Exhibit 10.1

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of

August 2, 2011

among

PENN VIRGINIA HOLDING CORP.,

as Borrower

PENN VIRGINIA CORPORATION,

as Parent

The Lenders Party Hereto

and

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

as Administrative Agent and Issuing Bank

and

WELLS FARGO BANK, N.A. and BANK OF AMERICA, N.A.,

as Co-Syndication Agents

And

ROYAL BANK OF CANADA and BNP PARIBAS,

as Co-Documentation Agents,

 

 

J.P. MORGAN SECURITIES LLC,

as Sole Bookrunner and Sole Arranger

 

 

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CONTENTS

 

     Page   Clause              Subject Matter       

ARTICLE I       Definitions

     1   

SECTION 1.01.

   Defined Terms      1   

SECTION 1.02.

   Classification of Loans and Borrowings      25   

SECTION 1.03.

   Terms Generally      26   

SECTION 1.04.

   Accounting Terms; GAAP      26   

ARTICLE II       The Credits

     26   

SECTION 2.01.

   Commitments      26   

SECTION 2.02.

   Loans and Borrowings      27   

SECTION 2.03.

   Requests for Borrowings      27   

SECTION 2.04.

   Borrowing Base      28   

SECTION 2.05.

   Increase in Aggregate Commitment Amount      30   

SECTION 2.06.

   Letters of Credit      31   

SECTION 2.07.

   Funding of Borrowings      35   

SECTION 2.08.

   Interest Elections      36   

SECTION 2.09.

   Termination and Reduction of Commitments      37   

SECTION 2.10.

   Repayment of Loans; Evidence of Debt      38   

SECTION 2.11.

   Prepayment of Loans      38   

SECTION 2.12.

   Fees      40   

SECTION 2.13.

   Interest      41   

SECTION 2.14.

   Alternate Rate of Interest      42   

SECTION 2.15.

   Increased Costs      42   

SECTION 2.16.

   Break Funding Payments      43   

SECTION 2.17.

   Taxes      44   

SECTION 2.18.

   Payments Generally; Pro Rata Treatment; Sharing of Set-offs      47   

SECTION 2.19.

   Mitigation Obligations; Replacement of Lenders      49   

 

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CONTENTS

 

     Page   Clause              Subject Matter       

SECTION 2.20.

   Defaulting Lenders      50   

ARTICLE III    Representations and Warranties

     51   

SECTION 3.01.

   Existence; Organization; Powers      51   

SECTION 3.02.

   Authorization; Enforceability      51   

SECTION 3.03.

   Governmental Approvals; No Conflicts      51   

SECTION 3.04.

   Financial Condition; No Material Adverse Change      52   

SECTION 3.05.

   Properties      53   

SECTION 3.06.

   Litigation and Environmental Matters      53   

SECTION 3.07.

   Compliance with Laws and Agreements      55   

SECTION 3.08.

   Investment Company Status      55   

SECTION 3.09.

   Taxes      55   

SECTION 3.10.

   ERISA      55   

SECTION 3.11.

   Disclosure      55   

SECTION 3.12.

   Use of Loans and Letters of Credit      56   

SECTION 3.13.

   Subsidiaries      56   

SECTION 3.14.

   Jurisdiction of Incorporation or Organization      56   

SECTION 3.15.

   Maintenance of Properties      57   

SECTION 3.16.

   Insurance      57   

SECTION 3.17.

   Gas Imbalances, Prepayments      57   

SECTION 3.18.

   Marketing of Production      57   

SECTION 3.19.

   Hedging Transactions      58   

SECTION 3.20.

   Restriction on Liens      58   

SECTION 3.21.

   Intellectual Property      58   

SECTION 3.22.

   Material Personal Property      58   

SECTION 3.23.

   Business      58   

 

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CONTENTS

 

     Page   Clause              Subject Matter       

SECTION 3.24.

   Solvency      58   

SECTION 3.25.

   Licenses, Permits, Etc      59   

SECTION 3.26.

   Fiscal Year      59   

SECTION 3.27.

   Seniority Designation      59   

ARTICLE IV     Conditions

     59   

SECTION 4.01.

   Effective Date      59   

SECTION 4.02.

   Each Credit Event      62   

ARTICLE V      Affirmative Covenants

     63   

SECTION 5.01.

   Financial Statements; Other Information      63   

SECTION 5.02.

   Notices of Material Events      65   

SECTION 5.03.

   Existence; Conduct of Business      66   

SECTION 5.04.

   Payment of Obligations, Taxes and Material Claims      66   

SECTION 5.05.

   Maintenance of Properties; Insurance      67   

SECTION 5.06.

   Books and Records; Inspection Rights      68   

SECTION 5.07.

   Compliance with Laws      68   

SECTION 5.08.

   Use of Proceeds and Letters of Credit      68   

SECTION 5.09.

   Environmental Matters      69   

SECTION 5.10.

   Further Assurances      69   

SECTION 5.11.

   Reserve Reports      69   

SECTION 5.12.

   Title Information      70   

SECTION 5.13.

   Additional Collateral; Additional Guarantors      71   

SECTION 5.14.

   ERISA Information and Compliance      72   

SECTION 5.15.

   Business of the Borrower      72   

SECTION 5.16.

   Permits, Licenses      72   

SECTION 5.17.

   Swap Agreement Termination      72   

 

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CONTENTS

 

     Page   Clause              Subject Matter       

SECTION 5.18.

   Restricted Subsidiaries      73   

SECTION 5.19.

   Agreements Respecting Unrestricted Subsidiaries      73   

SECTION 5.20.

   Additional Covenants Upon Issuance of Unsecured Notes      73   

ARTICLE VI    Negative Covenants

     74   

SECTION 6.01.

   Indebtedness      74   

SECTION 6.02.

   Liens      75   

SECTION 6.03.

   Fundamental Changes      76   

SECTION 6.04.

   Investments, Loans and Advances      77   

SECTION 6.05.

   Hedging Transactions      77   

SECTION 6.06.

   Restricted Payments      78   

SECTION 6.07.

   Transactions with Affiliates      78   

SECTION 6.08.

   Restrictive Agreements      78   

SECTION 6.09.

   Financial Covenants      79   

SECTION 6.10.

   Designation and Conversion of Restricted and Unrestricted Subsidiaries;
Indebtedness of Unrestricted Subsidiaries      79   

SECTION 6.11.

   Proceeds of Loans      80   

SECTION 6.12.

   ERISA Compliance      80   

SECTION 6.13.

   Sale of Properties      81   

SECTION 6.14.

   Environmental Matters      82   

SECTION 6.15.

   Subsidiaries      82   

SECTION 6.16.

   Gas Imbalances, Take-or-Pay or Other Prepayments      82   

SECTION 6.17.

   Fiscal Year; Fiscal Quarter      82   

SECTION 6.18.

   Repayment of Unsecured Notes; Amendment of Unsecured Notes Documents      82
  

SECTION 6.19.

   Marketing Activities      83   

SECTION 6.20.

   Sale or Discount of Receivables      83   

 

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CONTENTS

 

     Page   Clause               Subject Matter       

ARTICLE VII    Events of Default; Remedies; Application of Proceeds

     84   

SECTION 7.01.

   If any of the following events (“Events of Default”) shall occur:      84   

SECTION 7.02.

   Application of Payments      86   

ARTICLE VIII

   The Administrative Agent      87   

SECTION 8.01.

   Appointment; Powers      87   

SECTION 8.02.

   Agents as Lenders      87   

SECTION 8.03.

   Duties and Obligations of Administrative Agent      87   

SECTION 8.04.

   Reliance by Administrative Agent      88   

SECTION 8.05.

   Subagents      88   

SECTION 8.06.

   Resignation or Removal of Administrative Agent      88   

SECTION 8.07.

   No Reliance      88   

SECTION 8.08.

   Administrative Agent May File Proofs of Claim      89   

SECTION 8.09.

   Authority of Administrative Agent to Execute Collateral Documents and Release
Collateral and Liens      89   

SECTION 8.10.

   The Arranger, the Co-Syndication Agents and the Co-Documentation Agents     
90   

ARTICLE IX     Miscellaneous

     90   

SECTION 9.01.

   Notices      90   

SECTION 9.02.

   Waivers; Amendments      91   

SECTION 9.03.

   Expenses; Indemnity; Damage Waiver      92   

SECTION 9.04.

   Successors and Assigns      94   

SECTION 9.05.

   Survival      97   

SECTION 9.06.

   Counterparts; Integration; Effectiveness      97   

SECTION 9.07.

   Severability      98   

SECTION 9.08.

   Right of Setoff      98   

SECTION 9.09.

   Governing Law; Jurisdiction; Consent to Service of Process      98   

 

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CONTENTS

 

     Page   Clause                Subject Matter       

SECTION 9.10.

   WAIVER OF JURY TRIAL      99   

SECTION 9.11.

   Headings      99   

SECTION 9.12.

   Confidentiality      99   

SECTION 9.13.

   Interest Rate Limitation      100   

SECTION 9.14.

   Collateral Matters; Lender Party Swap Agreements and Lender Party Financial
Service Products      101   

SECTION 9.15.

   No Third Party Beneficiaries      102   

SECTION 9.16.

   USA PATRIOT Act      102   

SECTION 9.17.

   NO ORAL AGREEMENTS      102   

SECTION 9.18.

   Sale and Purchase of Loans      102   

 

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SCHEDULES:

Schedule 2.01 – Commitments

Schedule 2.06(k) – Existing Letters of Credit

Schedule 3.06 – Litigation

Schedule 3.13 – Subsidiaries

Schedule 3.17 – Gas Imbalances

Schedule 3.18 –Marketing Contracts

Schedule 3.19 – Swap Agreements

Schedule 4.01(m) – Certain Unrestricted Subsidiaries

Schedule 6.01(b) – Outstanding Unsecured Notes

Schedule 6.01(c) – Existing Indebtedness

Schedule 6.02 – Existing Liens

Schedule 6.04 – Investments

Schedule 6.08 – Existing Restrictions

EXHIBITS:

Exhibit A – Form of Assignment and Assumption

Exhibit B – Additional Lender Agreement

Exhibit C – Compliance Certificate

Exhibit D – Form of Subordination Agreement

Exhibit E – U.S. Tax Withholding Certificates

 

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This AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 2, 2011, among
PENN VIRGINIA HOLDING CORP., as Borrower, PENN VIRGINIA CORPORATION, as Parent,
LENDERS party hereto, and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as
Administrative Agent.

W I T N E S S E T H:

WHEREAS, the Borrower, JPMorgan Chase Bank, National Association, as
administrative agent, Wells Fargo Bank, N.A. and Bank of America, N.A., as
co-syndication agents, Royal Bank of Canada and BNP Paribas, as co-documentation
agents, and certain lenders party thereto (the “Existing Lenders”) have
heretofore entered into a Credit Agreement dated as of November 18, 2009, as
amended, modified or supplemented (the “Existing Credit Facility”);

WHEREAS, the Borrower desires to amend and restate the Existing Credit Facility
in order to restructure, rearrange, renew, extend and continue all indebtedness
evidenced by and outstanding under the Existing Credit Facility (the “Existing
Indebtedness”), and to modify the commitments from the Lenders pursuant to which
Loans will be made by the Lenders to the Borrower and Letters of Credit will be
issued by the Issuing Bank under the several responsibilities of the Lenders for
the account of the Borrower from time to time prior to the Maturity Date;

WHEREAS, the Administrative Agent, the Lenders and the Issuing Bank are willing,
on the terms and subject to the conditions hereinafter set forth (including
Article IV), to amend and restate the Existing Credit Facility in order to
restructure, rearrange, renew, extend and continue all Existing Indebtedness and
to modify the commitments and make such Loans to the Borrower and issue and
participate in such Letters of Credit for the account of the Borrower; and

NOW, THEREFORE, the parties hereto agree that the Existing Credit Facility is
amended and restated in its entirety as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

“2007 Convertible Notes” means those certain 4 1/2% convertible senior
subordinated notes due November 15, 2012, issued by the Parent in an aggregate
principal amount of $230,000,000 on the date of issuance thereof.

“2007 Convertible Notes Indenture” means collectively, that certain indenture
dated as of December 5, 2007, by and among the Parent, as issuer, certain of its
affiliates and Wells Fargo Bank, National Association, as trustee, that certain
first supplemental indenture dated as of December 5, 2007, between the Parent
and Wells Fargo Bank, National Association, as trustee, and related
documentation entered into in connection therewith, pursuant to which the 2007
Convertible Notes have been issued, as the same may be amended, restated,
modified or supplemented from time to time.

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“2016 Senior Notes” means those certain 10.375% Senior Notes due June 2016,
issued by the Parent in an aggregate principal amount of $300,000,000 on the
date of issuance thereof.

“2016 Senior Notes Indenture” means collectively, that certain indenture dated
as of June 15, 2009, by and among the Parent, as issuer, certain of its
affiliates and Wells Fargo Bank, National Association, as trustee, that certain
first supplemental indenture dated as of June 15, 2009, between the Parent and
Wells Fargo Bank, National Association, as trustee, that certain second
supplemental indenture dated as of April 4, 2011, between the Parent and Wells
Fargo Bank, National Association, as trustee, and related documentation entered
into in connection therewith, pursuant to which the 2016 Senior Notes have been
issued, as the same may be amended, restated, modified or supplemented from time
to time.

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

“Additional Lender Agreement” shall have the meaning assigned to such term in
Section 2.05(b).

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.

“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Lenders hereunder, pursuant to Article VIII (and
not in its individual capacity as a Lender), together with any successor agent
appointed pursuant to Article VIII.

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

“Advance Payment Contract” means (a) any production payment (whether volumetric
or dollar denominated) granted or sold by any Credit Party payable from a
specified share of proceeds received from production from specified Oil and Gas
Properties, together with all undertakings and obligations in connection
therewith, or (b) any contract whereby any Credit Party receives or becomes
entitled to receive (either directly or indirectly) any payment (an “Advance
Payment”) as consideration for (i) Hydrocarbons produced or to be produced from
Oil and Gas Properties owned by any Credit Party in advance of the delivery of
such Hydrocarbons (and regardless of whether such Hydrocarbons are actually
produced or actual delivery is required) to or for the account of the purchaser
thereof or (ii) a right or option to receive such Hydrocarbons (or a cash
payment in lieu of such Hydrocarbons); provided that inclusion of customary and
standard “take or pay” provisions in any gas sales or purchase contract or any
other similar contract shall not, in and of itself, cause such gas sales or
purchase contract to constitute an Advance Payment Contract for the purposes of
this definition.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

 

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“Aggregate Commitment Amount” means the aggregate of the Commitment Amounts of
all the Lenders, as increased or reduced from time to time pursuant to the terms
hereof; provided that the Aggregate Commitment Amount shall not at any time
exceed the Maximum Facility Amount.

“Agreement” means this Amended and Restated Credit Agreement, as it may be
amended, restated, supplemented or otherwise modified and in effect from time to
time.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day plus  1/2 of 1% and (c) the Adjusted LIBO 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%, provided that, for the avoidance of
doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing
on the Reuters Screen LIBOR01 Page (or on any successor or substitute page) at
approximately 11:00 a.m. London time on such day (without any rounding). Any
change in the Alternate Base Rate due to a change in the Prime Rate, the Federal
Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and
including the effective date of such change in the Prime Rate, the Federal Funds
Effective Rate or the Adjusted LIBO Rate, respectively.

“Applicable Percentage” means, with respect to any Lender, the percentage of the
Aggregate Commitment Amount represented by such Lender’s Commitment Amount;
provided that for purposes of Section 2.20 when a Defaulting Lender shall exist,
“Applicable Percentage” shall mean the percentage of the Aggregate Commitment
Amount (disregarding any Defaulting Lender’s Commitment Amount) represented by
such Lender’s Commitment Amount. If the Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Commitment Amounts
most recently in effect, giving effect to any assignments and to any Lender’s
status as a Defaulting Lender at the time of determination.

“Applicable Rate” means, for any day, with respect to any ABR Loan or Eurodollar
Loan, or with respect to the Unused Commitment Fees payable hereunder, as the
case may be, the applicable rate per annum set forth below under the caption
“ABR Spread”, “Eurodollar Spread” or “Unused Commitment Fee Rate”, as the case
may be, based upon the Borrowing Base Usage applicable on such date:

 

Borrowing Base Usage:

   ABR
Spread     Eurodollar
Spread     Unused
Commitment Fee
Rate  

Equal to or greater than 90%

     1.500 %      2.500 %      0.500 % 

Equal to or greater than 75%, but less than 90%

     1.250 %      2.250 %      0.500 % 

Equal to or greater than 50%, but less than 75%

     1.000 %      2.000 %      0.500 % 

Equal to or greater than 25% but less than 50%

     0.750 %      1.750 %      0.375 % 

Less than 25%

     0.500 %      1.500 %      0.375 % 

 

3

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Each change in the Applicable Rate 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 Counterparty” means, at any time and from time to time, (i) any Person
engaged in the business of entering into Swap Agreements for commodity, interest
rate or currency risk that has (or the credit support provider of such Person
has), at the time the Parent, the Borrower or any Restricted Subsidiary enters
into a Swap Agreement with such Person, a long term senior unsecured debt credit
rating of “A-” or better from S&P, (ii) any Lender or Affiliate of a Lender or
(iii) any other Person designated by the Parent or the Borrower that is
acceptable to the Administrative Agent.

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

“Approved Petroleum Engineers” means any of Wright & Company, Inc., Ryder Scott
Company, Netherland Sewell & Associates, Inc., and Miller and Lentz, Ltd., or
such other reputable firm(s) of independent petroleum engineers as shall be
approved by the Majority Lenders.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.

“Authorized Officer” means, as to any Person, the chief executive officer, the
president, the chief financial officer or any vice president of such Person.
Unless otherwise specified, all references to an Authorized Officer herein shall
mean an Authorized Officer of the Parent.

“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Commitments.

“Beneficial Owner” means, with respect to any U.S. Federal withholding Tax, the
beneficial owner, for U.S. Federal income tax purposes, to whom such Tax
relates.

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.

“Borrower” means Penn Virginia Holding Corp., a Delaware corporation.

 

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“Borrowing” means Loans of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.

“Borrowing Base” means at any time an amount equal to the amount determined in
accordance with Section 2.04.

“Borrowing Base Deficiency” means, as of any date, the amount, if any, by which
the Credit Exposure on such date exceeds the Borrowing Base in effect on such
date; provided that, for purposes of determining the existence and amount of any
Borrowing Base Deficiency, obligations under any Letter of Credit will not be
deemed to be outstanding to the extent such obligations are secured by cash in
the manner contemplated by Section 2.06(j).

“Borrowing Base Properties” means all proved Oil and Gas Properties of the
Borrower and the Guarantors located in the United States included in the most
recently delivered Reserve Report and evaluated by the Administrative Agent and
the Lenders for purposes of establishing the Borrowing Base.

“Borrowing Base Usage” means, as of any date and for all purposes, the quotient,
expressed as a percentage, of (i) the Credit Exposure as of such date, divided
by (ii) the lesser of (A) the Aggregate Commitment Amount as of such date and
(B) the Borrowing Base in effect on such date.

“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Chicago, Illinois or New York, New York are authorized
or required by law to remain closed; provided that, when used in connection with
a Eurodollar Loan, the term “Business Day” shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.

“Call Spread Transaction” means, collectively, that certain transaction entered
into by the Parent in connection with the issuance of the 2007 Convertible Notes
pursuant to which (i) the Parent purchased for cash one or more call options
from one or more Persons (including one or more Lenders or Affiliates of
Lenders) with respect to a specified number of shares of the Parent’s issued and
outstanding capital stock determined based on the aggregate principal amount of
the 2007 Convertible Notes at a strike price approximately equal to the
conversion price of the 2007 Convertible Notes and (ii) the Parent concurrently
sold one or more warrants to one or more Person (including one or more Lenders
or Affiliates of Lenders) with respect to a specified number of shares of the
Parent’s issued and outstanding capital stock determined based on the aggregate
principal amount of the 2007 Convertible Notes at a strike price in excess of
the conversion price.

“Capital Lease” of any Person means any lease of Property by such Person, as
lessee, that would be capitalized on a balance sheet of such Person prepared in
accordance with GAAP.

“Capital Lease Obligations” of any Person means the amount of the obligations of
such Person under any Capital Lease, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
under GAAP, and the amount of such obligations shall be the capitalized amount
thereof determined in accordance with GAAP.

 

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“Casualty Event” means any loss, casualty or other insured damage to, or any
taking under power of eminent domain or by condemnation or similar proceeding
of, any Property or asset of the Parent, the Borrower or any Restricted
Subsidiary that was included in the most recent Reserve Report having a Fair
Market Value in excess of $10,000,000.

“Change in Control” means (a) any Person or two or more Persons acting as a
group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the SEC under the Securities Exchange Act of 1934) of 35% or more of the
outstanding shares of voting stock of the Parent; (b) individuals who, as of the
Effective Date, constitute the Board of Directors of the Parent (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board of
Directors of the Parent; provided, however, that any individual becoming a
director of the Parent subsequent to the date hereof whose election, or
nomination for election by the Parent’s shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board, shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act of 1934) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board of
Directors of the Parent; or (c) less than 100% of the Equity Interests of the
Borrower are owned directly or indirectly by the Parent.

“Change in Law” means (a) the adoption after the date hereof of any applicable
law, rule or regulation (including any applicable law, rule or regulation
regarding capital adequacy) or any change therein after the date hereof, (b) any
change after the date hereof in the interpretation or administration thereof by
any Governmental Authority charged with the interpretation or administration
thereof, or compliance with any request or directive (whether or not having the
force of law) of any such Governmental Authority, or (c) the compliance, whether
commenced prior to or after the date hereof, by any Lender with the requirements
(regardless of the date enacted, adopted, promulgated or issued) of (i) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives thereunder or issued in connection therewith and
(ii) all requests, rules guidelines or directives concerning capital adequacy
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Regulations and Supervisory Practices (or any successor similar
authority) or the United States financial regulatory authorities, in each case
pursuant to Basel III.

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

“Collateral” means any and all “Mortgaged Property” and “Collateral”, as defined
in any Collateral Document.

“Collateral Documents” means the Guaranty, the Pledge Agreement, the Mortgages
and any and all other agreements, documents or instruments now or hereafter
executed and delivered by the Parent, the Borrower or any other Person
(including participation or similar agreements

 

6

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between any Lender and any other lender or creditor with respect to any Secured
Obligation pursuant to this Agreement) in connection with, or as security for
the payment or performance of the Secured Obligations, as such agreements,
documents or instruments may be amended, supplemented or restated from time to
time.

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans and to acquire participations in Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such
Lender’s Credit Exposure hereunder; provided that such Lender’s Commitment (and
such Lender’s Credit Exposure) shall never exceed the least of (x) such Lender’s
Commitment Amount, (y) such Lender’s Applicable Percentage of the Borrowing Base
then in effect and (z) such Lender’s Applicable Percentage of the Aggregate
Commitment Amount, in each case, as such amounts may be adjusted from time to
time in accordance with this Agreement.

“Commitment Amount” means, with respect to each Lender, as applicable, the
amount set forth opposite such Lender’s name on Schedule 2.01 (including any
revision thereof in accordance with Section 2.05) or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Commitment (or
as set forth opposite such Lender’s name on Schedule 2.01, plus (minus) any
amounts assumed (assigned) pursuant to an Assignment and Assumption). The
initial amount of each Lender’s Commitment Amount as of the Effective Date is
set forth on Schedule 2.01.

“Consolidated Current Assets” means with respect to the Parent and the
Restricted Subsidiaries, for any period, the consolidated current assets of the
Parent and the Restricted Subsidiaries; provided that Consolidated Current
Assets shall (i) include the unused amount of the total Commitments and
(ii) exclude any non-cash assets in respect of any Swap Agreement.

“Consolidated Current Liabilities” means with respect to the Parent and the
Restricted Subsidiaries, for any period, the consolidated current liabilities of
the Parent and the Restricted Subsidiaries; provided that Consolidated Current
Liabilities shall exclude (i) any non-cash liabilities or obligations in respect
of any Swap Agreement and (ii) current maturities under this Agreement, the 2007
Convertible Notes and the 2016 Senior Notes.

“Consolidated Net Income” means with respect to the Parent and the Restricted
Subsidiaries, for any period, the aggregate of the net income (or loss) of the
Parent and the Restricted Subsidiaries after allowances for taxes for such
period determined on a consolidated basis in accordance with GAAP; provided that
there shall be excluded from such net income (to the extent otherwise included
therein) the following: (i) the net income of any Person in which the Parent or
any Restricted Subsidiary has an interest (which interest does not cause the net
income of such other Person to be consolidated with the net income of the Parent
and the Restricted Subsidiaries in accordance with GAAP), except to the extent
of the amount of dividends or distributions actually paid in such period by such
other Person to the Parent or to a Restricted Subsidiary, as the case may be;
(ii) the net income (but not loss) during such period of any Restricted
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions or transfers or loans by such Restricted Subsidiary is not at the
time permitted by operation of the terms of its charter or any agreement,
instrument or Governmental Requirement applicable to such Restricted Subsidiary
or is otherwise restricted or prohibited, in each case

 

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determined in accordance with GAAP; (iii) the net income (or loss) of any Person
acquired in a pooling-of-interests transaction for any period prior to the date
of such transaction; (iv) any extraordinary gains or losses during such period,
including gains or losses attributable to (A) Property sales and (B) stock or
other equity purchases or divestitures; (v) any non-cash charges or losses and
any non-cash income or gains in respect of any Swap Agreement; and (vi) the
cumulative effect of a change in accounting principles and any gains or losses
attributable to writeups or writedowns of assets; and provided that if the
Parent or any Restricted Subsidiary shall acquire or dispose of any Property or
stock or other equity interests during such period or a Subsidiary shall be
redesignated pursuant to the terms of this Agreement as either an Unrestricted
Subsidiary or a Restricted Subsidiary, then, upon delivery to the Administrative
Agent of audited or reviewed financial statements or other financial statements
acceptable to the Administrative Agent that support a recalculation,
Consolidated Net Income shall be calculated after giving pro forma effect to
such acquisition, disposition or redesignation, as if such acquisition,
disposition or redesignation had occurred on the first day of such period.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

“Credit Exposure” means, at any time, the sum of the outstanding principal
amount of the Loans of all Lenders as of such date, plus the aggregate LC
Exposure of all Lenders as of such date.

“Credit Party” means any of the Borrower, the Parent or any other Guarantor;
“Credit Parties” means, collectively, all of the Borrower, the Parent and each
other Guarantor.

“Default” means any event or condition that constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

“Default Rate” has the meaning assigned to such term in Section 2.13(c).

“Defaulting Lender” means any Lender that has, as determined by the
Administrative Agent, (a) failed to fund any portion of its Loans or
participations in Letters of Credit within three Business Days of the date
required to be funded by it hereunder, (b) notified the Parent, the Borrower,
the Administrative Agent, the Issuing Bank or any Lender in writing that it does
not intend to comply with any of its funding obligations under this Agreement or
has made a public statement to the effect that it does not intend to comply with
its funding obligations under this Agreement or under other agreements in which
it commits to extend credit, (c) failed, within three Business Days after
request by the Administrative Agent, to confirm that it will comply with the
terms of this Agreement relating to its obligations to fund prospective Loans
and participations in then outstanding Letters of Credit, (d) otherwise failed
to pay over to the Administrative Agent or any other Lender any other amount
required to be paid by it hereunder within three Business Days of the date when
due, unless the subject of a good faith dispute, or (e) (i) become or is
insolvent or has a parent company that has become or is insolvent or (ii) become
the subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, assignee for the benefit of creditors or
similar Person charged with reorganization

 

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or liquidation of its business or custodian, appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that
has become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or custodian appointed for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment.

“Disqualified Stock” means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable (other than in connection with a change of control or an asset sale
(provided that such maturity or mandatory redemption resulting from such asset
sale is subject to any mandatory prepayments and commitment reductions required
hereunder or in accordance herewith)) for any consideration other than Equity
Interests (other than Disqualified Stock), pursuant to a sinking fund obligation
or otherwise, or is convertible or exchangeable for Indebtedness or redeemable
(other than in connection with a change of control or an asset sale (provided
that such maturity or mandatory redemption resulting from such asset sale is
subject to any mandatory prepayments and commitment reductions required
hereunder or in accordance herewith)) for any consideration other than Equity
Interests (other than Disqualified Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is 91 days after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.

“dollars” or “$” refers to lawful money of the United States of America.

“Domestic Subsidiary” means any Restricted Subsidiary organized under the laws
of any jurisdiction within the United States of America (including territories
thereof).

“EBITDAX” means, for any period, the sum of Consolidated Net Income for such
period, plus, to the extent deducted from Consolidated Net Income in such
period, the sum (determined without duplication) of the aggregate amount of
interest expense paid (or payable) in cash during such period on Indebtedness of
the Parent and the Restricted Subsidiaries (including the interest portion of
payments under Capital Leases and Synthetic Leases), taxes, depreciation,
depletion, amortization expenses, exploration expenses, impairments, cash and
non-cash expenditures paid for early termination of existing Indebtedness and
other noncash charges or losses, minus, to the extent included in Consolidated
Net Income in such period, any noncash income included in Consolidated Net
Income.

“Effective Date” means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or health
and safety matters.

 

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“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Parent or any of its Subsidiaries directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.

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

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, the Parent or any other Guarantor, is treated
as a single employer under 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.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Parent or any ERISA Affiliate of any liability
under Title IV of ERISA with respect to the termination of any Plan; (e) the
receipt by the Parent or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Parent or any ERISA Affiliate of any liability with respect to the withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by
the Parent or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Parent or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Section 7.01.

“Excluded Taxes” means, with respect to any Recipient of any payment to be made
by or on account of any obligation of the Borrower or any other Credit Party
hereunder or under any

 

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Loan Document, any of the following Taxes: (a) income or franchise Taxes imposed
on (or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such Recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) Other Connection Taxes, (c) any branch
profits Taxes imposed by the United States of America or any similar Tax imposed
by any other jurisdiction in which the Borrower is located, (d) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.19(b)), any withholding Taxes resulting from any law in effect
on such date such Foreign Lender becomes a party to this Agreement (or
designates a new lending office) or is attributable to such Foreign Lender’s
failure to comply with Section 2.17(f), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding Taxes pursuant to Section 2.17(a) and
(e) any Taxes imposed under FATCA.

“Existing Credit Facility” is defined in the first recital.

“Existing Letters of Credit” means each letter of credit issued and outstanding
on the Effective Date set forth on Schedule 2.06(k).

“Fair Market Value” means, with respect to any Property, the cash value that a
Person that is not an Affiliate of the Parent would pay in an arms-length
transaction to purchase the specified Property.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (and any amended or successor versions thereof that are substantively
comparable and not materially more onerous to comply with) and any regulations
or official interpretations thereof.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

“Fee Letter” means the Fee Letter, dated June 17, 2011, by and among the
Administrative Agent, J.P. Morgan Securities LLC, the Parent and the Borrower.

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

“GAAP” means generally accepted accounting principles in the United States of
America.

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

 

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“Governmental Requirement” means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
including, without limitation, Environmental Laws, energy regulations and
occupational, safety and health standards or controls, of any Governmental
Authority.

“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

“Guarantor” means each of the Parent, PVA Oil & Gas, PVA Texas, PVMC and each
other Restricted Subsidiary that executes the Guaranty or otherwise guarantees
the Secured Obligations as of the Effective Date or thereafter, and its
successors and assigns.

“Guaranty” means each Guaranty made pursuant to this Agreement in favor of the
Administrative Agent, as amended, supplemented, restated or otherwise modified
from time to time in accordance with the terms of this Agreement and the other
Loan Documents.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

“Highest Lawful Rate” means, on any day, the maximum nonusurious rate of
interest permitted for that day by applicable law. On each day, if any, that
Chapter 303 of the Texas Finance Code, as amended establishes the Highest Lawful
Rate, such rate shall be the “indicated (weekly) rate ceiling” (as defined in
Chapter 303 of the Texas Finance Code, as amended) for that day.

“Hydrocarbon Interests” means all rights, titles, interests and estates now or
hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, 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.

 

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

“Increase Effective Date” has the meaning assigned to such term in
Section 2.05(b).

“Indebtedness” means, for any Person (without duplication): (i) all obligations
of such Person for borrowed money or evidenced by bonds, bankers’ acceptances,
debentures, notes or other similar instruments, other than surety or other
bonds; (ii) all obligations of such Person (whether contingent or otherwise) in
respect of letters of credit, surety or other bonds and similar instruments;
(iii) all obligations of such Person (other than for borrowed money) to pay the
deferred purchase price of Property or services (but excluding accounts payable
incurred in the ordinary course of business that are not more than 90 days past
due unless contested in good faith by appropriate proceedings and for which
adequate reserves under GAAP have been established therefor, and any guaranties
by the Parent, the Borrower or any Restricted Subsidiary of such accounts
payable); (iv) all Capital Lease Obligations; (v) all obligations under
Synthetic Leases; (vi) all Indebtedness (as described in the other clauses of
this definition) of others secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person; (vii) all
Indebtedness (as described in the other clauses of this definition) of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the debtor to the extent of the lesser of the amount of such
Indebtedness and the maximum stated amount of such guarantee or assurance
against loss; (viii) all obligations or undertakings of such Person to maintain
or cause to be maintained the financial position or covenants of others or to
purchase the Indebtedness or Property of others; (ix) all obligations to deliver
Hydrocarbons in consideration of advance payments (other than customary and
standard “take or pay” provisions in any gas sales or purchase contract or any
other similar contract), including, without limitation, obligations under
Advance Payment Contracts; and (x) any Indebtedness of a partnership for which
such Person is liable either by agreement or because of a Governmental
Requirement but only to the extent of such liability.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitee” has the meaning assigned to such term in Section 9.03(b).

“Information” has the meaning assigned to such term in Section 9.12(a).

“Initial Reserve Report” has the meaning assigned to such term in
Section 4.01(k).

“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.08.

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of
each March, June, September and December, and (b) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period.

 

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“Interest Period” means, with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, with the consent of each Lender, nine or twelve months) thereafter, as the
Borrower may elect; provided that (i) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such
next succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Eurodollar Borrowing
initially shall be the date on which such Eurodollar Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Eurodollar Borrowing.

“Investment” means, for any Person: (i) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person (including, without limitation, any “short sale” or any sale of any
securities at a time when such securities are not owned by the Person entering
into such short sale), (ii) the making of any advance, loan or other extension
of credit to, any other Person (including the purchase of Property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such Property to such Person, but excluding any such advance, loan or
extension of credit having a term not exceeding 90 days representing the
purchase price of inventory or supplies sold by such Person in the ordinary
course of business) or (iii) the entering into of any guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person.

“IRS” means the United States Internal Revenue Service.

“Issuing Bank” means JPMorgan Chase Bank, N.A., in its capacity as the issuer of
Letters of Credit hereunder (including the Existing Letters of Credit), and its
successors in such capacity as provided in Section 2.06(i). The Issuing Bank
may, in its discretion, arrange for one or more Letters of Credit to be issued
by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit.

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time, plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time. The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time (as modified or
re-allocated pursuant to Section 2.20, as applicable).

 

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“Lender Party Financial Service Product” means agreements or other arrangements
under which any Person who is or was a Lender or Affiliate of a Lender (or was a
“Lender” under the Existing Credit Facility) at the time such agreement or other
arrangement was entered into provides any of the following products or services
to the Parent, the Borrower or any Restricted Subsidiary: (a) credit cards,
(b) credit card processing services, (c) debit cards, (d) purchase cards,
(e) ACH transactions, (f) cash management, including controlled disbursement,
accounts or services, or (g) foreign currency exchange.

“Lender Party Swap Agreement” means (i) any Swap Agreement between or among any
Credit Party and any Person who is or was a Lender or Affiliate of a Lender (or
was a “Lender” under the Existing Credit Facility) at the time such Swap
Agreement was entered into and (ii) any Swap Agreement that is listed on
Schedule 3.19 and is between or among any Credit Party and a Lender or Affiliate
of a Lender.

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Assumption.

“Letter of Credit” means any letter of credit issued pursuant to this Agreement
(including any Existing Letter of Credit).

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Reuters Screen LIBOR01 Page1 (or on any successor
or substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate at which dollar deposits of $5,000,000
and for a maturity comparable to such Interest Period are offered by the
principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.

“Lien” means, with respect to any Property, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such Property (including but not limited to any production payments and the
like payable out of Oil and Gas Properties), (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 Property and (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities.

“Loan Documents” means this Agreement, each Borrowing Request, each application
for a Letter of Credit, each Letter of Credit, each Collateral Document, any
promissory notes issued pursuant to Section 2.10, each Subordination Agreement,
all applications, all instruments,

 

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certificates and agreements now or hereafter executed or delivered to the
Administrative Agent or any Lender pursuant to any of the foregoing, and all
amendments, modifications, renewals, extensions, increases and rearrangements
of, and substitutions for, any of the foregoing; provided that “Loan Documents”
shall not include any Swap Agreement or any Lender Party Financial Service
Product.

“Loans” means the loans made by the Lenders to the Borrower pursuant to
Section 2.03.

“Majority Lenders” means, at any time, Lenders having in the aggregate more than
50% of the Aggregate Commitment Amount, or, if the Commitments to make Loans and
the obligation of the Issuing Bank to issue Letters of Credit have been
terminated pursuant to Article VII, Lenders holding more than 50% of the
aggregate unpaid principal amount of the outstanding Credit Exposure; provided
that the Commitment of, and the portion of the Credit Exposure held or deemed
held by, any Defaulting Lender shall be excluded for purposes of making a
determination of the Majority Lenders.

“material adverse change” mean any event, development or circumstance that has
had or could reasonably be expected to have a Material Adverse Effect.

“Material Adverse Effect” means a material adverse effect on (i) the business,
Property, condition (financial or otherwise) or results of operations of the
Parent, the Borrower and the Restricted Subsidiaries taken as a whole, (ii) the
ability of the Parent, the Borrower and the Restricted Subsidiaries taken as a
whole to timely perform their obligations under the Loan Documents to which each
is a party, or (iii) the legality, validity or enforceability of any of the Loan
Documents or the rights, benefits or remedies of the Administrative Agent, the
Issuing Bank or the Lenders thereunder.

“Material Domestic Subsidiary” means, as of any date, any Restricted Subsidiary
organized under the laws of any jurisdiction within the United States of America
(including territories thereof) that (i) is a wholly-owned Restricted Subsidiary
and (ii) together with its Restricted Subsidiaries, owns Property having a Fair
Market Value of $10,000,000 or more.

“Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit) of any one or more of the Parent, the Borrower or any Restricted
Subsidiary in an aggregate principal amount exceeding $25,000,000.

“Material Swap Obligations” means obligations in respect of one or more Swap
Agreements of any one or more of the Parent, the Borrower or any Restricted
Subsidiary in an aggregate amount exceeding $25,000,000. For purposes of
determining Material Swap Obligations, the obligations of the Parent, the
Borrower or any Restricted Subsidiary in respect of any Swap Agreement at any
time shall be the maximum aggregate amount (giving effect to any netting
agreements) that the Parent, the Borrower or such Restricted Subsidiary would be
required to pay if such Swap Agreement were terminated on the date of
determination.

“Maturity Date” means August 2, 2016.

“Maximum Facility Amount” means $600,000,000.

 

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“Moody’s” means Moody’s Investors Service, Inc.

“Mortgage” means each mortgage or deed of trust executed and delivered by any
Credit Party, including pursuant to Section 5.13, and each mortgage supplement
after execution and delivery of such mortgage supplement, in each case, as
amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms of this Agreement and the other Loan Documents.

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

“Net Cash Proceeds” means, with respect to any of the transactions or events
described in Sections 5.17, 6.01(j) or 6.13 that results in a reduction in the
Borrowing Base, the positive difference, if any, of (a) the sum of cash and cash
equivalents received in connection with such transaction, but only as and when
so received, minus (b) the sum of (i) if applicable, the principal amount of any
Indebtedness that is secured by such asset (if any) and that is required to be
repaid in connection with the sale thereof (other than the Loans), (ii) the
out-of-pocket expenses incurred by the Parent, the Borrower or such Restricted
Subsidiary in connection with such transaction and (iii) if applicable, income
taxes reasonably estimated to be actually payable within two years of the date
of the relevant asset sale as a result of any gain recognized in connection
therewith.

“Non-Recourse Obligation” means Indebtedness as to which (a) none of the Parent,
the Borrower, any Restricted Subsidiary or any Assets of the Parent, the
Borrower or any Restricted Subsidiary (i) is obligated to provide credit support
in any form or (ii) is directly or indirectly liable and (b) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any Indebtedness of the Parent, the
Borrower or any Restricted Subsidiary to declare a default on such Indebtedness
of the Parent, the Borrower or such Restricted Subsidiary or cause the payment
of any such Indebtedness to be accelerated or payable prior to its stated
maturity or cause any Guarantee in respect of such Indebtedness to become
payable, in the case of (a) and (b) above, except for obligations that arise
solely as a result of such Person’s status as a general partner of a
partnership.

“Obligations” means all obligations or liabilities of every nature of any Credit
Party from time to time owed to the Administrative Agent, the Issuing Bank, the
Lenders or any of them under any Loan Document, in each case, whether for
principal, interest, reimbursement of amounts drawn under any Letter of Credit,
funding indemnification amounts, fees, expenses, indemnification or otherwise.

“Oil and Gas Properties” means Hydrocarbon Interests; the Properties now or
hereafter pooled or unitized with Hydrocarbon Interests; all presently existing
or future unitization, pooling agreements and declarations of pooled units and
the units created thereby (including without limitation all units created under
orders, regulations and rules of any Governmental Authority) that may affect all
or any portion of the Hydrocarbon Interests; all operating agreements, contracts
and other agreements, including production sharing contracts and agreements that
relate to any of the Hydrocarbon Interests or the production, sale, purchase,

 

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exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon
Interests; all Hydrocarbons in and under and that may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, the lands
covered thereby and all rents, issues, profits, proceeds, products, revenues and
other incomes from or attributable to the Hydrocarbon Interests; all tenements,
hereditaments, appurtenances and Properties in any manner appertaining,
belonging, affixed or incidental to the Hydrocarbon Interests; and all
Properties, rights, titles, interests and estates described or referred to
above, including any and all Property, real or personal, now owned or
hereinafter acquired and situated upon, used, held for use or useful in
connection with the operating, working or development of any of such Hydrocarbon
Interests or Property (excluding drilling rigs, automotive equipment, rental
equipment or other personal Property which may be on such premises for the
purpose of drilling a well or for other similar temporary uses) and including
any and all oil wells, gas wells, injection wells or other wells, buildings,
structures, fuel separators, liquid extraction plants, plant compressors, pumps,
pumping units, field gathering systems, tanks and tank batteries, fixtures,
valves, fittings, machinery and parts, engines, boilers, meters, apparatus,
equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
and rods, surface leases, rights-of-way, easements and servitudes together with
all additions, substitutions, replacements, accessions and attachments to any
and all of the foregoing.

“Organizational Documents” means (a) with respect to any corporation, its
certificate or articles of incorporation or organization, as amended, and its
bylaws, as amended, (b) with respect to any limited partnership, its certificate
of limited partnership, as amended, and its partnership agreement, as amended,
(c) with respect to any general partnership, its partnership agreement, as
amended, (d) with respect to any limited liability company, its certificate of
formation or articles of organization, as amended, and its limited liability
company agreement or operating agreement, as amended, and (e) with respect to
any other type of Person, any certificate, document or agreement comparable to
any of the foregoing.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Taxes (other than a connection arising from such
Recipient having executed, delivered, enforced, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, or engaged in any other transaction pursuant to, or enforced,
any Loan Document, or having sold or assigned an interest in any Loan Document).

“Other Taxes” means any present or future stamp, court, documentary intangible,
recording, filing, excise, property or similar other Taxes that arise from any
payment made under, from the execution, delivery, performance, enforcement or
registration of, or from the registration, receipt or perfection of a security
interest under, or otherwise with respect to, any Loan Document, except any such
Taxes that are Other Connection Taxes imposed with respect to an assignment
(other than an assignment under Section 2.19(b)).

“Parent” means Penn Virginia Corporation, a Virginia corporation.

“Participant” has the meaning set forth in Section 9.04(c).

“Participant Register” has the meaning assigned to such term in Section 9.04(c).

 

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“Patriot Act” has the meaning set forth in Section 9.16.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

“Permitted Corporate Acquisition” means an Investment in the Equity Interests of
any Person for the purpose of acquiring such Person and its Subsidiaries, if
any, and with respect to which each of the following conditions is satisfied:
(i) the Borrower shall have delivered to the Administrative Agent and the
Lenders written notice of such Investment describing such Investment in
reasonable detail not less than 10 Business Days prior such Investment being
consummated; (ii) the Borrower shall have delivered or caused to be delivered to
the Administrative Agent such additional documents or due diligence materials
with respect to such Investment as the Administrative Agent shall have
reasonably requested; (iii) the primary business of the Person acquired (and its
Subsidiaries, if any, taken as a whole) shall be the acquisition, exploration,
development, financing, ownership, operation, production, maintenance, storage,
transportation, gathering, processing and marketing of Hydrocarbons, Hydrocarbon
Interests and Oil and Gas Properties and related activities; (iv) after giving
effect to any such Investment, the Person acquired shall be a direct or indirect
wholly-owned Restricted Subsidiary, or will be merged with or into a Restricted
Subsidiary; (v) if such Person acquired (or the Restricted Subsidiary with or
into which such Person acquired is merged) or any Subsidiary of such Person
acquired (or such Restricted Subsidiary) is or becomes a Material Domestic
Subsidiary, such Person acquired (or such Restricted Subsidiary) and any such
Subsidiary shall have complied with the requirements of Section 5.13 (or the
Administrative Agent shall be satisfied, in its sole discretion, that
appropriate arrangements and progress shall have been made or shall then be in
process to cause such Person acquired (or such Restricted Subsidiary) to have
complied with the requirements of Section 5.13 reasonably promptly following the
consummation of such Investment); (vi) the Borrower shall have delivered to the
Administrative Agent a compliance certificate prepared by the Borrower in good
faith and in a manner, and using a methodology that is consistent with, the most
recent financial statements delivered pursuant to Section 5.01(c) giving pro
forma effect to the consummation of such Investment and confirming that no
Default or Event of Default shall exist either before or after, or result from,
the consummation of such Investment; (vii) to the extent that any Person
acquired or any Subsidiary of such Person acquired has any Indebtedness
outstanding at the time of the consummation of such Investment, which
Indebtedness is not otherwise permitted under Section 6.01 of the Credit
Agreement, the Administrative Agent shall be reasonably satisfied that such
Indebtedness has been (or, upon the consummation of such Investment, shall be)
repaid or otherwise satisfied and all liens securing any such Indebtedness have
been (or, upon the consummation of such Investment, shall be) released,
terminated or otherwise discharged; and (viii) the consideration payable in
respect of such Investment comprises capital stock of the Parent or cash,
provided that the aggregate amount of all cash Investments made by the Parent,
the Borrower and the Restricted Subsidiaries from and after the Effective Date,
in reliance on the terms and provisions of clause (f) of Section 6.04 (and this
definition) shall not exceed $100,000,000.

“Permitted Investments” means: (a) direct obligations of the United States or
any agency thereof, or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one year from the date of creation
thereof; (b) commercial paper maturing

 

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within one year from the date of creation thereof rated in the investment grade
by S&P or Moody’s; (c) deposits maturing within one year from the date of
creation thereof with, including certificates of deposit issued by, any Lender
or any office located in the United States of any other bank or trust company
which is organized under the laws of the United States or any state thereof, has
capital, surplus and undivided profits aggregating at least $100,000,000 (as of
the date of such Lender’s or bank or trust company’s most recent financial
reports) and has a short term deposit rating of no lower than A2 or P2, as such
rating is set forth from time to time, by S&P or Moody’s, respectively;
(d) fully collateralized repurchase agreements with a term of not more than
seven days for securities described in clause (a) above and entered into with a
Lender, an Affiliate of a Lender or a financial institution satisfying the
criteria described in clause (c) above; and (e) deposits in money market funds
investing exclusively in Investments described in the foregoing clauses (a),
(b), (c) and (d).

“Permitted Liens” means: (i) Liens for taxes, assessments or other governmental
charges or levies which are not delinquent or that are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (ii) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations that are not delinquent or that are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (iii) operators’, vendors’, carriers’,
warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’, materialmen’s,
construction or other like Liens arising by operation of law in the ordinary
course of business or incident to the exploration, development, operation and
maintenance of Oil and Gas Properties or statutory landlord’s liens, including
lessee or operator obligations under statutes, governmental regulations or
instruments related to the ownership, exploration and production of oil, gas and
minerals on private, state, federal or foreign lands or waters, each of which is
in respect of obligations that have not been outstanding more than 60 days or
that are being contested in good faith by appropriate proceedings and for which
adequate reserves have been maintained in accordance with GAAP; (iv) Liens that
(a) arise in the ordinary course of business under operating agreements, joint
venture agreements, oil and gas partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale, transportation or
exchange of oil and natural gas, unitization and pooling declarations and
agreements, area of mutual interest agreements, overriding royalty agreements,
marketing agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements that
are usual and customary in the oil and gas business and (b) are for claims that
either are not delinquent or are being contested in good faith by appropriate
proceedings and as to which the Parent, the Borrower or any Restricted
Subsidiary shall have set aside on its books such reserves as may be required
pursuant to 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 or materially impair the value of such Property subject thereto;
(v) Liens reserved in oil and gas mineral leases, or created by statute, to
secure royalty, net profits interests, bonus payments, rental payments or other
payments out of or with respect to the production, transportation or processing
of Hydrocarbons, and compliance with the terms of such Hydrocarbon Interests,
provided that such Liens secure claims that either are not delinquent or are
being contested in good faith by appropriate proceedings and as to which the
Parent, the

 

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Borrower or the applicable Restricted Subsidiary shall have set aside on its
books such reserves as may be required pursuant to GAAP; (vi) Liens arising
solely by virtue of any statutory or common law provision relating to banker’s
liens, rights of set-off or similar rights and remedies and burdening only
deposit accounts or other funds maintained with a creditor depository
institution, provided that (a) no such deposit account is a dedicated cash
collateral account or is subject to restrictions against access by the depositor
in excess of those set forth by regulations promulgated by the Board, and (b) no
such deposit account is intended by the Parent, the Borrower or any Restricted
Subsidiaries to provide collateral to the depository institution; (vii) all
other non-consensual defects in title (which might otherwise constitute Liens)
arising in the ordinary course of the Parent’s, the Borrower’s or such
Restricted Subsidiary’s business or incidental to the ownership of their
respective Properties; provided that no such Liens shall secure the payment of
Indebtedness or shall, in the aggregate, materially detract from the value or
marketability of the Property subject thereto or materially impair the use or
operation thereof in the operation of the business of the Parent, the Borrower
or such Restricted Subsidiary; (viii) encumbrances (other than to secure the
payment of borrowed money or the deferred purchase price of Property or
services), easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations in any Property of the Parent, the Borrower or any
Restricted Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal or
other minerals or timber, and other like purposes, or for the joint or common
use of real estate, rights of way, facilities and equipment, and defects,
irregularities, zoning restrictions and deficiencies in title of any Property
that in the aggregate do not materially impair the use of such Property for the
purposes of which such Property is held by the Parent, the Borrower or any
Restricted Subsidiary or materially impair the value of such Property subject
thereto; (ix) Liens on cash or securities pledged to secure performance of
surety and appeal bonds, government contracts, performance and return of money
bonds, bids, trade contracts, leases, statutory obligations, regulatory
obligations and other obligations of a like nature incurred in the ordinary
course of business; and (x) judgment Liens not giving rise to an Event of
Default, provided that (a) any appropriate legal proceedings which may have been
duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated shall not
have expired and (b) no action to enforce such Lien has been commenced.

“Permitted Refinancing Indebtedness” means Indebtedness (for purposes of this
definition, “new Indebtedness”) incurred in exchange for, or proceeds of which
are used to refinance, all or any portion of the Unsecured Notes (including any
settlement payments or other obligations in respect of Unsecured Notes for which
a conversion election has been made by the holder of such Unsecured Note) (the
“Refinanced Indebtedness”); provided that (a) the portion of such new
Indebtedness incurred to refinance the Refinanced Indebtedness is in an
aggregate principal amount not in excess of the sum of (i) the aggregate
principal amount then outstanding of the Refinanced Indebtedness (or, if the
Refinanced Indebtedness is exchanged or acquired for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount) and (ii) an amount necessary to pay
any fees and expenses, including premiums, related to such exchange or
refinancing; (b) such new Indebtedness has a stated maturity no earlier than the
date that is 91 days after the earlier of (i) the Maturity Date and (ii) the
date on which there are no Loans, LC Exposure or other obligations hereunder
outstanding and all of the Commitments are terminated and an average life no
shorter than the period beginning on the date of incurrence of such Indebtedness
and ending

 

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on the date that is 91 days after the Maturity Date; (c) such new Indebtedness
does not contain any covenants that are more onerous to the Parent, the Borrower
and its Subsidiaries than those imposed by the Refinanced Indebtedness; (d) the
stated interest or coupon rate of such new Indebtedness is reasonably acceptable
to the Administrative Agent; and (e) such new Indebtedness (and any Guarantees
in respect thereof) is unsecured.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Parent or any ERISA Affiliate
is (or, if such plan were terminated, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pledge Agreement” means the Amended and Restated Pledge Agreement and
Irrevocable Proxy of even date herewith made by the Pledgors in favor of the
Administrative Agent, as amended, supplemented, restated or otherwise modified
from time to time in accordance with the terms of this Agreement and the other
Loan Documents.

“Pledgor” means each of the Parent, the Borrower and each Guarantor other than
Parent that executes and delivers the Pledge Agreement, and its successors and
assigns.

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMorgan Chase Bank as its prime rate in effect at its office located
at 270 Park Avenue, New York, New York; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.

“Property” of a Person means any and all property, whether real, personal,
tangible, intangible or mixed, of such Person, or other assets owned, leased or
operated by such Person.

“PVA Oil & Gas” means Penn Virginia Oil & Gas Corporation, a Virginia
corporation.

“PVA Texas” means Penn Virginia Oil & Gas, L.P., a Texas limited partnership.

“PVMC” means Penn Virginia MC Corporation, a Delaware corporation.

“Recipient” means, as applicable, (a) the Administrative Agent, (b) any Lender
and (c) the Issuing Bank.

“Redemption” means the repurchase, redemption, prepayment, repayment or
defeasance (or the segregation of funds with respect to any of the foregoing) of
the Unsecured Notes. “Redeem” has the correlative meaning thereto.

“Redetermination Date” means the date that the redetermined Borrowing Base
becomes effective subject to the notice requirements specified in Section 2.04
both for scheduled redeterminations and unscheduled redeterminations.

 

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“Register” has the meaning set forth in Section 9.04(b)(iv).

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.

“Required Lenders” means, at any time, Lenders having in the aggregate at least
66-2/3% of the Aggregate Commitment Amount, or, if the Commitments to make Loans
and the obligation of the Issuing Bank to issue Letters of Credit have been
terminated pursuant to Article VII, Lenders holding at least 66-2/3% of the
aggregate unpaid principal amount of the outstanding Credit Exposure; provided
that the Commitment of, and the portion of the Credit Exposure held or deemed
held by, any Defaulting Lender shall be excluded for purposes of making a
determination of the Required Lenders.

“Reserve Report” means a report, in form and substance satisfactory to the
Administrative Agent, setting forth, as of each December 31 or June 30 (or such
other date in the event of an unscheduled redetermination) the oil and gas
reserves attributable to the Oil and Gas Properties of the Borrower and the
Guarantors, together with a projection of the rate of production and future net
income, taxes, operating expenses and capital expenditures with respect thereto
as of such date, based upon the pricing assumptions consistent with SEC
reporting requirements at the time.

“Restricted Subsidiary” means, as of any date, each Subsidiary of the Parent,
other than Unrestricted Subsidiaries. As of the Effective Date, the Restricted
Subsidiaries are designated on Schedule 3.13 as such.

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw Hill
Corporation.

“SEC” means the Securities and Exchange Commission or any successor Governmental
Authority.

“Secured Obligations” means, collectively, (i) all Obligations, (ii) all
liabilities and obligations of the Parent, the Borrower or any Restricted
Subsidiaries arising under any Lender Party Swap Agreement now or hereafter
existing between or among the Parent, the Borrower or any Restricted Subsidiary
and any Lender or any Affiliate of any Lender, as applicable, and (iii) all
liabilities and obligations of the Parent, the Borrower or any Restricted
Subsidiaries arising under any Lender Party Financial Service Product now or
hereafter existing between or among the Parent, the Borrower or any Restricted
Subsidiary and any Lender or any Affiliate of any Lender, as applicable.

“Stated Rate” has the meaning assigned to such term in Section 9.13.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one, minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves), expressed as a decimal
established by the Board to which the Administrative Agent is subject, with
respect to the Adjusted LIBO Rate, for eurocurrency

 

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funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.

“Subordination Agreement” means each Subordination Agreement made pursuant to
Section 4.01(m) or Section 6.01(g) by one or more Unrestricted Subsidiaries of
the Parent in favor of the Administrative Agent, the Issuing Bank and the
Lenders, substantially in the form of Exhibit D, as each may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms of this Agreement and the other Loan Documents.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
of which securities or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held by the parent or one or more Subsidiaries of the
parent or by the parent and one or more Subsidiaries of the parent. Unless
otherwise expressly provided, all references herein to a “Subsidiary” shall mean
a Subsidiary of the Parent.

“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Parent, the Borrower
or the Restricted Subsidiaries shall be a Swap Agreement and provided, further,
that none of the options or warrants entered into by the Parent under the Call
Spread Transaction shall constitute a Swap Agreement.

“Synthetic Leases” means, in respect of any Person, all leases that shall have
been, or should have been, in accordance with GAAP, treated as operating leases
on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 85% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

“Total Debt” means all Indebtedness of the Parent, the Borrower and the
Restricted Subsidiaries on a consolidated basis described under clauses (i) and
(iii) through (x) of the definition of “Indebtedness”; provided that any
Indebtedness permitted by Section 6.01(g) of this Agreement shall, in any event,
be excluded from “Total Debt”.

 

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“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“Unrestricted Subsidiary” means (a) Penn Virginia Resource Holdings Corp., a
Delaware corporation, and each of its Subsidiaries, (b) Penn Virginia Resource
GP Corp., a Delaware corporation, and each of its Subsidiaries, and (c) any
other Subsidiary of the Parent that is designated as an Unrestricted Subsidiary
either (i) on Schedule 3.13 or (ii) in the manner set forth in Section 6.10.

“Unsecured Notes” means any senior unsecured notes, senior unsecured convertible
notes, subordinated unsecured notes, subordinated unsecured convertible notes or
senior subordinated unsecured convertible notes (including the 2007 Convertible
Notes), in each case, issued by the Parent, the Borrower or a Guarantor in one
or more transactions on or after November 21, 2007.

“Unsecured Notes Documents” means, as applicable, both individually and
collectively, any Unsecured Notes and any related Unsecured Notes Indenture.

“Unsecured Notes Indenture” means, collectively, any indenture (including the
2007 Convertible Notes Indenture and the 2016 Senior Notes Indenture) by and
among the Parent, the Borrower or a Guarantor, as issuer, and a trustee, and any
and all related documentation entered into in connection therewith, pursuant to
which Unsecured Notes shall have been issued, as the same may be amended,
restated, modified or supplemented from time to time.

“Unused Commitment” means, with respect to each Lender at any time, such
Lender’s Commitment at such time, minus such Lender’s Credit Exposure at such
time.

“Unused Commitment Fee” means the commitment fee described in Section 2.12(a).

“U.S. Person” means a “United States person” within the meaning of
Section 7701(a)(30) of the Code.

“U.S. Tax Certificate” has the meaning assigned to such term in
Section 2.17(f)(ii)(D)(2).

“Withdrawal Liability” means 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.

“Withholding Agent” means the Borrower or the Administrative Agent.

SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar
Loan” or “ABR Loan”).

 

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SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any restrictions on
such amendments, restatements, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Parent or the Borrower notifies the Administrative Agent that the Parent or the
Borrower requests an amendment to any provision hereof to eliminate the effect
of any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent
notifies the Parent or the Borrower that the Majority Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith. Notwithstanding any other provision contained herein, all
terms of an accounting or financial nature used herein shall be construed, and
all computations of amounts and ratios referred to herein shall be made, without
giving effect to any election under Financial Accounting Standards Board
Accounting Standards Codification 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 Subsidiary at “fair value”, as defined
therein.

ARTICLE II

The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein,
each Lender agrees to make Loans to the Borrower from time to time during the
Availability Period in an aggregate principal amount that will not result in
(a) such Lender’s Credit Exposure exceeding such Lender’s Commitment or (b) the
sum of all of the Lenders’ Credit Exposures exceeding the sum of all of the
Lenders’ Commitments. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow Loans.

 

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SECTION 2.02. Loans and Borrowings.

(a) Each Loan shall be made as part of a Borrowing consisting of Loans made by
the Lenders ratably in accordance with their respective Commitments. The failure
of any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender’s
failure to make Loans as required.

(b) Subject to Section 2.14, each Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith.
Each Lender at its option may, subject to Section 2.19(a), make any Eurodollar
Loan by causing any domestic or foreign branch or Affiliate of such Lender to
make such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.

(c) At the commencement of each Interest Period for any Eurodollar Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$500,000 and not less than $1,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $500,000; provided that an ABR Borrowing
may be in an aggregate amount that is equal to the entire unused balance of the
total Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.06(e). Borrowings of more than one
Type may be outstanding at the same time; provided that there shall not at any
time be more than a total of ten (10) Eurodollar Borrowings outstanding.

(d) Notwithstanding any other provision of this Agreement, the Borrower shall
not be entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the Maturity
Date.

SECTION 2.03. Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 12:00 noon, New York City time,
three Business Days before the date of the proposed Borrowing or (b) in the case
of an ABR Borrowing, not later than 12:00 noon, New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:

(i) the aggregate amount of the requested Borrowing;

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

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

 

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(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”; and

(v) the location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.07.

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender’ s Loan to be made as part of the requested Borrowing.

SECTION 2.04. Borrowing Base.

(a) Amount. For the period from and including the Effective Date to but not
including the first Redetermination Date, the amount of the Borrowing Base shall
be $400,000,000; provided, however, that upon the sale of those certain assets
pursuant to that certain Purchase and Sale Agreement, dated July 28, 2011, by
and among Penn Virginia MC Energy L.L.C., a Delaware limited liability company,
PVA Oil & Gas and Unit Petroleum Company, an Oklahoma corporation, then the
Borrowing Base shall automatically decrease to $380,000,000. Notwithstanding the
foregoing, the Borrowing Base will be subject to interim adjustments pursuant to
Sections 2.04(e), 5.12, 5.17, 6.01(j) and 6.13.

(b) Redetermination. On or before April 15th and October 15th of each year, the
Administrative Agent shall propose in writing to the Borrower and the Lenders a
new or reaffirmed Borrowing Base in accordance with Section 2.04(c) (assuming
receipt by the Administrative Agent of the Reserve Report in a timely and
complete manner). After having received notice of such proposal by the
Administrative Agent, each Lender shall have 15 days to agree with such proposal
or disagree by proposing an alternate Borrowing Base. If, at the end of such 15
days, any Lender has not communicated to the Administrative Agent its approval
or disapproval, such silence shall be deemed to be an approval of the new or
reaffirmed Borrowing Base proposed by the Administrative Agent. If, however, at
the end of such 15-day period, all of the Lenders or the Required Lenders, as
applicable, have not approved or deemed to have approved, as aforesaid, the
proposed Borrowing Base, then the Borrowing Base shall be determined in
accordance with Section 2.04(d). After such redetermined Borrowing Base is
approved by (a) all Lenders in the case of any increase in the Borrowing Base,
(b) the Required Lenders in the case of any maintenance or any decrease in the
Borrowing Base or (c) as otherwise determined as provided in Section 2.04(d),
the Administrative Agent will notify the Borrower and the Lenders of the amount
of the redetermined Borrowing Base, and such amount shall become effective and
applicable to the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders on or about May 1st (with respect to each Reserve Report prepared as of
December 31) or November 1st (with respect to each Reserve Report prepared as of
June 30), as applicable, of each year. Notwithstanding the foregoing, however,
any increase in the Borrowing Base shall require approval or deemed approval of
all the Lenders as set forth in this Section 2.04(b).

 

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(c) Reserve Reports. Upon receipt of the Reserve Report and such other reports,
data and supplemental information, including the information provided pursuant
to Section 5.11, as may, from time to time, be reasonably requested by the
Required Lenders, the Administrative Agent will evaluate such information. The
Administrative Agent, with the approval or deemed approval of the Lenders as set
forth in Section 2.04(b), but subject to the terms of Section 2.04(b), shall, in
good faith, redetermine the Borrowing Base based upon such information and such
other information (including, without limitation, information described in the
Reserve Report, the status of title with respect to the Oil and Gas Properties
and the existence of any other Indebtedness) as the Administrative Agent deems
appropriate in its discretion and consistent with customary industry practices
and its normal oil and gas lending criteria as it exists at the particular time.
Such redetermination shall be accomplished not later than and effective on or
about the first day of each May and November of each calendar year, assuming
that the Borrower shall have furnished the Reserve Report and other reports,
data and supplemental information in a timely and complete manner as required by
Section 5.11. In assessing whether to approve or reject a proposed Borrowing
Base, each Lender will assess, in good faith, the Reserve Report and the other
information as they deem appropriate in its discretion and consistent with
customary industry practices and its respective oil and gas lending criteria and
procedures as they exist at the particular time.

(d) Consensus and Failure of Consensus. Except as hereinafter provided, the
decision of the Lenders or the Required Lenders, as applicable, with respect to
any Borrowing Base determination shall control; provided, however, that if the
Lenders or the Required Lenders, as applicable, have not approved or are not
deemed to have approved the Borrowing Base as of the end of the 15-day period
specified in Section 2.04(b), the Borrowing Base shall be redetermined at the
highest amount approved by each Lender (if such redetermined Borrowing Base
constitutes an increase in the Borrowing Base in effect immediately prior
thereto) or the Required Lenders (if such redetermined Borrowing Base
constitutes a reaffirmation or decrease in the Borrowing Base in effect
immediately prior thereto), as applicable, and such amount shall then become the
Borrowing Base until the next scheduled redetermination pursuant to
Section 2.04(b) or the next date on which an interim redetermination occurs
under Section 2.04(e) or the next adjustment under either Section 5.17, 6.01(j)
or 6.13. Notwithstanding the foregoing, however, any increase in the Borrowing
Base shall require approval or deemed approval of all the Lenders as set forth
in Section 2.04(a).

(e) Interim Redeterminations. The Borrower may, at its option, one time during
any 12-month period initiate an interim redetermination of the Borrowing Base.
In addition, the Borrower may, at its option, in connection with any acquisition
(or any series of acquisitions occurring since the most recent redetermination
of the Borrowing Base) by the Parent, the Borrower or a Restricted Subsidiary of
Oil and Gas Properties having a purchase price, either individually or in the
aggregate, of $50,000,000 or more, initiate an interim redetermination of the
Borrowing Base. The Administrative Agent (at the direction of the Required
Lenders, in their option) may one time during any 12-month period initiate an
interim redetermination of the Borrowing Base. The Borrowing Base also may be
redetermined in accordance with this Agreement upon the occurrence of any of the
events described in any of Sections 5.12, 5.17, 6.01(j) or 6.13.

 

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SECTION 2.05. Increase in Aggregate Commitment Amount.

(a) Upon prior notice to the Administrative Agent, the Borrower may from time to
time, (i) request that the Lenders increase the Aggregate Commitment Amount pro
rata among the Lenders up to an amount not exceeding the Maximum Facility Amount
or (ii) invite additional financial institutions acceptable to the
Administrative Agent and the Issuing Bank to become Lenders party to the
Agreement so as to increase the Aggregate Commitment Amount to an amount not
exceeding the Maximum Facility Amount. At the time of sending such notice to the
Lenders or any invitee, the Borrower (in consultation with the Administrative
Agent) shall specify the time period within which each Lender or invitee, as
applicable, is requested to respond (which shall in no event be less than 10
Business Days from the date of delivery of such notice to the Lenders). If the
Borrower has requested that the Lenders increase their respective Commitment
Amounts pro rata hereunder, each Lender shall notify the Administrative Agent
within such time period whether or not it agrees to increase its respective
Commitment Amount and, if so, whether by an amount equal to, greater than, or
less than its Applicable Percentage of such requested increase and any Lender
not responding within such time period shall be deemed to have declined to
increase its respective Commitment Amount. Anything herein contained to the
contrary notwithstanding, no Lender shall have any obligation whatsoever to
increase its respective Commitment Amount hereunder. The consent of the Lenders
shall not be required in order for any financial institution acceptable to the
Administrative Agent and the Issuing Bank to become a party to this Agreement
pursuant to this Section 2.05.

(b) If the Aggregate Commitment Amount is increased in accordance with this
Section 2.05, the Administrative Agent and the Borrower shall determine the
effective date of such increase (the “Increase Effective Date”). The
Administrative Agent and the Borrower shall promptly notify the Lenders of the
final allocation of such increase and the Increase Effective Date. Each existing
Lender that increases its Commitment Amount and each additional Lender, if any,
and the Borrower shall execute and deliver to the Administrative Agent (which
the Administrative Agent shall also execute to acknowledge its acceptance
thereof) an agreement substantially in the form of Exhibit B (an “Additional
Lender Agreement”). Upon receipt by the Administrative Agent of Additional
Lender Agreements from existing Lenders or additional Lenders (together with an
Administrative Questionnaire, in the case of any additional Lender), if any, in
an amount sufficient to effectuate the increase requested by the Borrower:
(1) the Aggregate Commitment Amount shall be increased, (2) the Administrative
Agent shall amend and distribute to the Borrower and the Lenders a revised
Schedule 2.01 of the Commitment Amounts of each Lender adding or amending, as
applicable, the Commitment Amount of any Lender executing the Additional Lender
Agreement and the revised Applicable Percentages of the Lenders (which shall be
deemed incorporated into this Agreement), (3) any additional Lender shall be
deemed to be a party in all respects to this Agreement and the other Loan
Documents to which the Lenders are party as of the Increase Effective Date and
(4) upon the Increase Effective Date, any increasing or additional Lender party
to the Additional Lender Agreement shall purchase from each of the (other)
Lenders party to the Agreement immediately prior to the Increase Effective Date
a pro rata portion of the outstanding Loans (and participation interests in
Letters of Credit) of each such (other) Lender such that each Lender (including
any additional Lender, if any) shall hold its respective Applicable Percentage
of the outstanding Loans (and participation interests in Letters of Credit) as
reflected on the revised Schedule 2.01 required by this Section 2.05, provided
that the Borrower shall pay any amounts due under Section 2.16 to the extent
that any such purchase gives rise to the costs indemnified thereby.

 

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(c) As a condition precedent to such increase, the Borrower shall deliver to the
Administrative Agent a certificate dated as of the Increase Effective Date (in
sufficient copies for each Lender) signed by a Authorized Officer of the
Borrower (i) certifying and attaching the resolutions adopted by the Borrower
approving or consenting to such increase, (ii) including a certificate of the
type described in Section 5.01(c) demonstrating pro forma compliance with
Section 6.09 after giving effect to such increase and (iii) certifying that,
before and after giving effect to such increase, the representations and
warranties contained in Article III are true and correct on and as of the
Increase Effective Date and no Default or Event of Default exists.

(d) This Section shall supersede any provision in Section 9.02 to the contrary.

SECTION 2.06. Letters of Credit.

(a) General. Subject to the terms and conditions set forth herein, the Borrower
may request the issuance of Letters of Credit as the applicant thereof, for its
own account or the account of any other Credit Party, in a form reasonably
acceptable to the Administrative Agent and the Issuing Bank, at any time and
from time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension, but in any event no less than three Business
Days) a notice requesting the issuance of a Letter of Credit, or identifying the
Letter of Credit to be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension (which shall be a Business Day), the
date on which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the name
and address of the beneficiary thereof and such other information as shall be
necessary to prepare, amend, renew or extend such Letter of Credit. If requested
by the Issuing Bank, the Borrower also shall submit a letter of credit
application on the Issuing Bank’s standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension, (i) the
LC Exposure shall not exceed $20,000,000 and (ii) the aggregate Credit Exposure
shall not exceed the lesser of (x) the Aggregate Commitment Amount and (y) the
Borrowing Base then in effect, in each case, as such amounts may be adjusted
from time to time in accordance with this Agreement.

 

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(c) Expiration Date. Each Letter of Credit shall expire at or prior to the
earlier of (i) the close of business on the date that is five Business Days
prior to the Maturity Date and (ii) one year after its issuance, provided,
however, that any Letter of Credit with a one-year term may provide for the
renewal thereof for additional one-year periods (which shall in no event extend
beyond the fifth Business Day prior to the Maturity Date) unless the Issuing
Bank provides prior notice of non-renewal to the beneficiary thereof.

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action
on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants
to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the
date due as provided in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to the Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.

(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by
paying to the Administrative Agent an amount equal to such LC Disbursement not
later than 12:00 noon, New York City time, on (i) the Business Day that the
Borrower receives such notice, if such notice is received prior to 10:00 a.m.,
New York City time, on the day of receipt, or (ii) the Business Day immediately
following the day that the Borrower receives such notice, if such notice is not
received prior to such time on the day of receipt; provided that the Borrower
shall, subject to the conditions to borrowing set forth herein, automatically be
deemed to have requested in accordance with Section 2.03 that such payment be
financed with an ABR Borrowing in an equivalent amount and, to the extent so
financed, the Borrower’s obligation to make such payment shall be discharged and
replaced by the resulting ABR Borrowing. If the Borrower fails to make such
payment when due, the Administrative Agent shall notify each Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender’s Applicable Percentage thereof. Promptly following
receipt of such notice, each Lender shall pay to the Administrative Agent its
Applicable Percentage of the payment then due from the Borrower, in the same
manner as provided in Section 2.07 with respect to Loans made by such Lender
(and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of
the Lenders), and the Administrative Agent shall promptly pay to the Issuing
Bank the amounts so received by it from the Lenders. Promptly following receipt
by the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing
Bank as their interests may appear. Any payment made by a Lender pursuant to
this paragraph

 

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to reimburse the Issuing Bank for any LC Disbursement (other than the funding of
ABR Loans as contemplated above) shall not constitute a Loan and shall not
relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f) Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) 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, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not strictly
comply with the terms of such Letter of Credit or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower’s obligations
hereunder. Except as set forth herein, neither the Administrative Agent, the
Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any
liability or responsibility by reason of or in connection with the issuance or
transfer of any Letter of Credit or any payment or failure to make any payment
thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond the control of the Issuing Bank; provided
that the foregoing shall not be construed to excuse the Issuing Bank from
liability to the Borrower to the extent of any damages (other than special,
indirect or consequential 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 the Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination
(AND THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT IT IS THE INTENTION OF THE
PARTIES HERETO THAT THE ISSUING BANK BE EXCUSED FOR ITS OWN NEGLIGENCE (OTHER
THAN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), REGARDLESS OF WHETHER SUCH
NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR
TECHNICAL). In furtherance of the foregoing and without limiting the generality
thereof, the parties agree that, with respect to documents presented that appear
on their face to be in substantial compliance with the terms of a Letter of
Credit, the Issuing Bank may, in its sole discretion, either accept and 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.

(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by

 

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telephone (confirmed by telecopy) of such demand for payment and whether the
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse the Issuing Bank and the Lenders with
respect to any such LC Disbursement.

(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then,
unless the Borrower shall reimburse such LC Disbursement in full on the date
such LC Disbursement is made, the unpaid amount thereof shall bear interest, for
each day from and including the date such LC Disbursement is made to but
excluding the date that the Borrower reimburses such LC Disbursement, at the
rate per annum then applicable to ABR Loans; provided that, if the Borrower
fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of
this Section, then Section 2.13(c) shall apply. Interest accrued pursuant to
this paragraph shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Lender pursuant to
paragraph (e) of this Section to reimburse the Issuing Bank shall be for the
account of such Lender to the extent of such payment.

(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any
time by written agreement among the Borrower, the Administrative Agent and the
successor Issuing Bank, with the consent of the replaced Issuing Bank, such
consent not to be unreasonably withheld or delayed. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement,
(i) the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the 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 with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.

(j) Cash Collateralization. If any Event of Default shall occur and be
continuing or if required pursuant to Section 2.11, on the Business Day that the
Borrower receives notice from the Administrative Agent or the Majority Lenders
demanding the deposit of cash collateral pursuant to this paragraph, the
Borrower shall deposit in an account with the Administrative Agent, in the name
of the Administrative Agent and for the benefit of the Lenders, an amount in
cash equal to the LC Exposure as of such date, plus any accrued and unpaid
interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Borrower described in clause (h) or
(i) of Section 7.01. The Borrower hereby grants to the Administrative Agent, for
the benefit of the Issuing Bank and the Lenders, an exclusive first priority and
continuing perfected security interest in and Lien on such account and all cash,
checks, drafts, certificates and instruments, if any, from time to time
deposited or held in such account, all deposits or wire transfers made thereto,
any and all investments purchased with funds deposited in such account, all
interest, dividends, cash, instruments, financial assets and other Property from
time to time

 

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received, receivable or otherwise payable in respect of, or in exchange for, any
or all of the foregoing, and all proceeds, products, accessions, rents, profits,
income and benefits therefrom, and any substitutions and replacements therefor.
Such deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of the Borrower under this Agreement.
The Administrative Agent shall have exclusive dominion and control, including
the exclusive right of withdrawal, over such account. Other than any interest
earned on the investment of such deposits, which investments shall be made at
the option and sole discretion of the Administrative Agent and at the Borrower’s
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of Majority
Lenders), be applied to satisfy other obligations of the Borrower under this
Agreement. If at any time the amount of cash collateral held by the
Administrative Agent pursuant hereto shall exceed the LC Exposure as of such
date, Administrative Agent shall return such excess to the Borrower within two
Business Days thereafter. If the Borrower is required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within three Business Days after all Events of Default have been cured
or waived.

(k) Existing Letters of Credit. All Existing Letters of Credit shall be deemed
to be issued under this Agreement as of the Effective Date and shall constitute
Letters of Credit hereunder for all purposes (including Section 2.06(b)), and no
notice requesting issuance thereof shall be required hereunder. Each reference
herein to the issuance of a Letter of Credit shall include any such deemed
issuance. All fees accrued on the Existing Letters of Credit to but excluding
the Effective Date shall be for the account of the Issuing Bank and the lenders
under the Existing Credit Facility, and all fees accruing on the Existing
Letters of Credit on and after the Effective Date shall be for the account of
the Issuing Bank and the Banks as provided herein.

SECTION 2.07. Funding of Borrowings.

(a) Each Lender shall make each Loan to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds by 1:00 p.m., New
York City time, to the account of the Administrative Agent most recently
designated by it for such purpose by notice to the Lenders. The Administrative
Agent will make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower maintained
with the Administrative Agent designated by the Borrower in the applicable
Borrowing Request; provided that ABR Loans made to finance the reimbursement of
an LC Disbursement as provided in Section 2.06(e) shall be remitted by the
Administrative Agent to the Issuing Bank.

(b) Unless the Administrative Agent shall have received written notice from a
Lender prior to the proposed date of any Eurodollar Borrowing or prior to
1:00 p.m., New York City time, on the date any proposed ABR Borrowing, as
applicable, that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the

 

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Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith within two Business Days after demand therefor such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Loan included in such Borrowing.

SECTION 2.08. Interest Elections.

(a) Each Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.

(b) To make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were requesting a
Borrowing of the Type resulting from such election to be made on the effective
date of such election. Each such telephonic Interest Election Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a form approved
by the Administrative Agent and signed by the Borrower.

(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

 

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(iii) with respect to any Borrowing, whether the resulting Borrowing is to be an
ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.

(e) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Majority Lenders, so notifies the Borrower, then, so long as an Event of
Default is continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.

SECTION 2.09. Termination and Reduction of Commitments.

(a) Unless previously terminated, each Lender’s Commitment shall terminate on
the Maturity Date.

(b) The Borrower may at any time terminate, or from time to time reduce, the
Commitments; provided that (i) each reduction of the Commitments shall be in an
amount that is an integral multiple of $5,000,000 and not less than $5,000,000
and (ii) the Borrower shall not terminate or reduce the Commitments if, after
giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.11, the Credit Exposure would exceed the total Commitments, as so
reduced.

(c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments shall be permanent,
subject to the Borrower’s right to request an increase in the Aggregate
Commitment Amount pursuant to Section 2.05. Each reduction of the Commitments
shall be made ratably among the Lenders in accordance with their respective
Commitments.

 

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SECTION 2.10. Repayment of Loans; Evidence of Debt.

(a) The Borrower hereby unconditionally promises to pay to the Administrative
Agent for the account of each Lender the then unpaid principal amount of each
Loan on the Maturity Date.

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

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

(d) The entries made in the accounts maintained pursuant to paragraphs (b)
or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein absent manifest error; provided that
the failure of any Lender or the Administrative Agent to maintain such accounts
or any error therein shall not in any manner affect the obligation of the
Borrower to repay the Loans in accordance with the terms of this Agreement.

(e) Any Lender may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrower shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in a form
approved by the Administrative Agent; provided that any promissory note issued
to evidence any Lender’s Loans shall be in a stated amount equal to such
Lender’s Commitment Amount. Thereafter, the Loans evidenced by such promissory
note and interest thereon shall at all times (including after assignment
pursuant to Section 9.04) be represented by one or more promissory notes in such
form payable to the order of the payee named therein (or, if such promissory
note is a registered note, to such payee and its registered assigns).

SECTION 2.11. Prepayment of Loans.

(a) Mandatory Prepayments. At any time that a Borrowing Base Deficiency shall
occur, the Borrower shall:

(i) If such Borrowing Base Deficiency results from a redetermination of the
Borrowing Base pursuant to Sections 2.04(b), 2.04(e) or 5.12, at the Borrower’s
election, take either or both of the following actions to eliminate the
Borrowing Base Deficiency: (A) prepay the Loans in an aggregate principal amount
equal to such Borrowing Base

 

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Deficiency, together with interest on the principal amount paid accrued to the
date of such prepayment and any funding indemnification amounts required by
Section 2.16, and, if a Borrowing Base Deficiency remains after prepaying all of
the Loans as a result of LC Exposure, pay to the Administrative Agent on behalf
of the Lenders an amount equal to such remaining Borrowing Base Deficiency to be
held as cash collateral in a special collateral account as provided in
Section 2.06(j), or (B) provide additional Collateral acceptable to the
Administrative Agent with a fair market value greater than or equal to the
amount of such Borrowing Base Deficiency. The Borrower shall be obligated to
make such prepayment, deposit of cash collateral or provide additional
Collateral within 60 days following its receipt of written notice from the
Administrative Agent of the existence of the Borrowing Base Deficiency.

(ii) If such Borrowing Base Deficiency results from a reduction of the Borrowing
Base in accordance with Sections 5.17, 6.01(j) or 6.13, use the Net Cash
Proceeds of the transaction giving rise to the reduction of the Borrowing Base
pursuant to any such Section, promptly, but in any event within two Business
Days of receipt of such Net Cash Proceeds, to prepay the Loans in an aggregate
principal amount equal to such Borrowing Base Deficiency, together with interest
on the principal amount paid accrued to the date of such prepayment and any
funding indemnification amounts required by Section 2.16, and, if a Borrowing
Base Deficiency remains after prepaying all of the Loans as a result of LC
Exposure, pay to the Administrative Agent on behalf of the Lenders an amount
equal to such remaining Borrowing Base Deficiency to be held as cash collateral
in a special collateral account as provided in Section 2.06(j); provided that
if, after application of such Net Cash Proceeds in accordance with the
foregoing, any Borrowing Base Deficiency shall remain, then the Borrower shall
eliminate such remaining Borrowing Base Deficiency in accordance with the
foregoing clause (i).

(iii) Amounts applied to the prepayment of Loans pursuant to this Section shall
be first applied ratably to ABR Loans then outstanding and, upon payment in full
of all outstanding ABR Loans, second, to Eurodollar Loans then outstanding, and
if more than one Eurodollar Loan is then outstanding, to each such Eurodollar
Loan beginning with the Eurodollar Loan with the fewest number of days remaining
in the Interest Period applicable thereto until paid in full, and then to the
Eurodollar Loan with the next fewest number of days remaining in the Interest
Period applicable thereto until paid in full, and continuing in a similar
fashion until the Borrowing Base Deficiency has been eliminated or, in the case
of any prepayment pursuant to the foregoing clause (ii), until such Net Cash
Proceeds have been exhausted.

(b) Optional Prepayment of Loans. The Borrower shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part, without
premium or penalty, but subject to the requirements of Sections 2.09(b) and
2.16. The Borrower shall notify the Administrative Agent by telephone (confirmed
by telecopy) of any optional prepayment (i) in the case of a Eurodollar
Borrowings, not later than 12:00 noon, New York City time, three Business Days
before the date of prepayment or (ii) in the case of prepayment of any ABR
Borrowings, not later than 12:00 noon New York City time, on the date of such
prepayment. Such notice shall be irrevocable and shall specify the prepayment
date and the principal amount of the Borrowings or portion thereof to be
prepaid; provided that, if a notice of prepayment is given in

 

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connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.09, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.09. Promptly
following receipt of any such notice of prepayment, the Administrative Agent
shall advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowings shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.13 and any amount payable under Section 2.16.

SECTION 2.12. Fees.

(a) Subject to the provisions of Section 2.20, the Borrower agrees to pay to the
Administrative Agent, for the account of each Lender (excluding any Defaulting
Lenders), an unused commitment fee (the “Unused Commitment Fee”) equal to the
Applicable Rate set forth under the heading Unused Commitment Fee Rate
multiplied by the daily average of each such Lender’s Unused Commitment. Such
Unused Commitment Fee shall be calculated on the basis of a year consisting of
360 days and shall be payable in arrears on the last day of each March, June,
September and December and on the Maturity Date for any period then ending for
which the Unused Commitment Fee shall not have been previously paid. In the
event the Commitments terminate on any date other than the last day of March,
June, September or December, the Borrower agrees to pay to the Administrative
Agent, for the account of each Lender (excluding any Defaulting Lenders), on the
date of such termination, each such Lender’s Unused Commitment Fee due for the
period from the last day of the immediately preceding March, June, September or
December, as the case may be, to the date such termination occurs.

(b) Subject to the provisions of Section 2.20, the Borrower agrees to pay (i) to
the Administrative Agent for the account of each Lender (excluding any
Defaulting Lenders) a participation fee with respect to its participations in
Letters of Credit, which shall accrue at the same Applicable Rate used to
determine the interest rate applicable to Eurodollar Loans on the average daily
amount of such Lender’s LC Exposure (excluding any portion thereof attributable
to unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure, and (ii) to the Issuing Bank a fronting fee as set forth in the Fee
Letter, as well as the Issuing Bank’s standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Commitments terminate and any such
fees accruing after the date on which the Commitments terminate shall be payable
on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

 

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

(d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or to the Issuing Bank, in the
case of fees payable to it) for distribution, in the case of Unused Commitment
Fees and participation fees, to the Lenders. Fees paid shall not be refundable
under any circumstances, except in the case of any overpayment due to erroneous
calculation or invoicing thereof.

SECTION 2.13. Interest.

(a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate
Base Rate plus the Applicable Rate.

(b) Eurodollar Loans shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Rate.

(c) Notwithstanding the foregoing, (i) if a Default or an Event of Default has
occurred and is continuing, the Majority Lenders may, at their option, by notice
to the Borrower declare that no Borrowing may be made as, converted into or
continued as a Eurodollar Borrowing, (ii) during the continuance of an Event of
Default the Majority Lenders may, at their option, by notice to the Borrower,
declare that (A) each Eurodollar Borrowing shall bear interest for the remainder
of the applicable Interest Period plus 2% per annum, (B) each ABR Borrowing
shall bear interest at a rate per annum equal to the Alternate Base Rate in
effect from time to time plus 2% per annum and (C) the fees described in
Section 2.12(b) shall be increased by 2% per annum, provided that, during the
continuance of an Event of Default under clauses (h) or (i) of Section 7.01, the
interest rates forth in clauses (A) and (B) above and the increase in the Letter
of Credit fee set forth in clause (C) above shall be applicable to all
Borrowings without any election or action on the part of the Administrative
Agent or any Lender (as applicable, the “Default Rate”).

(d) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and upon termination of the Commitments; provided
that (i) interest accrued pursuant to paragraph (c) of this Section shall be
payable on demand, (ii) in the event of any repayment or prepayment of any Loan
(other than a prepayment of an ABR Loan prior to the end of the Availability
Period unless such prepayment is made to reduce a Borrowing Base Deficiency),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.

(e) All interest hereunder shall be computed on the basis of a year of 360 days,
except that interest computed by reference to the Alternate Base Rate at times
when the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate
or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

 

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SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period; or

(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

SECTION 2.15. Increased Costs.

(a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement (including any compulsory loan requirement, insurance charge or
other assessment) against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate) or the Issuing Bank; or

(ii) impose on any Lender or the Issuing Bank or the London interbank market any
other condition, cost or expense affecting this Agreement or Eurodollar Loans
made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s

 

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or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing
Bank’s holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender, or the
Letters of Credit issued by the Issuing Bank, to a level below that which such
Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s or the Issuing Bank’s policies and the policies of
such Lender’s or the Issuing Bank’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company for any such reduction suffered.

(c) A certificate of a Lender or the Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or the Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 Business
Days after receipt thereof.

(d) Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or the Issuing Bank’s right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the Issuing Bank’s
intention to claim compensation therefor; provided, further, that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.

SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert, continue
or prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under
Section 2.11(b) and is revoked in accordance therewith) or (d) the assignment of
any Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.05 or
Section 2.19, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest that would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar

 

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deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.

SECTION 2.17. Taxes.

(a) General. Each payment by any Credit Party under any Loan Document shall be
made without withholding for any Taxes, unless such withholding is required by
law. If any Withholding Agent determines, in its sole discretion exercised in
good faith, that it is so required to withhold Taxes, then such Withholding
Agent may so withhold and shall timely pay the full amount of withheld Taxes to
the relevant Governmental Authority in accordance with applicable law. If such
Taxes are Indemnified Taxes, then the amount payable by any Credit Party shall
be increased as necessary so that net of such withholding (including withholding
applicable to additional amounts payable under this Section) the applicable
Recipient receives the amount it would have received had no such withholding
been made.

(b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable
law.

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

(d) Indemnification by the Borrower and the Parent. The Borrower and the Parent
shall jointly and severally indemnify each Recipient for any Indemnified Taxes
that are paid or payable by such Recipient in connection with any Loan Document
(including amounts paid or payable under this Section 2.17(d)) and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. The indemnity under this Section 2.17(d) shall
be paid within 10 days after the Recipient delivers to the Borrower a
certificate stating the amount of any Indemnified Taxes so paid or payable by
such Recipient or Beneficial Owner and describing the basis for the
indemnification claim. Such certificate shall be conclusive of the amount so
paid or payable absent manifest error. Such Recipient shall deliver a copy of
such certificate to the Administrative Agent.

(e) Indemnification by the Lenders. Each Lender shall severally indemnify the
Administrative Agent for any Taxes (but, in the case of any Indemnified Taxes,
only to the extent that any Loan Party has not already indemnified the
Administrative Agent for such Indemnified Taxes and without limiting the
obligation of the Borrower and the Parent to do so) attributable to such Lender
that are paid or payable by the Administrative Agent in connection with any Loan
Document and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. The indemnity under this Section 2.17(e) shall
be paid within 10 days

 

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after the Administrative Agent or the applicable Credit Party (as applicable)
delivers to the applicable Lender a certificate stating the amount of Taxes so
paid or payable by the Administrative Agent or the Borrower (as applicable).
Such certificate shall be conclusive of the amount so paid or payable absent
manifest error.

(f) Status of Lenders.

(i) Any Lender that is entitled to an exemption from, or reduction of, any
applicable withholding Tax with respect to any payments under any Loan Document
shall deliver to the Borrower and the Administrative Agent, at the time or times
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent as will permit such payments to be made without, or at a
reduced rate of, withholding. In addition, any Lender, if requested by the
Borrower or the Administrative Agent, shall deliver such other documentation
prescribed by 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 any withholding (including backup
withholding) or information reporting requirements. Notwithstanding anything to
the contrary in the preceding two sentences and except as otherwise required by
applicable law, the completion, execution and submission of such documentation
(other than such documentation set forth in Section 2.17(f)(ii)(A) through
(E) below) shall not be required if in the Lender’s 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. Upon the reasonable request of such Borrower or the
Administrative Agent, any Lender shall update any form or certification
previously delivered pursuant to this Section 2.17(f). If any form or
certification previously delivered pursuant to this Section expires or becomes
obsolete or inaccurate in any respect with respect to a Lender, such Lender
shall promptly (and in any event within 10 days after such expiration,
obsolescence or inaccuracy) notify such Borrower and the Administrative Agent in
writing of such expiration, obsolescence or inaccuracy and update the form or
certification if it is legally eligible to do so.

(ii) Without limiting the generality of the foregoing, if the Borrower is a U.S.
Person, any Lender with respect to such Borrower shall, if it is legally
eligible to do so, deliver to such Borrower and the Administrative Agent (in
such number of copies reasonably requested by such Borrower and the
Administrative Agent) on or prior to the date on which such Lender becomes a
party hereto, duly completed and executed copies of whichever of the following
is applicable:

(A) in the case of a Lender that is a U.S. Person, IRS Form W-9 certifying that
such Lender is exempt from U.S. Federal backup withholding tax;

(B) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (1) with respect to payments of
interest under any Loan Document, IRS Form W-8BEN establishing an exemption
from, or reduction of, U.S. Federal withholding Tax pursuant to the

 

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“interest” article of such tax treaty and (2) with respect to any other
applicable payments under this Agreement, IRS Form W-8BEN establishing an
exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the
“business profits” or “other income” article of such tax treaty;

(C) in the case of a Foreign Lender for whom payments under this Agreement
constitute income that is effectively connected with such Lender’s conduct of a
trade or business in the United States, IRS Form W-8ECI;

(D) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code both (1) IRS Form W-8BEN and
(2) a certificate substantially in the form of Exhibit E (a “U.S. Tax
Certificate”) to the effect that such Lender is not (a) a “bank” within the
meaning of Section 881(c)(3)(A) of the Code, (b) a “10 percent shareholder” of
the Borrower within the meaning of Section 881(c)(3)(B) of the Code (c) a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code
and (d) conducting a trade or business in the United States with which the
relevant interest payments are effectively connected;

(E) in the case of a Foreign Lender that is not the Beneficial Owner of payments
made under this Agreement (including a partnership or a participating Lender)
(1) an IRS Form W-8IMY on behalf of itself and (2) the relevant forms prescribed
in clauses (A), (B), (C), (D) and (F) of this paragraph (f)(ii) that would be
required of each such Beneficial Owner or partner of such partnership if such
Beneficial Owner or partner were a Lender; provided, however, that if the Lender
is a partnership and one or more of its partners are claiming the exemption for
portfolio interest under Section 881(c) of the Code, such Lender may provide a
U.S. Tax Certificate on behalf of such partners; or

(F) any other form prescribed by law as a basis for claiming exemption from, or
a reduction of, U.S. Federal withholding Tax together with such supplementary
documentation necessary to enable the Borrower or the Administrative Agent to
determine the amount of Tax (if any) required by law to be withheld.

(iii) If a payment made to a Lender under any Loan Document would be subject to
U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Withholding Agent, at the time or times prescribed by law
and at such time or times reasonably requested by the Withholding 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 Withholding Agent as may be necessary for the
Withholding Agent to comply with its obligations under FATCA, to determine that
such Lender has or has not complied with such Lender’s obligations under FATCA
and, as necessary, to determine the amount to deduct and withhold from such
payment. Solely for purposes of this Section 2.17(f)(iii), “FATCA” shall include
any amendments made to FATCA after the date of this Agreement.

 

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(g) Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified or Other Taxes paid by the Borrower pursuant
to this Section 2.17 (including additional amounts paid pursuant to this
Section 2.17), it shall pay to the indemnifying party an amount equal to such
refund (but only to the extent of indemnity payments made, or such Other Taxes
paid, under this Section with respect to the Taxes giving rise to such refund),
net of all out-of-pocket expenses (including any Taxes) of such indemnified
party and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund). Such indemnifying party,
upon the request of such indemnified party, shall repay to such indemnified
party the amount paid such indemnified party pursuant to the previous sentence
(plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) in the event such indemnified party is required to repay
such refund to such Governmental Authority. Notwithstanding anything herein to
the contrary in this Section 2.17(g), in no event will any indemnified party be
required to pay any amount to any indemnifying party pursuant to this
Section 2.17(g) to the extent that such payment would place such indemnified
party in a less favorable position (on a net after-Tax basis) than such
indemnified party would have been in if the indemnification payments or
additional amounts giving rise to such refund had never been paid. This
Section 2.17(g) shall not be construed to require any indemnified party to make
available its Tax returns (or any other information relating to its Taxes which
it deems confidential) to the indemnifying party or any other Person.

(h) Survival. Each party’s obligations under this Section 2.17 shall survive any
assignment of rights by, or the replacement of, a Lender, the termination of the
Commitments and the repayment, satisfaction or discharge of all other
obligations under any Loan Document.

(i) Issuing Bank. For purposes of Section 2.17(e) and (f), the term “Lender”
includes any Issuing Bank.

SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a) The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to
12:00 noon, New York City time, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices at 270 Park Avenue, New York, New York, except payments to be made
directly to the Issuing Bank as expressly provided herein and except that
payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly
to the Persons entitled thereto. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.

 

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(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

(c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in LC Disbursements resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
and participations in LC Disbursements and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements of other Lenders to the extent necessary
so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in LC Disbursements; provided that
(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph shall not be construed to
apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or participant,
other than to the Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this paragraph shall apply). The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

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

 

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(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c), then the
Administrative Agent may, in its discretion and notwithstanding any contrary
provision hereof, (i) apply any amounts thereafter received by the
Administrative Agent for the account of such Lender and for the benefit of the
Administrative Agent or the Issuing Bank to satisfy such Lender’s obligations
under such Sections until all such unsatisfied obligations are fully paid and/or
(ii) hold any such amounts in a segregated account over which the Administrative
Agent shall have exclusive control as cash collateral for, and application to,
any future funding obligations of such Lender under such Sections; in the case
of each of (i) and (ii) above, in any order as determined by the Administrative
Agent in its discretion.

SECTION 2.19. Mitigation Obligations; Replacement of Lenders.

(a) If any Lender requests compensation under Section 2.15, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

(b) If any Lender requests compensation under Section 2.15, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, or if any
Lender becomes a Defaulting Lender, or if any Lender fails to execute an
amendment or waiver with respect to the Loan Documents that is executed by the
Required Lenders, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent (and if a Commitment is being
assigned, the Issuing Bank), which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.15 or payments required to be made pursuant to
Section 2.17, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.

 

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SECTION 2.20. 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) fees shall cease to accrue on the unfunded portion of the Commitment of such
Defaulting Lender pursuant to Section 2.12(a);

(b) the Commitment and Credit Exposure of such Defaulting Lender shall not be
included in determining whether all Lenders, the Majority Lenders or the
Required Lenders have taken or may take any action hereunder (including any
consent to any amendment, waiver or other modification pursuant to
Section 9.02); provided that (i) such Defaulting Lender’s Commitment may not be
increased or extended without its consent and (ii) the principal amount of, or
interest or fees payable on, Loans or LC Disbursements may not be reduced or
excused or the scheduled date of payment may not be postponed as to such
Defaulting Lender without such Defaulting Lender’s consent;

(c) if any LC Exposure exists at the time a Lender becomes a Defaulting Lender
then:

(i) all or any part of such LC Exposure shall be reallocated among the
non-Defaulting Lenders in accordance with their respective Applicable
Percentages but only to the extent (x) the sum of all non-Defaulting Lenders’
Credit Exposures plus such Defaulting Lender’s LC Exposure does not exceed the
total of all non-Defaulting Lenders’ Commitments and (y) the conditions set
forth in Section 4.02 are satisfied at such time;

(ii) if the reallocation described in clause (i) above cannot, or can only
partially, be effected, the Borrower shall within one Business Day following
notice by the Administrative Agent cash collateralize such Defaulting Lender’s
LC Exposure (after giving effect to any partial reallocation pursuant to clause
(i) above) in accordance with the procedures set forth in Section 2.06(j) for so
long as such LC Exposure is outstanding;

(iii) if the Borrower cash collateralizes any portion of such Defaulting
Lender’s LC Exposure pursuant to Section 2.20(c), the Borrower shall not be
required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b)
with respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;

(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to
Section 2.20(c), then the fees payable to the Lenders pursuant to
Section 2.12(a) and Section 2.12(b) shall be adjusted in accordance with such
non-Defaulting Lenders’ Applicable Percentages; or

(v) if any Defaulting Lender’s LC Exposure is neither cash collateralized nor
reallocated pursuant to Section 2.20(c), then, without prejudice to any rights
or remedies of the Issuing Bank or any Lender hereunder, all letter of credit
fees payable under Section 2.12(b) with respect to such Defaulting Lender’s LC
Exposure shall be payable to the Issuing Bank until such LC Exposure is cash
collateralized and/or reallocated; and

 

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(d) so long as any Lender is a Defaulting Lender the Issuing Bank shall not be
required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related exposure will be 100% covered by the Commitments of
the non-Defaulting Lenders and/or cash collateral will be provided by the
Borrower in accordance with Section 2.20(c), and participating interests in any
such newly issued or increased Letter of Credit shall be allocated among
non-Defaulting Lenders in a manner consistent with Section 2.20(c)(i) (and
Defaulting Lenders shall not participate therein).

In the event that the Administrative Agent, the Borrower and the Issuing Bank
each agrees that a Defaulting Lender has adequately remedied all matters that
caused such Lender to be a Defaulting Lender, then the LC Exposure of the
Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment
and on such date such Lender shall purchase at par such of the Loans of the
other Lenders as the Administrative shall determine may be necessary in order
for such Lender to hold such Loans in accordance with its Applicable Percentage.

ARTICLE III

Representations and Warranties

Each of the Parent and the Borrower represents and warrants to the Lenders that:

SECTION 3.01. Existence; Organization; Powers. The Parent, the Borrower and each
Restricted Subsidiary: (a) is duly organized or formed, legally existing and in
good standing, if applicable, under the laws of the jurisdiction of its
formation, except as to any Restricted Subsidiary where the failure to so exist
or remain in good standing could not reasonably be expected to have a Material
Adverse Effect, (b) has all requisite power and authority, and has all material
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted, except where failure to have such power could not reasonably be
expected to have a Material Adverse Effect, and (c) is qualified to do business
in all jurisdictions in which the nature of the business conducted by it makes
such qualification necessary and where failure so to qualify could reasonably be
expected to have a Material Adverse Effect.

SECTION 3.02. Authorization; Enforceability. The Parent, the Borrower and each
Restricted Subsidiary have all necessary power and authority to execute, deliver
and perform its obligations under this Agreement and the Loan Documents to which
it is a party. The execution, delivery and performance by the Parent, the
Borrower and each Restricted Subsidiary of this Agreement and the Loan Documents
to which it is a party have been duly authorized by all necessary corporate,
limited liability company or partnership action, and this Agreement and the Loan
Documents constitute the legal, valid and binding obligations of the Parent, the
Borrower and each Restricted Subsidiary party thereto, enforceable in accordance
with their terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and general principles of equity, regardless of whether considered in
a proceeding in equity or at law.

SECTION 3.03. Governmental Approvals; No Conflicts. No authorizations, approvals
or consents of, and no filings or registrations with, any Governmental Authority
or any third

 

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Person are necessary for the execution, delivery or performance by the Parent,
the Borrower or any Restricted Subsidiary of this Agreement or the Loan
Documents or for the validity or enforceability thereof, except for (i) the
recording and filing of the Collateral Documents as required by this Agreement
and (ii) those third party approvals or consents which, if not made or obtained,
would not cause a Default or Event of Default hereunder, could not reasonably be
expected to have a Material Adverse Effect and do not have an adverse effect on
the enforceability of the Loan Documents. Neither the execution and delivery of
this Agreement or any Loan Document, nor compliance with the terms and
provisions hereof or thereof, will conflict with or result in a breach of, or
require any consent that has not been obtained as of the Effective Date under,
the respective Organizational Documents of the Parent, the Borrower or any
Restricted Subsidiary, any Governmental Requirement, any Unsecured Notes
Document or any other material agreement or instrument to which the Parent, the
Borrower or any Restricted Subsidiary is a party or by which it is bound or to
which it or its Properties are subject, or constitute a default under any
Unsecured Notes Document or any such agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Parent, the Borrower or any Restricted Subsidiary pursuant to the terms of any
Unsecured Notes Documents or any such agreement or instrument, other than the
Liens created by the Loan Documents.

SECTION 3.04. Financial Condition; No Material Adverse Change.

(a) The Parent has heretofore furnished to the Administrative Agent and the
Lenders its consolidated balance sheet, and the related consolidated statements
of income, cash flows and shareholders’ equity of the Parent and its
Subsidiaries (a) as of and for the fiscal year ended December 31, 2010, audited
by and accompanied by the unqualified opinion of KPMG LLP, independent certified
public accountants, and (b) as of and for the fiscal quarter ended
March 31, 2011, certified by an Authorized Officer that such financial
statements present fairly in all material respects, the financial condition and
results of operations of the Parent and its Subsidiaries as of such dates and
for such periods. Such financial statements were prepared in accordance with
GAAP applied on a consistent basis. Since the date of the audited financial
statements of the Parent that have most recently been delivered pursuant to
Section 5.01(a), there has been no material adverse change.

(b) Except as disclosed to the Administrative Agent in writing, none of the
Parent, the Borrower or any Restricted Subsidiary has any material contingent
liabilities, material liabilities for taxes, unusual and material forward or
long-term commitments or material unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for in
the consolidated balance sheets of the Parent or as otherwise disclosed to the
Lenders in writing.

(c) The Parent and the Borrower have disclosed to the Lenders in writing any and
all facts that, in the reasonable good faith judgment of the Parent and the
Borrower, could reasonably be expected to result in a Material Adverse Effect.

 

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SECTION 3.05. Properties.

(a) Each of the Parent, the Borrower and the Restricted Subsidiaries has good
and defensible title to its material Oil and Gas Properties and good title to
its material personal Properties, in each case, free and clear of all Liens
except Liens permitted by Section 6.02. After giving full effect to Liens
permitted by Section 6.02, the Parent, the Borrower or the Restricted
Subsidiary, as applicable, specified as the owner owns the net interests in
production attributable to the Hydrocarbon Interests as reflected in the most
recently delivered Reserve Report, and the ownership of such Properties shall
not in any material respect obligate the Parent, 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 Parent’s, 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 Parent, the Borrower and the Restricted Subsidiaries are valid and
subsisting, in full force and effect, and there exists no default or event or
circumstance that with the giving of notice or the passage of time or both would
give rise to a default under any such lease or leases, except as could not
reasonably be expected to have a Material Adverse Effect.

(c) The rights, Properties and other assets presently owned, leased or licensed
by the Parent, the Borrower and the Restricted Subsidiaries, including, without
limitation, all easements and rights of way, include all rights, Properties and
other assets necessary to permit the Parent, the Borrower and the Restricted
Subsidiaries to conduct their business in all material respects in the same
manner as such business has been conducted prior to the Effective Date.

(d) All of the assets and Properties of the Parent, the Borrower and the
Restricted Subsidiaries that are reasonably necessary for the operation of their
business are in good working condition and are maintained in accordance with
prudent business standards.

SECTION 3.06. Litigation and Environmental Matters.

(a) Except as set forth on Schedule 3.06, there are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Parent or the Borrower, threatened against
or affecting the Parent, the Borrower or any of the Restricted Subsidiaries
(i) as to which there is a reasonable possibility of an adverse determination
and that, if adversely determined, could reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect or (ii) that involve
the Existing Credit Facility, this Agreement or the other Loan Documents.

(b) Except as could not be reasonably expected to have a Material Adverse Effect
(or with respect to (iii), (iv) and (v) below, where the failure to take such
actions could not be reasonably expected to have a Material Adverse Effect):

(i) neither any Property of the Parent, the Borrower or any Restricted
Subsidiary, nor the operations conducted thereon, violate any order or
requirement of any court or Governmental Authority or any Environmental Laws;

 

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(ii) no Property of the Parent, the Borrower or any Restricted Subsidiary nor
the operations currently conducted thereon or, to the knowledge of the Parent or
the Borrower, by any prior owner or operator of such Property or operation, are
in violation of or subject to any existing, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court or Governmental
Authority or to any remedial obligations under Environmental Laws;

(iii) all notices, permits, licenses or similar authorizations, if any, required
to be obtained or filed in connection with the operation or use of any and all
Property of the Parent, the Borrower and each Restricted Subsidiary, including,
without limitation, past or present treatment, storage, disposal or release of a
hazardous substance or solid waste into the environment, have been duly obtained
or filed, and the Parent, the Borrower and each Restricted Subsidiary are in
compliance with the terms and conditions of all such notices, permits, licenses
and similar authorizations;

(iv) all hazardous substances, solid waste and oil and gas exploration and
production wastes, if any, generated at any and all Property of the Parent, the
Borrower or any Restricted Subsidiary have in the past been transported, treated
and disposed of in accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and, to the knowledge of the Parent or the Borrower, all such
transport carriers and treatment and disposal facilities have been and are
operating in compliance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and are not the subject of any existing, pending or threatened
action, investigation or inquiry by any Governmental Authority in connection
with any Environmental Laws;

(v) the Parent and the Borrower have taken all steps reasonably necessary to
determine and have determined that no hazardous substances, solid waste or oil
and gas exploration and production wastes have been disposed of or otherwise
released, and there has been no threatened release of any hazardous substances
on or to any Property of the Parent, the Borrower or any Restricted Subsidiary,
except in compliance with Environmental Laws and so as not to pose an imminent
and substantial endangerment to public health or welfare or the environment;

(vi) to the extent applicable, all Property of the Parent, the Borrower and each
Restricted Subsidiary currently satisfies all design, operation and equipment
requirements imposed by the Oil Pollution Act of 1990 and neither the Parent nor
the Borrower has any reason to believe that such Property, to the extent subject
thereto, will not be able to maintain compliance with the requirements thereof
during the term of this Agreement; and

(c) none of the Parent, the Borrower or any Restricted Subsidiary has any known
material contingent liability in connection with any release or threatened
release of any oil, hazardous substance or solid waste into the environment.

 

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SECTION 3.07. Compliance with Laws and Agreements. None of the Parent, the
Borrower or any Restricted Subsidiary has violated any applicable Governmental
Requirement binding upon it or its Properties or failed to obtain any license,
permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
None of the Parent, the Borrower or any Restricted Subsidiary is in default nor
has any event or circumstance occurred that, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default under any Unsecured Notes Documents or any other material agreement or
instrument to which the Borrower or any Restricted Subsidiary is a party or by
which the Borrower or any Restricted Subsidiary is bound, which default could
reasonably be expected to have a Material Adverse Effect. No Default hereunder
has occurred and is continuing.

SECTION 3.08. Investment Company Status. None of the Parent, the Borrower or any
Restricted Subsidiary is an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.

SECTION 3.09. Taxes. Each of the Parent, the Borrower and the Restricted
Subsidiaries has filed all United States Federal income tax returns and all
other tax returns that are required to be filed by it and has paid all material
taxes due pursuant to such returns or pursuant to any assessment received by the
Parent, the Borrower or any Restricted Subsidiary, except any such taxes that
are being contested in good faith by appropriate proceedings diligently
conducted and for which adequate reserves are being maintained in accordance
with GAAP. The charges, accruals and reserves on the books of the Parent, the
Borrower and the Restricted Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of the Parent, adequate. No tax lien
has been filed and, to the knowledge of the Parent or the Borrower, no claim is
being asserted with respect to any such tax or other such governmental charge.

SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Financial Accounting Standards Board Accounting Standards Codification 715)
did not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $2,000,000 the fair market value of the assets of
such Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Financial
Accounting Standards Board Accounting Standards Codification 715) did not, as of
the date of the most recent financial statements reflecting such amounts, exceed
by more than $2,000,000 the fair market value of the assets of all such
underfunded Plans.

SECTION 3.11. Disclosure. The Parent and the Borrower have disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to which
either of them or any of the Restricted Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. No reports, financial
statements, certificates or other information furnished by or on behalf of the
Parent or

 

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the Borrower to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Parent represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time. There
is no fact peculiar to the Parent, the Borrower or any Restricted Subsidiary
that has a Material Adverse Effect or in the future is reasonably likely to have
(so far as the Parent or the Borrower can now foresee) a Material Adverse Effect
and that has not been set forth in this Agreement or the other documents,
certificates and statements furnished to the Administrative Agent by or on
behalf of the Parent, the Borrower or any Restricted Subsidiary prior to, or on,
the Effective Date in connection with the transactions contemplated hereby.
There are no statements or conclusions in any Reserve Report which are based
upon or include misleading information or fail to take into account material
information regarding the matters reported therein, it being understood that
each Reserve Report is necessarily based upon professional opinions, estimates
and projections and that neither the Parent nor the Borrower warrants that such
opinions, estimates and projections will ultimately prove to have been accurate.
No representation or warranty is made with respect to any Oil and Gas Properties
to which no proved Hydrocarbon Interests are properly attributed.

SECTION 3.12. Use of Loans and Letters of Credit. The proceeds of the Loans and
the Letters of Credit shall be used (a) to provide working capital to the
Parent, the Borrower and the Restricted Subsidiaries and for other general
corporate purposes, (b) to finance capital expenditures and acquisitions
(including acquisitions of the Equity Interests in Persons owning Oil and Gas
Properties) by the Parent, the Borrower and the Restricted Subsidiaries, (c) to
provide for letters of credit for the account of the Parent, the Borrower and
the Restricted Subsidiaries and (d) to purchase, refinance, restructure,
rearrange, renew, extend and continue the Indebtedness outstanding under the
Existing Credit Facility. Neither the Parent nor the Borrower is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose, whether immediate, incidental or ultimate, of buying or
carrying margin stock (within the meaning of Regulation U or X of the Board). No
part of the proceeds of any Loan or Letter of Credit will be used for any
purpose which violation the provisions of Regulations T, U or X of the Board.

SECTION 3.13. Subsidiaries. Except as set forth on Schedule 3.13 or as disclosed
in writing to the Administrative Agent (which shall promptly furnish a copy to
the Lenders) that shall be a supplement to Schedule 3.13, the Borrower has no
Subsidiaries other than Penn Virginia Resource Holdings Corp. and its
Subsidiaries. Schedule 3.13 identifies each Subsidiary (other than Penn Virginia
Resource Holdings Corp. and its Subsidiaries) as either Restricted or
Unrestricted, and each Restricted Subsidiary on such schedule is a wholly-owned
Subsidiary.

SECTION 3.14. Jurisdiction of Incorporation or Organization. The jurisdiction of
organization, name as listed in the public records of its jurisdiction of
organization and location of the principal place of business or, if it has more
than one place of business, the chief executive office of the Parent, the
Borrower and each Restricted Subsidiary is set forth on Schedule 3.13 (or, in
each case, as set forth in a notice delivered to the Administrative Agent
pursuant to Section 5.01(k) in accordance with Section 9.01).

 

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SECTION 3.15. Maintenance of Properties. Except for such acts or failures to act
as could not be reasonably expected to have a Material Adverse Effect, the Oil
and Gas Properties (and properties unitized therewith) have been maintained,
operated and developed in a good and workmanlike manner and in conformity with
all applicable laws and all rules, regulations and orders of all duly
constituted authorities having jurisdiction and in conformity with the
provisions of all leases, subleases or other contracts comprising a part of the
Hydrocarbon Interests and other contracts and agreements forming a part of the
Oil and Gas Properties; specifically in this connection, except for those as
could not be reasonably expected to have a Material Adverse Effect, (i) after
the Effective Date, no Oil and Gas Property is subject to having allowable
production reduced below the full and regular allowable (including the maximum
permissible tolerance) because of any overproduction (whether or not the same
was permissible at the time) prior to the Effective Date and (ii) none of the
wells comprising a part of the Oil and Gas Properties (or properties unitized
therewith) owned by the Parent, the Borrower or any of the Restricted
Subsidiaries is deviated from the vertical more than the maximum permitted by
applicable laws, regulations, rules and orders, and such wells are, in fact,
bottomed under and are producing from, and the well bores are wholly within, the
Oil and Gas Properties (or in the case of wells located on properties unitized
therewith, such unitized properties) owned by the Parent, the Borrower or any of
the Restricted Subsidiaries.

SECTION 3.16. Insurance. The Parent or the Borrower has, and has caused all of
the Restricted Subsidiaries to have, (i) all insurance policies sufficient for
the compliance by each of them with all material Governmental Requirements and
all material agreements and (ii) insurance coverage in at least amounts and
against such risk (including, without limitation, public liability) that are
usually insured against by companies similarly situated and engaged in the same
or a similar business for the assets and operations of the Parent, the Borrower
and the Restricted Subsidiaries. The Administrative Agent, the Issuing Bank and
the Lenders have been named as additional insureds in respect of such liability
insurance policies.

SECTION 3.17. Gas Imbalances, Prepayments. Except as set forth on Schedule 3.17
or as disclosed in writing to the Administrative Agent and the Lenders in
connection with the most recently delivered Reserve Report, on a net basis there
are no gas imbalances, take or pay or other prepayments that would require the
Parent, the Borrower or any of the Restricted Subsidiaries to deliver
Hydrocarbons produced from their respective Oil and Gas Properties at some
future time without then or thereafter receiving full payment therefor exceeding
two Bcf of gas (or its equivalent) of gas in the aggregate on a net basis.

SECTION 3.18. Marketing of Production. Except for contracts listed and in effect
on the date hereof on Schedule 3.18, and thereafter either disclosed in writing
to the Administrative Agent or included in the most recently delivered Reserve
Report (with respect to all of which contracts the Parent and the Borrower
represent that they or the Restricted Subsidiaries are receiving a price for all
production sold thereunder that is computed substantially in accordance with the
terms of the relevant contract and are not having deliveries curtailed
substantially below the subject Property’s delivery capacity), no material
agreements exist that are not cancelable on 60 days notice or less without
penalty or detriment for the sale of production from the Parent’s, the
Borrower’s or the Restricted Subsidiaries’ Hydrocarbons (including, without
limitation, calls on or other rights to purchase, production, whether or not the
same are currently being exercised) and that (a) pertain to the sale of
production at a fixed price and (b) have a maturity or expiry date of longer
than six (6) months from the date hereof.

 

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SECTION 3.19. Hedging Transactions. Schedule 3.19 sets forth, as of June 30,
2011, a true and complete list of all Swap Agreements (including commodity price
swap agreements, forward agreements or contracts of sale which provide for
prepayment for deferred shipment or delivery of oil, gas or other commodities)
of the Parent, the Borrower and each Restricted Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark to market value thereof, all credit support
agreements relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.

SECTION 3.20. Restriction on Liens. None of the Parent, the Borrower or any of
the Restricted Subsidiaries is a party to any material agreement or arrangement
(other than instruments creating Liens permitted by Sections 6.02, but then only
on the Property subject of such Lien), or subject to any order, judgment, writ
or decree, that either restricts or purports to restrict its ability to grant
Liens to the Administrative Agent and the Lenders on or in respect of their
respective assets or Properties to secure the Secured Obligations and the Loan
Documents.

SECTION 3.21. Intellectual Property. The Parent, the Borrower and the Restricted
Subsidiaries either own or have valid licenses or other rights to use all
databases, geological data, geophysical data, engineering data, maps,
interpretations and other technical information used in their business as
presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons, with
such exceptions as could not reasonably be expected to have a Material Adverse
Effect.

SECTION 3.22. Material Personal Property. All pipelines, wells, gas processing
plants, platforms and other material improvements, fixtures and equipment owned
in whole or in part by the Parent, the Borrower or any of the Restricted
Subsidiaries that are necessary to conduct normal operations are being
maintained in a state adequate to conduct normal operations, and with respect to
such of the foregoing which are operated by the Parent, the Borrower or any of
the Restricted Subsidiaries, in a manner consistent with the Parent’s, the
Borrower’s or the Restricted Subsidiaries’ past practices (other than those the
failure of which to maintain in accordance with this Section 3.22 could not
reasonably be expect to have a Material Adverse Effect).

SECTION 3.23. Business. The Parent, the Borrower and the Restricted Subsidiaries
have not conducted and are not conducting any business other than businesses
relating to the acquisition, exploration, development, financing, ownership,
operation, production, maintenance, storage, transportation, gathering,
processing and marketing of Hydrocarbons, Hydrocarbon Interests and the Oil and
Gas Properties and related activities.

SECTION 3.24. Solvency. None of the Parent, the Borrower or any Restricted
Subsidiary (i) is “insolvent” (within the meaning of Section 101(32) of the
Bankruptcy Code, Section 2 of the Uniform Fraudulent Conveyance Act or Section 2
of the Uniform Fraudulent Transfer Act) or will become insolvent as a result of
the incurrence of any obligation under this

 

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Agreement or any other Loan Document to which it is a party; or (ii) has
unreasonably small capital (after giving effect to the transactions contemplated
in this Agreement or any other Loan Document to which it is a party) for the
conduct of its existing and contemplated business. Each of the Parent, the
Borrower and the Restricted Subsidiaries is able to perform its contingent
obligations and other commitments as they mature in the normal course of
business.

SECTION 3.25. Licenses, Permits, Etc. The Borrower and each of the Restricted
Subsidiaries possess such valid franchises, certificates of convenience and
necessity, operating rights, licenses, permits, consents, authorizations,
exemptions and orders of Governmental Authorities, as are necessary to carry on
their business as now conducted and as proposed to be conducted, except to the
extent a failure to obtain any such item could not reasonably be expected to
result in a Material adverse Effect.

SECTION 3.26. Fiscal Year. The fiscal year of the Parent and the Borrower is
January 1 through December 31.

SECTION 3.27. Seniority Designation. For the purposes of the Unsecured Notes
Documents or any Permitted Refinancing Indebtedness, the Secured Obligations
have been irrevocably designated as “senior indebtedness” (or such other
applicable term denoting seniority) ranking, as applicable, equally in right of
payment with any senior unsecured notes (including any such notes that are
convertible) issued under such Unsecured Notes Documents and senior in right of
payment to any subordinated unsecured notes or senior subordinated unsecured
notes (including any such notes that are convertible) issued under such
Unsecured Notes Documents without giving effect to rights in the Collateral of
the Administrative Agent, the Issuing Bank, the Lenders and the other
beneficiaries thereof.

ARTICLE IV

Conditions

SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

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

(b) Collateral Documents. The Administrative Agent (or its counsel) shall have
received the following documents: (A) the Guaranty duly completed and executed
by the Parent and each Material Domestic Subsidiary that exists on the Effective
Date; (B) the Mortgages and all documents and instruments duly completed and
executed, including Uniform Commercial Code financing statements, required by
law or reasonably requested by the Administrative Agent with respect to such
Mortgages; (C) any promissory notes requested by a Lender pursuant to
Section 2.10 payable to the order of each such requesting Lender duly executed
and completed

 

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by the Borrower; and (D) the other Collateral Documents duly completed and
executed in a sufficient number of counterparts for recording, if necessary;
provided that, to the extent that Administrative Agent receives any such
documents in a form other than original counterparts thereof, the Administrative
Agent shall be reasonably satisfied that duly completed and executed
counterparts thereof, in a sufficient number for recording, if necessary, have
been executed by the applicable Credit Party and appropriate arrangements have
been made for the prompt delivery thereof to the Administrative Agent or its
counsel. In connection with the execution and delivery of the Collateral
Documents, the Administrative Agent shall be reasonably satisfied that, upon the
filing or recordation thereof, the Collateral Documents create or continue, as
applicable, first priority, perfected Liens (subject only to Liens permitted
pursuant to Section 6.02) on at least 75% of the total value of the Oil and Gas
Properties evaluated in the Initial Reserve Report.

(c) Pledge Agreement. The Administrative Agent shall have received the Pledge
Agreement, dated as of the Effective Date, duly executed and delivered by the
Parent, the Borrower and each other Guarantor that owns Equity Interests in any
Restricted Subsidiary, together with (as applicable) stock certificates
representing 100% of such outstanding Equity Interests, and stock powers and
instruments of transfer, endorsed in blank, with respect to such stock
certificates, and all documents and instruments, including Uniform Commercial
Code Financing Statements (Form UCC-1), required by law or reasonably requested
by the Administrative Agent to be filed, registered or recorded to create or
perfect the Liens intended to be created under the Pledge Agreement.

(d) Organizational Documents. The Administrative Agent shall have received a
certificate of the Secretary or an Assistant Secretary of each Credit Party
dated as of the Effective Date, on which the Administrative Agent and the
Lenders may conclusively rely until the Administrative Agent receives notice in
writing from the Parent or the Borrower to the contrary, certifying:

(i) that attached to each such certificate are (1) a true and complete copy of
the Organizational Documents of such Credit Party, as the case may be, as in
effect on the date of such certificate and (2) a true and complete copy of a
certificate from the Governmental Authority of the state of such entity’s
organization certifying that such entity is duly organized and validly existing
in such jurisdiction;

(ii) that attached to such certificate is a true and complete copy of
resolutions duly adopted by the board of directors of such Credit Party, as
applicable, authorizing the execution, delivery and performance of each of the
Loan Documents to which such Credit Party is or is intended to be a party; and

(iii) as to the incumbency and specimen signature of each officer of such Credit
Party (1) who is authorized to execute the Loan Documents to which such Credit
Party is or is intended to be a party and (2) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby.

 

 

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(e) Qualification and Good Standing. The Administrative Agent shall have
received certificates of the appropriate state agencies with respect to the
existence and good standing of the Parent, the Borrower and each Guarantor in
the jurisdiction of its organization and the qualification as a foreign entity
and good standing of the Parent, the Borrower and each Guarantor in each other
jurisdiction with respect to which a Mortgage is being delivered by the Parent,
the Borrower or such Guarantor, as applicable, pursuant to this Section 4.01.

(f) Legal Opinions. The Administrative Agent shall have received a written legal
opinion addressed to the Administrative Agent, the Issuing Bank and the Lenders
in form and substance satisfactory to the Administrative Agent from (i) Nancy M.
Snyder, Esq., as general counsel to the Parent, the Borrower and the Guarantors,
and (ii) Thompson Knight LLP, special Texas counsel to the Parent and the
Borrower. The Parent and the Borrower hereby request such counsel to deliver
such opinion.

(g) UCC and Lien Searches. The Administrative Agent shall have received
appropriate UCC search certificates for the Parent, the Borrower and each
Guarantor in its jurisdiction of organization, and any other jurisdiction
reasonably requested by the Administrative Agent, reflecting no prior liens or
security interests encumbering the Collateral other than those being assigned or
released on or prior to the Effective Date and those permitted by Section 6.02.

(h) Insurance. The Administrative Agent and the Lenders shall have received
certificates, dated within 15 days of the Effective Date, from the Parent’s
insurers reflecting (a) compliance with all of the insurance required by
Section 5.05 and by the Collateral Documents and (b) that such insurance is in
full force and effect.

(i) Compliance Certificate. The Administrative Agent shall have received from
the Parent and the Borrower a compliance certificate substantially in the form
of Exhibit C.

(j) Financial Statements. The Administrative Agent shall have received the
financial statements described in Section 3.04(a).

(k) Initial Reserve Report. The Administrative Agent shall have received a
reserve engineering report as of December 31, 2010, prepared by one or more
Approved Petroleum Engineers (the “Initial Reserve Report”) with respect to the
value of the Oil and Gas Properties of the Parent, the Borrower and the
Restricted Subsidiaries acceptable to the Administrative Agent using such
reasonable assumptions as the Administrative Agent shall specify (including such
discount rates and projected hydrocarbon price assumptions) and such other
reserve, engineering, geological and title information as may be requested by
the Administrative Agent.

(l) [Intentionally Omitted].

(m) Subordination Agreement. The Administrative Agent shall have received the
Subordination Agreement from each Unrestricted Subsidiary designated as on
Schedule 4.01(m) duly executed by each such Unrestricted Subsidiary.

(n) Satisfactory Legal Form. All documents executed or submitted pursuant hereto
by and on behalf of the Parent, the Borrower or any other Credit Party shall be
in form and

 

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substance reasonably satisfactory to the Administrative Agent and its counsel.
The Administrative Agent and its counsel shall have received all information,
approvals, documents or instruments as the Administrative Agent or its counsel
may reasonably request.

(o) Fees and Expenses. The Administrative Agent and the Lenders shall have
received all fees and other amounts due and payable pursuant to this Agreement
or any other Loan Document on or prior to the date hereof, including, to the
extent invoiced, reimbursement or payment of all reasonable out-of-pocket
expenses (including reasonable fees, charges and disbursements of counsel)
required to be reimbursed or paid by any Credit Party hereunder or under any
other Loan Document.

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to the satisfaction of the following
conditions:

(a) The representations and warranties of the Parent, the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct in all material respects, or, to the extent that a particular
representation or warranty is qualified as to materiality, such representation
or warranty shall be true and correct, in each case, on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, except to the extent any such representations
and warranties are expressly limited to an earlier date, in which case, on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, such representations and
warranties shall continue to be true and correct as of such specified earlier
date.

(b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.

(c) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no event, development or circumstance has occurred or shall then
exist that has resulted in, or could reasonably be expected to have, a Material
Adverse Effect.

(d) The making of such Loan or the issuance, amendment, renewal or extension of
such Letter of Credit, as applicable, would not conflict with, or cause any
Lender or the Issuing Bank to violate or exceed, any applicable Governmental
Requirement and no litigation shall be pending or threatened, which does or,
with respect to any threatened litigation, seeks to, enjoin, prohibit or
restrain the making or repayment of any Loan, the issuance, amendment, renewal,
extension or repayment of any Letter of Credit or any participations therein or
the consummation of the transactions contemplated by this Agreement or any other
Loan Document.

 

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(e) The receipt by the Administrative Agent of a Borrowing Request in accordance
with Section 2.03 or a request for a Letter of Credit in accordance with
Section 2.06(b), as applicable.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.

ARTICLE V

Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Parent and the Borrower covenant
and agree with the Lenders that:

SECTION 5.01. Financial Statements; Other Information. The Parent or the
Borrower, as applicable, will furnish to the Administrative Agent and each
Lender:

(a) as soon as available and in any event within 120 days after the end of each
fiscal year of the Parent, the audited consolidated statements of income,
shareholders’ equity, changes in financial position and cash flow of the Parent
and its Subsidiaries, and the related audited consolidated balance sheets of the
Parent and its Subsidiaries as at the end of such fiscal year, setting forth in
each case in comparative form the corresponding figures for the preceding fiscal
year, and accompanied by either (x) with respect to any audited financial
statements, the related opinion of independent public accountants of recognized
national standing acceptable to the Administrative Agent which opinion shall
state that such financial statements fairly present, in all material respects,
the consolidated financial condition and results of operations of the Parent and
its Subsidiaries as at the end of, and for, such fiscal year and that such
financial statements have been prepared in accordance with GAAP except for such
changes in such principles with which the independent public accountants shall
have concurred and such opinion shall not contain a “going concern” or like
qualification or exception, or (y) with respect to any unaudited financial
statements, the certificate of an Authorized Officer, which certificate shall
state that such financial statements fairly present, in all material respects,
the consolidated financial condition and results of operations of the Parent and
its Subsidiaries in accordance with GAAP, as at the end of, and for, such
period;

(b) as soon as available and in any event within 60 days after the end of each
of the first three fiscal quarters of each fiscal year of the Parent,
consolidated statements of income, shareholders’ equity, changes in financial
position and cash flow of the Parent and its Subsidiaries for such period and
for the period from the beginning of the respective fiscal year to the end of
such period, and the related consolidated balance sheets as at the end of such
period, setting forth in each case in comparative form the corresponding figures
for the corresponding period in the preceding fiscal year, accompanied by the
certificate of an Authorized Officer, which certificate shall state that such
financial statements fairly present, in all material respects, the consolidated
financial condition and results of operations of the Parent and its Subsidiaries
in accordance with GAAP, as at the end of, and for, such period (subject to
normal year-end audit adjustments);

 

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(c) at the time it furnishes each set of financial statements under
Sections 5.01(a) and (b) above, a certificate substantially in the form of
Exhibit C executed by an Authorized Officer (A) certifying as to the matters set
forth therein and stating that no Event of Default has occurred and is
continuing (or, if any Event of Default has occurred and is continuing,
describing the same in reasonable detail) and (B) setting forth in reasonable
detail the computations necessary to determine whether the Parent, the Borrower
and the Restricted Subsidiaries are in compliance with Section 6.09 as of the
end of the respective fiscal quarter or fiscal year;

(d) promptly upon receipt thereof, a copy of each other report or letter
submitted to the Parent, the Borrower or any of the Restricted Subsidiaries by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Parent, the Borrower or any Restricted
Subsidiary, and a copy of any response by the Parent, the Borrower or any such
Restricted Subsidiary, or the Board of Directors of the Parent, the Borrower or
any such Restricted Subsidiary, to such letter or report;

(e) promptly upon its becoming available, each financial statement, report,
notice or proxy statement sent by the Parent to shareholders generally and each
Form 10-K, Form 10-Q, registration statement or prospectus filed by the Parent
with any securities exchange or the SEC;

(f) promptly after the furnishing thereof, copies of any financial statement,
report or notice (other than ministerial notices) furnished to any Person
pursuant to the terms of any preferred stock designation, indenture (including
any Unsecured Notes Indenture), loan or credit or other similar agreement in
respect of Indebtedness in excess of $10,000,000, other than this Agreement and
not otherwise required to be furnished to the Lenders pursuant to any other
provision of this Section 5.01;

(g) promptly following the written request from the Administrative Agent
thereof, a list of all Persons purchasing Hydrocarbons from the Parent, the
Borrower or any Restricted Subsidiary accounting for at least 80% in the
aggregate of the revenues resulting from the sale of all Hydrocarbons in the
six-month period prior to the “as of” date of the most recently delivered
Reserve Report;

(h) together with the delivery of the financial information to be supplied under
Sections 5.01(a) and (b), a report, in form and substance satisfactory to the
Administrative Agent, setting forth as of the last Business Day of such fiscal
quarter or fiscal year, a true and complete list of all Swap Agreements
(including commodity price swap agreements, forward agreements or contracts of
sale which provide for prepayment for deferred shipment or delivery of oil, gas
or other commodities) of the Parent, the Borrower and each Restricted
Subsidiary, the material terms thereof (including the type, term, effective
date, termination date and notional amounts or volumes), the net mark to market
value therefor, any new credit support agreements relating thereto not listed on
Schedule 3.19, any margin required or supplied under any credit support
document, and the counterparty to each such agreement;

 

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(i) concurrently with any delivery of financial statements under
Section 5.01(a), a certificate of insurance coverage from each insurer or its
authorized agent or broker with respect to the insurance required by
Section 5.05, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, all copies of the
applicable policies;

(j) prompt written notice (and in any event within 30 days prior thereto) of any
change in (i) any Credit Party’s corporate name, (ii) the location of any Credit
Party’s chief executive office or principal place of business, (iii) the Credit
Party’s identity or corporate structure or in the jurisdiction in which such
Person is incorporated or formed, (iv) any Credit Party’s jurisdiction of
organization or such Credit Party’s organizational identification number in such
jurisdiction of organization and (v) any Credit Party’s federal taxpayer
identification number;

(k) promptly, but in any event, by the time specified in any of Sections 5.17,
5.20 or 6.13, as applicable, written notice of the transactions, events or
circumstances described in such Section for which notice is required to be
given;

(l) at the time it furnishes each set of financial statements under
Sections 5.01(a) or (b) above, a certificate executed by an Authorized Officer
of the Parent certifying as to the aggregate amount of all outstanding
intercompany Indebtedness permitted pursuant to Section 6.01(g) as of the end of
the respective fiscal year or fiscal quarter and setting forth in reasonable
detail the Unrestricted Subsidiary payor and the recipient with respect thereto,
whether a Subordination Agreement from such payor has been provided to the
Administrative Agent (which Subordination Agreement shall remain in full force
and effect as of the date of such certificate) and such additional information
related thereto as the Administrative Agent may request; and

(m) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of the Parent, the
Borrower or any Restricted Subsidiary, or compliance with the terms of this
Agreement, as the Administrative Agent or any Lender may reasonably request.

Documents required to be delivered pursuant to Section 5.01(a), (b) or (e) (to
the extent any such documents are included in materials otherwise filed with the
SEC) shall be deemed to be delivered hereunder upon such filing with the SEC on
the date of such filing.

SECTION 5.02. Notices of Material Events. The Parent or the Borrower, as
applicable, will furnish to the Administrative Agent and each Lender prompt
written notice of the following:

(a) the occurrence of any Default;

(b) the commencement of any legal or arbitral proceedings, and of all
proceedings before any Governmental Authority filed against the Parent, the
Borrower or any Restricted Subsidiary, except proceedings that, if adversely
determined, could not reasonably be expected to result in liability not fully
covered by insurance, subject to normal deductibles, in excess of $10,000,000
(whether individually or in the aggregate);

 

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(c) in the event the amount of contested taxes or claims not previously
disclosed in the financial statements delivered under Section 5.01(a) and
Section 5.01(b) above exceeds $10,000,000 in the aggregate at any one time,
prompt written notice from an Authorized Officer describing such circumstances,
in detail satisfactory to the Administrative Agent;

(d) prompt written notice, and in any event within three Business Days, of the
occurrence of any Casualty Event to Oil and Gas Properties subject to any
Mortgage or the commencement of any action or proceeding for the taking of any
Oil and Gas Properties subject to any Mortgage with a value exceeding
$10,000,000 under power of eminent domain or by condemnation, nationalization or
similar proceeding;

(e) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Parent, the Borrower and the Restricted Subsidiaries in an
aggregate amount exceeding $10,000,000; and

(f) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
an Authorized Officer of the Parent (or the Borrower, if applicable) setting
forth the details of the event or development requiring such notice and any
action taken or proposed to be taken with respect thereto.

SECTION 5.03. Existence; Conduct of Business. Each of the Parent and the
Borrower will, and will cause each of the Restricted Subsidiaries to, do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of their business, except where the failure
to so preserve, renew or keep could not reasonably be expected to have a
Material Adverse Effect; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.03.

SECTION 5.04. Payment of Obligations, Taxes and Material Claims. Each of the
Parent and the Borrower will, and will cause each of the Restricted Subsidiaries
to, pay the Obligations according to the terms set forth in this Agreement and
the Loan Documents and do and perform every act and discharge all of the
obligations to be performed and discharged by them under this Agreement and the
Loan Documents, at the time or times and in the manner specified. The Parent and
the Borrower will, and will cause each of the Restricted Subsidiaries to, pay
(a) all taxes imposed upon it or any of its assets or with respect to any of its
franchises, business, income or profits before any material penalty or interest
accrues thereon and (b) all material claims (including, without limitation,
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or might become a Lien (other than Liens
permitted pursuant to Section 6.02) on any of its assets; provided, however,
that no payment of taxes or claims shall be required if (i) the amount,
applicability or validity thereof is currently being contested in good faith by
appropriate action promptly initiated and diligently conducted in accordance
with good business practices and no Oil and Gas Property subject to any Mortgage
with a value in excess of $10,000,000 is subject to levy or execution, (ii) the
Parent, as and to the extent required in accordance with GAAP, shall have set
aside on its books reserves (segregated to the extent required by GAAP) deemed
by it to be adequate with respect thereto and (iii) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

 

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SECTION 5.05. Maintenance of Properties; Insurance.

(a) Each of the Parent and the Borrower will, and will cause each of the
Restricted Subsidiaries to: (i) except as permitted in Section 6.03, preserve
and maintain its existence and all of its material rights, privileges and
franchises and maintain, if necessary, its qualification to do business in each
other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect; (ii) keep books of record and account in accordance with GAAP;
(iii) comply with all Governmental Requirements if failure to comply with such
requirements could reasonably be expected to have a Material Adverse Effect; and
(iv) keep, or cause to be kept, insured by financially sound and reputable
insurers all Property of a character usually insured by Persons engaged in the
same or similar business similarly situated against loss or damage of the kinds
and in the amounts customarily insured against by such Persons and carry such
other insurance against risks as is usually carried by such Persons. The loss
payable clauses or provisions in such insurance policy or policies insuring any
of the Collateral shall be endorsed in favor of and made payable to the
Administrative Agent as its interests may appear and naming the Administrative
Agent, the Issuing Bank and the Lenders as “additional insureds” and shall
provide that the insurer will endeavor to give at least 10 days’ prior notice of
any cancellation to the Administrative Agent.

(b) Each of the Parent and the Borrower will, and will cause each of the
Restricted Subsidiaries to, operate its Properties or cause such Properties to
be operated in a careful and efficient manner in accordance with the practices
of the industry and in compliance with all applicable contracts and agreements
and in compliance with all Governmental Requirements, including, without
limitation, applicable Environmental Laws and all applicable laws, rules and
regulations of every other Governmental Authority from time to time constituted
to regulate the development and operation of its Oil and Gas Properties and the
production and sale of Hydrocarbons and other minerals therefrom, except, in
each case, where the failure to comply could not reasonably be expected to have
a Material Adverse Effect.

(c) Each of the Parent and the Borrower will, and will cause each of the
Restricted Subsidiaries to, at its own respective expense, do or cause to be
done all things reasonably necessary to preserve and keep in good repair,
working order and efficiency (ordinary wear and tear excepted) all of its
material Oil and Gas Properties and other material Properties, including,
without limitation, all equipment, machinery and facilities, and from time to
time will make all the reasonably necessary repairs, renewals and replacements
so that at all times the state and condition of its material Oil and Gas
Properties and other material Properties will be preserved and maintained,
except to the extent such failure to so preserve and keep could not reasonably
be expected to have a Material Adverse Effect. Each of the Parent and the
Borrower will, and will cause each of the Restricted Subsidiaries to, promptly:
(a) pay and discharge, or make reasonable and customary efforts to cause to be
paid and discharged, all delay rentals, royalties, expenses and indebtedness
accruing under the leases or other agreements affecting or pertaining to its Oil
and Gas Properties and will do all other things necessary to keep unimpaired
their

 

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rights with respect thereto and prevent any forfeiture thereof or default
thereunder, and (b) perform or make reasonable and customary efforts to cause to
be performed, in accordance with industry standards, the obligations required by
each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its Oil and Gas Properties and other
material Properties, except in each case of clauses (a) and (b) to the extent
such failure could not reasonably be expected to have a Material Adverse Effect
and except for dispositions permitted by Section 6.13. Each of the Parent and
the Borrower will, and will cause each of the Restricted Subsidiaries to,
operate its Oil and Gas Properties and other material Properties or cause or
make reasonable and customary efforts to cause such Oil and Gas Properties and
other material Properties to be operated in accordance with the practices of the
industry and in material compliance with all applicable contracts and agreements
and in compliance in all material respects with all Governmental Requirements,
except where the failure to do so could not reasonably be expected to result in
a Material Adverse Effect. To the extent that none of the Parent, the Borrower
or any Restricted Subsidiary is the operator of such Property, the Parent and
the Borrower shall use reasonable efforts to cause the operator to comply with
this Section 5.05(c).

SECTION 5.06. Books and Records; Inspection Rights. Each of the Parent and the
Borrower will, and will cause each of the Restricted Subsidiaries to, keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and
activities. Each of the Parent and the Borrower will, and will cause each of the
Restricted Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records
and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times and as often as reasonably
requested.

SECTION 5.07. Compliance with Laws. Each of the Parent and the Borrower will,
and will cause each of the Restricted Subsidiaries to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of the Loans
and Letters of Credit will be used only for (i) providing working capital for
the Parent, the Borrower and the Restricted Subsidiaries and for other general
corporate purposes, (ii) financing capital expenditures and acquisitions (other
than acquisitions of “margin stock”) of the Parent, the Borrower and the
Restricted Subsidiaries, (iii) providing for letters of credit for the account
of the Parent, the Borrower and the Restricted Subsidiaries and (iv) purchasing,
refinancing, restructuring, rearranging, renewing, extending and continuing the
outstanding Indebtedness under the Existing Credit Facility. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X. Letters of Credit will be issued only to
support general corporate purposes of the Parent, the Borrower and the
Restricted Subsidiaries.

 

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SECTION 5.09. Environmental Matters.

(a) Each of the Parent and the Borrower will, and will cause each Restricted
Subsidiary to, establish and implement such procedures as may be reasonably
necessary to continuously determine and assure that any failure of the following
could not reasonably be expected to have a Material Adverse Effect: (a) all
Property of the Parent, the Borrower and the Restricted Subsidiaries and the
operations conducted thereon and other activities of the Parent, the Borrower
and the Restricted Subsidiaries are in compliance with and do not violate the
requirements of any Environmental Laws, (b) no oil, oil and gas production or
exploration wastes, Hazardous Materials or solid wastes are disposed of or
otherwise released on or to any Property owned by any such party except in
compliance with Environmental Laws, (c) no Hazardous Material will be released
on or to any such Property in a quantity equal to or exceeding that quantity
which requires reporting pursuant to Section 103 of the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980, as amended,
and (d) no oil, oil and gas exploration and production wastes or Hazardous
Materials or solid wastes are released on or to any such Property so as to pose
an imminent and substantial endangerment to public health or welfare or the
environment.

(b) The Parent or the Borrower will promptly notify the Administrative Agent and
the Lenders in writing of any threatened action, investigation or inquiry by any
Governmental Authority against the Parent, the Borrower or any of the Restricted
Subsidiaries or their Properties of which the Parent or the Borrower has
knowledge in connection with any Environmental Laws (excluding routine testing
and corrective action) if the Parent or the Borrower reasonably anticipates that
such action will result in liability, not fully covered by insurance, subject to
normal deductibles (whether individually or in the aggregate) in excess of
$10,000,000.

SECTION 5.10. Further Assurances. The Parent and the Borrower will, at their
expense, and will cause each Restricted Subsidiary to, promptly execute and
deliver to the Administrative Agent all such other documents, agreements and
instruments reasonably requested by the Administrative Agent to comply with,
cure any defects or accomplish the covenants and agreements of the Parent, the
Borrower or any Restricted Subsidiary, as the case may be, in this Agreement or
any other Loan Document, or to further evidence and more fully describe the
Collateral, or to correct any omissions in this Agreement or any other Loan
Document, or to state more fully the security obligations set out herein or in
any of the Collateral Documents, or to perfect, protect or preserve any Liens
created pursuant to any of the Collateral Documents or the priority thereof, or
to make any recordings, file any notices or obtain any consents, all as may be
reasonably necessary or appropriate in connection therewith.

SECTION 5.11. Reserve Reports.

(a) On or before April 1 and October 1 of each year, the Parent or the Borrower
shall furnish to the Administrative Agent and the Lenders a Reserve Report. The
Reserve Report as of December 31 of each year shall be prepared (x) by one or
more Approved Petroleum Engineers or (y) by or under the supervision of the
chief engineer of the Parent (who shall certify such Reserve Report to be true
and accurate and to have been prepared in accordance with the procedures used in
the immediately preceding December 31 Reserve Report) and audited by one or more
Approved Petroleum Engineers. The June 30 Reserve Report of each year shall be
prepared by or under the supervision of the chief engineer of the Parent, who
shall certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately preceding
December 31 Reserve Report.

 

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(b) In the event of an unscheduled redetermination of the Borrowing Base, the
Parent or the Borrower shall furnish to the Administrative Agent and the Lenders
a Reserve Report prepared by or under the supervision of the chief engineer of
the Parent who shall certify such Reserve Report to be true and accurate and to
have been prepared in accordance with the procedures used in the immediately
preceding Reserve Report. For any unscheduled redetermination requested by the
Required Lenders or the Parent or the Borrower pursuant to Section 2.04(e), the
Parent or 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 30 days following the receipt of such request.

(c) With the delivery of each Reserve Report, the Parent or the Borrower shall
provide to the Administrative Agent and the Lenders, a certificate from an
Authorized Officer certifying that, to his knowledge (after reasonable inquiry)
and in all material respects: (i) the information contained in the Reserve
Report and any other information delivered in connection therewith is true and
correct, (ii) the Parent, the Borrower or the Restricted Subsidiaries owns good
and defensible title to the Oil and Gas Properties evaluated in such Reserve
Report and such Properties are free of all Liens except for Liens permitted by
Section 6.02, (c) except as set forth on an exhibit to the certificate, on a net
basis there are no gas imbalances, take or pay or other prepayments with respect
to the Oil and Gas Properties evaluated in such Reserve Report which would
require the Parent, the Borrower or any Restricted Subsidiary to deliver
Hydrocarbons produced from such Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor, (d) none of such Oil
and Gas Properties have been sold since the date of the last Borrowing Base
determination except as set forth on an exhibit to the certificate, which
certificate shall list the Oil and Gas Properties sold and in such detail as
reasonably required by the Majority Lenders, and (e) attached thereto is a
schedule of the Oil and Gas Properties evaluated by such Reserve Report that are
subject to Mortgages.

SECTION 5.12. Title Information.

(a) On or before the delivery to the Administrative Agent and the Lenders of
each Reserve Report required by Section 5.11, the Parent or the Borrower will
deliver title information in form and substance reasonably acceptable to the
Administrative Agent covering enough of the Oil and Gas Properties evaluated by
such Reserve Report so that the Administrative Agent shall have received
together with title information previously delivered to the Administrative
Agent, satisfactory title information on at least 75% of the total value of the
proved Oil and Gas Properties evaluated by such Reserve Report.

(b) If the Parent and the Borrower have provided title information for
additional Properties under Section 5.12(a), the Parent and the Borrower shall,
within 60 days of notice from the Administrative Agent that title defects or
exceptions exist with respect to such additional Properties, either (i) cure any
such title defects or exceptions (including defects or exceptions as to
priority) that are not permitted by Section 6.02 raised by such information,
(ii) substitute acceptable proved Oil and Gas Properties with no title defects
or exceptions (except for Liens permitted pursuant to Section 6.02) having an
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title information in form and substance acceptable to the Administrative Agent
so that the Administrative Agent shall have received, together with title
information previously delivered to the Administrative Agent, satisfactory title
information on at least 75% of the total value of the proved Oil and Gas
Properties evaluated by such Reserve Report.

(c) If the Parent and the Borrower are unable to cure any title defect requested
by the Administrative Agent or the Lenders to be cured within the 60-day period
or if neither the Parent nor the Borrower complies with the requirements to
provide acceptable title information covering 75% of the total value of the
proved Oil and Gas Properties evaluated in the most recent Reserve Report, such
default shall not be a Default or an Event of Default, but instead the
Administrative Agent and the Lenders shall have the right to exercise the
following remedy in their sole discretion from time to time, and any failure to
so exercise this remedy at any time shall not be a waiver as to future exercise
of the remedy by the Administrative Agent or the Lenders. To the extent that the
Administrative Agent or the Lenders are not satisfied with title to any such Oil
and Gas Property after the 60-day period has elapsed and the value attributed to
all such unacceptable Oil and Gas Property during any period between two
successive regularly scheduled Redetermination Dates, when aggregated with
(A) the net reduction (determined in accordance with Section 5.17) in the value
attributable to the Credit Party’s Swap Agreements during such period and
(B) the Fair Market Value assigned to any Oil and Gas Properties (or Restricted
Subsidiaries owning Oil and Gas Properties) sold, transferred, assigned or
conveyed pursuant to Section 6.13 during such period by the Required Lenders in
good faith in determining the Borrowing Base then in effect, exceeds five
percent (5%) of the Borrowing Base then in effect, the Administrative Agent and
the Required Lenders shall have the right to reduce the Borrowing Base in
accordance with Section 2.04.

SECTION 5.13. Additional Collateral; Additional Guarantors.

(a) In connection with each redetermination of the Borrowing Base, the Borrower
shall review the Reserve Report and the list of current Oil and Gas Properties
subject to Mortgages to ascertain whether such Oil and Gas Properties represent
at least 75% of the total value of the proved Oil and Gas Properties evaluated
in the most recent Reserve Report and included in the Borrowing Base after
giving effect to exploration and production activities, acquisitions,
dispositions and production. In the event that the Oil and Gas Properties
subject to Mortgages do not represent at least 75% of such total value, then the
Parent or the Borrower shall, and shall cause the Restricted Subsidiaries to,
grant to the Administrative Agent as security for the Secured Obligations a
first-priority Lien interest (subject only to Liens permitted pursuant to
Section 6.02) on additional Oil and Gas Properties not already subject to a Lien
of the Collateral Documents such that after giving effect thereto, the Oil and
Gas Properties subject to Mortgages will represent at least 75% of such total
value. All such Liens will be created and perfected by and in accordance with
the provisions of mortgages, deeds of trust, security agreements and financing
statements or other Collateral Documents, all in form and substance reasonably
satisfactory to the Administrative Agent and in sufficient executed (and
acknowledged where necessary or appropriate) counterparts for recording
purposes. In order to comply with the foregoing, if any Restricted Subsidiary
places a Lien on its Oil and Gas Properties and such Restricted Subsidiary is
not a Guarantor, then it shall become a Guarantor and comply with
Section 5.13(b).

 

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(b) The Parent and the Borrower shall promptly cause each Restricted Subsidiary
that either (x) is or becomes a Material Domestic Subsidiary or (y) has
guaranteed the Unsecured Notes or other Material Indebtedness, in each case, to
guarantee the Secured Obligations pursuant to a Guaranty. In connection with any
such guaranty, the Parent and the Borrower shall, or shall cause (i) such
Restricted Subsidiary to execute and deliver a Guaranty, (ii) the parent of such
Restricted Subsidiary to pledge all of the capital stock of such Restricted
Subsidiary (including, without limitation, delivery of original stock
certificates evidencing the capital stock of such Restricted Subsidiary,
together with an appropriate undated stock powers for each certificate duly
executed in blank by the registered owner thereof) and (iii) execute and deliver
such other additional closing documents, certificates and legal opinions as
shall reasonably be requested by the Administrative Agent.

SECTION 5.14. ERISA Information and Compliance. As soon as available, and in any
event, within 10 days after the Parent or the Borrower obtains knowledge of any
of the following, the Parent or the Borrower will furnish and will cause each
ERISA Affiliate to promptly furnish to the Administrative Agent with sufficient
copies to the Lenders (a) a written notice signed by an Authorized Officer
describing the occurrence of any ERISA Event or of any material “prohibited
transaction,” as described in section 406 of ERISA or in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, and
specifying what action the Parent, the Borrower or the ERISA Affiliate is taking
or proposes to take with respect thereto, and, when known, any action taken or
proposed by the Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto, (b) copies of any notice of the PBGC’s intention to
terminate or to have a trustee appointed to administer any Plan and (c) a
written notice of the Parent’s, the Borrower’s or an ERISA Affiliate’s
participation in a Multiemployer Plan. With respect to each Plan (other than a
Multiemployer Plan), the Parent or the Borrower will, and will cause each ERISA
Affiliate to, (i) satisfy in full and in a timely manner, without incurring any
material late payment or underpayment charge or penalty and without giving rise
to any Lien, all of the contribution and funding requirements of section 412 of
the Code (determined without regard to subsections (d), (e), (f) and
(k) thereof) and of section 302 of ERISA (determined without regard to sections
303, 304 and 306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a
timely manner, without incurring any material late payment or underpayment
charge or penalty, all premiums required pursuant to sections 4006 and 4007 of
ERISA.

SECTION 5.15. Business of the Borrower. The primary business of the Parent, the
Borrower and the Restricted Subsidiaries is and will continue to be the
acquisition, exploration, development, financing, ownership, operation,
production, maintenance, storage, transportation, gathering, processing and
marketing of Hydrocarbons, Hydrocarbon Interests and Oil and Gas Properties and
related activities.

SECTION 5.16. Permits, Licenses. Each of the Parent and the Borrower shall, and
shall cause each Restricted Subsidiary to, maintain all material patents,
copyrights, trademarks, service marks and trade names necessary to conduct its
business, including, without limitation all consents, permits, licensees and
agreements material to its Oil and Gas Properties, except as could not
reasonably be expected to have a Material Adverse Effect.

SECTION 5.17. Swap Agreement Termination. To the extent that, during any period
between two successive regularly scheduled Redetermination Dates, (a) the
Parent, the Borrower

 

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or any Restricted Subsidiary changes the material terms of any commodity-price
Swap Agreement, terminates any such Swap Agreement or enters into a new
commodity-price Swap Agreement that has the effect of creating an off-setting
position and the product of (i) the amount of the decrease in the notional
volumes covered by such Swap Agreement times (ii) the excess of (x) the strike
or fixed rate payor price over (y) the “price deck” used in calculating the
Borrowing Base then in effect, when aggregated with (A) the value attributed to
all title defects with respect to Borrowing Base Properties identified during
such period and (B) the Fair Market Value assigned to any Oil and Gas Properties
(or Restricted Subsidiaries owning Oil and Gas Properties) by the Required
Lenders in good faith in determining the Borrowing Base then in effect that have
been sold, transferred, assigned or conveyed pursuant to Section 6.13 during
such period, exceeds five percent (5%) of the Borrowing Base then in effect, the
Parent or the Borrower will give the Administrative Agent and the Lenders prompt
written notice of such event and the Administrative Agent and the Required
Lenders shall have the right to reduce the Borrowing Base in accordance with
Section 2.04 promptly following receipt of such notice.

SECTION 5.18. Restricted Subsidiaries. Except as permitted by Sections 6.03 and
6.13, at all times, the Parent and the Borrower shall directly or indirectly
through a wholly-owned Restricted Subsidiary retain full, absolute and
unencumbered title to all of the issued and outstanding stock or other ownership
interests in each Restricted Subsidiary

SECTION 5.19. Agreements Respecting Unrestricted Subsidiaries. The Parent and
the Borrower shall, and shall cause each Restricted Subsidiary to, operate each
Unrestricted Subsidiary in such a manner as to make it apparent to all creditors
of such Unrestricted Subsidiary that such Unrestricted Subsidiary is a legal
entity separate and distinct from the Parent, the Borrower or any Restricted
Subsidiary and, as such, is solely responsible for its debts and other
obligations (including maintaining separate books of account).

SECTION 5.20. Additional Covenants Upon Issuance of Unsecured Notes. If the
Parent issues any additional Unsecured Notes permitted under Section 6.01(j)
hereof, the Parent shall:

(a) deliver, or cause to be delivered, to the Administrative Agent not later
than five Business Days following the date on which any prospectus or offering
memorandum prepared in connection with the original issuance of any Unsecured
Notes is delivered to the prospective or actual holders of the Unsecured Notes,
a final, true and correct copy of such prospectus or offering memorandum;

(b) deliver to the Administrative Agent not more than 10 Business Days after the
date of issuance of any Unsecured Notes by the Parent, a true and correct copy
of the Unsecured Notes Indenture (or any supplement (if any) to the Unsecured
Notes Indenture) entered into by the Parent in connection with the Unsecured
Notes;

(c) deliver to the Administrative Agent concurrently with the issuance of any
Unsecured Notes, a certificate of an Authorized Officer confirming such issuance
and setting forth the aggregate principal amount of Unsecured Notes issued;

 

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(d) deliver to the Administrative Agent and the Lenders promptly such other
related materials evidencing the issuance of the Unsecured Notes as the
Administrative Agent may reasonably request; and

(e) if, after giving effect to the issuance of any Unsecured Notes and the
automatic reduction of the Borrowing Base pursuant to Section 6.01(j), the
aggregate outstanding Credit Exposure would exceed the Borrowing Base as so
reduced, repay Loan and cash collateralize Letters of Credit in accordance with
Section 2.11(a).

ARTICLE VI

Negative Covenants

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall
have been reimbursed, the Parent and the Borrower covenant and agree with the
Lenders that:

SECTION 6.01. Indebtedness. The Parent and the Borrower will not, and will not
permit any Restricted Subsidiary to, create, incur, assume or permit to exist
any Indebtedness, except:

(a) the Obligations arising under this Agreement or any other Loan Document or
any guaranty of or suretyship arrangement for the Obligations arising under any
Loan Document;

(b) Indebtedness under the Unsecured Notes outstanding on the Effective Date
listed on Schedule 6.01(b), and any Permitted Refinancing Indebtedness in
respect thereof;

(c) Indebtedness of the Parent, the Borrower or any Restricted Subsidiary
existing on the Effective Date (other than Indebtedness under Unsecured Notes
outstanding on the Effective Date) that is listed on Schedule 6.01(c), and any
refinancings, renewals or extensions (but not increases) thereof;

(d) Indebtedness under Capital Leases (as required to be reported on the
consolidated financial statements of the Parent pursuant to GAAP) not to exceed
$15,000,000;

(e) Indebtedness associated with bonds or surety obligations required by
Governmental Requirements in connection with the operation of the Oil and Gas
Properties;

(f) unsecured intercompany Indebtedness between (a) any of the Parent, the
Borrower and any Restricted Subsidiary or (b) any Restricted Subsidiaries to the
extent permitted by Section 6.04(d); provided that any such Indebtedness is not
held, assigned, transferred, negotiated or pledged to any Person other than the
Parent, the Borrower or a Restricted Subsidiary, and provided, further, that any
such Indebtedness owed by the Borrower or any Guarantor to any (other) Guarantor
shall be subordinated to the Secured Obligations on terms set forth in the
Guaranty;

 

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(g) to the extent that it constitutes Indebtedness, unsecured intercompany
Indebtedness owed by any of the Parent, the Borrower and any Restricted
Subsidiary to any Unrestricted Subsidiary existing on the Effective Date
(together with any capitalized interested with respect thereto); provided that
any such Indebtedness (if any) is not held, assigned, transferred, negotiated or
pledged to any Person other than a wholly-owned Subsidiary of the Parent, and
provided, further, that any such Indebtedness shall be subordinated to the
Secured Obligations on terms set forth in the Subordination Agreement;

(h) endorsements of negotiable instruments for collection in the ordinary course
of business;

(i) other Indebtedness (not included under subsections (a) through (h) of this
Section 6.01) not to exceed $35,000,000 in the aggregate at any one time
outstanding; and

(j) unsecured Indebtedness under (a) Unsecured Notes (other than the Unsecured
Notes outstanding on the Effective Date and any Permitted Refinancing
Indebtedness in respect thereof) and any Guarantees of any Credit Party in
respect thereof, in an aggregate principal amount not exceeding $300,000,000 at
any time outstanding, provided that (1) such Unsecured Notes and any Unsecured
Notes Indenture under which such Unsecured Notes are issued contain customary
terms and conditions for unsecured notes of similar type and of like tenor and
amount and do not contain any covenants (other than in connection with a change
of control or other fundamental change affecting the Parent or a termination of
trading with respect to the Parent’s capital stock) that are more onerous to the
Parent, the Borrower and the Restricted Subsidiaries than those imposed by this
Agreement or the other Loan Documents, (2) the final stated maturity date of
such Unsecured Notes and the average life of such Unsecured Notes (based on the
stated final maturity date and payment schedule provided at the date of issuance
of such Unsecured Notes) shall not be earlier than 91 days after the Maturity
Date (as in effect on the date of issuance of such Unsecured Notes) and (3) at
the time of and immediately after giving effect to each incurrence of such
Indebtedness, no Default shall have occurred and be continuing, and provided,
further, that immediately upon any incurrence of Indebtedness permitted by this
clause (j), the Borrowing Base then in effect shall be automatically reduced by
an amount equal to 25% of the aggregate principal amount of such Indebtedness
incurred (calculated at the face amount of the Indebtedness incurred without
giving effect to any original issue discount) and (b) any Permitted Refinancing
Indebtedness in respect thereof.

SECTION 6.02. Liens. The Parent and the Borrower will not, and will not permit
any Restricted Subsidiary to, create, incur, assume or permit to exist any Lien
on any of its Properties (now owned or hereafter acquired), except:

(a) Liens securing the payment of any Secured Obligations;

(b) Permitted Liens;

(c) Liens securing leases giving rise to Indebtedness allowed under
Section 6.01(d) but only on the Property under lease;

(d) Liens disclosed on Schedule 6.02;

 

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(e) any Lien arising out of the refinancing, extension, renewal or refunding of
any Indebtedness secured by any Lien permitted by any of the foregoing clauses
in this Section 6.02; provided that any such Indebtedness is not increased
beyond the amount thereof outstanding on the Effective Date (other than
increases associated with the capitalization of refinancing costs) and is not
secured by any additional assets; and

(f) additional Liens upon Property that does not constitute Collateral created
after the date hereof, provided that the aggregate obligations secured thereby
and incurred on or after the date hereof shall not exceed $10,000,000 in the
aggregate at any one time outstanding.

SECTION 6.03. Fundamental Changes.

(a) Each of the Parent and the Borrower will not, and will not permit any
Restricted Subsidiary to, merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or sell, transfer,
lease or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all of its assets, or all or substantially
all of the stock of any of the Restricted Subsidiaries (in each case, whether
now owned or hereafter acquired), except as permitted pursuant to Section 6.13,
or liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be continuing,
(i) any Person may merge into the Parent or the Borrower in a transaction in
which the Parent or the Borrower, respectively, is the surviving Person,
(ii) any Person may merge into any Guarantor in a transaction in which the
surviving entity is wholly-owned, directly or indirectly, by the Borrower and
such surviving entity is such Guarantor or expressly assumes in writing (in form
and substance satisfactory to the Administrative Agent) all obligations of such
Guarantor under the Loan Documents, (iii) any Person may merge into any
Restricted Subsidiary that is not a Guarantor in a transaction in which the
surviving entity is wholly-owned, directly or indirectly, by the Borrower and,
if such surviving entity constitutes a Material Domestic Subsidiary, the Parent,
the Borrower and such surviving entity comply with the requirements of
Section 5.13, (iv) any Restricted Subsidiary may sell, transfer, lease or
otherwise dispose of its assets to the Parent, the Borrower or another
Restricted Subsidiary and (v) any Restricted Subsidiary may liquidate or
dissolve if the Parent or the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Parent and the
Borrower and is not materially disadvantageous to the Lenders; provided that any
such merger involving a Person that is not a wholly-owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by
Section 6.04.

(b) The Parent and the Borrower will not, and will not permit any Restricted
Subsidiary to, engage to any material extent in any business other than
businesses of the type conducted by the Parent, the Borrower and the Restricted
Subsidiaries on the date of execution of this Agreement and businesses
reasonably related thereto. From and after the date hereof, the Parent and the
Borrower will not, and will 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 Subsidiary
organized under any jurisdiction outside of the United States.

 

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SECTION 6.04. Investments, Loans and Advances. Each of the Parent and the
Borrower will not, and will not permit any Restricted Subsidiary to, make or
permit to remain outstanding any loans or advances to or Investments in any
Person, except that the foregoing restriction shall not apply to:
(a) Investments reflected in the financial statements delivered pursuant to
Section 3.04(a) or that are disclosed to the Lenders on Schedule 6.04;
(b) Permitted Investments; (c) accounts receivable arising in the ordinary
course of business; (d) Investments made by (i) the Parent in or to the Borrower
or the Guarantors, (ii) the Borrower in or to the Guarantors, (iii) any
Restricted Subsidiary in the Borrower or any Guarantor or (iv) the Parent, the
Borrower or any Restricted Subsidiary in or to all other Domestic Subsidiaries
that are not Guarantors in an aggregate amount at any one time outstanding not
to exceed $10,000,000; (e) Investments in direct ownership interests in
additional Oil and Gas Properties and gas gathering systems related thereto or
related to farm-out, farm-in, joint operating, joint venture or area of mutual
interest agreements, gathering systems, pipelines or other similar arrangements
that are usual and customary in the oil and gas exploration and production
business; (f) Permitted Corporate Acquisitions; and (g) other Investments,
including Investments in Unrestricted Subsidiaries, not to exceed $25,000,000 in
the aggregate at any time outstanding.

SECTION 6.05. Hedging Transactions. Each of the Parent and the Borrower will
not, and will not permit any Restricted Subsidiary to, enter into:

(a) any Swap Agreement in respect of commodities except for Swap Agreements with
an Approved Counterparty the notional volumes for which (when aggregated with
other commodity Swap Agreements then in effect other than basis differential
swaps on volumes already hedged pursuant to other Swap Agreements) do not
exceed, as of the date any such Swap Agreement is executed, the lesser of:

(i) 80% of the Parent’s, the Borrower’s and the Restricted Subsidiaries’
reasonably anticipated projected production of crude oil and condensate (with
respect to crude oil and condensate related transactions) for each month in the
period during which such Swap Agreement is in effect and 80% of the Parent’s,
the Borrower’s and the Restricted Subsidiaries’ projected production of natural
gas (with respect to natural gas related transactions) for each month in the
period during which such Swap Agreement is in effect, in each case, from proved
Hydrocarbon Interests as set forth on the most recent Reserve Report; and

(ii) 90% of the Parent’s, the Borrower’s and the Restricted Subsidiaries’
reasonably anticipated projected production of crude oil and condensate (with
respect to crude oil and condensate related transactions) for each month in the
period during which such Swap Agreement is in effect and 90% of the Parent’s,
the Borrower’s and the Restricted Subsidiaries’ projected production of natural
gas (with respect to natural gas related transactions) for each month in the
period during which such Swap Agreement is in effect, in each case, from proved
developed producing Hydrocarbon Interests as set forth on the most recent
Reserve Report; or

(b) any Swap Agreement with respect to the interest rate on any Indebtedness
except for Swap Agreements with one or more Approved Counterparties and provided
that the aggregate notional principal amount of all Indebtedness that is the
subject of all such Swap Agreements does not exceed the outstanding principal
amount of Indebtedness for borrowed money.

 

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For purposes of clause (a) of this Section 6.05, forecasts of projected
production shall equal the projections for proved Hydrocarbon Interests or
proved developed producing Hydrocarbon Interests, as applicable, set out in the
most recent Reserve Report as revised to account for any increase or decrease
therein anticipated because of information obtained by the Parent and the
Borrower subsequent to the publication of the most recent Reserve Report,
including the Parent’s or Borrower’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.

SECTION 6.06. Restricted Payments. The Parent will not directly or indirectly
declare or pay or incur any liability to pay, and the Parent will not permit the
Borrower or any Restricted Subsidiaries to directly or indirectly declare or
pay, or incur any liability to pay any dividends or other distributions;
provided that (i) the Borrower or any Restricted Subsidiary may pay dividends or
make distributions to the Parent, the Borrower or any other Restricted
Subsidiary and (ii) if no Borrowing Base Deficiency then exists and no Event of
Default or Default has occurred and is continuing or would result therefrom, the
Parent may (a) declare and pay dividends solely in additional shares of Equity
Interests of the Parent, (b) repurchase or redeem shares of its capital stock
issued to its employees, officers or directors in an amount not to exceed
$1,000,000 in any 12-month period, (c) pay cash dividends and distributions to
its shareholders from funds legally available for such purpose during any fiscal
year in an amount not in excess of $15,000,000, and (d) make any mandatory or
optional cash payments or deliveries of the Parent’s capital stock, or any
combination thereof, in settlement of its obligations under the 2007 Convertible
Notes Indenture upon conversion or required repurchase of any 2007 Convertible
Notes or the Call Spread Transaction.

SECTION 6.07. Transactions with Affiliates. The Parent and the Borrower will
not, and will not permit any Restricted Subsidiaries to, sell, lease or
otherwise transfer any Property or assets to, or purchase, lease or otherwise
acquire any Property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates (other than the Parent, the Borrower
and the Restricted Subsidiaries), except (a) on terms and conditions not less
favorable to the Parent, the Borrower or such Restricted Subsidiary than could
be obtained on an arm’s-length basis from unrelated third parties,
(b) transactions between or among the Parent, the Borrower and any Restricted
Subsidiary not involving any other Affiliate and (c) any payments permitted by
Section 6.06.

SECTION 6.08. Restrictive Agreements. The Parent and the Borrower will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Parent, the Borrower or any Restricted Subsidiary to create, incur or permit to
exist any Lien upon any of its Property or assets or (b) the ability of any
Restricted Subsidiary to pay dividends or other distributions to the Borrower or
the ability of the Borrower or any Restricted Subsidiary to pay dividends or
other distributions to the Parent, in each case, with respect to any shares of
its capital stock or to make or repay loans or advances to the Parent or the
Borrower or any Restricted Subsidiary or to Guarantee Indebtedness of the
Parent, the

 

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Borrower or any Restricted Subsidiary; provided that (i) the foregoing shall not
apply to restrictions and conditions imposed by law, by this Agreement or the
Unsecured Notes Documents, (ii) the foregoing shall not apply to restrictions
and conditions existing on the date hereof identified on Schedule 6.08 (but
shall apply to any extension or renewal of, or any amendment or modification
expanding the scope of, any such restriction or condition), (iii) the foregoing
shall not apply to customary restrictions and conditions contained in agreements
relating to the sale of a subsidiary pending such sale, provided that such
restrictions and conditions apply only to the subsidiary that is to be sold and
such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the Property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof.

SECTION 6.09. Financial Covenants.

(a) Total Debt to EBITDAX Ratio. The Parent will not, at any time, permit its
ratio of Total Debt as of such time to EBITDAX (i) for any period of four
consecutive fiscal quarters ending on or prior to June 30, 2013, for which
financial statements are available, to be greater than 4.5 to 1.0, and (ii) for
any period of four consecutive fiscal quarters ending on or after September 30,
2013, for which financial statements are available, to be greater than 4.0 to
1.0. For purposes of calculating Total Debt, at any time that the aggregate
Credit Exposure is less than $20,000,000, Total Debt shall be reduced by the
aggregate amount of all cash and Permitted Investments held at such time by the
Parent, the Borrower or any Restricted Subsidiary.

(b) Current Ratio. The Parent will not permit, as of the last day of any fiscal
quarter, its ratio of (i) Consolidated Current Assets to (ii) Consolidated
Current Liabilities to be less than 1.0 to 1.0.

SECTION 6.10. Designation and Conversion of Restricted and Unrestricted
Subsidiaries; Indebtedness of Unrestricted Subsidiaries.

(a) Unless designated as an Unrestricted Subsidiary on Schedule 3.13 as of the
Effective Date or thereafter pursuant to Section 6.10(b), any Person that
becomes a direct or indirect Subsidiary of the Parent or any Restricted
Subsidiary shall be classified as a Restricted Subsidiary, provided that any
Person that becomes a Subsidiary of an Unrestricted Subsidiary shall be
classified as an Unrestricted Subsidiary.

(b) The Parent or the Borrower may designate any Restricted Subsidiary as an
Unrestricted Subsidiary if (i) such designation is made by the Parent or the
Borrower in a written notice to the Administrative Agent and (ii) such
designation is approved by the Required Lenders. The Parent or the Borrower may
designate any newly formed or newly acquired direct Subsidiary of the Parent,
the Borrower or any Restricted Subsidiary as an Unrestricted Subsidiary if
(i) such designation is made by the Parent or the Borrower in a written notice
to the Administrative Agent and (ii) no Default or Event of Default shall then
exist or would result from such designation. Except as provided in this Section,
no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary.

 

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(c) The Parent or the Borrower may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary if after giving effect to such designation, (i) the
representations and warranties of the Parent, the Borrower and the Restricted
Subsidiaries contained in this Agreement and each of the other Loan Documents
are true and correct in all material respects on and as of such date as if made
on and as of the date of such redesignation (or, if stated to have been made
expressly as of an earlier date, were true and correct as of such date), (ii) no
Event of Default or Default would exist or result therefrom and (iii) the Parent
or the Borrower complies with the requirements of Sections 5.13.

(d) The Parent and the Borrower shall not, and shall not permit any Unrestricted
Subsidiary to, incur any Indebtedness except as a Non-Recourse Obligation.

SECTION 6.11. Proceeds of Loans. The Parent and the Borrower will not permit the
proceeds of the Loans or any Letter of Credit to be used for any purpose other
than those permitted by Section 5.08. None of the Parent, the Borrower or any
Person acting on behalf of the Parent or the Borrower has taken or will take any
action which might cause any of the Loan Documents to violate Regulation T, U or
X or any other regulation of the Board or to violate Section 7 of the Securities
Exchange Act of 1934 or any rule or regulation thereunder, in each case as now
in effect or as the same may hereinafter be in effect. If requested by the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 or such other form referred to in Regulation U,
Regulation T or Regulation X of the Board, as the case may be.

SECTION 6.12. ERISA Compliance. The Parent and the Borrower will not at any
time: (a) engage in, or permit any ERISA Affiliate to engage in, any transaction
in connection with which the Parent, the Borrower or any ERISA Affiliate could
be subjected to either a material civil penalty assessed pursuant to section
502(c), (i) or (l) of ERISA or a material tax imposed by Chapter 43 of Subtitle
D of the Code with respect to a Plan; (b) terminate, or permit any ERISA
Affiliate to terminate, any Plan in a manner, or take any other action with
respect to any Plan, that could result in any liability to the Parent, the
Borrower or any ERISA Affiliate to the PBGC that could reasonably be expected to
have a Material Adverse Effect; (c) fail to make, or permit any ERISA Affiliate
to fail to make, full payment when due of all amounts which, under the
provisions of any Plan, agreement relating thereto or applicable law, the
Parent, the Borrower or any ERISA Affiliate is required to pay as contributions
thereto if such failure could reasonably be expected to have a Material Adverse
Effect; (d) permit to exist, or allow any ERISA Affiliate to permit to exist,
any accumulated funding deficiency within the meaning of Section 302 of ERISA or
section 412 of the Code, whether or not waived, with respect to any Plan that
exceeds $2,000,000; (e) except as provided in Section 6.12(g), permit, or allow
any ERISA Affiliate to permit, the actuarial present value of the benefit
liabilities under any Plan maintained by the Parent or any ERISA Affiliate which
is regulated under Title IV of ERISA to exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities by more than $2,000,000, with
the term “actuarial present value of the benefit liabilities” having the meaning
specified in section 4041 of ERISA; (f) contribute to or assume an obligation to
contribute to, or permit any Subsidiary or ERISA Affiliate to contribute to or
assume an obligation to contribute to, any Multiemployer Plan if such action
could reasonably be expected to have a Material Adverse Effect; (g) acquire,

 

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or permit any ERISA Affiliate to acquire, an interest in any Person that causes
such Person to become an ERISA Affiliate with respect to the Parent or any ERISA
Affiliate if such Person sponsors, maintains or contributes to, or at any time
in the six-year period preceding such acquisition has sponsored, maintained or
contributed to, (i) any Multiemployer Plan if the funding status of such
Multiemployer Plan is such that a total or partial withdrawal from it by such
Person could reasonably be expected to have a Material Adverse Effect or
(ii) any other Plan that is subject to Title IV of ERISA under which the
actuarial present value of the benefit liabilities under such Plan exceeds the
current value of the assets (computed on a plan termination basis in accordance
with Title IV of ERISA) of such Plan allocable to such benefit liabilities by an
amount in excess of $2,000,000; (h) incur, or permit any ERISA Affiliate to
incur, a liability to or on account of a Plan under sections 515, 4062, 4063,
4064, 4201 or 4204 of ERISA in excess of $2,000,000; or (i) amend, or permit any
ERISA Affiliate to amend, a Plan resulting in an increase in current liability
such that the Borrower or any ERISA Affiliate is required to provide security to
such Plan under section 401(a)(29) of the Code.

SECTION 6.13. Sale of Properties. The Parent and the Borrower will not, and will
not permit any Restricted Subsidiary to, sell, assign, farm-out, convey or
otherwise transfer any Property or any interest in any Property except for
(a) the sale of Hydrocarbons in the ordinary course of business; (b) farmouts of
undeveloped acreage and assignments in connection with such farmouts; (c) the
sale or transfer of equipment that is no longer necessary for the business of
the Parent, the Borrower or any Restricted Subsidiary or is replaced by
equipment of at least comparable value and use; (d) the sale, transfer or other
disposition of Equity Interests in Unrestricted Subsidiaries; and (e) sales or
other dispositions (including Casualty Events and dispositions resulting from
the exercise of eminent domain, condemnation or nationalization) of Oil and Gas
Properties or any interest therein or all of the Equity Interests in Restricted
Subsidiaries owning Oil and Gas Properties; provided that if such Oil and Gas
Properties (or Oil and Gas Properties of such Restricted Subsidiaries) included
in the most recently delivered Reserve Report during any period between two
successive regularly scheduled Redetermination Dates have a Fair Market Value
(individually or in the aggregate) that, when aggregated with (i) the value
attributed to all title defects with respect to Borrowing Base Properties
identified during such period and (ii) the net reduction (determined in
accordance with Section 5.17) in the value attributable to the Credit Party’s
Swap Agreements during such period, exceeds five percent (5%) of the Borrowing
Base then in effect, the Borrowing Base shall be reduced in an amount equal to
the value, if any, assigned such Property by the Required Lenders in good faith
in determining the Borrowing Base then in effect; and provided, further, that if
any such sale or other disposition is of a Restricted Subsidiary owning Oil and
Gas Properties, such sale or other disposition shall include all the Equity
Interests of such Restricted Subsidiary. To determine the amount by which the
Borrowing Base shall be adjusted, the Parent or the Borrower shall give the
Administrative Agent and the Lenders notice of the proposed sale or other
disposition not less than 10 days prior to the date of the proposed sale or
other disposition. The Administrative Agent shall, in good faith and utilizing
the Reserve Reports and other data, reports and information delivered in
connection with the most recent redetermination of the Borrowing Base (or the
initial determination, as applicable), propose to the Lenders a reduction to the
Borrowing Base in accordance with the standards set forth in Section 2.04.
Thereafter, the Lenders shall have five days to approve or object to such
proposed amount; and any failure to object shall be deemed to be an approval. In
the event there is no approval or deemed approval, the Administrative Agent
shall poll the Lenders to ascertain the smallest reduction to the Borrowing

 

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Base then acceptable to a number of Lenders sufficient to constitute the
Required Lenders for purposes of this Section 6.13 and such amount shall then be
the allocated value of the Property subject to such sale or disposition.

SECTION 6.14. Environmental Matters. None of the Parent, the Borrower or any
Restricted Subsidiary will cause or permit any of its Property to be in
violation of, or do anything or permit anything to be done which will subject
any such Property to any remedial obligations under, any Environmental Laws,
assuming disclosure to the applicable Governmental Authority of all relevant
facts, conditions and circumstances, if any, pertaining to such Property where
such violations or remedial obligations could reasonably be expected to result
in an Environmental Liability to the Parent, the Borrower or the Restricted
Subsidiaries in excess of $10,000,000.

SECTION 6.15. Subsidiaries. The Parent and the Borrower shall not, and shall not
permit any Restricted Subsidiary to, create or acquire any additional Restricted
Subsidiary or redesignate any Unrestricted Subsidiary as a Restricted Subsidiary
unless the Parent and the Borrower comply with Section 5.13. The Parent and the
Borrower shall not, and shall not permit any Restricted Subsidiary to, sell,
assign or otherwise dispose of any Equity Interest in any Restricted Subsidiary
except in compliance with Section 6.13.

SECTION 6.16. Gas Imbalances, Take-or-Pay or Other Prepayments. The Parent and
the Borrower will not allow gas imbalances, take-or-pay or other prepayments
with respect to the Oil and Gas Properties of the Parent, the Borrower or the
Restricted Subsidiaries that would require the Parent, the Borrower or any
Restricted Subsidiary to deliver Hydrocarbons produced on Oil and Gas Properties
at some future time without then or thereafter receiving full payment therefor
in excess of two Bcf of gas (or its equivalent) in the aggregate on a net basis
for the Parent, the Borrower and the Restricted Subsidiaries.

SECTION 6.17. Fiscal Year; Fiscal Quarter. The Parent and the Borrower shall
not, and shall not permit any Subsidiaries to, change its fiscal year or any of
its fiscal quarters.

SECTION 6.18. Repayment of Unsecured Notes; Amendment of Unsecured Notes
Documents. The Parent will not, and will not permit the Borrower or any
Subsidiary to: (i) call, make or offer to make any optional or voluntary
Redemption of, or otherwise optionally or voluntarily Redeem, any of the
Unsecured Notes or any Permitted Refinancing Indebtedness in respect thereof;
provided, however, that (x) the Parent may prepay the Unsecured Notes or any
Permitted Refinancing Indebtedness with the proceeds of (A) any Permitted
Refinancing Indebtedness or any additional Unsecured Notes issued pursuant to
clause (a) of Section 6.01(j), (B) the net cash proceeds of a sale of capital
stock (other than Disqualified Stock) of the Parent that is contemporaneous with
such Permitted Refinancing Indebtedness or (C) a combination of any Permitted
Refinancing Indebtedness and the net cash proceeds of a sale of capital stock
(other than Disqualified Stock) of the Parent that is contemporaneous with such
Permitted Refinancing Indebtedness; (y) so long as (A) no Borrowing Base
Deficiency then exists and (B) no Event of Default or Default has occurred and
is continuing or would result therefrom, the Parent shall be permitted to
(a) make any optional cash payments or deliveries of the Parent’s capital stock,
or any combination thereof, in settlement of its obligations under the 2007
Convertible Notes Indenture upon the conversion or required repurchase of any
2007 Convertible Notes thereunder (and, for the avoidance of doubt, nothing in
this Section 6.18 shall limit the

 

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Parent’s ability to make any scheduled payments or mandatory prepayments with
respect to any Unsecured Notes) and (b) prepay the full principal of, along with
any premium and interest thereon, the 2007 Convertible Notes prior to the stated
maturity therefor; and (z) so long as (A) no Borrowing Base Deficiency then
exists, (B) no Event of Default or Default has occurred and is continuing or
would result therefrom and (C) the Borrower has unused availability under the
Aggregate Commitment Amount of at least the greater of 25% of the Borrowing Base
or $100,000,000 after such repurchase, the Parent shall be permitted, until
August 2, 2012, to repurchase up to $100,000,000 of the 2016 Senior Notes; or
(ii) amend, modify, waive or otherwise change, consent or agree to any
amendment, modification, waiver or other change to, any of the terms of any
Unsecured Notes Documents or any Permitted Refinancing Indebtedness if the
effect thereof would be to shorten its maturity or average life or increase the
amount of any payment of principal thereof or increase the rate or shorten any
period for payment of interest thereon, provided that the foregoing shall not
prohibit the execution of (1) supplemental indentures associated with the
incurrence of additional Unsecured Notes to the extent permitted by
Section 6.01(j), (2) other indentures or agreements in connection with the
issuance of Permitted Refinancing Indebtedness, (3) supplemental indentures to
add guarantors if required by the terms of any Unsecured Notes Indenture
provided such Person complies with Section 5.13(b), or (4) amendments,
modifications, waivers or other changes that are acceptable to the
Administrative Agent and not materially adverse to the Lenders.

SECTION 6.19. Marketing Activities. The Parent and the Borrower will not, and
will not permit any of the Restricted Subsidiaries to, engage in marketing
activities for any Hydrocarbons or enter into any contracts related thereto
other than (a) contracts for the sale of Hydrocarbons scheduled or reasonably
estimated to be produced from their proved Oil and Gas Properties during the
period of such contract, (b) contracts for the sale of Hydrocarbons scheduled or
reasonably estimated to be produced from proved Oil and Gas Properties of third
parties during the period of such contract associated with the Oil and Gas
Properties of the Parent, the Borrower and the Restricted Subsidiaries that the
Parent, the Borrower or one of the Restricted Subsidiaries has the right to
market pursuant to joint operating agreements, unitization agreements or other
similar contracts that are usual and customary in the oil and gas business and
(c) other contracts for the purchase and/or sale of Hydrocarbons of third
parties (i) that have generally offsetting provisions (i.e. corresponding
pricing mechanics, delivery dates and points and volumes) such that no
“position” is taken and (ii) for which appropriate credit support has been taken
to alleviate the material credit risks of the counterparty thereto.

SECTION 6.20. Sale or Discount of Receivables. Except for receivables obtained
by the Parent, the Borrower or any Restricted Subsidiary out of the ordinary
course of business or the settlement of joint interest billing accounts in the
ordinary course of business or discounts granted to settle collection of
accounts receivable or the sale of defaulted accounts arising in the ordinary
course of business in connection with the compromise or collection thereof and
not in connection with any financing transaction, the Parent and the Borrower
will not, and will not permit any Restricted Subsidiary to, discount or sell
(with or without recourse) any of its notes receivable or accounts receivable.

 

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ARTICLE VII

Events of Default; Remedies; Application of Proceeds

SECTION 7.01. If any of the following events (“Events of Default”) shall occur:

(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Section)
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of three Business Days;

(c) any representation or warranty made or deemed made by or on behalf of the
Borrower or any Subsidiary in or in connection with this Agreement or any
amendment or modification hereof or waiver hereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof or waiver
hereunder, shall prove to have been incorrect in any material respect when made
or deemed made;

(d) the Parent or the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(a), 5.03 (with respect to
either the Parent’s or the Borrower’s existence) or 5.08 or in Article VI;

(e) the Parent or the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in clause (a), (b) or (d) of this Section), and such failure shall continue
unremedied for a period of 30 days after notice thereof from the Administrative
Agent to the Parent or the Borrower (which notice will be given at the request
of any Lender);

(f) the Parent, the Borrower or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness or any Material Swap Obligation, when and as the
same shall become due and payable;

(g)(i) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity,
other than a conversion of the 2007 Convertible Notes pursuant to the terms of
the 2007 Convertible Notes Indenture, or (ii) a default or early termination
event shall occur and be continuing under any Swap Agreement of the Borrower or
any Restricted Subsidiary which results in Material Swap Obligations being due
by the Borrower or such Restricted Subsidiary, and such Material Swap
Obligations are not paid when due or within three Business Days thereafter;
provided that this clause (g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness;

 

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(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Parent, the Borrower or any Restricted Subsidiary or its debts,
or of a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent, the Borrower or any Restricted
Subsidiary or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;

(i) the Parent, the Borrower or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Section, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent, the Borrower or any Restricted
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the foregoing;

(j) the Parent, the Borrower or any Restricted Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they become
due;

(k) a judgment or judgments for the payment of money in excess of $25,000,000
(net of any amount payable because of insurance) in the aggregate shall be
rendered by a court against the Parent, the Borrower or any Restricted
Subsidiary and the same shall not be discharged (or provision shall not be made
for such discharge), or a stay of execution thereof shall not be procured,
within 30 days from the date of entry thereof and the Parent, the Borrower or
such Restricted Subsidiary, as applicable, shall not, within such period of 30
days, or such longer period during which execution of the same shall have been
stayed, appeal in good faith therefrom and cause the execution thereof to be
stayed during such appeal;

(l) an ERISA Event shall have occurred that, in the opinion of the Majority
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;

(m) the Loan Documents after delivery thereof shall for any reason, except to
the extent permitted by the terms thereof, cease to be in full force and effect
and valid, binding and enforceable in accordance with their terms against the
Parent, the Borrower or a Guarantor party thereto, or cease to create a valid
and perfected Lien of the priority required thereby on any of the Collateral
purported to be covered thereby, except to the extent permitted by the terms of
this Agreement, or the Borrower or any Restricted Subsidiary or any of their
Affiliates shall so state in writing; or

(n) any Change in Control occurs;

then, and in every such event (other than an event with respect to the Parent,
the Borrower or any Guarantor described in clause (h) or (i) of this Section),
and at any time thereafter during the continuance of such event, the
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Lenders shall, by notice to the Borrower, take either or both of the following
actions, at the same or different times: (i) terminate the Commitments, and
thereupon the Commitments shall terminate immediately, and (ii) declare the
Loans then outstanding to be due and payable in whole (or in part, in which case
any principal not so declared to be due and payable may thereafter be declared
to be due and payable), and thereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower; and in case of any event
with respect to the Parent, the Borrower or any Guarantor described in clause
(h) or (i) of this Section, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower. In
the case of the occurrence of an Event of Default, the Administrative Agent, the
Issuing Bank and the Lenders will have all other rights and remedies available
at law and equity.

SECTION 7.02. Application of Payments. Any amount received by the Administrative
Agent from the exercise of any rights or remedies hereunder or under any of the
Collateral Documents shall be applied by the Administrative Agent to payment of
the Secured Obligations in the following order unless a court of competent
jurisdiction shall otherwise direct:

(a) FIRST, to payment of all reasonable costs and expenses of the Administrative
Agent incurred in connection with the collection and enforcement of the Secured
Obligations or of any security interest granted to the Administrative Agent in
connection with any collateral securing the Secured Obligations;

(b) SECOND, to payment of that portion of the Obligations constituting accrued
and unpaid interest and fees, pro rata among the Lenders and their Affiliates in
accordance with the amount of such accrued and unpaid interest and fees owing to
each of them;

(c) THIRD, to payment of the principal of the Obligations, the net early
termination payments or other liabilities and obligations under any Lender Party
Swap Agreement and any obligations or liabilities under any Lender Party
Financial Service Product, in each case, then due and unpaid from the Borrower
or any Restricted Subsidiary to any of the Lenders or their Affiliates, pro rata
among the Lenders and their Affiliates in accordance with their respective
shares of the aggregate amount of the principal of the Obligations, the net
early termination payments or other obligations under any Lender Party Swap
Agreement and any other liabilities and obligations under any Lender Party
Financial Service Product, in each case, then due and unpaid owing to them;

(d) FOURTH, to payment of any Secured Obligations (other than those listed
above) pro rata among those parties to whom such Secured Obligations are due in
accordance with the amounts owing to each of them;

(e) FIFTH, to serve as cash collateral to be held by the Administrative Agent to
secure the LC Exposure; and

 

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(f) SIXTH, any surplus thereafter remaining shall be paid to the Borrower or its
successor or assigns as its or their interests shall appear.

ARTICLE VIII

The Administrative Agent

SECTION 8.01. Appointment; Powers. Each of the Lenders and the Issuing Bank
hereby irrevocably appoints the Administrative Agent as its agent and authorizes
the Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof,
together with such actions and powers as are reasonably incidental thereto.

SECTION 8.02. Agents as Lenders. The bank serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Parent, the
Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.

SECTION 8.03. Duties and Obligations of Administrative Agent. The Administrative
Agent shall not have any duties or obligations except those expressly set forth
herein. Without limiting the generality of the foregoing, (a) the Administrative
Agent shall not be subject to any fiduciary or other implied duties, regardless
of whether a Default has occurred and is continuing, (b) the Administrative
Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is required to exercise in
writing as directed by the Majority Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 9.02), and (c) except as expressly set forth herein, the Administrative
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Parent, the Borrower or any
of its Subsidiaries that is communicated to or obtained by the bank serving as
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Majority Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross negligence or
willful misconduct (IT BEING THE INTENTION OF THE PARTIES HERETO THAT THE
ADMINISTRATIVE AGENT BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER
THAN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), REGARDLESS OF WHETHER SUCH
NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR
TECHNICAL). The Administrative Agent shall be deemed not to have knowledge of
any Default unless and until written notice thereof is given to the
Administrative Agent by the Parent, the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement, (ii) the contents of any certificate, report or
other document delivered hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
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forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

SECTION 8.04. Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon, and shall not incur any liability for relying upon,
any notice, request, certificate, consent, statement, instrument, document or
other writing believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon. The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

SECTION 8.05. Subagents. The Administrative Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

SECTION 8.06. Resignation or Removal of Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying the
Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the
Majority Lenders shall have the right, in consultation with the Borrower, to
appoint a successor. If no successor shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent’s
resignation hereunder, the provisions of this Article and Section 9.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.

SECTION 8.07. No Reliance. Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and

 

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decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any
document furnished hereunder or thereunder. In this regard, each Lender
acknowledges that Mayer Brown LLP is acting in this transaction as special
counsel to the Administrative Agent only. Each other party hereto will consult
with its own legal counsel to the extent that it deems necessary in connection
with this Agreement and the other Loan Documents and the matters contemplated
herein and therein.

SECTION 8.08. 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 relative to the Borrower or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans and all other Indebtedness that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 9.03) allowed in such judicial proceeding;
and

(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 9.03.

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.

SECTION 8.09. Authority of Administrative Agent to Execute Collateral Documents
and Release Collateral and Liens. Each Lender and the Issuing Bank hereby
empower and authorize the Administrative Agent to execute and deliver to the
Parent, the Borrower or the Guarantors, as applicable, on their behalf the
Collateral Documents and all related financing statements and any financing
statements, agreements, documents or instruments as shall be

 

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necessary or appropriate to effect the purposes of the Collateral Documents.
Each Lender and the Issuing Bank hereby authorizes the Administrative Agent to
release any collateral that is permitted to be sold or released pursuant to the
terms of the Loan Documents. Each Lender and the Issuing Bank hereby authorizes
the Administrative Agent to execute and deliver to the Borrower, at the
Borrower’s sole cost and expense, any and all releases of Liens, termination
statements, assignments or other documents reasonably requested by the Borrower
in connection with any sale or other disposition of Property to the extent such
sale or other disposition is permitted by the terms of Section 6.13 or is
otherwise authorized by the terms of the Loan Documents.

SECTION 8.10. The Arranger, the Co-Syndication Agents and the Co-Documentation
Agents. The arranger, bookrunner, the co-syndication agents and the
co-documentation agents shall have no duties, responsibilities or liabilities
under this Agreement and the other Loan Documents other than their duties,
responsibilities and liabilities in their capacity as Lenders hereunder.

ARTICLE IX

Miscellaneous

SECTION 9.01. Notices.

(a) Except in the case of notices and other communications expressly permitted
to be given by telephone (and subject to paragraph (b) below), all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

(i) if to the Parent, to it at Penn Virginia Corporation, Four Radnor Corporate
Center, Suite 200, 100 Matsonford Road, Radnor, Pennsylvania 19087, Attention of
Steven A. Hartman (Telecopy No. (610) 687-3688), with a copy to Penn Virginia
Corporation, Four Radnor Corporate Center, Suite 200, 100 Matsonford Road,
Radnor, Pennsylvania 19087, Attention of Nancy M. Snyder (Telecopy No. (610)
687-3688);

(ii) if to the Borrower, to it at Penn Virginia Holding Corp., 1011 Centre Road,
Suite 322, Wilmington, Delaware 19805, Attention of Steven A. Hartman (Telecopy
No. (302) 225-0625), with a copy to (A) Penn Virginia Corporation, Four Radnor
Corporate Center, Suite 200, 100 Matsonford Road, Radnor, Pennsylvania 19087,
Attention of Steven A. Hartman (Telecopy No. (610) 687-3688) and (B) Penn
Virginia Corporation, Four Radnor Corporate Center, Suite 200, 100 Matsonford
Road, Radnor, Pennsylvania 19087, Attention of Nancy M. Snyder (Telecopy
No. (610) 687-3688);

(iii) if to the Administrative Agent, to JPMorgan Chase Bank, Loan and Agency
Services Group, 10 South Dearborn, Floor 07, Chicago, IL 60603-2003, Attention
of Leonida G. Mischke, (Telecopy No. 312-385-7096);

(iv) if to the Issuing Bank, to it at 10 South Dearborn, Floor 07, Chicago, IL
60603-2003, Attention of Susan Moy (Telecopy No. 312-385-7107); and

 

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(v) if to any other Lender, to it at its address (or telecopy number) set forth
in its Administrative Questionnaire.

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.

(c) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

SECTION 9.02. Waivers; Amendments.

(a) No failure or delay by the Administrative Agent, the Issuing Bank or any
Lender in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Bank and the Lenders hereunder are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of
this Agreement or consent to any departure by the Borrower therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrower and the Majority Lenders or by the Borrower and the
Administrative Agent with the consent of the Majority Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, increase the Borrowing Base or amend the
specified approval standards set forth in Section 2.04 without the written
consent of each Lender or maintain or decrease the Borrowing Base without the
written consent of the Required Lenders, (ii) reduce the principal amount of any
Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any
fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.18(b) or (c) or
Section 7.02 in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (v) change any of
the

 

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provisions of this Section or the definition of “Majority Lenders” or “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender, or (vi) release any Credit Party from its obligations under the
Loan Documents or release all or substantially all of the Collateral for the
Obligations arising under this Agreement, except in connection with any sales,
transfers, leases, dispositions or other transactions permitted by Section 6.03
or Section 6.13, without the prior written consent of each Lender; provided,
further, that no such agreement shall (x) amend, modify or otherwise affect the
rights or duties of the Administrative Agent or the Issuing Bank hereunder
without the prior written consent of the Administrative Agent or the Issuing
Bank, as the case may be, or (y) release any of the Collateral, except in
connection with any sales, transfers, leases, dispositions or other transactions
permitted by Section 6.03 or Section 6.13, without the written consent of the
Administrative Agent (it being acknowledged by the Credit Parties that the
Administrative Agent may condition such consent on the Credit Parties having
assigned, novated, terminated, unwound or otherwise obtained a release from any
obligations or liabilities under Swap Agreements (or with respect to projected
production of Hydrocarbons hedged thereunder) attributable to the Collateral to
be released. Notwithstanding anything to the contrary herein, no Defaulting
Lender shall have any right to approve or disapprove any amendment, waiver or
consent hereunder, except that the Commitment of such Lender may not be
increased or extended without the consent of such Lender.

SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent, in connection with the syndication of the
credit facilities provided for herein, the preparation and administration of
this Agreement or any amendments, modifications or waivers of the provisions
hereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all reasonable
out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or
any Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.

(b) THE PARENT AND THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE
ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING
PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”), AGAINST, AND HOLD EACH
INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND
RELATED EXPENSES, INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF
ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE
ARISING OUT OF, IN CONNECTION WITH OR AS A RESULT OF (I) THE EXECUTION OR
DELIVERY OF THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY,
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PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY, (II) ANY LOAN OR
LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY
THE 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 PRESENCE OR
RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE
PARENT, THE BORROWER OR ANY OF THE RESTRICTED SUBSIDIARIES, OR ANY ENVIRONMENTAL
LIABILITY RELATED IN ANY WAY TO THE PARENT, THE BORROWER OR ANY OF THE
RESTRICTED SUBSIDIARIES, 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 AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A
PARTY THERETO; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE
AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR
RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL
AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNITEE (IT BEING ACKNOWLEDGED AND AGREED THAT IT IS THE
INTENTION OF THE PARTIES HERETO THAT THE INDEMNITEES BE INDEMNIFIED IN THE CASE
OF THEIR OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT),
REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR
PASSIVE, IMPUTED, JOINT OR TECHNICAL).

(c) To the extent that the Parent or the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent or the Issuing Bank under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as the case may be, such Lender’s
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent or the Issuing Bank in its capacity as such.

(d) To the extent permitted by applicable law, neither the Parent nor the
Borrower shall assert, and each hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with or as a result of this Agreement or any agreement or instrument
contemplated hereby, any Loan or Letter of Credit or the use of the proceeds
thereof.

(e) All amounts due under this Section shall be payable promptly after written
demand therefor.

 

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SECTION 9.04. Successors and Assigns.

(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 the Issuing Bank that issues any
Letter of Credit), except that (i) neither the Parent nor the Borrower may
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of the Issuing Bank and each Lender (and any attempted
assignment or transfer by the Parent or the Borrower without such consent shall
be null and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section. 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 the Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld) of:

(A) the Borrower, provided that no consent of the Borrower shall be required for
an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an
Event of Default has occurred and is continuing, any other assignee;

(B) the Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment of any Commitment to an assignee that
is a Lender with a Commitment immediately prior to giving effect to such
assignment; and

(C) the Issuing Bank, provided that no consent of the Issuing Bank shall be
required for an assignment of any Commitment to an assignee that is a Lender
with a Commitment immediately prior to giving effect to such assignment;

provided, however, that no Lender may assign all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) to the Parent or any Affiliate of the
Parent or any natural person (or any company, investment vehicle or trust for,
or owned and operated for the primary benefit of, a natural person or
relative(s) thereof), in each case, without the consent of all of the Lenders.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender,
the amount of the Commitment Amount of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption with respect
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Agent) shall not be less than $5,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent, provided that no such consent of the
Borrower shall be required if an Event of Default 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 of $3,500; and

(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more individuals to whom all syndicate-level information
(which may contain material non-public information about the Credit Parties and
their related parties or their respective securities) will be made available and
who may receive such information in accordance with the assignee’s compliance
procedures and applicable laws, including Federal and state securities laws.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
of this Section, 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 2.15, 2.16 and 2.17 (with respect to amounts accruing during the period
such Lender was a party hereto and for which such Lender was entitled to
reimbursement or indemnity) and Section 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 9.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section. If the consent of the Borrower to an assignment
is required hereunder (including a consent to an assignment that does not meet
the minimum assignment thresholds specified in this Section), the Borrower shall
be deemed to have given its consent ten days after the date notice thereof has
been delivered by the assigning Lender (through the Administrative Agent) unless
such consent is expressly refused by the Borrower prior to such tenth day.

(iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
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Administrative Agent, the Issuing Bank and the Lenders may 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
Issuing Bank and any 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 paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.06(d) or (e), 2.07(b),
2.18(d) or 9.03(c), the Administrative Agent shall have no obligation to accept
such Assignment and Assumption and record the information therein in the
Register unless and until such payment shall have been made in full, together
with all accrued interest thereon. No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.

(c) Any Lender may, without the consent of the Borrower, the Administrative
Agent or the Issuing Bank, sell participations to one or more banks or other
entities (a “Participant”), other than the Borrower or any Affiliate of the
Borrower or any natural person (or any company, investment vehicle or trust for,
or owned and operated for the primary benefit of, a natural person or
relative(s) thereof), in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (A) such Lender’s obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the 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; 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 the first proviso to
Section 9.02(b) that affects such Participant. The Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17
(subject to the requirements and limitations therein, including the requirements
under Section 2.17(f) (it being understood that the documentation required under
Section 2.17(f) shall be delivered to the participating Lender)) to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section; provided that such Participant
(A) agrees to be subject to the provisions of Sections 2.18 and 2.19 as if it
were an assignee under paragraph (b) of this Section; and (B) shall not be
entitled to receive any greater payment under Sections 2.15 or 2.17, with
respect to any participation, than its participating Lender would have been
entitled to receive, except to the extent such entitlement to receive a greater
payment results from a Change in Law that occurs after the Participant acquired
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applicable participation. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 9.08 as though it were a Lender,
provided that such Participant agrees to be subject to Section 2.18(c) as though
it were a Lender. Each Lender that sells a participation shall, acting solely
for this purpose as a non-fiduciary agent of the Borrower, maintain a register
on which it enters the name and address of each Participant and the principal
amounts (and stated interest) of each Participant’s interest in the Loans or
other obligations under this Agreement (the “Participant Register”); provided
that 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 this Agreement or any other
Loan 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. The entries in the Participant Register shall be conclusive absent
manifest error, and such Lender shall treat each person whose name is recorded
in the Participant Register as the owner of such participation for all purposes
of this Agreement notwithstanding any notice to the contrary.

(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section 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.

SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Parent or the Borrower herein and in the certificates or
other instruments delivered in connection with or pursuant to this Agreement
shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of this Agreement and the making of any
Loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and
Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.

SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
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Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy or other electronic transmission shall be
effective as delivery of a manually executed counterpart of this Agreement.

SECTION 9.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of the Parent or the
Borrower against any of and all the obligations of the Parent or the Borrower
now or hereafter existing under this Agreement held by such Lender, irrespective
of whether or not such Lender shall have made any demand under this Agreement
and although such obligations may be unmatured. The rights of each Lender under
this Section are in addition to other rights and remedies (including other
rights of setoff) that such Lender may have.

SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.

(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF TEXAS.

(b) EACH OF THE PARENT AND THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON
EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR TEXAS STATE COURT SITTING
IN HARRIS COUNTY, TEXAS, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENTS, AND EACH OF THE PARENT AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT, THE ISSUING
BANK OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE PARENT OR THE BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION.

(c) The Parent and the Borrower hereby irrevocably and unconditionally waive, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
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Agreement in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

SECTION 9.12. Confidentiality.

(a) Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (i) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that (A) 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 and (B) in any event, it shall be responsible
for any subsequent disclosure by such Person in violation hereof), (ii) to the
extent requested by any regulatory or self-regulatory authority, (iii) to the
extent required by applicable laws or regulations or by any subpoena or similar
legal process, (iv) to any other party to this Agreement, (v) in connection with
the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or the enforcement of rights hereunder, (vi) subject
to an agreement containing provisions substantially the same as those of this
Section, to (x) any assignee of or Participant in, or any prospective assignee
of or Participant in, any of its rights or obligations under this Agreement or
(y) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Parent or the Borrower and its
obligations, (vii) with the consent of the Borrower or (viii) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, the Issuing
Bank or any Lender on a nonconfidential basis from a source other than the
Parent or the Borrower. For the purposes of this Section, “Information” means
all information received from the Parent or the Borrower relating to the Parent,
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businesses, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by the Parent or the Borrower. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

(b) EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12(a)
FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING THE PARENT, THE BORROWER AND ITS 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.

(c) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY
THE PARENT, THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE
COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION,
WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE PARENT, THE
BORROWER, THE CREDIT PARTIES 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.

SECTION 9.13. Interest Rate Limitation. The Parent, the Borrower, the
Administrative Agent and the Lenders intend to strictly comply with all
applicable laws, including applicable usury laws. Accordingly, the provisions of
this Section 9.13 shall govern and control over every other provision of this
Agreement or any other Loan Document that conflicts or is inconsistent with this
Section 9.13, even if such provision declares that it controls. As used in this
Section 9.13, the term “interest” includes the aggregate of all charges, fees,
benefits or other compensation which constitute interest under applicable law,
provided that, to the maximum extent permitted by applicable law, (a) any
non-principal payment shall be characterized as an expense or as compensation
for something other than the use, forbearance or detention of money and not as
interest, and (b) all interest at any time contracted for, reserved, charged or
received shall be amortized, prorated, allocated and spread, in equal parts
during the full term of the Obligations. In no event shall the Parent, the
Borrower or any other Person be obligated to pay, or any Lender have any right
or privilege to reserve, receive or retain, (i) any interest in excess of the
maximum amount of nonusurious interest permitted under the applicable laws (if
any) of the United States or of any other applicable state or (ii) total
interest in excess of the amount which such Lender could lawfully have
contracted for, reserved, received, retained or charged had the interest been
calculated for the full term of the Obligations at the Highest Lawful Rate. On
each

 

100

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

day, if any, that the interest rate (the “Stated Rate”) called for under this
Agreement or any other Loan Document exceeds the Highest Lawful Rate, the rate
at which interest shall accrue shall automatically be fixed by operation of this
sentence at the Highest Lawful Rate for that day, and shall remain fixed at the
Highest Lawful Rate for each day thereafter until the total amount of interest
accrued equals the total amount of interest which would have accrued if there
were no such ceiling rate as is imposed by this sentence. Thereafter, interest
shall accrue at the Stated Rate unless and until the Stated Rate again exceeds
the Highest Lawful Rate when the provisions of the immediately preceding
sentence shall again automatically operate to limit the interest accrual rate.
The daily interest rates to be used in calculating interest at the Highest
Lawful Rate shall be determined by dividing the applicable Highest Lawful Rate
per annum by the number of days in the calendar year for which such calculation
is being made. None of the terms and provisions contained in this Agreement or
in any other Loan Document that directly or indirectly relate to interest shall
ever be construed without reference to this Section 9.13, or be construed to
create a contract to pay for the use, forbearance or detention of money at an
interest rate in excess of the Highest Lawful Rate. If the term of any
Obligation is shortened by reason of acceleration of maturity as a result of any
Event of Default or by any other cause, or by reason of any required or
permitted prepayment, and if for that (or any other) reason any Lender at any
time, including but not limited to, the stated maturity, is owed or receives
(and/or has received) interest in excess of interest calculated at the Highest
Lawful Rate, then and in any such event all of any such excess interest shall be
canceled automatically as of the date of such acceleration, prepayment or other
event which produces the excess, and, if such excess interest has been paid to
such Lender, it shall be credited pro tanto against the then-outstanding
principal balance of the Borrower’s obligations to such Lender, effective as of
the date or dates when the event occurs which causes it to be excess interest,
until such excess is exhausted or all of such principal has been fully paid and
satisfied, whichever occurs first, and any remaining balance of such excess
shall be promptly refunded to its payor. Chapter 346 of the Texas Finance Code
(which regulates certain revolving credit accounts) shall not apply to this
Agreement or to any Loan, nor shall this Agreement or any Loan be governed by or
be subject to the provisions of such Chapter 346 in any manner whatsoever.

SECTION 9.14. Collateral Matters; Lender Party Swap Agreements and Lender Party
Financial Service Products. The benefit of the Collateral Documents and of the
provisions of this Agreement relating to the Collateral shall also extend to,
secure and be available on a pro rata basis (as set forth in Section 7.03 of
this Agreement) to each Lender or Affiliate of a Lender (or Existing Lender
party to a Lender Party Swap Agreement or Lender Party Financial Service Product
entered into while such Existing Lender was a “Lender” under the Existing Credit
Facility) that is (i) a counterparty to a Lender Party Swap Agreement (including
any Lender Party Swap Agreement in existence prior to the date hereof) or (ii) a
provider under a Lender Party Financial Service Product (including any Lender
Party Financial Service Product in existence prior to the date hereof), in each
case, with respect to any obligations of the Parent, the Borrower or any
Restricted Subsidiary arising under such Lender Party Swap Agreement or Lender
Party Financial Service Product, as applicable, but only with respect to any
Lender Party Swap Agreement or Lender Party Financial Service Product, and the
transactions thereunder, that were entered into while such Person or its
Affiliate was a Lender (or an Existing Lender) or prior to such time until such
obligations are paid in full or otherwise expire or are terminated (and
notwithstanding that the outstanding Obligations have been repaid in full and
the Commitments have terminated); provided that, with respect to any Lender
Party Swap Agreement or Lender

 

101

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

Party Financial Service Product that remains secured after the counterparty
thereto or provider of Financial Service Product thereunder is no longer a
Lender or an Affiliate of a Lender or the outstanding Obligations have been
repaid in full and the Commitments have terminated, the provisions of
Article VIII shall also continue to apply to such counterparty or provider in
consideration of its benefits hereunder and each such counterparty or provider
shall, if requested by the Administrative Agent, promptly execute and deliver to
the Administrative Agent all such other documents, agreements and instruments
reasonably requested by the Administrative Agent to evidence the continued
applicability of the provisions of Article VIII. Notwithstanding the foregoing,
no Lender or Affiliate of a Lender (or former Lender or Affiliate of a former
Lender) shall have any voting or consent right under this Agreement or any
Collateral Document as a result of the existence of obligations owed to it under
a Lender Party Swap Agreement or Lender Party Financial Service Product that is
secured any Collateral Document.

SECTION 9.15. No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans and the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of the Parent and the Borrower, and no other Person (including, without
limitation, any Subsidiary of the Borrower, any obligor, contractor,
subcontractor, supplier or materialman) shall have any rights, claims, remedies
or privileges hereunder or under any other Loan Document against the
Administrative Agent, any other Agent, the Issuing Bank or any Lender for any
reason whatsoever. There are no third party beneficiaries.

SECTION 9.16. USA PATRIOT Act. Each Lender that is subject to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Patriot Act”) hereby notifies the Parent, the Borrower and the
Guarantors that pursuant to the requirements of the Patriot Act, it is required
to obtain, verify and record information that identifies the Parent, the
Borrower and the Guarantors, which information includes the name and address of
the Parent, the Borrower and the Guarantors and other information that will
allow such Lender to identify the Parent, the Borrower and the Guarantors in
accordance with the Patriot Act.

SECTION 9.17. NO ORAL AGREEMENTS. THE LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

SECTION 9.18. Sale and Purchase of Loans. Upon the effectiveness of this
Agreement, all indebtedness evidenced by the Existing Credit Facility
outstanding on such date shall hereby be restructured, rearranged, renewed,
extended and continued as provided in this Agreement and all loans outstanding
under the Existing Credit Facility shall become Loans outstanding hereunder.

In connection herewith, the Existing Lenders have sold, assigned, transferred
and conveyed, and the Lenders party to this Agreement have purchased and
accepted, and hereby purchase and accept, so much of the indebtedness evidenced
by and outstanding under the Existing Credit Facility such that each Lender’s
percentage of the loans and obligations

 

102

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

outstanding pursuant to the Existing Credit Facility, as restructured,
rearranged, renewed, extended and continued pursuant to this Agreement, shall be
equal to such Lender’s Applicable Percentage upon the effectiveness of this
Agreement, provided that the Lenders shall not be liable for any act or omission
of the Existing Lenders occurring prior to the Effective Date. The foregoing
assignments, transfers and conveyances are without recourse to the Existing
Lenders and without any warranties whatsoever by the Administrative Agent or any
Existing Lender as to title, enforceability, collectibility, documentation or
freedom from liens or encumbrances, in whole or in part, other than the warranty
by each Existing Lender that it has not previously sold, transferred, conveyed
or encumbered such Interests. Each Lender so acquiring a part of such
outstanding loans assumes its Applicable Percentage of the outstanding Loans,
Commitments, rights, titles, interests, privileges, claims, liens, security
interests, benefits and obligations under this Agreement and the other Loan
Documents.

 

103

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

PENN VIRGINIA HOLDING CORP., as Borrower By  

      /s/ STEVEN A. HARTMAN

        Name:     Steven A. Hartman         Title:     Senior Vice President and
      Chief Financial Officer PENN VIRGINIA CORPORATION, as Parent By  

      /s/ STEVEN A. HARTMAN

        Name:     Steven A. Hartman         Title:     Senior Vice President and
      Chief Financial Officer

 

 

S - 1

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

JPMORGAN CHASE BANK, N.A., as Administrative Agent, Issuing Bank and a Lender By
 

      /s/ JO LINDA PAPADAKIS

        Name:   Jo Linda Papadakis         Title:   Authorized Officer

 

 

S - 2

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

BANK OF AMERICA, N.A., as a Lender

By

 

      /s/ ADAM H. FEY

 

      Name:

  Adam H. Fey  

      Title:

  Director

 

 

S - 3

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

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

      /s/ THOMAS E. STELMAR, JR.

        Name:   Thomas E. Stelmar, Jr.         Title:   Vice President

 

 

S - 4

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

BNP PARIBAS, as a Lender By  

      /s/ POLLY SCHOTT

        Name:   Polly Schott         Title:   Director By  

      /s/ EDWARD PAK

        Name:   Edward Pak         Title:   Director

 

 

S - 5

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

ROYAL BANK OF CANADA, as a Lender By  

      /s/ DON J. MCKINNERNEY

        Name: Don J. McKinnerney         Title:   Authorized Signatory

 

S - 6

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

CAPITAL ONE, NATIONAL ASSOCIATION, as a Lender By  

      /s/ NANCY M. MAK

        Name: Nancy M. Mak         Title:   Vice President

 

S - 7

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

SCOTIABANC INC., as a Lender By  

      /s/ H. THIND

        Name: H. Thind         Title:   Director

 

S - 8

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

COMERICA BANK, as a Lender By  

      /s/ JOHN S. LESIKAR

        Name: John S. Lesikar         Title:   Assistant Vice President

 

S - 9

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

BOKF, NA (d/b/a Bank of Oklahoma), as a Lender By  

      /s/ MICHAEL M. COATS

        Name: Michael M. Coats         Title:   Executive Vice President

 

S - 10

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

BARCLAYS BANK PLC, as a Lender By  

      /s/ MICHAEL J. MOZER

        Name:   Michael J. Mozer         Title:   Vice President

 

 

S - 11

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

PNC BANK, NATIONAL ASSOCIATION, as a Lender By  

      /s/ RICHARD C. MUNSICK

        Name:   Richard C. Munsick         Title:   Senior Vice President

 

 

S - 12

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

Schedule 2.01

COMMITMENT AMOUNTS

 

Lender

   Commitment Amount      Percentage  

JPMorgan Chase Bank, N.A.

   $ 35,000,000.00         11.6666666667 % 

Bank of America, N.A.

   $ 32,500,000.00         10.8333333333 % 

Wells Fargo Bank, N.A.

   $ 32,500,000.00         10.8333333333 % 

BNP Paribas

   $ 32,500,000.00         10.8333333333 % 

Royal Bank of Canada

   $ 32,500,000.00         10.8333333333 % 

Capital One, National Association

   $ 25,000,000.00         8.3333333333 % 

Scotiabanc Inc.

   $ 25,000,000.00         8.3333333333 % 

Comerica Bank

   $ 25,000,000.00         8.3333333333 % 

BOKF, NA (d/b/a Bank of Oklahoma)

   $ 20,000,000.00         6.6666666667 % 

Barclays Bank PLC

   $ 20,000,000.00         6.6666666667 % 

PNC Bank, National Association

   $ 20,000,000.00         6.6666666667 %    

 

 

    

 

 

 

Total:

   $ 300,000,000.00         100.000000000 %    

 

 

    

 

 

 

Schedule 2.01

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

Schedule 2.06(k)

Existing Letters of Credit

 

Number

   Amount      Expiration   

Beneficiary

  

Purpose

   Bank

#S-267875

   $ 25,000       6/26/2012    City of Norman    Production permit    JPMorgan

#S-267876

   $ 25,000       6/26/2012    City of Oklahoma City    Production permit   
JPMorgan

#CPCS-304384

   $ 250,000       4/1/2012    Railroad Commission of Texas    P-5    JPMorgan

#CPCS-921484

   $ 1,100,000       3/31/12    Dominion Transmission    Transportation   
JPMorgan

Total

   $ 1,400,000               

Schedule 2.06(k)

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

Schedule 3.06

Litigation

None

Schedule 3.06

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

Schedule 3.13

Subsidiaries

Parent:

Penn Virginia Corporation

 

Jurisdiction of Organization    Virginia Chief Executive Office    Four Radnor
Corporate Center, Suite 200 100 Matsonford Road Radnor, PA 19087-4564

Borrower:

Penn Virginia Holding Corp.

 

Jurisdiction of Organization    Delaware Chief Executive Office    1011 Centre
Road, Suite 322 Wilmington, DE 19805

Restricted Subsidiaries:

Penn Virginia Oil & Gas Corporation

 

Jurisdiction of Organization    Virginia Chief Executive Office    Four Radnor
Corporate Center, Suite 200 100 Matsonford Road Radnor, PA 19087-4564

Penn Virginia Oil & Gas GP LLC

 

Jurisdiction of Organization    Delaware Chief Executive Office    Four Radnor
Corporate Center, Suite 200 100 Matsonford Road Radnor, PA 19087-4564

Penn Virginia Oil & Gas LP LLC

 

Jurisdiction of Organization    Delaware Chief Executive Office    1011 Centre
Road, Suite 322 Wilmington, DE 19805

Schedule 3.13

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

Penn Virginia Oil & Gas, L.P.

 

Jurisdiction of Organization    Texas Chief Executive Office    Four Radnor
Corporate Center, Suite 200 100 Matsonford Road Radnor, PA 19087-4564

Penn Virginia MC Corporation

 

Jurisdiction of Organization    Delaware Chief Executive Office    Four Radnor
Corporate Center, Suite 200 100 Matsonford Road Radnor, PA 19087-4564

Penn Virginia MC Energy L.L.C.

 

Jurisdiction of Organization    Delaware Chief Executive Office    Four Radnor
Corporate Center, Suite 200 100 Matsonford Road Radnor, PA 19087-4564

Penn Virginia MC Operating Company L.L.C.

 

Jurisdiction of Organization    Delaware Chief Executive Office    Four Radnor
Corporate Center, Suite 200 100 Matsonford Road Radnor, PA 19087-4564

Penn Virginia MC Gathering Company L.L.C.

 

Jurisdiction of Organization    Oklahoma Chief Executive Office    Four Radnor
Corporate Center, Suite 200 100 Matsonford Road Radnor, PA 19087-4564

Unrestricted Subsidiaries:

Penn Virginia Resource Holdings Corp., a Delaware corporation, and each of its
Subsidiaries

Penn Virginia Resource GP Corp., a Delaware corporation, and each of its
Subsidiaries

Schedule 3.13

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

Schedule 3.17

Gas Imbalances

None

Schedule 3.17

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

Schedule 3.18

Marketing Contracts

None

Schedule 3.18

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

Schedule 3.19

Swap Agreements

ISDA Agreements

 

1. ISDA® - International Swaps and Derivatives Association, Inc. Master
Agreement and Schedule dated as of June 9, 2010 between Penn Virginia Holding
Corp. and Bank of Montreal

 

2. ISDA® - International Swaps and Derivatives Association, Inc. Master
Agreement and Schedule dated as of June 10, 2010 between Barclays Bank PLC and
Penn Virginia Holding Corp.

 

3. ISDA® - International Swaps and Derivatives Association, Inc. Master
Agreement and Schedule dated as of November 18, 2009 between BNP Paribas and
Penn Virginia Holding Corp.

 

4. ISDA® - International Swaps and Derivatives Association, Inc. Novation
Agreement dated as of December 9, 2009 among BNP Paribas, Penn Virginia
Corporation and Penn Virginia Holding Corp.

 

5. ISDA® - International Swaps and Derivatives Association, Inc. Master
Agreement and Schedule dated as of March 23, 2010 between The Bank of Nova
Scotia and Penn Virginia Holding Corp.

 

6. ISDA® - International Swaps and Derivatives Association, Inc. Master
Agreement and Schedule dated as of November 18, 2009 between Merrill Lynch
Commodities, Inc. and Penn Virginia Holding Corp.

 

7. ISDA® - International Swaps and Derivatives Association, Inc. Master
Agreement and Schedule dated as of November 18, 2009 between Comerica Bank and
Penn Virginia Holding Corp.

 

8. ISDA® - International Swaps and Derivatives Association, Inc. Master
Agreement and Schedule dated as of November 18, 2009 between JPMorgan Chase
Bank, National Association and Penn Virginia Holding Corp.

 

9. ISDA® - International Swaps and Derivatives Association, Inc. Master
Agreement and Schedule dated as of November 18, 2009 between Royal Bank of
Canada and Penn Virginia Holding Corp., as amended by Amendment dated as of
June 7, 2010

 

10. ISDA® - International Swaps and Derivatives Association, Inc. Master
Agreement and Schedule dated as of November 18, 2009 between Wells Fargo Bank,
N.A. and Penn Virginia Holding Corp.

Schedule 3.19

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

11. ISDA® - International Swaps and Derivatives Association, Inc. Four-Way
Novation Agreement dated as of November 18, 2009 among Wachovia Bank, National
Association, Wells Fargo Bank, National Association, Penn Virginia Corporation
and Penn Virginia Holding Corp.

Schedule 3.19

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

Outstanding Positions

Commodity Swaps

Volume and prices are shown in MMBtu/day for natural gas and Barrels/day for oil

 

Trade

Date

  

Type

   Volume      Floor      Ceiling     

Effective
Date

  

Termination
Date

  

Index (1)

5/18/2009

   Natural gas collar      10,000       $ 6.00       $ 8.00       Apr-11   
Sep-11    LD

12/17/2009

   Natural gas collar      20,000       $ 6.00       $ 8.50       Oct-11   
Mar-12    LD

4/26/2010

   Crude oil collar      360       $ 80.00       $ 103.30       Jul-11    Dec-11
   WTI

6/17/2010

   Natural gas swap      10,000       $ 5.52          Apr-12    Sep-12    LD

11/24/2010

   Natural gas swap      10,000       $ 5.50          Apr-11    Sep-11    LD

11/24/2010

   Natural gas collar      10,000       $ 4.25       $ 5.00       Apr-11   
Sep-11    LD

11/24/2010

   Natural gas swap      10,000       $ 5.50          Apr-11    Sep-11    LD

11/24/2010

   Natural gas collar      10,000       $ 4.25       $ 5.00       Apr-11   
Sep-11    LD

1/12/2011

   Natural gas swap      5,000       $ 4.60          Apr-11    Sep-11    LD

1/20/2011

   Natural gas swap      5,000       $ 4.7025          Apr-11    Sep-11    LD

1/20/2011

   Natural gas swap      10,000       $ 5.01          Oct-11    Dec-11    LD

1/21/2011

   Natural gas swap      5,000       $ 5.10          Jan-12    Dec-12    LD

3/25/2011

   Natural gas swap      5,000       $ 5.10          Jan-12    Dec-12    LD

3/28/2011

   Natural gas swap      10,000       $ 4.60          Apr-11    Sep-11    LD

4/19/2011

   Crude oil swap      500       $ 109.00          Jul-11    Dec-11    WTI

4/21/2011

   Crude oil collar      500       $ 100.00       $ 120.00       Jan-12   
Dec-12    WTI

 

(1) LD = NYMEX Last Day settle for natural gas; WTI = crude oil

Interest Rate Swaps

 

Trade

Date

  

Type

   Notional
Amount     

Pay

   Receive    

Effective
Date

  

Termination
Date

12/22/2009

   Fixed to floating rate interest rate swap    $
  100.0
million   
     

3-month LIBOR

+ 8.175%

     10.375 %    12/24/2009    6/15/2013

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

Schedule 4.01(m)

Certain Unrestricted Subsidiaries

 

1. Penn Virginia Resource Holdings Corp.

 

2. Penn Virginia Resource GP Corp.

Schedule 4.01(m)

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

Schedule 6.01(b)

Outstanding Unsecured Notes

 

1. $300 million aggregate principal amount of 10.375% Senior Notes due 2016

 

2. $300 million aggregate principal amount of 7.25% Senior Notes due 2019

 

3. $4.915 million aggregate principal amount of 4.50% Convertible Senior
Subordinated Notes due 2012

Schedule 6.01(b)

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

Schedule 6.01(c)

Existing Indebtedness

None

Schedule 6.01(c)

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

Schedule 6.02

Existing Liens

 

1. Liens under the Existing Credit Facility

Schedule 6.02

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

Schedule 6.04

Investments

 

1. Equity Investments as of the Effective Date in Restricted Subsidiaries

 

2. Equity Investments as of the Effective Date in Unrestricted Subsidiaries

 

3. Call Spread Transaction

Schedule 6.04

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

Schedule 6.08

Existing Restrictions

Restrictions contained in the Organizational Documents of the Borrower and the
Restricted Subsidiaries

Schedule 6.08

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

EXHIBIT A

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any letters of credit guarantees included in such
facilities) and (ii) to the extent permitted to be assigned under applicable
law, all claims, suits, causes of action and any other right of the Assignor (in
its capacity as a Lender) against any Person, whether known or unknown, arising
under or in connection with the Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed thereby
or in any way based on or related to any of the foregoing, including contract
claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity related to the rights and obligations sold and assigned
pursuant to clause (i) above (the rights and obligations sold and assigned
pursuant to clauses (i) and (ii) above being referred to herein collectively as
the “Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.

 

1.

   Assignor:   _________________________________________________________

2.

   Assignee:   _________________________________________________________     
[and is an Affiliate/Approved Fund of [identify Lender]2]

3.

   Borrower(s):   _________________________________________________________

4.

   Administrative Agent:                                                    , as
the administrative agent under the Credit Agreement

5.

   Credit Agreement:   [The [amount] Amended and Restated Credit Agreement dated
as of              among [name of Borrower(s)], the Lenders parties thereto,
[name of Administrative Agent], as Administrative Agent, and the other agents
parties thereto]

 

2  Select as applicable.

 

Exhibit A-1

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

6. Assigned Interest:

 

Facility Assigned3

   Aggregate Amount of
Commitment/Loans
for all Lenders      Amount of
Commitment/Loans
Assigned      Percentage Assigned
of
Commitment/Loans4      $                    $                               % 
   $         $                    %     $         $                    % 

Effective Date:             , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND
WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

The Assignee agrees to deliver to the Administrative Agent a completed
Administrative Questionnaire in which the Assignee designates one or more Credit
Contacts to whom all syndicate-level information (which may contain material
non-public information about the Borrower, the Credit Parties] and [its] [their]
Related Parties or their respective securities) will be made available and who
may receive such information in accordance with the Assignee’s compliance
procedures and applicable laws, including Federal and state securities laws.

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR [NAME OF ASSIGNOR] By:  

 

        Title: ASSIGNEE [NAME OF ASSIGNEE] By:  

 

        Title:

 

3  Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g.
“Commitment,” etc.).

4  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

 

Exhibit A-2

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

[Consented to and]5 Accepted: [NAME OF ADMINISTRATIVE AGENT], as Administrative
Agent

By  

 

        Title: [Consented to:]6 [NAME OF RELEVANT PARTY]

By  

 

              Title:

 

5  To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.

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

 

Exhibit A-3

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

ANNEX 1

[                    ]7

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

ARTICLE I

Representations and Warranties.

SECTION 1.01. Assignor. The Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect
to (i) any statements, warranties or representations made in or in connection
with the Credit Agreement or any other Loan Document8, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan Documents or any collateral thereunder, (iii) the financial condition of
the Borrower, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document or (iv) the performance or observance
by the Borrower, any of its Subsidiaries or Affiliates or any other Person of
any of their respective obligations under any Loan Document.

SECTION 1.02. Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement as a Lender thereunder and, to the extent
of the Assigned Interest, shall have the obligations of a Lender thereunder,
(iv) it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section             
thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, and (v) if it is a
Foreign Lender9, attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

 

7  Describe Credit Agreement at option of Administrative Agent.

8  The term “Loan Document” should be conformed to that used in the Credit
Agreement.

9  The concept of “Foreign Lender” should be conformed to the section in the
Credit Agreement governing withholding taxes and gross-up.

 

Annex 1 - 1

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ARTICLE II

Payments.

From and after the Effective Date, the Administrative Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have accrued
to but excluding the Effective Date and to the Assignee for amounts which have
accrued from and after the Effective Date.

ARTICLE III

General Provisions.

This Assignment and Assumption shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which
together shall constitute one instrument. Delivery of an executed counterpart of
a signature page of this Assignment and Assumption by telecopy shall be
effective as delivery of a manually executed counterpart of this Assignment and
Assumption. This Assignment and Assumption shall be governed by, and construed
in accordance with, the law of the State of New York [confirm that choice of law
provision parallels the Credit Agreement].

 

Annex 1 - 2

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EXHIBIT B

FORM OF

ADDITIONAL LENDER AGREEMENT

 

To: JPMorgan Chase Bank, National Association,

  as Administrative Agent

The Borrower, the Administrative Agent, the Issuing Bank, the other Agents and
certain Lenders have heretofore entered into an Amended and Restated Credit
Agreement, dated as of             , 2011, as amended from time to time (the
“Credit Agreement”). Capitalized terms not otherwise defined herein shall have
the meaning given to such terms in the Credit Agreement.

This Additional Lender Agreement is being delivered pursuant to Section 2.5(ii)
of the Credit Agreement.

[Language for Existing Lender]

[Please be advised that the undersigned has agreed to increase its Commitment
under the Credit Agreement effective as of [            ] from $         to
$         and (b) that it shall continue to be a party in all respect to the
Credit Agreement and the other Loan Documents to which the Lenders are party.]

[Language for New Lender]

[Please be advised that the undersigned has agreed (a) to become a Lender under
the Credit Agreement effective as of [            ] with a Commitment of
$         and (b) that it shall be deemed to be a party in all respect to the
Credit Agreement and the other Loan Documents to which the Lenders are party.]

 

Very truly yours,

[LENDER]

By:

Name: Title:

 

Exhibit B-1

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EXHIBIT C

FORM OF

COMPLIANCE CERTIFICATE

As of [            ]

 

To: The Lenders parties to the Credit Agreement Described Below

This Compliance Certificate (this “Certificate”) is furnished pursuant to that
certain Amended and Restated Credit Agreement, dated as of              , 2011
(as amended, modified, renewed or extended from time to time, the “Agreement”),
among Penn Virginia Holding Corp. (the “Borrower”), Penn Virginia Corporation
(the “Parent”), the lenders party thereto and JP Morgan Chase Bank, N.A., as
Administrative Agent. Unless otherwise defined herein, capitalized terms used in
this Certificate have the meanings ascribed thereto in the Agreement.

The undersigned hereby certifies that:

ARTICLE I

I am the duly elected Executive Vice President and Chief Financial Officer of
the Parent;

ARTICLE II

I have reviewed the terms of the Agreement and I have made, or have caused to be
made under my supervision, a detailed review of the transactions and conditions
of the Parent, the Borrower and the Restricted Subsidiaries during the
accounting period covered by the attached financial statements;

ARTICLE III

The examinations described in paragraph 2 did not disclose, and I have no
knowledge of, the existence of any condition or event which constitutes an Event
of Default during or at the end of the accounting period covered by the attached
financial statements or as of the date of this Certificate, except as set forth
below;

ARTICLE IV

Schedule I attached hereto sets forth financial data and computations evidencing
the compliance by the Parent, the Borrower and the Restricted Subsidiaries with
certain covenants of the Agreement, all of which data and computations are true,
complete and correct; and

5. Schedule II attached hereto sets forth the various reports and deliveries
which are required at this time under the Agreement, the Collateral Documents
and the other Loan Documents and the status of compliance.

 

Exhibit C-1

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Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Parent has taken, is taking, or proposes to
take with respect to each such condition or event:

                                                                           
  None                                       
                                         
                                                   

                                                                   
                                         
                                         
                                                                     

The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this [            ].

 

PENN VIRGINIA CORPORATION By:  

 

Name:   Title:  

[Schedule I and II to be attached]

 

Exhibit C- 2

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EXHIBIT D

FORM OF

SUBORDINATION AGREEMENT

SUBORDINATION AGREEMENT (this “Agreement”) dated as of [            ], by and
among [            ], a [            ] and [            ], a [            ]
(“[            ]”, and together with [            ], collectively the “PVA
Debtors”), a [            ] and [            ], a [            ]
(“[            ]”, and together with [            ], collectively the
“Subordinated Creditors”) and in favor of JPMorgan Chase Bank, N.A., as
Administrative Agent, for the benefit of the Senior Creditors (as defined
herein).

RECITALS

1. PVHC is a party to that certain Amended and Restated Credit Agreement dated
as of [August     , 2011], with PVC, as Parent, each of the “Lenders” named
therein (the “Lenders”), JPMorgan Chase Bank, National Association, as
Administrative Agent (the “Administrative Agent”), and the other Agents parties
thereto (as the same may from time to time be amended, modified, refinanced or
replaced, the “Credit Agreement”).

2. The PVA Debtors, except for PVHC (the “Guarantors”), have delivered a certain
Guaranty dated as of [            , 2011], pursuant to which the Guarantors have
guaranteed all of the “Obligations” (as defined in the Credit Agreement) of PVHC
under the Credit Agreement and the other Loan Documents.

3. The PVA Debtors and the Subordinated Creditors were required to enter into
that certain Subordination Agreement, dated as of November 18, 2009, by and
among the PVA Debtors and the Subordinated Creditors in favor of the
Administrative Agent (the “Existing Subordination Agreement”) pursuant to that
certain Credit Agreement dated as of November 18, 2009, among PVHC, as borrower,
PVC, as Parent, the Administrative Agent, as administrative agent, and lenders
party thereto, as amended, supplemented, restated or otherwise modified.

4. The Subordinated Creditors have made or may make certain intercompany loans
or advances to PVA Debtors.

5. To induce the Administrative Agent, the Issuing Bank and the Lenders to enter
into the Credit Agreement and make the loans and other extensions of credit
contemplated thereby, the Subordinated Creditors have agreed to execute and
deliver this Agreement and subordinate the indebtedness of the PVA Debtors owed
to the Subordinated Creditors to all of the “Obligations” (as defined in the
Credit Agreement) of PVHC owed to the Lenders under the Credit Agreement or the
“Guaranteed Obligations” (as defined in the Guaranty) of the Guarantors, as the
case may be, and the other Loan Documents related thereto.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

 

Exhibit D-1

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ARTICLE I

Definitions

SECTION 1.01. Definitions. Unless otherwise defined herein, all capitalized
terms referred to herein shall have the meaning given to them in the Credit
Agreement.

“Senior Creditors” shall mean the Administrative Agent, the Lenders (including
any Lender acting as an “Issuing Bank” under the Credit Agreement) and any
Lender or Affiliate of a Lender party to Lender Party Swap Agreement or a Lender
Party Financial Service Product, and any permitted assignees of any of the
foregoing pursuant to the terms of the Credit Agreement.

“Senior Indebtedness” shall mean any and all indebtedness, liabilities and
obligations owed by any PVA Debtor to any Lender, Affiliate of a Lender, Issuing
Bank or Administrative Agent under the Loan Documents, any Lender Party Swap
Agreement or any Lender Party Financial Service Product. The Senior Indebtedness
shall include amounts accruing subsequent to the filing of any bankruptcy,
receivership, insolvency or similar petition.

“Subordinated Indebtedness” shall mean, for each PVA Debtor, the Indebtedness of
such PVA Debtor to any Subordinated Creditor.

ARTICLE II

Subordination

SECTION 2.01. Agreement to Subordinate. Each Subordinated Creditor agrees that
the Subordinated Indebtedness is subordinated in right of payment, to the extent
and in the manner provided in this Article II, to the payment when due of all
Senior Indebtedness.

SECTION 2.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of any PVA Debtor to creditors upon a total or
partial liquidation or a total or partial dissolution of such PVA Debtor (other
than, to the extent permitted by the Credit Agreement or the other Loan
Documents, a voluntary dissolution of such PVA Debtor or merger of such PVA
Debtor into any wholly owned subsidiary of any PVA Debtor solely for the purpose
of permitting such PVA Debtor or such wholly owned Subsidiary to assume all
obligations in respect of the Subordinated Indebtedness as if it were the direct
obligor with respect thereto and in which all the assets of such PVA Debtor are
transferred to such PVA Debtor or such wholly owned Subsidiary and no material
payment or distribution is made to creditors) or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to such
PVA Debtor or its Property:

(i) the Senior Creditors shall be entitled to receive payment in full in cash of
such Senior Indebtedness before the Subordinated Creditors shall be entitled to
receive any payments in respect of the Subordinated Indebtedness; and

(ii) until such Senior Indebtedness is paid in full in cash, any distribution
made by or on behalf of any PVA Debtor to which any Subordinated Creditor would
be entitled but for this Article II shall be made to the Senior Creditors as
their interests may

 

Exhibit D-2

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

appear, except that all Subordinated Creditors may receive and retain shares of
stock and any debt securities that are subordinated to all Senior Indebtedness
to at least the same extent as the Subordinated Indebtedness.

SECTION 2.03. Default on Senior Indebtedness. No PVA Debtor may make any
payments in respect of the Subordinated Indebtedness nor repurchase, redeem or
otherwise retire any of the Subordinated Indebtedness (collectively, “pay the
Subordinated Indebtedness”) if a “Default” or “Event of Default” has occurred
and is continuing under the Credit Agreement or such payment would create a
“Default” or “Event of Default” thereunder; provided, however, any PVA Debtor
may pay the Subordinated Indebtedness without regard to the foregoing if such
PVA Debtor receives written notice approving such payment from the
Administrative Agent.

SECTION 2.04. When Distribution Must Be Paid Over. If a distribution or payment
is made in respect of the Subordinated Indebtedness to a Subordinated Creditor
that because of this Article II should not have been made to it, such
Subordinated Creditor shall hold it in trust for the Senior Creditors and
promptly pay it over to the Administrative Agent for the benefit of the Lenders,
the Administrative Agent and the Issuing Bank.

SECTION 2.05. Subrogation. After all Senior Indebtedness is paid in full and
until the Subordinated Indebtedness is paid in full, each Subordinated Creditor
shall be subrogated to the rights of the Senior Creditors to receive
distributions applicable to such Senior Indebtedness.

SECTION 2.06. Agreement Not to Pursue Actions. Until the Administrative Agent
notifies the Subordinated Creditors that all Senior Indebtedness shall have been
paid in full, the Subordinated Creditors will not commence any action or
proceeding against any PVA Debtor to recover all or any part of the Subordinated
Indebtedness or join with any other creditor, unless the Administrative Agent
shall also join, in bringing any proceedings against such Person under any
bankruptcy, reorganization, readjustment of debt, arrangement of debt,
receivership, liquidation or insolvency law or statute of the Federal or any
state government.

SECTION 2.07. Subordination May Not Be Impaired by Subordinated Creditors. No
right of any Senior Creditor to enforce the subordination of the Subordinated
Indebtedness shall be impaired by any act or failure to act by such Subordinated
Creditor or by its failure to comply with this Agreement. The Senior Creditors
may extend, renew, increase, modify or amend the terms of such Senior
Indebtedness and otherwise deal freely with any Subordinated Creditors, all
without affecting the liabilities and obligations of the parties to this
Agreement or any other Subordinated Creditor.

SECTION 2.08. Subordinated Creditors Not Fiduciary for Senior Creditors. A
Subordinated Creditor shall not be deemed to owe any fiduciary duty to the
Senior Creditors and shall not be liable to any such Senior Creditor if it shall
mistakenly pay over or distribute to any other Person, money or assets to which
any Senior Creditor shall be entitled by virtue of this Article II or otherwise,
unless such payment or distribution was a result of the negligence or willful
misconduct of such Subordinated Creditor.

SECTION 2.09. Reliance by Senior Creditors on Subordination Provisions. Each
Subordinated Creditor acknowledges and agrees that the foregoing subordination
provisions are,

 

Exhibit D-3

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and are intended to be, an inducement and a consideration to each Senior
Creditor, whether such Senior Indebtedness was created or acquired before or
after the incurrence of the Subordinated Indebtedness, to acquire and continue
to hold, or to continue to hold, such Subordinated Indebtedness and such Senior
Creditor shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Subordinated Indebtedness. Each Subordinated Creditor acknowledges and agrees
that this Agreement is for the benefit of the Senior Creditors and any permitted
assignees of the Senior Indebtedness, and each such Senior Creditor and assignee
is a third party beneficiary of this Agreement and, as such, shall be entitled
to enforce the obligations of Subordinated Creditors hereunder.

SECTION 2.10. Liens Subordinated. Each Subordinated Creditor agrees that the
Subordinated Indebtedness shall be at all times unsecured, provided that if any
Lien arises by statute or other operation of law upon the property of any PVA
Debtor securing payments of the Subordinated Indebtedness, such Lien shall be
and remain inferior and subordinated to any Liens securing payments of the
Senior Indebtedness regardless of whether such encumbrances in favor of such
Subordinated Creditor or the Senior Creditors presently exist or are hereafter
created or attached. If, notwithstanding the foregoing, a Subordinated Creditor
shall obtain a Lien on property of a PVA Debtor that is not subject to a Lien in
favor of the Senior Creditors, then such Subordinated Creditor agrees not to
exercise any rights under the instruments evidencing such Liens, and not to
receive any payments or distributions in respect of such Liens, until the Senior
Creditors have received payment of the Senior Indebtedness in full in cash. If
under any applicable bankruptcy, insolvency or other similar law, a Subordinated
Creditor receives a secured claim in lieu of a set-off, then such Subordinated
Creditor agrees not to exercise any rights under such secured claim, and not to
receive any payments or distributions in respect of such secured claim, until
the Senior Creditors have received payment of the Senior Indebtedness in full in
cash.

ARTICLE III

Miscellaneous

SECTION 3.01. Notice. Any demand, notice or communication to be made or given
hereunder shall be made or given in the manner provided for in the Credit
Agreement.

SECTION 3.02. Governing Law; Waiver of Jury Trial.

(i) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS.

(ii) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE STATE OF TEXAS
SITTING IN HOUSTON, HARRIS COUNTY, TEXAS AND OF THE UNITED STATES DISTRICT COURT
OF THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS

 

Exhibit D-4

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AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
TEXAS STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF
THE PARTIES HERETO AGREES THAT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT
THE SENIOR CREDITORS MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AGAINST BORROWER OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.

(iii) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(iv) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
TEXAS. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS
AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

(v) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE SENIOR CREDITORS HAVE BEEN INDUCED
TO ENTER INTO THE CREDIT AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

 

Exhibit D-5

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SECTION 3.03. Severability. In the event that one or more of the provisions
contained in this Agreement shall be finally judicially determined to be
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction the validity, legality or enforceability of the remaining
provisions hereof shall not be affected or impaired thereby and the parties
agree to negotiate in good faith to agree on a provision which is enforceable
and which preserves the economic bargain of the parties to the greatest extent
possible. Each of the Sections of this Agreement is hereby declared to be
separate and distinct.

SECTION 3.04. Benefit of the Agreement. This Agreement shall inure to the
benefit of the Senior Creditors and be binding upon the Subordinated Creditors
and their respective successors and assigns.

SECTION 3.05. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and with respect to the subject matter hereof
supersedes any prior agreement, undertaking, declarations, commitments or
representations, written or oral, in respect thereof. There are no unwritten
oral agreements among the parties.

SECTION 3.06. Amendments. This Agreement may not be modified or amended except
by an instrument in writing signed by the Subordinated Creditors or by their
respective successors or permitted assigns and consented to by the Required
Lenders.

SECTION 3.07. No Waivers, Remedies. No failure to exercise and no delay in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law except
as otherwise expressly provided herein.

SECTION 3.08. Counterparts. This Agreement may be executed in counterparts, each
of which so executed shall be deemed to be an original and such counterparts
together shall constitute one and the same instrument.

SECTION 3.09. Further Assurances. The parties hereto agree to take all such
further actions and to execute, acknowledge and deliver all such further
documents that are necessary or useful to carry out the purposes of this
Agreement.

SECTION 3.10. Reinstatement. To the extent that any payments on the Senior
Indebtedness or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid by
the Administrative Agent or any Senior Creditor to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, obligations hereunder with respect to the
Subordinated Indebtedness so satisfied shall be revived and continue as if such
payment or proceeds had not been received and the Administrative Agent’s and the
Senior Creditors’ Liens, interests, rights, powers and remedies under the Loan
Documents and this Agreement shall continue in full force and effect. In such
event, each Loan Document and this Agreement shall be automatically reinstated
and the PVA Debtors and the Subordinated Creditors shall take such action as may
be reasonably requested by the Administrative Agent and the Senior Creditors to
effect such reinstatement.

 

Exhibit D-6

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SECTION 3.11. NO ORAL AGREEMENTS. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

SECTION 3.12. Termination of Existing Subordination Agreements. Each party
hereto hereby agrees that the Existing Subordination Agreements are hereby
terminated.

 

Exhibit D-7

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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first written above.

 

PVA DEBTORS:

[                    ],

a [                    ]

By:  

 

Name:   Title:  

[                    ],

a [                    ]

 

By:  

 

Name:   Title:   SUBORDINATED CREDITORS:

[                    ],

a [                    ]

 

By:  

 

Name:   Title:  

[                    ],

a [                    ]

 

By:  

 

Name:   Title:  

 

Exhibit D-8

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EXHIBIT E-1

[FORM OF]

U.S. TAX CERTIFICATE

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

Reference is hereby made to the Amended and Restated Credit Agreement dated as
of [    ] (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among [    ], and each lender from time to time party
thereto.

Pursuant to the provisions of Section 2.17 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and Beneficial Owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder
of the Borrower or the Parent within the meaning of Section 871(h)(3)(B) of the
Code, (iv) it is not a controlled foreign corporation related to the Borrower or
the Parent as described in Section 881(c)(3)(C) of the Code and (v) the interest
payments in question are not effectively connected with the undersigned’s
conduct of a U.S. trade or business.

The undersigned has furnished the Administrative Agent and the Borrower with a
certificate of its non-U.S. person status on IRS Form W-8BEN. By executing this
certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform the Borrower and
the Administrative Agent and (2) the undersigned shall have at all times
furnished the Borrower and the Administrative Agent with a properly completed
and currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years
preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

 

By:

 

 

 

      Name:

 

      Title:

Date:             , 20[    ]

 

Exhibit E-1

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EXHIBIT E-2

[FORM OF]

U.S. TAX CERTIFICATE

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

Reference is hereby made to the Amended and Restated Credit Agreement dated as
of [    ] (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among [    ], and each lender from time to time party
thereto.

Pursuant to the provisions of Section 2.17 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s)
(as well as any Note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (ii) its partners/members are the sole Beneficial
Owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)),
(iii) with respect to the extension of credit pursuant to this Credit Agreement,
neither the undersigned nor any of its partners/members is a bank extending
credit pursuant to a loan agreement entered into in the ordinary course of its
trade or business within the meaning of Section 881(c)(3)(A) of the Code,
(iv) none of its partners/members is a ten percent shareholder of the Borrower
or the Parent within the meaning of Section 871(h)(3)(B) of the Code, (v) none
of its partners/members is a controlled foreign corporation related to the
Borrower or the Parent as described in Section 881(c)(3)(C) of the Code, and
(vi) the interest payments in question are not effectively connected with the
undersigned’s or its partners/members’ conduct of a U.S. trade or business.

The undersigned has furnished the Administrative Agent and the Borrower with
IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of its
partners/members claiming the portfolio interest exemption. By executing this
certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform the Borrower and
the Administrative Agent and (2) the undersigned shall have at all times
furnished the Borrower and the Administrative Agent with a properly completed
and currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years
preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

 

By:  

 

        Name:         Title:

Date:             , 20[    ]

 

Exhibit E-2

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EXHIBIT E-3

[FORM OF]

U.S. TAX CERTIFICATE

(For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Amended and Restated Credit Agreement dated as
of [    ] (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among [    ], and each lender from time to time party
thereto.

Pursuant to the provisions of Section 2.17 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and Beneficial Owner
of the participation in respect of which it is providing this certificate,
(ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code,
(iii) it is not a ten percent shareholder of the Borrower or the Parent within
the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled
foreign corporation related to the Borrower or the Parent as described in
Section 881(c)(3)(C) of the Code, and (v) the interest payments in question are
not effectively connected with the undersigned’s conduct of a U.S. trade or
business.

The undersigned has furnished its participating Lender with a certificate of its
non-U.S. person status on IRS Form W-8BEN. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform such Lender in writing and
(2) the undersigned shall have at all times furnished such Lender with a
properly completed and currently effective certificate in either the calendar
year in which each payment is to be made to the undersigned, or in either of the
two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER]

By:

 

 

 

Name:

   

Title:

 

Date:             , 20[    ]

 

Exhibit E-3

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EXHIBIT E-4

[FORM OF]

U.S. TAX CERTIFICATE

(For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Amended and Restated Credit Agreement dated as
of [    ] (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among [    ], and each lender from time to time party
thereto.

Pursuant to the provisions of Section 2.17 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
partners/members are the sole Beneficial Owners of such participation,
(iii) with respect such participation, neither the undersigned nor any of its
partners/members is a bank extending credit pursuant to a loan agreement entered
into in the ordinary course of its trade or business within the meaning of
Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten
percent shareholder of the Borrower or the Parent within the meaning of
Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a
controlled foreign corporation related to the Borrower or the Parent as
described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in
question are not effectively connected with the undersigned’s or its
partners/members’ conduct of a U.S. trade or business.

The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by an IRS Form W-8BEN from each of its partners/members claiming the
portfolio interest exemption. By executing this certificate, the undersigned
agrees that (1) if the information provided on this certificate changes, the
undersigned shall promptly so inform such Lender and (2) the undersigned shall
have at all times furnished such Lender with a properly completed and currently
effective certificate in either the calendar year in which each payment is to be
made to the undersigned, or in either of the two calendar years preceding such
payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]

By:

 

 

 

  Name:

   

  Title:

 

Date:             , 20[    ]

 

Exhibit E-4