situated) and (ii) after the Closing Date, to pay or
reimburse the Administrative Agent for all reasonable and documented
out-of-pocket costs and expenses incurred in connection with the enforcement of
any rights or remedies under this Agreement or the other Credit Documents
(including all such costs and expenses incurred during any legal proceeding,
including any bankruptcy or insolvency proceeding, and including all respective
Attorney Costs, which shall be limited to Attorney Costs of one counsel to the
Administrative Agent and the Lenders taken as a whole and one local counsel as
reasonably necessary in any relevant jurisdiction material to the interests of
the Lenders taken as a whole and solely in the case of an actual conflict of
interest, one additional counsel and (if reasonably necessary) one local counsel
in each relevant jurisdiction to the affected Indemnitees similarly situated).
The agreements in this Section 13.5 shall survive the repayment of all other
Obligations. All amounts due under this Section 13.5 shall be paid within thirty
(30) days after written demand therefor (together with backup documentation
supporting such reimbursement request); provided that, with respect to the
Closing Date, all amounts due under this Section 13.5 shall be paid on the
Closing Date solely to the extent invoiced to the Borrower within two (2)
Business Days prior to the Closing Date. If any Credit Party fails to pay when
due any costs, expenses or other amounts payable by it hereunder or under any
Credit Document, such amount may be paid on behalf of such Credit Party by the
Administrative Agent in its discretion.

 

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(b) The Borrower shall indemnify and hold harmless each Agent, Lender, Issuing
Bank, Lead Arranger and Bookrunner, Agent-Related Party and their Affiliates,
and their respective officers, directors, employees, partners, agents, advisors
and other representatives of the foregoing (collectively the “Indemnitees”) from
and against any and all liabilities, losses, damages, claims, or out-of-pocket
expenses (including Attorney Costs but limited in the case of legal fees and
expenses to the reasonable and documented out-of-pocket fees, disbursements and
other charges of one counsel to all Indemnitees taken as a whole (and solely in
the case of an actual conflict of interest, one additional counsel to the
affected Indemnitees, taken as a whole) and (if reasonably necessary) one local
counsel, in any relevant material jurisdiction) of any kind or nature whatsoever
which may at any time be imposed on, incurred by or asserted against any such
Indemnitee in any way relating to or arising out of or in connection with (i)
the execution, delivery, enforcement, performance or administration of any
Credit Document or any other agreement, letter or instrument delivered in
connection with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (ii) any Commitment, Letter of Credit, or
Loan or the use or proposed use of the proceeds therefrom (including any refusal
by an 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), (iii) any actual or alleged Environmental
Claim regarding, or liability or obligation (whether accrued, contingent,
absolute, determined, determinable or otherwise) of the Credit Parties or any
Subsidiary under or relating to any Environmental Law or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory (including
any investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding) (a “Proceeding”) and regardless
of whether any Indemnitee is a party thereto or whether or not such Proceeding
is brought by the Borrower or any other Person and, in each case, whether or not
caused by or arising, in whole or in part, out of the negligence of the
Indemnitee (all of the foregoing, collectively, the “Indemnified Liabilities”);
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such liabilities, losses, damages, claims or out-of-pocket
expenses resulted from (x) the gross negligence, bad faith or willful misconduct
of such Indemnitee or of any of its Related Indemnified Persons, as determined
by a final non-appealable judgment of a court of competent jurisdiction, (y) a
material breach of any obligations under any Credit Document by such Indemnitee
or of any of its Related Indemnified Persons, as determined by a final
non-appealable judgment of a court of competent jurisdiction or (z) any dispute
solely among Indemnitees other than any claims against an Indemnitee in its
capacity or in fulfilling its role as an administrative agent or collateral
agent or arranger or any similar role under this Agreement and other than any
claims arising out of any act or omission of the Borrower, the Sponsor or any of
their Affiliates (as determined in a final and non-appealable judgment of a
court of competent jurisdiction). No Indemnitee shall be liable for any damages
arising from the use by others of any information or other materials obtained
through IntraLinks or other similar information transmission systems in
connection with this Agreement (except for direct (as opposed to indirect,
special, punitive or consequential) damages resulting from the gross negligence,
bad faith or willful misconduct, as determined by a court of competent
jurisdiction in a final and non-appealable judgment, of such Indemnitee),
nor shall any Indemnitee, Agent-Related Parties, Credit Party or any Subsidiary
have any liability for any special, punitive, indirect or consequential damages
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
Closing Date) (other than, in the case of any Credit Party, in respect of any
such damages incurred or paid by an Indemnitee to a third party, or which are
included in a third-party claim, and for any out-of-pocket expenses related
thereto). In the case of an investigation, litigation or other proceeding to
which the indemnity in this Section 13.5 applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by any Credit Party, any Subsidiary of any Credit Party, its directors,
stockholders or creditors or an Indemnitee or any other Person, whether or not
any Indemnitee is otherwise a party thereto and whether or not any of the
transactions contemplated hereunder or under any of the other Credit Documents
are consummated. All amounts due under this Section 13.5 shall be paid within
thirty (30) days after written demand therefor (together with backup
documentation supporting such reimbursement request); provided, however, that
such Indemnitee shall promptly refund such amount to the extent that there is a
final judicial determination that such Indemnitee was not entitled to
indemnification rights with respect to such payment pursuant to the express
terms of this Section 13.5. The agreements in this Section 13.5 shall survive
the resignation of the Administrative Agent, the replacement of any Lender and
the repayment, satisfaction or discharge of all the other Obligations. For the
avoidance of doubt, this Section 13.5(b) shall not apply to Taxes, except any
Taxes that represent liabilities, obligations, losses, damages, penalties,
claims, demands, actions, prepayments, suits, costs, expenses and disbursements
arising from any non-Tax claims.

 

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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) except as expressly permitted by
Section 10.3, 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 any of 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),
Participants (to the extent provided in clause (c) of this Section 13.6) and, to
the extent expressly contemplated hereby, the Agent-Related Parties 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 Section 13.6(b)(ii) below, any
Lender may at any time assign to one or more assignees (other than the Borrower,
its Subsidiaries and their respective Affiliates, any natural person, any
Disqualified Institution, 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 or
Swingline Loans) at the time owing to it) with the prior written consent of:

 

(A)   the Borrower (not to be unreasonably withheld or delayed); provided that
no consent of the Borrower shall be required (x) for an assignment to an
existing Lender and their Affiliates of similar credit worthiness and (y) for an
assignment if an Event of Default under Section 11.1 or Section 11.5 with
respect to the Borrower or any Subsidiary Guarantor has occurred and is
continuing; and

 

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(B)   the Administrative Agent, each Swingline Lender 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 of the entire remaining amount of the
assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Assumption with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $5,000,000 or an integral
multiple of $5,000,000, 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 with
respect to the Borrower or any Material Subsidiary has occurred and is
continuing;

 

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

 

(C)   the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee 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 the Administrative Agent shall
enter the relevant information in the Register pursuant to clause (b)(iv) of
this Section 13.6; 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 Sections 5.4(d), (e), (h) and (i), 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 Assumption, the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Sections 2.10, 2.11, 3.11, 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.

 

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(iv) The Administrative Agent, acting solely for this purpose as a nonfiduciary
agent of the Borrower, shall maintain at the Administrative Agent’s Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders (including any SPVs that
provide all or any part of a Loan pursuant to Section 13.6(g) hereof), and the
Commitments 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,
the Collateral 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, the
Collateral Agent, each Issuing Bank, each Swingline Lender 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 Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in 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 Assumption and record the information contained therein in the Register.

 

(c) (i) Any Lender may, with the prior written consent of the Borrower (such
consent not to be unreasonably withheld or delayed), sell participations to one
or more banks or other entities other than any Defaulting Lender, any
Disqualified Institution (to the extent that the list of Disqualified
Institutions has been made available to all Lenders, it being agreed that as of
the date hereof, the Administrative Agent has made the list of Disqualified
Institutions available to all Lenders), the Borrower or any Subsidiary of the
Borrower or their respective Affiliates or natural persons (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 no consent of the Borrower shall be required (x) for
any sale to an existing Lender and their Affiliates of similar credit worthiness
and (y) for a sale if an Event of Default under Section 11.1 or Section 11.5
with respect to the Borrower or any Subsidiary Guarantor has occurred and is
continuing; provided further 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 definitions
of the terms “Majority Lenders” or “Required 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, 2.11, 3.11 and 5.4 to the same extent
as if it were a Lender (subject to the limitations and requirements of those
Sections and Sections 2.12 and 13.7) and had acquired its 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.

 

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(ii) A Participant shall not be entitled to receive any greater payment under
Section 2.10, 2.11, 3.11 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 or except to the extent the entitlement to
receive a greater payment results from a Change in Law that occurs after the
Participant acquired the applicable participation; provided that the Participant
shall be subject to the provisions in Section 2.12 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 stated 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 Swingline Lender,
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 H-1 or H-2, as the case
may be, evidencing the Loans and Swingline Loans, respectively, 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 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.

 

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(f) The words “execution,” “signed,” “signature,” and words of like import in
any Assignment and Assumption shall be deemed to include electronic signatures
or the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature or the
use of a paper-based recordkeeping system, as the case may be, to the extent and
as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic
Signatures and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.

 

(g) Notwithstanding anything to the contrary contained herein, any Lender
(a “Granting Lender”) may grant to a special purpose funding vehicle (a “SPV”),
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrower, the option to provide to the Borrower all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPV to make any Loan and (ii) if an
SPV elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPV hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPV shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPV, it shall not institute
against, or join any other person in instituting against, such SPV any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any state thereof. In addition,
notwithstanding anything to the contrary contained in this Section 13.6, any SPV
may (A) with notice to, but without the prior written consent of, the Borrower
and the Administrative Agent and without paying any processing fee therefor,
assign all or a portion of its interests in any Loans to the Granting Lender or
to any financial institutions (consented to by the Borrower and Administrative
Agent) providing liquidity and/or credit support to or for the account of such
SPV to support the funding or maintenance of Loans and (B) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPV. This Section 13.6(g) may not be
amended without the written consent of the SPV. Notwithstanding anything to the
contrary in this Agreement, subject to the following sentence, each SPV shall be
entitled to the benefits of Sections 2.10, 2.11, 3.11 and 5.4 to the same extent
as if it were a Lender (subject to the limitations and requirements of
Sections 2.10, 2.11, 3.11 and 5.4 as though it were a Lender, and Sections 2.12
and 13.7), and had acquired its interest by assignment pursuant to clause (b) of
this Section 13.6). Notwithstanding the prior sentence, an SPV shall not be
entitled to receive any greater payment under Section 2.10, 2.11, 3.11 or 5.4
than its Granting Lender would have been entitled to receive absent the grant to
such SPV, unless such grant to such SPV is made with the Borrowers’ prior
written consent.

 

(h) Any request for consent of the Borrower pursuant to Section 13.6(b)(i)(A) or
13.6(c) and related communications shall be delivered by the Administrative
Agent simultaneously to the following Persons:

 

(i) with respect to any request for consent in respect of any assignment or
participation relating to Commitments or Loans, to (A) any recipient that is an
employee of the Borrower, as designated in writing to the Administrative Agent
by the Borrower from time to time (if any) and (B) the chief financial officer
of the Borrower or any other Responsible Officer designated by the Borrower in
writing to the Administrative Agent from time to time; and

 

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(ii)   in addition to the Persons set forth in clause (i) above and prior to the
occurrence of a Change of Control, with respect to any request for consent in
respect of any assignment or participation relating to Commitments or Loans, to
an employee of the Sponsor designated in writing to the Administrative Agent by
the Sponsor from time to time.

 

(i) The Administrative Agent shall not be responsible or have any liability for,
or have any duty to ascertain, inquire into, monitor or enforce, compliance with
the provisions hereof relating to Disqualified Institutions. Without limiting
the generality of the foregoing, the Administrative Agent shall not (a) be
obligated to ascertain, monitor or inquire as to whether any Lender or
participant or prospective Lender or participant is a Disqualified Institution
or (b) have any liability with respect to or arising out of any assignment or
participation of Loans, or disclosure of confidential information, to any
Disqualified Institution.

 

(j) If any Loans or Commitments are assigned or participated (x) to a
Disqualified Institution or (y) without complying with the notice requirement
under Section 13.6(h), then: (a) the Borrower may (i) terminate any commitment
of such person and prepay any applicable outstanding Loans at a price equal to
the lesser of par and the amount such Person paid to acquire such Loans or
Commitments, without premium, penalty, prepayment fee or breakage, and/or (ii)
require such person to assign its rights and obligations to one or more eligible
Lenders at the price indicated above (which assignment shall not be subject to
any processing and recordation fee), (b) no such Person shall receive any
information or reporting provided by the Borrower, the Administrative Agent or
any Lender, (c) for purposes of voting, any Loans and Commitments held by such
Person shall be deemed not to be outstanding, and such Person shall have no
voting or consent rights with respect to “Required Lender” or class votes or
consents, (d) for purposes of any matter requiring the vote or consent of each
Lender affected by any amendment or waiver, such person shall be deemed to have
voted or consented to approve such amendment or waiver if a majority of the
affected class so approves, and (e) such person shall not be entitled to any
expense reimbursement or indemnification rights and shall be treated in all
other respects as a Defaulting Lender; it being understood and agreed that the
foregoing provisions shall only apply to a Disqualified Institution and not to
any assignee of such Disqualified Institution that becomes a Lender so long as
such assignee is not a Disqualified Institution or an affiliate thereof.

 

13.7 Replacements of Lenders under Certain Circumstances.

 

(a) In the event that any Lender (i) requests reimbursement for amounts owing
pursuant to Section 2.10, 3.11 or 5.4 (other than Section 5.4(b)), (ii) is
affected in the manner described in Section 2.10(a)(iii) and as a result thereof
any of the actions described in such Section is required to be taken or (iii)
becomes a Defaulting Lender, the Borrower shall be entitled to replace such
Lender or terminate the Commitment of such Lender; provided that, (x) in the
case of a replacement, (A) such replacement does not conflict with any
Requirement of Law, (B) 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 2.10, 3.11 or 5.4, as the case may be
owing to such replaced Lender prior to the date of replacement, (C) 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, the Swingline Lender and each Issuing Bank (except to the
extent such Swingline Lender or Issuing Banks is, or is an Affiliate of, the
Lender being replaced) and (D) 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 as long as the replacement Lender pays such fee) and (y) in
the case of a termination, repay all Obligations (including amounts (other than
any disputed amounts), owing pursuant to Section 2.10, 3.11 or 5.4, as the case
may be) owing to such Lender as of such termination date (and, in the case of an
Issuing Bank, cancel or backstop on terms reasonably satisfactory to such
Issuing Bank any Letters of Credit issued by it).

 

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(b) If any Lender (such Lender, a “Non-Consenting Lender”) (i) failed to consent
to a proposed amendment, waiver, discharge or termination that pursuant to the
terms of Section 13.1 requires the consent of all of the Lenders affected or the
Required Lenders and with respect to which the Majority Lenders shall have
granted their consent or (ii) is a Non-Consenting Lender that is an Extending
Lender, then the Borrower shall have the right (unless such Non-Consenting
Lender grants such consent or approves such Proposed Borrowing Base and provided
that no Event of Default pursuant to Section 11.1 or 11.5 shall have occurred
and be continuing) (x) 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, the
Swingline Lender and each Issuing Bank (except to the extent such Swingline
Lender or Issuing Banks is, or is an Affiliate of, the Lender being replaced) or
(y) terminate the Commitment of such Lender; provided that, (x) in the case of a
replacement, (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, (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 and (iii) the Borrower, the Administrative Agent and such
Non-Consenting Lender shall otherwise comply with Section 13.6 (provided that
the Borrower shall not be obligated to pay the registration and processing fee
referred to therein as long as the replacement Lender pays such fee) and (y) in
the case of a termination, all Obligations owing to such Non-Consenting Lender
shall be paid in full concurrently with such termination.

 

(c) Notwithstanding anything herein to the contrary, (i) each party hereto
agrees that any assignment pursuant to the terms of this Section 13.7 may be
effected pursuant to an Assignment and Assumption executed by the Borrower, the
Administrative Agent, the Swingline Lender, each Issuing Bank and the assignee
and that the Lender making such assignment need not be a party thereto and (ii)
no termination of Commitments may be made pursuant to this Section 13.7 unless
the Letter of Credit Exposure and Swingline Exposure of the terminated Lender is
cash collateralized on terms reasonably satisfactory to the Issuing Bank and
Swingline Lender.

 

(d) Any such Lender replacement or Commitment termination pursuant to this
Section 13.7 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.

 

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 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, (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
or (3) any disproportionate payment obtained by a Lender as a result of the
extension by Lenders of the maturity date or expiration date of some but not all
Loans or Commitments or any increase in the Applicable Margin in respect of
Loans or Commitments of Lenders that have consented to any such extension. 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.

 

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(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.

 

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.

 

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 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.

 

13.11  Integration. This Agreement and the other Credit Documents represent the
agreement of the Borrower, the Guarantors, the Collateral Agent, 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, any Agent nor any Lender relative to
subject matter hereof not expressly set forth or referred to herein or in the
other Credit Documents.

 

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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 NEW YORK; provided, however, that (a)
whether the Acquisition has been consummated as contemplated by the Contribution
Agreement and (b) whether the Specified Purchase Agreement Representations are
accurate and whether as a result of any inaccuracy thereof the Borrower has the
right to terminate its obligations under the Contribution Agreement shall be
determined in accordance with the laws of the State of Texas without regard to
conflict of laws principles that would result in the application of laws of
another jurisdiction.

 

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 New York and
the courts of the United States of America for the Southern District of
New York, in each case located in New York County, and appellate courts from any
thereof; provided that nothing contained herein or in any other Credit Document
will prevent any Lender, the Collateral Agent or the Administrative Agent from
bringing any action to enforce any award or judgment or exercise any right under
the Credit Documents or against any Collateral or any other property of any
Credit Party in any other forum in which jurisdiction can be established;

 

(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) without limitation of Sections 12.7 and 13.5, 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 (other than, in the case of any Credit Party,
in respect of any such damages incurred or paid by an Indemnitee to a third
party, or which are included in a third-party claim, and for any out-of-pocket
expenses related thereto); and

 

(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.

 

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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 credit 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, the Lenders and
the other Agents 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, other Agents 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; (iii) neither the Administrative Agent, any other Agent, the
Lead Arranger and Bookrunner, 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 or any other Agent, any Lead Arranger, 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, any Agent, the Lead Arranger and Bookrunner 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; (iv) the Administrative Agent and its Affiliates, each other Agent
and each of 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, any other Agent or any Lender has any obligation to disclose any of such
interests by virtue of any advisory, agency or fiduciary relationship; and
(v) none of the Administrative Agent, any 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 and each Agent with respect to any breach or alleged breach
of agency or fiduciary duty; and

 

(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.

 

13.15  WAIVERS OF JURY TRIAL. THE BORROWER, EACH 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.

 

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13.16  Confidentiality. The Administrative Agent, each other Agent, any Issuing
Bank, any Swingline Lender 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 in connection with such Lender’s evaluation of whether
to become a Lender hereunder or obtained by such Lender, any Swingline Lender,
the Administrative Agent, any Issuing Bank or such other Agent 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 to any other Lender hereto and
(a) to its Affiliates and its Affiliates’ employees, legal counsel, independent
auditors and other experts or agents (collectively, the “Representatives”) who
need to know such information in connection with the Transactions and are
informed of the confidential nature of such information (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such information and instructed to keep such information
confidential); (b) to the extent requested by any Governmental Authority or
self-regulatory authority having jurisdiction over such Person; provided that
the Administrative Agent or such Lender, as applicable, agrees that it will
notify the Borrower as soon as practicable in the event of any such disclosure
by such Person (other than at the request of a regulatory authority or examiner)
unless such notification is prohibited by law, rule or regulation; (c) to the
extent required by applicable Requirements of Law or regulations or by any
subpoena or similar legal process; provided, that the Administrative Agent or
such Lender, as applicable, agrees that it will notify the Borrower as soon as
practicable in the event of any such disclosure by such Person (other than at
the request of a regulatory authority or examiner) unless such notification is
prohibited by law, rule or regulation; (d) subject to an agreement containing
provisions at least as restrictive as those set forth in this Section 13.16
(or as may otherwise be reasonably acceptable to the Borrower), to any pledgee
referred to in Section 13.6(d), counterparty to a Hedge Agreement, credit
insurer, eligible assignee of or participant in, or any prospective eligible
assignee of or participant in any of its rights or obligations under this
Agreement pursuant to Section 13.6, provided that the disclosure of any such
Confidential Information to any Lenders or eligible assignees or participants
shall be made subject to the acknowledgement and acceptance by such Lender,
eligible assignee or participant that such Confidential Information is being
disseminated on a confidential basis (on substantially the terms set forth in
this Section 13.16 or as otherwise reasonably acceptable to the Borrower)
in accordance with the standard processes of the Administrative Agent or
customary market standards for dissemination of such type of Confidential
Information; (e) with the prior written consent of the Borrower; (f) 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
prohibited by applicable Requirements of Law, each Lender, the Administrative
Agent, any Swingline Lender, any Issuing Bank and each other Agent 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, any Issuing Bank or such other Agent, as applicable, by any governmental
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, any Issuing Bank or any other Agent be obligated or
required to return any materials furnished by the Borrower or any Subsidiary;
(g) to any rating agency when required by it (it being understood that, prior to
any such disclosure, such rating agency shall undertake to preserve the
confidentiality of any information relating to Credit Parties and their
Subsidiaries received by it from such Lender) or to the CUSIP Service Bureau or
any similar organization; or (h) to the extent such Confidential Information is
independently developed by or was in the prior possession of the Administrative
Agent, the Lead Arranger and Bookrunner, such Lender or any of their respective
Affiliates so long as not based on information obtained in a manner that would
violate this Section 13.16; provided that no disclosure shall be made to any
Disqualified Institution. In addition, each Lender, the Administrative Agent and
each other 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 Agreements 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 Section 13.16 or confidentiality
provisions at least as restrictive as those set forth in the Section 13.16.
“Information” means all information received from the Borrower relating to the
Borrower or its business, other than any such information that is available to
the Administrative Agent, any Issuing Bank or any Lender on a non-confidential
basis prior to disclosure by the Borrower and other than information pertaining
to this Agreement routinely provided by arrangers to data service providers,
including league table providers, that serve the lending industry.

 

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Each Lender acknowledges that information furnished to it pursuant to this
Agreement or the other Credit Documents may include material non-public
information concerning the Borrower and its Affiliates and their related parties
or their respective securities, and confirms that it has developed compliance
procedures regarding the use of material non-public information and that it will
handle such material non-public information in accordance with those procedures
and applicable law, including federal and state securities laws.

 

All information, including requests for waivers and amendments, furnished by the
Borrower or the Administrative Agent pursuant to, or in the course of
administering, this Agreement or the other Credit Documents will be
syndicate-level information, which may contain material non-public information
about the Borrower and its Affiliates and their related parties or their
respective securities. Accordingly, each Lender represents to the Borrower and
the Administrative Agent that it has identified in its Administrative
Questionnaire a credit contact who may receive information that may contain
material non-public information in accordance with its compliance procedures and
applicable law, including federal and state securities laws.

 

13.17  Release of Collateral and Guarantee Obligations.

 

(a) The Lenders hereby irrevocably agree that the Liens granted to the
Collateral 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 Liens encumbering such Collateral and held by each other
creditor party to any Customary Intercreditor Agreement are required to be
released pursuant to the relevant intercreditor agreement (and the Collateral
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) upon any Collateral becoming an Excluded Equity Interest, an Excluded
Asset or becoming owned by an Excluded Subsidiary or (in the case of Collateral
constituting cash) becoming subject to Liens pursuant to clauses (d) and (e) of
the definition of “Permitted Liens” or becoming subject to any Lien permitted
pursuant to Sections 10.2(g), (j), (i), (o), (p), (w) and (y), in each case,
except in connection with a transaction prohibited hereunder, (iv) to the extent
such Collateral is comprised of property leased to a Credit Party, upon
termination or expiration of such lease, (v) 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), (vi) 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 in accordance with the second succeeding sentence or
Section 5(g) of the Guarantee and (vii) as required by the Collateral Agent to
effect any Disposition of Collateral in connection with any exercise of remedies
of the Collateral 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.
Additionally, the Lenders hereby irrevocably agree that the Guarantors shall be
released from the Guarantees upon consummation of any transaction permitted
hereunder resulting in such Subsidiary ceasing to constitute a Restricted
Subsidiary or otherwise becoming an Excluded Subsidiary. Any representation,
warranty or covenant contained in any Credit Document relating to any such
Collateral or Guarantor shall no longer be deemed to be repeated. In connection
with any release hereunder, the Administrative Agent and Collateral Agent shall
promptly 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 in respect of such
Subsidiary, property or asset.

 

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(b) Notwithstanding anything to the contrary contained herein or any other
Credit Document, when Payment in Full has occurred (subject to any (i) Hedging
Obligations in respect of any Secured Hedge Agreements, (ii) Cash Management
Obligations in respect of any Secured Cash Management Agreements and (iii) any
contingent or indemnification obligations not then due and payable), upon
request of the Borrower, the Administrative Agent and/or Collateral Agent, as
applicable, 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, whether or
not on the date of such release there may be any (i) Hedging Obligations in
respect of any Secured Hedge Agreements, (ii) Cash Management Obligations in
respect of any Secured Cash Management Agreements and (iii) any contingent or
indemnification obligations not then due and payable. 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
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.

 

13.18  USA PATRIOT Act. The Agents 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 such Agent and such Lender to identify each Credit
Party in accordance with the Patriot Act.

 

13.19  Payments Set Aside. To the extent that any payment by or on behalf of the
Borrower is made to any Agent or any Lender, or any 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 such 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 (a) 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 (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or repaid
by any 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.

 

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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.

 

13.21  Disposition of Proceeds. The Security Documents contain an assignment by
the Borrower and/or the Guarantors unto and in favor of the Collateral 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, (a) the
Administrative Agent and the Lenders agree that they will neither notify the
purchaser or purchasers of such production nor take any other action to cause
such proceeds to be remitted to the Administrative Agent or the Lenders, but the
Lenders will instead permit such proceeds to be paid to the Borrower and its
Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to
take such actions as may be necessary to cause such proceeds to be paid to the
Borrower and/or such Subsidiaries.

 

13.22  Collateral Matters; Hedge Agreements. 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
(a) under any Secured Hedge Agreement, in each case, after giving effect to all
netting arrangements relating to such Hedge Agreements or (b) under any Secured
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 Secured Hedge Agreement or Secured Cash Management Agreement.

 

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.

 

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

 

Notwithstanding anything to the contrary in any Credit Document or in any other
agreement, arrangement or understanding among any such parties, each party
hereto acknowledges that any liability of any Lender that is an EEA Financial
Institution arising under any Credit 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 to any Lender 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 Credit 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.]

 

 182 

 

 

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.

 

  FALCON MINERALS OPERATING PARTNERSHIP, LP, as the Borrower       By: Falcon
Minerals GP, LLC, its general partner

 

  By: /s/Jeffrey F. Brotman     Name:  Jeffrey F. Brotman     Title:  Chief
Financial Officer, Chief Legal                 Officer and Secretary

 

[Signature page to RBL Credit Agreement]

 

 

 

 

  CITIBANK, N.A., as the Administrative Agent and the Collateral Agent        
By: /s/ Jeff Ard     Name:  Jeff Ard     Title:  Vice President        
CITIBANK, N.A., as a Swing Line Lender, an Issuing Bank and a Lender         By:
Jeff Ard     Name:  Jeff Ard     Title:  Vice President

 

[Signature page to RBL Credit Agreement]

 

 

 

 

  JPMORGAN CHASE BANK, N.A.,   as a Lender         By: /s/ Theresa M. Benson    
Name:  Theresa M. Benson     Title:  Authorized Officer

 

[Signature page to RBL Credit Agreement]

 

 

 

 

  ROYAL BANK OF CANADA,   as a Lender         By: /s/ Kristan Spivey    
Name:  Kristan Spivey     Title:  Authorized Signatory

 

[Signature page to RBL Credit Agreement]

 

 

 

 

  ING CAPITAL LLC,    as a Lender         By: /s/ Juli Bieser     Name:  Juli
Bieser     Title:  Managing Director         By: /s/ Josh Strong     Name:  Josh
Strong     Title:  Director

 

[Signature page to RBL Credit Agreement]

 

 

 

 

  NATIXIS, NEW YORK BRANCH,   as a Lender         By: /s/ Leila Zomorrodian    
Name:  Leila Zomorrodian     Title:  Director         By: /s/ Vikram Nath    
Name:  Vikram Nath     Title:  Director

 

[Signature page to RBL Credit Agreement]