Exhibit 10.1

 

Execution Version

 

 

FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT

 

dated as of

 

October 22, 2014

 

among

 

MAGNUM HUNTER RESOURCES CORPORATION,
as Borrower,

 

BANK OF MONTREAL,
as Administrative Agent,

 

THE LENDERS PARTY HERETO,

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
as Syndication Agents

 

and

 

CAPITAL ONE, NATIONAL ASSOCIATION
and
SUNTRUST BANK,
as Co-Documentation Agents

 

*****

 

BMO CAPITAL MARKETS
and
CREDIT SUISSE SECURITIES (USA) LLC,
as Lead Arrangers and Joint Bookrunners

 

 

Andrews Kurth LLP

Counsel to Administrative Agent

 

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TABLE OF CONTENTS

 

ARTICLE I Definitions and Accounting Matters

1

Section 1.01

Terms Defined Above

1

Section 1.02

Certain Defined Terms

1

Section 1.03

Types of Loans and Borrowings

27

Section 1.04

Terms Generally; Rules of Construction

27

Section 1.05

Accounting Terms and Determinations; GAAP

27

 

 

 

ARTICLE II The Credits

27

Section 2.01

Commitments

27

Section 2.02

Loans and Borrowings

28

Section 2.03

Requests for Borrowings

29

Section 2.04

Interest Elections

30

Section 2.05

Funding of Borrowings

31

Section 2.06

Changes in the Aggregate Maximum Credit Amounts

32

Section 2.07

Borrowing Base

32

Section 2.08

Letters of Credit

35

 

 

 

ARTICLE III Payments of Principal and Interest; Prepayments; Fees

40

Section 3.01

Repayment of Loans

40

Section 3.02

Interest

40

Section 3.03

Alternate Rate of Interest

41

Section 3.04

Prepayments

41

Section 3.05

Fees

43

 

 

 

ARTICLE IV Payments; Pro Rata Treatment; Sharing of Set-offs

44

Section 4.01

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

44

Section 4.02

Presumption of Payment by the Borrower

45

Section 4.03

Certain Deductions by the Administrative Agent

45

Section 4.04

Disposition of Proceeds

46

 

 

 

ARTICLE V Increased Costs; Break Funding Payments; Taxes; Illegality; Defaulting
Lenders

46

Section 5.01

Increased Costs

46

Section 5.02

Break Funding Payments

47

Section 5.03

Taxes

48

Section 5.04

Mitigation Obligations

52

Section 5.05

Illegality

53

Section 5.06

Cash Collateral

53

Section 5.07

Defaulting Lenders

54

 

 

 

ARTICLE VI Conditions Precedent

56

Section 6.01

Conditions to Effectiveness

56

Section 6.02

Each Credit Event

58

 

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ARTICLE VII Representations and Warranties

60

Section 7.01

Organization; Powers

60

Section 7.02

Authority; Enforceability

60

Section 7.03

Approvals; No Conflicts

60

Section 7.04

Financial Condition; No Material Adverse Change

61

Section 7.05

Litigation

61

Section 7.06

Environmental Matters

61

Section 7.07

Compliance with the Laws and Agreements; No Defaults

62

Section 7.08

Investment Company Act

63

Section 7.09

Taxes

63

Section 7.10

ERISA

63

Section 7.11

Disclosure; No Material Misstatements

63

Section 7.12

Insurance

64

Section 7.13

Labor Matters

64

Section 7.14

Subsidiaries

64

Section 7.15

Location of Business and Offices

65

Section 7.16

Properties; Titles, Etc.

65

Section 7.17

Maintenance of Properties

66

Section 7.18

Gas Imbalances, Prepayments

66

Section 7.19

Marketing of Production

66

Section 7.20

Swap Agreements

67

Section 7.21

Use of Loans and Letters of Credit

67

Section 7.22

Solvency

67

Section 7.23

Sanctioned Persons; USA PATRIOT Act; FCPA

67

 

 

 

ARTICLE VIII Affirmative Covenants

68

Section 8.01

Financial Statements; Ratings Change; Other Information

68

Section 8.02

Notices of Material Events

71

Section 8.03

Existence; Conduct of Business

72

Section 8.04

Payment of Obligations

72

Section 8.05

Performance of Obligations under Loan Documents

72

Section 8.06

Operation and Maintenance of Properties

72

Section 8.07

Insurance

73

Section 8.08

Books and Records; Inspection Rights

73

Section 8.09

Compliance with Laws

74

Section 8.10

Environmental Matters

74

Section 8.11

Further Assurances

75

Section 8.12

Reserve Reports

75

Section 8.13

Title Information

76

Section 8.14

Additional Collateral

77

Section 8.15

ERISA Compliance

78

Section 8.16

Additional Guarantors

78

Section 8.17

OFAC; Anti-Corruption Laws

79

Section 8.18

Maintenance of Ratings

80

Section 8.19

Material Contracts

80

Section 8.20

Post-Closing Obligations

80

 

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ARTICLE IX Negative Covenants

80

Section 9.01

Financial Covenants

80

Section 9.02

Debt

81

Section 9.03

Liens

83

Section 9.04

Restricted Payments

84

Section 9.05

Investments, Loans and Advances

85

Section 9.06

Nature of Business; International Operations

87

Section 9.07

Limitation on Leases

87

Section 9.08

Use of Proceeds

88

Section 9.09

Sale or Discount of Receivables

88

Section 9.10

Mergers, Etc.

88

Section 9.11

Sale of Assets

88

Section 9.12

Environmental Matters

90

Section 9.13

Transactions with Affiliates

90

Section 9.14

Subsidiaries

91

Section 9.15

Subsidiary Obligations and Preferred Stock

91

Section 9.16

Negative Pledge Agreements; Dividend Restrictions

91

Section 9.17

Gas Imbalances, Take-or-Pay or Other Prepayments

91

Section 9.18

Swap Agreements

92

Section 9.19

Sale and Leaseback Transactions

93

Section 9.20

Covenants Regarding the Second Lien Term Loans

93

 

 

ARTICLE X Events of Default; Remedies

94

Section 10.01

Events of Default

94

Section 10.02

Remedies

96

 

 

 

ARTICLE XI The Administrative Agent

97

Section 11.01

Appointment; Powers

97

Section 11.02

Duties and Obligations of Administrative Agent

97

Section 11.03

Action by Administrative Agent

97

Section 11.04

Reliance by Administrative Agent

98

Section 11.05

Subagents

98

Section 11.06

Resignation or Removal of Administrative Agent

99

Section 11.07

Administrative Agent as Lender

99

Section 11.08

No Reliance

99

Section 11.09

Authority to Release Collateral, Liens and Guarantors

100

Section 11.10

The Lead Arrangers, the Syndication Agent and the Co-Documentation Agents

100

Section 11.11

Filing of Proofs of Claim

100

 

 

ARTICLE XII Miscellaneous

101

Section 12.01

Notices

101

Section 12.02

Waivers; Amendments

102

Section 12.03

Expenses, Indemnity; Damage Waiver

103

Section 12.04

Successors and Assigns

105

Section 12.05

Survival; Revival; Reinstatement

109

Section 12.06

Counterparts; Integration; Effectiveness

109

 

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Section 12.07

Severability

110

Section 12.08

Right of Setoff

110

Section 12.09

Governing Law; Jurisdiction; Consent to Service of Process

111

Section 12.10

Headings

112

Section 12.11

Confidentiality

112

Section 12.12

Exculpation Provisions

112

Section 12.13

No Third Party Beneficiaries

113

Section 12.14

Collateral Matters; Swap Agreements

113

Section 12.15

USA Patriot Act Notice

113

Section 12.16

Interest Rate Limitation

113

Section 12.17

Intercreditor Agreement

114

Section 12.18

Amendment and Restatement

114

Section 12.19

Exiting Lenders

115

 

Annex 1

List of Maximum Credit Amounts

 

 

 

 

Exhibit A

Form of Note

 

Exhibit B

Form of Borrowing Request

 

Exhibit C

Form of Interest Election Request

 

Exhibit D

Form of Compliance Certificate

 

Exhibit E

Form of Assignment and Assumption

 

Exhibit F

Form of Joinder Agreement

 

Exhibit G

Forms of U.S. Tax Compliance Certificates

 

 

 

 

Schedule 1.01A

Existing Letters of Credit

 

Schedule 1.01B

Unrestricted Subsidiaries as of the Effective Date

 

Schedule 7.05

Litigation

 

Schedule 7.14

Subsidiaries

 

Schedule 7.16

Properties

 

Schedule 7.18

Gas Imbalances

 

Schedule 7.19

Marketing Contracts

 

Schedule 7.20

Swap Agreements

 

Schedule 8.20

Post-Closing Matters

 

Schedule 9.02

Debt

 

Schedule 9.03

Liens

 

Schedule 9.05

Investments

 

 

iv

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THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 22, 2014
(the “Effective Date”), is among MAGNUM HUNTER RESOURCES CORPORATION, a Delaware
corporation (the “Borrower”), each of the Lenders from time to time party
hereto, BANK OF MONTREAL (in its individual capacity, “BOM”), as administrative
agent for the Lenders (in such capacity, together with its successors in such
capacity, the “Administrative Agent”), CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
as Syndication Agent and CAPITAL ONE, NATIONAL ASSOCIATION and SUNTRUST BANK, as
Co-Documentation Agents.

 

R E C I T A L S

 

A.                                    The Borrower is a party to that certain
Third Amended and Restated Credit Agreement dated December 13, 2013 (as amended,
the “Prior Agreement”), among the Borrower, the lenders party thereto, Capital
One, National Association, as Syndication Agent, KeyBank National Association,
SunTrust Bank and UBS Securities LLC, as Co-Documentation Agents and Bank of
Montreal, as administrative agent.

 

B.                                    The Borrower, the Administrative Agent and
the Lenders mutually desire to amend and restate the Prior Agreement in its
entirety.

 

C.                                    In consideration of the mutual covenants
and agreements herein contained and of the loans, extensions of credit and
commitments hereinafter referred to, the parties hereto agree that the Prior
Agreement is amended and restated in its entirety as follows:

 

ARTICLE I
Definitions and Accounting Matters

 

Section 1.01                            Terms Defined Above.

 

As used in this Agreement, each term defined above has the meaning indicated
above.

 

Section 1.02                            Certain Defined Terms.

 

As used in this Agreement, the following terms have the meanings specified
below:

 

“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.

 

“Adjusted Consolidated Net Tangible Assets” has the meaning assigned to such
term in the Second Lien Term Loan Agreement as in effect on the Effective Date.

 

“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 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.

 

“Administrative Agent” has the meaning given in the introductory paragraph.

 

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

 

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

 

“Affected Loans” has the meaning assigned to such term in Section 5.05.

 

“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.

 

“Aggregate Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be reduced or terminated pursuant to
Section 2.06.  As of the Effective Date, the Aggregate Maximum Credit Amount of
the Lenders is $250,000,000.

 

“Agreement” means this Fourth Amended and Restated Credit Agreement, as the same
may from time to time be amended, modified, supplemented or restated.

 

“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 ½ of 1% and (c) the Adjusted LIBO Rate for a one
month interest period in effect on such day plus 1%.  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 day of such change in the Prime Rate, the Federal Funds Effective
Rate and the Adjusted LIBO Rate, respectively.

 

“Applicable Margin” means for any day, with respect to any ABR Loan or
Eurodollar Loan, or with respect to the Commitment Fee Rate, as the case may be,
the rate per annum set forth in the Borrowing Base Utilization Grid below based
upon the Borrowing Base Utilization Percentage then in effect:

 

Borrowing Base Utilization Grid

 

 

 

< 25%

 

> 25%, but 
< 50%

 

> 50%, but 
< 75%

 

> 75%, but 
< 90%

 

> 90%

 

ABR Loans

 

1.00

%

1.25

%

1.50

%

1.75

%

2.00

%

Eurodollar Loans

 

2.00

%

2.25

%

2.50

%

2.75

%

3.00

%

Commitment Fee

 

0.50

%

0.50

%

0.50

%

0.50

%

0.50

%

 

Each change in the Applicable Margin shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change; provided, however, if at any time
the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a), then
the “Applicable Margin” means the rate per annum set forth on the grid when the
Borrowing Base Utilization Percentage is at its highest level; provided

 

2

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further that the Applicable Margin shall revert to the previous Applicable
Margin upon the Borrower’s delivery of such Reserve Report.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the
Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit
Amount as such percentage is set forth on Annex I or in an Assignment and
Assumption Agreement, as the case may be.

 

“Approved Counterparty” means (a) any Lender or any Affiliate of a Lender,
(b) with respect to Swap Agreements existing as of Effective Date, any Person
who was a Lender under the Prior Agreement or an Affiliate of a Lender under the
Prior Agreement or (c) any other Person whose long term senior unsecured debt
rating at the time of entry into the applicable Swap Agreement is A-/A3 by S&P
or Moody’s (or their equivalent) or higher.

 

“Approved Fund” means (a) a CLO or (b) with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor.

 

“Approved Petroleum Engineers” means an independent petroleum engineer or
engineers proposed by the Borrower and approved by the Administrative Agent.

 

“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 12.04(b)), and accepted by the Administrative Agent, in the form of
Exhibit E or any other form approved by the Administrative Agent.

 

“Availability Period” means the period from and including the Effective Date to
but excluding the Termination Date.

 

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America or any successor Governmental Authority.

 

“BOM” has the meaning given in the introductory paragraph.

 

“Borrower” has the meaning given in the introductory paragraph.

 

“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 Deficiency” means the occurrence at any time in which the total
Credit Exposures exceed the total Commitments.

 

“Borrowing Base” means, at any time, an amount equal to the amount determined in
accordance with Section 2.07, as the same may be adjusted from time to time
pursuant to Section 8.13(c) or Section 9.11.

 

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“Borrowing Base Utilization Percentage” means, as of any day, the fraction
expressed as a percentage, the numerator of which is the sum of the Credit
Exposures of the Lenders on such day, and the denominator of which is the
Borrowing Base in effect on such day.

 

“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 Houston, Texas, are authorized or required by law to
remain closed; and if such day relates to a Borrowing or continuation of, a
payment or prepayment of principal of or interest on, or a conversion of or
into, or the Interest Period for, a Eurodollar Loan or a notice by the Borrower
with respect to any such Borrowing or continuation, payment, prepayment,
conversion or Interest Period, any day which is also a day on which dealings in
dollar deposits are carried out in the London interbank market.

 

“Capital Leases” means, in respect of any Person, all leases that shall have
been, or should have been, in accordance with GAAP, recorded as capital leases
on the balance sheet of the Person liable (whether contingent or otherwise) for
the payment of rent thereunder.

 

“Cash Collateralize” means, to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of one or more of the Issuing Bank or the
Lenders, as collateral for LC Exposure or obligations of Lenders to fund
participations in respect of Letters of Credit, cash or deposit account balances
or, if the Administrative Agent and the Issuing Bank shall agree in their sole
discretion, other credit support, in each case pursuant to documentation in form
and substance reasonably satisfactory to the Administrative Agent and the
Issuing Bank.  “Cash Collateral” shall have a meaning correlative to the
foregoing and shall include the proceeds of such cash collateral and other
credit support.

 

“Cash Management Agreement” means any agreement to provide cash management
services, including treasury, depository, overdraft, credit or debit card,
electronic funds transfer and other cash management arrangements.

 

“Casualty Event” means any loss, casualty or other insured damage to, or any
nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Borrower or any of its Restricted
Subsidiaries having a fair market value in excess of $5,000,000.

 

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

 

(a)                           acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Exchange Act and the rules of the SEC thereunder as in effect on the Effective
Date) of Equity Interests representing more than thirty percent (30%) of the
aggregate ordinary voting power represented by the issued and outstanding Equity
Interests of the Borrower;

 

(b)                           the direct or indirect sale, lease, transfer,
conveyance or other disposition (other than by way of merger or consolidation),
in one or a series of related transactions, of all or

 

4

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substantially all of the properties or assets of the Borrower and the Restricted
Subsidiaries taken as a whole to any Person (including any “person” (as that
term is used in Section 13(d)(3) of the Exchange Act));

 

(c)                            the adoption of a plan relating to the
liquidation or dissolution of the Borrower; or

 

(d)                           the first day on which a majority of the members
of the Board of Directors of the Borrower are not Continuing Directors.

 

“Change in Law” means the occurrence, after the Effective Date, of any of the
following: (a) the adoption or taking into effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided, that notwithstanding anything herein to the
contrary, (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 promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or any
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued.

 

“CLO” means any Person (other than a natural Person) that is engaged in making,
purchasing, holding or otherwise investing in bank loans and similar extensions
of credit in the ordinary course of its business and is administered or managed
by a Lender or an Affiliate of such Lender.

 

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

 

“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, as such commitment may be (a) modified from
time to time pursuant to Sections 2.06 and 10.02 and (b) modified from time to
time pursuant to assignments by or to such Lender pursuant to Section 12.04(b),
and “Commitments” means the aggregate amount of the Commitments of all the
Lenders.  The amount representing each Lender’s Commitment shall at any time be
the lesser of (i) such Lender’s Maximum Credit Amount and (ii) such Lender’s
Applicable Percentage of the then effective Borrowing Base.

 

“Commitment Fee Rate” has the meaning set forth in the definition of “Applicable
Margin”.

 

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

 

5

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“Consolidated Net Income” means with respect to the Borrower and the Restricted
Subsidiaries, for any period, the aggregate of the net income (or loss) of the
Borrower and the Restricted Subsidiaries after allowances for Taxes payable by
the Borrower and the Restricted Subsidiaries 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: (a) the net income of any Person in which the Borrower or any
Restricted Subsidiary has an interest (which interest does not cause the net
income of such other Person to be consolidated with the net income of the
Borrower and the Restricted Subsidiaries in accordance with GAAP), except to the
extent of the amount of dividends or distributions actually paid in cash during
such period by such other Person to the Borrower or to a Restricted Subsidiary,
as the case may be; (b) any extraordinary gains or losses (excluding any
unrealized gains and losses under FAS 133) during such period; and (c) any gains
or losses (excluding any unrealized gains and losses under FAS 133) attributable
to writeups or writedowns of assets; and provided further that (i) if the
Borrower or any Restricted Subsidiary consummates any acquisitions during any
fiscal quarter and the inclusion of the effect of all such acquisitions in the
calculation of EBITDAX, as if such acquisitions had occurred on the first day of
the relevant testing period, would have increased EBITDAX by 15% or more of the
EBITDAX for the immediately preceding fiscal quarter (as such EBITDAX may have
been adjusted pursuant to this proviso), then the Consolidated Net Income shall
be calculated after giving pro forma effect to all such acquisitions, as if such
acquisitions had occurred on the first day of such period; and (ii) if the
Borrower or any Restricted Subsidiary consummates any dispositions during any
fiscal quarter and the actual EBITDAX generated by the assets that were the
subject of all such dispositions is 15% or more of the EBITDAX for the
immediately preceding fiscal quarter (as such EBITDAX may have been adjusted
pursuant to this proviso), then Consolidated Net Income shall be calculated
after giving pro forma effect to all such dispositions, as if such dispositions
had occurred on the first day of such period.

 

“Consolidated Subsidiaries” means each Subsidiary of the Borrower (whether now
existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Borrower in accordance with GAAP.

 

“Continuing Directors” means, as of any date of determination, any member of the
Board of Directors of the Borrower who:

 

(a)                           was a member of such Board of Directors on the
Closing Date; or

 

(b)                           was nominated for election or elected to such
Board of Directors whose election to such Board of Directors or whose nomination
for election by the stockholders of the Borrower was approved or consented to by
a majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination or election.

 

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.  For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 40% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing

 

6

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body of a Person (other than as a limited partner of such other Person) will be
deemed to “control” such other Person.  “Controlling” and “Controlled” have
meanings correlative thereto.

 

“Credit Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Loans and LC Exposure at such
time.

 

“Debt” means, for any Person, the sum of the following (without duplication): 
(a) all obligations of such Person for borrowed money or evidenced by bonds,
bankers’ acceptances, debentures, notes or other similar instruments; (b) all
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable and all accrued expenses, liabilities or other obligations of
such Person to pay the deferred purchase price of Property or services; (d) all
obligations under Capital Leases; (e) all obligations under Synthetic Leases;
(f) all Debt (as defined in the other clauses of this definition) of others
secured by a Lien on any Property of such Person, whether or not such Debt is
assumed by such Person; (g) all Debt (as defined in the other clauses of this
definition) of others guaranteed by such Person or in which such Person
otherwise assures a creditor against loss of the Debt (howsoever such assurance
shall be made) to the extent of the lesser of the amount of such Debt and the
maximum stated amount of such guarantee or assurance against loss; (h) all
obligations or undertakings of such Person to maintain or cause to be maintained
the financial position or covenants of others or to purchase the Debt of others;
(i) obligations to deliver commodities, goods or services, including, without
limitation, Hydrocarbons, in consideration of one or more advance payments,
other than gas balancing arrangements in the ordinary course of business; (j)
any Debt of a partnership for which such Person is liable either by agreement,
by operation of law or by a Governmental Requirement but only to the extent of
such liability; (k) Disqualified Capital Stock; and (l) the undischarged balance
of any production payment created by such Person or for the creation of which
such Person directly or indirectly received payment.  The Debt of any Person
shall include all obligations of such Person of the character described above to
the extent such Person remains legally liable in respect thereof notwithstanding
that any such obligation is not included as a liability of such Person under
GAAP; provided that for purposes of calculating the financial covenants set
forth in Section 9.01(b) and (c), the term “Debt” shall not include the then
outstanding LC Exposure or obligations in respect of Swap Agreements.

 

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

 

“Defaulting Lender” means, subject to Section 5.07(b), any Lender, as determined
by the Administrative Agent, that (a) has failed to (i) fund all or any portion
of its Loans within two Business Days of the date such Loans were required to be
funded by it hereunder unless such Lender notifies the Administrative Agent and
the Borrower in writing that such failure is a result of such Lender’s good
faith determination that a condition precedent to funding (specifically
identified and including the particular default, if any) has not been satisfied,
or (ii) pay to the Administrative Agent, the Issuing Bank or any other Lender
any other amount required to be paid by it hereunder (including in respect of
its participation in Letters of Credit) within two Business Days of the date
when due, (b) has notified the Borrower, the Administrative Agent or the Issuing
Bank 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

 

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comply with its funding obligations under this Agreement (unless such writing or
public statement relates to such Lender’s obligation to fund a Loan hereunder
and states that such position is based upon such Lender’s good faith
determination that a condition precedent to funding (specifically identified and
including the particular default, if any) cannot be satisfied), (c) has failed,
within three Business Days after written request by the Administrative Agent or
the Borrower, to confirm in writing to the Administrative Agent and the Borrower
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, provided that such Lender will cease to be a Defaulting Lender pursuant
to this clause (c) upon receipt of such written confirmation by the
Administrative Agent and the Borrower), or (d) (i) has become or is insolvent or
has a parent company that has become or is insolvent or (ii) 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, including the Federal Deposit Insurance Corporation
or any other federal or state regulatory authority acting in such a capacity, 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, including the Federal Deposit Insurance
Corporation or any other federal or state regulatory authority acting in such a
capacity, or has taken any action in furtherance of, or indicating its consent
to, approval of or acquiescence in any such proceeding or appointment; provided
that a Lender shall not be considered a Defaulting Lender solely by virtue of
any ownership interest, or the acquisition of any ownership interest, in such
Lender by a Governmental Authority or instrumentality thereof, provided,
further, that such ownership interest does not result in or provide such Lender
with immunity from the jurisdiction of courts within the United States or from
the enforcement of judgments or writs of attachment on its assets or permit such
Lender (or such Governmental Authority or instrumentality) to reject, repudiate,
disavow or disaffirm any contracts or agreements made by such Lender.  Any
determination by the Administrative Agent that a Lender is a Defaulting Lender
under any one or more of clauses (a) through (d) above shall be conclusive and
binding absent manifest error, and such Lender shall be deemed to be a
Defaulting Lender (subject to Section 5.07(b)) upon delivery of written notice
of such determination to the Borrower, the Issuing Bank and each Lender.

 

“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year 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; provided, however, Disqualified Capital Stock shall not include
Series C, Series D or

 

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Series E preferred stock permitted under Section 9.02, so long as any dividends
paid with respect thereto comply with the provisions of Section 9.04.

 

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

 

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
the United States of America or any state thereof or the District of Columbia.

 

“EBITDAX” means, for any period, the sum of Consolidated Net Income for such
period calculated on a trailing four quarter basis plus the following expenses
or charges to the extent deducted from Consolidated Net Income in such period:
interest, income Taxes, depreciation, depletion, amortization, expenses
associated with the exploration of Oil and Gas Properties, all non-cash charges
and adjustments (including stock-based compensation, impairment of asset values,
non-cash adjustments to derivative carrying values, non-cash adjustments to
asset retirement obligations and other similar items as from time to time
required under GAAP) and all non-recurring expenses, minus all non-cash income
added to Consolidated Net Income.

 

“Effective Date” means the date first written above.

 

“Engineering Reports” has the meaning assigned such term in Section 2.07(c)(i).

 

“Environmental Laws” means any and all Governmental Requirements pertaining in
any way to health, safety, the environment or the preservation or reclamation of
natural resources, in effect in any and all jurisdictions in which the Borrower
or any Subsidiary is conducting or at any time has conducted business, or where
any Property of the Borrower or any Restricted Subsidiary is located, including
without limitation, the Oil Pollution Act of 1990 (“OPA”), as amended, the Clean
Air Act, as amended, the Comprehensive Environmental, Response, Compensation,
and Liability Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 (“RCRA”), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection Governmental Requirements.  The term
“oil” shall have the meaning specified in OPA, the terms “hazardous substance”
and “release” (or “threatened release”) have the meanings specified in CERCLA,
the terms “solid waste” and “disposal” (or “disposed”) have the meanings
specified in RCRA and the term “oil and gas waste” shall have the meaning
specified in Section 91.1011 of the Texas Natural Resources Code (“Section
91.1011”); provided, however, that (a) in the event either OPA, CERCLA, RCRA or
Section 91.1011 is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date of
such amendment and (b) to the extent the laws of the state or other jurisdiction
in which any Property of the Borrower or any Subsidiary is located establish a
meaning for “oil,” “hazardous substance,” “release,” “solid waste,” “disposal”
or “oil and gas waste” which is broader than that specified in either OPA,
CERCLA, RCRA or Section 91.1011, such broader meaning shall apply.

 

9

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“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 each trade or business (whether or not incorporated)
that, together with the Borrower or a Subsidiary is treated as a “single
employer” under Section 414(b) or (c) of the Code, or solely for the proposes 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 Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower 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
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower 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.

 

“Eureka Hunter” means Eureka Hunter Pipeline, LLC, a Delaware limited liability
company.

 

“Eureka Hunter Holdings” means Eureka Hunter Holdings, LLC, a Delaware limited
liability company.

 

“Eureka MLP” means a limited partnership or limited liability company (a) formed
to own and operate the Properties of Eureka Hunter Holdings and its
Subsidiaries, (b) in which the Borrower and/or one or more of its Restricted
Subsidiaries has direct or indirect ownership interest(s), and (c) that effects
a registered public offering of Equity Interests and is treated as a partnership
for U.S. federal income tax purposes.

 

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“Eureka MLP GP” means (i) the general partner of the Eureka MLP and (ii) any
direct or indirect Subsidiary of the Borrower that Controls or otherwise owns an
interest in the general partner of the Eureka MLP.

 

“Event of Default” has the meaning assigned to such term in Section 10.01.

 

“Excepted Liens” means:

 

(a)                           Liens for Taxes, assessments or other governmental
charges or levies which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP;

 

(b)                           Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP;

 

(c)                            statutory landlord’s liens, operators’, vendors’,
carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’,
materialmen’s, construction or other like Liens arising by operation of law in
the ordinary course of business or incident to the exploration, development,
operation and maintenance of Oil and Gas Properties each of which is in respect
of obligations that are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP;

 

(d)                           contractual Liens that arise in the ordinary
course of business under operating agreements, joint venture agreements, oil and
gas partnership agreements, oil and gas leases, farm-out agreements, division
orders, contracts for the sale, transportation or exchange of oil and natural
gas, unitization and pooling declarations and agreements, area of mutual
interest agreements, overriding royalty agreements, marketing agreements,
processing agreements, net profits agreements, development agreements, gas
balancing or deferred production agreements, injection, repressuring and
recycling agreements, salt water or other disposal agreements, seismic or other
geophysical permits or agreements, and other agreements which are usual and
customary in the oil and gas business and are for claims which are not
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP (or,
with respect to royalty interests, such liens will not reasonably be expected to
result in a Material Adverse Effect), 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;

 

(e)                            Liens arising solely by virtue of any statutory
or common law provision relating to banker’s liens, rights of set-off or similar
rights and remedies and burdening only deposit accounts or other funds
maintained with a creditor depository institution, provided that no such deposit
account is a dedicated cash collateral account or is subject to restrictions
against access by the depositor in excess of those set forth by regulations
promulgated by the Board and no such deposit account is intended by Borrower or
any of its Restricted Subsidiaries to provide collateral to the depository
institution;

 

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(f)                             easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any Property of 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,
which in the aggregate do not materially impair the use of such Property for the
purposes of which such Property is held by the Borrower or any Restricted
Subsidiary or materially impair the value of such Property subject thereto;

 

(g)                            Liens on cash, letters of credit, or securities
pledged to secure performance of tenders, surety and appeal bonds, government
contracts, performance and return of money bonds, bids, trade contracts, leases,
transportation contracts, statutory obligations, regulatory obligations and
other obligations of a like nature incurred in the ordinary course of business;

 

(h)                           judgment and attachment Liens not giving rise to
an Event of Default, provided that any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have been
finally terminated or the period within which such proceeding may be initiated
shall not have expired and no action to enforce such Lien has been commenced;
and

 

(i)                               Liens arising from UCC financing statement
filings regarding operating leases entered into by the Borrower and the
Restricted Subsidiaries in the ordinary course of business covering only the
Property under lease;

 

provided that that Liens described in clauses (a) through (e) shall remain
Excepted Liens only for so long as no action to enforce such Lien has been
commenced and no intention to subordinate the first priority Lien granted in
favor of the Administrative Agent and the Lenders is to be hereby implied or
expressed by the permitted existence of such Excepted Liens.

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of any Lender, U.S.
federal withholding Taxes imposed on amounts payable to or for the account of
such Lender with respect to an applicable interest in a Loan or Commitment
pursuant to a law in effect on the date on which (i) such Lender acquires such
interest in the Loan or Commitment (other than pursuant to an assignment request
by the Borrower under Section 5.04(b)) or (ii) such Lender changes its lending
office, except in each case to the extent that, pursuant to Section 5.03,
amounts with respect to such Taxes were payable either to such Lender’s assignor
immediately before such Lender became a party hereto or to such Lender
immediately before it changed its lending office, (c) Taxes attributable to such
Recipient’s failure to comply with Section 5.03(g) and (d) any U.S. federal
withholding taxes imposed under FATCA.

 

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“Existing Letters of Credit” means the letters of credit set forth on Schedule
1.01A.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date
(or any amended or successor version that is substantively comparable and not
materially more onerous to comply with), any current or future regulations or
official interpretations thereof, any agreements entered into pursuant to
Section 1471(b)(1) of the Code and any intergovernmental agreement that
implements or modifies the provisions of the foregoing (together with any laws
implementing such agreement).

 

“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, 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 letter agreement dated October 6, 2014, among the
Borrower, the Administrative Agent and BMO Capital Markets pertaining to certain
fees payable to the Administrative Agent and BMO Capital Markets.

 

“Financial Officer” means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person.  Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.

 

“Financial Statements” means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).

 

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

 

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

 

“Fronting Exposure” means, at any time there is a Defaulting Lender, such
Defaulting Lender’s Applicable Percentage of the outstanding LC Exposure with
respect to Letters of Credit issued by the Issuing Bank other than LC Exposure
as to which such Defaulting Lender’s participation obligation has been
reallocated to other Lenders or Cash Collateralized in accordance with the terms
hereof.

 

“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time subject to the terms and conditions set
forth in Section 1.05.

 

“Governmental Authority” means the government of the United States of America,
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 over the
Borrower, any Subsidiary, any of their Properties, the

 

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Administrative Agent, the Issuing Bank or any Lender (including any
supra-national bodies such as the European Union or the European Central Bank).

 

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

 

“Guarantor” means all Restricted Subsidiaries of the Borrower and any other
Person that becomes a party to the Guaranty pursuant to the terms hereof.

 

“Guaranty” means that certain Second Amended and Restated Guaranty dated as of
the Effective Date, executed by the Guarantors, in favor of the Administrative
Agent, as amended, modified, supplemented or restated from time to time.

 

“Highest Lawful Rate” means, as to any Lender, the maximum non-usurious interest
rate, if any (or, if the context so requires, an amount calculated at such
rate), that at any time or from time to time may be contracted for, taken,
reserved, charged, or received by such Lender under applicable laws with respect
to an obligation, as such laws are presently in effect or, to the extent allowed
by applicable law, as such laws may hereafter be in effect and which allow a
higher maximum non-usurious interest rate than such laws now allow.  The
determination of the Highest Lawful Rate shall, to the extent required by
applicable law, take into account as interest paid, taken, received, charged,
reserved or contracted for any and all relevant payments or charges under the
Loan Documents.

 

“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.

 

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

 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any Loan
Party under any Loan Document or (b) to the extent not otherwise described in
(a), Other Taxes.

 

“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of
the Effective Date, among the Administrative Agent, the Second Lien Agent (and
acknowledged and agreed by the Loan Parties), as the same may be amended,
supplemented, modified or restated in accordance with the terms thereof.

 

“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.

 

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“Interest Expense” means, for any applicable period, the aggregate cash interest
expense (both accrued and paid and net of interest income paid during such
period to the Borrower and its Restricted Subsidiaries) of the Borrower and its
Restricted Subsidiaries for such applicable period, including the portion of any
payments made in respect of Capital Leases allocable to interest expense;
provided that if the Borrower or any Restricted Subsidiary shall acquire or
dispose of any Property during such period in an aggregate amount that equals or
exceeds ten percent (10%) of the Borrowing Base then in effect, then Interest
Expense shall be calculated after giving pro forma effect to such acquisition or
disposition, as if such acquisition or disposition had occurred on the first day
of such period.

 

“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.

 

“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, six or twelve
months thereafter, as the Borrower may elect; provided, that (a) 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 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 (b) 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 Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.

 

“Interim Redetermination” means any redetermination of the Borrowing Base under
Section 2.07(b)(ii) or Section 2.07(b)(iii).

 

“Interim Redetermination Date” means the date on which a Borrowing Base that has
been redetermined pursuant to an Interim Redetermination becomes effective as
provided in Section 2.07(d).

 

“Investment” means, for any Person: (a) 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) or any capital contribution to any other Person; (b) the
making of any deposit with, or advance, loan or capital contribution to,
assumption of Debt of, purchase or other acquisition of any other Debt or equity
participation or interest in, or other extension of credit to, any other Person
(including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person); or (c) the entering into of any guarantee of, or other contingent

 

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obligation (including the deposit of any Equity Interests to be sold) with
respect to, Debt or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person.  Except as otherwise provided in this Agreement, the amount of an
Investment will be determined at the time the Investment is made and without
giving effect to subsequent changes in value.

 

“IRS” means the United States Internal Revenue Service.

 

“Issuing Bank” means BOM, in its capacity as the issuer of Letters of Credit
hereunder, and its successors in such capacity as provided herein, and BOM, in
its capacity as the issuer of the Existing Letters of Credit.  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.

 

“Joinder Agreement” means the Addendum and Joinder Agreement substantially in
the form of Exhibit F.

 

“Lead Arrangers” means BMO Capital Markets and Credit Suisse Securities (USA)
LLC, collectively in their capacities as lead arrangers and joint bookrunners
hereunder.

 

“LC Commitment” at any time means the least of (a) Fifty Million Dollars
($50,000,000), (b) the Aggregate Maximum Credit Amounts at such time and (c) the
then effective Borrowing Base.

 

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

 

“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.

 

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

 

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

 

“Letter of Credit Agreements” means all letter of credit applications and other
agreements (including any amendments, modifications or supplements thereto)
submitted by the Borrower, or entered into by the Borrower, with the Issuing
Bank relating to any Letter of Credit issued by the Issuing Bank.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Reuters Screen LIBOR01 Page (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

 

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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; provided that if such rate shall be
less than zero, such rate shall be deemed to be zero for purposes of this
Agreement.  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, in
each case, 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; provided
that if such rate shall be less than zero, such rate shall be deemed to be zero
for purposes of this Agreement.

 

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) royalties, production payments and the like payable
out of Oil and Gas Properties.  The term “Lien” shall include easements,
restrictions, servitudes, permits, conditions, covenants, encroachments,
exceptions or reservations.  For the purposes of this Agreement, the Borrower
and its Subsidiaries shall be deemed to be the owner of any Property which it
has acquired or holds subject to a conditional sale agreement, or leases under a
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person in a transaction intended to
create a financing.

 

“Liquidate” means, with respect to any Swap Agreement, (a) the sale, assignment,
novation, unwind or termination of all or any part of such Swap Agreement or (b)
the creation of an offsetting position against all or any part of such Swap
Agreement; provided that, a Swap Agreement shall not be considered “Liquidated”
for the purposes of this Agreement if, upon the occurrence of any of the events
described in clauses (a) and (b), such Swap Agreement is replaced simultaneously
with a new Swap Agreement containing substantially the same terms and provisions
as the prior Swap Agreement.  The term “Liquidated” has a correlative meaning
thereto.

 

“Liquidity” means the sum of (a) the Borrower’s unrestricted cash and cash
equivalents and (b) the total unused availability under the Borrowing Base.

 

“Loan Documents” means this Agreement, the Notes, the Letter of Credit
Agreements, the Letters of Credit and the Security Instruments.

 

“Loan Parties” means the Borrower and each Subsidiary that is a party to any
Loan Document.

 

“Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement.

 

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“Majority Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having more than fifty percent (50%) of the Aggregate
Maximum Credit Amounts; and at any time while any Loans or LC Exposure is
outstanding, Lenders holding more than fifty percent (50%) of the outstanding
aggregate principal amount of the Loans or participation interests in Letters of
Credit (without regard to any sale by a Lender of a participation in any Loan
under Section 12.04(c)).  Notwithstanding the foregoing, in the event there are
three or fewer Lenders, Majority Lenders means all of the Lenders.  The
Aggregate Maximum Credit Amounts or the Loans and LC Exposure, as applicable, of
any Defaulting Lender shall be disregarded in determining Majority Lenders at
any time.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, Property or condition (financial or otherwise) of the Borrower and
the Restricted Subsidiaries taken as a whole, (b) the ability of any Loan Party
to perform any of its obligations under any Loan Document, (c) the validity or
enforceability of any Loan Document or (d) the rights and remedies of or
benefits available to the Administrative Agent, the Issuing Bank or any Lender
under any Loan Document.

 

“Material Contract” means the Amended and Restated Gas Gathering Services
Agreement, effective as of March 21, 2012 among Eureka Hunter, Triad Hunter LLC,
a Delaware limited liability company, and solely with respect to Sections 2.6
and 2.7 therein, the Borrower (as amended, modified, supplemented or restated
from time to time).

 

“Material Debt” means Debt (other than the Loans and Letters of Credit), or
obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower and its Restricted Subsidiaries in an aggregate principal amount
exceeding $10,000,000.  For purposes of determining Material Debt, the
“principal amount” of the obligations of 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 Borrower or
such Restricted Subsidiary would be required to pay if such Swap Agreement were
terminated at such time.

 

“Maturity Date” means October 22, 2018.

 

“Maximum Credit Amount” means, as to each Lender, the amount set forth opposite
such Lender’s name on Annex I under the caption “Maximum Credit Amounts,” as the
same may be (a) modified from time to time pursuant to Sections 2.06 or 10.02 or
(b) modified from time to time pursuant to any assignment permitted by Section
12.04(b).

 

“Minimum Collateral Amount” means Oil and Gas Properties to which are
attributable, 90% of the Present Value of the Loan Parties’ Proved Reserves as
reflected in the Reserve Report most recently delivered pursuant to Section
8.12(a).

 

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

 

“Mortgaged Property” means any Property owned by the Borrower or any Restricted
Subsidiary that is subject to the Liens existing and to exist under the terms of
the Security Instruments.

 

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“Mortgages” means all mortgages and deeds of trust executed in connection
herewith.

 

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

 

“New Borrowing Base Notice” has the meaning assigned such term in Section
2.07(d).

 

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender as such time.

 

“Notes” means the promissory notes of the Borrower described in Section 2.02(d)
and being substantially in the form of Exhibit A, together with all amendments,
modifications, replacements, extensions and rearrangements thereof.

 

“Obligations” means, without duplication, (a) all Debt evidenced hereunder,
(b) the obligation of the Loan Parties for the payment of the fees payable
hereunder or under the other Loan Documents, (c) all obligations and liabilities
of the Loan Parties to any Person relating to Swap Agreements between any Loan
Party and such Person initially entered into while such Person was a Lender
under the Prior Agreement or this Agreement or an Affiliate of a Lender under
the Prior Agreement or this Agreement, (d) all obligations and other liabilities
of the Loan Parties to any Person relating to Cash Management Agreements between
any Loan Party and such Person while such Person is a Lender under this
Agreement or an Affiliate of a Lender under this Agreement and (e) all other
obligations and liabilities (monetary or otherwise, whether absolute or
contingent, matured or unmatured) of the Loan Parties to the Administrative
Agent, the Issuer and the Lenders, including reimbursement obligations with
respect to LC Disbursements, in each case now existing or hereafter incurred
under, arising out of or in connection with any Loan Document, and to the extent
that any of the foregoing includes or refers to the payment of amounts deemed or
constituting interest, only so much thereof as shall have accrued, been earned
and which remains unpaid at each relevant time of determination.

 

“Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) Properties now or
hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of Hydrocarbon Interests; (d) all operating
agreements, contracts and other agreements, including production sharing
contracts and agreements, which relate to any of Hydrocarbon Interests or the
production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under
and which may be produced and saved or attributable to the Hydrocarbon
Interests, including all oil in tanks, and all rents, issues, profits, proceeds,
products, revenues and other incomes from or attributable to Hydrocarbon
Interests; (f) all tenements, hereditaments, appurtenances and Properties in any
manner appertaining, belonging, affixed or incidental to Hydrocarbon Interests
and (g) all Properties, rights, titles, interests and estates described or
referred to above, including any and all Property, real or personal, now owned
or 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

 

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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.

 

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

 

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 5.04(b)).

 

“Participant” has the meaning set forth in Section 12.04(c)(i).

 

“Participant Register” has the meaning set forth in Section 12.04(c)(iii).

 

“Patriot Act” has the meaning set forth in Section 12.15.

 

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

 

“PDP Reserves” means those Oil and Gas Properties designated as “proved
developed and producing” (in accordance with SEC definitions and regulations) in
the Reserve Report most recently delivered to the Administrative Agent pursuant
to Section 8.12(a).

 

“PDP Reserves Coverage Ratio” means, as of any date of determination, (a) the
ratio of the Present Value of the Loan Parties’ PDP Reserves set forth in the
most recently delivered Reserve Report (as adjusted to give pro forma effect to
all dispositions and acquisitions completed since the date of such Reserve
Report) to (b) the Loan Parties’ aggregate Secured Debt as of the last day of
the immediately preceding fiscal quarter.

 

“Permitted Prior Liens” means Liens described in Section 9.03(i) and of the type
described in clauses (a) to (d) and (f) of the definition “Excepted Liens”.

 

“Permitted Refinancing Debt” means any unsecured Debt of the Borrower issued in
exchange for, or the net proceeds of which are used to renew, refund, refinance,
replace or

 

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discharge, the Second Lien Term Loans; provided that (a) the aggregate principal
amount (or accreted value, if applicable) of such Permitted Refinancing Debt
does not exceed the principal amount of the Second Lien Term Loans and (b) the
maturity date of such Permitted Refinancing Debt is not earlier than one year
after the Maturity Date.

 

“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 Borrower 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.

 

“Present Value” means, as of any date of determination for the Loan Parties, the
discounted net present value, on a pre-income tax basis, of projected future
cash flows from the production of the Loan Parties’ Proved Reserves, as set
forth in the most recent Reserve Report delivered pursuant hereto, calculated in
accordance with the SEC guidelines but using the five-year strip price for crude
oil (WTI Cushing), for natural gas liquids (Mont Belvieu) and natural gas (Henry
Hub), with such price held flat for each subsequent year, quoted on the New York
Mercantile Exchange (or its successor) on such date of determination and
adjusted by appropriate management adjustments for additions to reserves and
depletion or sale of reserves since the date of such Reserve Report, adjusted
for any basis differential as of the date of determination, as of the date of
estimation without future escalation, and discounted using an annual discount
rate of 10%.  Present Value shall be adjusted to give effect to the Swap
Agreements permitted by this Agreement as in effect on the date of such
determination.

 

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by BOM as its prime rate in effect at its principal office in 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.  Such rate is set
by the Administrative Agent as a general reference rate of interest, taking into
account such factors as the Administrative Agent may deem appropriate; it being
understood that many of the Administrative Agent’s commercial or other loans are
priced in relation to such rate, that it is not necessarily the lowest or best
rate actually charged to any customer and that the Administrative Agent may make
various commercial or other loans at rates of interest having no relationship to
such rate.

 

“Prior Agreement” has the meaning assigned to such term in the Recitals hereto.

 

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

 

“Proposed Borrowing Base” has the meaning assigned to such term in Section
2.07(c)(i).

 

“Proposed Borrowing Base Notice” has the meaning assigned to such term in
Section 2.07(c)(ii).

 

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“Proved Reserves” means those Oil and Gas Properties designated as proved (in
accordance with SEC rules and regulations) in the Reserve Report most recently
delivered to Administrative Agent pursuant to this Agreement.

 

“Proved Reserves Coverage Ratio” means, as of any date of determination, (a) the
ratio of the Present Value of the Loan Parties’ Proved Reserves as set forth in
the most recently delivered Reserve Report (as adjusted to give pro forma effect
to all dispositions and acquisitions completed since the date of such Reserve
Report) to (b) the Loan Parties’ aggregate Secured Debt as of the last day of
the immediately preceding fiscal quarter.

 

“Ratification Agreement” means that certain document executed of even date
herewith by the Loan Parties thereto that ratifies the Security Agreement.

 

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

 

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

 

“Redetermination Date” means, with respect to any Scheduled Redetermination or
any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.07(d).

 

“Register” has the meaning assigned to such term in Section 12.04(b)(iv).

 

“Regulation D” means Regulation D of the Board, as the same may be amended,
supplemented or replaced from time to time.

 

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

 

“Remedial Work” has the meaning assigned to such term in Section 8.10(a).

 

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

 

“Responsible Officer” means, as to any Person, the Chief Executive Officer, the
Chief Operating Officer, the President, any Financial Officer or any Vice
President of such Person.  Unless otherwise specified, all references to a
Responsible Officer herein means a Responsible Officer of the Borrower.

 

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“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any Equity Interests in the
Borrower or any Restricted Subsidiary, or any payment (whether in cash,
securities or other Property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such Equity Interests in the Borrower or any Restricted
Subsidiary or any option, warrant or other right to acquire any such Equity
Interests in the Borrower or any Restricted Subsidiary.

 

“Restricted Subsidiary” means any Subsidiary that is not an Unrestricted
Subsidiary.

 

“Revolver Availability” as of any date means the total unused availability under
the Borrowing Base on such date; provided that, to the extent any Letters of
Credit are outstanding on such date, for the purposes of determining Revolver
Availability only, the Borrower shall be permitted to offset the aggregate
undrawn amount of such Letters of Credit by the amount of any unencumbered
balance sheet cash of the Borrower and the Restricted Subsidiaries as of such
date.

 

“Scheduled Redetermination” has the meaning assigned such term in Section
2.07(b)(i).

 

“Scheduled Redetermination Date” means the date on which a Borrowing Base that
has been redetermined pursuant to a Scheduled Redetermination becomes effective
as provided in Section 2.07(d).

 

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

 

“Second Lien Agent” means the “Administrative Agent” under and as defined in the
Second Lien Term Loan Agreement.

 

“Second Lien Term Loans” means the Debt evidenced by the Second Lien Term Loan
Documents.

 

“Second Lien Term Loan Agreement” means that certain Second Lien Credit
Agreement dated as of the date hereof, among the Borrower, the lenders party
thereto and the Second Lien Agent.

 

“Second Lien Term Loan Documents” means the “Loan Documents”, as such term is
defined in the Second Lien Term Loan Agreement.

 

“Second Lien Termination Date” means the date on which no Second Lien Term Loans
remain outstanding.

 

“Secured Debt” means all Debt that is secured by a Lien on any Property of the
Borrower or any Restricted Subsidiary; provided that the term “Secured Debt”
shall not include obligations in respect of Swap Agreements.

 

“Security Agreement” means that certain Amended and Restated Security and Pledge
Agreement dated December 13, 2013, executed in connection with the Prior
Agreement by the

 

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Loan Parties and the Administrative Agent, as amended, modified, supplemented or
restated from time to time.

 

“Security Instruments” means the mortgages, deeds of trust and other agreements,
instruments or certificates, and any and all other agreements, instruments,
certificates or certificates now or hereafter executed and delivered by the
Borrower or any other Person (other than participation or similar agreements
between any Lender and any other lender or creditor with respect to any
Obligations pursuant to this Agreement) in connection with, or as security for
the payment or performance of the Obligations, the Notes, this Agreement, as
such agreements may be amended, modified, supplemented or restated from time to
time, including, without limitation, the Security Agreement, the Mortgages, the
Guaranty, the Ratification Agreement, the Deposit Account Control Agreements (as
defined in the Security Agreement) and each Joinder Agreement.

 

“Senior Notes” means the Borrower’s 9.750% senior notes due 2020 and governed by
that certain indenture, dated May 16, 2012.

 

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.

 

“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 for
Eurocurrency 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.

 

“Subject Borrowing Base Period” means any period prior to the Second Lien
Termination Date during which the maximum aggregate Credit Exposures permitted
under the Second Lien Term Loan Agreement are determined pursuant to Section
6.02(b)(ii) thereof.

 

“Subsidiary” means (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or Controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner.  Unless otherwise indicated herein, each reference to the term
“Subsidiary” means a Subsidiary of the Borrower.

 

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“Supermajority Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least sixty-six and two-thirds percent (66 2/3%)
of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC
Exposure is outstanding, Lenders holding at least sixty-six and two-thirds
percent (66 2/3%) of the outstanding aggregate principal amount of the Loans or
participation interests in Letters of Credit (without regard to any sale by a
Lender of a participation in any Loan under Section 12.04(c)).  Notwithstanding
the foregoing, in the event there are three or fewer Lenders, Supermajority
Lenders means all of the Lenders.  The Aggregate Maximum Credit Amounts or the
Loans and LC Exposure, as applicable, of any Defaulting Lender shall be
disregarded in determining Supermajority Lenders at any time.

 

“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement, whether exchange
traded, “over-the-counter” or otherwise, involving, or settled by reference to,
one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any combination
of these transactions; provided that no stock incentive, stock option, phantom
stock or similar plan or program providing for stock-based awards or payments to
current or former directors, officers, employees or consultants of the Borrower
or the Subsidiaries, shall be considered to be a Swap Agreement.

 

“Synthetic Leases” means, in respect of any Person, all leases which 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
Obligations 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, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

 

“Termination Date” means the earlier of the Maturity Date and the date of
termination of the Commitments.

 

“Transactions” means the execution, delivery and performance by the Borrower of
this Agreement, the execution, delivery and performance of the Loan Parties of
each other Loan Document to which it is a party, the borrowing of Loans, the use
of the proceeds thereof and the issuance of Letters of Credit hereunder, and the
grant of Liens by the Loan Parties on Mortgaged Properties and other Properties
pursuant to the Security Instruments.

 

“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 Alternate Base Rate or the Adjusted LIBO Rate.

 

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“UCC” means the Uniform Commercial Code in effect from time to time in the State
of New York, or, where applicable as to specific Property, any other relevant
state.

 

“Unrestricted Subsidiary” means (i) any Subsidiary that at the time of
determination shall have been designated as an Unrestricted Subsidiary by the
Borrower in the manner provided below (and shall not have been subsequently
designated as a Restricted Subsidiary), (ii) any Subsidiary of an Unrestricted
Subsidiary and (iii) the Persons listed on Schedule 1.01B (except to the extent
any such Person has been subsequently designated as a Restricted Subsidiary). 
The Borrower may designate any Restricted Subsidiary of the Borrower to be an
Unrestricted Subsidiary if that designation would not cause a Default.

 

If a Restricted Subsidiary of the Borrower is designated as an Unrestricted
Subsidiary, the aggregate fair market value of all outstanding Investments owned
by the Borrower and its Restricted Subsidiaries in the Subsidiary designated as
an Unrestricted Subsidiary will be deemed to be an Investment and the
designation will only be permitted if the Investment would be permitted under
Section 9.05 at that time and if the Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.

 

If, at any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it will thereafter cease to be an
Unrestricted Subsidiary for purposes of this Agreement and any Debt of such
Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the
Borrower as of such date and, if such Debt is not permitted to be incurred as of
such date under Section 9.02, the Borrower will be in default of such covenant.

 

The Borrower may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary of the Borrower; provided that such designation will be
deemed to be an incurrence of Debt by a Restricted Subsidiary of the Borrower of
any outstanding Debt of such Unrestricted Subsidiary, and such designation will
only be permitted if (1) such Debt is permitted under Section 9.02 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the applicable reference period; and (2) no Default or Event of
Default would be in existence following such designation.

 

Any designation by the Borrower pursuant to this definition shall be made in a
certificate of Responsible Officer delivered to the Administrative Agent and
containing a certification that such designation is in compliance with the terms
of this definition.

 

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

 

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in
Section 5.03(g).

 

“Wholly-Owned Subsidiary” means any Subsidiary of which all of the outstanding
Equity Interests (other than any directors’ qualifying shares mandated by
applicable law), on a fully-diluted basis, are owned by the Borrower or one or
more of the Wholly-Owned Subsidiaries or by the Borrower and one or more of the
Wholly-Owned Subsidiaries.

 

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“Withholding Agent” means any Loan Party and the Administrative Agent.

 

Section 1.03                            Types of Loans and Borrowings.  For
purposes of this Agreement, Loans and Borrowings, respectively, may be
classified and referred to by Type (e.g., a “Eurodollar Loan” or a “Eurodollar
Borrowing”).

 

Section 1.04                            Terms Generally; Rules of Construction. 
The definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms.  The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”.  The word “will” shall be construed to have the
same meaning and effect as the word “shall”.  Unless the context requires
otherwise (a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (b) any reference herein to any law shall be
construed as referring to such law as amended, modified, codified or reenacted,
in whole or in part, and in effect from time to time, (c) any reference herein
to any Person shall be construed to include such Person’s successors and assigns
(subject to the restrictions contained herein), (d) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (e)
with respect to the determination of any time period, the word “from” means
“from and including” and the word “to” means “to and including” and (f) any
reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Annexes, Exhibits and
Schedules to, this Agreement.  No provision of this Agreement or any other Loan
Document shall be interpreted or construed against any Person solely because
such Person or its legal representative drafted such provision.

 

Section 1.05                            Accounting Terms and Determinations;
GAAP.  Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished to the Administrative Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis
consistent with the Financial Statements except for changes in which Borrower’s
independent certified public accountants concur and which are disclosed to
Administrative Agent on the next date on which financial statements are required
to be delivered to the Lenders pursuant to Section 8.01(a); provided that,
unless the Borrower and the Majority Lenders shall otherwise agree in writing,
no such change shall modify or affect the manner in which compliance with the
covenants contained herein is computed such that all such computations shall be
conducted utilizing financial information presented consistently with prior
periods.

 

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
during the Availability Period in an aggregate

 

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principal amount that will not result in (a) such Lender’s Credit Exposure
exceeding such Lender’s Commitment or (b) a Borrowing Base Deficiency.  Within
the foregoing limits and subject to the terms and conditions set forth herein,
the Borrower may borrow, repay and reborrow the Loans.

 

Section 2.02                            Loans and Borrowings.

 

(a)                                 Borrowings; Several Obligations.  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 are several
and no Lender shall be responsible for any other Lender’s failure to make Loans
as required.

 

(b)                                 Types of Loans.  Subject to Section 3.03,
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
make any 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)                                  Minimum Amounts; Limitation on Number of
Borrowings.  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 $100,000 and not less than $500,000.  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 2.08(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 10 Eurodollar
Borrowings outstanding.  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.

 

(d)                                 Notes.  Any Lender may request that Loans
made by it be evidenced by a single 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 in substantially the form of Exhibit A,
dated, in the case of (i) any Lender party hereto as of the Effective Date, as
of the Effective Date, (ii) any Lender that becomes a party hereto pursuant to
an Assignment and Assumption, as of the effective date of the Assignment and
Assumption, payable to the order of such Lender in a principal amount equal to
its Maximum Credit Amount as in effect on such date, and otherwise duly
completed.  If any Lender’s Maximum Credit Amount increases or decreases for any
reason (whether pursuant to Section 2.06, Section 12.04(b) or otherwise), the
Borrower shall deliver or cause to be delivered on the effective date of such
increase or decrease, a new Note payable to the order of any Lender who
requested a Note hereunder in a principal amount equal to its Maximum Credit
Amount after giving effect to such increase or decrease, and otherwise duly
completed, and such Lender agrees to promptly thereafter return the previously

 

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issued Note held by such Lender marked canceled or otherwise similarly defaced. 
The date, amount, Type, interest rate and, if applicable, Interest Period of
each Loan made by each Lender that receives a Note, and all payments made on
account of the principal thereof, shall be recorded by such Lender on its books
for its Note, and, prior to any transfer, may be endorsed by such Lender on a
schedule attached to such Note or any continuation thereof or on any separate
record maintained by such Lender.  Failure to make any such notation or to
attach a schedule shall not affect any Lender’s or the Borrower’s rights or
obligations in respect of such Loans or affect the validity of such transfer by
any Lender of its Note.

 

Section 2.03                            Requests for Borrowings.  To request a
Borrowing, the Borrower shall notify the Administrative Agent of such request by
telephone or by written Borrowing Request in substantially the form of Exhibit B
and signed by the Borrower (a “written Borrowing Request”):  (a) in the case of
a Eurodollar Borrowing, not later than 12:00 noon, New York, New York time,
three Business Days before the date of the proposed Borrowing or (b) in the case
of an ABR Borrowing, not later than 11:00 a.m., New York, New York time, on the
Business Day of the proposed Borrowing; provided that no such notice shall be
required for any deemed request of an ABR Borrowing to finance the reimbursement
of an LC Disbursement as provided in Section 2.08(e).  Each telephonic and
written Borrowing Request shall be irrevocable and each telephonic Borrowing
Request shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request.  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;

 

(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”;

 

(v)                                 the amount of the then effective Borrowing
Base, the current total Credit Exposures (without regard to the requested
Borrowing) and the pro forma total Credit Exposures (giving effect to the
requested Borrowing); and

 

(vi)                              the location and number of the Borrower’s
account to which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.

 

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.  Each Borrowing
Request shall constitute a representation that the amount of the requested
Borrowing shall not result in a Borrowing Base Deficiency.  Promptly following
receipt of a Borrowing Request in accordance with this Section 2.03, the
Administrative Agent

 

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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                            Interest Elections.

 

(a)                                 Conversion and Continuance.  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 2.04.  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)                                 Interest Election Requests.  To make an
election pursuant to this Section 2.04, the Borrower shall notify the
Administrative Agent of such election by telephone or by a written Interest
Election Request in substantially the form of Exhibit C and signed by the
Borrower (a “written Interest Election Request”) 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 telephonic and written Interest Election Request
shall be irrevocable and each telephonic Interest Election Request shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent.

 

(c)                                  Information in Interest Election Requests. 
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 Section 2.04(c)(iii) and (iv) 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;

 

(iii)                               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.

 

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(d)                                 Notice to Lenders by the Administrative
Agent.  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)                                  Effect of Failure to Deliver Timely
Interest Election Request and Events of Default on Interest Election.  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:  (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing (and 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) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.

 

Section 2.05                            Funding of Borrowings.

 

(a)                                 Funding by Lenders.  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 2:00 p.m., New York, New York 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 in New York, New York and 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 2.08(e) shall be remitted by the
Administrative Agent to the Issuing Bank that made such LC Disbursement.

 

(b)                                 Presumption of Funding by the Lenders. 
Unless the Administrative Agent shall have received notice from a Lender prior
to the time such Lender is required to fund its share of a Borrowing that such
Lender will not make available to the Administrative Agent such Lender’s share
of such Borrowing, the Administrative Agent may assume that such Lender has made
such share available on such date in accordance with paragraph (a) above and
may, in reliance upon such assumption, make available to the Borrower a
corresponding amount.  In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of 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.

 

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Section 2.06                            Changes in the Aggregate Maximum Credit
Amounts.

 

(a)                                 Scheduled Termination of Commitments. 
Unless previously terminated, the Commitments shall terminate on the Maturity
Date.  If at any time the Aggregate Maximum Credit Amounts or the Borrowing Base
is terminated or reduced to zero, then the Commitments shall terminate on the
effective date of such termination or reduction.

 

(b)                           Optional Termination and Reduction of Aggregate
Maximum Credit Amounts.

 

(i)                                     The Borrower may at any time terminate,
or from time to time reduce, the Aggregate Maximum Credit Amounts; provided that
(A) each reduction of the Aggregate Maximum Credit Amounts shall be in an amount
that is an integral multiple of $1,000,000 and not less than $5,000,000 and (B)
the Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts
if, after giving effect to any concurrent prepayment of the Loans in accordance
with Section 3.04(c), a Borrowing Base Deficiency would exist.

 

(ii)                                  The Borrower shall notify the
Administrative Agent of any election to terminate or reduce the Aggregate
Maximum Credit Amounts under Section 2.06(b)(i) 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
2.06(b)(ii) shall be irrevocable.  Any termination or reduction of the Aggregate
Maximum Credit Amounts shall be permanent and may not be reinstated.  Each
reduction of the Aggregate Maximum Credit Amounts shall be made ratably among
the Lenders in accordance with each Lender’s Applicable Percentage.

 

Section 2.07                            Borrowing Base.

 

(a)                                 Borrowing Base.  On the Effective Date, the
Borrowing Base shall be equal to $50,000,000.  The Borrowing Base shall be
automatically reduced as follows:

 

(i)                                     upon the incurrence after the Effective
Date of any additional Debt under the Second Lien Term Loan Agreement, by $0.25
for each $1.00 of the aggregate principal amount of such additional Debt; and

 

(ii)                                  during any Subject Borrowing Base Period,
in the event the calculation of Adjusted Consolidated Net Tangible Assets, as
shown on the certificate delivered by the Borrower pursuant to Section 8.01(i),
results in the sum of the Borrowing Base plus the aggregate principal amount of
Secured Debt outstanding on the date of such certificate (other than the
aggregate Credit Exposure) exceeding the greater of (A) the sum of $50,000,000
and the aggregate principal amount of Second Lien Term Loans repaid or prepaid
as of such date of determination and (B) an amount equal to 25% of such Adjusted
Consolidated Net Tangible Assets, by the amount of such excess.

 

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In addition, the Borrowing Base may be subject to further adjustments from time
to time pursuant to Section 8.13(c) or Section 9.11.

 

(b)                           Scheduled and Interim Redeterminations.

 

(i)                                     The Borrowing Base shall be redetermined
semi-annually on or around November 1st and May 1st in accordance with this
Section 2.07 (a “Scheduled Redetermination”) with the first Scheduled
Redetermination to take place May 1, 2015, and, subject to Section 2.07(d), such
redetermined Borrowing Base shall become effective and applicable to the
Borrower, the Administrative Agent, the Issuing Bank and the Lenders on or
around November 1st and May 1st of each year.

 

(ii)                                  The Administrative Agent may or shall, at
the direction of the Majority Lenders, by notifying the Borrower thereof, one
time during any six-month period, elect to cause the Borrowing Base to be
redetermined between Scheduled Redeterminations in accordance with this Section
2.07.

 

(iii)                               The Borrower may elect to redetermine the
Borrowing Base, by notifying the Administrative Agent thereof, one time during
any six-month period, that it elects to cause the Borrowing Base to be
redetermined between Scheduled Redeterminations in accordance with this Section
2.07.

 

(c)                            Scheduled and Interim Redetermination Procedure.

 

(i)                                     Each Scheduled Redetermination and each
Interim Redetermination shall be effectuated as follows:  upon receipt by the
Administrative Agent of (A) the Reserve Report and the certificate required to
be delivered by the Borrower, in the case of a Scheduled Redetermination,
pursuant to Section 8.12(a) and (c), and, in the case of an Interim
Redetermination, pursuant to Section 8.12(b) and (c), and (B) such other
reports, data and supplemental information, including, without limitation, the
information provided pursuant to Section 8.12(d), as may, from time to time, be
reasonably requested by the Majority Lenders (the Reserve Report, such
certificate and such other reports, data and supplemental information being the
“Engineering Reports”), the Administrative Agent shall evaluate the information
contained in the Engineering Reports and shall, in good faith, propose a new
Borrowing Base (such amount being the “Proposed Borrowing Base”) based upon such
information and such other information (including, without limitation, the
status of title information with respect to the Oil and Gas Properties as
described in the Engineering Reports and the existence of any other Debt) as the
Administrative Agent deems appropriate in its sole discretion and consistent
with its normal oil and gas lending criteria as it exists at the particular
time.  In no event shall the Proposed Borrowing Base exceed the Aggregate
Maximum Credit Amounts.

 

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

 

(A)                               in the case of a Scheduled Redetermination (1)
if the Administrative Agent shall have received the Engineering Reports and
other information required to be

 

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delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then on or before October 15th and April 15th of such year
following the date of delivery or (2) if the Administrative Agent shall not have
received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then
promptly after the Administrative Agent has received complete Engineering
Reports and other information from the Borrower and has had a reasonable
opportunity to determine the Proposed Borrowing Base in accordance with Section
2.07(c)(i), and in any event, within 15 days after the Administrative Agent has
received the required Engineering Reports; and

 

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

 

(iii)                               Any Proposed Borrowing Base that would
increase the Borrowing Base then in effect must be approved or deemed to have
been approved by all of the Lenders as provided in this Section 2.07(c)(iii) and
any Proposed Borrowing Base that would decrease or maintain the Borrowing Base
then in effect must be approved or be deemed to have been approved by the
Supermajority Lenders as provided in this Section 2.07(c)(iii).  Upon receipt of
the Proposed Borrowing Base Notice, each Lender shall have 15 days to agree with
the Proposed Borrowing Base or disagree with the Proposed Borrowing Base by
proposing an alternate Borrowing Base.  If, at the end of such 15 days, any
Lender has not communicated its approval or disapproval in writing to the
Administrative Agent, such silence shall be deemed to be an approval of the
Proposed Borrowing Base.  If, at the end of such 15-day period, all of the
Lenders, in the case of a Proposed Borrowing Base that would increase the
Borrowing Base then in effect, or the Supermajority Lenders, in the case of a
Proposed Borrowing Base that would decrease or maintain the Borrowing Base then
in effect, have approved or been deemed to have approved, as aforesaid, then the
Proposed Borrowing Base shall become the new Borrowing Base, effective on the
date specified in Section 2.07(d).  If, however, at the end of such 15-day
period, all of the Lenders or the Supermajority Lenders, as applicable, have not
approved or been deemed to have approved, as aforesaid, then the Administrative
Agent shall (A) notify the Borrower of the Proposed Borrowing Base and which
Lenders have not approved or been deemed to have approved the Proposed Borrowing
Base and (B) poll the Lenders to ascertain the highest Borrowing Base then
acceptable to a number of Lenders sufficient to constitute the Supermajority
Lenders for purposes of this Section 2.07 and, so long as such amount does not
increase the Borrowing Base then in effect, such amount shall become the new
Borrowing Base, effective on the date specified in Section 2.07(d).

 

(d)                                 Effectiveness of a Redetermined Borrowing
Base.  After a redetermined Borrowing Base is approved or is deemed to have been
approved by all of the Lenders or the Supermajority Lenders, as applicable,
pursuant to Section 2.07(c)(iii), the Administrative Agent shall notify the
Borrower and the Lenders of the amount of the redetermined Borrowing Base (the
“New Borrowing Base Notice”), and such amount (or amounts, as applicable) shall
become the new Borrowing Base, effective and applicable to the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders:

 

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(i)                                     in the case of a Scheduled
Redetermination, (A) if the Administrative Agent shall have received the
Engineering Reports required to be delivered by the Borrower pursuant to
Section 8.12(a) and (c) in a timely and complete manner, then on the November
1st or May 1st, as applicable, following such New Borrowing Base Notice, or (B)
if the Administrative Agent shall not have received the Engineering Reports
required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in
a timely and complete manner, then on the Business Day next succeeding delivery
of such New Borrowing Base Notice; and

 

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

 

Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 8.13(c) or Section 9.11,
whichever occurs first.  Notwithstanding the foregoing, no Scheduled
Redetermination or Interim Redetermination shall become effective until the New
Borrowing Base Notice related thereto is received by the Borrower.

 

(e)                                  Reductions of Borrowing Base Related to
Swap Agreements.  If any Swap Agreement to which the Borrower or any Subsidiary
is a party is Liquidated and which was used by the Lenders to establish the
Borrowing Base, and the total termination value payable by the Borrower in
respect of all such Liquidated Swap Agreements in any period between any two
Scheduled Redetermination Dates exceeds five percent (5%) of the then effective
Borrowing Base, then, contemporaneously therewith, the Borrowing Base then in
effect shall be reduced by an amount equal to the value, if any, assigned to the
Liquidated portion of all such Swap Agreements so terminated during such period,
as determined by the Supermajority Lenders.

 

Section 2.08                            Letters of Credit.

 

(a)                                 General.  Subject to the terms and
conditions set forth herein, the Borrower may request the Issuing Bank to issue
Letters of Credit in dollars for its own account or for the account of any of
its Restricted Subsidiaries, 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
Letter of Credit Agreement, 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 (not less than three (3)
Business Days in advance of the requested date of issuance, amendment, renewal
or extension) a notice: (i) requesting the issuance of a Letter of Credit or
identifying the outstanding Letter of Credit issued by the Issuing Bank to be
amended, renewed or extended; (ii) specifying the date of issuance, amendment,
renewal or extension (which shall be a Business Day); (iii) specifying the date
on which such Letter of Credit is to expire (which shall comply with Section
2.08(c)); (iv)

 

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specifying the amount of such Letter of Credit; (v) specifying 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; and (vi)
specifying the amount of the then effective Borrowing Base (without regard to
the requested Letter of Credit or the requested amendment, renewal or extension
of an outstanding Letter of Credit) and the pro forma total Credit Exposures
(giving effect to the requested Letter of Credit or the requested amendment,
renewal or extension of an outstanding Letter of Credit).  If requested by the
Issuing Bank, the Borrower 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 with respect to each notice provided by the Borrower above and any
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 (A) the LC Exposure shall not exceed
the LC Commitment and (B) no Borrowing Base Deficiency shall exist.

 

(c)                                  Expiration Date.  Each Letter of Credit
shall expire at or prior to the close of business on the earlier of (i) the date
one year after the date of the issuance of such Letter of Credit (or, in the
case of any renewal or extension thereof, one year after such renewal or
extension) and (ii) the date that is five Business Days prior to the Maturity
Date; provided, however, that any Letter of Credit with a one-year tenor may
provide for the renewal thereof for additional one-year periods (which shall in
no event extend beyond the date referred to in clause (ii) above).

 

(d)                                 Participations.  By the issuance of a Letter
of Credit (or an amendment to an existing Letter of Credit increasing the amount
thereof) and without any further action on the part of the Issuing Bank that
issues such Letter of Credit or the Lenders, the Issuing Bank that issues a
Letter of Credit hereunder 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 that issues a
Letter of Credit hereunder, 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 Section 2.08(e), 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 Section 2.08(d) 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 issued by the Issuing
Bank, 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, New York time, on the date that such LC Disbursement is
made, if the Borrower shall have received notice of such LC Disbursement prior
to 10:00 a.m., New York, New York time, on such date, or, if such notice has not
been received by the

 

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Borrower prior to such time on such date, then not later than 12:00 noon, New
York, New York 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, New York 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 if such LC Disbursement is not
less than $1,000,000, the Borrower shall, subject to the conditions to Borrowing
set forth herein, be deemed to have requested, and the Borrower does hereby
request under such circumstances, 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 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank that issued
such Letter of Credit 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 Section 2.08(e), the Administrative Agent shall distribute such
payment to the Issuing Bank that issued such Letter of Credit or, to the extent
that Lenders have made payments pursuant to this Section 2.08(e) 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 Section 2.08(e) 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 Section 2.08(e) 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, any Letter of Credit Agreement 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 issued by the Issuing Bank against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit or any Letter of Credit Agreement, 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 2.08(f), constitute a legal or
equitable discharge of, or provide a right of setoff against, the Borrower’s
obligations hereunder.  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

 

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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 direct damages (as opposed to 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 all
requisite care in each such determination.  In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank that issued such Letter
of Credit may, in its sole reasonable 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 issued by the Issuing
Bank.  The Issuing Bank shall promptly notify the Administrative Agent and the
Borrower by 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, until the Borrower shall have reimbursed the
Issuing Bank for such LC Disbursement (either with its own funds or a Borrowing
under Section 2.08(e)), 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.  Interest accrued pursuant to this Section
2.08(h) 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 Section
2.08(e) 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 or resign at any time by written agreement among
the Borrower, the Administrative Agent, such resigning or replaced Issuing Bank
and, in the case of a replacement, the successor Issuing Bank.  The
Administrative Agent shall notify the Lenders of any such resignation or
replacement of the Issuing Bank.  At the time any such resignation or
replacement shall become effective, the Borrower shall pay all unpaid fees
accrued for the account of the resigning or replaced Issuing Bank pursuant to
Section 3.05(b).  In the case of the replacement of the Issuing Bank, from and
after the effective date of such replacement, (i) the successor Issuing Bank
shall have all the rights and obligations of the replaced 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

 

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previous Issuing Banks, as the context shall require.  After the resignation or
replacement of the Issuing Bank hereunder, the resigning or replaced Issuing
Bank shall remain a party hereto and shall continue to have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit issued by it prior to such resignation or replacement, but shall not be
required to issue additional Letters of Credit.

 

(j)                                    Cash Collateralization.  If (i) any Event
of Default shall occur and be continuing and the Borrower receives notice from
the Administrative Agent or the Majority Lenders demanding the deposit of Cash
Collateral pursuant to this Section 2.08(j), or (ii) the Borrower is required to
pay to the Administrative Agent the excess attributable to any LC Exposure in
connection with any prepayment pursuant to Section 3.04(c), then 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, Cash Collateral in an
amount equal to, in the case of an Event of Default, the LC Exposure, and in the
case of a payment required by Section 3.04(c), the amount of such excess as
provided in Section 3.04(c), 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 or any Restricted
Subsidiary described in Section 10.01(h) or Section 10.01(i).  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 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.  The
Borrower’s obligation to deposit amounts pursuant to this Section 2.08(j) shall
be absolute and unconditional, without regard to whether any beneficiary of any
such Letter of Credit has attempted to draw down all or a portion of such amount
under the terms of a Letter of Credit, and, to the fullest extent permitted by
applicable law, shall not be subject to any defense or be affected by a right of
set-off, counterclaim or recoupment which the Borrower or any of its
Subsidiaries may now or hereafter have against any such beneficiary, the Issuing
Bank, the Administrative Agent, the Lenders or any other Person for any reason
whatsoever.  Such deposit shall be held as collateral securing the payment and
performance of the Borrower’s obligations under this Agreement and the other
Loan Documents in a “securities account” (within the meaning of Article 8 of the
UCC) over which the Administrative Agent shall have “control” (within the
meaning of the UCC).  Notwithstanding the foregoing, the Borrower may direct the
Administrative Agent and the “securities intermediary” (within the meaning of
the UCC) to invest amounts credited to the securities account, at the Borrower’s
risk and expense, in Investments described in Section 9.05(c) through (f). 
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, on a pro rata basis, 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, be
applied to satisfy other

 

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obligations of the Borrower under this Agreement or the other Loan Documents. 
If the Borrower is required to provide an amount of Cash Collateral hereunder as
a result of the occurrence of an Event of Default, and the Borrower is not
otherwise required to pay to the Administrative Agent the excess attributable to
an LC Exposure in connection with any prepayment pursuant to Section 3.04(c),
then 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.  The Existing
Letters of Credit shall be Letters of Credit hereunder for all purposes.

 

ARTICLE III
Payments of Principal and Interest; Prepayments; Fees

 

Section 3.01                            Repayment of Loans.  The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Loan on the Termination
Date.

 

Section 3.02                            Interest.

 

(a)                                 ABR Loans.  The Loans comprising each ABR
Borrowing shall bear interest at the Alternate Base Rate plus the Applicable
Margin, but in no event to exceed the Highest Lawful Rate.

 

(b)                                 Eurodollar Loans.  The Loans comprising each
Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Margin, but in
no event to exceed the Highest Lawful Rate.

 

(c)                                  Post-Default Rate.  Notwithstanding the
foregoing, if any principal of or interest on any Loan or any fee or other
amount payable by the Borrower hereunder or under any other Loan Document is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to two percent (2%) plus the rate applicable to ABR Loans as
provided in Section 3.02(a), but in no event to exceed the Highest Lawful Rate.

 

(d)                                 Interest Payment Dates.  Accrued interest on
each Loan shall be payable in arrears on each Interest Payment Date for such
Loan and on the Termination Date; provided that (i) interest accrued pursuant to
Section 3.02(c) shall be payable on demand, (ii) in the event of any repayment
or prepayment of any Loan (other than an optional prepayment of an ABR Loan
prior to the Termination Date), 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)                                  Interest Rate Computations.  All interest
hereunder shall be computed on the basis of a year of 360 days, unless such
computation would exceed the Highest Lawful Rate, in which

 

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case interest shall be computed on the basis of a year of 365 days (or 366 days
in a leap year), 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, and be binding
upon the parties hereto.

 

Section 3.03                            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 for such Interest Period; or

 

(b)                                 the Administrative Agent is advised by the
Majority Lenders that the Adjusted LIBO Rate or LIBO Rate, as applicable, for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining their Loans 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 3.04                            Prepayments.

 

(a)                                 Optional Prepayments.  The Borrower shall
have the right at any time and from time to time to prepay any Borrowing in
whole or in part, subject to prior notice in accordance with Section 3.04(b).

 

(b)                                 Notice and Terms of Optional Prepayment. 
The Borrower shall notify the Administrative Agent by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Borrowing, not later than 12:00 noon, New York, New York time, three
Business Days before the date of prepayment, or (ii) in the case of prepayment
of an ABR Borrowing, not later than 12:00 noon, New York, New York time, on the
Business Day of prepayment.  Each such notice shall be irrevocable and shall
specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid.  Promptly following receipt of any such notice
relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof.  Each partial prepayment of any Borrowing 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

 

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the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied
by accrued interest to the extent required by Section 3.02.

 

(c)                                  Mandatory Prepayments.

 

(i)                                     If, after giving effect to any
termination or reduction of the Aggregate Maximum Credit Amounts pursuant to
Section 2.06(b) or to any reduction of the Borrowing Base pursuant to Section
2.07(e), a Borrowing Base Deficiency exists, then the Borrower shall (A) prepay
the applicable Borrowings on the date of such termination or reduction in an
aggregate principal amount equal to such deficiency, and (B) if such Borrowing
Base Deficiency remains after prepaying all of the Borrowings as a result of an
LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount
equal to such deficiency to be held as Cash Collateral as provided in Section
2.08(j).

 

(ii)                                  Upon any redetermination of or adjustment
to the amount of the Borrowing Base in accordance with Section 2.07 (other than
Section 2.07(e)) or Section 8.13(c), if a Borrowing Base Deficiency exists after
giving effect to such redetermination or adjustment, then the Borrower shall (A)
prepay the Borrowings in an aggregate principal amount equal to such deficiency,
and (B) if such Borrowing Base Deficiency remains after prepaying all of the
Borrowings as a result of an LC Exposure, pay to the Administrative Agent on
behalf of the Lenders an amount equal to such deficiency to be held as Cash
Collateral as provided in Section 2.08(j).  The Borrower shall be obligated to
pay all of such prepayment and/or deposit of Cash Collateral amount within 45
days following its receipt of the New Borrowing Base Notice in accordance with
Section 2.07(d) or the date the adjustment occurs; provided that all payments
required to be made pursuant to this Section 3.04(c)(ii) must be made on or
prior to the Termination Date.

 

(iii)                               Upon any adjustments to the Borrowing Base
pursuant to Section 9.11, if a Borrowing Base Deficiency exists after giving
effect to such adjustment, then the Borrower shall (A) prepay the Borrowings in
an aggregate principal amount equal to such deficiency, and (B) if a Borrowing
Base Deficiency remains after prepaying all of the Borrowings as a result of an
LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount
equal to such deficiency to be held as cash collateral as provided in Section
2.08(j).  The Borrower shall be obligated to make such prepayment and/or deposit
of Cash Collateral on the date it receives cash proceeds as a result of such
disposition or such incurrence of Debt; provided that all payments required to
be made pursuant to this Section 3.04(c)(iii) must be made on or prior to the
Termination Date.

 

(iv)                              Each prepayment of Borrowings pursuant to this
Section 3.04(c) shall be applied to outstanding Borrowings as directed by the
Borrower or, if no such direction is given, first, ratably to any ABR Borrowings
then outstanding, and, second, to any Eurodollar Borrowings then outstanding,
and if more than one Eurodollar Borrowing is then outstanding, to each such
Eurodollar Borrowing in order of priority beginning with the Eurodollar
Borrowing with the least number of days remaining in the Interest Period
applicable thereto and ending with the Eurodollar Borrowing with the most number
of days remaining in the Interest Period applicable thereto.

 

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(v)                                 Each prepayment of Borrowings pursuant to
this Section 3.04(c) shall be applied ratably to the Loans included in the
prepaid Borrowings.  Prepayments pursuant to this Section 3.04(c) shall be
accompanied by accrued interest to the extent required by Section 3.02.

 

(d)                                 No Premium or Penalty.  Prepayments
permitted or required under this Section 3.04 shall be without premium or
penalty, except as required under Section 5.02.

 

Section 3.05                            Fees.

 

(a)                                 Commitment Fees.  The Borrower agrees to pay
to the Administrative Agent for the account of each Lender a commitment fee,
which shall accrue at the applicable Commitment Fee Rate on the average daily
amount of the unused Commitment of such Lender during the period from and
including the Effective Date to but excluding the Termination Date.  Accrued
commitment fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the Termination Date, commencing on
the first such date to occur after the Effective Date.  All commitment fees
shall be computed on the basis of a year of 360 days, unless such computation
would exceed the Highest Lawful Rate, in which case such fees shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

 

(b)                                 Letter of Credit Fees.  The Borrower agrees
to pay (i) to the Administrative Agent for the account of each Lender a
participation fee with respect to its participations in Letters of Credit, which
shall accrue at the same Applicable Margin 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, (ii) to the
Issuing Bank, for its own account, a fronting fee, of 0.375% face amount of each
Letter of Credit upon its issuance, provided that in no event shall such fee be
less than $500, and (iii) to the Issuing Bank, for its own account, its standard
and customary fees with respect to the issuance, amendment, renewal or extension
of any Letter of Credit issued by the Issuing Bank 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 and fronting fees with respect
to any Letter of Credit shall be payable at the time of issuance of such Letter
of Credit; provided that all such fees shall be payable on the Termination Date
and any such fees accruing after the Termination Date shall be payable on
demand.  Any other fees payable to the Issuing Bank pursuant to this
Section 3.05(b) shall be payable within 10 days after demand.  All participation
fees shall be computed on the basis of a year of 360 days, unless such
computation would exceed the Highest Lawful Rate, in which case interest shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).

 

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

 

(d)                                 Borrowing Base Fees.  The Borrower agrees to
pay to the Administrative Agent, for the account of each Lender then party to
this Agreement, ratably in accordance with its Applicable Percentage, a
Borrowing Base increase fee equal to an amount to be agreed upon by the
Administrative Agent and the Borrower at the time of any increase of the
Borrowing Base on the amount of such increase over the highest Borrowing Base
previously in effect, payable on the effective date of any such increase to the
Borrowing Base.

 

ARTICLE IV
Payments; Pro Rata Treatment; Sharing of Set-offs.

 

Section 4.01                            Payments Generally; Pro Rata Treatment;
Sharing of Set-offs.

 

(a)                                 Payments by the Borrower.  The Borrower
shall make each payment required to be made by it hereunder (whether of
principal, interest, fees or reimbursement of LC Disbursements, or of amounts
payable under Section 5.01, Section 5.02, Section 5.03 or otherwise) prior to
12:00 noon, New York, New York time, on the date when due, in dollars that
constitute immediately available funds, without defense, deduction, recoupment,
set-off or counterclaim.  Fees, once paid, shall not be refundable under any
circumstances absent manifest error (e.g., as a result of a clerical mistake). 
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 located at 3 Times
Square, 27th Floor, New York, New York 10036, except payments to be made
directly to the Issuing Bank as expressly provided herein and except that
payments pursuant to Section 5.01, Section 5.02, Section 5.03 and Section 12.03
shall be made directly to the Persons entitled thereto.  The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. 
If any payment hereunder shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable for
the period of such extension.  All payments hereunder shall be made in dollars.

 

(b)                                 Application of Insufficient Payments.  If at
any time insufficient funds are received by and available to the Administrative
Agent to pay fully all amounts of principal, 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.

 

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(c)                                  Sharing of Payments by Lenders.  If any
Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on 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 Section 4.01(c) 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 Section 4.01(c) 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.

 

Section 4.02                            Presumption of Payment by the Borrower. 
Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders or the Issuing Bank 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 the 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.

 

Section 4.03                            Certain Deductions by the Administrative
Agent.  If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.05(a), 2.08(d) or (e), 4.02 or 12.03(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 as cash collateral
for, and application to, any future funding obligations of such Lender under
such

 

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Sections; in the case of each of (i) and (ii) above, in any order as determined
by the Administrative Agent in its discretion.

 

Section 4.04                            Disposition of Proceeds.  The Security
Instruments contain an assignment by the Borrower to and in favor of the
Administrative Agent for the benefit of the Lenders and the other Persons named
therein of all of the Borrower’s interest in and to production and all proceeds
attributable thereto that may be produced from or allocated to the Mortgaged
Property.  The Security Instruments further provide in general for the
application of such proceeds to the satisfaction of the Obligations and other
obligations described therein and secured thereby.  Notwithstanding the
assignment contained in such Security Instruments, until the occurrence of an
Event of Default, (a) the Administrative Agent and the Lenders agree that they
will neither notify the purchaser or purchasers of such production nor take any
other action to cause such proceeds to be remitted to the Administrative Agent
or the Lenders, but the Lenders will instead permit such proceeds to be paid to
the Borrower and its Restricted Subsidiaries and (b) the Lenders hereby
authorize the Administrative Agent to take such actions as may be necessary to
cause such proceeds to be paid to the Borrower and/or such Restricted
Subsidiaries.

 

ARTICLE V
Increased Costs; Break Funding Payments; Taxes; Illegality; Defaulting Lenders

 

Section 5.01                            Increased Costs.

 

(a)                           Increased Costs Generally.  If any Change in Law
shall:

 

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

 

(ii)                                  subject any Recipient to any Taxes (other
than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of
the definition of “Excluded Taxes” and (C) Connection Income Taxes) on its loan,
loan principal, letters of credit, commitments or other obligations, or its
deposits, reserves, other liabilities or capital attributable thereto; or

 

(iii)                               impose on any Lender or the Issuing Bank or
the London interbank market any other condition, cost or expense (other than
Taxes) affecting this Agreement or 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 or such other Recipient of making, converting to, continuing or
maintaining any Loan or of maintaining its obligation to make any such Loan,
increase the cost to such Lender, the Issuing Bank or such other Recipient of
participating in, issuing or maintain any Letter of Credit (or of maintaining
its obligation to participate in or to issue and Letter of Credit), or to reduce
the amount of any sum received or receivable by such Lender, the Issuing Bank or
other Recipient hereunder (whether of principal, interest or otherwise), then
upon the request of such Lender, the Issuing Bank or

 

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other Recipient, the Borrower will pay to such Lender, the Issuing Bank or other
Recipient, as the case may be, such additional amount or amounts as will
compensate such Lender, the Issuing Bank or other Recipient, as the case may be,
for such additional costs incurred or reduction suffered.

 

(b)                                 Capital Requirements.  If any Lender or the
Issuing Bank determines that any Change in Law affecting such Lender or the
Issuing Bank or any lending office of such Lender or such Lender’s or the
Issuing Bank’s holding company, if any, regarding capital or liquidity
requirements has or would have the effect of reducing the rate of return on such
Lender’s 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, the
Commitment of such Lender 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)                                  Certificates.  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 Section 5.01(a) or (b) and reasonably detailed calculations
therefor 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 days
after receipt thereof.

 

(d)                                 Effect of Failure or Delay in Requesting
Compensation.  Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section 5.01 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 5.01 for any increased costs or reductions
incurred more than 90 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 90-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

Section 5.02                            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 into an ABR 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, 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 5.04(b), then, in any
such event, the Borrower shall compensate each Lender for the

 

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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 which 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 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 5.02 and reasonably detailed
calculations therefor 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 5.03                            Taxes.

 

(a)                                 Defined Terms.  For purposes of this Section
5.03, the term “Lender” includes the Issuing Bank and the term “applicable law”
includes FATCA.

 

(b)                                 Payments Free of Taxes.  Any and all
payments by or on account of any obligation of any Loan Party under any Loan
Document shall be made without deduction or withholding for any Taxes, except as
required by applicable law.  If any applicable law (as determined in the good
faith discretion of an applicable Withholding Agent) requires the deduction or
withholding of any Tax from any such payment by a Withholding Agent, then the
applicable Withholding Agent shall be entitled to make such deduction or
withholding and shall timely pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with applicable law and, if such
Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party
shall be increased as necessary so that after such deduction or withholding has
been made (including such deductions and withholdings applicable to additional
sums payable under this Section) the applicable Recipient receives an amount
equal to the sum it would have received had no such deduction or withholding
been made.

 

(c)                                  Payment of Other Taxes by the Loan
Parties.  The Loan Parties shall timely pay to the relevant Governmental
Authority in accordance with applicable law, or at the option of the
Administrative Agent timely reimburse it for the payment of, any Other Taxes.

 

(d)                                 Indemnification by the Loan Parties.  The
Loan Parties shall jointly and severally indemnify each Recipient, within 10
days after written demand therefor, for the full amount of any Indemnified Taxes
(including Indemnified Taxes imposed or asserted on or attributable to amounts
payable under this Section) paid or payable by such Recipient or required to be
withheld or deducted from a payment to such Recipient and any reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.

 

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(e)                                  Indemnification by the Lenders.  Each
Lender shall severally indemnify the Administrative Agent, within 10 days after
demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but
only to the extent that any Loan Party has not already indemnified the
Administrative Agent for such Indemnified Taxes and without limiting the
obligation of the Loan Parties to do so), (ii) any Taxes attributable to such
Lender’s failure to comply with the provisions of Section 12.04(c)(iii) relating
to the maintenance of a Participant Register and (iii) any Excluded Taxes
attributable to such Lender, in each case, that are payable or paid by the
Administrative Agent in connection with any Loan Document, and any reasonable
expenses arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the amount of such payment or liability
delivered to any Lender by the Administrative Agent shall be conclusive absent
manifest error.  Each Lender hereby authorizes the Administrative Agent to set
off and apply any and all amounts at any time owing to such Lender under any
Loan Document or otherwise payable by the Administrative Agent to the Lender
from any other source against any amount due to the Administrative Agent under
this paragraph (e).

 

(f)                                   Evidence of Payments.  As soon as
practicable after any payment of Taxes by any Loan Party to a Governmental
Authority pursuant to this Section 5.03, such Loan Party shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

 

(g)                                  Status of Lenders.  (i) Any Lender that is
entitled to an exemption from or reduction of withholding Tax with respect to
payments made under any Loan Document shall deliver to the Borrower and the
Administrative Agent, at the time or times reasonably requested by the Borrower
or the Administrative Agent, such properly completed and executed documentation
reasonably requested by the Borrower or the Administrative Agent as will permit
such payments to be made without withholding or at a reduced rate of
withholding.  In addition, any Lender, if reasonably requested by the Borrower
or the Administrative Agent, shall deliver such other documentation prescribed
by applicable law or reasonably requested by the Borrower or the Administrative
Agent as will enable the Borrower or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.  Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in Section
5.03(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the
Lender’s reasonable judgment such completion, execution or submission would
subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender.

 

(ii)                                  Without limiting the generality of the
foregoing,

 

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

 

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

 

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

 

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

 

(3)                                 in the case of a Foreign Lender claiming the
benefits of the exemption for portfolio interest under Section 881(c) of the
Code, (x) a certificate substantially in the form of Exhibit G-1 to the effect
that such Foreign Lender is not a “bank” within the meaning of Section
881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the
meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign
corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax
Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E
(as applicable); or

 

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

 

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

 

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Borrower or the Administrative Agent to determine the withholding or deduction
required to be made; and

 

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

 

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

 

(h)                                 On or before the date that BMO (or any
successor or replacement Administrative Agent) becomes the Administrative Agent
hereunder, it shall deliver to the Borrower properly and completed executed
originals of either (i) IRS Form W-9, or (ii) such other documentation as will
establish that the Borrower can make payments to the Administrative Agent
without deduction or withholding of any Taxes imposed by the United States.

 

(i)                                     Treatment of Certain Refunds.  If any
party determines, in its reasonable discretion, that it has received a refund of
any Taxes as to which it has been indemnified pursuant to this Section 5.03
(including by the payment of additional amounts pursuant to this Section 5.03),
it shall pay to the indemnifying party an amount equal to such refund (but only
to the extent of indemnity payments made under this Section 5.03 with respect to
the Taxes giving rise to such refund), net of all out-of-pocket expenses
(including Taxes) of such indemnified party and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund).  Such indemnifying party, upon the request of such indemnified party,
shall repay to such indemnified party the amount paid over pursuant to this
paragraph (i) (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) in the event that such indemnified party is
required to repay such refund to such Governmental Authority.  Notwithstanding
anything to the contrary in this paragraph (i), in no event will the indemnified
party be required to pay any amount to an indemnifying party pursuant to this
paragraph (i) the payment of which would place the indemnified party in a less
favorable net after-Tax position than the indemnified party would have been in
if the Tax subject to indemnification and giving rise to such refund had not
been deducted, withheld or otherwise imposed and the indemnification payments or
additional amounts with respect to such Tax had never been paid.  This paragraph
shall not be construed to require any indemnified party to

 

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make available its Tax returns (or any other information relating to its Taxes
that it deems confidential) to the indemnifying party or any other Person

 

(j)                                    FATCA Grandfathering.  For purposes of
determining withholding Taxes imposed under FATCA, the Borrower and the
Administrative Agent shall treat (and the Lenders hereby authorize the Borrower
and the Administrative Agent to treat) this Agreement and any Advance as not
qualifying as a “grandfathered obligation” within the meaning of Treasury
Regulation Section 1.1471-2(b)(2)(i).

 

(k)                                 Survival.  Each party’s obligations under
this Section 5.03 shall survive the resignation or replacement of the
Administrative Agent or any assignment of rights by, or the replacement of, a
Lender, the termination of the Commitments and the repayment, satisfaction or
discharge of all obligations under any Loan Document.

 

Section 5.04                            Mitigation Obligations.

 

(a)                                 Designation of Different Lending Office.  If
any Lender requests compensation under Section 5.01, 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 5.03, 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 5.01 or Section 5.03, as the case may be, in
the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender.  The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

 

(b)                                 Replacement of Lenders.  If (i) any Lender
requests compensation under Section 5.01, (ii) 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 5.03, (iii) any Lender becomes a
Defaulting Lender, or (iv) any Lender has not approved (or is not deemed to have
approved) an increase in the Borrowing Base proposed by the Administrative Agent
pursuant to Section 2.07(c)(iii), then the Borrower may, at its sole expense and
effort, upon notice to such Lender and the Administrative Agent, (A) require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in Section 12.04(b)), 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) or (B) require such Lender to be removed as a Lender under this
Agreement and the other Loan Documents with a corresponding reduction in the
Aggregate Maximum Credit Amount equal to the Maximum Credit Amount of such
Lender; provided that, (1) in the case of a required assignment of interest, the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (2) 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

 

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(3) in the case of any such assignment resulting from a claim for compensation
under Section 5.01 or payments required to be made pursuant to Section 5.03,
such assignment will result in a reduction in such compensation or payments.  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.

 

Section 5.05                            Illegality.  Notwithstanding any other
provision of this Agreement, in the event that it becomes unlawful for any
Lender or its applicable lending office to honor its obligation to make or
maintain Eurodollar Loans either generally or having a particular Interest
Period hereunder, then (a) such Lender shall promptly notify the Borrower and
the Administrative Agent thereof and such Lender’s obligation to make such
Eurodollar Loans shall be suspended (the “Affected Loans”) until such time as
such Lender may again make and maintain such Eurodollar Loans and (b) all
Affected Loans which would otherwise be made by such Lender shall be made
instead as ABR Loans (and, if such Lender so requests by notice to the Borrower
and the Administrative Agent, all Affected Loans of such Lender then outstanding
shall be automatically converted into ABR Loans on the date specified by such
Lender in such notice) and, to the extent that Affected Loans are so made as (or
converted into) ABR Loans, all payments of principal which would otherwise be
applied to such Lender’s Affected Loans shall be applied instead to its ABR
Loans.

 

Section 5.06                            Cash Collateral.  At any time that there
shall exist a Defaulting Lender, within one Business Day following the written
request of the Administrative Agent or the Issuing Bank (with a copy to the
Administrative Agent) the Borrower shall Cash Collateralize the Issuing Bank’s
Fronting Exposure with respect to such Defaulting Lender (determined after
giving effect to Section 5.07(a)(iv) and any Cash Collateral provided by such
Defaulting Lender) in an amount equal to the Fronting Exposure as of such date.

 

(a)                                 Grant of Security Interest.  The Borrower,
and to the extent provided by any Defaulting Lender, such Defaulting Lender,
hereby grants to the Administrative Agent, for the benefit of the Issuing Bank,
and agrees to maintain, a first priority security interest in all such Cash
Collateral as security for the Defaulting Lenders’ obligation to fund
participations in respect of Letters of Credit, to be applied pursuant to clause
(b) below.  If at any time the Administrative Agent determines that Cash
Collateral is subject to any right or claim of any Person other than the
Administrative Agent and the Issuing Bank as herein provided, or that the total
amount of such Cash Collateral is less than the Fronting Exposure as of such
date, the Borrower will, promptly upon demand by the Administrative Agent, pay
or provide to the Administrative Agent additional Cash Collateral in an amount
sufficient to eliminate such deficiency (after giving effect to any Cash
Collateral provided by the Defaulting Lender).

 

(b)                                 Application.  Notwithstanding anything to
the contrary contained in this Agreement, Cash Collateral provided under this
Section 5.06 or Section 5.07 in respect of Letters of Credit shall be applied to
the satisfaction of the Defaulting Lender’s obligation to fund participations in
respect of Letters of Credit (including, as to Cash Collateral provided by a
Defaulting Lender, any interest accrued on such obligation) for which the Cash
Collateral was so provided, prior to any other application of such property as
may otherwise be provided for herein.

 

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(c)                                  Termination of Requirement.  Cash
Collateral (or the appropriate portion thereof) provided to reduce the Issuing
Bank’s Fronting Exposure shall no longer be required to be held as Cash
Collateral pursuant to this Section 5.06 following (i) the elimination of the
applicable Fronting Exposure (including by the termination of Defaulting Lender
status of the applicable Lender), or (ii) the determination by the
Administrative Agent and the Issuing Bank that there exists excess Cash
Collateral; provided that, subject to Section 5.07, the Person providing Cash
Collateral and the Issuing Bank may agree that Cash Collateral shall be held to
support future anticipated Fronting Exposure or other obligations; and provided
further that to the extent that such Cash Collateral was provided by the
Borrower, such Cash Collateral shall remain subject to the security interest
granted pursuant to the Loan Documents.

 

Section 5.07                            Defaulting Lenders.

 

(a)                           Defaulting Lender Adjustments.  Notwithstanding
anything to the contrary contained in this Agreement, if any Lender becomes a
Defaulting Lender, then, until such time as such Lender is no longer a
Defaulting Lender, to the extent permitted by applicable law:

 

(i)                                     Waivers and Amendments.  Such Defaulting
Lender’s right to approve or disapprove any amendment, waiver or consent with
respect to this Agreement shall be restricted as set forth in the definitions of
Majority Lenders and Supermajority Lenders and in the last sentence of Section
12.02(b).

 

(ii)                                  Defaulting Lender Waterfall.  Any payment
of principal, interest, fees or other amounts received by the Administrative
Agent for the account of such Defaulting Lender (whether voluntary or mandatory,
at maturity, pursuant to ARTICLE X or otherwise) or received by the
Administrative Agent from a Defaulting Lender pursuant to Section 12.08 shall be
applied at such time or times as may be determined by the Administrative Agent
as follows: first, to the payment of any amounts owing by such Defaulting Lender
to the Administrative Agent hereunder; second, to the payment on a pro rata
basis of any amounts owing by such Defaulting Lender to the Issuing Bank
hereunder; third, to Cash Collateralize the Issuing Bank’s Fronting Exposure
with respect to such Defaulting Lender in accordance with Section 5.06; fourth,
as the Borrower may request (so long as no Default or Event of Default exists),
to the funding of any Loan in respect of which such Defaulting Lender has failed
to fund its portion thereof as required by this Agreement, as determined by the
Administrative Agent; fifth, if so determined by the Administrative Agent and
the Borrower, to be held in a deposit account and released pro rata in order to
(x) satisfy such Defaulting Lender’s potential future funding obligations with
respect to Loans under this Agreement and (y) Cash Collateralize the Issuing
Bank’s future Fronting Exposure with respect to such Defaulting Lender with
respect to future Letters of Credit issued under this Agreement, in accordance
with Section 5.06; sixth, to the payment of any amounts owing to the Lenders or
the Issuing Bank as a result of any judgment of a court of competent
jurisdiction obtained by any Lender or the Issuing Bank against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under
this Agreement; seventh, so long as no Default or Event of Default exists, to
the payment of any amounts owing to the Borrower as a result of any judgment of
a court of competent jurisdiction obtained by the Borrower against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations

 

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under this Agreement; and eighth, to such Defaulting Lender or as otherwise
directed by a court of competent jurisdiction; provided that if (x) such payment
is a payment of the principal amount of any Loans or LC Disbursements in respect
of which such Defaulting Lender has not fully funded its appropriate share, and
(y) such Loans were made or the related Letters of Credit were issued at a time
when the conditions set forth in Section 6.02 were satisfied or waived, such
payment shall be applied solely to pay the Loans of, and LC Disbursements owed
to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the
payment of any Loans of, or LC Disbursements owed to, such Defaulting Lender
until such time as all Loans and funded and unfunded participations in LC
Disbursements are held by the Lenders pro rata in accordance with the
Commitments without giving effect to Section 5.07(a)(iv).  Any payments,
prepayments or other amounts paid or payable to a Defaulting Lender that are
applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash
Collateral pursuant to this Section 5.07 shall be deemed paid to and redirected
by such Defaulting Lender, and each Lender irrevocably consents hereto.

 

(iii)                               Certain Fees.

 

(A)                               No Defaulting Lender shall be entitled to
receive any commitment fee payable under Section 3.05(a) for any period during
which that Lender is a Defaulting Lender (and the Borrower shall not be required
to pay any such fee that otherwise would have been required to have been paid to
that Defaulting Lender).

 

(B)                               Each Defaulting Lender shall be entitled to
receive participation fees pursuant to Section 3.05(b) for any period during
which that Lender is a Defaulting Lender only to the extent allocable to its
Applicable Percentage of the stated amount of Letters of Credit for which it has
provided Cash Collateral pursuant to Section 5.06.

 

(C)                               With respect to any participation fees not
required to be paid to any Defaulting Lender pursuant to clause (B) above, the
Borrower shall (1) pay to each Non-Defaulting Lender that portion of any such
fee otherwise payable to such Defaulting Lender with respect to such Defaulting
Lender’s participation in LC Disbursements that has been reallocated to such
Non-Defaulting Lender pursuant to clause (iv) below, (2) pay to the Issuing Bank
the amount of any such fee otherwise payable to such Defaulting Lender to the
extent allocable to the Issuing Bank’s Fronting Exposure to such Defaulting
Lender, and (3) not be required to pay the remaining amount of any such fee.

 

(iv)                              Reallocation of Participations to Reduce
Fronting Exposure.  All or any part of such Defaulting Lender’s participation in
LC Disbursements shall be reallocated among the Non-Defaulting Lenders in
accordance with their respective Applicable Percentages (calculated without
regard to such Defaulting Lender’s Commitment) but only to the extent that such
reallocation does not cause the aggregate Credit Exposure of any Non-Defaulting
Lender to exceed such Non-Defaulting Lender’s Credit Commitment.  No
reallocation hereunder shall constitute a waiver or release of any claim of any
party hereunder against a Defaulting Lender arising from that Lender having
become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a
result of such Non-Defaulting Lender’s increased exposure following such
reallocation.

 

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(v)                                 Cash Collateral.  If the reallocation
described in clause (iv) above cannot, or can only partially, be effected, the
Borrower shall, without prejudice to any right or remedy available to it
hereunder or under law, Cash Collateralize the Issuing Bank’s Fronting Exposure
in accordance with the procedures set forth in Section 5.06.

 

(b)                                 Defaulting Lender Cure.  If the Borrower,
the Administrative Agent and the Issuing Bank agree in writing that a Lender is
no longer a Defaulting Lender, the Administrative Agent will so notify the
parties hereto, whereupon as of the effective date specified in such notice and
subject to any conditions set forth therein (which may include arrangements with
respect to any Cash Collateral), that Lender will, to the extent applicable,
purchase at par that portion of outstanding Loans of the other Lenders or take
such other actions as the Administrative Agent may determine to be necessary to
cause the Loans and funded and unfunded participations in Letters of Credit to
be held pro rata by the Lenders in accordance with the Commitments (without
giving effect to Section 5.07(a)(iv)), whereupon such Lender will cease to be a
Defaulting Lender; provided that no adjustments will be made retroactively with
respect to fees accrued or payments made by or on behalf of the Borrower while
that Lender was a Defaulting Lender; and provided, further, that except to the
extent otherwise expressly agreed by the affected parties, no change hereunder
from Defaulting Lender to Lender will constitute a waiver or release of any
claim of any party hereunder arising from that Lender’s having been a Defaulting
Lender.

 

(c)                                  New Letters of Credit.  So long as any
Lender is a Defaulting Lender, the Issuing Bank shall not be required to issue,
extend, renew or increase any Letter of Credit unless it is satisfied that it
will have no Fronting Exposure after giving effect thereto.

 

ARTICLE VI

 

Conditions Precedent

 

Section 6.01                            Conditions to Effectiveness.  This
Agreement shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 12.02):

 

(a)                                 The Administrative Agent, the Co-Lead
Arrangers and the Lenders shall have received all fees and other amounts due and
payable hereunder, including, to the extent invoiced, reimbursement or payment
of all out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder.

 

(b)                                 The Administrative Agent shall have received
a certificate of the Secretary, an Assistant Secretary or other authorized
officer of each Loan Party setting forth (i) resolutions of its board of
directors or similar governing authority with respect to the authorization of
such Loan Party to execute and deliver the Loan Documents to which it is a party
and to enter into the Transactions to which it is a party, (ii) the officers of
such Loan Party (y) who are authorized to sign the Loan Documents to which such
Loan Party is a party and (z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for the
purposes of signing documents and giving notices and other communications in
connection with this Agreement and the Transactions, (iii) specimen

 

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signatures of such authorized officers, and (iv) the articles or certificate of
incorporation and bylaws or similar organizational documents of such Loan Party,
certified as being true and complete.  To the extent a Loan Party previously
delivered a certificate complying with the foregoing sentence, the
Administrative Agent shall have received from such Loan Party a certificate of
the Secretary, Assistant Secretary or other authorized officer of such Loan
Party certifying that the documents and certificates attached to such previously
delivered certificate and relating to such Loan Party’s formation and
organization remain in full force and effect without any amendment thereto,
provided that, notwithstanding the foregoing, each Loan Party shall be required
to deliver the resolutions described in clause (i) above.  The Administrative
Agent and the Lenders may conclusively rely on such certificate until the
Administrative Agent receives notice in writing from the Borrower to the
contrary.

 

(c)                                  The Administrative Agent shall have
received certificates of the appropriate State agencies with respect to the
existence, qualification and good standing of each Loan Party.

 

(d)                                 The Administrative Agent shall have received
a compliance certificate which shall be substantially in the form of Exhibit D,
duly and properly executed by a Financial Officer and dated as of June 30, 2014
(which certificate was delivered in connection with the Prior Agreement).

 

(e)                                  The Administrative Agent shall have
received from each party hereto counterparts (in such number as may be requested
by the Administrative Agent) of this Agreement signed on behalf of such party.

 

(f)                                   The Administrative Agent shall have
received duly executed Notes payable to the order of each Lender in a principal
amount equal to its Maximum Credit Amount dated as of the Effective Date.

 

(g)                                  The Administrative Agent shall have
received from each party thereto duly executed counterparts (in such number as
may be requested by the Administrative Agent) of the Ratification Agreements.

 

(h)                                 The Administrative Agent shall have received
the opinions of Bracewell & Giuliani LLP, special counsel to the Borrower, and
Wyatt, Tarrant & Combs, LLP, special Kentucky counsel to the Borrower, in each
case, in form and substance satisfactory to Administrative Agent.

 

(i)                                     The Administrative Agent shall have
received certificates of insurance coverage of the Borrower evidencing that the
Borrower is carrying insurance in accordance with Section 7.12.

 

(j)                                    The Administrative Agent shall have
received a certificate of a Responsible Officer of the Borrower certifying that
(i) the Borrower has received all consents and approvals required by
Section 7.03, (ii) the Borrower has no other Debt in respect of borrowed money,
except as permitted by Section 9.02, (iii) Liquidity is equal to at least
$100,000,000, as of the Effective Date and after giving effect to this Agreement
and the consummation of the Second Lien Term Loans and (iv) the representations
and warranties of the Borrower and the Restricted

 

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Subsidiaries set forth in this Agreement and the other Loan Documents are true
and correct in all material respects (or, if qualified by Material Adverse
Effect or materiality, in all respects).

 

(k)                                 The Administrative Agent shall have received
the financial statements referred to in Section 7.04(a).

 

(l)                                     The Administrative Agent shall have
received title information as it may reasonably require setting forth the status
of title to at least the Minimum Collateral Amount.

 

(m)                             The Administrative Agent shall be reasonably
satisfied with the environmental condition of the Oil and Gas Properties of the
Borrower and its Subsidiaries.

 

(n)                                 The Administrative Agent shall have received
the most recent Reserve Report for the Oil and Gas Properties, accompanied by a
certificate covering the matters described in Section 8.12(d).

 

(o)                                 The Administrative Agent shall have received
appropriate UCC search certificates from the jurisdiction of incorporation or
formation of each Loan Party reflecting no Liens encumbering the Properties of
such Loan Party, other than those being assigned or released on or prior to the
Effective Date or Liens permitted by Section 9.03.

 

(p)                                 To the extent not previously delivered in
connection with the Prior Agreement, all membership and stock certificates of
each Subsidiary of the Borrower to the extent required to be delivered to the
Administrative Agent pursuant to the Security Agreement, together with related
stock and membership powers executed in blank by the owner of such certificates.

 

(q)                                 The Administrative Agent and the Lenders
shall have received all documentation and other information reasonably requested
by them under applicable “know your customer” and anti-money laundering
rules and regulations, including the Patriot Act, and their respective internal
policies.

 

(r)                                    The Administrative Agent shall have
received true and correct copies of the Second Lien Term Loan Documents, which
documents shall be in form and substance satisfactory to the Administrative
Agent.

 

(s)                                   The Administrative Agent, the Second Lien
Agent and the Loan Parties shall have entered into the Intercreditor Agreement.

 

(t)                                    The Second Lien Term Loans shall close
concurrently with this Agreement on the Effective Date.

 

(u)                                 The Administrative Agent shall have received
such other documents as the Administrative Agent or its special counsel may
reasonably request.

 

Section 6.02                            Each Credit Event.  The obligation of
each Lender to make a Loan on the occasion of any Borrowing (including the
initial funding), and of the Issuing Bank to issue, amend, renew or extend any
Letter of Credit, is subject to the satisfaction of the following conditions:

 

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(a)                                 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.

 

(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 event, development or condition that
has or could reasonably be expected to have a Material Adverse Effect shall have
occurred.

 

(c)                                  The representations and warranties of the
Borrower set forth in this Agreement and in the other Loan Documents shall be
true and correct in all material respects 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 in all material respects as of
such specified earlier date; provided that any representation or warranty that
is qualified as to “materiality”, “Material Adverse Effect” or similar language
shall be true and correct (after giving effect to any qualification therein) in
all respects on such respective dates.

 

(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 Change in Law shall have
occurred, and no litigation shall be pending or threatened, which does or, with
respect to any threatened litigation, seeks to, enjoin, prohibit or restrain,
the making or repayment of any Loan, 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.

 

(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 2.08(b), as applicable.

 

(f)                                   In connection with the execution and
delivery of the Security Instruments, the Administrative Agent shall be
reasonably satisfied that the Security Instruments create first priority,
perfected Liens (subject only to Permitted Prior Liens) on at least the Minimum
Collateral Amount.

 

Each request for a Borrowing and each issuance, amendment, renewal or extension
of any 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
Sections 6.01(l) and 6.02(a) through (d).

 

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ARTICLE VII

 

Representations and Warranties

 

The Borrower represents and warrants to the Lenders that:

 

Section 7.01                            Organization; Powers.  Each of the
Borrower and the Restricted Subsidiaries is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, has all
requisite power and authority, and has all material governmental licenses,
authorizations, consents and approvals necessary, to own its assets and to carry
on its business as now conducted, and is qualified to do business in, and is in
good standing in, every jurisdiction where such qualification is required,
except where failure to have such power, authority, licenses, authorizations,
consents, approvals and qualifications could not reasonably be expected to have
a Material Adverse Effect.

 

Section 7.02                            Authority; Enforceability.  The
Transactions to be entered into by each Loan Party are within such Loan Party’s
corporate, limited liability company or limited partnership powers and have been
duly authorized by all necessary corporate, limited liability company or
partnership and, if required, stockholder action (including, without limitation,
any action required to be taken by any class of directors of such Loan Party or
any other Person, whether interested or disinterested, in order to ensure the
due authorization of the Transactions).  Each Loan Document to which any Loan
Party is a party has been duly executed and delivered by such Loan Party and
constitutes a legal, valid and binding obligation of such Loan Party enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.

 

Section 7.03                            Approvals; No Conflicts.  The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority or any other
third Person (including shareholders or any class of directors, whether
interested or disinterested, of any Loan Party or any other Person), nor is any
such consent, approval, registration, filing or other action necessary for the
validity or enforceability of any Loan Document or the consummation of the
transactions contemplated thereby, except such as have been obtained or made and
are in full force and effect other than (i) the recording and filing of the
Security Instruments as required by this Agreement and (ii) those third party
approvals or consents which, if not made or obtained, would not cause a Default
hereunder, could not reasonably be expected to have a Material Adverse Effect or
do not have an adverse effect on the enforceability of the Loan Documents,
(b) will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of the Borrower or any Restricted Subsidiary or
any order of any Governmental Authority, (c) will not violate or result in a
default under any indenture, agreement or other instrument binding upon the
Borrower or any Restricted Subsidiary or its Properties, or give rise to a right
thereunder to require any payment to be made by the Borrower or such Restricted
Subsidiary and (d) will not result in the creation or imposition of any Lien on
any Property of the Borrower or any Restricted Subsidiary (other than the Liens
created by the Loan Documents and the Second Lien Term Loan Documents).

 

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Section 7.04                            Financial Condition; No Material Adverse
Change.

 

(a)                                 The Borrower has heretofore furnished to the
Lenders its audited consolidated balance sheet and statement of income,
stockholders equity and cash flows as of and for the fiscal year ended
December 31, 2013, all reported on by a firm of independent public accountants
acceptable to the Administrative Agent.  Such audited financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its Consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP.

 

(b)                                 Since December 31, 2013, (i) there has been
no event, development or circumstance that has had or could reasonably be
expected to have a Material Adverse Effect and (ii) the business of the Borrower
and its Restricted Subsidiaries has been conducted only in the ordinary course
consistent with past business practices.

 

(c)                                  Except for the Obligations, the Second Lien
Term Loans, and as set forth on Schedule 9.02, neither the Borrower nor any
Restricted Subsidiary has on the Effective Date any material Debt (including
Disqualified Capital Stock) or any material contingent liabilities, off-balance
sheet liabilities or partnerships, material liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments.

 

Section 7.05                            Litigation.

 

(a)                                 As of the Effective Date, except as set
forth on Schedule 7.05, there are no actions, suits, investigations or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Borrower, threatened in writing against or
affecting the Borrower or any Subsidiary (i) as to which there is a reasonable
possibility of an adverse determination that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect or (ii) that involve any Loan Document or the
Transactions.

 

(b)                                 Since the Effective Date, there has been no
change in the status of the matters disclosed in Schedule 7.05 that,
individually or in the aggregate, has resulted in, or materially increased the
likelihood of, a Material Adverse Effect.

 

Section 7.06                            Environmental Matters.  Except as could
not reasonably be expected to have a Material Adverse Effect (or with respect to
clauses (c), (d) and (e) below, where the failure to take such actions could not
be reasonably expected to have a Material Adverse Effect), to the knowledge of
Borrower:

 

(a)                                 no Property of the Borrower or any
Subsidiary nor the operations conducted thereon violate any order or requirement
of any court or Governmental Authority or any Environmental Laws;

 

(b)                                 no Property of the Borrower or any
Subsidiary nor the operations currently conducted thereon or 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

 

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or proceeding by or before any court or Governmental Authority or to any
remedial obligations under Environmental Laws;

 

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

 

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

 

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

 

(f)                                   to the extent applicable, all Property of
the Borrower and each Subsidiary currently satisfies all design, operation, and
equipment requirements imposed by the OPA, and the Borrower does not have any
reason to believe that such Property, to the extent subject to the OPA, will not
be able to maintain compliance with the OPA requirements during the term of this
Agreement; and

 

(g)                                  neither the Borrower nor any Subsidiary has
any known contingent liability or Remedial Work in connection with any release
or threatened release of any oil, hazardous substance, solid waste or oil and
gas waste into the environment.

 

Section 7.07                            Compliance with the Laws and Agreements;
No Defaults.  Except as could not be reasonably be expected to have a Material
Adverse Effect:

 

(a)                                 each of the Borrower and each Restricted
Subsidiary is in compliance with all Governmental Requirements applicable to it
or its Property and all agreements and other instruments binding upon it or its
Property, and possesses all licenses, permits, franchises, exemptions, approvals
and other governmental authorizations necessary for the ownership of its
Property and the conduct of its business, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect;

 

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(b)                                 neither the Borrower nor any Restricted
Subsidiary is in default nor has any event or circumstance occurred which, but
for the expiration of any applicable grace period or the giving of notice, or
both, would constitute a default or would require the Borrower or a Restricted
Subsidiary to Redeem or make any offer to Redeem under any indenture, note,
credit agreement or instrument pursuant to which any Material Debt is
outstanding or by which the Borrower or any Restricted Subsidiary or any of
their Properties is bound; and

 

(c)                                  no Default has occurred and is continuing.

 

Section 7.08                            Investment Company Act.  Neither the
Borrower nor any Subsidiary is an “investment company” or a company “controlled”
by an “investment company,” within the meaning of, or subject to regulation
under, the Investment Company Act of 1940, as amended.

 

Section 7.09                            Taxes.  Each of the Borrower and its
Restricted Subsidiaries has timely filed or caused to be filed all Tax returns
and reports required to have been filed and has paid or caused to be paid all
Taxes required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which the Borrower or
such Restricted Subsidiary, as applicable, has set aside on its books adequate
reserves in accordance with GAAP or (b) to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Effect.  The
charges, accruals and reserves on the books of the Borrower and its Restricted
Subsidiaries in respect of Taxes and other governmental charges are, in the
reasonable opinion of the Borrower, adequate.  No Lien relating to Taxes
described in the first sentence of this Section 7.09 has been filed and, to the
knowledge of the Borrower, no claim is being asserted with respect to any such
Tax or other such governmental charge.

 

Section 7.10                            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 Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $250,000 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 Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $250,000 the fair market value of the assets of all such underfunded Plans.

 

Section 7.11                            Disclosure; No Material Misstatements. 
The Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its 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.  To the knowledge of Borrower, taken as a whole,
none of the other reports, financial statements, certificates or other
information furnished by or on behalf of the Borrower or any Restricted
Subsidiary to the Administrative Agent or any Lender or any of their Affiliates
in connection with the negotiation of this Agreement or any other Loan Document
or delivered hereunder or under any other Loan Document (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any

 

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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, prospect information, geological and
geophysical data and engineering projections, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.  To the knowledge of Borrower there is no fact
peculiar to the Borrower or any Restricted Subsidiary which could reasonably be
expected to have a Material Adverse Effect or in the future is reasonably likely
to have a Material Adverse Effect and which has not been set forth in this
Agreement or the Loan Documents or the other documents, certificates and
statements furnished to the Administrative Agent or the Lenders by or on behalf
of the 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 known to the Borrower 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 projections concerning volumes attributable to the Oil and Gas Properties
and production and cost estimates contained in each Reserve Report are
necessarily based upon professional opinions, estimates and projections and that
the Borrower and the Subsidiaries do not warrant that such opinions, estimates
and projections will ultimately prove to have been accurate.

 

Section 7.12                            Insurance.  The Borrower has, and has
caused all its Restricted Subsidiaries to have, (a) all insurance policies
sufficient for the compliance by each of them with all material Governmental
Requirements and all material agreements and (b) insurance coverage in at least
amounts and against such risk (including, without limitation, public liability)
that are usually insured against by companies similarly situated and engaged in
the same or a similar business for the assets and operations of the Borrower and
its Restricted Subsidiaries.  The Administrative Agent and the Lenders have been
named as additional insureds in respect of such liability insurance policies and
the Administrative Agent has been named as loss payee with respect to Property
loss insurance.

 

Section 7.13                            Labor Matters.  As of the Effective
Date, there are no strikes, lockouts or slowdowns against the Borrower or any
Restricted Subsidiary pending or, to the knowledge of the Borrower, threatened
that are reasonably likely to impact the Borrower and its Restricted
Subsidiaries material operations (taken as a whole).  The hours worked by and
payments made to employees of the Borrower and the Restricted Subsidiaries have
not been in violation in any material respect of the Fair Labor Standards Act or
any other material Federal, state, local or foreign law dealing with such
matters.  All material payments due from the Borrower or any Restricted
Subsidiary, or for which any claim may be made against the Borrower or any
Restricted Subsidiary, on account of wages and employee health and welfare
insurance and other benefits, have been paid or accrued as a liability on the
books of the Borrower or such Restricted Subsidiary.  The consummation of the
Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Borrower or any Restricted Subsidiary is bound.

 

Section 7.14                            Subsidiaries.  Schedule 7.14 sets forth
the name of, and the ownership interest of the Borrower in, each Subsidiary of
the Borrower (as such Schedule may be updated from time to time, including
pursuant to a notice delivered in accordance with Section 8.01(l)).

 

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As of the Effective Date there are no Unrestricted Subsidiaries other than the
Subsidiaries set forth on Schedule 1.01.

 

Section 7.15                            Location of Business and Offices.  The
Borrower’s jurisdiction of organization is Delaware; the name of the Borrower as
listed in the public records of Delaware is Magnum Hunter Resources Corporation;
and the organizational identification number of the Borrower in Delaware is
2758331 (or, in each case, as set forth in a notice delivered to the
Administrative Agent pursuant to Section 8.01(l) in accordance with
Section 12.01).  Each Subsidiary’s jurisdiction of organization, name as listed
in the public records of its jurisdiction of organization and organizational
identification number in its jurisdiction of organization is stated on Schedule
7.14 (as such Schedule may be updated from time to time, including pursuant to a
notice delivered in accordance with Section 8.01(l)).

 

Section 7.16                            Properties; Titles, Etc.

 

(a)                                 Except as disclosed in Schedule 7.16, each
of the Borrower and the Restricted Subsidiaries has good and defensible title to
the proved Oil and Gas Properties evaluated in the most recently delivered
Reserve Report (excluding, to the extent this representation and warranty is
deemed to be made after the Effective Date, any such Oil and Gas Properties sold
or transferred in compliance with Section 9.11) and good title to all its
personal Properties, in each case, free and clear of all Liens except Liens
permitted by Section 9.03.  After giving full effect to the Excepted Liens, the
Borrower or the Restricted Subsidiary specified as the owner owns the net
interests in production attributable to the Hydrocarbon Interests as reflected
in the most recently delivered Reserve Report, and the ownership of such
Properties shall not in any material respect obligate the Borrower or such
Restricted Subsidiary to bear the costs and expenses relating to the
maintenance, development and operations of each such Property in an amount in
excess of the working interest of each Property set forth in the most recently
delivered Reserve Report that is not offset by a corresponding proportionate
increase in the Borrower’s or such Restricted Subsidiary’s net revenue interest
in such Property.

 

(b)                                 All material leases and agreements necessary
for the conduct of the business of the Borrower and the Restricted Subsidiaries
are valid and subsisting, in full force and effect, and there exists no default
or event or circumstance which with the giving of notice or the passage of time
or both would give rise to a default under any such lease or leases, which could
reasonably be expected to result in a Material Adverse Effect.

 

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

 

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

 

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(e)                                  The Borrower and each Restricted Subsidiary
owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and
other intellectual Property material to its business, and the use thereof by the
Borrower and such Subsidiary does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.  The Borrower and its Restricted Subsidiaries either own or have valid
licenses or other rights to use all databases, geological data, geophysical
data, engineering data, seismic data, maps, interpretations and other technical
information used in their businesses as presently conducted, subject to the
limitations contained in the agreements governing the use of the same, which
limitations are customary for companies engaged in the business of the
exploration and production of Hydrocarbons, with such exceptions as could not
reasonably be expected to have a Material Adverse Effect.

 

Section 7.17                            Maintenance of Properties.  Except for
such acts or failures to act as could not be reasonably expected to have a
Material Adverse Effect, 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 Government Requirements and in
conformity with the provisions of all leases, subleases or other contracts
comprising a part of the Hydrocarbon Interests and other contracts and
agreements forming a part of the Oil and Gas Properties.  Specifically in
connection with the foregoing, except for those as could not be reasonably
expected to have a Material Adverse Effect, (i) no Oil and Gas Property is
subject to having allowable production reduced below the full and regular
allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) and (ii) to
the knowledge of Borrower, none of the wells comprising a part of the Oil and
Gas Properties (or Properties unitized therewith) is deviated from the vertical
more than the maximum permitted by Government Requirements, 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).  All pipelines, wells,
gas processing plants, platforms and other material improvements, fixtures and
equipment owned in whole or in part by the Borrower or any of its 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 that are operated by the Borrower or any of its Restricted
Subsidiaries, in a manner consistent with the Borrower’s or its Restricted
Subsidiaries’ past practices (other than those the failure of which to maintain
in accordance with this Section 7.17 could not reasonably be expect to have a
Material Adverse Effect).

 

Section 7.18                            Gas Imbalances, Prepayments.  As of the
Effective Date, except as set forth on Schedule 7.18 or on the most recent
certificate delivered pursuant to Section 8.12(d), on a net basis there are no
gas imbalances, take or pay or other prepayments which would require the
Borrower or any of the Restricted Subsidiaries to deliver Hydrocarbons produced
from the Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor exceeding 500 mmcf equivalent in the aggregate.

 

Section 7.19                            Marketing of Production.  Except for
contracts listed and in effect on the Effective Date on Schedule 7.19, and
thereafter either disclosed in writing to the Administrative Agent or included
in the most recently delivered Reserve Report (with respect to all of which

 

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contracts the Borrower represents that it or its Restricted Subsidiaries are
receiving a price for all production sold thereunder which is computed
substantially in accordance with the terms of the relevant contract and are not
having deliveries curtailed substantially below the subject Property’s delivery
capacity), no material agreements exist which are not cancelable on 60 days’
notice or less without penalty or detriment for the sale of production from the
Borrower’s or the Restricted Subsidiaries’ Hydrocarbons (including, without
limitation, calls on or other rights to purchase, production, whether or not the
same are currently being exercised) that (a) pertain to the sale of production
at a fixed price and (b) have a maturity or expiry date of longer than six
(6) months from the Effective Date.

 

Section 7.20                            Swap Agreements.  Schedule 7.20, as of
the Effective Date, and after the Effective Date, each report required to be
delivered by the Borrower pursuant to Section 8.01(d), sets forth, a true and
complete list of all Swap Agreements of 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 7.21                            Use of Loans and Letters of Credit.  The
proceeds of the Loans and the Letters of Credit shall be used (a)  to repay
existing Debt, (b) to provide working capital for exploration and production,
midstream trading and marketing operations and (c) for general corporate
purposes of the Borrower and its Subsidiaries, including the acquisition of
exploration and production and midstream properties.  The Borrower and its
Subsidiaries are not engaged principally, or as one of its or their important
activities, in the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying margin stock (within
the meaning of Regulation T, U or X of the Board).  No part of the proceeds of
any Loan or Letter of Credit will be used for any purpose which violates the
provisions of Regulations T, U or X of the Board.

 

Section 7.22                            Solvency.  Before and after giving
effect to the Transactions, (a) the aggregate assets, at a fair valuation, of
the Borrower and its Restricted Subsidiaries, taken as a whole, will exceed the
aggregate Debt of the Borrower on a consolidated basis, as the Debt becomes
absolute and matures, (b) none of the Borrower nor any Restricted Subsidiary
will have incurred or intended to incur, and will not believe that it will
incur, Debt beyond its ability to pay such Debt as such Debt becomes absolute
and matures and (c) none of the Borrower nor any Restricted Subsidiary will have
(nor will have any reason to believe that it will have thereafter) unreasonably
small capital for the conduct of its business.

 

Section 7.23                            Sanctioned Persons; USA PATRIOT Act;
FCPA.

 

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

 

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(b)                                 The Borrower and each of the Subsidiaries is
in compliance in all material respects with all applicable statutes, regulations
and orders of (including any laws relating to terrorism, money laundering,
embargoed persons or the USA PATRIOT Act), and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property (including, without
limitation, applicable statutes, regulations, orders and restrictions relating
to environmental standards and controls).

 

(c)                                  The Borrower and each of the Subsidiaries
is in compliance in all material respects with the Foreign Corrupt Practices
Act, 15 U.S.C.§§ 78dd-1, et seq. (“FCPA”) and any foreign counterpart thereto
applicable to the Borrower or such Subsidiary.  Neither the Borrower nor any of
the Subsidiaries has made a payment, offering, or promise to pay, or authorized
the payment of, money or anything of value (a) in order to assist in obtaining
or retaining business for or with, or directing business to, any foreign
official, foreign political party, party official or candidate for foreign
political office, (b) to a foreign official, foreign political party or party
official or any candidate for foreign political office, and (c) with the intent
to induce the recipient to misuse his or her official position to direct
business wrongfully to the Borrower or any Subsidiary or to any other Person.

 

ARTICLE VIII

 

Affirmative Covenants

 

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents 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 Borrower covenants and agrees with the Lenders that:

 

Section 8.01                            Financial Statements; Ratings Change;
Other Information.  The Borrower will furnish to the Administrative Agent which
shall furnish to each Lender:

 

(a)                                 Annual Financial Statements.  As soon as
available, but in any event not later than the earlier of the date in each
fiscal year on which the Borrower is required to file its Annual Report on form
10-K with the SEC (after giving effect to any extensions obtained by the
Borrower) or 90 days after the end of each fiscal year of the Borrower, its
audited consolidated (and, if there are any Unrestricted Subsidiaries, unaudited
consolidating) balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on by a firm of independent public accountants proposed by Borrower and approved
by the Administrative Agent (without a “going concern” or like qualification or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Borrower and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied.  If the Borrower has designated any
of its Subsidiaries as Unrestricted Subsidiaries, then, concurrently with the
financial information required by this clause (a), the Borrower shall provide a
reasonably detailed presentation of the consolidated financial position and
results of operations of the Borrower and its Restricted

 

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Subsidiaries as of the end of and for such fiscal year which financial
presentation shall exclude the financial position and results of operations of
the Unrestricted Subsidiaries and be certified by a Financial Officer of the
Borrower as fairly presenting in all material respects such consolidated
financial position and results of operations as of the end of and for such year.

 

(b)                                 Quarterly Financial Statements.  As soon as
available, but in any event not later than the earlier of each date in each
fiscal year on which the Borrower is required to file a Quarterly Report on
Form 10-Q with the SEC (after giving effect to any extensions obtained by the
Borrower) or 45 days after the end of each of the first three fiscal quarters of
each fiscal year of the Borrower, its consolidated (and, if there are any
Unrestricted Subsidiaries, consolidating) balance sheet and related statements
of operations, stockholders’ equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting fairly
in all material respects the financial condition and results of operations of
the Borrower and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes.  If the Borrower has designated any of
its Subsidiaries as Unrestricted Subsidiaries, then, concurrently with the
financial information required by this clause (b), the Borrower shall provide a
reasonably detailed presentation of the consolidated financial position and
results of operations of the Borrower and its Restricted Subsidiaries as of the
end of and for such fiscal quarter which financial presentation shall exclude
the financial position and results of operations of the Unrestricted
Subsidiaries and be certified by a Financial Officer of the Borrower as fairly
presenting in all material respects such consolidated financial condition and
results of operations as of the end of and for such fiscal quarter.

 

(c)                                  Certificate of Financial Officer —
Compliance.  Concurrently with any delivery of financial statements under
Section 8.01(a) or Section 8.01(b), a certificate of a Financial Officer in
substantially the form of Exhibit D hereto (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto,
(ii) setting forth reasonably detailed calculations demonstrating compliance
with Section 9.01 and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the audited financial
statements referred to in Section 7.04 and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate.

 

(d)                                 Certificate of Financial Officer - Swap
Agreements.  Concurrently with the delivery of each Reserve Report hereunder and
concurrently with any delivery of financial statements under Section 8.01(b), a
certificate of a Financial Officer, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth as of a recent date a
true and complete list of all Swap Agreements of 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 7.20, any margin required or supplied under any
credit support document and the counterparty to each such agreement; provided
that each such certificate furnished concurrently with the delivery of financial
statements under Section 8.01(b) shall also include the calculations described
in Section 9.18(a)(i).

 

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(e)                                  Certificate of Insurer — Insurance
Coverage.  Concurrently with any delivery of financial statements under Section
8.01(a), a certificate of insurance coverage from each insurer with respect to
the insurance required by Section 8.07, in form and substance satisfactory to
the Administrative Agent, and, if requested by the Administrative Agent or any
Lender, all copies of the applicable policies.

 

(f)                                   Other Accounting Reports.  Promptly upon
receipt thereof, a copy of each other report or letter (except standard and
customary correspondence) submitted to the Borrower or any of its Restricted
Subsidiaries by independent accountants in connection with any annual, interim
or special audit made by them of the books of the Borrower or any such
Restricted Subsidiary, and a copy of any response by the Borrower or any such
Restricted Subsidiary, or the Board of Directors of the Borrower or any such
Restricted Subsidiary, to such letter or report.

 

(g)                                  SEC and Other Filings; Reports to
Shareholders.  Promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Restricted Subsidiary with the SEC, or with any national
securities exchange, or distributed by the Borrower to its shareholders
generally, as the case may be.

 

(h)                                 Notices Under Material Instruments. 
Promptly after the furnishing thereof, copies of any financial statement, report
or notice furnished to or by any Person pursuant to the terms of any preferred
stock designation, indenture, loan or credit or other similar agreement of the
Borrower or any of its Restricted Subsidiaries, other than this Agreement and
not otherwise required to be furnished to the Lenders pursuant to any other
provision of this Section 8.01.

 

(i)                                     Calculation of Adjusted Consolidated Net
Tangible Assets and Secured Debt.  During any Subject Borrowing Base Period,
concurrently with the delivery of each Reserve Report, a certificate of a
Financial Officer, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth as of the date of such Reserve Report, a
reasonably detailed calculation of Adjusted Consolidated Net Tangible Assets and
the aggregate principal amount of Secured Debt (other than the aggregate Credit
Exposures) outstanding as of such date.

 

(j)                                    Notice of Sales of Oil and Gas
Properties.  In the event the Borrower or any Restricted Subsidiary intends to
sell, transfer, assign or otherwise dispose of any Oil or Gas Properties or any
Equity Interests in any Restricted Subsidiary owning Oil and Gas Properties, in
either case, having a fair market value in excess of 5% of the Borrowing Base
then in effect in accordance with Section 9.11, prior written notice of such
disposition, the anticipated price thereof, the anticipated date of closing and,
during any Subject Borrowing Base Period, a certificate of a Financial Officer
setting forth, as of such anticipated date of closing, a reasonably detailed
calculation of Adjusted Consolidated Net Tangible Assets and the aggregate
principal amount of Secured Debt (other than the aggregate Credit Exposures)
outstanding as of such date, in each case, after giving pro forma effect to such
disposition.

 

(k)                                 Notice of Casualty Events.  Prompt written
notice, and in any event within five (5) Business Days, of the occurrence of any
Casualty Event or the commencement of any action or proceeding that could
reasonably be expected to result in a Casualty Event.

 

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(l)                                     Information Regarding the Loan Parties. 
Prompt written notice (and in any event within five (5) Business Days prior
thereto) of any change in any Loan Party’s corporate name, jurisdiction of
organization, organizational identification number in such jurisdiction of
organization or federal taxpayer identification number.

 

(m)                             Production Report and Lease Operating
Statements.  Within 45 days after the end of each calendar month, a report
setting forth, for each calendar month during the then current fiscal year to
date, the volume of production and sales attributable to production (and the
prices at which such sales were made and the revenues derived from such sales)
for each such calendar month from the Oil and Gas Properties, and setting forth
the related ad valorem, severance and production taxes and lease operating
expenses attributable thereto and incurred for each such calendar month.

 

(n)                                 Notices of Certain Changes.  Promptly, but
in any event within five (5) Business Days after the execution thereof, copies
of any amendment, modification or supplement to the certificate or articles of
incorporation, by-laws, any preferred stock designation or any other organic
document of the Borrower or any Restricted Subsidiary.

 

(o)                                 Other Requested Information.  Promptly
following any request therefor, such other information regarding the operations,
business affairs and financial condition of the Borrower or any Subsidiary
(including, without limitation, any Plan or Multiemployer Plan and any reports
or other information required to be filed under ERISA), or compliance with the
terms of this Agreement or any other Loan Document, as the Administrative Agent
or any Lender may reasonably request.

 

Documents or notices required to be delivered pursuant to Section 8.01 may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto, on “EDGAR”, the Borrower’s website on the Internet at
www.magnumhunterresources.com or another website identified by the Borrower to
the Administrative Agent and which is accessible by the Administrative Agent at
no charge or (ii) on which such documents are delivered to the Administrative
Agent.  Upon its receipt of any such documents or notices that are not posted to
EDGAR or such a website, the Administrative Agent shall post such documents or
notices to a website available to the Lenders and shall notify the Lenders of
such posting.

 

Section 8.02                            Notices of Material Events.  The
Borrower will furnish to the Administrative Agent prompt written notice of the
following:

 

(a)                                 the occurrence of any Default;

 

(b)                                 the filing or commencement of, or the threat
in writing of, any action, suit, proceeding, investigation or arbitration by or
before any arbitrator or Governmental Authority against the Borrower or any
Affiliate thereof not previously disclosed in writing to the Lenders or any
material adverse development in any action, suit, proceeding, investigation or
arbitration previously disclosed to the Lenders that, in either such case, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect;

 

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(c)                                  the occurrence of any ERISA Event that,
alone or together with any other ERISA Events that have occurred, could
reasonably be expected to result in a Material Adverse Effect;

 

(d)                                 any Event of Default under and as defined in
the Second Lien Term Loan Documents, any notice of an Event of Default delivered
to the Borrower by the Second Lien Agent or the lenders thereunder, or the
receipt by the Second Lien Agent or such lenders from any Loan Party of any
notice of an Event of Default thereunder; and

 

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

 

Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.

 

Section 8.03                            Existence; Conduct of Business.  The
Borrower will, and will cause each Restricted Subsidiary to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business and maintain, if necessary, its
qualification to do business in each other jurisdiction in which its Oil and Gas
Properties are located or the ownership of its Properties requires such
qualification, except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 9.10.

 

Section 8.04                            Payment of Obligations.  The Borrower
will, and will cause each Restricted Subsidiary to, pay its obligations,
including Tax liabilities of the Borrower and all of its Restricted Subsidiaries
before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings and the Borrower or such Restricted Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP or (b) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect or result in the seizure or levy of any
material Property of the Borrower or any Restricted Subsidiary.

 

Section 8.05                            Performance of Obligations under Loan
Documents.  The Borrower will pay the Loans and the Notes according to the
reading, tenor and effect thereof, and the Borrower will, and will cause each
Restricted Subsidiary to, do and perform every act and discharge all of the
obligations to be performed and discharged by them under the Loan Documents,
including, without limitation, this Agreement, at the time or times and in the
manner specified.

 

Section 8.06                            Operation and Maintenance of
Properties.  Except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect, the Borrower, at its
own expense, will, and will cause each Restricted Subsidiary to:

 

(a)                                 operate its Oil and Gas Properties and other
material Properties or cause such Oil and Gas Properties and other material
Properties to be operated in accordance with the practices

 

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of the industry and in compliance with all applicable contracts and agreements
and in compliance with all Governmental Requirements, including, without
limitation, applicable pro ration requirements and Environmental Laws, and all
applicable laws, rules and regulations of every other Governmental Authority
from time to time constituted to regulate the development and operation of its
Oil and Gas Properties and the production and sale of Hydrocarbons and other
minerals therefrom;

 

(b)                                 keep and maintain all Property material to
the conduct of its business in good working order and condition (ordinary wear
and tear excepted), preserve, maintain and keep in good repair, working order
and efficiency (ordinary wear and tear excepted) all of its material producing
Oil and Gas Properties and other material Properties, including, without
limitation, all equipment, machinery and facilities;

 

(c)                                  promptly pay and discharge, or make
reasonable and customary efforts to cause to be paid and discharged, all delay
rentals, royalties, expenses and obligations accruing under the leases or other
agreements affecting or pertaining to its proved producing Oil and Gas
Properties and will do all other things necessary to keep unimpaired their
rights with respect thereto and prevent any forfeiture thereof or default
thereunder;

 

(d)                                 promptly perform or make reasonable and
customary efforts to cause to be performed, in accordance with industry
standards, the obligations required by each and all of the assignments, deeds,
leases, sub-leases, contracts and agreements affecting its interests in its
proved producing Oil and Gas Properties and other material Properties;

 

(e)                                  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; and

 

(f)                                   to the extent the Borrower is not the
operator of any Property, the Borrower shall use reasonable efforts to cause the
operator to comply with this Section 8.06.

 

Section 8.07                            Insurance.  The Borrower will, and will
cause each Restricted Subsidiary to, maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.  The loss payable clauses
or provisions in said insurance policy or policies insuring any of the
collateral for the Loans shall be endorsed in favor of and made payable to the
Administrative Agent as its interests may appear and such policies shall name
the Administrative Agent and the Lenders as “additional insureds” and provide
that the insurer will endeavor to give at least 30 days prior notice of any
cancellation to the Administrative Agent.

 

Section 8.08                            Books and Records; Inspection Rights. 
The Borrower will, and will cause each Restricted Subsidiary to, keep proper
books of record and account in which full, true and correct entries are made of
all dealings and transactions in relation to its business and activities.  The
Borrower will, and will cause each Restricted Subsidiary to, permit any

 

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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 during normal business hours and as often as reasonably
requested on an individual and aggregate basis.

 

Section 8.09                            Compliance with Laws.  The Borrower
will, and will cause each Restricted Subsidiary to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
Property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

 

Section 8.10                            Environmental Matters.

 

(a)                                 The Borrower shall at its sole expense:
(i) comply, and shall cause its Properties and operations and each Restricted
Subsidiary and each Restricted Subsidiary’s Properties and operations to comply,
with all applicable Environmental Laws, the breach of which could be reasonably
expected to have a Material Adverse Effect; (ii) not dispose of or otherwise
release, and shall cause each Restricted Subsidiary not to dispose of or
otherwise release, any oil, oil and gas waste, hazardous substance, or solid
waste on, under, about or from any of the Borrower’s or its Restricted
Subsidiaries’ Properties or any other Property to the extent caused by the
Borrower’s or any of its Restricted Subsidiaries’ operations except in
compliance with applicable Environmental Laws, the disposal or release of which
could reasonably be expected to have a Material Adverse Effect; (iii) timely
obtain or file, and shall cause each Restricted Subsidiary to timely obtain or
file, all notices, permits, licenses, exemptions, approvals, registrations or
other authorizations, if any, required under applicable Environmental Laws to be
obtained or filed in connection with the operation or use of the Borrower’s or
its Restricted Subsidiaries’ Properties, which failure to obtain or file could
reasonably be expected to have a Material Adverse Effect; promptly commence and
diligently prosecute to completion, and shall cause each Restricted Subsidiary
to promptly commence and diligently prosecute to completion, any assessment,
evaluation, investigation, monitoring, containment, cleanup, removal, repair,
restoration, remediation or other remedial obligations (collectively, the
“Remedial Work”) in the event any Remedial Work is required or reasonably
necessary under applicable Environmental Laws because of or in connection with
the actual or suspected past, present or future disposal or other release of any
oil, oil and gas waste, hazardous substance or solid waste on, under, about or
from any of the Borrower’s or its Restricted Subsidiaries’ Properties, which
failure to commence and diligently prosecute to completion could reasonably be
expected to have a Material Adverse Effect; and (iv) establish and implement,
and shall cause each Restricted Subsidiary to establish and implement, such
reasonable procedures as may be necessary to assure that the Borrower’s and its
Restricted Subsidiaries’ obligations under this Section 8.10(a) are timely and
fully satisfied, which failure to establish and implement could reasonably be
expected to have a Material Adverse Effect.

 

(b)                                 The Borrower will promptly, but in no event
later than five Business Days of the occurrence of a triggering event, notify
the Administrative Agent in writing of any threatened action, investigation or
inquiry by any Governmental Authority or any threatened demand or lawsuit by any
landowner or other third party against the Borrower or its Restricted
Subsidiaries

 

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or their Properties of which the Borrower has knowledge in connection with any
applicable Environmental Laws (excluding routine testing and corrective action)
if the Borrower reasonably anticipates that such action could reasonably result
in a Material Adverse Effect.

 

(c)                                  The Borrower will, and will cause each
Restricted Subsidiary to, undertake reasonable environmental audits in
connection with any future acquisitions of producing Oil and Gas Properties.

 

Section 8.11                            Further Assurances.

 

(a)                                 The Borrower at its expense will, 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 conditions precedent, covenants and agreements of the
Borrower or any Restricted Subsidiary, as the case may be, in the Loan
Documents, including the Notes, or to further evidence and more fully describe
the collateral intended as security for the Obligations, or to correct any
omissions in this Agreement or the Security Instruments, or to state more fully
the obligations secured therein, or to perfect, protect or preserve any Liens
created pursuant to this Agreement or any of the Security Instruments or the
priority thereof, or to make any recordings, file any notices or obtain any
consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith.

 

(b)                                 The Borrower hereby authorizes the
Administrative Agent to file one or more financing or continuation statements,
and amendments thereto, relative to all or any part of the Mortgaged Property. 
A carbon, photographic or other reproduction of the Security Instruments or any
financing statement covering the Mortgaged Property or any part thereof shall be
sufficient as a financing statement where permitted by law.

 

Section 8.12                            Reserve Reports.

 

(a)                                 Promptly after January 1st of each calendar
year and in any event before April 1st of each calendar year, and promptly after
July 1st of each calendar year, commencing April 1, 2015, and in any event
before October 1st of each year, the Borrower shall furnish to the
Administrative Agent and the Lenders a Reserve Report.  The Reserve Report as of
January 1st of each year and the Reserve Report delivered in connection with the
first redetermination of the Borrowing Base after the Effective Date shall be
prepared by Borrower or an Approved Petroleum Engineer and audited by one or
more Approved Petroleum Engineers, and the July 1st Reserve Report of each year
shall be prepared by or under the supervision of the chief engineer of the
Borrower.  In each case, the chief engineer of Borrower shall certify such
Reserve Report is based on information that was prepared in good faith based
upon assumptions believed to be reasonable at the time and to have been prepared
in accordance with the procedures used in the immediately preceding Reserve
Report.

 

(b)                                 In the event of an Interim Redetermination,
except in connection with the first redetermination, 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 Borrower who

 

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shall certify such Reserve Report to be based on information that was prepared
in good faith based upon assumptions believed to be reasonable at the time and
to have been prepared in accordance with the procedures used in the immediately
preceding Reserve Report.  For any Interim Redetermination requested by the
Administrative Agent or the Borrower pursuant to Section 2.07(b)(ii) or
Section 2.07(b)(iii), 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 45 days following the receipt of such request.

 

(c)                            Each Reserve Report may be supplemented by all
such other internal information as the Borrower or the Administrative Agent,
acting reasonably, may request or deem appropriate, including without limitation
sufficient internally prepared information to permit the Administrative Agent’s
engineering consultants to prepare economic engineering evaluations covering the
Oil and Gas Properties.

 

(d)                           With the delivery of each Reserve Report, the
Borrower shall provide to the Administrative Agent and the Lenders a certificate
from a Responsible Officer certifying that to his knowledge, after reasonable
investigation, in all material respects: (i) the information contained in the
Reserve Report and any other information delivered in connection therewith is
based on information that was prepared in good faith based upon assumptions
believed to be reasonable at the time, (ii) the Borrower or its Subsidiaries
owns good and defensible title to the Proved Reserves evaluated in such Reserve
Report and such Properties are free of all Liens except for Liens permitted by
Section 9.03, (iii) except as set forth on an exhibit to the certificate, on a
net basis there are no gas imbalances, take or pay or other prepayments in
excess of the volume specified in Section 7.18 with respect to its Oil and Gas
Properties evaluated in such Reserve Report which would require the Borrower or
any Restricted Subsidiary to deliver Hydrocarbons either generally or produced
from such Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor, (iv) none of the Borrower’s and its Restricted
Subsidiaries’ Proved Reserves have been sold since the date of the last
Borrowing Base determination except as set forth on an exhibit to the
certificate, which certificate shall list all of its Proved Reserves sold and in
such detail as reasonably required by the Administrative Agent and (v) attached
thereto is a schedule of the Proved Reserves evaluated by such Reserve Report
that are Mortgaged Properties and demonstrating the percentage of the Borrowing
Base that the value of such Mortgaged Properties represent.  Upon the request of
the Administrative Agent, the Borrower shall attach to such certificate a list
of all marketing agreements entered into subsequent to the later of the
Effective Date or the most recently delivered Reserve Report which the Borrower
could reasonably be expected to have been obligated to list on Schedule 7.19 had
such agreement been in effect on the Effective Date.

 

Section 8.13                            Title Information.

 

(a)                           On or before the delivery to the Administrative
Agent and the Lenders of each Reserve Report required by Section 8.12(a), the
Borrower will deliver title information in form and substance acceptable to the
Administrative Agent covering enough of the proved Oil and Gas Properties
evaluated by such Reserve Report that were not included in the immediately
preceding Reserve Report, so that the Administrative Agent shall have received
together with

 

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title information previously delivered, satisfactory title information on at
least the Minimum Collateral Amount.

 

(b)                           If the Borrower has provided title information for
additional Properties under Section 8.13(a), the Borrower shall, within 60 days
of notice from the Administrative Agent that title defects or exceptions exist
with respect to such additional Properties, either (i) cure any such title
defects or exceptions (including defects or exceptions as to priority) which are
not permitted by Section 9.03 raised by such information, (ii) substitute
acceptable Mortgaged Properties with no title defects or exceptions except for
Permitted Prior Liens having an equivalent value or (iii) deliver title
information in form and substance acceptable to the Administrative Agent so that
the Administrative Agent shall have received, together with title information
previously delivered, satisfactory title information on at least the Minimum
Collateral Amount.

 

(c)                            If the Borrower is unable to cure any title
defect requested to be cured within the 60-day period or the Borrower does not
comply with the requirement to provide acceptable title information covering at
least the Minimum Collateral Amount, such default shall not be a Default, but
instead the Administrative Agent and/or the Supermajority 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 Supermajority
Lenders are not satisfied with title to any Mortgaged Property after the 60-day
period has elapsed, such unacceptable Mortgaged Property shall not count towards
the Minimum Collateral Amount and the Administrative Agent may send a notice to
the Borrower and the Lenders that the then outstanding Borrowing Base shall be
reduced by an amount as determined by the Supermajority Lenders to cause the
Borrower to be in compliance with the requirement to provide acceptable title
information on at least the Minimum Collateral Amount.  This new Borrowing Base
shall become effective immediately after receipt of such notice.

 

Section 8.14                            Additional Collateral.

 

(a)                           In connection with each redetermination of the
Borrowing Base, the Borrower shall review the Reserve Report and the list of
current Mortgaged Properties (as described in Section 8.12(d)) to ascertain
whether the Mortgaged Properties represent at least the Minimum Collateral
Amount after giving effect to exploration and production activities,
acquisitions, dispositions and production.  In the event that the Mortgaged
Properties do not represent at least the Minimum Collateral Amount, then the
Borrower shall, and shall cause its Restricted Subsidiaries to, grant to the
Administrative Agent as security for the Obligations a first-priority Lien
interest (subject only to Permitted Prior Liens) on additional Oil and Gas
Properties not already subject to a Lien of the Security Instruments such that
after giving effect thereto, the Mortgaged Properties will represent at least
the Minimum Collateral Amount.  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 Security Instruments, all in form
and substance satisfactory to the Administrative Agent and in sufficient
executed (and acknowledged where necessary or appropriate) counterparts for
recording purposes.

 

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(b)                           In addition, from time to time prior to the Second
Lien Termination Date, the Borrower will, at its cost and expense, secure the
Obligations by pledging or creating, or causing to be pledged or created,
perfected security interests with respect to such of its assets and properties
as the Administrative Agent or the Majority Lenders shall designate within 30
days of such designation (or such later date as the Administrative Agent may
agree (it being understood that it is the intent of the parties that the
Obligations shall be secured by substantially all the assets of the Borrower and
its Restricted Subsidiaries (including real and other properties acquired
subsequent to the Effective Date) subject to the limitations herein); provided
that, neither the Borrower nor any Restricted Subsidiary shall be required to
take additional action with respect to assets not required to be pledged as
collateral for the obligations under the Second Lien Term Loan Agreement, assets
specifically excluded from Collateral in the Security Instruments and assets
which in the reasonable judgment of the Administrative Agent are of de minimis
value or for which the cost of obtaining a perfected security interest outweighs
the value thereof.  Such security interests and Liens will be created under the
Security Instruments and other security agreements, mortgages, deeds of trust
and other instruments and documents in form and substance satisfactory to the
Administrative Agent, and the Borrower shall deliver or cause to be delivered to
the Administrative Agent all such instruments and documents (including legal
opinions and lien searches but excluding title insurance) as the Administrative
Agent shall reasonably request within such thirty-day period to evidence
compliance with this Section. The Borrower agrees to provide such evidence as
the Administrative Agent shall reasonably request as to the perfection and
priority status of each such security interest and Lien.

 

Section 8.15                            ERISA Compliance.  In addition to and
without limiting the generality of Section 8.09, the Borrower shall and shall
cause each of its Subsidiaries to (a) comply in all material respects with all
applicable provisions of ERISA and the regulations and published interpretations
thereunder with respect to all employee benefit plans (as defined in ERISA),
(b) not take any action or fail to take action the result of which could be
(i) a liability to the PBGC (other than liability for PBGC premiums) or (ii) a
past due liability to any Multiemployer Plan, (c) not participate in any
prohibited transaction that could result in any material civil penalty under
ERISA or any tax under the Code, (d) operate each employee benefit plan in such
a manner that will not incur any material tax liability under Section 4980B of
the Code or any liability to any qualified beneficiary as defined in
Section 4980B of the Code except to the extent such failure to comply could not
reasonably be expected to have Material Adverse Effect and (e) furnish to the
Administrative Agent upon the Administrative Agent’s request such additional
information about any employee benefit plan as may be reasonably requested by
the Administrative Agent.

 

Section 8.16                            Additional Guarantors.  Concurrently
with the acquisition or formation of any Subsidiary (other than any Subsidiary
designated as an Unrestricted Subsidiary in accordance with the terms of this
Agreement substantially concurrently with such acquisition or formation) and in
any event no later than 30 days following such acquisition or formation, the
Borrower shall (a) cause to be delivered to the Administrative Agent (i) a
Joinder Agreement executed by such Restricted Subsidiary and the direct owner of
the Equity Interests of such Restricted Subsidiary, (ii) stock certificates or
other instruments representing all the Equity Interests of such Restricted
Subsidiary and stock powers and instruments of transfer, endorsed in

 

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blank, with respect to such stock certificates or other instruments, or, if any
Equity Interests pledged pursuant to such Security Agreement are uncertificated
securities, confirmation and evidence satisfactory to the Administrative Agent
that the security interest in such uncertificated securities has been
transferred to and perfected by the Administrative Agent in accordance with the
UCC, (iii) all agreements, deeds of trust, mortgages, documents and instruments,
including UCC Financing Statements (Form UCC-1), required by law or reasonably
requested by the Administrative Agent to be executed, filed, registered or
recorded to create or perfect the Liens on the Property of such Subsidiary
(except to the extent not required under the Security Agreement), (iv) UCC
searches, all dated reasonably close to the date of the Joinder Agreement and in
form and substance satisfactory to the Administrative Agent, and evidence
reasonably satisfactory to the Administrative Agent that any Liens indicated in
such UCC searches are Excepted Liens or have been released, (v) the corporate
resolutions or similar approval documents of such Restricted Subsidiary
approving the execution and delivery of the Joinder Agreement and the
performance of the Security Agreement and Guaranty by such Restricted
Subsidiary, and (vi) if requested by the Administrative Agent, a legal opinion
reasonably acceptable to the Administrative Agent, opining favorably on the
execution, delivery and enforceability of the Loan Documents to which such
Restricted Subsidiary is a party, and the grant and perfection of the security
interest or lien purported to be made or effected by any such Loan Document and
otherwise being in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.

 

Section 8.17                            OFAC; Anti-Corruption Laws.  Neither the
Borrower nor any of its Subsidiaries (a) is an “enemy” or “ally of the enemy”
within the meaning of Section 2 of the Trading with the Enemy Act of the United
States (50 U.S.C. App. §§ 1 et seq.), as amended, (b) is in violation of (i) the
Trading with the Enemy Act, as amended, (ii) any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended), or any enabling legislation or executive order relating
thereto or (iii) the Patriot Act, (c) is a Sanctioned Person (as hereinafter
defined), (d) has more than 10% of its assets in Sanctioned Countries (as
hereinafter defined) or (e) derives more than 10% of its operating income from
investments in, or transactions with, Sanctioned Persons or Sanctioned
Countries.  No part of the proceeds of any Loan will be used directly, or to the
knowledge of the Borrower, indirectly to fund any operations in, finance any
investments or activities in or make any payments to, a Sanctioned Person or a
Sanctioned Country.  As used herein, “Sanctioned Country” means a country
subject to a sanctions program identified on the list maintained by the U.S.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and
available at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx,
or as otherwise published from time to time and “Sanctioned Person” means (a) a
Person named on the list of “Specially Designated Nationals and Blocked Persons”
maintained by OFAC available as
http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx,
or as otherwise published from time to time, or (b) (i) an agency of the
government of a Sanctioned Country, (ii) an organization controlled by a
Sanctioned Country, or (iii) a person resident in a Sanctioned Country, to the
extent subject to a sanctions program administered by OFAC.  The Borrower and
its Subsidiaries, to their knowledge, are in compliance in all material respects
with all laws, rules and regulations of any jurisdiction applicable to the
Borrower or its Subsidiaries from time to time concerning or relating to bribery
or corruption.

 

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Section 8.18                            Maintenance of Ratings.  Prior to the
Second Lien Termination Date, the Borrower shall use commercially reasonable
efforts to (a) cause the credit facility evidenced by the Second Lien Term Loan
Agreement to be continuously rated by S&P and Moody’s and (b) to maintain a
corporate rating from S&P and a corporate family rating from Moody’s, in each
case in respect of the Borrower.

 

Section 8.19                            Material Contracts.  The Borrower and
its Restricted Subsidiaries shall perform and observe in all material respects
all of the terms and provisions of each Material Contract to be performed or
observed by it within any grace period applicable thereto and, in accordance
with prudent business practices, enforce its rights under each such Material
Contract, except, in any case, where the failure to do so, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

 

Section 8.20                            Post-Closing Obligations.  The Borrower
will (a) deliver or cause to be delivered to the Administrative Agent each of
the agreements, documents, instruments or certificates described on Schedule
8.20, all in form and substance reasonably satisfactory to Administrative Agent;
(b) perform each of the actions described on Schedule 8.20 in a manner
reasonably satisfactory to the Administrative Agent; and (c) cause all such
matters described in clauses (a) and (b) to be completed within the time periods
set forth opposite each such item or action on such Schedule 8.20 (in each case,
unless otherwise agreed to by the Administrative Agent).

 

ARTICLE IX

 

Negative Covenants

 

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:

 

Section 9.01                            Financial Covenants.

 

(a)                           Current Ratio.  Commencing with the fiscal quarter
ending December 31, 2014, the Borrower will not permit, as of the last day of
any fiscal quarter, its ratio of (i) consolidated current assets of the Borrower
and the Restricted Subsidiaries (including the unused amount of the total
Commitments, but excluding non-cash assets under FAS 133) to (ii) consolidated
current liabilities of the Borrower and the Restricted Subsidiaries (excluding
non-cash obligations under FAS 133) to be less than 1.0 to 1.0.

 

(b)                           Total Secured Net Debt to EBITDAX.  The Borrower
will not permit, as of the last day of any fiscal quarter commencing with the
fiscal quarter ending December 31, 2014, the ratio of (i) the amount equal to
the aggregate principal amount of all Secured Debt of the Borrower and the
Restricted Subsidiaries as of such date minus (x) for each fiscal quarter ending
prior to March 31, 2016, the aggregate unencumbered balance sheet cash of the
Borrower and the Restricted Subsidiaries as of such date and (y) for the fiscal
quarter ending

 

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March 31, 2016 and for each fiscal quarter ending thereafter, up to $100,000,000
of the aggregate unencumbered balance sheet cash of the Borrower and the
Restricted Subsidiaries as of such date to (ii) EBITDAX of the Borrower and the
Restricted Subsidiaries for the trailing four-quarter period then ended to
exceed (A) 2.50 to 1.0 for the fiscal quarter ending December 31, 2014, (B) 2.25
to 1.0 for the fiscal quarter ending March 31, 2015 and (C) 2.00 to 1.0 for the
fiscal quarter ending June 30, 2015 and for each fiscal quarter ending
thereafter.

 

(c)                            Second Lien Term Loan Agreement Financial
Covenants.  The Borrower will not permit, as of the last day of any fiscal
quarter commencing with the fiscal quarter ending December 31, 2014, (i) the
Proved Reserves Coverage Ratio to be less than 1.5 to 1.0 or (ii) the PDP
Reserves Coverage Ratio to be less than 1.0 to 1.0.  The covenants set forth in
this paragraph (c) shall automatically cease to apply (A) upon repayment in full
of the Second Lien Term Loans and the termination of all commitments thereunder
or (B) if such covenants are no longer required under the Second Lien Term
Loans.

 

Section 9.02                            Debt.  The Borrower will not, and will
not permit any Restricted Subsidiary to, incur, create, assume or suffer to
exist any Debt, except:

 

(a)                           the Obligations;

 

(b)                           Debt of the Borrower and its Subsidiaries existing
on the Effective Date that is, in the case of Debt incurred prior to the date of
the Financial Statements, reflected in the Financial Statements and, in any
event, is described on Schedule 9.02 and any refinancings, refundings, renewals
or extensions thereof; provided that the amount of such Debt is not increased at
the time of such refinancing, refunding, renewal or extension except by an
amount equal to a reasonable premium or other reasonable amount paid, and fees
and expenses reasonably incurred, in connection with such refinancing and by an
amount equal to any existing commitments unutilized thereunder and the direct or
any contingent obligor with respect thereto is not changed, as a result of or in
connection with such refinancing, refunding, renewal or extension; and provided,
still further, that the terms relating to principal amount, amortization,
maturity, collateral (if any) and subordination (if any), and other material
terms taken as a whole, of any such refinancing, refunding, renewing or
extending Debt, and of any agreement entered into and of any instrument issued
in connection therewith, are no less favorable in any material respect to the
Borrower, the Restricted Subsidiaries or the Lenders than the terms of any
agreement or instrument governing the Debt being refinanced, refunded, renewed
or extended;

 

(c)                            accounts payable and accrued expenses,
liabilities or other obligations to pay the deferred purchase price of Property
or services, from time to time incurred in the ordinary course of business which
are not greater than 90 days past the date of invoice or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP;

 

(d)                           Debt under Capital Leases and Debt to finance the
acquisition, construction or improvement of any fixed or capital assets;
provided that (i) such Debt is incurred prior to or within 180 days after such
acquisition or the completion of such construction or improvement

 

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and (ii) the aggregate principal amount of Debt permitted by this
Section 9.02(d) shall not exceed $10,000,000 at any time outstanding.

 

(e)                            Debt associated with worker’s compensation
claims, or in respect of self-insurance obligations or bid, plugging and
abandonment, appeal, reimbursement, performance, bid, surety or similar bonds or
surety obligations required by Governmental Requirements or third parties in
connection with the operation of the Oil and Gas Properties of the Borrower or
any Restricted Subsidiary in the ordinary course of business;

 

(f)                             unsecured intercompany Debt between or among
Loan Parties so long as such Debt is expressly subordinated in all respects to
the Loans and other Obligations on terms set forth in the Guaranty; provided,
that (i) any subsequent issuance or other disposition of Equity Interests that
results in any such Debt being held by a Person other than a Loan Party and
(ii) any sale or other disposition of any such Debt to a Person that is not a
Loan Party, will be deemed, in each case, to constitute an incurrence of such
Debt by such Loan Party, that was not permitted by this Section 6.02(f);

 

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

 

(h)                           Debt arising under take-or-pay agreements or gas
balancing agreements which do not give rise to liability in the aggregate on a
consolidated basis for the Borrower in excess of $2,000,000 at any one time
outstanding;

 

(i)                               Debt incurred in the ordinary course of
Borrower’s business in connection with Swap Agreements provided they are
permitted under Section 9.18 of this Agreement;

 

(j)                              any obligation arising from agreements of the
Borrower or any Restricted Subsidiary providing for indemnification, adjustment
of purchase price, earn outs, or similar obligations, in each case, incurred or
assumed in connection with the disposition or acquisition of any business,
assets or Equity Interest of a Restricted Subsidiary in a transaction permitted
under this Agreement; provided that such obligation is not reflected as a
liability on the face of the balance sheet of the Borrower or any Restricted
Subsidiary;

 

(k)                           obligations with respect to Series C, Series D and
Series E preferred stock issued by the Borrower, so long as any dividends with
respect thereto comply with the provisions of Section 9.04;

 

(l)                               unsecured guarantees by the Borrower or any
Restricted Subsidiary of Debt of Alpha Hunter Drilling, LLC not exceeding
$35,000,000 in the aggregate which Debt shall be on terms and conditions
reasonably satisfactory to the Administrative Agent and have terms and
conditions no more restrictive than the terms and conditions set forth in this
Agreement;

 

(m)                       Debt evidenced by Senior Notes (including unsecured
guarantees in respect thereof) outstanding on the Effective Date;

 

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(n)                           (i) guarantees by the Borrower and the Restricted
Subsidiaries in respect of Debt permitted to be incurred pursuant to this
Section 9.02; provided, that if the Debt being guaranteed is subordinate or pari
passu with the Loans, then the guarantee must be subordinated or pari passu, as
applicable, to the same extent as the Debt guaranteed and (ii) unsecured
guarantees by the Borrower or any Restricted Subsidiary at any one time
outstanding not to exceed $2,000,000 in respect of Debt of any Unrestricted
Subsidiary incurred in the ordinary course of business in connection with
accounts payable which are not greater than 90 days past the date of invoice or
which are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP;

 

(o)                           the Second Lien Term Loans (including guarantees
in respect thereof) in an aggregate principal amount not to exceed $350,000,000
at any time outstanding and all Permitted Refinancing Debt; and

 

(p)                           other Debt not to exceed $7,500,000 in aggregate
principal amount at any one time outstanding.

 

Section 9.03                            Liens.  The Borrower will not, and will
not permit any Subsidiary to, create, incur, assume or permit to exist any Lien
on any of its Properties (now owned or hereafter acquired), except:

 

(a)                           Liens securing the Obligations;

 

(b)                           Excepted Liens;

 

(c)                            Liens securing Debt permitted by
Section 9.02(d) but only on the Property purchased and/or financed with the
proceeds of such Debt;

 

(d)                           Liens described on Schedule 9.03 and any renewals,
replacements or extensions thereof, provided that (i) the property covered
thereby is not changed, (ii) the amount secured or benefited thereby is not
increased except as contemplated by Section 9.02(b), (iii) the direct or any
contingent obligor with respect thereto is not changed, and (iv) any
refinancing, renewal or extension of the obligations secured or benefited
thereby is permitted by Section 9.02(b);

 

(e)                            Liens on Property not constituting collateral for
the Obligations not otherwise permitted by the foregoing clauses of this
Section 9.03; provided that the aggregate principal or face amount of all Debt
secured under this clause (e) shall not exceed $500,000 at any time;

 

(f)                             a Lien on the Equity Interests in Eureka Hunter
securing Debt of Eureka Hunter or any of its Subsidiaries; provided that
(i) neither the Borrower nor any of the Restricted Subsidiaries provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Debt) for such Debt or is directly or indirectly liable for
such Debt as a guarantor or otherwise and (ii) the lenders of such Debt do not
have any recourse to the Equity Interests or Property of the Borrower or any of
its Restricted Subsidiaries (other than the Equity Interests of an Unrestricted
Subsidiary or another Person that is not a Restricted Subsidiary);

 

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(g)                            (i) leases and subleases of the properties of the
Borrower or any Restricted Subsidiary granted to third parties, in each case, in
the ordinary course of business and (ii) any interest of title of a lessor or
sublessor under any leases entered into by the Borrower or its Subsidiaries in
the ordinary course of business;

 

(h)                           Liens attaching solely to cash earnest money
deposits in connection with an Investment permitted by Section 9.05;

 

(i)                               subject to the Intercreditor Agreement, Liens
securing the “Obligations” (as defined in the Second Lien Term Loan Agreement);
and

 

(j)                              Liens securing Debt permitted by
Section 9.02(p); provided that the Debt secured by such Liens shall not exceed
$5,000,000 at any one time outstanding.

 

Section 9.04                            Restricted Payments.  The Borrower will
not, and will not permit any Restricted Subsidiary to, declare or make, or agree
to pay or make, directly or indirectly, any Restricted Payment, return any
capital to its stockholders or make any distribution of its Property to its
Equity Interest holders, except:

 

(a)                           Restricted Subsidiaries may declare and pay
Restricted Payments ratably with respect to their Equity Interests;

 

(b)                           the Borrower may (i) declare and pay dividends in
respect of its Equity Interests so long as such dividends (A) are in the form of
Equity Interests (other than Disqualified Capital Stock) and (B) do not include
cash or other Property of the Borrower not specified in the foregoing clause
(A), and (ii) may pay cash in lieu of fractional shares in connection with any
stock splits or reverse stock splits of the Borrower’s Equity Interests, up to a
maximum of $500,000 during the term of this Agreement;

 

(c)                            without limiting the dividends permitted by
Section 9.04(b), the Borrower may declare and pay cash dividends on its
Series C, Series D and Series E preferred stock permitted hereunder so long as
(i) no Event of Default exists at the time of, or is caused by, such payment,
(ii) after giving effect to such payment, Revolver Availability is equal to or
greater than the greater of (x) two and one-half percent (2.5%) of the Borrowing
Base then in effect and (y) $5,000,000, and (iii) such dividends do not exceed
$45,000,000 in the aggregate in any calendar year;

 

(d)                           without limiting the dividends permitted by
Section 9.04(b) above, the Borrower may (i) pay cash in lieu of issuing
fractional shares in connection with an exchange of outstanding preferred stock
for newly issued preferred stock (other than Disqualified Capital Stock) or
common equity, and (ii) redeem its preferred stock with the proceeds of an
issuance by the Borrower of common equity or preferred stock (other than
Disqualified Capital Stock) so long as (x) such redemption takes place as soon
as reasonably practicable upon receipt of such proceeds (but in any event,
within 6 months of the date of issuance) and (y) after giving effect to such
redemption, Revolver Availability is equal to or greater than ten percent (10%)
of the Borrowing Base then in effect;

 

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(e)                            the Borrower may repurchase warrants, options or
other rights entitling the holder thereof to purchase or acquire any Equity
Interest in the Borrower for cash consideration in an amount not to exceed
$100,000; and

 

(f)                             the Borrower may (i) so long as no Event of
Default is occurring, make payments to directors, officers, members of
management, employees or consultants of the Borrower or any Restricted
Subsidiary (or their transferees, estates or beneficiaries under their estates)
upon their death, disability, retirement, severance or termination of employment
or service for the acquisition by the Borrower from such Persons of Equity
Interests in the Borrower or any Restricted Subsidiary, provided that the
aggregate cash consideration paid for all such payments shall not exceed
$500,000 in any calendar year, and (ii) make cashless repurchases of securities
that are deemed to occur upon the exercise or vesting of options, rights or
shares of stock held by directors, officers, members of management, employees or
consultants of the Borrower or any Restricted Subsidiary to the extent such
securities represent a portion of the exercise price of or withholding taxes
attributable to such options, rights or shares.

 

Section 9.05                            Investments, Loans and Advances.  The
Borrower will not, and will not permit any Restricted Subsidiary to, make or
permit to remain outstanding any Investments in or to any Person, except that
the foregoing restriction shall not apply to:

 

(a)                           Investments existing on the Effective Date that
are, in the case of Investments made prior to the date of the Financial
Statements, reflected in the Financial Statements and, in any event, described
on Schedule 9.05;

 

(b)                           accounts receivable arising in the ordinary course
of business;

 

(c)                            direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one year from the date of creation
thereof;

 

(d)                           commercial paper maturing within one year from the
date of creation thereof rated in the highest grade by S&P or Moody’s;

 

(e)                            deposits maturing within one year from the date
of creation thereof with, including certificates of deposit issued by, any
Lender or any office located in the United States of any other bank or trust
company which is organized under the laws of the United States or any state
thereof, has capital, surplus and undivided profits aggregating at least
$100,000,000 (as of the date of such bank or trust company’s most recent
financial reports) and has a short term deposit rating of no lower than A2 or
P2, as such rating is set forth from time to time, by S&P or Moody’s,
respectively or, in the case of any Foreign Subsidiary, a bank organized in a
jurisdiction in which the Foreign Subsidiary conducts operations having assets
in excess of $500,000,000 (or its equivalent in another currency);

 

(f)                             deposits in money market funds investing
exclusively in Investments described in Section 9.05(c), Section 9.05(d) or
Section 9.05(e);

 

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(g)                            Investments made by the Borrower in or to any
Restricted Subsidiary or by any Restricted Subsidiary in or to another
Restricted Subsidiary;

 

(h)                           subject to the limits in Section 9.06, Investments
in direct ownership interests in additional Oil and Gas Properties, gas
gathering, processing and transportation systems and all other assets
contemplated by the permitted business of Borrower located within the geographic
boundaries of the United States of America and Canada; provided that, except
with respect to Investments funded in connection with the purchase of direct
ownership interests in Hydrocarbon Interests that contain proved reserves and
are actually producing oil and gas at the time of such Investment, any
Investment made pursuant to this clause (h) shall be subject to the condition
that, at the time of and after giving effect to such Investment, Revolver
Availability is equal to or greater than the lesser of $50,000,000 and
twenty-five percent (25%) of the Borrowing Base then in effect;

 

(i)                               entry into operating agreements, working
interests, royalty interests, mineral leases, processing agreements, farm-out
agreements, contracts for the sale, transportation or exchange of oil and
natural gas, unitization agreements, pooling arrangements, area of mutual
interest agreements, production sharing agreements or other similar or customary
agreements, transactions, properties, interests or arrangements, and Investments
and expenditures in connection therewith or pursuant thereto, in each case made
or entered into in the ordinary course of the oil and gas business, excluding,
however, Investments in other Persons; provided that none of the foregoing shall
involve the incurrence of any Debt not permitted by Section 9.02; provided,
further, that any Investment made pursuant to this clause (i) in Hydrocarbon
Interests shall be subject to the condition that, at the time of and after
giving effect to such Investment, Revolver Availability is equal to or greater
than the lesser of $50,000,000 and twenty-five percent (25%) of the Borrowing
Base then in effect;

 

(j)                              loans and advances to directors, officers and
employees in connection with the acquisition of Equity Interests in the Borrower
or any Restricted Subsidiary and loans and advances to directors, officers and
employees permitted by applicable law not to exceed $500,000 in the aggregate at
any time;

 

(k)                           travel advances in the ordinary course of
business;

 

(l)                               repurchase agreements of a commercial bank in
the United States or Canada if the commercial paper of such bank or of the bank
holding company of which such bank is a wholly owned subsidiary is rated in the
highest rating categories of S&P, Moody’s, or any other rating agency
satisfactory to the Majority Lenders, that are fully secured by securities
described in Section 9.04;

 

(m)                       Investments (other than Investments in GreenHunter
Energy, Inc.) not to exceed $1,000,000 in the aggregate outstanding at any time;

 

(n)                           Investments arising from the endorsement of
financial instruments in the ordinary course of business;

 

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(o)                           guarantees permitted under Section 9.02 and
guarantees by the Borrower of obligations of Restricted Subsidiaries incurred in
the ordinary course of business and not in respect of Debt;

 

(p)                           Investments by the Borrower or any Restricted
Subsidiaries in Unrestricted Subsidiaries (other than Eureka Hunter Holdings or
its Subsidiaries), not to exceed $10,000,000 in any calendar year;

 

(q)                           Investments in Eureka Hunter Holdings (or another
direct or indirect Subsidiary of Eureka Hunter Holdings) in an aggregate amount
not to exceed in any calendar year the sum of (i) $20,000,000, (ii) net cash
proceeds from the issuance by the Borrower of common or preferred equity (other
than Disqualified Capital Stock) during such calendar year, so long as such
proceeds are invested pursuant to this clause (q) within 30 days after receipt
thereof and (iii) net cash proceeds received by the Borrower in connection with
the sale of its Equity Interests in Eureka Hunter Holdings, so long as such
proceeds are invested pursuant to this clause (q) within 180 days after receipt
thereof; provided that any Investment made pursuant to this clause (q) shall be
subject to the condition that, at the time of and after giving effect to such
Investment, Revolver Availability is equal to or greater than the lesser of
$50,000,000 and twenty-five percent (25%) of the Borrowing Base then in effect;

 

(r)                              Investments in securities or other assets of
trade creditors or customers in the ordinary course of business received in
settlement or bona fide disputes or upon foreclosure or pursuant to any plan of
reorganization or liquidation or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers;

 

(s)                             (i) Investments consisting of earnest money
deposits in connection with an Investment otherwise permitted by this
Section 9.05, and (ii) lease, utility or similar deposits in the ordinary course
of business; and

 

(t)                              (i) Investments in Equity Interests in the
Eureka MLP GP and the Eureka MLP acquired in connection with dispositions made
pursuant to Section 9.11(i) and (ii) Investments consisting of non-cash
consideration received, to the extent permitted, in dispositions permitted
pursuant to Sections 9.11(b), (c), (e) or (h).

 

Section 9.06                            Nature of Business; International
Operations.  The Borrower will not, and will not permit any Restricted
Subsidiary to, allow any material change to be made in the character of its
business as an independent oil and gas exploration and production company with
midstream, marketing and trading components, including gathering systems,
processing plants, pipelines and related equipment and facilities.  From and
after the Effective Date, the Borrower and its Subsidiaries will not acquire or
make any other expenditure (whether such expenditure is capital, operating or
otherwise) in or related to, any Oil and Gas Properties not located within the
geographical boundaries or territorial waters of the United States or Canada.

 

Section 9.07                            Limitation on Leases.  The Borrower will
not, and will not permit any Restricted Subsidiary to, create, incur, assume or
suffer to exist any obligation for the payment of rent or hire of Property of
any kind whatsoever (real or personal but excluding Capital Leases and leases of
Hydrocarbon Interests), under leases or lease agreements which would cause the

 

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aggregate amount of all payments made by the Borrower and the Restricted
Subsidiaries pursuant to all such leases or lease agreements, including, without
limitation, any residual payments at the end of any lease, to exceed $2,000,000
in any period of twelve (12) consecutive calendar months during the life of such
leases.

 

Section 9.08                            Use of Proceeds.  The Borrower will not
permit the proceeds of Loans to be used for any purpose other than those
specified in Section 7.21.  Neither the Borrower nor any Person acting on behalf
of the Borrower has taken or will take any action which might cause any of the
Loan Documents to violate Regulations T, U or X or any other regulation of the
Board or to violate Section 7 of the Exchange Act 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 9.09                            Sale or Discount of Receivables.  Except
for receivables obtained by 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, neither the Borrower nor any
Subsidiary will discount or sell (with or without recourse) to any other Person
that is not the Borrower any of its notes receivable or accounts receivable.

 

Section 9.10                            Mergers, Etc.  Neither the Borrower nor
any Restricted Subsidiary will merge into or with or consolidate with any other
Person, or sell, lease or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of its Property to any other
Person (any such transaction, a “consolidation”); provided that (a) any
Subsidiary may participate in a consolidation with the Borrower (provided that
the Borrower shall be the continuing or surviving corporation) or any Restricted
Subsidiary (provided that such Restricted Subsidiary shall be the continuing or
surviving Person) and (b) the Borrower and its Subsidiaries may consummate any
Investment or disposition in compliance with Section 9.05 or Section 9.11,
respectively.

 

Section 9.11                            Sale of Assets.  The Borrower will not,
and will not permit any Restricted Subsidiary to, sell, assign, farm-out, convey
or otherwise transfer any asset, including, without limitation, Property
containing proved reserves constituting a portion of the Borrowing Base except
for:

 

(a)                           the sale of Hydrocarbons in the ordinary course of
business;

 

(b)                           farmouts, sales or other dispositions of
undeveloped acreage or Oil and Gas Properties with no associated Proved Reserves
and assignments in connection with such transactions;

 

(c)                             the sale or other disposition of equipment in
the ordinary course of business or that is no longer necessary for the business
of the Borrower or such Restricted Subsidiary or is

 

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replaced by equipment of at least comparable value and use and the sale or other
disposition of assets that are obsolete or no longer necessary for the business
of the Borrower or such Restricted Subsidiary;

 

(d)                           the sale or other disposition (including Casualty
Events) of any Oil and Gas Property or any interest therein or any Restricted
Subsidiary owning Oil and Gas Properties; provided that

 

(A)                               100% of the consideration received in respect
of such sale or other disposition shall be cash;

 

(B)                               the consideration received in respect of such
sale or other disposition shall be equal to or greater than the fair market
value of the Oil and Gas Property, interest therein or the Restricted Subsidiary
subject of such sale or other disposition (as reasonably determined by the Board
of Directors of the Borrower and, if requested by the Administrative Agent, the
Borrower shall deliver a certificate of a Responsible Officer of the Borrower
certifying to that effect);

 

(C)                               if such sale or other disposition of Oil and
Gas Property or Restricted Subsidiary owning Oil and Gas Properties included in
the most recently delivered Reserve Report during any period between two
successive Scheduled Redetermination Dates has a fair market value in excess of
5% of the Borrowing Base then in effect, as determined by the Supermajority
Lenders, individually or in the aggregate, the Borrowing Base shall be reduced,
effective immediately upon such sale or disposition, by an amount equal to the
value, if any, assigned such Property in the most recently delivered Reserve
Report; provided that, in addition to the foregoing, if during any Subject
Borrowing Base Period such sale results in the sum of the Borrowing Base, as so
reduced, plus the aggregate principal amount of Secured Debt outstanding on the
date of such sale or disposition (other than the aggregate Credit Exposures)
exceeding the greater of (A) the sum of $50,000,000 and the aggregate principal
amount of Second Lien Term Loans repaid or prepaid as of such date of
determination and (B) an amount equal to 25% of Adjusted Consolidated Net
Tangible Assets as calculated in the certificate delivered by the Borrower
pursuant to Section 8.01(j), the Borrowing Base shall be further reduced,
effective immediately upon such sale or disposition, by an amount equal to such
excess; and

 

(D)                               if any such sale or other disposition is of a
Restricted Subsidiary, such sale or other disposition shall include all the
Equity Interests of such Restricted Subsidiary;

 

(e)                            sales and other dispositions of Properties not
regulated by the foregoing provisions of this Section 9.11 having a fair market
value not to exceed $1,000,000 during any 6-month period, and the sale, trade or
other disposition of seismic, geologic or other data, licenses and similar
rights or assets;

 

(f)                             sales, transfers and dispositions to the
Borrower or a Restricted Subsidiary;

 

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(g)                            dispositions of claims against customers, working
interest owners, other industry partners or any other Person in connection with
workouts or bankruptcy, insolvency or other similar proceedings with respect
thereto;

 

(h)                           dispositions of Equity Interests in Unrestricted
Subsidiaries and Investments in other Persons in existence on the Effective
Date; and

 

(i)                               dispositions of Equity Interests in Eureka
Hunter Holdings, including in exchange for Equity Interests in the Eureka MLP GP
and the Eureka MLP (including common units, subordinated units or incentive
distribution rights) or otherwise.

 

Section 9.12                            Environmental Matters.  The Borrower
will not, and will not permit any Restricted Subsidiary to, 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 Work under any
applicable Environmental Laws, assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions and circumstances, if
any, pertaining to such Property where such violations or remedial obligations
could reasonably be expected to have a Material Adverse Effect.

 

Section 9.13                            Transactions with Affiliates.  The
Borrower will not, and will not permit any Restricted Subsidiary to, enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate (other
than the Loan Parties) other than:

 

(a)                           transactions otherwise permitted under this
Agreement;

 

(b)                           transactions upon terms no less favorable to it
than it would obtain in a comparable arm’s length transaction with a Person not
an Affiliate;

 

(c)                            reasonable and customary director, officer and
employee compensation (including bonuses and severance) and other benefits
(including retirement, health, stock option and other benefit plans and
indemnification arrangements for the benefit of Borrower’s or any Subsidiary’s
officers, directors and employees entered into in the ordinary course of
business and in good faith or to the extent approved in good faith by the Board
of Directors of the Borrower; or

 

(d)                           (i) agreements entered into with one or more
Unrestricted Subsidiaries, Eureka MLP or Eureka MLP GP in connection the public
offering of securities by the Eureka MLP with respect to the operation,
management and administration of the Eureka MLP and its Subsidiaries, including
tax sharing agreements and the underwriting, offer and sale of securities in
such offering that, in the good faith judgment of the Borrower’s Board of
Directors, are on terms and conditions reasonably comparable to those in effect
with other similarly situated publicly traded master limited partnerships or
otherwise fair to the Borrower and the Restricted Subsidiaries, from a financial
point of view, in each case, as such agreements are in effect on the date of
closing of such public offering, (ii) any amendment, restatement, replacement or
other modification of any of such agreements and (iii) any agreement entered
into hereafter that is similar to any such agreements, so long as, in the case
of clause (ii) or (iii), the terms of any

 

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such amendment, restatement, replacement or other modification or future
agreement, taken as a whole, are no less advantageous to the Borrower and its
Restricted Subsidiaries in any material respect than the agreement so amended,
restated, replaced or modified or the similar such agreement, respectively, as
determined in good faith by the Borrower.

 

Section 9.14                            Subsidiaries.  The Borrower shall not,
and shall not permit any Restricted Subsidiary to, create or acquire any
additional Subsidiary unless the Borrower complies with Section 8.16.  The
Borrower shall not, and shall not permit any Restricted Subsidiary to, sell,
assign or otherwise dispose of any Equity Interests in any Subsidiary except in
compliance with Section 9.11.  Neither the Borrower nor any Restricted
Subsidiary shall acquire or form any Foreign Subsidiaries, except Subsidiaries
organized under Canadian law or Outback Shale Hunter Pty, Ltd., an Australian
company.

 

Section 9.15                            Subsidiary Obligations and Preferred
Stock.  The Borrower will not and will not permit any Restricted Subsidiary to
issue preferred stock or create, incur or assume any Debt, except for preferred
stock and Debt, in each case permitted under Section 9.02.

 

Section 9.16                            Negative Pledge Agreements; Dividend
Restrictions.  The Borrower will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or suffer to exist any contract, agreement
or understanding which in any way prohibits or restricts the granting,
conveying, creation or imposition of any Lien on any of its Property in favor of
the Administrative Agent and the Lenders or restricts any Loan Party from paying
dividends or making distributions to any other Loan Party, or which requires the
consent of or notice to other Persons in connection therewith; provided,
however, that the preceding restrictions will not apply to encumbrances or
restrictions arising under or by reason of (a) this Agreement or the Security
Instruments, (b) any leases or licenses or similar contracts as they affect any
Property or Lien subject to a lease or license, (c) any contract, agreement or
understanding creating Liens on Capital Leases or purchase money Debt permitted
by Section 9.03(c) or Debt described on Schedule 9.02 (but in each case only to
the extent related to the Property on which such Liens were created), (d) any
restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement entered into for the direct or indirect sale or disposition of all or
substantially all the equity or Property of such Restricted Subsidiary (or the
Property that is subject to such restriction) pending the closing of such sale
or disposition, (e) customary provisions with respect to the distribution of
Property in joint venture agreements, (f) the documents evidencing the Senior
Notes and (g) the Second Lien Term Loan Documents as in effect on the Effective
Date and any Permitted Refinancing Debt to the extent the restrictions and
agreements contained in such documents evidencing such Permitted Refinancing
Debt are not materially more restrictive than the restrictions and agreements in
the Second Lien Term Loan Documents or are otherwise reasonably satisfactory to
the Administrative Agent.

 

Section 9.17                            Gas Imbalances, Take-or-Pay or Other
Prepayments.  The Borrower will not allow gas imbalances, take-or-pay or other
prepayments with respect to the Oil and Gas Properties of the Borrower or any
Restricted Subsidiary that would require the Borrower or such Restricted
Subsidiary to deliver Hydrocarbons at some future time without then or
thereafter receiving full payment therefor to exceed 500 mmcf equivalent in the
aggregate at all times except for such amounts that are covered by adequate
reserves, which reserves (or the future cash flow therefrom) are excluded from
the most recent Reserve Report.

 

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Section 9.18                            Swap Agreements.

 

(a)                           The Borrower will not, and will not permit any
Restricted Subsidiary to, enter into or in any manner be liable on any Swap
Agreements with any Person other than:

 

(i)                                     Swap Agreements in respect of crude oil
(including natural gas liquids) or natural gas, in each case, (A) with an
Approved Counterparty and (B) the notional volumes for which (when aggregated
with other commodity Swap Agreements in effect for the same periods as such Swap
Agreement, other than basis differential swaps on volumes already hedged
pursuant to other Swap Agreements) do not exceed, as of the date such Swap
Agreement is executed, for crude oil (including natural gas liquids) or natural
gas, respectively, (1) 80% of the reasonably anticipated production of its
Proved Reserves with respect to such commodity for each month during the period
in which such Swap Agreement is in effect, and (2) (x) 100% of the most recent
production as provided in the report most recently delivered by the Borrower
pursuant to Section 8.01(m) for any succeeding twenty-four month period;
provided that, for any Swap Agreement executed during the last quarter of any
calendar year, such period shall be extended to December 31st of the second
calendar year following execution of such Swap Agreement and (y) 75% of the most
recent production as provided in the report most recently delivered by the
Borrower pursuant to Section 8.01(m) for any period beyond such twenty-four
month period (or such extended period as provided in the foregoing proviso);

 

(ii)                                  Swap Agreements in respect of interest
rates with an Approved Counterparty, as follows: (A) Swap Agreements effectively
converting interest rates from fixed to floating, the notional amounts of which
(when aggregated with all other Swap Agreements of the Borrower and its
Restricted Subsidiaries then in effect effectively converting interest rates
from fixed to floating) do not exceed 75% of the then outstanding principal
amount of the Borrower’s fixed rate Debt for borrowed money and (B) Swap
Agreements effectively converting interest rates from floating to fixed, the
notional amounts of which (when aggregated with all other Swap Agreements of the
Borrower and its Restricted Subsidiaries then in effect effectively converting
interest rates from floating to fixed) do not exceed 75% of the then outstanding
principal amount of the Borrower’s Debt for borrowed money which bears interest
at a floating rate;

 

(iii)                               Swap Agreements with respect to which Debt
is allowed pursuant to Section 9.02; and

 

(iv)                              Swap Agreements to hedge foreign exchange rate
risks to which the Borrower or any of its Restricted Subsidiaries has actual
exposure.

 

In no event shall any Swap Agreement to which the Borrower or any Restricted
Subsidiary is a party contain any requirement, agreement or covenant for the
Borrower or any Restricted Subsidiary to post cash or other collateral or margin
to secure their obligations under such Swap Agreement or to cover market
exposures.

 

(b)                           Notwithstanding the provisions of Section 2.07(e),
the Borrower will not, and will not permit any Restricted Subsidiary to,
terminate, cancel or otherwise cease to be a party to

 

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existing Swap Agreements to the extent the termination value, as determined by
the Administrative Agent in its sole discretion, of any such terminated Swap
Agreement, on a net basis considering all other Swap Agreements so terminated
during the period between any two Scheduled Redetermination Dates (including any
new Swap Agreements entered into hereafter), would exceed five percent (5%) of
the then effective Borrowing Base.

 

(c)                            For purposes of this Section 9.18, purchases of
put options or price floors or offsetting Hedging Agreements entered into for
the purpose of unwinding an existing Hedging Agreement to maintain compliance
with this Section 9.18 shall not be considered Swap Agreements and shall not be
prohibited by the terms hereof.

 

Section 9.19                            Sale and Leaseback Transactions.  The
Borrower will not, and will not permit any of its Restricted Subsidiaries to,
enter into any arrangement, directly or indirectly, whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereinafter acquired, and thereafter rent or lease such property or
other property that it intends to use for substantially the same purpose or
purposes as the property sold or transferred.

 

Section 9.20                            Covenants Regarding the Second Lien Term
Loans.

 

(a)                           The Borrower shall not repay or prepay any amounts
owing in respect of the Second Lien Term Loans except (i) regularly scheduled
payments as set forth in the Second Lien Term Loan Documents as in effect on the
Effective Date, (ii) mandatory prepayments to the extent permitted by the Second
Lien Term Loan Documents as in effect on the Effective Date, (iii) voluntary
prepayments so long as in this case of this clause (iii), at the time of and
after giving effect to such prepayment and any prepayment penalty required in
connection therewith, (A) no Default or Event of Default shall exist, (B) the
Borrower is in compliance on a pro forma basis with the financial covenants set
forth in Section 9.01 and (C) Revolver Availability is equal to or greater than
the lesser of (x) $50,000,000 and (y) twenty-five percent (25%) of the Borrowing
Base then in effect or (iv) prepayments in connection with Permitted Refinancing
Debt.

 

(b)                           Neither the Borrower nor any of its Subsidiaries
shall grant a Lien in favor of the Second Lien Agent or otherwise securing the
Second Lien Term Loans on any of its assets if those same assets are not subject
to, and do not become subject to, a Lien securing the Obligations.

 

(c)                            The Borrower shall not permit any of its
Subsidiaries to be a guarantor of the Second Lien Term Loans if such Subsidiary
is not a party to, and does not become a party to, the Guaranty.

 

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ARTICLE X

 

Events of Default; Remedies

 

Section 10.01                     Events of Default.  One or more of the
following events shall constitute an “Event of Default”:

 

(a)                           the Borrower shall fail to pay any principal of
any Loan 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, by acceleration or otherwise;

 

(b)                           the Borrower shall fail to pay any interest on any
Loan or any fee or any other amount (other than an amount referred to in
Section 10.01(a)) payable under any Loan Document, when and as the same shall
become due and payable, and such failure shall continue unremedied for a period
of three (3) Business Days;

 

(c)                            any representation or warranty made or deemed
made by or on behalf of the Borrower or any Restricted Subsidiary in or in
connection with any Loan Document or any amendment or modification of any Loan
Document or waiver under such Loan Document, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with any Loan Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect when made or deemed made in any
material respect;

 

(d)                           the Borrower or any Restricted Subsidiary shall
fail to observe or perform any covenant, condition or agreement contained in
Section 8.01(h), Section 8.01(l), Section 8.02, Section 8.03, Section 8.12,
Section 8.15, Section 8.17, Section 8.20 or in ARTICLE IX (other than
Section 9.02, Section 9.03 and Section 9.18);

 

(e)                            any Loan Party shall fail to observe or perform
any covenant, condition or agreement contained in this Agreement (other than
those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or
any other Loan Document, and such failure shall continue unremedied for a period
of 30 days after the earlier to occur of (i) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender) or (ii) a Responsible Officer of the Borrower or such Restricted
Subsidiary otherwise becoming aware of such default;

 

(f)                             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 Debt, when and as the same shall become due
and payable if the effect of such event is to cause, or (with the giving of any
notice or the lapse of time or both) to permit the holder or holders of such
Debt (or a trustee or agent on behalf of such holder or holders) to cause, such
Debt to become due prior to its stated maturity;

 

(g)                            any event or condition occurs that results in any
Material Debt 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 Debt or any trustee or agent on its or their
behalf to cause any Material Debt to become due, or to require the Redemption
thereof or any offer to Redeem to be made in respect thereof, prior to its
scheduled maturity or require the Borrower or any Restricted Subsidiary to make
an offer in respect thereof;

 

(h)                           an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the Borrower or any

 

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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
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 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 Section 10.01(h),
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for 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 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)                           one or more judgments for the payment of money in
an aggregate amount in excess of $10,000,000 (to the extent not covered by
independent third party insurance provided by insurers of the highest claims
paying rating or financial strength as to which the insurer has been notified,
does not dispute coverage and is not subject to an insolvency proceeding) shall
be rendered against the Borrower, any Restricted Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 60 consecutive
days during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to attach or levy upon any assets of the
Borrower or any Restricted Subsidiary to enforce any such judgment;

 

(l)                               the Loan Documents after delivery thereof
shall for any reason, except to the extent permitted by the terms thereof, cease
to be in full force and effect and valid, binding and enforceable in accordance
with their terms against the Borrower or any other Loan Party thereto or shall
be repudiated, 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;

 

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

 

(n)                            a Change in Control shall occur;

 

(o)                           an “Event of Default” as defined in the Second
Lien Term Loan Agreement shall occur; or

 

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(p)                           the Intercreditor Agreement 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 against the parties thereto or
shall be repudiated, or any party thereto shall so state in writing.

 

Section 10.02                     Remedies.

 

(a)                           In the case of an Event of Default other than one
described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time
thereafter during the continuance of such Event of Default, the Administrative
Agent may, and at the request of the Majority 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 Notes and 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 and under the Notes and the other
Loan Documents (including, without limitation, the payment of Cash Collateral to
secure the LC Exposure as provided in Section 2.08(j)), shall become due and
payable immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor; and in case of an Event of
Default described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), the
Commitments shall automatically terminate and the Notes and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
the other obligations of the Borrower accrued hereunder and under the Notes and
the other Loan Documents (including, without limitation, the payment of Cash
Collateral to secure the LC Exposure as provided in Section 2.08(j)), 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.

 

(b)                           In the case of the occurrence of an Event of
Default, the Administrative Agent and the Lenders will have all other rights and
remedies available at law and equity.

 

(c)                            All proceeds realized from the liquidation or
other disposition of collateral or otherwise received after maturity of the
Loans or the Notes, whether by acceleration or otherwise, shall be applied: 
first, to reimbursement of expenses and indemnities provided for in this
Agreement and the Security Instruments; second, to accrued interest on the
Loans; third, to fees; fourth, pro rata to principal outstanding on the Loans
and to Obligations referred to in clause (c) of the definition of “Obligations”;
fifth, to any other Obligations; sixth, to serve as Cash Collateral to be held
by the Administrative Agent to secure the LC Exposure; and any excess shall be
paid to the Borrower or as otherwise required by any Governmental Requirement.

 

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ARTICLE XI

 

The Administrative Agent

 

Section 11.01                     Appointment; Powers.

 

Each of the Lenders and the Issuing Bank hereby irrevocably (subject to
Section 11.06) 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 and the
other Loan Documents, together with such actions and powers as are reasonably
incidental thereto.

 

Section 11.02                     Duties and Obligations of Administrative
Agent.  The Administrative Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents.  Without limiting the
generality of the foregoing, the Administrative Agent (a) shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) shall not have any duty to take any
discretionary action or exercise any discretionary powers, except as provided in
Section 11.03, and (c) except as expressly set forth herein, shall not have any
duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as the Administrative Agent or
any of its Affiliates in any capacity.  The Administrative Agent shall be deemed
not to have knowledge of any Default unless and until written notice thereof is
given to it by the Borrower or a Lender, and shall not be responsible for or
have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or under any other Loan Document or in connection herewith
or therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any other agreement, instrument or
document, (v) the satisfaction of any condition set forth in ARTICLE VI or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to it or as to those conditions precedent specifically required to
be to its satisfaction, (vi) the existence, value, perfection or priority of any
collateral security or the financial or other condition of the Borrower and its
Subsidiaries or any other obligor or guarantor, or (vii) any failure by the
Borrower or any other Person (other than itself) to perform any of its
obligations hereunder or under any other Loan Document or the performance or
observance of any covenants, agreements or other terms or conditions set forth
herein or therein.

 

Section 11.03                     Action by Administrative Agent.  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 it 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 12.02) and in all cases it shall be fully justified in failing or
refusing to act hereunder or under any other Loan Documents unless it shall
(a) receive written instructions from the Majority Lenders or the Lenders, as
applicable, (or such other number or percentage of the Lenders as shall be
necessary under the

 

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circumstances as provided in Section 12.02) specifying the action to be taken
and (b) be indemnified to its satisfaction by the Lenders against any and all
liability and expenses which may be incurred by it by reason of taking or
continuing to take any such action.  The instructions as aforesaid and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders.  If a Default has occurred and is continuing, then the Administrative
Agent shall take such action with respect to such Default as shall be directed
by the requisite Lenders in the written instructions (with indemnities)
described in this Section 11.03, provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interests of the Lenders.  In no event, however, shall the
Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement, the Loan Documents or applicable law.  If a Default has occurred and
is continuing, the Arranger shall not have any obligation to perform any act in
respect thereof.  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 the Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 12.02), and
otherwise the Administrative Agent shall not be liable for any action taken or
not taken by it hereunder or under any other Loan Document or under any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith including its own ordinary negligence, except
for its own gross negligence or willful misconduct.

 

Section 11.04                     Reliance by Administrative Agent.  The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing 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 and each of the Borrower, the Lenders and the Issuing Bank
hereby waives the right to dispute the Administrative Agent’s record of such
statement, except in the case of gross negligence or willful misconduct by the
Administrative Agent.  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.  The
Administrative Agent may deem and treat the payee of any Note as the holder
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof permitted hereunder shall have been filed with
the Administrative Agent.

 

Section 11.05                     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 it.  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 Sections of this ARTICLE XI 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.

 

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Section 11.06                     Resignation or Removal of Administrative
Agent.  Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this Section 11.06, the Administrative Agent may resign at
any time by notifying the Lenders, the Issuing Bank and the Borrower, and the
Administrative Agent may be removed at any time with or without cause by the
Majority Lenders.  Upon any such resignation or removal, the Majority Lenders
shall have the right, in consultation with and upon the approval of the Borrower
(so long as no Event of Default has occurred and is continuing), which approval
shall not be unreasonably withheld, 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 or removal of the retiring Administrative Agent, 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 XI and Section 12.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.

 

Section 11.07                     Administrative Agent as Lender.  Each 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 Borrower or any Subsidiary or other Affiliate thereof as if it
were not the Administrative Agent hereunder.

 

Section 11.08                     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 decision to enter into this
Agreement and each other Loan Document to which it is a party.  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 other Loan Document, any related agreement or any document furnished
hereunder or thereunder.  The Administrative Agent shall not be required to keep
itself informed as to the performance or observance by the Borrower or any of
its Subsidiaries of this Agreement, the Loan Documents or any other document
referred to or provided for herein or to inspect the Properties or books of the
Borrower or its Subsidiaries.  Except for notices, reports and other documents
and information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, neither the Administrative Agent nor the
Arranger shall have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of the Borrower

 

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(or any of its Affiliates) which may come into the possession of the
Administrative Agent or any of its Affiliates.  In this regard, each Lender
acknowledges that Andrews Kurth LLP is acting in this transaction as special
counsel to the Administrative Agent only, except to the extent otherwise
expressly stated in any legal opinion or any Loan Document.  Each other party
hereto will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.

 

Section 11.09                     Authority to Release Collateral, Liens and
Guarantors.  Each Lender and the Issuing Bank hereby authorizes the
Administrative Agent to (a) release any collateral that is permitted to be sold
or released pursuant to the terms of the Loan Documents and (b) subject to
Section 12.02(b)(vii), release any Guarantor from its obligations under any Loan
Documents if such Person ceases to be a Restricted Subsidiary as a result of a
transaction permitted under this Agreement.  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,
termination statements, assignments or other documents reasonably requested by
the Borrower in connection with such sale or other disposition or such
transaction to the extent such sale or other disposition or such transaction is
permitted by the terms of Section 9.11 or is otherwise authorized by the terms
of the Loan Documents.

 

Section 11.10                     The Lead Arrangers, the Syndication Agent and
the Co-Documentation Agents.  None of the Lead Arrangers, the Syndication Agent
or the Co-Documentation Agents shall have any duties, responsibilities or
liabilities under this Agreement and the other Loan Documents other than, in the
case of any Persons that are also Lenders, their duties, responsibilities and
liabilities in their capacities as Lenders hereunder.

 

Section 11.11                     Filing of Proofs of Claim.  In case of any
Default or Event of Default under Section 10.01(h), Section 10.01(i) or
Section 10.01(j), the Administrative Agent (regardless of whether the principal
of any Loan or LC Exposure shall then be due and payable and regardless of
whether the Administrative Agent has made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

 

(a)                           to (i) file and prove a claim for the whole amount
of the principal and interest owing and unpaid in respect of the Loans, LC
Exposure and all other Obligations that is owing and unpaid and (ii) 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, the
Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders, the Administrative Agent under Section 3.03 and
Section 12.03) allowed in such judicial proceeding; and

 

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

 

Each Lender hereby authorizes any custodian, receiver, assignee, trustee,
conservator, sequestrator or other similar official in any such judicial
proceeding: (i) to make such payments to the Administrative Agent; and (ii) if
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

 

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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 3.03 and Section 12.03.  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 Obligations
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.  Each Lender retains
its right to file and prove a claim separately.

 

ARTICLE XII

 

Miscellaneous

 

Section 12.01                     Notices.

 

(a)                           Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
Section 12.01(b)), 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 Borrower, to it at Magnum
Hunter Resources Corporation, 1046 Texan Trail, Grapevine, Texas 76051,
Attention Joseph C. Daches (Telecopy No. 832-369-6992);

 

(ii)                                  if to the Administrative Agent or the
Issuing Bank, to it at Bank of Montreal, 700 Louisiana Street, Suite 4400,
Houston, Texas 77002, Attention Gumaro Tijerina (Telecopy No. 713-223-4007, with
a copy to 600 Travis, Suite 4200, Houston, Texas 77002, Attention Tom Perich
(Telecopy No. (713) 220-7175);

 

(iii)                               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, ARTICLE III, ARTICLE IV and
ARTICLE V 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.

 

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Section 12.02                     Waivers; Amendments.

 

(a)                           No failure on the part of the Administrative
Agent, the Issuing Bank or any Lender to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power or privilege, or any
abandonment or discontinuance of steps to enforce such right, power or
privilege, under any of the Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any of the Loan Documents preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies of the
Administrative Agent, the Issuing Bank and the Lenders hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have.  No waiver of any provision of this
Agreement or any other Loan Document or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
Section 12.02(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the
generality of the foregoing, the making of a Loan 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 or the Maximum
Credit Amount of any Lender without the written consent of such Lender,
(ii) increase the Borrowing Base without the written consent of each Lender,
decrease or maintain the Borrowing Base without the consent of the Supermajority
Lenders, or modify Section 2.07 without the consent of each Lender, (iii) reduce
the principal amount of any Loan or LC Disbursement or reduce the rate of
interest thereon, or reduce any fees payable hereunder, or reduce any other
Obligations hereunder or under any other Loan Document, without the written
consent of each Lender affected thereby, (iv) postpone the scheduled date of
payment of the principal amount of any Loan or LC Disbursement, or any interest
thereon, or any fees payable hereunder, or any other Obligations hereunder or
under any other Loan Document, or reduce the amount of, waive or excuse any such
payment, or postpone or extend the Termination Date without the written consent
of each Lender affected thereby, (v) change Section 4.01(b) or
Section 4.01(c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (vi) waive or
amend Section 8.14, without the written consent of each Lender, (vii) release
all or substantially all of the value of the guarantees of the Obligations
pursuant to the Guaranty, without the written consent of each Lender,
(viii) release any of the collateral (other than as provided in Section 11.09),
or reduce the percentage set forth in the definition of “Minimum Collateral
Amount” to less than 90%, without the written consent of each Lender,
(viii) change any of the provisions of this Section 12.02(b) or the definitions
of “Applicable Percentage”, “Majority Lenders” or “Supermajority Lenders” or any
other provision hereof specifying the number or percentage of Lenders required
to waive, amend or modify any rights hereunder or under any other Loan Documents
or make any determination or grant any consent hereunder or any other Loan
Documents, without the written consent of each Lender or (ix) waive, amend or
modify this

 

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Agreement or the Security Agreement in a manner that would alter the ratable
treatment of Obligations arising under the Loan Documents and Obligations
described in clause (c) of the definition of “Obligations” or the definitions of
“Approved Counterparty”, “Obligations” or “Swap Agreement” in a manner adverse
to any Person described in clause (c) of the definition of “Obligations”,
without the written consent of each such affected Person; provided further that
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent or the Issuing Bank hereunder or under any other
Loan Document without the prior written consent of the Administrative Agent or
the Issuing Bank, as the case may be.  Notwithstanding the foregoing, any
supplement to Schedule 7.14 (Subsidiaries) shall be effective simply by
delivering to the Administrative Agent a supplemental schedule clearly marked as
such and, upon receipt, the Administrative Agent will promptly deliver a copy
thereof to the Lenders.  Notwithstanding anything to the contrary contained
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or modification hereunder, except that (x) any amendment,
waiver or modification requiring the consent of all Lenders or each affected
Lender which affects such Defaulting Lender differently that other affected
Lenders and (y) any amendment referenced in clauses (i), (iii) and (iv) of this
Section 12.02(b) which affects such Defaulting Lender, shall, in each case,
require the consent of such Defaulting Lender.

 

Section 12.03                     Expenses, Indemnity; Damage Waiver.

 

(a)                           The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and their
Affiliates, including, without limitation, the reasonable fees, charges and
disbursements of counsel and other outside consultants for the Administrative
Agent, the reasonable travel, photocopy, mailing, courier, telephone and other
similar expenses, and the cost of environmental audits and surveys and
appraisals, in connection with the syndication of the credit facilities provided
for herein, the preparation, negotiation, execution, delivery and administration
(both before and after the execution hereof and including advice of counsel to
the Administrative Agent as to the rights and duties of the Administrative Agent
and the Lenders with respect thereto) of this Agreement and the other Loan
Documents and any amendments, modifications or waivers of or consents related to
the provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all costs, expenses, Taxes,
assessments and other charges incurred by the Administrative Agent or any Lender
in connection with any filing, registration, recording or perfection of any
security interest contemplated by this Agreement or any Security Instrument or
any other document referred to therein, (iii) all reasonable out-of-pocket
expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit issued by the Issuing
Bank or any demand for payment thereunder and (iv) all out-of-pocket expenses
incurred by the Administrative Agent, the Issuing Bank or any Lender, including
the reasonable 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 or any
other Loan Document, including its rights under this Section 12.03, or in
connection with the Loans made or Letters of Credit issued hereunder, including,
without limitation, all such out-of-pocket expenses incurred during  any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

 

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(b)                           The Borrower shall indemnify the Arranger, 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 other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto or the parties to any other Loan Document of
their respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or by any other Loan Document, (ii) the failure
of the Borrower or any Subsidiary to comply with the terms of any Loan Document,
including this Agreement, or with any Governmental Requirement, (iii) any
inaccuracy of any representation or any breach of any warranty or covenant of
the Borrower set forth in any of the Loan Documents or any instruments,
documents or certifications delivered in connection therewith, (iv) any loan or
Letter of Credit or the use of the proceeds therefrom, including, without
limitation, (A) any refusal by the Issuing Bank to honor a demand for payment
under a Letter of Credit issued by the Issuing Bank if the documents presented
in connection with such demand do not strictly comply with the terms of such
Letter of Credit, or (B) the payment of a drawing under any Letter of Credit
notwithstanding the non-compliance, non-delivery or other improper presentation
of the documents presented in connection therewith, (v) the operations of the
business of the Borrower and its Subsidiaries by the Borrower and its
Subsidiaries, (vi) any assertion that the Lenders were not entitled to receive
the proceeds received pursuant to the Security Instruments, (vii) any
Environmental Law applicable to the Borrower or any Subsidiary or any of their
properties, including without limitation, the presence, generation, storage,
release, threatened release, use, transport, disposal, arrangement of disposal
or treatment of oil, oil and gas wastes, solid wastes or hazardous substances on
any of their properties, (viii) the breach or non-compliance by the Borrower or
any Subsidiary with any Environmental Law applicable to the Borrower or any
Subsidiary, (ix) the past ownership by the Borrower or any Subsidiary of any of
their properties or past activity on any of their properties which, though
lawful and fully permissible at the time, could result in present liability,
(x) the presence, use, release, storage, treatment, disposal, generation,
threatened release, transport, arrangement for transport or arrangement for
disposal of oil, oil and gas wastes, solid wastes or hazardous substances on or
at any of the properties owned or operated by the Borrower or any Subsidiary or
any actual or alleged presence or release of hazardous materials on or from any
property owned or operated by the Borrower or any of its Subsidiaries, (xi) any
environmental liability related in any way to the Borrower or any of its
Subsidiaries, (xii) any other environmental, health or safety condition in
connection with the Loan Documents, or (xiii) 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, and such Indemnity shall extend to each
Indemnitee notwithstanding the sole or concurrent negligence of every kind or
character whatsoever, whether active or passive, whether an affirmative act or
an omission, including without limitation, all types of negligent conduct
identified in the restatement (second) of torts of one or more of the
Indemnitees or by reason of strict liability imposed without fault on any one or
more of the Indemnitees; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (a) are

 

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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, (b) relate to agreements, or obligations to which Borrower and
its Subsidiaries are not parties, (c) relate to any claim not involving an act
or omission by the Borrower or its Affiliates that is brought by an Indemnitee
against any other Indemnitee (other than a dispute involving claims against the
Administrative Agent or the Issuing Lender, in each case, in its capacity as
such), (d) relate to laws, rules or regulations affecting the Lenders, the
Administrative Agent or the Lead Arrangers and not the Borrower or its
Subsidiaries, or (e) in respect of any property for any occurrence arising from
the acts or omissions of the Administrative Agent or any Lender during the
period after which such Person, its successors or assigns shall have obtained
possession of such property (whether by foreclosure or deed in lieu of
foreclosure, as mortgagee-in-possession or otherwise).  This
Section 12.03(b) shall not apply with respect to Taxes other than any Taxes that
represent losses, claims, damages, etc. arising from any non-Tax claim.

 

(c)                            To the extent that the Borrower fails to pay any
amount required to be paid by it to the Administrative Agent or the Issuing Bank
under Section 12.03(a) or (b), 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, the
Borrower and the Indemnified Parties shall not assert, and hereby waive, any
claim against each other, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby or thereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof
(it being understood that, to the extent any Indemnitee is liable to a third
party for any special, indirect, consequential or punitive damages, the
Borrower’s indemnification obligations set forth in paragraph (b) above shall
apply, subject to the proviso contained in such paragraph (b)).  No Indemnitee
shall be liable for any damages arising from the use by unintended recipients of
any information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby.

 

(e)                            All amounts due under this Section 12.03 shall be
payable promptly after written demand therefor.

 

Section 12.04                     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) the Borrower may not
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower

 

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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 12.04.  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 Section 12.04(c)) 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 Section 12.04(b)(ii), 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 or delayed) of:  (A) the Borrower, provided that no
consent of the Borrower shall be required for an assignment to a Lender that is
not a Defaulting Lender, an Affiliate of a Lender that is not a Defaulting
Lender, an Approved Fund or, if an Event of Default has occurred and is
continuing, any other assignee, provided further that the Borrower shall be
deemed to have consented to any such assignment unless it shall object thereto
by written notice to the Administrative Agent within five Business Days after
having received written notice thereof; and (B) the Administrative Agent,
provided that no such consent shall be required for an assignment to an assignee
that is a Lender that is not a Defaulting Lender immediately prior to giving
effect to such assignment.

 

(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 or an assignment of the entire remaining
amount of the assigning Lender’s Commitment, the amount of the Commitment of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $10,000,000, and the Commitments of
any assigning Lender remaining a party hereto after giving effect to the
assignment shall be at least $10,000,000, unless, in each case, each of the
Borrower, the Administrative Agent otherwise consents, 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; (D) the assignee, if it shall not be
a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire and shall deliver notice of the Assignment and Assumption to the
Borrower; (E) in the case of an assignment to a CLO, the assigning Lender shall
retain the sole right to approve any amendment, modification or waiver of any
provision of this Agreement, provided that the Assignment and Assumption between
such Lender and such CLO may provide that such Lender will not, without the
consent of such CLO, agree to any amendment, modification or waiver described in
the first proviso to Section 12.02 that affects such CLO or (F) no assignment
shall be made to (1) a natural Person, (2) the Borrower or any of its Affiliates
or Subsidiaries or (3) any Defaulting Lender or

 

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any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder,
would constitute any of the foregoing Persons described in this clause (3).

 

(iii)                               Subject to Section 12.04(b)(iv) and the
acceptance and recording thereof, 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 Section 5.01, Section 5.02, Section 5.03 and Section 12.03).  Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 12.04 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 Section 12.04(c).

 

(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 Maximum Credit
Amount 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 conclusive, and the Borrower, the
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.  In connection with any changes to the Register, if
necessary, the Administrative Agent will reflect the revisions on Annex I and
forward a copy of such revised Annex I to the Borrower, the Issuing Bank and
each Lender.

 

(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 Section 12.04(b) and any written consent to such assignment required by
Section 12.04(b), the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register.  No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this Section 12.04(b).

 

(c)                            (i)                                     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”) 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

 

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(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 proviso to Section 12.02 that
affects such Participant.  In addition such agreement must provide that the
Participant be bound by the provisions of Section 12.03.  Subject to
Section 12.04(c)(ii), the Borrower agrees that each Participant shall be
entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 12.04(b).  To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 12.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 4.01(c) as
though it were a Lender.

 

(ii)                                  A Participant shall not be entitled to
receive any greater payment under Section 5.01 or Section 5.03 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 5.03 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 5.03(g) as though it were a
Lender.

 

(iii)                               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 the Loan Documents (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all or
any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant’s interest in any
commitments, loans, letters of credit or its other obligations under any Loan
Document) to any Person except to the extent that such disclosure is necessary
to establish that such commitment, loan, 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.  For the avoidance
of doubt, the Administrative Agent (in its capacity as Administrative Agent)
shall have no responsibility for maintaining a Participant Register.

 

(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 any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section 12.04(d) shall not apply
to any such pledge or assignment of a security interest; provided that no such

 

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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.

 

(e)                            Notwithstanding any other provisions of this
Section 12.04, no transfer or assignment of the interests or obligations of any
Lender or any grant of participations therein shall be permitted if such
transfer, assignment or grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any
state.

 

Section 12.05                     Survival; Revival; Reinstatement.

 

(a)                           All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of this Agreement
and the making of any Loans 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 Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 and ARTICLE XI shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement, any other
Loan Document or any provision hereof or thereof.

 

(b)                           To the extent that any payments on the Obligations
or proceeds of any collateral are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver or other Person under any bankruptcy law, common
law or equitable cause, then to such extent, the Obligations so satisfied shall
be revived and continue as if such payment or proceeds had not been received and
the Administrative Agent’s, and the Lenders’ Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect.  In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent or the Lenders to effect such
reinstatement.

 

Section 12.06                     Counterparts; Integration; Effectiveness.

 

(a)                           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.

 

(b)                            This Agreement, the other Loan Documents and any
separate letter agreements with respect to fees payable to the Arranger and the
Administrative Agent constitute the entire

 

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contract among the parties relating to the subject matter hereof and thereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof and thereof.  This Agreement and the other
Loan Documents represent the final agreement among the parties hereto and
thereto and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties.  There are no unwritten oral
agreements between the parties.

 

(c)                            Except as provided in Section 6.01(a), 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 electronic transmission (e.g., “pdf”) shall be effective as delivery
of a manually executed counterpart of this Agreement.

 

Section 12.07                     Severability.  Any provision of this Agreement
or any other Loan Document held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof or thereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

 

Section 12.08                     Right of Setoff.  If an Event of Default shall
have occurred and be continuing, each Lender, the Issuing Bank and each of their
respective 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 (of whatsoever kind, including, without limitation, Swap
Agreements with the Borrower or any Restricted Subsidiary) at any time owing by
such Lender, the Issuing Bank or Affiliate to or for the credit or the account
of the Borrower or any Restricted Subsidiary against any of and all the
obligations of the Borrower or any Restricted Subsidiary owed to such Lender now
or hereafter existing under this Agreement or any other Loan Document,
irrespective of whether or not such Lender, the Issuing Bank or such Affiliate
shall have made any demand under this Agreement or any other Loan Document and
although such obligations may be contingent or unmatured or are owed to a
branch, office or Affiliate of such Lender or the Issuing Bank different from
the branch, office or Affiliate holding such deposit or obligated on such
indebtedness; provided that in the event that any Defaulting Lender shall
exercise any such right of setoff, (x) all amounts so set off shall be paid over
immediately to the Administrative Agent for further application in accordance
with the provisions of Section 5.07 and, pending such payment, shall be
segregated by such Defaulting Lender from its other funds and deemed held in
trust for the benefit of the Administrative Agent, the Issuing Bank, and the
Lenders, and (y) the Defaulting Lender shall provide promptly to the
Administrative Agent a statement describing in reasonable detail the Obligations
owing to such Defaulting Lender as to which it exercised such right of setoff. 
The rights of each Lender, the Issuing Bank and their respective Affiliates
under this Section 12.08 are in addition to other rights and remedies (including
other rights of setoff) which such Lender, the Issuing Bank or their respective
Affiliates may have.  Each Lender and the Issuing Bank agrees to notify the
Borrower and the Administrative Agent promptly after any

 

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such setoff and application; provided that the failure to give such notice shall
not affect the validity of such setoff and application.

 

Section 12.09                     Governing Law; Jurisdiction; Consent to
Service of Process.

 

(a)                           This Agreement and the Loan Documents shall be
governed by, and construed in accordance with, the laws of the State of New York
without regard to any choice-of-law provisions that would require the
application of the law of another jurisdiction; provided, to the extent any of
the Security Instruments recite that they are governed by the law of another
jurisdiction, or any action or event taken thereunder (such as foreclosure of
the Mortgaged Property) requires application of or compliance with the law of
another jurisdiction, such provisions and concepts shall apply.

 

(b)                           Any legal action or proceeding with respect to the
Loan Documents shall be brought in the courts of the Supreme Court of the State
of New York sitting in New York County and of the United States District Court
of the Southern District of New York, and, by execution and delivery of this
Agreement, each party hereby accepts for itself and (to the extent permitted by
law) in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts.  Each party hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions. 
This submission to jurisdiction is non-exclusive and does not preclude a party
from obtaining jurisdiction over another party in any court otherwise having
jurisdiction.

 

(c)                            Each party irrevocably consents to the service of
process of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage prepaid,
to it at the address specified in Section 12.01 or such other address as is
specified pursuant to Section 12.01 (or its assignment and assumption), such
service to become effective 30 days after such mailing.  Nothing herein shall
affect the right of a party or any holder of a note to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against another party in any other jurisdiction.

 

(d)                           Each party hereby (i) irrevocably and
unconditionally waives, to the fullest extent permitted by law, trial by jury in
any legal action or proceeding relating to this Agreement or any other Loan
Document and for any counterclaim therein; (ii) irrevocably waives, to the
maximum extent not prohibited by law, any right it may have to claim or recover
in any such litigation any special, exemplary, punitive or consequential
damages, or damages other than, or in addition to, actual damages (it being
understood that, to the extent any Indemnitee is liable to a third party for any
special, exemplary, punitive or consequential damages, the Borrower’s
indemnification obligations set forth in Section 12.03(b) shall apply, subject
to the proviso contained in Section 12.03(b)); (iii) certifies that no party
hereto nor any representative or agent of counsel for any party hereto has
represented, expressly or otherwise, or implied that such party would not, in
the event of litigation, seek to enforce the foregoing waivers, and
(iv) acknowledges that it has been induced to enter into this Agreement, the
Loan Documents

 

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and the transactions contemplated hereby and thereby by, among other things, the
mutual waivers and certifications contained in this Section 12.09.

 

Section 12.10                     Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.

 

Section 12.11                     Confidentiality.  Each of the Administrative
Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates’ directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent required or requested by any regulatory
authority or self-regulatory body, (c) to the extent required by applicable laws
or regulations or by any subpoena or similar legal process; provided Borrower
has been given reasonable advance notice thereof, to the extent permitted by
law, and been afforded an opportunity to limit or protest the disclosure, (d) to
any other party to this Agreement or any other Loan Document, (e) in connection
with the exercise of any remedies hereunder or under any other Loan Document or
any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this
Section 12.11, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors) to
any Swap Agreement relating to the Borrower and its obligations, (g) with the
consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section 12.11 or
(ii) becomes available to the Administrative Agent, the Issuing Bank or any
Lender on a nonconfidential basis from a source other than the Borrower.  For
the purposes of this Section 12.11, “Information” means all information received
from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary
and their 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 Borrower or a Subsidiary.  Any Person required to
maintain the confidentiality of Information as provided in this Section 12.11
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information. 
Notwithstanding anything herein to the contrary, any party hereto (and each
employee, representative or other agent of such party) may disclose without
limitation of any kind, any information with respect to the “tax treatment” and
“tax structure” (in each case, within the meaning of Treasury Regulation
Section 1.6011-4) of the transactions contemplated hereby and all materials of
any kind (including opinions or other tax analyses) that are provided to that
party relating to such tax treatment or tax structure; provided that with
respect to any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transactions, as well as
other information, this sentence shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax structure of
the transactions contemplated hereby.

 

Section 12.12                     Exculpation Provisions.  Each of the parties
hereto specifically agrees that it has a duty to read this Agreement and the
other Loan Documents and agrees that it is

 

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charged with notice and knowledge of the terms of this Agreement and the other
Loan Documents; that it has in fact read this Agreement and is fully informed
and has full notice and knowledge of the terms and conditions of this Agreement;
that it has been represented by independent legal counsel of its choice
throughout the negotiations preceding its execution of this Agreement and the
other Loan Documents; and has received the advice of its attorney in entering
into this Agreement and the other Loan Documents; and that it recognizes that
certain of the terms of this Agreement and the other Loan Documents may result,
subject to the terms hereof and thereof and applicable law, in one party
assuming the liability inherent in some aspects of the transaction and relieving
the other party of its responsibility for such liability.  Each party hereto
agrees and covenants that it will not contest the validity or enforceability of
any exculpatory provision of this Agreement and the other loan documents on the
basis that the party had no notice or knowledge of such provision or that the
provision is not “conspicuous.”

 

Section 12.13                     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 Borrower, and no other Person (including, without
limitation, any Subsidiary of the Borrower, any obligor, contractor,
subcontractor, supplier or materialmen) shall have any rights, claims, remedies
or privileges hereunder or under any other Loan Document against the
Administrative Agent, the Issuing Bank or any Lender for any reason whatsoever. 
There are no third party beneficiaries.

 

Section 12.14                     Collateral Matters; Swap Agreements.  The
benefit of the Security Instruments and of the provisions of this Agreement
relating to any collateral securing the Obligations shall also extend to and be
available to those Lenders or their Affiliates which are counterparties to any
Swap Agreement with the Borrower or any of its Restricted Subsidiaries on a pro
rata basis in respect of any obligations of the Borrower or any of its
Restricted Subsidiaries which arise under any such Swap Agreement so long as
such Person or its Affiliate was a Lender under the Prior Agreement or this
Agreement at the time of entering into such Swap Agreement.  No Lender or any
Affiliate of a Lender shall have any voting rights under any Loan Document as a
result of the existence of obligations owed to it under any such Swap
Agreements, except as expressly set forth in Section 12.02(b)(ix).

 

Section 12.15                     USA Patriot Act Notice.  Each Lender hereby
notifies the Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot
Act”), it is required to obtain, verify and record information that identifies
the Borrower, which information includes the name and address of the Borrower
and other information that will allow such Lender to identify the Borrower in
accordance with the Patriot Act.

 

Section 12.16                     Interest Rate Limitation.  Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan or reimbursement obligation, together with all fees, charges and other
amounts that are treated as interest on such Loan or reimbursement obligation
under applicable law (collectively the “Charges”), shall exceed the Highest
Lawful Rate that may be contracted for, charged, taken, received or reserved by
the Lender holding such Loan or reimbursement obligation in accordance with
applicable law, the rate of interest payable in respect of such Loan or
reimbursement obligation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Highest Lawful Rate and, to

 

113

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the extent lawful, the interest and Charges that would have been payable in
respect of such Loan or reimbursement obligation but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans, reimbursement
obligations or periods shall be increased (but not above the Highest Lawful Rate
therefor) until such cumulated amount shall have been received by such Lender
and in the event that, notwithstanding the foregoing, under any circumstances
the aggregate amounts taken, reserved, charged, received or paid on the Loans
include amounts which by applicable law are deemed interest which would exceed
the Highest Lawful Rate, then such excess shall be deemed to be a mistake and
each Lender receiving same shall credit the same on the principal of its Loans
(or if such Loans shall have been paid in full, refund said excess to the
Borrower).  In the event that the maturity of the Obligations are accelerated by
reason of any election of the holder thereof resulting from any Event of Default
under this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the Highest Lawful Rate, and excess interest, if any, provided for in
this Agreement or otherwise shall be canceled automatically as of the date of
such acceleration or prepayment and, if theretofore paid, shall be credited on
the Obligations (or, if the applicable Loans shall have been paid in full,
refunded to the Borrower of such interest).  The provisions of this
Section shall control over all other provisions of this Agreement or the other
Loan Documents which may be in apparent conflict herewith.

 

Section 12.17                     Intercreditor Agreement.  Each Lender hereby
(a) acknowledges that it has received a copy of the Intercreditor Agreement,
(b) agrees that it will be bound by and will take no action contrary to the
provisions of the Intercreditor Agreement as if it were a signatory thereto and
(c) authorizes and instructs the Administrative Agent to enter into the
Intercreditor Agreement (including any and all amendments, amendments and
restatements, modifications, supplements and acknowledgements thereto as
permitted hereby) on behalf of and without any further action by such Lender.

 

Section 12.18                     Amendment and Restatement.

 

(a)                           On the Effective Date, the Prior Agreement shall
be amended, restated and superseded in its entirety hereby.  The parties hereto
acknowledge and agree that (i) this Agreement, any promissory notes delivered
pursuant to Section 6.01(f) and the other Loan Documents executed and delivered
in connection herewith do not constitute a novation or termination of the
“Obligations” (as defined in the Prior Agreement) under the Prior Agreement as
in effect prior to the Effective Date and (ii) such “Obligations” are in all
respects continuing with only the terms thereof being modified as provided in
this Agreement.

 

(b)                           Notwithstanding the modifications effected by this
Agreement of the representations, warranties and covenants of the Borrower
contained in the Prior Agreement, the Borrower acknowledges and agrees that any
causes of action or other rights created in favor of the Administrative Agent,
any Issuing Bank or any Lender, in each case, party to or its successors arising
out of the representations and warranties of the Borrower contained in or
delivered in connection with the Prior Agreement shall survive the execution,
delivery and effectiveness of this Agreement to the extent provided in the Prior
Agreement prior to the termination thereof.

 

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(c)                            All indemnification obligations of the Borrower
arising under the Prior Agreement (including any arising from a breach of the
representations thereunder) shall survive to the extent provided in the Prior
Agreement prior to the termination thereof.

 

Section 12.19                     Exiting Lenders.  Upon the Effective Date,
Royal Bank of Canada, as a “Lender” under the Prior Agreement (the “Exiting
Lender”), shall be paid in full for all amounts owing to it under the Prior
Agreement and cease to be a “Lender” under the Prior Agreement and the “Loan
Documents” as defined therein.  The Exiting Lender is executing this Agreement
solely for the purpose of evidencing its agreement to this Section 12.19 only
and for no other purpose.

 

[Signatures Begin Next Page]

 

115

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The parties hereto have caused this Agreement to be duly executed as of the day
and year first above written.

 

 

BORROWER:

 

 

 

MAGNUM HUNTER RESOURCES

 

CORPORATION,

 

a Delaware corporation

 

 

 

 

 

By:

/s/ Joseph C. Daches

 

Name:

Joseph C. Daches

 

Title:

Senior Vice President and Chief Financial Officer

 

Signature Page to Credit Agreement

 

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

 

 

ADMINISTRATIVE AGENT, ISSUING BANK AND LENDER:

 

 

 

BANK OF MONTREAL

 

 

 

 

 

By:

/s/ Gumaro Tijerina

 

 

Gumaro Tijerina

 

 

Director

 

Signature Page to Credit Agreement

 

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

 

 

LENDER:

 

 

 

CREDIT SUISSE AG, Cayman Islands Branch

 

 

 

 

 

By:

/s/ Nupur Kumar

 

Name:

Nupur Kumar

 

Title:

Authorized Signatory

 

 

 

 

 

 

 

By:

/s/ Samuel Miller

 

Name:

Samuel Miller

 

Title:

Authorized Signatory

 

Signature Page to Credit Agreement

 

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

 

 

LENDER:

 

 

 

CAPITAL ONE, NATIONAL ASSOCIATION

 

 

 

 

 

 

By:

/s/ Kristin N. Oswald

 

Name:

Kristin N. Oswald

 

Title:

Vice President

 

Signature Page to Fourth Amended and Restated Credit Agreement

 

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

 

 

LENDER:

 

 

 

SUNTRUST BANK

 

 

 

 

 

 

By:

/s/ Shannon Juhan

 

Name:

Shannon Juhan

 

Title:

Vice President

 

Signature Page to Fourth Amended and Restated Credit Agreement

 

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

 

 

LENDER

 

 

 

ABN AMRO CAPITAL USA LLC

 

 

 

 

 

 

By:

/s/ Darrell Holley

 

Name:

Darrell Holley

 

Title:

Managing Director

 

 

 

 

 

 

 

By:

/s/ David Montgomery

 

Name:

David Montgomery

 

Title:

Executive Director

 

Signature Page to Fourth Amended and Restated Credit Agreement

 

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

 

 

LENDER:

 

 

 

CITIBANK, N.A.

 

 

 

 

 

 

By:

/s/ Gabriel Juarez

 

Name:

Gabriel Juarez

 

Title:

Vice President

 

Signature Page to Fourth Amended and Restated Credit Agreement

 

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

 

 

LENDER:

 

 

 

DEUTSCHE BANK AG NEW YORK BRANCH

 

 

 

 

 

 

By:

/s/ Michael Shannon

 

Name:

Michael Shannon

 

Title:

Vice President

 

 

 

 

 

 

 

By:

/s/ Kirk L. Tashjian

 

Name:

Kirk L. Tashjian

 

Title:

Vice President

 

Signature Page to Fourth Amended and Restated Credit Agreement

 

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

 

 

LENDER:

 

 

 

GOLDMAN SACHS BANK USA

 

 

 

 

 

 

By:

/s/ Nicole Ferry Lacchia

 

Name:

Nicole Ferry Lacchia

 

Title:

Authorized Signatory

 

Signature Page to Fourth Amended and Restated Credit Agreement

 

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

 

 

LENDER

 

 

 

BANK OF AMERICA, N.A.

 

 

 

 

 

 

By:

/s/ Alia Qaddumi

 

Name:

Alia Qaddumi

 

Title:

Vice President

 

Signature Page to Fourth Amended and Restated Credit Agreement

 

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

 

 

EXITING LENDER:

 

 

 

ROYAL BANK OF CANADA

 

 

 

 

 

 

By:

/s/ Kristan Spivey

 

Name:

Kristan Spivey

 

Title:

Authorized Signatory

 

Signature Page to Fourth Amended and Restated Credit Agreement

 

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

 

ANNEX I

 

LIST OF MAXIMUM CREDIT AMOUNTS

 

Name of Lender

 

Applicable Percentage

 

Maximum Credit
Amount

 

Bank of Montreal

 

13.25

%

$

33,125,000

 

Credit Suisse AG, Cayman Islands Branch

 

13.25

%

$

33,125,000

 

Capital One, National Association

 

10.50

%

$

26,250,000

 

SunTrust Bank

 

10.50

%

$

26,250,000

 

ABN AMRO Capital USA, LLC

 

10.50

%

$

26,250,000

 

Citibank, N.A.

 

10.50

%

$

26,250,000

 

Deutsche Bank AG New York Brach

 

10.50

%

$

26,250,000

 

Goldman Sachs Bank USA

 

10.50

%

$

26,250,000

 

Bank of America, N.A.

 

10.50

%

$

26,250,000

 

TOTAL

 

100.000000000

%

$

250,000,000.00

 

 

Annex 1-1

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

 

EXHIBIT A

 

FORM OF NOTE

 

AMENDED AND RESTATED NOTE

 

$[                  ]

, 201  

 

FOR VALUE RECEIVED, MAGNUM HUNTER RESOURCES CORPORATION, a Delaware corporation
(the “Borrower”), hereby promises to pay [                                  ]
(the “Lender”), the lesser of (i) [                              ] DOLLARS
($[                        ]) and (ii) the aggregate unpaid Loans made by the
Lender pursuant to the Credit Agreement, as hereinafter defined), in lawful
money of the United States of America and in immediately available funds, on the
dates and in the principal amounts provided in the Credit Agreement referred to
below, on the dates and in the amounts set forth in the Credit Agreement.  All
capitalized terms used herein and not otherwise defined that are defined in the
Credit Agreement have the meanings as defined in the Credit Agreement.

 

The Borrower promises to pay interest on the unpaid principal amount of this
Note outstanding from time to time from the date hereof until such principal
amount is paid in full, at the place and at such interest rates as are specified
in the Credit Agreement.

 

This Note is one of the Notes referred to in, and the Note and all provisions
herein are entitled to the benefits and are subject to the terms of, the Fourth
Amended and Restated Credit Agreement, dated as of October 22, 2014, among the
Borrower, Bank of Montreal, as Administrative Agent, and the lenders signatory
thereto (including the Lender) (as the same may be amended, restated, amended
and restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”).  This Note amends and restates in their entirety those certain
promissory notes executed in connection with the Prior Agreement and payable to
the Lender.

 

The obligations of the Borrower hereunder are secured by the Security
Instruments (subject to the limitations contained in the Security Instruments
and the Credit Agreement).  The Credit Agreement, among other things,
(a) provides for the making of advances by the Lender and other Lenders to the
Borrower from time to time, and (b) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events, for prepayments on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified, and for limitations on the amount of interest paid
such that no provision of the Credit Agreement or this Note shall require the
payment or permit the collection of interest in excess of the Highest Lawful
Rate.

 

The Borrower waives grace, demand, presentment for payment, notice of dishonor
or default, notice of intent to accelerate or acceleration, protest and notice
of protest and diligence in collecting and bringing of suit against any party
hereto.

 

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

 

This Note shall be governed by and construed under the laws of the State of New
York and the applicable laws of the United States of America.

 

 

MAGNUM HUNTER RESOURCES CORPORATION,

 

a Delaware corporation

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Exhibit A-2

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

 

EXHIBIT B

 

FORM OF BORROWING REQUEST

 

[                            ], 201[  ]

 

Magnum Hunter Resources Corporation, a Delaware corporation (the “Borrower”),
pursuant to Section 2.03 of the Fourth Amended and Restated Credit Agreement
dated as of October 22, 2014 (together with all amendments, restatements,
supplements or other modifications thereto, the “Credit Agreement”), among the
Borrower, Bank of Montreal, as Administrative Agent and the lenders (the
“Lenders”) which are or become parties thereto (unless otherwise defined herein,
each capitalized term used herein is defined in the Credit Agreement), hereby
requests a Borrowing as follows:

 

(i)            Aggregate amount of the requested Borrowing is
$[                        ];

 

(ii)           Date of such Borrowing is [                        ], 201[  ];

 

(iii)          Requested Borrowing is to be [an ABR Borrowing] [a Eurodollar
Borrowing];

 

(iv)          In the case of a Eurodollar Borrowing, the initial Interest Period
applicable thereto is [                        ];

 

(v)           Amount of Borrowing Base in effect on the date hereof is
$[                        ];

 

(vi)          Total Credit Exposures on the date hereof (i.e., outstanding
principal amount of Loans and total LC Exposure) is $[                        ];

 

(viii)        Pro forma total Credit Exposures (giving effect to the requested
Borrowing) is $[                        ]; and

 

(viii)        Location and number of the Borrower’s account to which funds are
to be disbursed, which shall comply with the requirements of Section 2.05 of the
Credit Agreement, is as follows:

 

[

]

 

 

[

]

 

Exhibit B-1

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

 

The undersigned certifies that he/she is the [                        ] of the
Borrower, and that as such he/she is authorized to execute this certificate on
behalf of the Borrower.  The undersigned further certifies, represents and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested Borrowing under the terms and conditions of the Credit Agreement.

 

 

MAGNUM HUNTER RESOURCES CORPORATION,

 

a Delaware corporation

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Exhibit B-2

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

 

EXHIBIT C

 

FORM OF INTEREST ELECTION REQUEST

 

[              ], 201[  ]

 

Magnum Hunter Resources Corporation, a Delaware corporation (the “Borrower”),
pursuant to Section 2.04 of the Fourth Amended and Restated Credit Agreement
dated as of October 22, 2014 (together with all amendments, restatements,
supplements or other modifications thereto, the “Credit Agreement”), among the
Borrower, Bank of Montreal, as Administrative Agent and the lenders (the
“Lenders”) which are or become parties thereto (unless otherwise defined herein,
each capitalized term used herein is defined in the Credit Agreement), hereby
makes an Interest Election Request as follows:

 

(i)            The Borrowing to which this 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 specified pursuant to (iii) and (iv) below shall be
specified for each resulting Borrowing) is [                        ];

 

(ii)           The effective date of the election made pursuant to this Interest
Election Request is [                        ], 201[  ];[and]

 

(iii)          The resulting Borrowing is to be [an ABR Borrowing] [a Eurodollar
Borrowing][; and]

 

[(iv)        [If the resulting Borrowing is a Eurodollar Borrowing] The Interest
Period applicable to the resulting Borrowing after giving effect to such
election is [                        ]].

 

The undersigned certifies that he/she is the [                        ] of the
Borrower, and that as such he/she is authorized to execute this certificate on
behalf of the Borrower.  The undersigned further certifies, represents and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested continuation or conversion under the terms and conditions of the
Credit Agreement.

 

 

MAGNUM HUNTER RESOURCES CORPORATION,

 

a Delaware corporation

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Exhibit C-1

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

 

EXHIBIT D

 

FORM OF
COMPLIANCE CERTIFICATE

 

The undersigned hereby certifies that he/she is the [                        ]
of Magnum Hunter Resources Corporation, a Delaware corporation (the “Borrower”),
and that as such he/she is authorized to execute this certificate on behalf of
the Borrower.  With reference to the Fourth Amended and Restated Credit
Agreement dated as of October 22, 2014 (together with all amendments,
restatements, supplements or other modifications thereto being the “Agreement”),
among the Borrower, Bank of Montreal, as Administrative Agent and the lenders
(the “Lenders”) which are or become a party thereto, the undersigned represents
and warrants as follows (each capitalized term used herein having the same
meaning given to it in the Agreement unless otherwise specified), to my
knowledge after reasonable investigation:

 

(a)           The representations and warranties of the Borrower contained in
ARTICLE VII of the Agreement and in the Loan Documents are repeated at and as of
the time of delivery hereof and are true and correct in all material respects at
and as of the time of delivery hereof, except to the extent such representations
and warranties are expressly limited to an earlier date or the Majority Lenders
have expressly consented in writing to the contrary.

 

(b)           There exists no Default [or specify Default and describe].

 

(c)           Attached hereto as Exhibit A are reasonably detailed computations
necessary to determine whether the Borrower is in compliance with Section 9.01
as of the end of the [fiscal quarter][fiscal year] ending
[                        ].

 

(d)           No change in GAAP or the application thereof has occurred since
the date of the audited financial statements referred to in Section 7.04 of the
Agreement [or specify change].

 

EXECUTED AND DELIVERED this [            ] day of [                        ],
201[  ].

 

 

MAGNUM HUNTER RESOURCES CORPORATION,

 

a Delaware corporation

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Exhibit D-1

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FINANCIAL COVENANT CALCULATION WORKSHEET

 

($ in 000’s)

 

 

 

Pro Forma 
Calculation

 

Covenant 
Requirement

Current Ratio

 

x

 

> 1.0 to 1.0

Total Secured Net Debt to EBITDAX Ratio(1)

 

x

 

< [      ] to 1.0

Proved Reserves Coverage Ratio(2)

 

x

 

> 1.5 to 1.0

PDP Reserves Coverage Ratio(3)

 

x

 

> 1.0 to 1.0

 

 

 

 

 

Current Ratio:  calculated as of the fiscal quarter ended
                            , 201  

 

 

 

 

(i)            consolidated current assets of the Borrower and the Restricted
Subsidiaries (including the unused amount of the total Commitments, but
excluding non-cash assets under FAS 133)

 

 

 

 

To

 

 

 

 

(ii)           consolidated current liabilities of the Borrower and the
Restricted Subsidiaries (excluding non-cash obligations under FAS 133).

 

 

 

 

 

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

(1)   Covenant requirement is (a) 2.50 to 1.0 for the fiscal quarter ending
December 31, 2014, (b) 2.25 to 1.0 for the fiscal quarter ending March 31, 2015,
and (c) 2.0 to 1.0 for the fiscal quarter ending June 30, 2015 and for each
fiscal quarter ending thereafter.

 

(2)   To be omitted (a) upon repayment in full of the Second Lien Term Loan and
termination of all commitments thereunder or (b) if such covenant is no longer
required under the Second Lien Term Loan.

 

(3)   To be omitted (a) upon repayment in full of the Second Lien Term Loan and
termination of all commitments thereunder or (b) if such covenant is no longer
required under the Second Lien Term Loan.

 

Exhibit D-2

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

 

Total Secured Net Debt to EBITDAX:  calculated as of the fiscal quarter ended
                  , 201    .

 

 

 

 

(i)            aggregate principal amount of all Secured Debt of the Borrower
and the Restricted Subsidiaries as of such date

 

 

 

 

Minus

 

 

 

 

(x) for each fiscal quarter ending prior to March 31, 2016, the aggregate
unencumbered balance sheet cash of the Borrower and the Restricted Subsidiaries
as of such date and (y) for the fiscal quarter ending March 31, 2016 and for
each fiscal quarter ending thereafter, up to $100,000,000 of the aggregate
unencumbered balance sheet cash of the Borrower and the Restricted Subsidiaries
as of such date

 

 

 

 

To

 

 

 

 

(ii)           EBITDAX of the Borrower and the Restricted Subsidiaries for the
trailing four-quarter period then ended

 

 

 

 

 

 

 

 

 

Proved Reserves Coverage Ratio: calculated as of the fiscal quarter ended
                            , 201  

 

 

 

 

(i)            Present Value of the Loan Parties’ Proved Reserves as set forth
in the most recently delivered Reserve Report (as adjusted to give pro forma
effect to all dispositions and acquisitions completed since the date of such
Reserve Report)

 

 

 

 

to

 

 

 

 

(ii)           the Loan Parties’ aggregate Secured Debt as of the last day of
the immediately preceding fiscal quarter

 

 

 

 

 

Exhibit D-3

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

 

PDP Reserves Coverage Ratio: calculated as of the fiscal quarter ended
                            , 201  

 

 

 

 

(i)            Present Value of the Loan Parties’ PDP Reserves as set forth in
the most recently delivered Reserve report (as adjusted to give pro forma effect
to all dispositions and acquisitions completed since the date of such Reserve
Report)

 

 

 

 

to

 

 

 

 

(ii)           the Loan Parties’ aggregate Secured Debt as of the last day of
the immediately preceding fiscal quarter

 

 

 

 

 

Exhibit D-4

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

 

EXHIBIT E

 

FORM OF ASSIGNMENT AND ASSUMPTION

 

Reference is made to the Fourth Amended and Restated Credit Agreement, dated as
of October 22, 2014 (as amended, restated, supplemented or otherwise modified
from time to time and in effect on the date hereof, the “Credit Agreement”),
among Magnum Hunter Resources Corporation, the Lenders named therein and Bank of
Montreal, as Administrative Agent for the Lenders.  Capitalized terms defined in
the Credit Agreement are used herein with the same meanings.

 

The Assignor named below hereby sells and assigns, without recourse, to the
Assignee named below, and the Assignee hereby purchases and assumes, without
recourse, from the Assignor, effective as of the Assignment Date set forth
below, the interests set forth below (the “Assigned Interest”) in the Assignor’s
rights and obligations under the Credit Agreement, including, without
limitation, the interests set forth below in the Commitment of the Assignor on
the Assignment Date and Loans owing to the Assignor which are outstanding on the
Assignment Date, together with the participations in Letters of Credit and LC
Disbursements held by the Assignor on the Assignment Date, but excluding accrued
interest and fees to and excluding the Assignment Date.  The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement.  From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.

 

This Assignment and Assumption is being delivered to the Administrative Agent
(with a copy to the Borrower) together with (i) any documentation required to be
delivered by the Assignee pursuant to Section 5.03(g) of the Credit Agreement,
duly completed and executed by the Assignee, and (ii) if the Assignee is not
already a Lender under the Credit Agreement, an Administrative Questionnaire in
the form supplied by the Administrative Agent, duly completed by the Assignee. 
The [Assignee/Assignor] shall pay the fee payable to the Administrative Agent
pursuant to Section 12.04(b) of the Credit Agreement.

 

This Assignment and Assumption shall be governed by and construed in accordance
with the laws of the State of New York.

 

Date of Assignment:

 

Legal Name of Assignor:

 

Legal Name of Assignee:

 

Assignee’s Address for Notices:

 

Effective Date of Assignment (“Assignment Date”):

 

Exhibit E-1

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

 

Facility

 

Principal Amount Assigned

 

Percentage Assigned of 
Facility/Commitment (set 
forth, to at least 8 decimals, as 
a percentage of the Facility 
and the aggregate 
Commitments of all Lenders 
thereunder)

Commitment Assigned:

 

$

 

 

%

Loans:

 

 

 

 

 

The terms set forth above are hereby agreed to:

 

 

[Name of Assignor], as Assignor

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

[Name of Assignee], as Assignee

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Exhibit E-2

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

 

The undersigned hereby consent to the within assignment:(4)

 

 

MAGNUM HUNTER RESOURCES CORPORATION,

BANK OF MONTREAL, as Administrative Agent

a Delaware corporation

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

 

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

(4)              Consents to be included to the extent required by
Section 12.04(b) of the Credit Agreement.

 

Exhibit E-3

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

 

EXHIBIT F

 

FORM OF JOINDER AGREEMENT

 

ADDENDUM AND JOINDER TO
SECURITY AGREEMENT AND GUARANTY AGREEMENT

 

THIS ADDENDUM AND JOINDER TO SECURITY AGREEMENT AND GUARANTY AGREEMENT (this
“Addendum”) dated as of                         , 201  , is between
                                        , a                              (the
“New Subsidiary”) and Magnum Hunter Resources Corporation, a Delaware
corporation (the “Borrower”) in favor of the Lenders (as defined in the Credit
Agreement defined below) and Bank of Montreal, as Administrative Agent for the
Lenders (in such capacity, the “Administrative Agent”).

 

WHEREAS, the Borrower, the Lenders and the Administrative Agent (collectively,
the “Original Parties”) are parties to that certain Fourth Amended and Restated
Credit Agreement dated October 22, 2014 (as the same has been or may be amended,
modified or supplemented from time to time, the “Credit Agreement”);

 

WHEREAS, the Borrower and the Guarantors are parties to that certain Amended and
Restated Security and Pledge Agreement dated as December 13, 2013 (as the same
has been or may be amended, modified or supplemented from time to time, the
“Security Agreement”);

 

WHEREAS, the Guarantors are parties to that certain Second Amended and Restated
Guaranty Agreement dated as of even date with the Credit Agreement (as the same
has been or may be amended, modified or supplemented from time to time, the
“Guaranty Agreement”);

 

WHEREAS, the New Subsidiary is required to execute this Addendum pursuant to
Section 8.16 of the Credit Agreement; and

 

WHEREAS, the New Subsidiary desires to become a party to the Security Agreement
and the Guaranty Agreement as a “Guarantor” and to receive all of the benefits
of and to become subject to the obligations thereof as a Guarantor;

 

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

 

1.                                      Terms.  Capitalized terms used in the
opening paragraph, the recitals and otherwise herein and not defined have the
same meaning assigned to such terms in the Credit Agreement.

 

2.                                      Joinder to and Ratification of Security
Agreement and Guaranty Agreement.  By executing and delivering this Addendum,
the New Subsidiary hereby (i) becomes a party to the Security Agreement and the
Guaranty Agreement as a Guarantor as if the New Subsidiary had originally signed
the Security Agreement and Guaranty Agreement and (ii) expressly assumes all
obligations and liabilities of a Guarantor thereunder.  The New Subsidiary
hereby makes as of the date hereof each of the representations and warranties
made by the Guarantors in the Security Agreement and the Guaranty Agreement;
provided that (a) any such representations and

 

Exhibit F-1

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

 

warranties that were made by the other Guarantors as of an earlier specific date
are (i) deemed to be made by the New Subsidiary as of the date hereof rather
than as of such earlier date and (ii) deemed to be made by the New Subsidiary
only as to information, disclosures and matters as it relates to such New
Subsidiary, and (b) any such representations and warranties made as to matters
disclosed or set forth in an Annex to the Security Agreement are deemed to be
made as to the corresponding Annex attached hereto.  After giving effect to this
Addendum, all of the obligations of the Borrower and the Guarantors contained in
the Credit Agreement and the other Loan Documents and all of the rights,
privileges and interests of the Lenders arising therefrom are hereby agreed to,
ratified, renewed, confirmed and brought forward in all respects and the
Security Agreement shall serve as security for the Obligations of the New
Subsidiary.  All of the terms and conditions of the Security Agreement and the
Guaranty Agreement are hereby incorporated herein by reference and are hereby
deemed restated in their entirety for the benefit of the Administrative Agent
and the Lenders.

 

3.                                      Security Interest.  As security for the
Obligations, the New Subsidiary hereby grants to the Administrative Agent, for
the benefit of the Lenders, to the maximum extent allowed by applicable law, a
lien and security interest on all of the assets of the New Subsidiary described
as Collateral in the Security Agreement, subject to the exclusions contained in
the Security Agreement, whether now held or hereafter acquired, of any kind,
pursuant to, and in accordance with the terms of the Security Agreement.

 

4.                                      Authorization to Take Further Action. 
The New Subsidiary hereby authorizes the Administrative Agent to file such
financing statements and any amendments and extensions thereof as may be
necessary or desirable in order to perfect the Liens under the Security
Agreement or any modification, extension or ratification thereof.

 

5.                                      Reliance.  All parties hereto
acknowledge that the Administrative Agent and the Lenders are relying on this
Addendum, the accuracy of the statements herein contained and the performance of
the conditions placed upon the New Subsidiary hereunder.  The New Subsidiary
shall execute such further documents and undertake any such measure as may be
necessary to effect and carry out the terms of this Addendum and the
implementation thereof.

 

6.                                      Warranties.  The New Subsidiary
(a) represents and warrants that it is legally authorized to enter into this
Addendum, (b) confirms that it has received copies of the Credit Agreement, the
Security Agreement, the Guaranty Agreement and all related documents, and that
on the basis of its review and analysis of this information has decided to enter
into this Addendum, (c) confirms that it is a Subsidiary of the Borrower that it
is required to enter into this Addendum pursuant to Section 8.16 of the Credit
Agreement, (d) confirms and agrees that it shall perform each and every covenant
applicable to it as a Guarantor as provided in the Security Agreement and the
Guaranty Agreement and that it will at all times be in compliance with the terms
of the Security Agreement and the Guaranty Agreement and all of the obligations
and covenants set forth therein to the same extent as though each and every such
agreement and covenant were set forth in their entirety in this Addendum, and
(e) agrees to execute and deliver such other documents as may be reasonably
required by the Administrative Agent in connection herewith.

 

Exhibit F-2

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

 

7.                                      Updated Information.  Concurrently with
this Addendum, the New Subsidiary is delivering a completed New Subsidiary
Information List, attached as Attachment A hereto.  The Borrower and the New
Subsidiary acknowledge and agree that Annexes 1 through 16, inclusive, of the
Security Agreement, have been updated with respect to the New Subsidiary only by
the information contained in Attachment A hereto, and, with respect to the New
Subsidiary only, are true, accurate and complete representations of the
information described and referenced in the corresponding sections of the
Security Agreement after giving effect to this Addendum.

 

8.                                      Choice of Law.  This Addendum shall be
governed by and construed under the laws of the State of New York.

 

9.                                      Ratification; Conflicts.  Any and all
conflicts or inconsistencies between the terms and provisions of this Addendum
and the Credit Agreement shall be governed and controlled by the terms and
provisions of this Addendum.  Except as modified hereby, the Security Agreement
and the Guaranty Agreement remain in full force and effect according to their
terms.

 

10.                               Effectiveness.  Upon execution of this
Addendum by the New Subsidiary and the Borrower, this Addendum shall become
immediately effective and enforceable as to the New Subsidiary and all of the
Original Parties.

 

[Signatures on following pages]

 

Exhibit F-3

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

 

IN WITNESS WHEREOF, the parties have executed this Agreement and agreed to the
provisions contained herein effective as of                                 ,
201  .

 

 

NEW SUBSIDIARY:

 

 

 

,

 

a

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

BORROWER:

 

 

 

MAGNUM HUNTER RESOURCES CORPORATION,

 

a Delaware corporation

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Exhibit F-4

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

 

ATTACHMENT A

 

ADDITIONAL INFORMATION REGARDING THE NEW SUBSIDIARY

 

The following Annexes as described in the Security Agreement:

 

Annex 1                                                  Copyright Collateral

Annex 2                                                  Patent Collateral

Annex 3                                                  Securities Collateral

Annex 4                                                  Trademark Collateral

Annex 5                                                  Filing Offices

Annex 6                                                  Debtor Information

Annex 7                                                  Previous Names and
Transactions

Annex 8                                                  Offices and Locations
of Records

Annex 9                                                  Locations of Inventory
and Equipment

Annex 10                                           Deposit Accounts

Annex 11                                           Securities Accounts and
Commodity Accounts

Annex 12                                           Instruments and Tangible
Chattel Paper

Annex 13                                           Electronic Chattel Paper

Annex 14                                           Letters of Credit

Annex 15                                           Commercial Tort Claims

Annex 16                                           Third Party Locations

 

Exhibit F-5

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

 

Entity Documents

Provide a copy of all that apply:

 

Corporation:

 

Filed Articles of Incorporation/Amendments and Bylaws/Resolutions with
Incumbency Certificate

Partnership:

 

Partnership Agreement and filed/recorded Certificate of Partnership

Limited Liability Company (LLC):

 

Article of Organization and Operating Agreement/Member or Manager Consent with
Incumbency Certificate

Limited Liability Partnership (LLP):

 

Certificate of registered partnership and partnership agreement

 

Exhibit F-6

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

 

EXHIBIT G-1

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

 

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

 

Reference is hereby made to the Fourth Amended and Restated Credit Agreement
dated as of October 22, 2014 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”), by and among Magnum Hunter Resources
Corporation, a Delaware corporation (the “Borrower”), the various financial
institutions that are or may become a party thereto (collectively, the
“Lenders”) and Bank of Montreal, as administrative agent for the Lenders (in
such capacity together with any successors thereto, the “Administrative Agent”).

 

Pursuant to the provisions of Section 5.03(g) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loans (as well as any Note(s) evidencing such Loans) in respect of which
it is providing this certificate, (ii) it is not a bank within the meaning of
Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of
the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it
is not a controlled foreign corporation related to the Borrower as described in
Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Administrative Agent and the Borrower with a
certificate of its non-U.S. Person status on IRS Form W-8BEN or W-BEN-E.  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 G-1-1

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

 

EXHIBIT G-2

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

 

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

 

Reference is hereby made to the Fourth Amended and Restated Credit Agreement
dated as of October 22, 2014 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”), by and among Magnum Hunter Resources
Corporation, a Delaware corporation (the “Borrower”), the various financial
institutions that are or may become a party thereto (collectively, the
“Lenders”) and Bank of Montreal, as administrative agent for the Lenders (in
such capacity together with any successors thereto, the “Administrative Agent”).

 

Pursuant to the provisions of Section 5.03(g) 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 within the meaning of
Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the
Code.

 

The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E.  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 PARTICIPANT]

 

 

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

Date:

                               , 20     .

 

 

Exhibit G-2-1

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

 

EXHIBIT G-3

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

 

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

 

Reference is hereby made to the Fourth Amended and Restated Credit Agreement
dated as of October 22, 2014 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”), by and among Magnum Hunter Resources
Corporation, a Delaware corporation (the “Borrower”), the various financial
institutions that are or may become a party thereto (collectively, the
“Lenders”) and Bank of Montreal, as administrative agent for the Lenders (in
such capacity together with any successors thereto, the “Administrative Agent”).

 

Pursuant to the provisions of Section 5.03(g) 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
direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect such participation, neither the undersigned
nor any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a ten percent shareholder of the
Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of
its direct or indirect partners/members is a controlled foreign corporation
related to the Borrower as described in Section 881(c)(3)(C) of the Code.

 

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

 

Unless otherwise defined herein, terms defined in the 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 G-3-1

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

 

EXHIBIT G-4

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

 

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

 

Reference is hereby made to the Fourth Amended and Restated Credit Agreement
dated as of October 22, 2014 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”), by and among Magnum Hunter Resources
Corporation, a Delaware corporation (the “Borrower”), the various financial
institutions that are or may become a party thereto (collectively, the
“Lenders”) and Bank of Montreal, as administrative agent for the Lenders (in
such capacity together with any successors thereto, the “Administrative Agent”).

 

Pursuant to the provisions of Section 5.03(g) 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 direct or indirect partners/members are
the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing
such Loan(s)), (iii) with respect to the extension of credit pursuant to this
Agreement or any other Loan Document, neither the undersigned nor any of its
direct or indirect partners/members is a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct
or indirect partners/members is a ten percent shareholder of the Borrower within
the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or
indirect partners/members is a controlled foreign corporation related to the
Borrower as described in Section 881(c)(3)(C) of the Code.

 

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

 

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

 

Exhibit G-4-1

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[NAME OF LENDER]

 

 

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

Date:

                               , 20     .

 

 

Exhibit G-4-2

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