Exhibit 10.2

 

Execution Version

 

 

 

CREDIT AGREEMENT

among

EARTHSTONE ENERGY HOLDINGS, LLC,

as Borrower,

EARTHSTONE OPERATING, LLC,

EF NON-OP, LLC,

SABINE RIVER ENERGY, LLC,

EARTHSTONE LEGACY PROPERTIES, LLC,

LYNDEN USA OPERATING, LLC,

BOLD ENERGY III LLC,

BOLD OPERATING, LLC,

 

as Guarantors,

BOKF, NA dba BANK OF TEXAS,

as Agent and Lead Arranger,

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Syndication Agent

and

THE LENDERS SIGNATORY HERETO

Dated as of May 9, 2017

$500,000,000 SENIOR SECURED REVOLVING CREDIT FACILITY

 

 

 

 

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TABLE OF CONTENTS

 

Article I. Definitions and Accounting Matters

2

Section 1.01

Terms Defined Above

2

Section 1.02

Certain Defined Terms

2

Section 1.03

Accounting Terms and Determinations

19

Section 1.04

Terms Generally

19

 

 

 

Article II. Commitments

19

Section 2.01

Loans and Letters of Credit.

19

Section 2.02

Borrowings, Continuations and Conversions, Letters of Credit.

20

Section 2.03

Changes of Commitments.

21

Section 2.04

Fees.

22

Section 2.05

Several Obligations

22

Section 2.06

Notes

22

Section 2.07

Prepayments.

23

Section 2.08

Borrowing Base.

24

Section 2.09

Assumption of Risks

26

Section 2.10

Obligation to Reimburse and to Prepay.

26

Section 2.11

Lending Offices

28

 

 

 

Article III. Payments of Principal and Interest

28

Section 3.01

Repayment of Loans.

28

Section 3.02

Interest.

28

 

 

 

Article IV. Payments; Pro Rata Treatment; Computations; Etc.

29

Section 4.01

Payments

29

Section 4.02

Pro Rata Treatment

29

Section 4.03

Computations

29

Section 4.04

Non-receipt of Funds by Agent

29

Section 4.05

Set-off, Sharing of Payments, Etc.

30

Section 4.06

Taxes.

31

 

 

 

Article V. Capital Adequacy and Additional Costs

34

Section 5.01

Additional Costs.

34

Section 5.02

Limitation on LIBOR Loans

35

Section 5.03

Illegality

35

Section 5.04

Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03

36

Section 5.05

Compensation

36

Section 5.06

Mitigation Obligations; Replacement of Lenders

36

 

 

 

Article VI. Conditions Precedent

37

Section 6.01

Initial Funding

37

Section 6.02

Initial and Subsequent Loans and Letters of Credit

39

Section 6.03

Conditions Precedent for the Benefit of Lenders

40

Section 6.04

No Waiver

40

 

 

 

Article VII. Representations and Warranties

40

Section 7.01

Corporate Existence

40

Section 7.02

Financial Condition

40

Section 7.03

Litigation

40

Section 7.04

No Breach

40

Section 7.05

Authority

41

Section 7.06

Approvals

41

Section 7.07

Use of Loans

41

Section 7.08

ERISA.

41

 

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Section 7.09

Taxes

42

Section 7.10

Titles, Etc.

42

Section 7.11

No Material Misstatements

43

Section 7.12

Investment Company Act

43

Section 7.13

Subsidiaries

43

Section 7.14

Location of Business and Offices; Tax Identification and Organizational
Identification Numbers

43

Section 7.15

Defaults

43

Section 7.16

Environmental Matters

43

Section 7.17

Compliance with the Law

44

Section 7.18

Insurance

44

Section 7.19

Hedging Agreements

45

Section 7.20

Restriction on Liens

45

Section 7.21

Material Agreements

45

Section 7.22

Solvency

45

Section 7.23

Gas Imbalances

45

Section 7.24

Improved Real Estate

45

Section 7.25

Anti-Terrorism; Anti-Money Laundering; FCPA

45

Section 7.26

Swap Agreements

46

Section 7.27

EEA Financial Institution

46

 

 

Article VIII. Affirmative Covenants

46

Section 8.01

Reporting Requirements

46

Section 8.02

Litigation

48

Section 8.03

Maintenance, Etc.

49

Section 8.04

Environmental Matters.

50

Section 8.05

Further Assurances

50

Section 8.06

Performance of Obligations

51

Section 8.07

Engineering Reports.

51

Section 8.08

Title Information Delivery

51

Section 8.09

Collateral.

52

Section 8.10

ERISA Information and Compliance

53

Section 8.11

Hedging Agreements

53

Section 8.12

Accounts

53

Section 8.13

Keepwell (Commodity Exchange Act)

53

Section 8.14

FCPA; Etc.

54

 

 

Article IX. Negative Covenants

54

Section 9.01

Debt

54

Section 9.02

Liens

55

Section 9.03

Investments, Loans and Advances

55

Section 9.04

Dividends, Distributions and Redemptions

56

Section 9.05

Sales and Leasebacks

56

Section 9.06

Nature of Business

56

Section 9.07

Limitation on Leases

56

Section 9.08

Mergers, Etc.

56

Section 9.09

Proceeds of Notes; Letters of Credit

57

Section 9.10

ERISA Compliance

57

Section 9.11

Sale or Discount of Receivables

58

Section 9.12

Financial Covenants.

58

Section 9.13

Sale of Properties

58

Section 9.14

Environmental Matters

58

Section 9.15

Transactions with Affiliates

58

Section 9.16

Subsidiaries

58

Section 9.17

Negative Pledge Agreements

59

Section 9.18

Gas Imbalances, Take-or-Pay or Other Prepayments

59

 

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Section 9.19

Hedging Agreements

59

Section 9.20

No Recourse Debt

60

 

 

Article X. Events of Default; Remedies

60

Section 10.01

Events of Default

60

Section 10.02

Remedies.

61

Section 10.03

Resignation of Operator

62

 

 

Article XI. Agent

62

Section 11.01

Appointment and Powers

62

Section 11.02

Reliance by Agent

63

Section 11.03

Default

63

Section 11.04

Rights as a Lender

63

Section 11.05

INDEMNIFICATION

63

Section 11.06

Non-Reliance on Agent and other Lenders

64

Section 11.07

Action by Agent

64

Section 11.08

Resignation of Agent

64

Section 11.09

Authorization to Execute other Loan Documents, Releases, Etc.

65

Section 11.10

Agent May File Proofs of Claim.

66

Section 11.11

Agency for Perfection.

66

Section 11.12

Right to Perform, Preserve and Protect.

66

Section 11.13

Additional Titled Agents.

66

 

 

Article XII. Miscellaneous

67

Section 12.01

Waiver

67

Section 12.02

Notices

67

Section 12.03

Payment of Expenses, Indemnities. Etc.

67

Section 12.04

Amendments, Etc.

69

Section 12.05

Successors and Assigns

70

Section 12.06

Assignments and Participations.

70

Section 12.07

Defaulting Lenders

73

Section 12.08

Invalidity

75

Section 12.09

Counterparts; Delivery of Electronic Signature Page

75

Section 12.10

Survival

75

Section 12.11

Captions

76

Section 12.12

NO ORAL AGREEMENTS

76

Section 12.13

GOVERNING LAW; SUBMISSION TO JURISDICTION.

76

Section 12.14

Interest

77

Section 12.15

Confidentiality

77

Section 12.16

USA Patriot Act

78

Section 12.17

Amendment and Restatement

78

Section 12.18

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

78

Section 12.19

EXCULPATION PROVISIONS

78

 

ANNEXES

 

 

 

 

Annex I

-

List of Percentage Shares and Maximum Credit Amounts

 

 

 

EXHIBITS

 

 

 

 

Exhibit A

-

Form of Note

Exhibit B

-

Form of Borrowing, Continuation, and Conversion Request

Exhibit C

-

Form of Compliance Certificate

Exhibit D

-

Security Instruments

Exhibit E

-

Form of Assignment Agreement

Exhibit F

-

Form of Reserve Report Certificate

 

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Exhibit G

-

Form of Letter-in-Lieu

Exhibit H-1

-

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

 

 

For U.S. Federal Income Tax Purposes)

Exhibit H-2

-

Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not

 

 

Partnerships For U.S. Federal Income Tax Purposes)

Exhibit H-3

-

Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are
Partnerships

 

 

For U.S. Federal Income Tax Purposes)

Exhibit H-4

-

Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are
Partnerships For

 

 

U.S. Federal Income Tax Purposes)

 

 

 

 

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CREDIT AGREEMENT

 

This CREDIT AGREEMENT (this “Agreement”), dated as of May 9, 2017, is among
EARTHSTONE ENERGY HOLDINGS, LLC, a Delaware limited liability company
(“Borrower”), EARTHSTONE OPERATING, LLC, a Texas limited liability company
(“EO”), EF NON-OP, LLC, a Texas limited liability company (“EF”), SABINE RIVER
ENERGY, LLC, a Texas limited liability company (“Sabine”), EARTHSTONE LEGACY
PROPERTIES, LLC, a Texas limited liability company (“ELP”), LYNDEN USA
OPERATING, LLC, a Texas limited liability company (“LUO”), BOLD ENERGY III LLC,
a Texas limited liability company (“BE”) and BOLD OPERATING, LLC, a Texas
limited liability company (“BO”), as guarantors; each of the lenders that is a
signatory hereto or which becomes a signatory hereto as provided in Section
12.06 (individually, together with its successors and assigns, a “Lender” and,
collectively, the “Lenders”); and BOKF, NA dba BANK OF TEXAS, a national banking
association, as administrative agent (in such capacity, together with its
successors in such capacity, the “Agent”) for the Lenders, and as letter of
credit issuer (the “Issuing Bank”).

 

A.Earthstone Energy, Inc., a Delaware corporation (“ESTE”), as borrower, EO, EF,
Sabine, Lynden Energy Corp., a company existing under the laws of British
Columbia (“LEC”), and Lynden USA Inc., a Utah corporation (“LUSA”), as
guarantors (collectively, the “Existing ESTE Credit Agreement Guarantors”),
BOKF, NA dba Bank of Texas, as administrative agent (“Existing ESTE Credit
Agreement Agent”) for the lenders from time to time party thereto (collectively,
the “Existing ESTE Lenders”), and the Existing ESTE Lenders are parties to that
certain Credit Agreement dated as of December 19, 2014 (as amended, modified or
restated from time to time, the “Existing ESTE Credit Agreement”).

 

B.In order to secure the full and punctual payment and performance of the
“Obligations” (as defined in the Existing ESTE Credit Agreement), ESTE and the
Existing ESTE Credit Agreement Guarantors executed and delivered deeds of trust,
mortgages, collateral assignments, security agreements, financing statements and
other instruments (collectively, the “Existing ESTE Credit Agreement Security
Instruments”) granting a mortgage lien and continuing security interest in and
to the collateral described in such Existing ESTE Credit Agreement Security
Instruments.

 

C.Immediately prior to the closing of this Agreement (i) Borrower, ELP and LUO
are direct or indirect subsidiaries of ESTE, (ii) ESTE has assigned all of its
Oil and Gas Properties to ELP subject to any existing Liens in favor of Existing
ESTE Credit Agreement Agent securing the “Obligations” (as defined in the
Existing ESTE Credit Agreement), (iii) LUSA has assigned all of its Oil and Gas
Properties to LUO subject to any existing Liens in favor of Existing ESTE Credit
Agreement Agent securing the “Obligations” (as defined in the Existing ESTE
Credit Agreement), and (iv) ESTE has assigned all of its rights and obligations
under the Existing ESTE Credit Agreement to Borrower.

 

D.BE, as borrower, BO, as guarantor, Wells Fargo Bank, N.A., as administrative
agent (“Existing BE Credit Agreement Agent”) for the lenders from time to time
party thereto (collectively, the “Existing BE Lenders”), and the Existing BE
Lenders are parties to that certain Credit Agreement dated as of August 14, 2013
(as amended, modified or restated from time to time, the “Existing BE Credit
Agreement”).

 

E.In order to secure the full and punctual payment and performance of the
“Indebtedness” (as defined in the Existing BE Credit Agreement), BE and BO
executed and delivered deeds of trust, mortgages, collateral assignments,
security agreements, financing statements and other instruments (collectively,
the “Existing BE Credit Agreement Security Instruments”) granting a mortgage
lien and continuing security interest in and to the collateral described in such
Existing BE Credit Agreement Security Instruments.

 

F.Immediately prior to the closing of this Agreement, BE has assigned all of its
rights and obligations under the Existing BE Credit Agreement to Borrower.

 

G.Pursuant to that certain (i) Letter Agreement and (ii) Assignment of Liens,
Security Interests and Other Rights, each dated as of May 9, 2017, and each
among ESTE, the Existing ESTE Credit Agreement Guarantors, ELP, LUO, Existing
ESTE Credit Agreement Agent, and Agent (collectively, the “ESTE Assignment”),
Existing ESTE Credit Agreement Agent has, on behalf of itself and the Existing
ESTE Lenders, assigned all

1

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“Obligations” (as defined in the Existing ESTE Credit Agreement) and all Liens
under the Existing ESTE Credit Agreement Security Instruments that secure the
“Obligations” (as defined in the Existing ESTE Credit Agreement) to Agent, on
behalf of itself and the Lenders.

 

H.Pursuant to that certain (i) Letter Agreement and (ii) Assignment of Liens,
Security Interests and Other Rights, each dated as of May 9, 2017, and each
among BE, BO, Existing BE Credit Agreement Agent, and Agent (collectively, the
“BE Assignment”), Existing BE Credit Agreement Agent has, on behalf of itself
and the Existing BE Lenders, assigned all “Indebtedness” (as defined in the
Existing BE Credit Agreement) and all Liens under the Existing BE Credit
Agreement Security Instruments that secure the “Indebtedness” (as defined in the
Existing BE Credit Agreement) to Agent, on behalf of itself and the Lenders.

 

I.The “Obligations” (as defined in the Existing ESTE Credit Agreement) and the
“Indebtedness” (as defined in the Existing BE Credit Agreement) are being
refinanced with Loans advanced pursuant to this Agreement on the Closing Date.

 

J.Borrower, EO, EF, Sabine, ELP, LUO, BE and BO, Agent and the Lenders desire to
(i) amend and restate (but not extinguish) the Existing ESTE Credit Agreement in
its entirety as hereinafter set forth herein, (ii) amend and restate (but not
extinguish) the Existing BE Credit Agreement in its entirety as hereinafter set
forth herein, (iii) have the “Obligations” (as defined in the Existing ESTE
Credit Agreement) renewed and rearranged under this Agreement as part of the
Obligations as set forth herein, (iv) have the “Indebtedness” (as defined in the
Existing BE Credit Agreement) renewed and rearranged under this Agreement as
part of the Obligations as set forth herein, and (v) have the Obligations under
this Agreement be secured by the liens and security interests under the Existing
ESTE Credit Agreement Security Instruments and the Existing BE Credit Agreement
Security Instruments.

 

K.It is the intention of the parties hereto that this Agreement is an amendment
and restatement of the Existing ESTE Credit Agreement and the Existing BE Credit
Agreement, and is not a new or substitute credit agreement or novation of the
Existing ESTE Credit Agreement or Existing BE Credit Agreement.

 

NOW, THEREFORE, in consideration of the premises and agreements, provisions and
covenants herein contained, the parties hereto (i) do hereby agree that the
Existing ESTE Credit Agreement and the Existing BE Credit Agreement are amended
and restated (but not substituted or extinguished) in their entirety as set
forth herein, and (ii) do hereby agree as follows:

 

Article I.
Definitions and Accounting Matters

Section 1.01Terms Defined Above.  As used in this Agreement, the terms defined
in the opening paragraph and the recitals above have the meanings indicated
therein.

Section 1.02Certain Defined Terms.  As used in this Agreement, the following
terms shall have the following meanings (all terms defined in this Article I or
in other provisions of this Agreement in the singular to have equivalent
meanings when used in the plural and vice versa):

“Acceptable Security Interest” in any Property means a Lien which (a) exists in
favor of Agent for the benefit of the Beneficiaries, (b) is superior to all
Liens or rights of any other Person in the Property encumbered thereby, other
than Liens permitted by Section 9.02 of this Agreement, (c) secures the
Obligations, and (d) is perfected and enforceable.

“Affected Loans” has the meaning assigned such term in Section 5.04.

“Affiliate” of any Person means (i) any Person directly or indirectly controlled
by, controlling or under common control with such first Person, (ii) any
director or officer of such first Person or of any Person referred to in clause
(i) above and (iii) if any Person in clause (i) above is an individual, any
member of the immediate family (including parents, spouse and children) of such
individual and any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is controlled by any
such member or trust. For purposes of this definition, any Person which owns
directly or indirectly ten percent (10%) or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or

2

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ten percent (10%) or more of the partnership or other ownership interests of any
other Person (other than as a limited partner of such other Person) will be
deemed to “control” (including, with its correlative meanings, “controlled by”
and “under common control with”) such corporation or other Person.

“Aggregate Commitments” at any time shall equal the amount calculated in
accordance with Section 2.03.

“Aggregate Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts of the Lenders, as the same may be reduced pursuant to
Section 2.03(b). As of the Closing Date, the Aggregate Maximum Credit Amounts
equal $500,000,000, subject in all events to the then-effective Borrowing Base.

“Applicable Lending Office” means, for each Lender and for each Type of Loan,
the lending office of such Lender (or an Affiliate of such Lender) designated
for such Type of Loan on the signature pages hereof or such other offices of
such Lender (or of an Affiliate of such Lender) as such Lender may from time to
time specify to Agent and Borrower as the office by which its Loans of such Type
are to be made and maintained.

“Applicable Margin” means the applicable per annum percentage set forth at the
appropriate intersection in the table shown below, based on the Borrowing Base
Utilization as in effect from time to time:

 

Borrowing Base Utilization

Applicable Margin

LIBOR Loans

Base Rate Loans

Less than 25%

2.25%

1.25%

Greater than or equal to 25%, but less than 50%

2.50%

1.50%

Greater than or equal to 50%, but less than 75%

2.75%

1.75%

Greater than or equal to 75%, but less than 90%

3.00%

2.00%

Greater than or equal to 90%

3.25%

2.25%

 

Each change in the Applicable Margin resulting from a change in the Borrowing
Base Utilization shall take effect on the day such change in the Borrowing Base
Utilization occurs.

“Approved Counterparty” means (i) any Lender or Affiliate of a Lender (other
than a Defaulting Lender or an Affiliate of a Defaulting Lender) and (ii) any
Person that at the time it made or entered into such trade or confirmation under
a Hedging Agreement, such Person was a Lender or Lender Affiliate (other than a
Defaulting Lender or an Affiliate of a Defaulting Lender) under this
Agreement.  For the purposes of the definition of “Approved Counterparty” the
trades and confirmations under the Hedging Agreements set forth on Schedule 7.19
that were made or entered into prior to the Closing Date shall be deemed to have
been made on the Closing Date.

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

“Assignment” means an assignment and assumption entered into by a Lender and an
Eligible Assignee (with the consent of any party whose consent is required by
Section 12.06), and accepted by Agent, in substantially the form of Exhibit E or
any other form approved by Agent.

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

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

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

“Banking Services Obligations” means any and all obligations of Borrower or any
Subsidiary, whether absolute or contingent and howsoever and whenever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.

“Banking Services Provider” means any Lender or Affiliate of a Lender that
provides Banking Services to Borrower or any Subsidiary.

3

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“Base Rate” means a variable rate, as of any date of determination, equal to the
greater of (i) the Prime Rate, (ii) the overnight cost of federal funds as
announced by the US Federal Reserve System plus one-half of one percent (0.50%),
and (iii) LIBOR for a one-month period plus one percent (1.00%) (collectively,
the “Index”). The Prime Rate is not necessarily the lowest rate charged by BOKF,
NA dba Bank of Texas on its loans and is set by Agent in its sole
discretion.  If any component of the Index becomes unavailable during the term
of this Agreement, Agent may designate a substitute index component after
notifying Borrower.  Any change in the Base Rate will become effective as of the
date the rate of interest is different from that on the preceding Business Day.

“Base Rate Loans” means Loans which accrue interest by reference to the Base
Rate, in accordance with the terms of this Agreement.

“Beneficiaries” means Agent, the Lenders, each Issuing Bank, each Approved
Counterparty and each Banking Services Provider.

“Bold Agreement” means that certain Contribution Agreement, date November 7,
2016, by and among ESTE, Borrower, LUSA, LUO, Bold Energy Holdings, LLC, and BE.

“Borrowing Base” means at any time an amount equal to the amount determined in
accordance with Section 2.08.

“Borrowing Base Deficiency” means, and occurs when, the amount by which the sum
of (i) the aggregate outstanding principal amount of the Loans, plus (ii) the LC
Exposure, exceeds the Borrowing Base, whether as the result of a
redetermination, a scheduled reduction, or otherwise.

“Borrowing Base Deficiency Rate” means one and one-quarter percent (1.25%) plus
the highest Applicable Margin, but in no event to exceed the Highest Lawful
Rate.

“Borrowing Base Utilization” means at any time, an amount equal to the quotient
of (i) the aggregate principal amount of Loans outstanding plus LC Exposure,
divided by (ii) the Borrowing Base.

“Borrowing, Continuation, and Conversion Request” means a loan request,
continuation request, or conversion request duly executed by Borrower,
substantially in the form of Exhibit B.

“BTA Development Agreement” means that certain Development Agreement, dated
September 24, 2013, by and between BTA Oil Producers, LLC, BE and BO, as in
effect on the Closing Date.

“Business Day” means any day other than a day on which commercial banks are
authorized or required to close in Texas 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 LIBOR Loan or a notice by
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 Securities” means, with respect to any Person, any and all shares,
units representing interests, participations, rights in or other equivalents
(however designated) of such Persons capital stock, including (x) with respect
to partnerships, partnership interests (whether general or limited) and any
other interest or participation that confers upon a Person the right to receive
a share of the profits and losses of, or distributions of assets of, such
partnership, (y) with respect to limited liability companies, member interests,
and (z) with respect to any Person, any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.

“Cash Collateralize” means, to pledge and deposit with or deliver to Agent, for
the benefit of Issuing Bank or the Lenders, as collateral for LC Exposure or
obligations of Lenders to fund participations in respect of LC Exposure, cash or
deposit account balances or, if Agent and Issuing Bank shall agree in their sole
discretion, other credit support, in each case pursuant to documentation in form
and substance satisfactory to Agent and 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.

“Change of Control” means Frank A. Lodzinski shall cease or fail for any reason
to serve and function as the Chief Executive Officer of Borrower and he shall
not be succeeded in such position by an individual reasonably acceptable to the
Majority Lenders.

“Charter Documents” means, as applicable, for any Person that is not an
individual, the articles or certificate of incorporation or formation,
certificate of limited partnership, regulations, bylaws, operating agreement,

4

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company agreement, partnership or limited partnership agreement, and all similar
documents related to the formation and governance of that Person, together with
all amendments thereto.

“Closing Date” means May 9, 2017.

“Closing Financial Statements” means the pro forma financial statements of ESTE
and BE for the fiscal year ending December 31, 2016, delivered to Agent on or
prior to the Closing Date.

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

“Collateral” means the Property owned by Borrower or any Guarantor and which is
subject to the Liens existing and to exist under the terms of the Security
Instruments.

“Commitment” means, for any Lender, its obligation to make Loans and to
participate in the Letters of Credit as provided in Section 2.01(b) up to the
lesser of (i) such Lender’s Maximum Credit Amount and (ii) the Lender’s
Percentage Share of the amount equal to the then effective Borrowing Base.

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

“Compliance Certificate” means a certificate from Borrower substantially in the
form of Exhibit C.

“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.

“Consolidated Cash Balance” means, at any time, the aggregate amount of cash and
cash equivalents, marketable securities, treasury bonds and bills, certificates
of deposit, investments in money market funds and commercial paper, in each
case, held or owned by (whether directly or indirectly), credited to the account
of, or otherwise reflected as an asset on the balance sheet of, the Borrower and
its Subsidiaries; provided that Consolidated Cash Balance shall exclude: (i) any
cash or cash equivalents set aside for payroll or employee benefits, the payment
of withholding or other taxes of the Borrower or any Subsidiary, or the payment
of royalty and working interest payments owing to third parties, (ii) any cash
or cash equivalents set aside to pay obligations (other than the obligations
listed in (i) above) of the Borrower or any Subsidiary to third parties and for
which either the Borrower or any Subsidiary (x) has issued checks or has
initiated wires or ACH transfers or (y) reasonably anticipates in good faith
that it will issue checks or initiate wires or ACH transfers within ten (10)
Business Days thereafter, (iii) other amounts permitted to be paid by the
Borrower or any Subsidiary in accordance with this Agreement and the other Loan
Documents for which the Borrower or any such Subsidiary has issued checks or has
initiated wires or ACH transfers, and (iv) any cash or cash equivalents of the
Borrower or any Subsidiary constituting purchase price deposits held in escrow
pursuant to a binding and enforceable purchase and sale agreement with a third
party containing customary provisions regarding the payment and refunding of
such deposits.

“Consolidated Cash Balance Limit” means $10,000,000.

“Consolidated Net Income” means with respect to Borrower and its Consolidated
Subsidiaries, for any period, the aggregate of the net income (or loss) of
Borrower and its Consolidated Subsidiaries after allowances for taxes for such
period, determined on a consolidated basis in accordance with GAAP; provided
that there shall be excluded from such net income (to the extent otherwise
included therein) the following: (i) the net income of any Person in which
Borrower or any Consolidated Subsidiary has an interest (which interest does not
cause the net income of such other Person to be consolidated with the net income
of Borrower and its Consolidated Subsidiaries in accordance with GAAP) or the
net income of any Unrestricted Subsidiary, except to the extent of the amount of
dividends or distributions actually paid in such period by such other Person or
such Unrestricted Subsidiary to Borrower or to a Consolidated Subsidiary, as the
case may be; (ii) the net income (but not loss) of any Consolidated Subsidiary
to the extent that the declaration or payment of dividends or similar
distributions or transfers or loans by that Consolidated Subsidiary is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument or Governmental Requirement applicable to such Consolidated
Subsidiary, or is otherwise restricted or prohibited in each case determined in
accordance with GAAP; (iii) the net income (or loss) of any Person acquired in a
pooling-of-interests transaction for any period prior to the date of such
transaction; (iv) any extraordinary gains or losses, including gains or losses
attributable to Property sales not in the ordinary course of business and hedge
unwinds not in the ordinary course of business; and (v) the cumulative effect of
a change in accounting principles and any gains or losses attributable to write
ups or write downs of assets.

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“Consolidated Subsidiaries” means each Subsidiary of a Person (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
such Person in accordance with GAAP. Unless otherwise indicated, each reference
to the term “Consolidated Subsidiary” means a Subsidiary consolidated with
Borrower. For the purposes of this Agreement, each reference to Consolidated
Subsidiaries of ESTE shall include Borrower and each of Borrower’s Consolidated
Subsidiaries.

“Debt” means, for any Person the sum of the following (without duplication): (i)
all obligations of such Person for borrowed money or evidenced by bonds,
debentures, notes or other similar instruments (including principal, interest,
fees and charges); (ii) all obligations of such Person (whether contingent or
otherwise) in respect of bankers’ acceptances, letters of credit, surety or
other bonds and similar instruments; (iii) all obligations of such Person to pay
the deferred purchase price of Property or services (other than for borrowed
money); (iv) all obligations under leases which shall have been, or should have
been, in accordance with GAAP, recorded as capital leases in respect of which
such Person is liable (whether contingent or otherwise); (v) all obligations of
such Person under “synthetic lease” transactions or other off balance sheet
financings; (vi) all Debt (as described in the other clauses of this definition)
and other obligations of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person; (vii) all Debt (as described
in the other clauses of this definition) and other obligations of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the debtor or obligations of others; (viii) all obligations or
undertakings of such Person to maintain or cause to be maintained the financial
position or covenants of others or to purchase the Debt or Property of others;
(ix) all obligations to deliver goods or services including Hydrocarbons in
consideration of advance payments, except as permitted by Section 9.18 and
disclosed in a Reserve Report Certificate; (x) all obligations to pay for goods
or services whether or not such goods or services are actually received or
utilized by such Person; (xi) any capital stock of such Person in which such
Person has a mandatory obligation to redeem such stock; (xii) any Debt of a
Subsidiary for which such Person is liable either by agreement or because of a
Governmental Requirement; (xiii) the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly
or indirectly received payment; and (xiv) all obligations of such Person under
Hedging Agreements.

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

“Default” means an Event of Default or an event which with notice, or lapse of
time, or both, would become an Event of Default.

“Defaulting Lender” means, subject to Section 12.07(b), any Lender 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 hereunder unless such Lender
notifies Agent and Borrower in writing that such failure is the result of such
Lender’s determination that one or more conditions precedent to funding (each of
which conditions precedent, together with any applicable default, shall be
specifically identified in such writing) has not been satisfied, or (ii) pay to
Agent, 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 Borrower, Agent
or Issuing Bank in writing that it does not intend to comply with its funding
obligations hereunder, or has made a public statement to that effect (unless
such writing or public statement relates to such Lender’s obligation to fund a
Loan hereunder and states that such position is based on such Lender’s
determination that a condition precedent to funding (which condition precedent,
together with any applicable default, shall be specifically identified in such
writing or public statement) cannot be satisfied), (c) has failed, within three
Business Days after written request by Agent or Borrower, to confirm in writing
to Agent and Borrower that it will comply with its prospective funding
obligations hereunder (provided that such Lender shall cease to be a Defaulting
Lender pursuant to this clause (c) upon receipt of such written confirmation by
Agent and Borrower), or (d) has, or has a direct or indirect parent company that
has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii)
had appointed for it a receiver, custodian, conservator, trustee, administrator,
assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or assets, including the Federal
Deposit Insurance Corporation or any other state or federal regulatory authority
acting in such a capacity or (iii) become the subject of a Bail-In Action;
provided that a Lender shall not be a Defaulting Lender solely by virtue of the
ownership of or acquisition of any equity interest in that Lender or any direct
or indirect parent company thereof by a Governmental Authority so long as such
ownership interest does not result in or provide such Lender with immunity from
the

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jurisdiction of courts within the United States or from the enforcement of
judgments or writs of attachment on its assets or permit such Lender (or such
Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts
or agreements made with such Lender.  Any determination by 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 12.07(b)) upon delivery of
written notice of such determination to Borrower, Issuing Bank and each Lender.

“Deposit Account Control Agreement” means a control agreement, in form and
substance reasonably satisfactory to Agent, which grants Agent “control” (as
defined in the Uniform Commercial Code in effect in the applicable jurisdiction)
over any deposit account maintained by Borrower or any Guarantor, in each case,
among Agent, Borrower or such Guarantor and the applicable depository
institution (either a Lender or other depository institution approved by Agent
and the Majority Lenders) at which the Deposit Account is maintained, pursuant
to which such depository institution agrees to take instructions from Agent
following notice from Agent during the continuance of an Event of Default, as it
may be amended, supplemented or otherwise modified from time to time in
accordance with this Agreement.

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

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

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

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

“EBITDAX” means, for any period, the sum of Consolidated Net Income for such
period plus (a) the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: (i) interest, (ii) taxes, (iii)
depreciation, (iv) depletion, (v) amortization, (vi) non-cash losses under FASB
ASC 815 as a result of changes in the fair market value of derivatives, (vii)
exploration expenses, (viii) impairment expenses, and (ix) non-cash compensation
expenses and minus (b) to the extent included in Consolidated Net Income in such
period, non-cash gains under FASB ASC 815 as a result of changes in the fair
market value of derivatives.

“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 12.06(b)(iii), (v) and (vi) (subject to such consents, if
any, as may be required under Section 12.06(b)(iii)).

“Engineering Reports” has the meaning assigned such term in Section 2.08.

“Environmental Laws” means any and all Governmental Requirements pertaining to
health or the environment in effect in any and all jurisdictions in which
Borrower or any Subsidiary is conducting or at any time has conducted business,
or where any Property of Borrower or any Subsidiary is located, including
without limitation, the Oil Pollution Act of 1990 (“OPA”) 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 laws. The term “oil” has the meaning specified in
OPA, the terms “hazardous substance” and “release” (or “threatened release”)
have the meanings specified in CERCLA, and the terms “solid waste” and
“disposal” (or “disposed”) have the meanings specified in RCRA; provided,
however, that (i) in the event either OPA, CERCLA or RCRA 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 (ii) to the extent
the laws of the state in which any Property of Borrower or any Subsidiary is
located establish a meaning for “oil,” “hazardous substance,” “release,” “solid
waste” or “disposal” which is broader than that specified in either OPA, CERCLA
or RCRA, such broader meaning shall apply.

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

“ERISA Affiliate” means each trade or business (whether or not incorporated)
which together with Borrower or any Subsidiary would be deemed to be a “single
employer” within the meaning of section 4001(b)(l) of ERISA or subsections (b),
(c), (m) or (o) of Section 414 of the Code.

“ERISA Event” means (i) a “Reportable Event” described in Section 4043 of ERISA
and the regulations issued thereunder, (ii) the withdrawal of Borrower, any
Subsidiary or any ERISA Affiliate from a Plan during a plan year in which it was
a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (iii) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, (iv) the institution of
proceedings to terminate a Plan by the PBGC or (v) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan.

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

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

“Excepted Liens” means: (i) Liens for taxes, assessments or other governmental
charges or levies not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (ii) Liens in connection with workmen’s compensation,
unemployment insurance or other social security, old age pension or public
liability obligations not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators’, vendors’, carriers’, warehousemen’s,
repairmen’s, mechanics’, workmen’s, materialmen’s, construction or other like
Liens arising by operation of law in the ordinary course of business or incident
to the exploration, development, operation and maintenance of Oil and Gas
Properties or statutory landlord’s liens, each of which is in respect of
obligations that have not been outstanding more than 90 days or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been maintained in accordance with GAAP; (iv) any Liens reserved
in leases or farmout agreements for rent or royalties and for compliance with
the terms of the farmout agreements or leases in the case of leasehold estates,
to the extent 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 Borrower or any Subsidiary or materially impair the
value of such Property subject thereto; (v) encumbrances (other than to secure
the payment of borrowed money or the deferred purchase price of Property or
services), easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations in any rights of way or other Property of Borrower or
any Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal or
other minerals or timber, and other like purposes, or for the joint or common
use of real estate, rights of way, facilities and equipment, and defects,
irregularities, zoning restrictions and deficiencies in title of any rights of
way or other Property which in the aggregate do not materially impair the use of
such rights of way or other Property for the purposes of which such rights of
way and other Property are held by Borrower or any Subsidiary or materially
impair the value of such Property subject thereto; (vi) deposits of cash or
securities to secure the performance of bids, trade contracts, leases, statutory
obligations and other obligations of a like nature incurred in the ordinary
course of business; (vii) contractual Liens which arise in the ordinary course
of business under operating agreements, joint venture agreements, oil and gas
partnership agreements, oil and gas leases, unitization and pooling declarations
and agreements, and farm-out agreements, which are usual and customary in the
oil and gas business, not entered into for the purpose of securing borrowed
money or deferred consideration 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, 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 applicable Loan Party or materially impair the value of such
Property subject thereto and (viii) Liens permitted by the Security Instruments;
provided, however, no intention to subordinate the first priority Lien granted
in favor of Agent and the Lenders is to be hereby implied or expressed by the
permitted existence of any of the foregoing Excepted Liens.

Excluded Swap Obligation” means, (a) with respect to any Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the guarantee of such
Guarantor of, or the grant by such Guarantor of a security interest to secure,
as applicable, such Swap Obligation (or any guarantee thereof) is or becomes
illegal under the

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Commodity Exchange Act and (b) with respect to Borrower, any Swap Obligation of
another Loan Party if, and to the extent that, all or a portion of the joint and
several liability of such Borrower with respect to, or the grant of such
Borrower of a security interest to secure, as applicable, such Swap Obligation
is or becomes illegal under the Commodity Exchange Act or any rule, regulation,
or order of the Commodity Futures Trading Commission (or the application or
official interpretation of any thereof), by virtue of such Guarantor’s (in the
case of (a)) or Borrower’s (in the case of (b)) failure to constitute an
“eligible contract participant,” as defined in the Commodity Exchange Act and
the regulations thereunder, at the time the guarantee of such Guarantor, joint
and several liability of such Borrower, or grant of such security interest by
such Guarantor or Borrower, as applicable, becomes or would become effective
with respect to such Swap Obligation. If a Swap Obligation arises under a Master
Agreement governing more than one Swap Obligation, such exclusion shall apply
only to the portion of such Swap Obligation that is attributable to Swap
Obligations for which such guarantee or security interest or joint and several
liability, as applicable, is or becomes illegal.

“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 a 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
Borrower under Section 5.06) or (ii) such Lender changes its lending office,
except in each case to the extent that, pursuant to Section 4.06, 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 4.06(g) and (d) any U.S. federal withholding Taxes
imposed under FATCA.

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

“Federal Funds Rate” means, for any day, the rate of interest (rounded upwards,
if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day and (ii) if no such rate is so published on such
next preceding Business Day, the Federal Funds Rate for such day shall be the
average rate quoted to Agent on such day on such transactions as determined by
Agent.

“Fee Letter” means that certain letter agreement between Agent and Borrower,
dated as of March 20, 2017, concerning certain fees in connection with this
Agreement and any agreements or instruments executed in connection therewith, as
the same may be amended or replaced from time to time.

“Flood Insurance Regulations” shall mean (i) the National Flood Insurance Act of
1968 as now or hereafter in effect or any successor statute thereto, (ii) the
Flood Disaster Protection Act of 1973 as now or hereafter in effect or any
successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994
(amending 42 USC 4001, et seq.), as the same may be amended or recodified from
time to time, and (iv) the Flood Insurance Reform Act of 2004 and any
regulations promulgated thereunder.

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

“Fronting Exposure” means, at any time there is a Defaulting Lender, such
Defaulting Lender’s Percentage Share of the outstanding LC Exposure with respect
to Letters of Credit issued by 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.

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

“GAAP” means generally accepted accounting principles in the United States of
America in effect from time to time.

“Governmental Authority” shall include the country, the state, county, city and
political subdivisions in which any Person or such Person’s Property is located
or which exercises valid jurisdiction over any such Person or such Person’s
Property, and any court, agency, department, commission, board, bureau or
instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person’s Property (including any
supra-national bodies such as the European Union or the European Central Bank).
Unless otherwise specified, all references to Governmental Authority herein
means a Governmental Authority having jurisdiction over, where applicable,
Borrower, its Subsidiaries or any of their Property or Agent, any Lender or any
Applicable Lending Office.

“Governmental Requirement” means any law, statute, code, ordinance, order,
determination, rule, regulation, treaty, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or
requirement (whether or not having the force of law), including, without
limitation, Regulation D and Environmental Laws, energy regulations and
occupational, safety and health standards or controls, of any Governmental
Authority.

“Guarantee Obligation” means, as to any Person (the “guaranteeing person”), any
obligation, including a reimbursement, counterindemnity or similar obligation,
of the guaranteeing Person that guarantees or in effect guarantees, or which is
given to induce the creation of a separate obligation by another Person
(including any bank under any letter of credit) that guarantees or in effect
guarantees, any Debt, leases, dividends or other obligations (the “primary
obligations”) of any other third Person (the “primary obligor”) in any manner,
whether directly or indirectly, including any obligation of the guaranteeing
person, whether or not contingent, (i) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv) otherwise
to assure or hold harmless the owner of any such primary obligation against loss
in respect thereof; provided, however, that the term Guarantee Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business. For the avoidance of doubt, for purposes of
determining any Guarantee Obligations of any Guarantor pursuant to the Security
Instruments, the definition of “Specified Swap Agreement” shall not create any
guarantee by any Guarantor of (or grant of security interest by any Guarantor to
support, if applicable) any Excluded Swap Obligation of such Guarantor.

“Guarantor” means each current and future Subsidiary of Borrower and any other
Person that becomes a guarantor of all or any portion of the Obligations
pursuant to Section 8.09(d).

“Guaranty Agreement” means the Guaranty Agreement executed by each Guarantor in
form and substance satisfactory to Agent guarantying, unconditionally, payment
of the Obligations, as the same may be amended, modified or supplemented from
time to time.

“Hedging Agreements” means any commodity, interest rate or currency swap, cap,
floor, collar, forward agreement or other exchange or protection agreements or
any option with respect to any such transaction, and any and all trades,
confirmations, and transactions entered into pursuant thereto.

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

“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,

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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 Parties” has the meaning assigned such term in Section
12.03(a)(ii).

“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 and (b) to the extent not otherwise described in
(a), Other Taxes.

“Indemnity Matters” means any and all actions, suits, proceedings (including any
investigations, litigation or inquiries), claims, demands and causes of action
made or threatened against a Person and, in connection therewith, all losses,
liabilities, damages (including, without limitation, consequential damages) or
reasonable costs and expenses of any kind or nature whatsoever incurred by such
Person whether caused by the sole or concurrent negligence of such Person
seeking indemnification.

“Initial Funding” means the funding of the initial Loans or issuance of the
initial Letters of Credit occurring on or after the Closing Date and upon
satisfaction of the conditions set forth in Sections 6.01 and 6.02.

“Interest Period” means, as to any LIBOR Loan, the period commencing on the date
such Loan is borrowed or continued as, or converted into, a LIBOR Loan and
ending on the date one (1), two (2), or three (3) months thereafter, as selected
by Borrower pursuant to Section 2.02(a) (or such longer period as may be
requested by Borrower and agreed to by all Lenders); provided, that:  (a) if any
Interest Period would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the following Business Day; (b) any
Interest Period that begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period shall
end on the last Business Day of the calendar month at the end of such Interest
Period; and (c) Borrower may not select any Interest Period for a Loan which
would extend beyond the Revolving Credit Termination Date.

“Investment Account” means any and all investment accounts, commodity accounts,
and securities accounts now owned or hereafter acquired or opened by Borrower or
any Guarantor, together with all securities, securities entitlements, monies,
instruments, certificates, checks, drafts, wire transfer receipts, and other
property deposited therein and all balances therein.

“Investment Account Control Agreement” means a control agreement, in form and
substance reasonably satisfactory to Agent, which grants Agent “control” (as
defined in the Uniform Commercial Code in effect in the applicable jurisdiction)
over any Investment Account maintained by Borrower or any Guarantor, in each
case, among Agent, Borrower or such Guarantor and the applicable financial
institution (either a Lender or other financial institution approved by Agent
and the Majority Lenders) at which the Investment Account is maintained,
pursuant to which such financial institution agrees to take instructions from
Agent following notice from Agent during the continuance of an Event of Default,
as it may be amended, supplemented or otherwise modified from time to time in
accordance with this Agreement.

“IRS” means the United States Internal Revenue Service.

“LC Commitment” at any time means $5,000,000.

“LC Exposure” at any time means the aggregate face amount of all undrawn and
uncancelled Letters of Credit plus the aggregate of all amounts drawn under all
Letters of Credit and not yet reimbursed.

“Lender Affiliate” means, (a) with respect to any Lender, (i) an Affiliate of
such Lender or (ii) any 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 and (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.

“Letter-in-Lieu” means a letter addressed to a Purchaser or in blank,
substantially in the form of Exhibit G.

“Letter of Credit Agreements” means the written agreements with Issuing Bank, as
issuing lender for any Letter of Credit, executed in connection with the
issuance by Issuing Bank of the Letters of Credit, such agreements

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to be on Issuing Bank’s customary form for letters of credit of comparable
amount and purpose as from time to time in effect or as otherwise agreed to by
Borrower and Issuing Bank.

“Letters of Credit” means the letters of credit issued pursuant to Section
2.01(b) and all reimbursement obligations pertaining to any such letters of
credit, and “Letter of Credit” means any one of the Letters of Credit and the
reimbursement obligations pertaining thereto.

“LIBOR” means, with respect to any LIBOR Loan for any Interest Period, a rate
(expressed to the fifth decimal place) equal to the rate of interest which is
identified and normally published by ICE Benchmark Administration (or any other
Person that takes over the administration of such rate) as the offered rate for
loans in United States dollars for the applicable Interest Period as of 11:00
a.m. (London time), on the second full Business Day next preceding the first day
of such Interest Period (unless such date is not a Business Day, in which event
the next succeeding Business Day will be used).  If ICE Benchmark Administration
(or such other Person that takes over the administration of such rate) no longer
reports the LIBOR or Agent determines in good faith that the rate so reported no
longer accurately reflects the rate available to Agent in the London Interbank
Market or if such index no longer exists or accurately reflects the rate
available to Agent in the London Interbank Market, Agent may select a
replacement index.   Notwithstanding anything in this definition to the
contrary, “LIBOR” shall be deemed not to be less than zero at any time.

“LIBOR Adjusted Rate” means, with respect to any LIBOR Loan, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by Agent
to be equal to the quotient of (i) LIBOR for such Loan for the Interest Period
for such Loan divided by (ii) 1 minus the Reserve Requirement for such Loan for
such Interest Period.

“LIBOR Loans” means any Loans which accrue interest by reference to the LIBOR,
in accordance with the terms 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 (i) 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 (ii) production payments and the like payable out of
Oil and Gas Properties. The term shall include reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For the
purposes of this Agreement, Borrower or any Subsidiary 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.

“Loan Documents” means this Agreement, the Notes, each Security Instrument, the
Fee Letter, each Borrowing Request and each Guaranty Agreement together, in each
case, with all exhibits, schedules and attachments thereto, and all other
agreements, documents or instruments from time to time executed or delivered in
connection with or pursuant to any of the foregoing, and any amendments or
restatements with respect to any of the foregoing.

“Loan Parties” means, collectively, Borrower and the Guarantors, and “Loan
Party” means any one of the foregoing.

“Loans” means the loans as provided for by Sections 2.01(a).

“Majority Lenders” means, at any time while no Loans are outstanding, Lenders
having greater than fifty percent (50%) of the Aggregate Commitments and, at any
time while Loans are outstanding, Lenders holding greater than fifty percent
(50%) of the outstanding aggregate principal amount of the Loans (without regard
to any sale by a Lender of a participation in any Loan under Section 12.06(c));
provided that, the portion of the unpaid principal amount of the outstanding
Loans held or deemed held by and the Commitment of, any Defaulting Lender shall
be excluded for purposes of making a determination of Majority Lenders unless
all Lenders are Defaulting Lenders; provide further that, at any time there are
only two Lenders under this Agreement, “Majority Lenders” means all Lenders
(subject to the foregoing proviso regarding Defaulting Lenders).

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“Master Agreement” means any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master derivatives agreement, and any
schedules to any of the foregoing.

“Material Adverse Effect” means any set of circumstances or events that (i) has
or could reasonably be expected to have any material and adverse effect upon, or
result in or reasonably be expected to result in a material adverse change in,
(A) the assets, liabilities, financial condition, business, operations or
affairs of Borrower and its Subsidiaries taken as a whole different from those
reflected in the Closing Financial Statements or from the facts represented or
warranted in any Loan Document, or (B) the ability of Borrower and its
Subsidiaries taken as a whole to carry out their business as at the Closing Date
or as proposed as of the Closing Date to be conducted or meet their obligations
under the Loan Documents on a timely basis, (ii) impairs materially or could be
reasonably expected to impair materially the ability of Borrower and its
Subsidiaries to duly and punctually pay and perform their obligations under the
Loan Documents or (iii) impairs materially or could reasonably be expected to
impair materially the ability of Agent or any of the Lenders, to the extent
permitted, to enforce its legal remedies pursuant to the Loan Documents.

“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 reduced pursuant to Section 2.03(b) pro rata to each Lender based on
its Percentage Share), as modified from time to time to reflect any assignments
permitted by Section 12.06(b).

“Minimum Collateral Amount” means, at any time, (i) with respect to Cash
Collateral consisting of cash or deposit account balances, an amount equal to
105% of the Fronting Exposure of Issuing Bank with respect to Letters of Credit
issued and outstanding at such time and (ii) otherwise, an amount determined by
Agent and Issuing Bank in their sole discretion.

“Monthly Reduction Amount” means the amount by which the Borrowing Base shall
automatically reduce on the last day of each month, as determined by Agent and
the Required Lenders or Agent and the Lenders, as applicable, in accordance with
Section 2.08.

“Mortgaged Property” means the Property owned by Borrower and its Subsidiaries
which is subject to the Liens existing and to exist under the terms of the
Security Instruments granting Liens in Oil and Gas Properties.

“Multiemployer Plan” means a Plan defined as such in Section 3(37) or 4001(a)(3)
of ERISA.

“NABORS Promissory Note” means that certain Promissory Note, dated as of July 8,
2016, from ESTE to NABORS Drilling Technologies USA, Inc., which was assigned by
ESTE to Borrower effective as of April 1, 2017, as in effect on May 9, 2017.

“Non-Consenting Lender” means any Lender that does not approve any consent,
waiver or amendment that (i) requires the approval of all or all affected
Lenders in accordance with the terms of Section 12.04 and (ii) has been approved
by the Required Lenders.

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

“Notes” means the Notes provided for by Section 2.06, together with any and all
renewals, extensions for any period, increases, rearrangements, substitutions or
modifications thereof.

“Obligations” means all indebtedness, obligations and liabilities of Borrower or
any Subsidiary to any Lender, any Lender Affiliate, Agent, Issuing Bank, any
Approved Counterparty, or any Banking Services Provider, individually or
collectively, existing on the date of this Agreement or arising thereafter,
direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising or incurred
under this Agreement, any Hedging Agreement, any of the other Loan Documents or
in respect of any of the Loans made, reimbursement obligations incurred, Banking
Services Obligations, or any of the Notes, Letters of Credit or other
instruments at any time evidencing any of the foregoing, including interest
accruing subsequent to the filing of a petition or other action concerning
bankruptcy or other similar proceedings, and all renewals, extensions,
refinancings and replacements for the foregoing; provided that the “Obligations”
of a Loan Party shall exclude any Excluded Swap Obligations with respect to such
Loan Party.

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

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“Oil and Gas Properties” means Hydrocarbon Interests; the Properties now or
hereafter pooled or unitized with Hydrocarbon Interests; all presently existing
or future unitization, pooling agreements and declarations of pooled units and
the units created thereby (including without limitation all units created under
orders, regulations and rules of any Governmental Authority) which may affect
all or any portion of the Hydrocarbon Interests; all operating agreements,
contracts and other agreements which relate to any of the Hydrocarbon Interests
or the production, sale, purchase, exchange or processing of Hydrocarbons from
or attributable to such Hydrocarbon Interests; all Hydrocarbons in and under and
which may be produced and saved or attributable to the Hydrocarbon Interests,
including all oil in tanks, the lands covered thereby and all rents, issues,
profits, proceeds, products, revenues and other incomes from or attributable to
the Hydrocarbon Interests; all tenements, hereditaments, appurtenances and
Properties in any manner appertaining, belonging, affixed or incidental to the
Hydrocarbon Interests; and all Properties, rights, titles, interests and estates
described or referred to above, including any and all Property, real or
personal, now owned or hereinafter acquired and situated upon, used, held for
use or useful in connection with the operating, working or development of any of
such Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment or other personal property which may be on such premises for the
purpose of drilling a well or for other similar temporary uses) and including
any and all oil wells, gas wells, injection wells or other wells, buildings,
structures, fuel separators, liquid extraction plants, plant compressors, pumps,
pumping units, field gathering systems, tanks and tank batteries, fixtures,
valves, fittings, machinery and parts, engines, boilers, meters, apparatus,
equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
and rods, surface leases, rights-of-way, easements and servitudes together with
all additions, substitutions, replacements, accessions and attachments to any
and all of the foregoing. Unless otherwise indicated herein, each reference to
the term “Oil and Gas Properties” means the Oil and Gas Properties of Borrower
and/or the Guarantors.

“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
interest 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 5.06).

“Participant” has the meaning assigned to such term in clause (d) of Section
12.06.

“Participant Register” has the meaning specified in clause (d) of Section 12.06.

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

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

“PDNP Reserves” means Proven Reserves which are categorized as both “Developed”
and “Non‑Producing” in the definitions promulgated by the Society of Petroleum
Evaluation Engineers and the World Petroleum Congress as in effect at the time
in question.

“PDP Reserves” means Proven Reserves which are categorized as both "Developed"
and "Producing" in the definitions promulgated by the Society of Petroleum
Evaluation Engineers and the World Petroleum Congress as in effect at the time
in question.

“Percentage Share” means the percentage of the Aggregate Commitments to be
provided by a Lender under this Agreement as indicated on Annex I hereto, as
modified from time to time to reflect any assignments permitted by Section
12.06(b).

“Permitted Unsecured Counterparty” means any unsecured counterparty to a Hedging
Agreement that, at the time the Hedging Agreement (and not the Master Agreement
with such counterparty) is entered into (a) has long-term obligations rated BBB+
or Baal or better, respectively, by Standard & Poor’s Corporation or Moody’s
Investors Services, Inc. (or a successor credit rating agency) or (b) has its
obligations under such Hedging Agreement guaranteed by a Person that has
long-term obligations rated BBB+ or Baal or better, respectively, by Standard &
Poor’s Corporation or Moody’s Investors Services, Inc. (or a successor credit
rating agency).

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“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, unincorporated organization or government or
any agency, instrumentality or political subdivision thereof, or any other form
of entity.

“Plan” means any employee pension benefit plan, as defined in Section 3(2) of
ERISA, which (i) is currently or hereafter sponsored, maintained or contributed
to by Borrower, any Subsidiary or an ERISA Affiliate or (ii) was at any time
during the preceding six calendar years sponsored, maintained or contributed to,
by Borrower, any Subsidiary or an ERISA Affiliate.

“Post Default Rate” means, in respect of any principal of any Loan (including
LIBOR Loans) or any other amount payable by Borrower under this Agreement or any
other Loan Document, a rate per annum during the period commencing on the date
of occurrence of an Event of Default until such amount is paid in full or all
Events of Default are cured or waived equal to four percent (4%) per annum above
the Base Rate as in effect from time to time plus the Applicable Margin, but in
no event to exceed the Highest Lawful Rate.

“Prime Rate” means the prime rate published in The Wall Street Journal's “Money
Rates” or similar table.  If multiple prime rates are quoted in the table, then
the highest prime rate will be the Prime Rate.  In the event that the prime rate
is no longer published by The Wall Street Journal in the “Money Rates” or
similar table, then Agent may select an alternative published index based upon
comparable information as a substitute Prime Rate.  Upon the selection of a
substitute Prime Rate, the applicable interest rate shall thereafter vary in
relation to the substitute index.

“Principal Office” means the principal office of Agent, presently located at
1401 McKinney, Suite 1000, Houston, Texas 77010.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

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

“PUD Reserves” means Proven Reserves which are categorized as “Undeveloped” in
the definitions promulgated by the Society of Petroleum Evaluation Engineers and
the World Petroleum Congress as in effect at the time in question.

“Purchasers” means each of the Persons that at any time purchase the
Hydrocarbons of Borrower from its Oil and Gas Properties.

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan
Party that has total assets exceeding $10,000,000 at the time the relevant
guaranty of such Loan Party, or the grant by such party of a security interest
or lien to secure, or the provision of other support of, such Swap Obligation
becomes effective with respect to such Swap Obligation or such other person as
constitutes an “eligible contract participant” under the Commodity Exchange Act
and can cause another person to qualify as an “eligible contract participant” at
such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the
Commodity Exchange Act.

“Quarterly Dates” means the last day of each March, June, September, and
December, in each year; provided, however, that if any such day is not a
Business Day, such Quarterly Date shall be the next succeeding Business Day.

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

“Recourse Debt” means Debt of an Unrestricted Subsidiary which is a liability
of, in whole or in part or guaranteed by, any Loan Party or which is secured by
any Lien upon any property or assets of any Loan Party.

“Redetermination Date” means the date that the redetermined Borrowing Base
and/or Monthly Reduction Amount becomes effective subject to the notice
requirements specified in Section 2.08(h) both for scheduled redeterminations
and unscheduled redeterminations.

“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be amended or supplemented
from time to time.

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“Regulatory Change” means the occurrence, after the date of this Agreement, of
any of the following: (a) the adoption or taking effect of any Governmental
Requirement, (b) any change in any Governmental Requirement 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, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Regulatory Change”, regardless of the date enacted,
adopted or issued.

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives of such Person and of
such Person’s Affiliates.

“Required Lenders” means, at any time while no Loans are outstanding, Lenders
having at least sixty-six and two-thirds percent (66-2/3%) of the Aggregate
Commitments and, at any time while Loans are outstanding, Lenders holding at
least sixty-six and two-thirds percent (66-2/3%) of the outstanding aggregate
principal amount of the Loans (without regard to any sale by a Lender of a
participation in any Loan under Section 12.06(c)); provided that, the portion of
the unpaid principal amount of the outstanding Loans held or deemed held by and
the Commitment of, any Defaulting Lender shall be excluded for purposes of
making a determination of Required Lenders unless all Lenders are Defaulting
Lenders; provided further that, at any time there are only two Lenders under
this Agreement, “Required Lenders” means all Lenders (subject to the foregoing
proviso regarding Defaulting Lenders).

“Reserve Report” means a report, in form and substance satisfactory to Agent,
setting forth, as of each March 1 and September 1 (or such other date in the
event of an unscheduled redetermination); (i) the oil and gas reserves
attributable to Borrower’s Oil and Gas Properties 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 and
(ii) such other information as Agent may reasonably request.

“Reserve Report Certificate” means, collectively, the certificates from Borrower
substantially in the form of Exhibit F.

“Reserve Requirement” means, for any Interest Period for any LIBOR Loan, the
average maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during such Interest Period
under Regulation D by member banks of the Federal Reserve System in New York
City with deposits exceeding one billion Dollars against  “Eurocurrency
liabilities” (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks by reason of any Regulatory
Change against (i) any category of liabilities which includes deposits by
reference to which LIBOR is to be determined as provided in the definition of
“LIBOR” or (ii) any category of extensions of credit or other assets which
include a LIBOR Loan.

“Responsible Officer” means, as to any Person, the Chief Executive Officer, the
President or any Vice President of such Person and, with respect to financial
matters, the term “Responsible Officer” shall include the Chief Financial
Officer of such Person. Unless otherwise specified, all references to a
Responsible Officer herein means a Responsible Officer of Borrower.

“Revolving Credit Termination Date” means the earlier to occur of (i) May 9,
2022 or (ii) the date that the Commitments are sooner terminated pursuant to
Sections 2.03(b) or 10.02.

“Sanctioned Country” means a country subject to a sanctions program identified
on the list maintained by OFAC and available at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx,
or as otherwise published from time to time.

“Sanctioned Person” means (a) a Person named on the list of “Specially
Designated Nationals and Blocked Persons” maintained by OFAC available at
http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx,
or as otherwise published from time to time, (b) a Person named on the lists
maintained by the United Nations Security Council available at
http://www.un.org/sc/committees/list_compend.shtml, or as

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otherwise published from time to time, (c) a Person named on the lists
maintained by the European Union available at
http://eeas.europa.eu/cfsp/sanctions/consol-list_en.htm, or as otherwise
published from time to time, (d) a Person named on the lists maintained by Her
Majesty’s Treasury available at
http://www.hm-treasury.gov.uk/fin_sanctions_index.htm, or as otherwise published
from time to time, or (e) (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.

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

“Scheduled Redetermination Date” has the meaning assigned to such term in
Section 2.08(d).

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

“Security Instruments” means the Deposit Account Control Agreements, Investment
Account Control Agreements, Letters of Credit, Letter of Credit Agreements,
pledge agreements, security agreements, mortgages, the agreements or instruments
described or referred to in Exhibit D, and any and all other agreements or
instruments now or hereafter executed and delivered by Borrower, a Guarantor 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 or guarantee of the
payment or performance of, the Obligations, the Notes, this Agreement, or
reimbursement obligations under the Letters of Credit, as such agreements or
instruments may be amended, supplemented, modified or restated from time to
time.

“Solvent” means, (a) the fair value of the Property of Borrower and its
Subsidiaries, at a fair valuation, will exceed their debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the Property of Borrower and its Subsidiaries will be greater than the amount
that will be required to pay the probable liability of its debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (c) Borrower and its Subsidiaries will
be able to pay their debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (d)
Borrower and its Subsidiaries will not have unreasonably small capital with
which to conduct the business in which they are engaged as such business is now
conducted and is proposed to be conducted following the Closing Date.

“Specified Swap Agreement” means any Swap Agreement for which the obligations to
pay or perform under are Obligations under this Agreement; provided that for
purposes of determining any Guarantee Obligations of any Guarantor pursuant to
the Security Instruments, the definition of “Specified Swap Agreement” shall not
create any guarantee by any Guarantor of (or grant of security interest by any
Guarantor to support, if applicable) any Excluded Swap Obligation of such
Guarantor.

“Subsidiary” means (i) any corporation of which at least a majority of the
outstanding shares of stock having by the terms thereof ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
another Person or one or more of such Person’s Subsidiaries or by such Person
and one or more of its Subsidiaries and (ii) any joint venture, limited
liability company or partnership, trust company, general or limited partnership
or any other type of partnership or entity other than a corporation in which a
Person or one or more of its other Subsidiaries is a member, owner, partner or
joint venturer and owns, directly or indirectly, at least a majority of the
equity of such entity or controls such entity, but excluding any tax
partnerships that are not classified as partnerships under state law; provided,
however, that such term shall not include an Unrestricted Subsidiary. For
purposes of this definition, any Person which owns directly or indirectly an
equity investment in another Person which allows the first Person to manage or
elect managers who manage the normal activities of such second Person will be
deemed to “control” such second Person (e.g. a sole general partner controls a
limited partnership). Unless otherwise indicated herein, each reference to the
term “Subsidiary” means a Subsidiary of Borrower.

“Swap” means any “swap” within the meaning of section 1a(47) of the Commodity
Exchange Act.

“Swap Agreement” means, any agreement, contract or transaction that constitutes
a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act,
including any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference
to, one or

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more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions; provided that no phantom stock or similar plan providing for
payments only on account of services provided by current or former directors,
officers, employees or consultants of any Borrower or any of its Subsidiaries
shall be a “Swap Agreement”.

“Swap Obligation” means, with respect to any Person, any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all Swap
Agreements, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any Swap Agreement transaction.

“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.

“Transactions” means, collectively, (a) the execution, delivery and performance
by Borrower and each Guarantor of this Agreement and each other Loan Document to
which it is a party and the initial borrowings and other extensions of credit
under this Agreement, (b) the consummation of the transactions contemplated by
the Bold Agreement pursuant to the terms thereof, (c) the refinancing in full of
the “Obligations” (as defined in the Existing ESTE Credit Agreement) and the
“Indebtedness” (as defined in the Existing BE Credit Agreement), the termination
of all commitments (if any) in respect thereof and the assignment to Agent of
all Liens under the Existing ESTE Credit Agreement Security Instruments that
secure the “Obligations” (as defined in the Existing ESTE Credit Agreement) and
all Liens under the Existing BE Credit Agreement Security Instruments that
secure the “Indebtedness” (as defined in the Existing BE Credit Agreement) and
(d) the payment of fees, commissions and expenses in connection with each of the
foregoing.

“Transfer” means any sale, assignment, farm-out, conveyance or other transfer of
any Oil and Gas Property, or any interest in any Oil and Gas Property
(including, without limitation, any working interest, overriding royalty
interest, production payments, net profits interest, royalty interest, or
mineral fee interest) of Borrower or any Guarantor, except for (i) the sale of
Hydrocarbons in the ordinary course of business and (ii) the sale or transfer of
equipment that is (A) obsolete, worn out, depleted or uneconomic and disposed of
in the ordinary course of business, (B) no longer necessary for the business of
Borrower or such Guarantor or (C) contemporaneously replaced by equipment of at
least comparable value and use.

“Triggering Event” means the novation or assignment (unless novated or assigned
to an Approved Counterparty that, at the time of such novation or assignment, is
a Lender or an Affiliate of a Lender under this Agreement (other than a
Defaulting Lender or an Affiliate of a Defaulting Lender)), unwinding or
termination (unless replaced with positions or contracts no less advantageous to
Borrower or the Subsidiary party thereto), or amendment (if such amendment is
materially adverse to Borrower or such Subsidiary party thereto) of a hedge
position or Hedging Agreement considered by Agent in determining the then
effective Borrowing Base, which, in either such case, after giving effect to
such event, results in the aggregate amount of all such events (the value of
such hedge position or Hedging Agreement subject to any such event, to be
reasonably determined by Agent) since the most recent redetermination of the
Borrowing Base exceeding 2.5% of the value of the PDP Reserves in the Borrowing
Base then in effect.

“Type” means, with respect to any Loan, a Base Rate Loan or a LIBOR Loan.

“Unrestricted Subsidiary” means any subsidiary of Borrower or a Guarantor (a) of
which Borrower notifies Agent at such subsidiary’s creation or acquisition that
such subsidiary will be an “Unrestricted Subsidiary” and (b) that meets the
requirements of an Unrestricted Subsidiary set forth in Section 9.16.  As of the
Closing Date, there are no Unrestricted Subsidiaries.

“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 4.06(g).

“Withholding Agent” means any Loan Party and Agent.

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

Section 1.03Accounting Terms and Determinations.  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 Agent or the Lenders hereunder shall be prepared, in
accordance with GAAP, applied on a basis consistent with the audited financial
statements of Borrower referred to in Section 7.02 (except for changes concurred
with by Borrower’s independent public accountants).

Section 1.04Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without limitation.”  The word
“will” shall be construed to have the same meaning and effect as the word
“shall.”  Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (c) the words “herein,” “hereof” and
“hereunder,” and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (e) any reference to any law or regulation herein shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (f) the words “asset” and “property” shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

Article II.
Commitments

Section 2.01Loans and Letters of Credit.

(a)Loans. Each Lender severally agrees, on the terms and conditions of this
Agreement, to make loans to Borrower and participate in Letters of Credit for
the account of Borrower or any Subsidiary during the period from and including
(i) the Closing Date or (ii) such later date that such Lender becomes a party to
this Agreement as provided in Section 12.06(b), to and up to, but excluding, the
Revolving Credit Termination Date in an aggregate principal amount at any one
time outstanding up to, but not exceeding, the amount of such Lender’s
Commitment as then in effect; provided, however, that the aggregate principal
amount of all such Loans by all Lenders hereunder at any one time outstanding
together with the LC Exposure shall not exceed the Aggregate Commitments.
Subject to the terms of this Agreement, during the period from the Closing Date
to and up to, but excluding, the Revolving Credit Termination Date, Borrower may
borrow, repay and reborrow the amount described in this Section 2.01(a).

(b)Letters of Credit. During the period from and including the Closing Date to,
but excluding the date 30 days prior to the Revolving Credit Termination Date,
Issuing Bank, as issuing bank for the Lenders, agrees to extend credit for the
account of Borrower or any Subsidiary at any time and from time to time by
issuing, renewing, extending or reissuing Letters of Credit; provided, however,
the LC Exposure at any one time outstanding shall not exceed the lesser of (i)
the LC Commitment and (ii) the Aggregate Commitments, as then in effect, minus
the aggregate principal amount of all Loans then outstanding. The Lenders shall
participate in such Letters of Credit according to their respective Percentage
Shares. Each of the Letters of Credit shall (i) be issued by Issuing Bank, (ii)
contain such terms and provisions as are reasonably required by Issuing Bank,
including a term of not more than one year from the

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date of issuance, (iii) be for the account of Borrower or a Subsidiary and (iv)
expire not later than five (5) days before the Revolving Credit Termination
Date.

(c)Limitation on Types of Loans. Subject to the other terms and provisions of
this Agreement, at the option of Borrower, the Loans may be Base Rate Loans or
LIBOR Loans; provided that, without the prior written consent of the Majority
Lenders, no more than four (4) LIBOR Loans may be outstanding at any time.

(d)Outstanding Loans under Existing ESTE Credit Agreement and Existing BE Credit
Agreement. The parties hereto acknowledge and agree that, effective as of the
date hereof, all outstanding loans under the Existing ESTE Credit Agreement and
the Existing BE Credit Agreement on the date hereof will be refinanced with the
initial loans to be made under this Agreement on the Closing Date.  The
“Obligations” (as defined in the Existing ESTE Credit Agreement) and the
“Indebtedness” (as defined in the Existing BE Credit Agreement) shall be
assigned, renewed, extended, and rearranged as Obligations outstanding pursuant
to the terms of this Agreement.

Section 2.02Borrowings, Continuations and Conversions, Letters of Credit.

(a)Borrowings. Borrower shall give Agent (which shall promptly notify the
Lenders) advance notice as hereinafter provided of each borrowing hereunder,
which shall specify (i) the aggregate amount of such borrowing, (ii) the Type
and (iii) the date (which shall be a Business Day) of the Loans to be borrowed,
and (iv) (in the case of LIBOR Loans) the duration of the Interest Period
therefor.

(b)Minimum Amounts. All Base Rate Loan borrowings shall be in amounts of at
least $100,000 or the remaining balance of the Aggregate Commitments, if less,
or any whole multiple of $100,000 in excess thereof, and all LIBOR Loans shall
be in amounts of at least $500,000 or any whole multiple of $100,000 in excess
thereof.

(c)Notices. All borrowings, continuations and conversions shall require advance
written notice to Agent (which shall promptly notify the Lenders) in the form of
the Borrowing, Continuation, and Conversion Request (or, in each case,
telephonic notice promptly confirmed by a Borrowing, Continuation, and
Conversion Request), which in each case shall be irrevocable and accompanied by
a Compliance Certificate (excluding the information required by clauses (f) and
(g) of the Compliance Certificate) from Borrower to be received by Agent not
later than 11:00 a.m. Houston, Texas time at least one Business Day prior to the
date of each Base Rate Loan borrowing and three Business Days prior to the date
of each LIBOR Loan borrowing, continuation or conversion. Without in any way
limiting Borrower’s obligation to confirm in writing any telephonic notice,
Agent may act without liability upon the basis of telephonic notice believed by
Agent in good faith to be from Borrower prior to receipt of written
confirmation. In each such case, Borrower hereby waives the right to dispute
Agent’s record of the terms of such telephonic notice except in the case of
gross negligence or willful misconduct by Agent.  

(d)Continuation Options. Subject to the provisions in this Section 2.02(d),
Borrower may elect to continue all or any part of any LIBOR Loan beyond the
expiration of the then current Interest Period relating thereto by giving a
Borrowing, Continuation, and Conversion Request as provided in Section 2.02(c)
to Agent (which shall promptly notify the Lenders) of such election, specifying
the amount of such Loan to be continued and the Interest Period therefor. In the
absence of such a timely and proper election, Borrower shall be deemed to have
elected to convert such LIBOR Loan to a Base Rate Loan pursuant to Section
2.02(e).  All or any part of any LIBOR Loan may be continued as provided herein,
provided that (i) any continuation of any such Loan shall be (as to each Loan as
continued for an applicable Interest Period) in amounts of at least $500,000 or
any whole multiple of $100,000 in excess thereof and (ii) no Default shall have
occurred and be continuing. If a Borrowing Base Deficiency or a Default shall
have occurred and be continuing, each LIBOR Loan shall be converted to a Base
Rate Loan on the last day of the Interest Period applicable thereto.

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(e)Conversion Options. Subject to the provisions of Section 2.01(c) and in this
Section 2.02(e), Borrower may elect to convert all or any part of any Base Rate
Loan at any time and from time to time to a LIBOR Loan by giving a Borrowing,
Continuation, and Conversion Request as provided in Section 2.02(c) to Agent
(which shall promptly notify the Lenders) of such election. All or any part of
any outstanding Loan may be converted as provided herein, provided that (i) any
conversion of any Base Rate Loan into a LIBOR Loan shall be (as to each such
Loan into which there is a conversion for an applicable Interest Period) in
amounts of at least $500,000 or any whole multiple of $100,000 in excess thereof
and (ii) neither a Borrowing Base Deficiency nor a Default shall have occurred
and be continuing. If a Borrowing Base Deficiency or a Default shall have
occurred and be continuing, no Base Rate Loan may be converted into a LIBOR
Loan.

(f)Advances. Not later than 11:00 a.m. Houston, Texas time on the date specified
for each borrowing hereunder, each Lender shall make available the amount of the
Loan to be made by it on such date to Agent, to an account which Agent shall
specify, in immediately available funds, for the account of Borrower. The
amounts so received by Agent shall, subject to the terms and conditions of this
Agreement, be made available to Borrower by depositing the same, in immediately
available funds, in an account of Borrower, designated by Borrower and
maintained at the Principal Office.

(g)Letters of Credit. Borrower shall give Issuing Bank (which shall promptly
notify the Lenders of such request and their Percentage Share of such Letter of
Credit) advance notice to be received by Issuing Bank not later than 11:00 a.m.
Houston, Texas time not less than three (3) Business Days prior thereto of each
request for the issuance, and at least thirty (30) Business Days prior to the
date of the renewal or extension, of a Letter of Credit hereunder which request
shall specify (i) the amount of such Letter of Credit, (ii) the date (which
shall be a Business Day) such Letter of Credit is to be issued, renewed or
extended, (iii) the duration thereof (which shall not exceed one year from the
date of issuance), (iv) the name and address of the beneficiary thereof, (v) the
type of the Letter of Credit and (vi) such other information as Issuing Bank may
reasonably request, all of which shall be reasonably satisfactory to Issuing
Bank. Subject to the terms and conditions of this Agreement, on the date
specified for the issuance, renewal or extension of a Letter of Credit, Issuing
Bank shall issue, renew or extend such Letter of Credit to the beneficiary
thereof.

In conjunction with the issuance of each Letter of Credit, Borrower and the
Subsidiary, if the account party, shall execute a Letter of Credit Agreement. In
the event of any conflict between any provision of a Letter of Credit Agreement
and this Agreement, Borrower, Issuing Bank, Agent and the Lenders hereby agree
that the provisions of this Agreement shall govern.

Issuing Bank will send to Borrower and each Lender, promptly upon issuance of
any Letter of Credit, or an amendment thereto, a true and complete copy of such
Letter of Credit, or such amendment thereto.

Section 2.03Changes of Commitments.

(a)The Aggregate Commitments shall at all times be equal to the lesser of (i)
the Aggregate Maximum Credit Amounts after adjustments resulting from reductions
pursuant to Section 2.03(b) or (ii) the Borrowing Base as determined from time
to time.

(b)Borrower shall have the right to terminate or to reduce the amount of the
Aggregate Maximum Credit Amounts at any time, or from time to time, upon not
less than three (3) Business Days’ prior notice to Agent (which shall promptly
notify the Lenders) of each such termination or reduction, which notice shall
specify the effective date thereof and the amount of any such reduction (which
shall not be less than $250,000 or any whole multiple of $100,000 in excess
thereof) and shall be irrevocable and effective only upon receipt by Agent.

(c)The Aggregate Maximum Credit Amounts once terminated or reduced may not be
reinstated.

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Section 2.04Fees.

(a)Commitment Fee. Borrower shall pay to Agent for the account of each Lender
(other than any Defaulting Lender) a commitment fee calculated on the actual
daily unused amount of the Aggregate Commitments for the period from and
including the date of Closing Date up to, but excluding, the earlier of the date
the Aggregate Commitments are terminated or the Revolving Credit Termination
Date at a rate per annum equal to 0.50%. Accrued commitment fees shall be
payable quarterly in arrears on each Quarterly Date and on the earlier of the
date the Aggregate Commitments are terminated or the Revolving Credit
Termination Date.

(b)Letter of Credit Fees.

(i)Borrower agrees to pay Agent, for the account of each Lender (other than any
Defaulting Lender), commissions for issuing the Letters of Credit on the daily
average outstanding of the maximum liability of Issuing Bank existing from time
to time under such Letter of Credit (calculated separately for each Letter of
Credit) at a rate per annum based on the current Applicable Margin for LIBOR
Loans, provided that each Letter of Credit shall bear a minimum commission of
$500. Each Letter of Credit shall be deemed to be outstanding up to the full
face amount of the Letter of Credit until Issuing Bank has received the canceled
Letter of Credit or a written cancellation of the Letter of Credit from the
beneficiary of such Letter of Credit in form and substance acceptable to Issuing
Bank, or for any deductions in the amount of the Letter of Credit (other than
from a drawing), written notification from the beneficiary of such Letter of
Credit. Such commissions are payable quarterly in arrears on each Quarterly Date
and upon cancellation or expiration of each such Letter of Credit.

(ii)Upon each issuance, renewal or extension of any Letter of Credit, Borrower
shall pay the sum of $250 to Agent for the account of Issuing Bank.

(iii)Borrower shall pay to Issuing Bank such other usual and customary fees of
Issuing Bank associated with any transfers, amendments, drawings, negotiations
or reissuances of any Letters of Credit.

(c)Fee Letter. Borrower shall pay such other fees as are set forth in the Fee
Letter pursuant to the provisions thereof.

Section 2.05Several Obligations. The failure of any Lender to make any Loan to
be made by it or to provide funds for disbursements or reimbursements under
Letters of Credit on the date specified therefor shall not relieve any other
Lender of its obligation to make its Loan or provide funds on such date, but no
Lender shall be responsible for the failure of any other Lender to make a Loan
to be made by such other Lender or to provide funds to be provided by such other
Lender.

Section 2.06Notes. The Loans made by each Lender shall be evidenced by a single
promissory note of Borrower in substantially the form of Exhibit A, dated (i)
the Closing Date or (ii) the effective date of an Assignment pursuant to Section
12.06(b), payable to the order of such Lender in a principal amount equal to its
Maximum Credit Amount as originally in effect and otherwise duly completed, and
such substitute Notes as required by Section 12.06(b). The date, amount, Type,
interest rate and Interest Period of each Loan made by each Lender, 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 Borrower’s
rights or obligations in respect of such Loans or affect the validity of such
transfer by any Lender of its Note.

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Section 2.07Prepayments.

(a)Voluntary Prepayments. Borrower may prepay the Base Rate Loans upon not less
than one (1) Business Day’s prior notice to Agent (which shall promptly notify
the Lenders), which notice shall specify the prepayment date (which shall be a
Business Day) and the amount of the prepayment (which shall be at least $100,000
or the remaining aggregate principal balance outstanding on the Notes) and shall
be irrevocable and effective only upon receipt by Agent, provided that interest
on the principal prepaid, accrued to the prepayment date, shall be paid on the
prepayment date. Borrower may prepay LIBOR Loans on the same conditions as for
Base Rate Loans (except that prior notice to Agent shall be not less than three
(3) Business Days for LIBOR Loans) and in addition such prepayments of LIBOR
Loans shall be subject to the terms of Section 5.05 and shall be in an amount
equal to all of the LIBOR Loans for the Interest Period prepaid.

(b)Mandatory Prepayments.

(i)Termination or Reduction of Aggregate Maximum Credit Amounts. If, after
giving effect to any termination or reduction of the Aggregate Maximum Credit
Amounts pursuant to Section 2.03(b), the outstanding aggregate principal amount
of the Loans plus the LC Exposure exceeds the Aggregate Maximum Credit Amounts,
Borrower shall (i) prepay the Loans on the date of such termination or reduction
in an aggregate principal amount equal to the excess, together with interest on
the principal amount paid accrued to the date of such prepayment and (ii) if any
excess remains after prepaying all of the Loans because of LC Exposure, pay to
Agent on behalf of the Lenders an amount equal to the excess to be held as cash
collateral as provided in Section 2.10(b) hereof.

(ii)Redetermination of Borrowing Base. Upon any redetermination of the amount of
the Borrowing Base in accordance with Section 2.08 (other than Section 2.08(f)
or Section 2.08(g) or due to decreases due to the effect of the Monthly
Reduction Amount), if the redetermined Borrowing Base results in a Borrowing
Base Deficiency, then Borrower shall within thirty (30) days of receipt of
written notice thereof (w) prepay the Loans in an aggregate principal amount
sufficient to eliminate such Borrowing Base Deficiency (together with interest
on the principal amount paid accrued to the date of such prepayment), (x) grant
to Agent a first priority Lien on additional Properties of Borrower, which in
the Lenders’ sole determination, have sufficient value to eliminate such
Borrowing Base Deficiency, (y) elect to make six payments each equal to
one-sixth of such Borrowing Base Deficiency (together with interest on the
principal amount paid accrued to the date of such prepayment) with the first
such payment due on such election date and each subsequent payment due on the
corresponding day of the month in each five (5) consecutive months occurring
after the month of such election date (provided that if any such month does not
have a corresponding day, then with respect to such month(s), the last day of
the month shall be deemed to be such corresponding day and if any corresponding
day is not a Business Day, then the immediately succeeding Business Day shall be
deemed to be such corresponding day) or (z) eliminate the Borrowing Base
Deficiency through a combination of the actions described in clauses (w), (x)
and (y). If, because of LC Exposure, a Borrowing Base Deficiency remains after
prepaying all of the Loans and granting first priority Liens in additional
Properties to Agent, Borrower shall pay to Agent on behalf of the Lenders an
amount equal to such remaining Borrowing Base Deficiency to be held as cash
collateral as provided in Section 2.10(b).

(iii)Monthly Reduction Amount. If any reduction of the amount of the Borrowing
Base by operation of the Monthly Reduction Amount in accordance with Section
2.08 results in a Borrowing Base Deficiency, then Borrower shall immediately
prepay the Loans in an aggregate principal amount equal to such Borrowing Base
Deficiency, together with interest on the principal amount paid accrued to the
date of such prepayment. If, because of LC Exposure, a Borrowing Base Deficiency
remains after prepaying all of the Loans, Borrower shall pay to Agent on behalf
of the Lenders an amount equal to such remaining Borrowing Base Deficiency to be
held as cash collateral as provided in Section 2.10(b).

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(iv)Transfer. If, after a Transfer of any Property to the extent allowed by
Section 9.13 and the reduction in the Borrowing Base pursuant to Section
2.08(f), a Borrowing Base Deficiency exists, then Borrower shall, concurrently
with the receipt thereof, prepay the Loans with the net proceeds received from
such Transfer in an amount necessary to eliminate such Borrowing Base
Deficiency. If, because of LC Exposure, a Borrowing Base Deficiency remains
after prepaying all of the Loans, Borrower shall pay to Agent on behalf of the
Lenders an amount equal to such remaining Borrowing Base Deficiency to be held
as cash collateral as provided in Section 2.10(b). Notwithstanding anything in
this Agreement to the contrary, if at the time of any permitted Transfer a
Borrowing Base Deficiency exists, then Borrower shall, concurrently with the
receipt thereof, prepay the Loans with the net proceeds received from such
Transfer to the extent necessary to eliminate the portion of the Borrowing Base
Deficiency resulting from such Transfer and such preexisting Borrowing Base
Deficiency; and Borrower shall remain obligated, pursuant to the terms of this
Agreement, to eliminate any Borrowing Base Deficiency remaining after prepaying
the Loans with the net proceeds from such Transfer. If Borrower Transfers any
Property at such time as a Default exists or would result therefrom, Borrower
shall, concurrently with the receipt of proceeds therefrom, prepay the Loans in
an amount equal to the lesser of (x) the aggregate principal amount outstanding
on the Loans and (y) 100% of the net proceeds received from such Transfer. The
preceding sentence shall not be interpreted as permitting the sale of any
Property at such time as a Default exists without the prior written consent of
the Lenders.

(v)Proceeds from Hedging Agreements. At any time that a Default exists, any
proceeds received by Borrower under any Hedging Agreements, including as a
result of the termination or early termination thereof, shall be used
immediately upon receipt thereof to prepay the Loans in an amount equal to the
lesser of (x) the aggregate principal amount outstanding on the Loans and (y)
100% of the net proceeds received.

(vi)Triggering Event. Upon each reduction of the Borrowing Base under Section
2.08(g) from the occurrence of a Triggering Event, if a Borrowing Base
Deficiency then exists then Borrower shall, concurrently with the receipt
thereof, prepay the Loans with the net proceeds received from such Triggering
Event in an amount necessary to eliminate such Borrowing Base Deficiency.  If,
because of LC Exposure, a Borrowing Base Deficiency remains after prepaying all
of the Loans, Borrower shall pay to Agent on behalf of the Lenders an amount
equal to such remaining Borrowing Base Deficiency to be held as cash collateral
as provided in Section 2.10(b). Notwithstanding anything in this Agreement to
the contrary, if at the time of any Triggering Event a Borrowing Base Deficiency
exists, then Borrower shall, concurrently with the receipt thereof, prepay the
Loans with the net proceeds received from such Triggering Event to the extent
necessary to eliminate the portion of the Borrowing Base Deficiency resulting
from such Triggering Event and such preexisting Borrowing Base Deficiency; and
Borrower shall remain obligated, pursuant to the terms of this Agreement, to
eliminate any Borrowing Base Deficiency remaining after prepaying the Loans with
the net proceeds from such Triggering Event.

(c)Generally. Prepayments permitted or required under this Section 2.07 shall be
without premium or penalty except as required under Section 5.05 for prepayment
of LIBOR Loans. Any prepayments on the Loans may be reborrowed subject to the
then effective Aggregate Commitments.

Section 2.08Borrowing Base.

(a)Borrowing Base and Monthly Reduction Amount. The Borrowing Base and the
Monthly Reduction Amount shall be determined in accordance with Section 2.08(b)
by Agent and the Required Lenders (in the case of any reaffirmation or decrease
in the Borrowing Base or reaffirmation or increase in the Monthly Reduction
Amount) or Agent and all of the Lenders (in the case of any increase in the
Borrowing Base or decrease in the Monthly Reduction Amount) and are subject to
redetermination in accordance with Sections 2.08(d), (e) and (f).  Upon any
redetermination of the Borrowing Base or the Monthly Reduction Amount, such
redetermination shall remain in effect until the next successive Redetermination
Date; provided, however, the then effective Borrowing Base shall reduce on the
last day of each month by the then effective Monthly Reduction Amount. So long
as any of the Commitments are in

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effect or any LC Exposure or Loans are outstanding hereunder, this facility
shall be governed by the then effective Borrowing Base and Monthly Reduction
Amount. During the period from and after the Closing Date until the next
redetermination pursuant to Sections 2.08(d), (e), (f) or (g) or adjustment
pursuant to Section 8.08(c), the amount of the Borrowing Base shall be
$150,000,000, as reduced on a cumulative basis on the last day of each month
following such effective date by the applicable Monthly Reduction Amount. The
Monthly Reduction Amount shall be $0 (zero dollars) each month until the next
redetermination thereof pursuant to Sections 2.08(d) or (e). No delay for any
reason whatsoever in a redetermination of the Monthly Reduction Amount shall
affect Borrower’s obligations under Section 2.07(b)(iii).

(b)Determination Procedure. Upon receipt of the reports required by Section 8.07
and such other reports, data and supplemental information as may from time to
time be reasonably requested by Agent (the “Engineering Reports”), Agent and the
Required Lenders (in the case of any reaffirmation or decrease in the Borrowing
Base or reaffirmation or increase in the Monthly Reduction Amount) or Agent and
all of the Lenders (in the case of any increase in the Borrowing Base or
decrease in the Monthly Reduction Amount) will redetermine the Borrowing Base
and the Monthly Reduction Amount. Such redetermination will be in accordance
with their normal and customary practices and procedures for evaluating oil and
gas reserves and other related assets as such exist at that particular time, and
may also take into consideration the financial condition, Debt, and business of
Borrower and its Subsidiaries and such other factors as Agent customarily deems
appropriate. Agent, in its sole discretion, may make adjustments to the rates,
volumes and prices and other assumptions set forth therein in accordance with
its normal and customary procedures for evaluating oil and gas reserves and
other related assets as such exist at that particular time. Agent shall propose
to the Lenders a new Borrowing Base and Monthly Reduction Amount within 15 days
following receipt by Agent and the Lenders of the Engineering Reports in a
timely and complete manner. After having received notice of such proposal by
Agent, the Required Lenders (in the case of any reaffirmation or decrease in the
Borrowing Base or reaffirmation or increase in the Monthly Reduction Amount) or
all of the Lenders (in the case of any increase in the Borrowing Base or
decrease in the Monthly Reduction Amount) shall have 15 days to agree or
disagree with such proposal. If the Required Lenders do not approve a proposed
reaffirmation or decrease in the Borrowing Base and/or reaffirmation or increase
in the Monthly Reduction Amount or if all the Lenders do not approve a proposed
increase in the Borrowing Base and/or decrease in the Monthly Reduction Amount,
the Required Lenders or all the Lenders, as applicable, shall, within a
reasonable period of time, work to agree on a new Borrowing Base and Monthly
Reduction Amount. Notwithstanding anything herein to the contrary, Agent and all
of the Lenders must approve any increase in the Borrowing Base and any reduction
in the Monthly Reduction Amount.

(c)Excluded Property. Agent may exclude any Oil and Gas Property or portion of
production therefrom or any income from any other Property from the Borrowing
Base, at any time, because title and/or environmental information is not
reasonably satisfactory, such Property is not Mortgaged Property or such
Property is not assignable.

(d)Redeterminations. So long as any of the Commitments are in effect and until
payment in full of all Loans and LC Exposure hereunder and termination of all
Letters of Credit issued hereunder, on or around the first Business Day of each
May and November, commencing November 1, 2017 (each being a “Scheduled
Redetermination Date”), the Lenders shall redetermine the amount of the
Borrowing Base and the Monthly Reduction Amount in accordance with Section
2.08(b).

(e)Unscheduled Redeterminations. In addition to the redeterminations of the
Borrowing Base and the Monthly Reduction Amount described in Section 2.08(d),
(i) Borrower may initiate a redetermination of the Borrowing Base and/or the
Monthly Reduction Amount at any other time as it so elects by specifying in
writing to Agent (who will promptly notify the Lenders) the date by which
Borrower will furnish to Agent and the Lenders a Reserve Report in accordance
with Section 8.07(b) and the date by which such redetermination is requested to
occur; provided, however, that Borrower may initiate such unscheduled
redetermination (x) once per fiscal year and (y) from time to time, pursuant to
an acquisition of additional Oil and Gas Properties by Borrower or any of its
Subsidiaries, and (ii) the Required Lenders or Agent may initiate a
redetermination of the Borrowing Base and/or the Monthly Reduction Amount at

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any other time they so elect by specifying in writing to Borrower the date by
which Borrower is to furnish a Reserve Report in accordance with Section 8.07(b)
and the date on which such redetermination is to occur.

(f)Redetermination Concurrent with Transfer. To the extent allowed by Section
9.13(b), if Borrower Transfers any Oil and Gas Property between Scheduled
Redetermination Dates with an aggregate fair market value in excess of
$1,000,000, Agent may or, at the direction of the Required Lenders, shall reduce
the Borrowing Base upon execution of such Transfer by an amount equal to the
Borrowing Base value attributed to such Property in the immediately preceding
determination of the Borrowing Base (as such values appear in Agent’s records
from such determination of the Borrowing Base).

(g)Redetermination Concurrent with Triggering Event.  Effective immediately upon
the occurrence of a Triggering Event, the Borrowing Base shall automatically be
reduced on the date such Triggering Event is effected by an amount equal to the
value, if any, assigned to the hedge position or Hedging Agreement under the
then effective Borrowing Base, as reasonably determined by Agent.

(h)Effective Upon Notice. Promptly following any redetermination of the
Borrowing Base, Agent shall notify in writing Borrower and the Lenders of the
new Borrowing Base and/or Monthly Reduction Amount. Any such redetermination of
the Borrowing Base and/or Monthly Reduction Amount shall not be effective until
Borrower receives written notice thereof.

Section 2.09Assumption of Risks. Borrower assumes all risks of the acts or
omissions of any beneficiary of any Letter of Credit or any transferee thereof
with respect to its use of such Letter of Credit. Neither Issuing Bank (except
in the case of gross negligence or willful misconduct on the part of Issuing
Bank or any of its employees), its correspondents nor any Lender shall be
responsible for the validity, sufficiency or genuineness of certificates or
other documents or any endorsements thereon, even if such certificates or other
documents should in fact prove to be invalid, insufficient, fraudulent or
forged; for errors, omissions, interruptions or delays in transmissions or
delivery of any messages by mail, telex, or otherwise, whether or not they be in
code; for errors in translation or for errors in interpretation of technical
terms; the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; the failure of any beneficiary or any
transferee of any Letter of Credit to comply fully with conditions required in
order to draw upon any Letter of Credit; or for any other consequences arising
from causes beyond Issuing Bank’s control or the control of Issuing Bank’s
correspondents. In addition, neither Issuing Bank, Agent nor any Lender shall be
responsible for any error, neglect, or default of any of Issuing Bank’s
correspondents; and none of the above shall affect, impair or prevent the
vesting of any of Issuing Bank’s, Agent’s or any Lender’s rights or powers
hereunder or under the Letter of Credit Agreements, all of which rights shall be
cumulative. Issuing Bank and its correspondents may accept certificates or other
documents that appear on their face to be in order, without responsibility for
further investigation of any matter contained therein regardless of any notice
or information to the contrary. In furtherance and not in limitation of the
foregoing provisions, Borrower agrees that any action, inaction or omission
taken or not taken by Issuing Bank or by any correspondent for Issuing Bank in
good faith in connection with any Letter of Credit, or any related drafts,
certificates, documents or instruments, shall be binding on Borrower and shall
not put Issuing Bank or its correspondents under any resulting liability to
Borrower.

Section 2.10Obligation to Reimburse and to Prepay.

(a)Reimbursement Obligations. If a disbursement by Issuing Bank is made under
any Letter of Credit, Borrower shall pay to Agent within two (2) Business Days
after notice of any such disbursement is received by Borrower, the amount of
each such disbursement made by Issuing Bank under the Letter of Credit (if such
payment is not sooner effected as may be required under this Section 2.10 or
under other provisions of the Letter of Credit), together with interest on the
amount disbursed from and including the date of disbursement until payment in
full of such disbursed amount at a varying rate per annum equal to (i) the then
applicable interest rate for Base Rate Loans through the second Business Day
after notice of such disbursement is received by Borrower and (ii) thereafter,
the Post Default Rate for Base Rate Loans (but in no event to exceed the Highest
Lawful Rate) for the period from and including the third Business Day following
the date of such disbursement to and including the date of repayment in full of
such disbursed

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amount. The obligations of Borrower under this Agreement with respect to each
Letter of Credit shall be absolute, unconditional and irrevocable and shall be
paid or performed strictly in accordance with the terms of this Agreement under
all circumstances whatsoever, including, without limitation, but only to the
fullest extent permitted by applicable law, the following circumstances: (i) any
lack of validity or enforceability of this Agreement, any Letter of Credit or
any of the Security Instruments; (ii) any amendment or waiver of (including any
default), or any consent to departure from this Agreement (except to the extent
permitted by any amendment or waiver), any Letter of Credit or any of the
Security Instruments; (iii) the existence of any claim, set-off, defense or
other rights which Borrower may have at any time against the beneficiary of any
Letter of Credit or any transferee of any Letter of Credit (or any Persons for
whom any such beneficiary or any such transferee may be acting), Issuing Bank,
Agent, any Lender or any other Person, whether in connection with this
Agreement, any Letter of Credit, the Security Instruments, the transactions
contemplated hereby or any unrelated transaction; (iv) any statement,
certificate, draft, notice or any other document presented under any Letter of
Credit proves to have been forged, fraudulent, insufficient or invalid in any
respect or any statement therein proves to have been untrue or inaccurate in any
respect whatsoever; (v) payment by Issuing Bank under any Letter of Credit
against presentation of a draft or certificate which appears on its face to
comply, but does not comply, with the terms of such Letter of Credit; (vi) any
affiliation between Issuing Bank and any Lender, and (vii) any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing. Notwithstanding anything in this Agreement to the contrary, Borrower
will not be liable for payment or performance that results from the gross
negligence or willful misconduct of Issuing Bank, except where Borrower or any
Subsidiary actually recovers the proceeds for itself or Issuing Bank of any
payment made by Issuing Bank in connection with such gross negligence or willful
misconduct.

(b)Cash Collateral for LC Exposure. In the event of the occurrence of any Event
of Default, a payment or prepayment pursuant to Section 2.07(b) or the maturity
of the Notes, whether by acceleration or otherwise, an amount equal to 105% of
the LC Exposure (or the excess in the case of Section 2.07(b)) shall be deemed
to be forthwith due and owing by Borrower to Issuing Bank, Agent and the Lenders
as of the date of any such occurrence; Borrower shall prepay the fees payable
under Section 2.04(b) with respect to such issued and outstanding Letters of
Credit for the full remaining terms of such Letters of Credit; and Borrower’s
obligation to pay such amounts 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 Borrower may now or hereafter have against any such beneficiary, Issuing
Bank, Agent, the Lenders or any other Person for any reason whatsoever. Such
payments shall be held by Issuing Bank on behalf of the Lenders as cash
collateral securing the LC Exposure in an account or accounts at the Principal
Office; and Borrower hereby grants to and by its deposit with Agent grants to
Agent a security interest in such cash collateral. In the event of any such
payment by Borrower of amounts contingently owing under outstanding Letters of
Credit and in the event that thereafter drafts or other demands for payment
complying with the terms of such Letters of Credit are not made prior to the
respective expiration dates thereof, Agent agrees, if no Event of Default has
occurred and is continuing or if no other amounts are outstanding under this
Agreement, the Notes or any other Loan Documents, to remit to Borrower amounts
for which the contingent obligations evidenced by the Letters of Credit have
ceased.

(c)Lender Reimbursement. Each Lender severally and unconditionally agrees that
it shall promptly reimburse Issuing Bank an amount equal to such Lender’s
Percentage Share of any disbursement made by Issuing Bank under any Letter of
Credit that is not reimbursed according to this Section 2.10.

(d)Automatic Funding as Loan. Notwithstanding anything to the contrary contained
herein, if no Default exists or would result therefrom, to the extent Borrower
has not reimbursed Issuing Bank for any drawn upon Letter of Credit within two
(2) Business Days after notice of such disbursement has been received by
Borrower, the amount of such Letter of Credit reimbursement obligation shall
automatically be funded by the Lenders as a Loan hereunder and used by the
Lenders to pay such Letter of Credit reimbursement obligation. If an Event of
Default exists, such Letter of Credit reimbursement obligation shall not be
funded as a Loan, but instead shall accrue interest as provided in Section
2.10(a).

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Section 2.11Lending Offices. The Loans of each Type made by each Lender shall be
made and maintained at such Lender’s Applicable Lending Office for Loans of such
Type.

 

Article III.
Payments of Principal and Interest

Section 3.01Repayment of Loans.

(a)Loans. On the Revolving Credit Termination Date Borrower shall repay the
outstanding aggregate principal amount of the Notes and all accrued but unpaid
interest, fees and expenses thereon.

(b)Generally. Borrower will pay to Agent, for the account of each Lender, the
principal payments required by this Section 3.01 and Section 2.07(b).

Section 3.02Interest.

(a)Interest Rates. Borrower will pay to Agent, for the account of each Lender,
interest on the unpaid principal amount of each Loan made by such Lender for the
period commencing on the date such Loan is made to, but excluding, the date such
Loan shall be paid in full, at the following rates per annum:

(i)if such a Loan is a Base Rate Loan or any other Obligation other than a LIBOR
Loan, the Base Rate (as in effect from time to time) plus the Applicable Margin,
but in no event to exceed the Highest Lawful Rate; and

(ii)if such Loan is a LIBOR Loan, for each Interest Period relating thereto, the
LIBOR Adjusted Rate for such Loan plus the Applicable Margin (as in effect from
time to time), but in no event to exceed the Highest Lawful Rate.

(b)Borrowing Base Deficiency Rate. Notwithstanding the foregoing, Borrower will
pay to Agent, for the account of each Lender, interest at the applicable
Borrowing Base Deficiency Rate on any principal of any Loan (including LIBOR
Loans) during the period commencing on the date Agent notifies Borrower of a
redetermined Borrowing Base that results in a Borrowing Base Deficiency and
ending on the date that such Borrowing Base Deficiency is cured.

(c)Post Default Rate. Notwithstanding the foregoing, Borrower will pay to Agent,
for the account of each Lender, interest at the applicable Post Default Rate on
any principal of any Loan made by such Lender, and (to the fullest extent
permitted by law) on any other amount payable by Borrower hereunder, under any
Loan Document or under any Note held by such Lender to or for account of such
Lender, for the period commencing on the date of an Event of Default until the
same is paid in full or all Events of Default are cured or waived.

(d)Due Dates. Accrued interest on Base Rate Loans shall be payable monthly on
the 5th day of each month, and accrued interest on each LIBOR Loan shall be
payable on the last day of the Interest Period therefor and, if such Interest
Period is longer than three months at three-month intervals following the first
day of such Interest Period, except that interest payable at the Post Default
Rate shall be payable from time to time on demand and interest on any LIBOR Loan
that is converted into a Base Rate Loan (pursuant to Section 5.04) shall be
payable on the date of conversion (but only to the extent so converted). Any
accrued and unpaid interest on the Loans on the Revolving Credit Termination
Date shall be paid on such date.  Notwithstanding the foregoing, the due dates
set forth in this Section 3.01(d) shall be subject to adjustment in accordance
with Section 4.01.

(e)Determination of Rates. Promptly after the determination of any interest rate
provided for herein or any change therein, Agent shall notify the Lenders to
which such interest is payable and Borrower thereof. Each determination by Agent
of an interest rate or fee hereunder shall, except in cases of manifest error,
be final, conclusive and binding on the parties.

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Article IV.
Payments; Pro Rata Treatment; Computations; Etc.

Section 4.01Payments. Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by Borrower under
this Agreement, the Notes or any other Loan Document shall be made in Dollars,
in immediately available funds, to Agent at such account as Agent shall specify
by notice to Borrower from time to time, not later than 11:00 a.m. Houston,
Texas time on the date on which such payments shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). Such payments shall be made without (to the
fullest extent permitted by applicable law) defense, set-off or counterclaim and
in connection therewith, Borrower hereby waives (to the fullest extent permitted
by applicable law) all defenses, rights of set-off and counterclaims it may have
with respect to such payments. Each payment received by Agent under this
Agreement or any Note for account of a Lender shall be paid promptly to such
Lender in immediately available funds. Except as otherwise provided in the
definition of “Interest Period”, if the due date of any payment under this
Agreement or any Note would otherwise fall on a day which is not a Business Day
such date shall be extended to the next succeeding Business Day and interest
shall be payable for any principal so extended for the period of such extension.
At the time of each payment to Agent of any principal of or interest on any
borrowing, Borrower shall notify Agent of the Loans to which such payment shall
apply. In the absence of such notice Agent may specify the Loans to which such
payment shall apply, but to the extent possible such payment or prepayment will
be applied first to the Loans comprised of Base Rate Loans.

Section 4.02Pro Rata Treatment. Except to the extent otherwise provided herein
each Lender agrees that: (i) each borrowing from the Lenders under Section 2.01
and each continuation and conversion under Section 2.02 shall be made from the
Lenders pro rata in accordance with their Percentage Share, each payment of fees
under Section 2.04(a) and Section 2.04(b)(i) shall be made for account of the
Lenders pro rata in accordance with their Percentage Share, and each termination
or reduction of the amount of the Aggregate Maximum Credit Amounts under Section
2.03(b) shall be applied to the Commitment of each Lender, pro rata according to
the amounts of its respective Commitment; (ii) each payment of principal of
Loans by Borrower shall be made for account of the Lenders pro rata in
accordance with the respective unpaid principal amount of the Loans held by the
Lenders; (iii) each payment of interest on Loans by Borrower shall be made for
account of the Lenders pro rata in accordance with the amounts of interest due
and payable to the respective Lenders; and (iv) each reimbursement by Borrower
of disbursements under Letters of Credit shall be made for account of Issuing
Bank or, if funded by the Lenders, pro rata for the account of the Lenders, in
accordance with the amounts of reimbursement obligations due and payable to each
respective Lender.

Section 4.03Computations. Interest on LIBOR Loans and fees shall be computed on
the basis of a year of 360 days and actual days elapsed (including the first day
but excluding the last day) occurring in the period for which such interest is
payable, unless such calculation would exceed the Highest Lawful Rate, in which
case interest shall be calculated on the per annum basis of a year of 365 or 366
days, as the case may be. Interest on Base Rate Loans shall be computed on the
basis of a year of 365 or 366 days, as the case may be, and actual days elapsed
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.

Section 4.04Non-receipt of Funds by Agent.

(a)Funding by Lenders; Presumption by Agent.  Unless Agent shall have received
notice from a Lender, prior to the proposed date of any borrowing that such
Lender will not make available to Agent such Lender’s share of such borrowing,
Agent may assume that such Lender has made such share available on such date and
may, in reliance upon such assumption, make available to Borrower a
corresponding amount.  In such event, if a Lender has not in fact made its share
of the applicable borrowing available to Agent, then the applicable Lender and
Borrower severally agree to pay to Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to Borrower to but excluding the date of payment to
Agent, at (i) in the case of a payment to be made by such Lender, the greater of
the Federal Funds Rate and a rate determined by Agent in accordance with banking
industry rules on interbank compensation, and (ii) in the case of a payment to
be made by Borrower, the interest rate applicable to Base Rate Loans.  If
Borrower and such Lender shall pay such interest to Agent for the same or an
overlapping period, Agent shall promptly remit to Borrower

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the amount of such interest paid by Borrower for such period.  If such Lender
pays its share of the applicable borrowing to Agent, then the amount so paid
shall constitute such Lender’s Loan included in such borrowing.  Any payment by
Borrower shall be without prejudice to any claim Borrower may have against a
Lender that shall have failed to make such payment to Agent.

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

Section 4.05Set-off, Sharing of Payments, Etc.

(a)If an Event of Default shall have occurred and be continuing, Agent, each
Lender, 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
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held,
and other obligations (in whatever currency) at any time owing, by Agent, such
Lender, Issuing Bank or any such Affiliate, to or for the credit or the account
of Borrower or any other Loan Party against any and all of the obligations of
Borrower or such Loan Party now or hereafter existing under this Agreement or
any other Loan Document to Agent, such Lender or Issuing Bank or their
respective Affiliates, irrespective of whether or not Agent, such Lender,
Issuing Bank or Affiliate shall have made any demand under this Agreement or any
other Loan Document and although such obligations of Borrower or such Loan Party
may be contingent or unmatured or are owed to a branch, office or Affiliate of
Agent, such Lender or 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 Agent for further
application in accordance with the provisions of Section 12.07 and, pending such
payment, shall be segregated by such Defaulting Lender from its other funds and
deemed held in trust for the benefit of Agent, Issuing Bank, and the Lenders,
and (y) the Defaulting Lender shall provide promptly to 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 Agent, each
Lender, Issuing Bank and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that
Agent, such Lenders, Issuing Bank or their respective Affiliates may have.  Each
Lender and Issuing Bank agrees to notify Borrower and Agent promptly after any
such setoff and application; provided that the failure to give such notice shall
not affect the validity of such setoff and application.

(b)If any Lender shall, by exercising any right of setoff or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or other obligations hereunder resulting in such Lender receiving
payment of a proportion of the aggregate amount of its Loans and accrued
interest thereon or other such obligations greater than its pro rata share
thereof as provided herein, then the Lender receiving such greater proportion
shall (x) notify Agent of such fact, and (y) purchase (for cash at face value)
participations in the Loans and such other obligations of the other Lenders, or
make such other adjustments as shall be equitable, 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 other amounts owing them; 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

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(ii)the provisions of this paragraph shall not be construed to apply to (x) any
payment made by Borrower pursuant to and in accordance with the express terms of
this Agreement (including the application of funds arising from the existence of
a Defaulting Lender), or (y) 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 Letters of Credit to any assignee or participant, other than
to Borrower or any Affiliate or Subsidiary thereof (as to which the provisions
of this paragraph shall apply).

Each Loan Party 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 each
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of each Loan Party in the
amount of such participation.  If under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 4.05 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 4.05 to share the benefits
of any recovery on such secured claim.

Section 4.06Taxes.

(a)Defined Terms.  For purposes of this Section 4.06, the term “Lender” includes
Issuing Bank and the term “applicable law” includes FATCA.

(b)Payments Free and Clear. 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)Other Taxes. The Loan Parties shall timely pay to the relevant Governmental
Authority in accordance with applicable law, or at the option of Agent timely
reimburse it for the payment of, any Other Taxes.

(d)INDEMNIFICATION BY LOAN PARTIES. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, the Loan Parties shall jointly and severally indemnify each
Recipient, within 10 days after 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) payable or paid 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 Borrower by a Lender (with a copy to
Agent), or by Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.   

(e)Indemnification by the Lenders.  Each Lender shall severally indemnify Agent,
within 10 days after demand therefor, for (i) any Indemnified Taxes attributable
to such Lender (but only to the extent that

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any Loan Party has not already indemnified 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
12.06 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 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 Agent shall be conclusive absent manifest
error.  Each Lender hereby authorizes 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 Agent to the Lender from any other source against any amount due to
Agent under this Section 4.06(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 4.06, such
Loan Party shall deliver to 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 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
Borrower and Agent, at the time or times reasonably requested by Borrower or
Agent, such properly completed and executed documentation reasonably requested
by Borrower or 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 Borrower or Agent, shall deliver such other documentation
prescribed by applicable law or reasonably requested by Borrower or Agent as
will enable Borrower or 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 4.06(g)(ii)(1), (ii)(2) and (ii)(4) 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,

(1)any Lender that is a U.S. Person shall deliver to Borrower and 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 Borrower or
Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt
from U.S. federal backup withholding tax;

(2)any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrower and 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 Borrower or Agent), whichever of the following is
applicable:

(a)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 originals of IRS Form

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W-8BEN 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
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;

(b)executed originals of IRS Form W-8ECI;

(c)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 H-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 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
originals of IRS Form W-8BEN; or

(d)to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a
U.S. Tax Compliance Certificate substantially in the form of Exhibit H-2 or
Exhibit H-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 H-4 on
behalf of each such direct and indirect partner;

(3)any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrower and 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 Borrower or Agent), executed originals 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
Borrower or Agent to determine the withholding or deduction required to be made;
and

(4)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 Borrower and Agent at the time or times prescribed by law and
at such time or times reasonably requested by Borrower or 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 Borrower or Agent as may be necessary for Borrower and 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
(4), “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 Borrower and Agent in writing of its
legal inability to do so.

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(h)Treatment of Certain Refunds.  If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 4.06 (including by
the payment of additional amounts pursuant to this Section 4.06), 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 4.06 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 Section 4.06(h)
(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 Section 4.06(h), in no event will the indemnified party be
required to pay any amount to an indemnifying party pursuant to this Section
4.06(h) 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 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.  

(i)Survival.  Each party’s obligations under this Section 4.06 shall survive the
resignation or replacement of 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.

Article V.
Capital Adequacy and Additional Costs

Section 5.01Additional Costs.

(a)LIBOR Regulations, etc. If any Regulatory Change 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 reserve requirement reflected in the LIBOR Adjusted Rate) or 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 Loans, 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 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, or
to increase the cost to such Lender, Issuing Bank or such other Recipient of
participating in, issuing or maintaining any Letter of Credit (or of maintaining
its obligation to participate in or to issue any Letter of Credit), or to reduce
the amount of any sum received or receivable by such Lender, Issuing Bank or
other Recipient hereunder (whether of principal, interest or any other amount)
then, upon request of such Lender, Issuing Bank or other Recipient, Borrower
will pay to such Lender, Issuing Bank or other Recipient, as the case may be,
such additional amount or amounts as will compensate such Lender, Issuing Bank
or other Recipient, as the case may be, for such additional costs incurred or
reduction suffered.  If any Lender requests compensation from Borrower under
this Section 5.01(a), Borrower may, by notice to such

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Lender, suspend the obligation of such Lender to make additional Loans of the
Type with respect to which such compensation is requested until the Regulatory
Change giving rise to such request ceases to be in effect (in which case the
provisions of Section 5.04 shall be applicable).

(b)Capital Adequacy. If any Lender or Issuing Bank determines that any
Regulatory Change affecting such Lender or Issuing Bank or any lending office of
such Lender or such Lender’s or 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 Issuing Bank’s capital or on the
capital of such Lender’s or Issuing Bank’s holding company, if any, as a
consequence of this Agreement, the Commitments 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 Issuing Bank, to a level below that which such Lender or
Issuing Bank or such Lender’s or Issuing Bank’s holding company could have
achieved but for such Regulatory Change (taking into consideration such Lender’s
or Issuing Bank’s policies and the policies of such Lender’s or Issuing Bank’s
holding company with respect to capital adequacy and liquidity), then from time
to time Borrower will pay to such Lender or Issuing Bank, as the case may be,
such additional amount or amounts as will compensate such Lender or Issuing Bank
or such Lender’s or Issuing Bank’s holding company for any such reduction
suffered.

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

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

Section 5.02Limitation on LIBOR Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any LIBOR Adjusted Rate
for any Interest Period:

(a)Agent determines (which determination shall be conclusive, absent manifest
error) that quotations of interest rates for the relevant deposits referred to
in the definition of “LIBOR Adjusted Rate” in Section 1.02 are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for LIBOR Loans as provided herein; or

(b)Agent determines (which determination shall be conclusive, absent manifest
error) that the relevant rates of interest referred to in the definition of
“LIBOR Adjusted Rate” in Section 1.02 upon the basis of which the rate of
interest for LIBOR Loans for such Interest Period is to be determined are not
sufficient to adequately cover the cost to the Lenders of making or maintaining
LIBOR Loans;

then Agent shall give Borrower prompt notice thereof, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional LIBOR Loans.

Section 5.03Illegality. 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 LIBOR Loans hereunder, then
such Lender shall promptly notify Borrower thereof and such Lender’s obligation
to make LIBOR Loans shall be suspended until such time as such Lender may again
make and maintain LIBOR Loans (in which case the provisions of Section 5.04
shall be applicable).

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Section 5.04Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03. If the
obligation of any Lender to make LIBOR Loans shall be suspended pursuant to
Sections 5.01, 5.02 or 5.03 (“Affected Loans”), all Affected Loans which would
otherwise be made by such Lender shall be made instead as Base Rate Loans (and,
if an event referred to in Section 5.01(a) or Section 5.03 has occurred and such
Lender so requests by notice to Borrower, all Affected Loans of such Lender then
outstanding shall be automatically converted into Base Rate 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) Base Rate Loans, all payments of principal
which would otherwise be applied to such Lender’s Affected Loans shall be
applied instead to its Base Rate Loans.

Section 5.05Compensation. Borrower shall pay to each Lender within thirty (30)
days of receipt of written request of such Lender (which request shall set
forth, in reasonable detail, the basis for requesting such amounts and which
shall be conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis), such amount or amounts as shall
compensate it for any loss, cost, expense or liability which such Lender
determines are attributable to:

(a)any payment, prepayment or conversion of a LIBOR Loan properly made by such
Lender or Borrower for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 10.01) on a date other than the
last day of the Interest Period for such Loan; or

(b)any failure by Borrower for any reason (including but not limited to, the
failure of any of the conditions precedent specified in Article VI to be
satisfied) to borrow, continue or convert a LIBOR Loan from such Lender on the
date for such borrowing, continuation or conversion specified in the relevant
notice given pursuant to Section 2.02(c). Without limiting the effect of the
preceding sentence, such compensation shall include an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount so paid, prepaid or converted or not borrowed for the period
from the date of such payment, prepayment or conversion or failure to borrow to
the last day of the Interest Period for such Loan (or, in the case of a failure
to borrow, the Interest Period for such Loan which would have commenced on the
date specified for such borrowing) at the applicable rate of interest for such
Loan provided for herein over (ii) the interest component of the amount such
Lender would have bid in the London interbank market for Dollar deposits of
leading banks in amounts comparable to such principal amount and with maturities
comparable to such period (as reasonably determined by such Lender).

Section 5.06Mitigation Obligations; Replacement of Lenders.

(a)Designation of a Different Lending Office.  If any Lender requests
compensation under Section 5.01, or requires Borrower to pay any Indemnified
Taxes or additional amounts to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 4.06, then such Lender shall (at the
request of Borrower) 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 4.06, 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.  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 any Lender requests compensation under
Section 5.01, or requires Borrower to pay any Indemnified Taxes or additional
amounts to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 4.06, and, in each case, such Lender has declined or
is unable to designate a different lending office in accordance with Section
5.06(a), is subject to restrictions based on Section 5.03, or if any Lender is a
Defaulting Lender or a Non-Consenting Lender, then Borrower may, at its sole
expense and effort, upon notice to such Lender and Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 12.06), all of its
interests, rights (other than its existing rights to payments pursuant to
Section 5.01 or Section 4.06) and obligations under this Agreement and the

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related Loan Documents to an Eligible Assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that:

(i)Borrower shall have paid to Agent the assignment fee (if any) specified in
Section 12.06;

(ii)such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in disbursements under
Letters of Credit that have not yet been reimbursed, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other
Loan Documents (including any amounts under Section 5.05) from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or
Borrower (in the case of all other amounts);

(iii)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 4.06,
such assignment will result in a reduction in such compensation or payments
thereafter;

(iv)such assignment does not conflict with applicable Governmental Requirements;
and

(v)in the case of any assignment resulting from a Lender becoming a
Non-Consenting Lender, the applicable assignee shall have consented to the
applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling Borrower to require such assignment and delegation cease
to apply.

Article VI.
Conditions Precedent

Section 6.01Initial Funding. The amendment and restatement of the Existing ESTE
Credit Agreement and the Existing BE Credit Agreement and the obligation of the
Lenders under this Agreement are subject to the receipt by Agent and the Lenders
of all fees payable pursuant to Section 2.04 on or before the Closing Date and
the receipt by Agent of the following documents (in sufficient original
counterparts, other than the Notes, for each Lender) and satisfaction of the
other conditions provided in this Section 6.01, each of which shall be
satisfactory to Agent in form and substance:

(a)A certificate of a Responsible Officer of Borrower setting forth (i)
resolutions of its board of directors, members, managers or other governing
body, as applicable, with respect to the authorization of Borrower to execute
and deliver the Loan Documents to which it is a party and to enter into the
transactions contemplated in those documents, (ii) the officers of Borrower (y)
who are authorized to sign the Loan Documents to which Borrower 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 contemplated hereby, (iii) specimen signatures of the
authorized officers, and (iv) the Charter Documents of Borrower, certified as
being true and complete. Agent and the Lenders may conclusively rely on such
certificate until Agent receives notice in writing from Borrower to the
contrary.

(b)A certificate of a Responsible Officer of each Guarantor setting forth (i)
resolutions of its board of directors, members, managers or other governing
body, as applicable, with respect to the authorization of such Guarantor to
execute and deliver the Loan Documents to which it is a party and to enter into
the transactions contemplated in those documents, (ii) the officers of such
Guarantor (y) who are authorized to sign the Loan Documents to which such
Guarantor 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

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signing documents and giving notices and other communications in connection with
this Agreement and the transactions contemplated hereby, (iii) specimen
signatures of the authorized officers, and (iv) the Charter Documents of such
Guarantor, certified as being true and complete. Agent and the Lenders may
conclusively rely on such certificate until Agent receives notice in writing
from such Guarantor to the contrary.

(c)Certificates of the appropriate state agencies with respect to the existence,
qualification and good standing of Borrower and each Guarantor.

(d)A Compliance Certificate duly and properly executed by a Responsible Officer
and dated as of the date of the Initial Funding and the Closing Financial
Statements.

(e)A certificate duly and properly executed by a Responsible Officer of
Borrower, in form and substance satisfactory to Agent, attesting to the Solvency
of the Loan Parties immediately after giving effect to the Transactions.

(f)This Agreement, the Notes, and the Security Instruments (including those
described on Exhibit D), each duly completed and executed and, if applicable, in
sufficient number of counterparts for recording.

(g)The (i) certificates representing Capital Securities pledged pursuant to the
Pledge and Security Agreement, together with an undated transfer power for each
such certificate executed in blank by the pledgor thereof and (ii) promissory
notes (if any) pledged to Agent pursuant to the Pledge and Security Agreement,
endorsed (without recourse) in blank (or accompanied by an executed transfer
form in blank) by the pledgor thereof.

(h)Favorable opinions of Barry Conge Harris LLP, counsel to Borrower and the
Guarantors and special Oklahoma counsel to Borrower and the Guarantors, Crowley
Fleck PLLP, special North Dakota counsel to Borrower and the Guarantors, and
Loren J. O’Toole II, Esq., special Montana counsel to Borrower and the
Guarantors, in form and substance satisfactory to Agent, as to such matters
incident to the transactions herein contemplated as Agent may reasonably
request.

(i)A certificate of insurance coverage of Borrower and the Guarantors evidencing
that Borrower and the Guarantors are carrying insurance in accordance with
Section 7.18.

(j)Letters-in-Lieu executed in blank by Borrower and the Guarantors.

(k)The Fee Letter, duly executed.

(l)Agent shall have received all appropriate evidence required by Agent
necessary to determine that Agent (for its benefit and the benefit of the
Beneficiaries) shall have (i) an Acceptable Security Interest in the Collateral
(other than Oil and Gas Properties) and (ii) a perfected first priority Lien
(subject only to Excepted Liens) on ninety percent (90%) of the value of the Oil
and Gas Properties evaluated by the Reserve Report delivered on or prior to the
Closing Date that are Proven Reserves (provided that when calculating “Proven
Reserves” for the purposes of this Section 6.01(l), Borrower may exclude any Oil
and Gas Properties subject to the BTA Development Agreement that are PUD
Reserves and have not yet been earned pursuant to the terms of the BTA
Development Agreement so long as BO has granted a perfected first priority Lien
(subject only to Excepted Liens) in the BTA Development Agreement to Agent for
the benefit of the Beneficiaries)), subject in each case to proper recording
thereof.

(m)Title information in form and substance reasonably acceptable to Agent
covering enough of the Mortgaged Properties evaluated by the Reserve Report
delivered on or prior to the Closing Date, so that Agent shall have received
together with title information previously delivered to Agent, satisfactory
title information on at least eighty percent (80%) of the value of the Oil and
Gas Properties evaluated in the most recent Reserve Report that are Proven
Reserves (provided that when calculating “Proven Reserves”

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for the purposes of this Section 6.01(m), Borrower may exclude any Oil and Gas
Properties subject to the BTA Development Agreement that are PUD Reserves and
have not yet been earned pursuant to the terms of the BTA Development Agreement
so long as BO has granted a perfected first priority Lien (subject only to
Excepted Liens) in the BTA Development Agreement to Agent for the benefit of the
Beneficiaries).

(n)Agent shall be satisfied that the “Obligations” (as defined in the Existing
ESTE Credit Agreement) and the “Indebtedness” (as defined in the Existing BE
Credit Agreement) shall be refinanced in full (or assigned in full to Agent),
all commitments (if any) in respect thereof shall have been terminated and all
Liens under the Existing ESTE Credit Agreement Security Instruments that secure
the “Obligations” (as defined in the Existing ESTE Credit Agreement) and all
Liens under the Existing BE Credit Agreement Security Instruments that secure
the “Indebtedness” (as defined in the Existing BE Credit Agreement) shall have
been assigned to Agent, and Agent shall have received evidence of such
refinancing, and assignments of liens and security interests assigning such
Liens, all in form and substance satisfactory to Agent.

(o)Agent shall have received evidence, reasonably satisfactory to Agent, that
the Bold Agreement has been consummated pursuant to the terms thereof and that
Borrower’s and the Guarantors’ corporate structure is as reflected on Schedule
6.01.

(p)Agent shall have received evidence, reasonably satisfactory to Agent, that
(i) LUSA has assigned all of its Oil and Gas Properties to LUO on terms and
conditions  reasonably satisfactory to Agent and (ii) ESTE has assigned all of
its Oil and Gas Properties to ELP on terms and conditions  reasonably
satisfactory to Agent.

(q)Agent shall be satisfied with the results of a recent search of all effective
UCC financing statements (or equivalent filings) made with respect to any
personal or mixed property of Borrower and each Guarantor that is Collateral in
all applicable jurisdictions.

(r)Agent shall be satisfied with the ownership, management, capital and
corporate, organization, tax and legal structure of Borrower and the Guarantors.

(s)Within five (5) Business days prior to the Closing Date, Agent shall have
received all documentation and other information that is required by regulatory
authorities under applicable “know your customer” and anti-money-laundering
rules and regulations, including, without limitation, the Patriot Act.

(t)Such other documents as Agent or any Lender or special counsel to Agent may
reasonably request.

Section 6.02Initial and Subsequent Loans and Letters of Credit. The obligation
of the Lenders to make Loans to Borrower upon the occasion of each borrowing
hereunder and to issue, renew, extend or reissue Letters of Credit for the
account of Borrower (including the Initial Funding) is subject to Agent
receiving an executed Borrowing Request and the further conditions precedent
that, as of the date of such Loans and after giving effect thereto:

(a)no Default shall exist;

(b)no Material Adverse Effect shall have occurred;

(c)in the case of a Borrowing Request for a Loan, at the time of, and after
giving effect to the making of, such Loan, (i) the Consolidated Cash Balance and
(ii) the pro forma Consolidated Cash Balance as of the end of the Business Day
on which such Loan is made, in each case, shall not exceed the Consolidated Cash
Balance Limit; and

(d)the representations and warranties made by Borrower in Article VII and by
Borrower and the Guarantors in the other Loan Documents to which they are a
party shall be true on and as of the date of

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the making of such Loans or issuance, renewal, extension or reissuance of a
Letter of Credit with the same force and effect as if made on and as of such
date and following such new borrowing, except to the extent such representations
and warranties are expressly limited to an earlier date or the Majority Lenders
may expressly consent in writing to the contrary.

Each Borrowing Request or request for issuance, renewal, extension or reissuance
of a Letter of Credit by Borrower hereunder shall constitute a certification by
Borrower that the statements set forth in Section 6.02(a), (b), (c) and (d) are
true (both as of the date of such notice and, unless Borrower otherwise notifies
Agent prior to the date of and immediately following such borrowing or issuance,
renewal, extension or reissuance of a Letter of Credit as of the date thereof).

Section 6.03Conditions Precedent for the Benefit of Lenders. All conditions
precedent to the obligations of the Lenders to make any Loan are imposed hereby
solely for the benefit of the Lenders, and no other Person may require
satisfaction of any such condition precedent or be entitled to assume that the
Lenders will refuse to make any Loan in the absence of strict compliance with
such conditions precedent.

Section 6.04No Waiver. No waiver of any condition precedent shall preclude Agent
or the Lenders from requiring such condition to be met prior to making any
subsequent Loan or preclude the Lenders from thereafter declaring that the
failure of Borrower to satisfy such condition precedent constitutes a Default.

Article VII.
Representations and Warranties

Borrower represents and warrants to Agent and the Lenders that (each
representation and warranty herein is given as of the Closing Date and shall be
deemed repeated and reaffirmed on the dates of each borrowing and issuance,
renewal, extension or reissuance of a Letter of Credit as provided in Section
6.02 and on the date of each delivery of a Compliance Certificate):  

Section 7.01Corporate Existence. Borrower and each Subsidiary: (i) is duly
organized, legally existing and in good standing under the laws of the
jurisdiction of its formation; (ii) has all requisite power, and has all
material governmental licenses, authorizations, consents and approvals necessary
to own its assets and carry on its business as now being or as proposed to be
conducted; and (iii) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualification necessary.

Section 7.02Financial Condition. The Closing Financial Statements, as of the
Closing Date, are complete and correct and fairly present in all material
respects the consolidated financial condition of Borrower and its Consolidated
Subsidiaries. None of Borrower nor any Subsidiary has on the Closing Date any
material Debt, contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in the Closing
Financial Statements or in Schedule 7.02. Since the date of the Closing
Financial Statements, there has been no change or event having a Material
Adverse Effect. Since the date of the Closing Financial Statements, neither the
business nor the Properties of Borrower or any Subsidiary have been materially
and adversely affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property or cancellation of contracts, permits or
concessions by any Governmental Authority, riot, activities of armed forces or
acts of God or of any public enemy.

Section 7.03Litigation. Except as disclosed to the Lenders in Schedule 7.03
hereto, at the Closing Date there is no litigation, legal, administrative or
arbitral proceeding, investigation or other action of any nature pending or, to
the knowledge of Borrower, threatened against or affecting Borrower or any
Subsidiary which involves the reasonable possibility of any judgment or
liability against Borrower or any Subsidiary that is not fully covered by
insurance (except for normal deductibles) or that, if adversely determined,
could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.

Section 7.04No Breach. Neither the execution and delivery of the Loan Documents,
nor compliance with the terms and provisions thereof, will conflict with or
result in a breach of, or require any consent which has not

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been obtained as of the Closing Date under, the respective Charter Documents of
Borrower or any Subsidiary, or any Governmental Requirement or any agreement or
instrument to which Borrower or any Subsidiary is a party or by which it is
bound or to which it or its Properties are subject, or constitute a default
under any such agreement or instrument, or result in the creation or imposition
of any Lien upon any of the revenues or assets of Borrower or any Subsidiary
pursuant to the terms of any such agreement or instrument other than the Liens
created by the Loan Documents.

Section 7.05Authority. Borrower and each Subsidiary have all necessary entity
power and authority to execute, deliver and perform its obligations under the
Loan Documents to which it is a party; and the execution, delivery and
performance by Borrower and each Subsidiary of the Loan Documents to which it is
a party, have been duly authorized by all necessary entity action on its part;
and the Loan Documents constitute the legal, valid and binding obligations of
Borrower and each Subsidiary party thereto, enforceable in accordance with their
terms.

Section 7.06Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority are necessary for the
execution, delivery or performance by Borrower or any Subsidiary of the Loan
Documents, or for the validity or enforceability thereof, except for the
recording and filing of the Security Instruments as required by this Agreement.

Section 7.07Use of Loans. The proceeds of the Loans shall be used (a) for
issuance of Letters of Credit, (b) to pay fees and expenses related to the
Transactions, (c) for the refinancing of the “Obligations” (as defined in the
Existing ESTE Credit Agreement) and the “Indebtedness” (as defined in the
Existing BE Credit Agreement) contemplated by Section 6.01(n), (d) to fund the
acquisition and development of Oil and Gas Properties and (e) to fund working
capital, capital expenditures and for other general corporate
purposes.  Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying margin stock (within
the meaning of Regulation T, U or X of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan hereunder will be used
to buy or carry any margin stock. Borrower will not request any Loan or Letter
of Credit, and Borrower shall not use, and shall ensure that its Subsidiaries
and its or their respective directors, officers, employees and agents shall not
use, the proceeds of any Loan or Letter of Credit (i) in furtherance of an
offer, payment, promise to pay, or authorization of the payment or giving of
money, or anything else of value, to any Person in violation of the United
States Foreign Corrupt Practices Act of 1977, as amended and in effect from time
to time, or any other law, rule, or regulation of any jurisdiction applicable to
Borrower or its Subsidiaries from time to time concerning or relating to bribery
or corruption, (ii) for the purpose of funding, financing or facilitating any
activities, business or transaction of or with any Sanctioned Person, or in any
Sanctioned Country, or (iii) in any manner that would result in the violation of
any Sanctions applicable to any party hereto.

Section 7.08ERISA.

(a)Borrower, each Subsidiary and each ERISA Affiliate have complied in all
material respects with ERISA and, where applicable, the Code regarding each
Plan.

(b)Each Plan is, and has been, maintained in substantial compliance with ERISA
and, where applicable, the Code.

(c)No act, omission or transaction has occurred which could result in imposition
on Borrower, any Subsidiary or any ERISA Affiliate (whether directly or
indirectly) of (i) either a civil penalty assessed pursuant to section 502(c),
(i) or (1) of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the
Code or (ii) breach of fiduciary duty liability damages under section 409 of
ERISA.

(d)No Plan (other than a defined contribution plan) or any trust created under
any such Plan has been terminated since September 2, 1974. No liability to the
PBGC (other than for the payment of current premiums which are not past due) by
Borrower, any Subsidiary or any ERISA Affiliate has been or is expected by
Borrower, any Subsidiary or any ERISA Affiliate to be incurred with respect to
any Plan. No ERISA Event with respect to any Plan has occurred.

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(e)Full payment when due has been made of all amounts which Borrower, any
Subsidiary or any ERISA Affiliate is required under the terms of each Plan or
applicable law to have paid as contributions to such Plan, and no accumulated
funding deficiency (as defined in section 302 of ERISA and section 412 of the
Code), whether or not waived, exists with respect to any Plan.

(f)The actuarial present value of the benefit liabilities under each Plan which
is subject to Title IV of ERISA does not, as of the end of Borrower’s most
recently ended fiscal year, exceed the current value of the assets (computed on
a plan termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities. The term “actuarial present value of the
benefit liabilities” has the meaning specified in section 4041 of ERISA.

(g)None of Borrower, any Subsidiary or any ERISA Affiliate sponsors, maintains,
or contributes to an employee welfare benefit plan, as defined in section 3(1)
of ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
Borrower, a Subsidiary or any ERISA Affiliate in its sole discretion at any time
without any material liability.

(h)None of Borrower, any Subsidiary or any ERISA Affiliate sponsors, maintains
or contributes to, or has at any time in the preceding six calendar years,
sponsored, maintained or contributed to, any Multiemployer Plan.

(i)None of Borrower, any Subsidiary or any ERISA Affiliate is required to
provide security under section 401(a)(29) of the Code due to a Plan amendment
that results in an increase in current liability for the Plan.

Section 7.09Taxes. Except as set out in Schedule 7.09, Borrower and each of its
Subsidiaries has filed all United States Federal income tax returns and all
other tax returns which are required to be filed by them and have paid all
material taxes due pursuant to such returns or pursuant to any assessment
received by Borrower or any Subsidiary. The charges, accruals and reserves on
the books of Borrower and its Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of Borrower, adequate. No tax lien has
been filed and, to the knowledge of Borrower, no claim is being asserted with
respect to any such tax, fee or other charge.

Section 7.10Titles, Etc.

(a)Except as set out in Schedule 7.10, Borrower and each of its Subsidiaries has
good and defensible title to its Hydrocarbon Interests and good and defensible
title to all other material (individually or in the aggregate) Properties, free
and clear of all Liens, except Liens permitted by Section 9.02. Except as set
forth in Schedule 7.10, after giving full effect to the Excepted Liens, Borrower
(or a Subsidiary of Borrower) owns the working interests and net revenue
interests in production attributable to the Hydrocarbon Interests reflected in
the most recently delivered or updated Reserve Report, and the ownership of such
Properties shall not in any material respect obligate Borrower (or its
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. All information contained in the most recently delivered Reserve
Report is true and correct in all material respects as of the date thereof.

(b)All leases and agreements necessary for the conduct of the business of
Borrower and its Subsidiaries are valid and subsisting, in full force and effect
and, to the knowledge of Borrower, 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 would affect
in any material respect the conduct of the business of Borrower and its
Subsidiaries.

(c)The rights, Properties and other assets presently owned, leased or licensed
by Borrower and its Subsidiaries including, without limitation, all easements
and rights of way, include all rights,

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Properties and other assets necessary to permit Borrower and its Subsidiaries to
conduct their business in all material respects in the same manner as its
business has been conducted prior to the Closing Date.

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

(e)There are no outstanding preferential rights or consents to assign affecting
Borrower or any Subsidiary’s Oil and Gas Properties that would impair, inhibit
or prevent Borrower or any Subsidiary from freely granting security interests
therein or any lienholder from exercising remedies, including any judicial or
private foreclosure sale or deed-in-lieu of such sale and transfer to third
parties.

Section 7.11No Material Misstatements. No written information, statement,
exhibit, certificate, document or report furnished to Agent and the Lenders (or
any of them) by Borrower or any Subsidiary in connection with the negotiation of
this Agreement contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statement contained therein not
materially misleading in the light of the circumstances in which made and with
respect to Borrower and its Subsidiaries taken as a whole. There is no fact
peculiar to Borrower or any Subsidiary which has a Material Adverse Effect or in
the future is reasonably likely to have (so far as Borrower can now foresee) a
Material Adverse Effect and which has not been set forth in this Agreement or
the other documents, certificates and statements furnished to Agent by or on
behalf of Borrower or any Subsidiary prior to, or on, the Closing Date in
connection with the transactions contemplated hereby.

Section 7.12Investment Company Act. Except as set forth herein, neither Borrower
nor any Subsidiary is an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940
(the “ICA”), as amended, provided that Borrower and its Subsidiaries are within
the definition set forth in Section 2(a)(36) of the ICA, and exempted pursuant
to Section 3(a)(9) of the ICA.

Section 7.13Subsidiaries. Except as set forth on Schedule 7.14, Borrower has no
Subsidiaries.

Section 7.14Location of Business and Offices; Tax Identification and
Organizational Identification Numbers. Borrower’s principal place of business
and chief executive offices are located at the address stated on the signature
page of this Agreement. The principal place of business and chief executive
office of each Subsidiary and each Guarantor are located at the addresses stated
on Schedule 7.14. The tax identification number, organizational identification
number and state of formation for Borrower, each Subsidiary and each Guarantor
are set forth on Schedule 7.14.

Section 7.15Defaults. Neither Borrower nor any 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 under any material agreement or instrument to which Borrower or any
Subsidiary is a party or by which Borrower or any Subsidiary is bound which
default would have a Material Adverse Effect. No Default hereunder has occurred
and is continuing.

Section 7.16Environmental Matters. Except (i) as provided in Schedule 7.16 or
(ii) as would not have a Material Adverse Effect (or with respect to (c), (d)
and (e) below, where the failure to take such actions would not have a Material
Adverse Effect):

(a)Neither any Property of 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)Without limitation of clause (a) above, no Property of Borrower or any
Subsidiary nor the operations currently conducted thereon or, to the knowledge
of Borrower, by any prior owner or operator of such Property or operation, are
in violation of or subject to any existing, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court or Governmental
Authority or to any remedial obligations under Environmental Laws;

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(c)All notices, permits, licenses or similar authorizations, if any, required to
be obtained or filed in connection with the operation or use of any and all
Property of Borrower and each Subsidiary, including without limitation past
(during Borrower’s ownership of such Properties and, to Borrower’s knowledge,
during any prior owner’s ownership) or present treatment, storage, disposal or
release of a hazardous substance or solid waste into the environment, have been
duly obtained or filed, and 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 exploration and
production wastes, if any, generated at any and all Property of Borrower or any
Subsidiary have in the past (during Borrower’s ownership of such Properties and,
to Borrower’s knowledge, during any prior owners ownership) been transported,
treated and disposed of in accordance with Environmental Laws and so as not to
pose an imminent and substantial endangerment to public health or welfare or the
environment, and, to the knowledge of Borrower, all such transport carriers and
treatment and disposal facilities have been and are operating in compliance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment, and are not the
subject of any existing, pending or threatened action, investigation or inquiry
by any Governmental Authority in connection with any Environmental Laws;

(e)Borrower has taken all steps reasonably necessary to determine, and has
determined, that no hazardous substances, solid waste, or oil and gas
exploration and production wastes, have been disposed of or otherwise released
and there has been no threatened release of any hazardous substances on or to
any Property of 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 Borrower and each Subsidiary
currently satisfies all design, operation, and equipment requirements imposed by
the OPA or scheduled as of the Closing Date to be imposed by the OPA during the
term of this Agreement, and Borrower does not have any reason to believe that
such Property, to the extent subject to OPA, will not be able to maintain
compliance with the OPA requirements during the term of this Agreement; and

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

Section 7.17Compliance with the Law. Neither Borrower nor any Subsidiary has
violated any Governmental Requirement or failed to obtain any license, permit,
franchise or other governmental authorization necessary for the ownership of any
of its Properties or the conduct of its business, which violation or failure
would have (in the event such violation or failure were asserted by any Person
through appropriate action) a Material Adverse Effect. Except for such acts or
failures to act as would not have a Material Adverse Effect, the Oil and Gas
Properties (and properties unitized therewith) have been maintained, operated
and developed in a good and workmanlike manner and in conformity with all
applicable laws and all rules, regulations and orders of all duly constituted
authorities having jurisdiction and in conformity with the provisions of all
leases, subleases or other contracts comprising a part of the Hydrocarbon
Interests and other contracts and agreements forming a part of the Oil and Gas
Properties; specifically in this connection, (i) after the Closing Date, no Oil
and Gas Property is subject to having allowable production reduced below the
full and regular allowable (including the maximum permissible tolerance) because
of any overproduction (whether or not the same was permissible at the time)
prior to the Closing Date and (ii) none of the wells comprising a part of the
Oil and Gas Properties (or properties unitized therewith) are deviated more than
the maximum permitted by applicable laws, regulations, rules and orders, and
such wells are, in fact, bottomed under and are producing from, and the well
bores are wholly within, the Oil and Gas Properties (or in the case of wells
located on properties unitized therewith, such unitized properties).

Section 7.18Insurance. Schedule 7.18 attached hereto contains an accurate and
complete description of all material policies of fire, liability, workmen’s
compensation and other forms of insurance owned or held by Borrower and each
Subsidiary. As of the Closing Date, all such policies are in full force and
effect, all premiums with respect thereto then due covering all periods up to
and including the date of the closing have been paid, and no

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notice of cancellation or termination has been received with respect to any such
policy. Such policies are sufficient for compliance with all requirements of law
and of all agreements to which Borrower or any Subsidiary is a party; are valid,
outstanding and enforceable policies; provide adequate insurance coverage in at
least such amounts and against at least such risks (but including in any event
public liability) as are usually insured against in the same general area by
companies engaged in the same or a similar business for the assets and
operations of Borrower and each Subsidiary; will remain in full force and effect
through the respective dates set forth in Schedule 7.18 without the payment of
additional premiums; and will not in any way be affected by, or terminate or
lapse by reason of, the transactions contemplated by this Agreement. Schedule
7.18 identifies all material risks, if any, which Borrower and its Subsidiaries
and their respective Board of Directors or officers have designated as being
self-insured. Neither Borrower nor any Subsidiary has been refused any insurance
with respect to its assets or operations, nor has its coverage been limited
below usual and customary policy limits, by an insurance carrier to which it has
applied for any such insurance or with which it has carried insurance during the
last three years.

Section 7.19Hedging Agreements. Schedule 7.19 sets forth, as of the Closing
Date, a true and complete list of all Hedging Agreements (including commodity
price swap agreements, forward agreements or contracts of sale which provide for
prepayment for deferred shipment or delivery of oil, gas or other commodities)
of Borrower and each 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 counter party to each such
agreement.

Section 7.20Restriction on Liens. Neither Borrower nor any of its Subsidiaries
is a party to any agreement or arrangement (other than the Loan Documents), or
subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its ability to grant Liens to other Persons on or in
respect of their respective assets or Properties.

Section 7.21Material Agreements. Set forth on Schedule 7.21 hereto is a complete
and correct list of all material agreements, leases (other than Hydrocarbon
Interests), indentures, purchase agreements, letters of credit, guarantees,
joint venture agreements and other agreements and contracts in effect or to be
in effect on the Closing Date (other than Hedging Agreements) providing for,
evidencing, securing or otherwise relating to any Debt of Borrower or any of its
Subsidiaries, and all obligations of Borrower or any of its Subsidiaries to
issuers of surety or appeal bonds issued for account of Borrower or any such
Subsidiary.  

Section 7.22Solvency. Borrower and its Subsidiaries are Solvent.

Section 7.23Gas Imbalances. Except as set forth on Schedule 7.23 or on the most
recently delivered Reserve Report Certificate, on a net basis there are no gas
imbalances, take or pay or other prepayments with respect to Borrower’s or any
Subsidiary’s Oil and Gas Properties which would require Borrower or a Subsidiary
to deliver, in the aggregate, two percent (2%) or more of the monthly production
from Hydrocarbons produced from Borrower’s or such Subsidiary’s Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor.

Section 7.24Improved Real Estate. There is no “Building” (as defined in the
applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined
in the applicable Flood Insurance Regulation) located on the lands covered by
the Mortgaged Property that are critical to the operations of any Mortgaged
Property for the exploration and production of oil and gas.   

Section 7.25Anti-Terrorism; Anti-Money Laundering; FCPA. Neither Borrower nor
any of its Subsidiaries is in violation of any of the country or list based
economic and trade sanctions administered and enforced by OFAC.  Neither
Borrower nor any of its Subsidiaries (a) is a Sanctioned Person, (b) has its
assets located in a Sanctioned Person, or (c) derives revenues from investments
in, or transactions with Sanctioned Persons.  No proceeds of any Loan will be
used to fund any operations in, finance any investments or activities in, or
make any payments to, a Sanctioned Person or a Sanctioned Entity. Neither
Borrower nor any of its Subsidiaries or, to their knowledge, any of their
Related Parties (a) is an “enemy” or an “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.), (b) is in violation of (i) the Trading with the Enemy Act,
(ii) any of the foreign assets control regulations of the United States Treasury

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Department (31 CFR, Subtitle B, Chapter V) or any enabling legislation or
executive order relating thereto or (iii) the PATRIOT Act (collectively, the
“Anti-Terrorism Laws”) or (c) is a Sanctioned Person or currently the subject or
target of any Sanctions.  No part of the proceeds of any Loan or Letter of
Credit hereunder will be unlawfully used directly or indirectly to fund any
operations in, finance any investments or activities in or make any payments to,
a Sanctioned Person or a Sanctioned Country, or in any other manner that will
result in any violation by any Person (including any Lender, Agent or Issuing
Bank) of any Anti-Terrorism Laws, or for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended and in
effect from time to time (the “FCPA”).  

Section 7.26Swap Agreements.  

(a)The rate, asset, liability or other notional item underlying any Specified
Swap Agreement regarding an interest or monetary rate, or foreign exchange swap,
entered into or executed in connection with this Agreement is, or is directly
related to, a financial term hereof;

(b)The aggregate notional amount of all Swap Agreements entered into or executed
by Borrower or any Subsidiary in connection with the financial terms of this
Agreement, will not at any time exceed the aggregate principal amount
outstanding hereunder, as such amounts may be determined or calculated
contemporaneously from time to time during and throughout the term of this
Agreement;

(c)the purpose of any Swap Agreements in respect of any commodity entered into
or executed in connection with this Agreement is to hedge commodity price risks
incidental to Borrower’s and its Subsidiaries’ business and arising from
potential changes in the price of such commodity; and

(d)each Swap Agreement entered into or executed in connection with this
Agreement mitigates against the risk of repayment hereof and is not for the
purpose of speculation.

For purposes of this Section 7.26, the term “financial term” shall include,
without limitation, the duration or term of this Agreement, rate of interest,
the currency or currencies in which the Loan is made and its principal amount.

Section 7.27EEA Financial Institution. No Loan Party is an EEA Financial
Institution.   

Article VIII.
Affirmative Covenants

Borrower covenants and agrees that, so long as any of the Commitments are in
effect and until payment in full of all Loans hereunder, all interest thereon
and all other amounts payable by Borrower hereunder:

Section 8.01Reporting Requirements. Borrower shall deliver, or shall cause to be
delivered, to Agent with sufficient copies of each for the Lenders:

(a)Annual Financial Statements. As soon as available and in any event within 120
days after the end of each fiscal year of ESTE, commencing with the fiscal year
ending December 31, 2017, the audited consolidated statements of income, equity
and cash flows of ESTE and its Consolidated Subsidiaries for such fiscal year,
and the related consolidated balance sheets of ESTE and its Consolidated
Subsidiaries as at the end of such fiscal year, and setting forth in each case
in comparative form the corresponding figures for the preceding fiscal year, and
accompanied by the related opinion of independent public accountants of
recognized national standing acceptable to Agent which opinion shall state that
said financial statements fairly present in all material respects the
consolidated financial condition and results of operations of ESTE and its
Consolidated Subsidiaries as at the end of, and for, such fiscal year and that
such financial statements have been prepared in accordance with GAAP, except for
such changes in such principles with which the independent public accountants
shall have concurred and such opinion shall not

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contain a “going concern” or like qualification or exception; provided, that (i)
in the event an Unrestricted Subsidiary existed during such fiscal year and was
consolidated in ESTE’s financial statements, the annual financial statements
shall also include unaudited consolidating statements of income, equity and cash
flows and balance sheets, (ii) the financial statements of ESTE shall
consolidate one hundred percent (100%) of the interest of Borrower and its
Consolidated Subsidiaries (including the interest of Bold Energy Holdings, LLC
in Borrower and its Consolidated Subsidiaries), (iii) LEC and LUSA shall not
have any assets or liabilities other than (x) LEC’s interest in LUSA and (y)
LUSA’s interest in Borrower, and (iv) ESTE shall not have any assets or
liabilities other than (x) ESTE’s interest in LEC, (y) ESTE’s interest in
Borrower and (z) cash balances for the purposes of tax distributions that are
made in compliance with this Agreement.

(b)Quarterly Financial Statements. As soon as available and in any event within
60 days after the end of each fiscal quarterly period (excluding the fiscal
quarterly period ending on December 31) of each fiscal year of ESTE, commencing
with the fiscal quarterly period ending September 30, 2017, consolidated
statements of income, equity and cash flows of ESTE and its Consolidated
Subsidiaries for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related consolidated
balance sheets as at the end of such period, and setting forth in each case in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, accompanied by the certificate of a Responsible Officer,
which certificate shall state that said financial statements fairly present in
all material respects the consolidated financial condition and results of
operations of ESTE and its Consolidated Subsidiaries in accordance with GAAP, as
at the end of, and for, such period (subject to normal year-end audit
adjustments); provided, that (i) in the event an Unrestricted Subsidiary existed
during such fiscal quarterly period and was consolidated in ESTE’s financial
statements, the quarterly financial statements shall also include consolidating
statements of income, equity and cash flows and balance sheets, (ii) the
financial statements of ESTE shall consolidate one hundred percent (100%) of the
interest of Borrower and its Consolidated Subsidiaries (including the interest
of Bold Energy Holdings, LLC in Borrower and its Consolidated Subsidiaries),
(iii) LEC and LUSA shall not have any assets or liabilities other than (x) LEC’s
interest in LUSA and (y) LUSA’s interest in Borrower, and (iv) ESTE shall not
have any assets or liabilities other than (x) ESTE’s interest in LEC, (y) ESTE’s
interest in Borrower and (z) cash balances for the purposes of tax distributions
that are made in compliance with this Agreement.

(c)Compliance Certificate. At the time each set of financial statements pursuant
to Sections 8.01(a) or (b) above is furnished, a Compliance Certificate executed
by a Responsible Officer, which among other things, (i) certifies as to the
matters set forth therein and states that no Default exists (or, if any Default
exists, describing the same in reasonable detail), and (ii) sets forth in
reasonable detail the computations necessary to determine whether Borrower is in
compliance with Section 9.12 as of the end of the respective fiscal quarter or
fiscal year.

(d)Notice of Default, Etc. Promptly after Borrower knows that any Default or any
Material Adverse Effect has occurred, a notice of such Default or Material
Adverse Effect, describing the same in reasonable detail and the action Borrower
proposes to take with respect thereto.

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

(f)Hedging Agreements, Gas Imbalances, and Property Reports. As soon as
available and in any event within 15 days after the last day of each calendar
month, a report certified as true and complete in all material respects by a
Responsible Officer, in form and substance satisfactory to Agent, setting forth
as of the last Business Day of such calendar month a true and complete list of
all Hedging Agreements (including commodity price swap agreements, forward
agreements or contracts of sale which provide for prepayment for deferred
shipment or delivery of oil, gas or other commodities) of Borrower and each
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

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relating thereto not listed on Schedule 7.21, any margin required or supplied
under any credit support document, and the counter party to each such agreement.
As soon as available and in any event within 60 days after the last day of each
calendar quarter, a report certified as true and complete in all material
respects by a Responsible Officer, in form and substance satisfactory to
Agent,  (i) certifying that except as set forth thereon, on a net basis there
are no gas imbalances, take-or-pay or other prepayments with respect to the Oil
and Gas Properties of Borrower and any Subsidiary which would require Borrower
or such Subsidiary to deliver Hydrocarbons produced from such Oil and Gas
Properties at some time in the future without then or thereafter receiving full
payment therefor, and (ii) setting forth a list of any Oil and Gas Properties
acquired and any oil or gas wells drilled or brought on line not reflected in a
previous report.

(g)Production Reports, Etc. Upon request by Agent, as soon as available but in
any event within fifteen days following such request, Borrower shall furnish to
Agent reports certified as true and complete in all material respects by a
Responsible Officer, regarding the most recently available monthly production
and general and administrative cost summaries by lease for its Oil and Gas
Properties, in form and substance satisfactory to Agent, which reports shall
include (i) quantities or volume of production, revenue, realized product
prices, operating expenses, taxes, capital expenditures and lease operating
costs which have accrued to Borrower’s accounts in such period, (ii) the name,
address, telephone and facsimile numbers, e-mail address (if available) and
contact individual for each Purchaser, and (iii) such other information with
respect thereto as Agent or the Lenders may require.

(h)Reserve Report Certificate. Concurrent with delivery of each Reserve Report
furnished pursuant to Section 8.07, a completed Reserve Report Certificate, duly
executed by a Responsible Officer.

(i)Tax Returns. As soon as available and in any event within 15 days after the
filing of any tax return or any other filing with a taxing authority, of
Borrower, any Guarantor or any Subsidiary, a copy of such filed tax return,
together with all exhibits and attachments thereto.

(j)Notices Under Other Loan Agreements. Promptly after the furnishing thereof,
copies of any statement, report or notice furnished to any Person pursuant to
the terms of any indenture, loan or credit or other similar agreement, other
than this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01.

(k)Material Agreements. Upon request, Borrower shall deliver to Agent and the
Lenders a complete and correct list of all material agreements and other
instruments of Borrower and its Subsidiaries relating to the purchase,
transportation by pipeline, gas processing, marketing, sale and supply of
natural gas and other Hydrocarbons, but in any event, any such agreement or
other instrument that will account for more than 10% of the sales of Borrower
and its Subsidiaries during Borrower’s current fiscal year. Upon request,
Borrower shall deliver to Agent and the Lenders a complete and correct copy of
all such material credit agreements, indentures, purchase and sale agreements,
letters of credit, guarantees, joint venture agreements, purchase agreements or
other contracts or instruments described in Section 7.21, including any
modifications or supplements thereto, as in effect on the Closing
Date.  Borrower will notify Agent of any amendment to the charter, by-laws, or
other constituent documents in any manner of any Unrestricted Subsidiary.

(l)Other Matters. From time to time such other information regarding the
business, affairs or financial condition of Borrower or any Subsidiary
(including, without limitation, any Plan or Multiemployer Plan and any reports
or other information required to be filed under ERISA) as any Lender or Agent
may reasonably request.

Section 8.02Litigation. Borrower shall promptly give to Agent notice of: (i) all
legal or arbitral proceedings, and of all proceedings before any Governmental
Authority affecting Borrower or any Subsidiary and (ii) of any litigation or
proceeding against or adversely affecting Borrower or any Subsidiary in which
the amount involved is not covered in full by insurance (subject to normal and
customary deductibles and for which the insurer has not assumed the defense), or
in which injunctive or similar relief is sought, that, in the case of either (i)
or (ii) above, if adversely determined, could reasonably be expected to have a
Material Adverse Effect. Borrower will, and

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will cause each of its Subsidiaries to, promptly notify Agent and each of the
Lenders of any claim, judgment, Lien or other encumbrance affecting any Property
of Borrower or any Subsidiary that, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.

Section 8.03Maintenance, Etc.

(a)Generally. Borrower shall and shall cause each Subsidiary to: preserve and
maintain its corporate existence and all of its material rights, privileges,
licenses, franchises and other rights necessary to conduct its business; keep
books of record and account in which full, true and correct entries will be made
of all dealings or transactions in relation to its business and activities;
comply with all Governmental Requirements if failure to comply with such
requirements will have a Material Adverse Effect; pay and discharge all taxes,
assessments and governmental charges or levies imposed on it or on its income or
profits or on any of its Property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy the payment of
which is being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained; upon reasonable notice, permit
representatives of Agent or any Lender, during normal business hours, to
examine, copy and make extracts from its books and records, to inspect its
Properties, and to discuss its business and affairs with its officers, all to
the extent reasonably requested by such Lender or Agent (as the case may be).

(b)Insurance. Borrower shall and shall cause each Subsidiary to keep, or cause
to be kept, insured by financially sound and reputable insurers (having a
minimum A.M. Best rating of A, size category VII) all Property of a character
usually insured by Persons engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts customarily
insured against by such Persons and carry such other insurance as is usually
carried by such Persons including, without limitation, environmental risk
insurance to the extent reasonably available, or as Agent may reasonably
request. Borrower shall promptly obtain endorsements to such insurance policies
naming “BOKF, NA dba Bank of Texas, as Agent for the Beneficiaries” as an
additional insured, assignee and loss payee (which shall include, as applicable,
identification as mortgagee), as applicable, on each insurance policy required
to be maintained pursuant to this Section 8.03(b) and containing provisions that
such policies will not be canceled without 30 days prior written notice having
been given by the insurance company to Agent.  Borrower will not, and will not
permit any Subsidiary to, bring or keep any article on any business location of
any Loan Party, or cause or allow any condition to exist, if the presence of
such article or the occurrence of such condition could reasonably cause the
invalidation of any insurance required by this Section 8.03(b), or would
otherwise be prohibited by the terms thereof.  In the event Borrower fails to
provide Agent with evidence of the insurance coverage required by this
Agreement, Agent may purchase insurance at Borrower’s expense to protect Agent’s
interests in the Collateral.  This insurance may, but need not, protect
Borrower’s interests.  The coverage purchased by Agent may not pay any claim
made by Borrower or any claim that is made against Borrower in connection with
the Collateral.  Borrower may later cancel any insurance purchased by Agent, but
only after providing Agent with evidence that Borrower has obtained insurance as
required by this Agreement.  If Agent purchases insurance for the Collateral, to
the fullest extent provided by law Borrower will be responsible for the costs of
that insurance, including interest and other charges imposed by Agent in
connection with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance.  The costs of the insurance may be
added to the Obligations.  The costs of the insurance may be more than the cost
of insurance Borrower is able to obtain on its own.

(c)Proof of Insurance. Contemporaneously with the delivery of the financial
statements required by Section 8.01(a) to be delivered for each year, Borrower
will furnish or cause to be furnished to Agent and the Lenders a certificate of
insurance coverage from the insurer in form and substance satisfactory to Agent
and, if requested, will furnish Agent and the Lenders copies of the applicable
policies.

(d)Oil and Gas Properties. Borrower will and will cause each Subsidiary to, at
its own expense, do or cause to be done all things reasonably necessary to
preserve and keep in good repair, working order and efficiency all of its Oil
and Gas Properties and other material Properties including, without limitation,
all equipment, machinery and facilities, and from time to time will make all the
reasonably necessary repairs, renewals and replacements so that at all times the
state and condition of its

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Oil and Gas Properties and other material Properties will be fully preserved and
maintained, except to the extent a portion of such Properties is no longer
capable of economically producing Hydrocarbons. Borrower will and will cause
each Subsidiary to promptly: (i) pay and discharge, or make reasonable and
customary efforts to cause to be paid and discharged, all delay rentals,
royalties, expenses and indebtedness accruing under the leases or other
agreements affecting or pertaining to its Oil and Gas Properties, (ii) 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, subleases, contracts and agreements affecting its
interests in its Oil and Gas Properties and other material Properties, and (iii)
do all other things necessary to keep unimpaired, except for Liens described in
Section 9.02, its rights with respect to its Oil and Gas Properties and other
material Properties and prevent any forfeiture thereof or a default thereunder,
except to the extent a portion of such Properties is no longer capable of
producing Hydrocarbons in economically reasonable amounts and except for
dispositions not prohibited by Section 9.13. Borrower will and will cause each
Subsidiary to operate its Oil and Gas Properties and other material Properties
or cause or make reasonable and customary efforts to cause such Oil and Gas
Properties and other material Properties to be operated in the manner of a
prudent operator in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance in all
material respects with all Governmental Requirements.  Borrower shall, and shall
cause each Subsidiary to, subordinate in favor of Agent for the benefit of the
Lenders any contractual or statutory Liens held by Borrower or such Subsidiary
as co-working interest owner under joint operating agreements or similar
contractual arrangements with respect to Borrower’s or such Subsidiary’s share
of the expense of exploration, development and operation of oil, gas and mineral
leasehold or fee interests jointly owned with others and operated by Borrower or
any Subsidiary.  BE and BO shall, in the event any other party defaults on or
breaches any provision of the BTA Development Agreement, exercise any and all
rights, powers and remedies of BE and BO with respect to such default or breach.

Section 8.04Environmental Matters.

(a)Establishment of Procedures. Borrower will and will cause each Subsidiary to
establish and implement such procedures as may be reasonably necessary to
continuously determine and assure that any failure of the following does not
have a Material Adverse Effect: (i) all Property of Borrower and its
Subsidiaries and the operations conducted thereon and other activities of
Borrower and its Subsidiaries are in compliance with and materially do not
violate the requirements of any Environmental Laws, (ii) no oil, hazardous
substances or solid wastes are disposed of or otherwise released on or to any
Property owned by any such party except in compliance with Environmental Laws,
(iii) no hazardous substance will be released on or to any such Property in a
quantity equal to or exceeding that quantity which requires reporting pursuant
to Section 103 of CERCLA, and (iv) no oil, oil and gas exploration and
production wastes or hazardous substance is released on or to any such Property
so as to pose an imminent and substantial endangerment to public health or
welfare or the environment.

(b)Notice of Action. Borrower will promptly notify Agent and the Lenders in
writing of any threatened action, investigation or inquiry by any Governmental
Authority of which Borrower has knowledge in connection with any Environmental
Laws, excluding routine testing and corrective action.

(c)Future Acquisitions. Borrower will and will cause each Subsidiary to provide
environmental audits and tests as reasonably requested by Agent and the Lenders
(or as otherwise required to be obtained by Agent or the Lenders by any
Governmental Authority) in connection with any future acquisitions of Oil and
Gas Properties or other material Properties.

Section 8.05Further Assurances. Borrower will and will cause each Subsidiary to
cure promptly any defects in the creation and issuance of the Notes and the
execution and delivery of this Agreement and any other Loan Document. Borrower,
at its expense, will and will cause each Subsidiary to promptly execute and
deliver to Agent upon request all such other documents, agreements and
instruments to comply with or accomplish the covenants and agreements of
Borrower or any Subsidiary, as the case may be, in this Agreement and any other
Loan Document, or to further evidence and more fully describe the Collateral
intended as security for the Obligations or to correct any omissions in the Loan
Documents, or to state more fully the security obligations set out herein or in
any

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of the Loan Documents, or to perfect, protect or preserve any Liens created
pursuant to any of the Security Instruments, or to make any recordings, to file
any notices or obtain any consents, all as may be necessary or appropriate in
connection therewith.

Section 8.06Performance of Obligations. Borrower will pay the Notes according to
the reading, tenor and effect thereof; and Borrower will and will cause each
Subsidiary to do and perform every act and discharge all of the obligations to
be performed and discharged by them under the Loan Documents, at the time or
times and in the manner specified.

Section 8.07Engineering Reports.

(a)Scheduled Redetermination. Not less than 30 days prior to each Scheduled
Redetermination Date, Borrower shall furnish to Agent and the Lenders a Reserve
Report. The March 1 Reserve Report of each year shall be prepared by certified
independent petroleum engineers or other independent petroleum consultant(s)
reasonably acceptable to Agent and the September 1 Reserve Report of each year
shall be prepared by or under the supervision of the chief engineer of Borrower
who shall certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately preceding
March 1 Reserve Report.

(b)Unscheduled Redetermination. In the event of an unscheduled redetermination,
Borrower shall furnish to Agent and the Lenders a Reserve Report prepared by or
under the supervision of the chief engineer of Borrower who shall certify such
Reserve Report to be true and accurate and to have been prepared in accordance
with the procedures used in the immediately preceding Reserve Report. For any
unscheduled redetermination requested by the Required Lenders, Agent or Borrower
pursuant to Section 2.08(e)), Borrower shall provide as soon as possible, but in
any event no later than 30 days following the receipt of the request by Agent,
such Reserve Report with an “as of” date not more than 60 days prior to the
anticipated date of redetermination or as otherwise required by the Required
Lenders or Agent.

Section 8.08Title Information Delivery.

(a)Title Information. On or before the delivery to Agent and the Lenders of each
Reserve Report required by Section 8.07(a), Borrower will deliver title
information in form and substance reasonably acceptable to Agent covering enough
of the Mortgaged Properties evaluated by such Reserve Report that were not
included in the immediately preceding Reserve Report, so that Agent shall have
received together with title information previously delivered to Agent,
satisfactory title information on at least (80%) of the value of the Oil and Gas
Properties evaluated in the most recent Reserve Report that are Proven Reserves
(provided that when calculating “Proven Reserves” for the purposes of this
Section 8.08(a), Borrower may exclude any Oil and Gas Properties subject to the
BTA Development Agreement that are PUD Reserves and have not yet been earned
pursuant to the terms of the BTA Development Agreement so long as BO has granted
a perfected first priority Lien (subject only to Excepted Liens) in the BTA
Development Agreement to Agent for the benefit of the Beneficiaries).

(b)Cure of Title Defects. Borrower shall cure any title defects or exceptions
which are not Excepted Liens raised by such information, or substitute
acceptable Mortgaged Properties with no title defects or exceptions, except for
Excepted Liens covering Mortgaged Properties of an equivalent value, within 60
days after a request by Agent or the Lenders to cure such defects or exceptions.

(c)Failure to Cure Title Defects. If Borrower is unable to cure any title defect
requested by Agent or the Lenders to be cured within the 60 day period or
Borrower does not comply with the requirements in Section 8.08(a) to provide
acceptable title information covering at least (80%) of the value of the Oil and
Gas Properties evaluated in the most recent Reserve Report that are Proven
Reserves (subject to the proviso in the parenthetical at the end of Section
8.08(a)), such failure shall not be a Default or an Event of Default, but
instead Agent and the Lenders shall have the right to exercise the following
remedy in their sole discretion from time to time, and any failure to so
exercise this remedy at any time shall not be a waiver as to future exercise of
the remedy by Agent or the Lenders. To the extent that Agent or the Lenders

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are not satisfied with title to any Mortgaged Property after the time period in
this Section 8.08(c) has elapsed, such unacceptable Mortgaged Property shall not
count towards the minimum eighty percent (80%) requirement set forth in Section
8.08(a), and Agent may send a notice to Borrower and the Lenders that the then
outstanding Borrowing Base shall be reduced by an amount as determined by all of
the Lenders to cause Borrower to be in compliance with the requirement set forth
in Section 8.08(a) to provide acceptable title information on at least eighty
percent (80%) of the value of the Oil and Gas Properties evaluated in the most
recent Reserve Report that are Proven Reserves). This new Borrowing Base shall
become effective immediately after receipt of such notice.

Section 8.09Collateral.

(a)Collateral. The Obligations shall be secured by a perfected first priority
Lien (subject only to Excepted Liens) granted to Agent for the benefit of the
Beneficiaries in (i) all of Borrower’s and each Subsidiary’s rights, titles and
interests, now owned or hereafter acquired, in any Oil and Gas Properties (and
all contracts and any other rights related thereto), other than any Properties
of de minimis value as determined by Agent in its sole discretion (provided,
however, in no event shall such Lien cover less than ninety percent (90%) of the
value of the Oil and Gas Properties evaluated in the most recent Reserve Report
that are Proven Reserves (provided that when calculating “Proven Reserves” for
the purposes of this Section 8.09(a), Borrower may exclude any Oil and Gas
Properties subject to the BTA Development Agreement that are PUD Reserves and
have not yet been earned pursuant to the terms of the BTA Development Agreement
so long as BO has granted a perfected first priority Lien (subject only to
Excepted Liens) in the BTA Development Agreement to Agent for the benefit of the
Beneficiaries)), (ii) all personal Property of Borrower and each Guarantor
(including, without limitation, BO’s interest in the BTA Development Agreement),
and (iii) all rights, titles and interests of the equity of all of the Capital
Securities of Borrower and Borrower’s Subsidiaries, and any Subsidiaries created
or acquired after the Closing Date.

(b)Lien in Acquired Oil and Gas Properties. Should Borrower or any Subsidiary
acquire any additional Oil and Gas Properties or additional interests in its
existing Oil and Gas Properties, Borrower or such Subsidiary will grant to Agent
as security for the Obligations a first priority Lien interest (subject only to
Excepted Liens) on Borrower’s or such Subsidiary’s interest in any Oil and Gas
Properties not already subject to a Lien of the Security Instruments, which Lien
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 Agent in
its sole discretion and in sufficient executed (and acknowledged where necessary
or appropriate) counterparts for recording purposes.   BO will grant to Agent as
security for the Obligations a first priority Lien interest (subject only to
Excepted Liens) on BO interest in any Oil and Gas Properties earned pursuant to
the terms of the BTA Development Agreement within ninety (90) days of BO earning
such Oil and Gas Properties, which Lien 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 Agent in its sole discretion and in sufficient
executed (and acknowledged where necessary or appropriate) counterparts for
recording purposes.  

(c)Title Information. Concurrently with the granting of the Lien or other action
referred to in Subsection (b) of this Section, Borrower will provide, or cause
to be provided, to Agent title information in form and substance satisfactory to
Agent in its sole discretion with respect to Borrower’s or such Subsidiary’s
interests in its Oil and Gas Properties.

(d)New Subsidiaries Collateral. If, at any time, a new Subsidiary is acquired or
created, Borrower shall, and, as applicable, shall cause such new Subsidiary to,
contemporaneously with such acquisition or creation, (x) execute and deliver a
Guaranty Agreement or a joinder to a Guaranty Agreement (y) pledge all of the
Capital Securities of such new Subsidiary (including, without limitation,
delivery of original certificates evidencing the Capital Securities of such new
Subsidiary, together with an appropriate undated transfer power for each
certificate duly executed in blank by the registered owner thereof, if
applicable) and (z) execute and deliver such other Loan Documents (including
Security Instruments granting to Agent a valid, first priority (subject only to
Excepted Liens) perfected Lien in the Properties of such new Subsidiary),
certificates and legal opinions as Agent shall reasonably request.  If, at

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any time, a new Unrestricted Subsidiary is acquired or created, Borrower shall,
and, as applicable, shall cause such new Unrestricted Subsidiary to,
contemporaneously with such acquisition or creation, (x) pledge all of the
Capital Securities of such new Unrestricted Subsidiary (including, without
limitation, delivery of original certificates evidencing the Capital Securities
of such new Unrestricted Subsidiary, together with an appropriate undated
transfer power for each certificate duly executed in blank by the registered
owner thereof, if applicable) and (y) execute and deliver such other Loan
Documents (including Security Instruments granting to Agent a valid, first
priority (subject only to Excepted Liens) perfected Lien in the Capital
Securities of such new Unrestricted Subsidiary), certificates and legal opinions
as Agent shall reasonably request.

(e)Legal Opinions. Promptly after the filing of any new Security Instrument in
any state, upon the reasonable request of Agent, Borrower will provide to Agent
an opinion addressed to Agent for the benefit of the Lenders in form and
substance satisfactory to Agent in its sole discretion from counsel acceptable
to Agent, stating that the Security Instrument is valid, binding and enforceable
in accordance with its terms in legally sufficient form for such jurisdiction,
and the means by which such Security Instrument will perfect the Lien created
thereby.

Section 8.10ERISA Information and Compliance. Borrower will promptly furnish and
will cause the Subsidiaries and any ERISA Affiliate to promptly furnish to Agent
with sufficient copies to the Lenders (i) promptly after the filing thereof with
the United States Secretary of Labor, the Internal Revenue Service or the PBGC,
copies of each annual and other report with respect to each Plan or any trust
created thereunder, (ii) immediately upon becoming aware of the occurrence of
any ERISA Event or of any “prohibited transaction,” as described in section 406
of ERISA or in section 4975 of the Code, in connection with any Plan or any
trust created thereunder, a written notice signed by a Responsible Officer
specifying the nature thereof, what action Borrower, the Subsidiary or the ERISA
Affiliate is taking or proposes to take with respect thereto, and, when known,
any action taken or proposed by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto, and (iii) immediately upon receipt
thereof, copies of any notice of the PBGC’s intention to terminate or to have a
trustee appointed to administer any Plan. With respect to each Plan (other than
a Multiemployer Plan), Borrower will, and will cause each Subsidiary and ERISA
Affiliate to, (i) satisfy in full and in a timely manner, without incurring any
late payment or underpayment charge or penalty and without giving rise to any
lien, all of the contribution and funding requirements of section 412 of the
Code (determined without regard to subsections (d), (e), (f) and (k) thereof)
and of section 302 of ERISA (determined without regard to sections 303, 304 and
306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a timely
manner, without incurring any late payment or underpayment charge or penalty,
all premiums required pursuant to sections 4006 and 4007 of ERISA.

Section 8.11Hedging Agreements. Borrower shall maintain Hedging Agreements, as
may be reasonably required by the Majority Lenders, provided that such Hedging
Agreements are permitted by Section 9.19 of this Agreement.  

Section 8.12Accounts. Borrower will and will cause each Subsidiary to maintain
all deposit accounts and operating accounts with the Lenders, and Borrower and
each Subsidiary will execute a Deposit Account Control Agreement with a grant in
favor of Agent of all rights necessary to deposit, withdraw or otherwise manage
and control all such accounts, subject to an Event of Default having occurred,
in form and substance satisfactory to Agent.  To the extent that Borrower or any
Subsidiary has any Investment Accounts, Borrower or such Subsidiary shall obtain
an executed Investment Account Control Agreement from each broker with respect
to each such Investment Account.

Section 8.13Keepwell (Commodity Exchange Act). Each Qualified ECP Guarantor
hereby jointly and severally absolutely, unconditionally and irrevocably
undertakes to provide such funds or other support as may be needed from time to
time by each other Guarantor to honor all of its obligations under the Guaranty
Agreement in respect of Swap Obligations (provided, however, that each Qualified
ECP Guarantor shall only be liable under the Guaranty Agreement for the maximum
amount of such liability that can be hereby incurred without rendering its
obligations under the Guaranty Agreement, as it relates to such other Guarantor,
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount). The obligations of each Qualified ECP
Guarantor under the Guaranty Agreement shall remain in full force and effect
until discharged in

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accordance with this Agreement. Each Qualified ECP Guarantor intends that this
Section 8.13 constitute, and this Section 8.13 shall be deemed to constitute, a
“keepwell, support, or other agreement” for the benefit of each other Guarantor
for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

Section 8.14FCPA; Etc. Borrower will maintain in effect and enforce policies and
procedures designed to promote and achieve compliance by Borrower, its
Subsidiaries and their respective directors, officers, employees and agents with
applicable Anti-Terrorism Laws, the FCPA, and all other laws, rules, and
regulations of any jurisdiction applicable to Borrower or its Subsidiaries from
time to time concerning or relating to bribery or corruption.   

 

Article IX.
Negative Covenants

Borrower covenants and agrees that, so long as any of the Commitments are in
effect and until payment in full of the Loans hereunder, all interest thereon
and all other amounts payable by Borrower hereunder:

Section 9.01Debt. Neither Borrower nor any Subsidiary will incur, create, assume
or permit to exist any Debt, except:

(a)the Notes or other Obligations or any guaranty of or suretyship arrangement
for the Notes or other Obligations.

(b)Debt of Borrower and its Subsidiaries existing on the Closing Date which is
reflected in the Closing Financial Statements and is disclosed in Schedule 9.01,
and any renewals or extensions (but not increases) thereof.

(c)accounts payable (for the deferred purchase price of Property or services)
from time to time incurred in the ordinary course of business which, if greater
than 90 days past the invoice or billing date, are being contested in good faith
by appropriate proceedings if reserves adequate under GAAP shall have been
established therefor.

(d)Debt under capital leases or purchase money Debt, in each case for the
acquisition of equipment (as required to be reported on the financial statements
of Borrower pursuant to GAAP) not to exceed $3,500,000, in the aggregate.

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

(f)Debt under Hedging Agreements that are required by the terms of Section 8.11
or not prohibited by the terms of Section 9.19; provided that (i) such Debt
shall not be secured, other than such Debt owing to Approved Counterparties
which are secured under the Loan Documents, and (ii) such Debt shall not contain
any requirement, agreement or covenant for Borrower or any of the Guarantors to
post collateral (including a letter of credit) or margin to secure their
obligations under such Hedging Agreements or to cover market exposures; provided
that, this clause (ii) shall not prevent an Approved Counterparty from requiring
the obligations under its Hedging Agreements with any Loan Party to be secured
by the Liens granted to Agent under the Security Instruments pursuant to such
Security Instruments.

(g)Debt under the NABORS Promissory Note in a principal amount not to exceed
$3,772,954.17.

(h)other Debt not otherwise permitted under this Section 9.01 in an aggregate
principal amount not to exceed $3,500,000 at any time.

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Section 9.02Liens. Neither Borrower nor any Subsidiary will create, incur,
assume or permit to exist any Lien on any of its Properties (now owned or
hereafter acquired), except:

(a)Liens securing the payment of any Obligations.

(b)Excepted Liens.

(c)Liens securing capital leases or purchase money Debt allowed under Section
9.01(d), but only on the Property under lease or acquired with such Debt.

(d)Liens disclosed on Schedule 9.02.

(e)Liens on cash or securities of Borrower or any Subsidiary securing the Debt
described in Section 9.01(e).

(f)Liens on cash or securities of Borrower or any Subsidiary posted as margin in
connection with investments allowed under Section 9.01(c), 9.01(d) or 9.01(e).

Section 9.03Investments, Loans and Advances. Neither Borrower nor any Subsidiary
will make or permit to remain outstanding any loans or advances to or
investments in any Person, except that the foregoing restriction shall not apply
to:

(a)investments, loans or advances reflected in the Closing Financial Statements
and which are disclosed to the Lenders in Schedule 9.03.

(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 Standard & Poor’s Corporation or Moody’s Investors
Service, Inc.

(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 $500,000,000 (as of the date of such
Lender’s or bank or trust company’s most recent financial reports) and has a
short term deposit rating of no lower than an investment grade rating (A-3 by
Standard & Poor’s Corporation, P-3 Moody’s Investors Service, Inc. or F-3 Fitch
Ratings, Inc.), as such rating is set forth from time, to time, by at least two
of the following rating agencies: Standard & Poor’s Corporation, Moody’s
Investors Service, Inc. or Fitch Ratings, Inc.

(f)deposits in money market funds investing exclusively in investments described
in Section 9.03(c), 9.03(d) or 9.03(e).

(g)investments by Borrower and its Subsidiaries in direct ownership interests in
additional Oil and Gas Properties.

(h)investments in Subsidiaries, subject to compliance with Section 8.09(d).

(i)investments in Unrestricted Subsidiaries engaged exclusively in oil and gas
exploration, development, production, processing and related activities in an
aggregate amount not to exceed $5,000,000.

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Section 9.04Dividends, Distributions and Redemptions. Neither Borrower nor any
of its Subsidiaries will declare or pay any dividend, purchase, redeem or
otherwise acquire for value any of its Capital Securities now or hereafter
outstanding, return any capital to its partners, shareholders or other holders
of equity interests or make any distribution of its assets to its partners,
shareholders or other holders of equity interests (collectively, “Restricted
Payments”) except:

(a)any Subsidiary of Borrower may declare and pay or make a Restricted Payments
to Borrower or any Guarantor.

(b)Borrower or any of its Subsidiaries may declare and pay or make Restricted
Payments that are payable solely in additional shares of its Capital Securities
(or warrants, options or other rights to acquire additional shares of its
Capital Securities) or shares of Capital Securities of ESTE.

(c)cash distributions payable by Borrower to the holders of Borrower’s Capital
Securities (individually, a “Holder”) to fund Permitted Tax Distributions during
the 45-day period following the end of a fiscal quarter, provided no Default
then exists.  For purposes of this Section 9.04(c), “Permitted Tax Distribution”
means a cash distribution to a Holder, calculated with respect to the fiscal
quarter most recently ended, equal to the product of the Holder’s maximum
combined effective income rate then in effect for such fiscal quarter (such
combination of U.S. and Canadian federal, state, local or provincial effective
tax rates hereinafter, the “Rate”) times such Holder’s estimated share of the
taxable income (ordinary income and capital gain) of the Borrower (“Taxable
Income”) for the entire taxable year to date, including such fiscal
quarter.  The Permitted Tax Distribution for such fiscal quarter shall take into
account, and be without duplication of, the prior quarterly Permitted Tax
Distributions for such fiscal year made to such Holder.  To the extent a
Holder’s actual taxable income as reported for any fiscal year exceeds the sum
of the foregoing quarterly estimates for such year, then, provided no Default
then exists, Borrower shall be entitled to make additional Permitted Tax
Distributions to such Holder, calculated in the manner provided above, based on
the actual allocations of Taxable Income to such Holder for such fiscal year and
the Rate.  If the Holder is a pass-through entity, the Rate shall be calculated
using the Rate of the Holder’s owners.

Section 9.05Sales and Leasebacks. Neither Borrower nor any Subsidiary will enter
into any arrangement, directly or indirectly, with any Person whereby Borrower
or any Subsidiary shall sell or transfer any of its Property, whether now owned
or hereafter acquired, and whereby Borrower or any Subsidiary shall then or
thereafter rent or lease as lessee such Property or any part thereof or other
Property which Borrower or any Subsidiary intends to use for substantially the
same purpose or purposes as the Property sold or transferred.

Section 9.06Nature of Business. Neither Borrower nor any Subsidiary will allow
any material change to be made in the character of its business as an
independent oil and gas exploration and production company owning and operating
Oil and Gas Properties located in the United States of America.

Section 9.07Limitation on Leases. Neither Borrower nor any Subsidiary will
create, incur, assume or permit to exist any obligation for the payment of rent
or hire of Property of any kind whatsoever (real or personal but excluding
capital leases covered by Section 9.01(b), and leases of Hydrocarbon Interests),
under leases or lease agreements which would cause the aggregate amount of all
payments made by Borrower and its Subsidiaries pursuant to all such leases or
lease agreements to exceed $1,000,000 in any period of twelve consecutive
calendar months during the life of such leases.

Section 9.08Mergers, Etc. Neither Borrower nor any 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 or assets to any other Person, except (a)
Borrower may merge into or consolidate with any other Person provided that
Borrower is the surviving entity and no Default exists or would result therefrom
and (b) Borrower and any Subsidiary may merge or consolidate, or sell, lease or
otherwise dispose of all or substantially all of its property with Borrower or
any other Subsidiary.

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Section 9.09Proceeds of Notes; Letters of Credit. Borrower will not permit the
proceeds of the Notes or Letters of Credit to be used for any purpose other than
those permitted by Section 7.07. Neither Borrower nor any Person acting on
behalf of Borrower has taken or will take any action which might cause any of
the Loan Documents to violate Regulation T, U or X or any other regulation of
the Board of Governors of the Federal Reserve System or to violate Section 7 of
the Securities Exchange Act of 1934 or any rule or regulation thereunder, in
each case as now in effect or as the same may hereinafter be in effect.

Section 9.10ERISA Compliance. Borrower will not at any time:

(a)Engage in, or permit any Subsidiary or ERISA Affiliate to engage in, any
transaction in connection with which Borrower, any Subsidiary or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to
section 502(c), (i) or (1) of ERISA or a tax imposed by Chapter 43 of Subtitle D
of the Code;

(b)Terminate, or permit any Subsidiary or ERISA Affiliate to terminate, any Plan
in a manner, or take any other action with respect to any Plan, which could
result in any liability to Borrower, any Subsidiary or any ERISA Affiliate to
the PBGC;

(c)Fail to make, or permit any Subsidiary or ERISA Affiliate to fail to make,
full payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, Borrower, a Subsidiary or any
ERISA Affiliate is required to pay as contributions thereto;

(d)Permit to exist, or allow any Subsidiary or ERISA Affiliate to permit to
exist, any accumulated funding deficiency within the meaning of Section 302 of
ERISA or section 412 of the Code, whether or not waived, with respect to any
Plan;

(e)Permit, or allow any Subsidiary or ERISA Affiliate to permit, the actuarial
present value of the benefit liabilities under any Plan maintained by Borrower,
any Subsidiary or any ERISA Affiliate which is regulated under Title IV of ERISA
to exceed the current value of the assets (computed on a plan termination basis
in accordance with Title IV of ERISA) of such Plan allocable to such benefit
liabilities. The term “actuarial present value of the benefit liabilities” has
the meaning specified in section 4041 of ERISA;

(f)Contribute to or assume an obligation to contribute to, or permit any
Subsidiary or ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan;

(g)Acquire, or permit any Subsidiary or ERISA Affiliate to acquire, an interest
in any Person that causes such Person to become an ERISA Affiliate with respect
to Borrower, any Subsidiary or any ERISA Affiliate if such Person sponsors,
maintains or contributes to, or at any time in the six-year period preceding
such acquisition has sponsored, maintained, or contributed to, (1) any
Multiemployer Plan, or (2) any other Plan that is subject to Title IV of ERISA
under which the actuarial present value of the benefit liabilities under such
Plan exceeds the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities;

(h)Incur, or permit any Subsidiary or ERISA Affiliate to incur, a liability to
or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA;

(i)Contribute to or assume an obligation to contribute to, or permit any
Subsidiary or ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability; or

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(j)Amend or permit any Subsidiary or ERISA Affiliate to amend, a Plan resulting
in an increase in current liability such that Borrower, any Subsidiary or any
ERISA Affiliate is required to provide security to such Plan under section
40.1(a)(29) of the Code.

Section 9.11Sale or Discount of Receivables. Neither Borrower nor any Subsidiary
will discount or sell (with or without recourse) any of its notes receivable or
accounts receivable.

Section 9.12Financial Covenants.

(a)Current Ratio. Borrower will not permit its ratio of (i) consolidated current
assets (including the unused Aggregate Commitments) to (ii) consolidated current
liabilities (excluding current maturities of the Notes) to be less than 1.0 to
1.0 at any time. As used in this Section, “consolidated current assets” means
assets which would, in accordance with GAAP, be included as current assets on a
consolidated balance sheet of Borrower and its Consolidated Subsidiaries, but
excluding non-cash assets under FASB ASC 815, and “consolidated current
liabilities” means liabilities which would, in accordance with GAAP, be included
as current liabilities on a consolidated balance sheet of Borrower and its
Consolidated Subsidiaries, but excluding non-cash obligations under FASB ASC
815.

(b)Leverage Ratio. Borrower will not permit its Leverage Ratio at any time
(calculated quarterly at the end of each fiscal quarter, starting with the
quarter ending September 30, 2017) to be greater than 4.0 to 1.0. For the
purposes of this Section, “Leverage Ratio” means the ratio of (i) the aggregate
Debt of Borrower and its Consolidated Subsidiaries as at the last day of the
fiscal quarter (excluding any Debt from obligations relating to non-cash losses
under FASB ASC 815 as a result of changes in the fair market value of
derivatives) to (ii) the product of EBITDAX for such fiscal quarter multiplied
by 4.

Section 9.13Sale of Properties. Borrower will not, and will not permit any
Subsidiary to Transfer any Oil and Gas Property or any interest in any Oil and
Gas Property, except for (a) cash sales of Hydrocarbons in the ordinary course
of business and (b) sales of Oil and Gas Properties with a value which, in the
aggregate, shall not exceed, during any consecutive 12 month period, 5% of the
value of the PDP Reserves in the Borrowing Base then in effect, provided, (x) no
Default exists or would result therefrom and (y) the cash or other Oil and Gas
Properties received as consideration for any such sale is equal to or greater
than the fair market value of the Oil and Gas Properties Transferred in
connection with such sale. Borrower shall provide Agent with at least 10
Business Days prior written notice of any proposed Transfer described in Section
9.13(b).

Section 9.14Environmental Matters. Neither Borrower nor any Subsidiary will
cause or permit any of its Property to be in violation of, or do anything or
permit anything to be done which will subject any such Property to any remedial
obligations under any Environmental Laws, assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions and circumstances, if
any, pertaining to such Property where such violations or remedial obligations
would have a Material Adverse Effect.

Section 9.15Transactions with Affiliates. Except as set out in Schedule 9.15,
neither Borrower nor any Subsidiary will enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of Property or the
rendering of any service, with any Affiliate unless such transactions are
otherwise permitted under this Agreement, are in the ordinary course of its
business and are upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm’s length transaction with a Person not an
Affiliate.

Section 9.16Subsidiaries. Borrower shall not and shall not permit any Subsidiary
to sell or to issue any Capital Securities of any Subsidiary, except to Borrower
or any Guarantor and except in compliance with Section 9.03. Borrower shall not,
and shall not permit any Subsidiary to, create any additional Subsidiaries,
unless (a) the creation of such Subsidiary is in preparation for the acquisition
of Oil and Gas Properties and (b) Borrower shall have notified Agent in writing
fifteen (15) days prior to the creation of such Subsidiary and provided Agent
with any information reasonably requested by Agent and the Lenders (through
Agent) concerning such Subsidiary or acquisition.  Any Subsidiary so created
shall be a U.S. Person and immediately upon its being created or acquired shall
enter into the requisite agreements as provided in Section 8.09(d). Borrower
shall not and shall cause its

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Subsidiaries to not permit any Unrestricted Subsidiary to sell or to issue any
Capital Securities of such Unrestricted Subsidiary, except to Borrower or any
Guarantor and except in compliance with Section 9.03. Borrower shall not, and
shall not permit any Subsidiary to, create any additional Unrestricted
Subsidiaries, unless Borrower shall have notified Agent in writing fifteen (15)
days prior to the creation of such Unrestricted Subsidiary and provided Agent
with any information reasonably requested by Agent and the Lenders (through
Agent) concerning such Unrestricted Subsidiary.  Any Unrestricted Subsidiary so
created shall be a U.S. Person.  Borrower shall not and shall not permit any
Subsidiary to create any Unrestricted Subsidiary, except to the extent (i) the
ownership interest of Borrower or its Subsidiary in such Unrestricted Subsidiary
is pledged as provided in Section 8.09(d), (ii) such Unrestricted Subsidiary
does not incur, create, assume, or permit to exist any Recourse Debt, (iii)
neither Borrower nor any of its Subsidiaries provides any credit support for any
obligation (contingent or otherwise) of such Unrestricted Subsidiary, (iv)
neither Borrower nor any of its Subsidiaries have any direct or indirect
obligation to maintain or preserve the financial condition of such Unrestricted
Subsidiary or cause such Unrestricted Subsidiary to achieve any specified level
of operating results, and (v) such Unrestricted Subsidiary does not own any
equity interest in Borrower or any of its Subsidiaries or hold any obligation
of, or Lien on the property of, Borrower or any of its Subsidiaries.  Borrower
shall not re-designate any Subsidiary as an Unrestricted Subsidiary.

Section 9.17Negative Pledge Agreements. Neither Borrower nor any Subsidiary will
create, incur, assume or permit to exist any contract, agreement or
understanding (other than the Loan Documents) which in any way prohibits or
restricts the granting, conveying, creation or imposition of any Lien on any of
its Property or restricts any Subsidiary from paying dividends to Borrower, or
which requires the consent of or notice to other Persons in connection
therewith.

Section 9.18Gas Imbalances, Take-or-Pay or Other Prepayments. Borrower will not
allow gas imbalances, take-or-pay or other prepayments with respect to the Oil
and Gas Properties of Borrower or any Guarantor which would require Borrower or
any Guarantor to deliver in the aggregate two percent (2%) or more of their
Hydrocarbons produced on a monthly basis from such Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor.

Section 9.19Hedging Agreements.

(a)Neither Borrower nor any Subsidiary will enter into any Hedging Agreements
with any Person other than an Approved Counterparty that is, at the time such
Hedging Agreement is entered into, a Lender or an Affiliate of a Lender (other
than a Defaulting Lender or an Affiliate of a Defaulting Lender) or a Permitted
Unsecured Counterparty.  At no time will Borrower or any Subsidiary hedge (i)
for months 1 through 48, more than 85% of anticipated monthly production from
its Proven Reserves (provided no more than 25% of anticipated monthly production
from such Proven Reserves may be attributable to PDNP Reserves or PUD Reserves)
and (ii) for months 49 through 60, more than 85% of anticipated monthly
production from its PDP Reserves.  

(b)Borrower shall not modify any trade or confirmation under a Hedging Agreement
in any material respect to the extent it adversely affects the then-current
Borrowing Base or terminate any Hedging Agreements to which it is currently a
party or subsequently becomes a party without the consent of Agent and Majority
Lenders, provided however that Borrower may terminate any such Hedging
Agreements without such consent if:

(i)such terminated Hedging Agreement is replaced by a Hedging Agreement on terms
which do not materially adversely affect the then-current Borrowing Base; or

(ii)such terminated Hedging Agreement was with a party who ceases to be a Lender
(or Lender Affiliate) and was terminated in connection with the assignment,
amendment or other transaction pursuant to which such party ceases to be a
Lender or a Lender Affiliate provided that in such event the Borrowing Base may
be redetermined upon request by Agent and the Majority Lenders (in which case
such redetermination shall not count as an unscheduled redetermination under
Section 2.08(e)).

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(c)Neither Borrower nor any Subsidiary will (i) purchase, assume, or hold a
speculative position in any commodities market or futures market or enter into
any Hedging Agreement for speculative purposes or (ii) enter into any Hedging
Agreement for reasons other than as a part of its normal business operations as
a risk management strategy to hedge against changes resulting from market
conditions related to its operations.

Section 9.20No Recourse Debt. Neither Borrower nor any Subsidiary will permit
any Unrestricted Subsidiary to incur, create, assume, or permit to exist any
Recourse Debt.

Article X.
Events of Default; Remedies

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

(a)Borrower shall default in the payment or prepayment when due of any principal
of or interest on any Loan, or any reimbursement obligation for a disbursement
made under any Letter of Credit, or any fees or other amount payable by it
hereunder or under any other Loan Document; or

(b)Borrower or any Subsidiary shall default in the payment when due of any
principal of or interest on any of its other Debt aggregating $1,000,000 or
more, or any event specified in any note, agreement, indenture or other document
evidencing or relating to any such Debt shall occur 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; or

(c)any representation, warranty or certification made or deemed made herein or
in any other Loan Document by Borrower, any Subsidiary or any Guarantor, or any
certificate furnished to any Lender or Agent pursuant to the provisions hereof
or any other Loan Document, shall prove to have been false or misleading as of
the time made or furnished in any material respect; or

(d)Borrower shall:

(i)default in the performance of any of its obligations under Article IX,
Section 8.0l(d) or Section 8.02; or

(ii)default in the performance of any of its obligations under Article VIII
(except Section 8.01(d) and Section 8.02), any other Article of this Agreement
(except Article IX) or any other Loan Document (other than the payment of
amounts due which shall be governed by Section 10.01(a)) and any of the
preceding defaults in this Subsection (d)(ii) shall continue unremedied for a
period of thirty (30) days after the earlier to occur of (i) notice thereof to
Borrower by Agent or any Lender (through Agent), or (ii) Borrower otherwise
becoming aware of such default; or

(e)any Guarantor shall default in the performance of any of its obligations
under its Guaranty Agreement or any other Loan Document to which it is a party
(other than the payment of amounts due, which shall have no grace period) and
such default shall continue unremedied for a period of thirty (30) days after
the earlier to occur of (i) notice thereof to Borrower and such Guarantor by
Agent or any Lender (through Agent), or (ii) Borrower or any Guarantor otherwise
becoming aware of such default; or

(f)Borrower shall admit in writing its inability to, or be generally unable to,
pay its debts as such debts become due; or

(g)Borrower shall (i) apply for or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee or liquidator of itself or of
all or a substantial part of its property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under the Federal

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Bankruptcy Code (as now or hereafter in effect), (iv) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, liquidation or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Federal Bankruptcy Code, or (vi) take any corporate action for the purpose of
effecting any of the foregoing; or

(h)a proceeding or case shall be commenced, without the application or consent
of Borrower, in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of Borrower of all or any substantial part of
its assets, or (iii) similar relief in respect of Borrower under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing shall
be entered and continue unstayed and in effect, for a period of 60 days; or (iv)
an order for relief against Borrower shall be entered in an involuntary case
under the Federal Bankruptcy Code; or

(i)a judgment or judgments for the payment of money in excess of $1,000,000 in
the aggregate shall be rendered by a court against Borrower or any Subsidiary
and the same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within thirty
(30) days from the date of entry thereof and Borrower or such Subsidiary shall
not, within said period of thirty (30) days, or such longer period during which
execution of the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal; or

(j)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, 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 Borrower shall so state any of the foregoing in
writing; or

(k)an event having a Material Adverse Effect shall occur; or

(l)Borrower discontinues its usual business or a Change of Control occurs; or

(m)any Guarantor takes, suffers or permits to exist any of the events or
conditions referred to in paragraphs (f), (g), (h) or (i) or if any provision of
any Guaranty Agreement related thereto shall for any reason cease to be valid
and binding on any Guarantor or if any Guarantor shall so state in writing.

Section 10.02Remedies.

(a)In the case of an Event of Default other than one referred to in clauses (f),
(g) or (h) of Section 10.01 or in clause (m) to the extent it relates to clauses
(f), (g) or (h), Agent, upon request of the Majority Lenders, shall, by notice
to Borrower, cancel the Commitments (in whole or part) and/or declare the
principal amount then outstanding of, and the accrued interest on, the Loans and
all other amounts payable by Borrower hereunder and under the Notes (including
without limitation the payment of cash collateral to secure the LC Exposure as
provided in Section 2.10(b)) to be forthwith due and payable, whereupon such
amounts shall be immediately due and payable without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other
formalities of any kind, all of which are hereby expressly waived by Borrower.
The rights under this Section 10.02(a) are in addition to all other rights and
remedies under this Agreement, any other Loan Document, at law and in equity.

(b)In the case of the occurrence of an Event of Default referred to in clauses
(f), (g) or (h) of Section 10.01 or in clause (m) to the extent it relates to
clauses (f), (g) or (h), the Commitments shall be automatically canceled and the
principal amount then outstanding of, and the accrued interest on, the Loans and
all other amounts payable by Borrower hereunder and under the Notes (including
without limitation the payment of cash collateral to secure the LC Exposure as
provided in Section 2.10(b)) shall become

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automatically immediately due and payable without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other formalities of
any kind, all of which are hereby expressly waived by Borrower.  The rights
under this Section 10.02(b) are in addition to all other rights and remedies
under this Agreement, any other Loan Document, at law and in equity.

(c)All proceeds received after maturity of the Notes, whether by acceleration or
otherwise shall be applied first to Agent for reimbursement of expenses and
indemnities provided for in this Agreement and the other Loan Documents; second
to the Lenders pro rata for fees and for reimbursement of expenses and
indemnities provided for in this Agreement and the other Loan Documents; third
pro rata to accrued interest on the Notes; fourth pro rata to principal
outstanding on the Notes and any other Obligations; fifth to serve as cash
collateral to be held by Agent to secure the LC Exposure; and any excess shall
be paid to Borrower or as otherwise required by any Governmental Requirement;
provided that, to the extent that any Excluded Swap Obligation exists, payments
or the proceeds of any Collateral provided by a Loan Party that is not a
Qualified ECP Guarantor may not be shared with an Approved Counterparty to the
extent that doing so would violate the Commodity Exchange Act.

Section 10.03Resignation of Operator. In addition to all rights and remedies
under this Agreement, any other Loan Document, at law and in equity, if any
Event of Default shall occur and Agent, or its designee or representative, shall
exercise any remedies under the Security Instruments with respect to any of the
Mortgaged Property (or Borrower or any Subsidiary shall transfer all of the
Mortgaged Property “in lieu of” foreclosure), Agent and the Lenders shall have
the right to request that any operator of any Mortgaged Property which is either
Borrower or any Affiliate of Borrower resign as operator under the joint
operating agreement applicable thereto; and no later than 60 days after receipt
by Borrower of any such request, Borrower or its Affiliate shall resign (or
cause such other party to resign) as operator of such Mortgaged Property.

Article XI.
Agent

Section 11.01Appointment and Powers; Exculpatory Provisions. Each Lender and
Issuing Bank hereby irrevocably appoints and authorizes BOKF, NA dba Bank of
Texas to act on its behalf as Agent hereunder and under the other Loan Documents
and authorizes Agent to take such actions on its behalf and to exercise such
powers as are delegated to Agent by the terms of this Agreement and the other
Loan Documents, together with such other actions and powers as are reasonably
incidental thereto.  The provisions of this Article are solely for the benefit
of Agent, the Lenders and Issuing Bank, and neither Borrower nor any other Loan
Party shall have rights as a third-party beneficiary of any of such
provisions.  The duties of Agent shall be mechanical and administrative in
nature.  Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender.  It is understood and agreed that the use
of the term “agent” herein or in any other Loan Documents (or any other similar
term) with reference to Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
law. Instead such term is used as a matter of market custom, and is intended to
create or reflect only an administrative relationship between contracting
parties.  Agent (which term as used in this sentence and in Section 11.05 and
the first sentence of Section 11.06 shall include reference to its Affiliates
and its and its Affiliates’ officers, directors, employees, attorneys,
accountants, experts and agents): (i) shall have no duties or responsibilities
except those expressly set forth in the Loan Documents, and shall not by reason
of the Loan Documents be a trustee or fiduciary for any Lender; (ii) makes no
representation or warranty to any Lender and shall not be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement, or in any certificate or other document referred to or provided
for in, or received by any of them under, this Agreement, or for the value,
validity, effectiveness, genuineness, execution, effectiveness, legality,
enforceability or sufficiency of this Agreement, any Note or any other document
referred to or provided for herein or for any failure by Borrower or any other
Person (other than Agent) to perform any of its obligations hereunder or
thereunder or for the existence, value, perfection or priority of any Collateral
or the financial or other condition of Borrower, its Subsidiaries or any other
obligor or guarantor; (iii) except pursuant to Section 11.07 shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder; and (iv) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith including its own ordinary
negligence, except for its own gross negligence or willful misconduct. Agent may
employ agents, accountants, attorneys and experts and shall

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not be responsible for the negligence or misconduct of any such agents,
accountants, attorneys or experts selected by it in good faith or any action
taken or omitted to be taken in good faith by it in accordance with the advice
of such agents, accountants, attorneys or experts. 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 Agent. Agent is authorized to release any Collateral that
is permitted to be sold or released pursuant to the terms of the Loan Documents.

Section 11.02Reliance by Agent. 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 (including any
electronic message, Internet or intranet website posting or other distribution)
believed by it to be genuine and to have been signed, sent or otherwise
authenticated by the proper Person.  Agent also may rely upon any statement made
to it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon.  In determining
compliance with any condition hereunder to the making of a Loan, or the
issuance, extension, renewal or increase of a Letter of Credit, that by its
terms must be fulfilled to the satisfaction of a Lender or Issuing Bank, Agent
may presume that such condition is satisfactory to such Lender or Issuing Bank
unless Agent shall have received notice to the contrary from such Lender or
Issuing Bank prior to the making of such Loan or the issuance of such Letter of
Credit.  In connection with taking any action pursuant to this Agreement, Agent
may consult with legal counsel (who may be counsel for 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, and such legal counsel, accountants and/or
experts shall be afforded all of the indemnities and other protections afforded
to Agent pursuant to Article XI.

Section 11.03Default. Agent shall not be deemed to have knowledge of the
occurrence of a Default unless Agent has received notice from a Lender, Issuing
Bank or Borrower specifying such Default and stating that such notice is a
“Notice of Default.”  Agent shall take such action with respect to such Default
or Event of Default as may be requested by the Majority Lenders (or all or such
other portion of the Lenders as shall be prescribed by this Agreement) in
accordance with the terms hereof.  Unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable or in the best interests of the Lenders.

Section 11.04Rights as a Lender. The Person serving as Agent hereunder shall
have the same rights and powers under the Loans Documents as any other Lender
and may exercise or refrains from exercising the same as though it were not
acting as Agent, and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as Agent hereunder in its individual capacity. Such Person and its
Affiliates may accept deposits from, lend money to, invest in, own securities
of, act as the financial advisor or in any other advisory capacity for, and
generally engage in any kind of business with, Borrower or any Subsidiary or
other Affiliate thereof as if such Person were not Agent hereunder and without
any duty to account therefor to the Lenders, and such Person and its Affiliates
may accept fees and other consideration from Borrower for services in connection
with this Agreement or otherwise without having to account for the same to the
Lenders.

Section 11.05INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY AGENT AND ISSUING
BANK RATABLY IN ACCORDANCE WITH THEIR PERCENTAGE SHARES FOR THE INDEMNITY
MATTERS AS DESCRIBED IN SECTION 12.03 TO THE EXTENT NOT INDEMNIFIED OR
REIMBURSED BY BORROWER UNDER SECTION 12.03, BUT WITHOUT LIMITING THE OBLIGATIONS
OF BORROWER UNDER SAID SECTION 12.03 AND FOR ANY AND ALL OTHER LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES OR DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST AGENT OR ISSUING BANK IN ANY WAY RELATING TO
OR ARISING OUT OF: (I) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OTHER
DOCUMENTS CONTEMPLATED BY OR REFERRED TO HEREIN OR THE TRANSACTIONS CONTEMPLATED
HEREBY, BUT EXCLUDING, UNLESS A DEFAULT HAS OCCURRED AND IS CONTINUING, NORMAL
ADMINISTRATIVE COSTS AND EXPENSES INCIDENT TO THE PERFORMANCE OF ITS AGENCY
DUTIES HEREUNDER OR (II) THE ENFORCEMENT OF ANY OF THE TERMS OF THIS AGREEMENT,
ANY LOAN DOCUMENT OR OF ANY SUCH OTHER DOCUMENTS;

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WHETHER OR NOT ANY OF THE FOREGOING SPECIFIED IN THIS SECTION 11.05 ARISES FROM
THE SOLE OR CONCURRENT NEGLIGENCE OF AGENT OR ISSUING BANK, PROVIDED THAT NO
LENDER SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AGENT.

Section 11.06Non-Reliance on Agent and other Lenders. Each Lender and Issuing
Bank acknowledges and agrees that it has, independently and without reliance on
Agent or any other Lender or any of their Related Parties and based on such
documents and information as it has deemed appropriate, made its own credit
analysis of Borrower and its decision to enter into this Agreement, and that it
will, independently and without reliance upon Agent or any other Lender or any
of their Related Parties, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under or based upon this Agreement, any
other Loan Document or any related agreement or any document furnished hereunder
or thereunder. Agent shall not be required to keep itself informed as to the
performance or observance by Borrower of this Agreement, the Notes, any other
Loan Document or any other document referred to or provided for herein or to
inspect the properties or books of Borrower. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by Agent hereunder, Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of Borrower (or any of its Affiliates) which may
come into the possession of Agent or any of its Affiliates. In this regard, each
Lender acknowledges that Haynes and Boone, LLP is acting in this transaction as
special counsel to Agent only. Each Lender 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 11.07Action by Agent; Delegation of Duties. Agent shall not be liable
for any action taken or not taken by it (i) with the consent or at the request
of the Majority Lenders (or such other number or percentage of the Lenders as
shall be necessary, or as Agent shall believe in good faith shall be necessary,
under the circumstances as provided in Section 10.02 and Section 12.04 ), and
(ii) in the absence of its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction by final and nonappealable
judgment. The instructions of the Majority Lenders (or all of the Lenders as
expressly required by Section 12.04) and any action taken or failure to act
pursuant thereto by Agent shall be binding on all of the Lenders. If a Default
has occurred and is continuing, Agent shall take such action with respect to
such Default as shall be directed by the Majority Lenders (or all of the Lenders
as required by Section 12.04) in the written instructions (with indemnities)
described in this Section 11.07, provided that, unless and until Agent shall
have received such directions, 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 Agent be required to take any action which exposes Agent to
personal liability or which is contrary to this Agreement and the other Loan
Documents or applicable law.  Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or
through any one or more sub‑agents appointed by Agent.  Agent and any such
sub‑agent may perform any and all of its duties and exercise its rights and
powers by or through their respective Related Parties.  The exculpatory
provisions of this Article shall apply to any such sub‑agent and to the Related
Parties of Agent and any such sub‑agent, and shall apply to their respective
activities in connection with the syndication of the credit facility created by
this Agreement, as well as activities as Agent.  Agent shall not be responsible
for the negligence or misconduct of any sub-agents except to the extent that a
court of competent jurisdiction determines in a final and nonappealable judgment
that Agent acted with gross negligence or willful misconduct in the selection of
such sub‑agents.

Section 11.08Resignation of Agent.

(a)Agent may at any time give notice of its resignation to the Lenders, Issuing
Bank and Borrower.  Upon receipt of any such notice of resignation, the Majority
Lenders shall have the right, in consultation with Borrower, to appoint a
successor.  If no such successor shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation (or such earlier day as shall be
agreed by the Majority Lenders) (the “Resignation Effective Date”), then the
retiring Agent may (but shall not be obligated to), on behalf of the Lenders and
Issuing Bank, appoint a successor Agent.  Whether or not a successor has been
appointed, such resignation shall become effective in accordance with such
notice on the Resignation Effective Date.

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(b)If the Person serving as Agent is a Defaulting Lender pursuant to clause (d)
of the definition thereof, the Majority Lenders may, to the extent permitted by
applicable law, by notice in writing to Borrower and such Person remove such
Person as Agent and, in consultation with Borrower, appoint a successor. If no
such successor shall have been so appointed by the Majority Lenders and shall
have accepted such appointment within 30 days (or such earlier day as shall be
agreed by the Majority Lenders) (the “Removal Effective Date”), then such
removal shall nonetheless become effective in accordance with such notice on the
Removal Effective Date.

(c)With effect from the Resignation Effective Date or the Removal Effective Date
(as applicable) (1) the retiring or removed Agent shall be discharged from its
duties and obligations hereunder and under the other Loan Documents (except that
in the case of any collateral security held by Agent on behalf of the Lenders or
Issuing Bank under any of the Loan Documents, the retiring or removed Agent
shall continue to hold such collateral security until such time as a successor
Agent is appointed) and (2) except for any indemnity payments owed to the
retiring or removed Agent, all payments, communications and determinations
provided to be made by, to or through Agent shall instead be made by or to each
Lender and Issuing Bank directly, until such time, if any, as the Majority
Lenders appoint a successor Agent as provided for above.  Upon the acceptance of
a successor’s appointment as Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring or removed Agent (other than any rights to indemnity payments owed to
the retiring or removed Agent), and the retiring or removed Agent shall be
discharged from all of its duties and obligations hereunder or under the other
Loan Documents.  The fees payable by Borrower to a successor Agent shall be the
same as those payable to its predecessor unless otherwise agreed between
Borrower and such successor.  After the retiring or removed Agent’s resignation
or removal hereunder and under the other Loan Documents, the provisions of this
Article and Section 12.03 shall continue in effect for the benefit of such
retiring or removed 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 the
retiring or removed Agent was acting as Agent.

Section 11.09Authorization to Execute other Loan Documents, Releases, Etc. Each
Lender (on behalf of itself and its Affiliates that are Approved Counterparties)
and Issuing Bank irrevocably authorize Agent, at its option and in its
discretion:  

(a)to execute in its capacity as Agent all Loan Documents to which Agent is a
party and to take such actions as Agent and to exercise such powers under the
Loan Documents as are delegated to Agent by the terms thereof, together with all
such powers as are reasonably incidental thereto;

(b)to release any Lien on any property granted to or held by Agent under any
Loan Document (x) upon termination of all Commitments and payment in full of all
Obligations (other than contingent indemnification obligations) and the
expiration or termination of all Letters of Credit (other than Letters of Credit
as to which other arrangements satisfactory to Agent and Issuing Bank shall have
been made), (y) that is sold or otherwise disposed of or to be sold or otherwise
disposed of as part of or in connection with any sale or other disposition
permitted under the Loan Documents, or (z) subject to Section 12.04,  if
approved, authorized or ratified in writing by the Majority Lenders;

(c)subject to the terms of Section 12.04, to release any Guarantor from its
obligations under the Guaranty if such Person ceases to be a Subsidiary as a
result of a transaction permitted under the Loan Documents; and

(d)subject to the terms of Section 12.04 and to the terms of the other Loan
Documents, amend, modify, or waive any provisions of this Agreement or the other
Loan Documents on behalf of Lenders.

Upon request by Agent at any time, the Majority Lenders will confirm in writing
Agent’s authority to release its interest in particular types or items of
property, or to release any Guarantor from its obligations under the Guaranty
pursuant to this Section 11.09.  Agent shall not be responsible for or have a
duty to ascertain or inquire into any representation or warranty regarding the
existence, value or collectability of the Collateral, the existence,

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priority or perfection of Agent’s Lien thereon, or any certificate prepared by
any Loan Party in connection therewith, nor shall Agent be responsible or liable
to the Lenders for any failure to monitor or maintain any portion of the
Collateral.

Section 11.10Agent May File Proofs of Claim.  In case of the pendency of any
proceeding under any Debtor Relief Law or any other judicial proceeding relative
to any Loan Party, Agent (irrespective of whether the principal of any Loan or
Letter of Credit Obligation shall then be due and payable as herein expressed or
by declaration or otherwise and irrespective of whether Agent shall have made
any demand on Borrower) shall be entitled and empowered (but not obligated) by
intervention in such proceeding or otherwise:

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

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

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

Section 11.11Agency for Perfection.  Agent and each Lender hereby appoint each
other Lender as agent for the purpose of perfecting Agent’s security interest in
assets which, in accordance with the Uniform Commercial Code in any applicable
jurisdiction, can be perfected by possession or control.  Should any Lender
(other than Agent) obtain possession or control of any such assets, such Lender
shall notify Agent thereof, and, promptly upon Agent’s request therefor, shall
deliver such assets to Agent or in accordance with Agent’s instructions or
transfer control to Agent in accordance with Agent’s instructions.  Each Lender
agrees that it will not have any right individually to enforce or seek to
enforce any Security Instrument or to realize upon any Collateral for the
Obligations unless instructed to do so by Agent, it being understood and agreed
that such rights and remedies may be exercised only by Agent.

Section 11.12Right to Perform, Preserve and Protect.  If any Loan Party fails to
perform any obligation hereunder or under any other Loan Document Agent itself
may, but shall not be obligated to, cause such obligation to be performed at
Borrower’s expense.  Agent is further authorized by Borrower and the Lenders to
make expenditures from time to time which Agent, in its reasonable business
judgment, deems necessary or desirable to (a) preserve or protect the business
conducted by Borrower, the Collateral, or any portion thereof and/or (b) enhance
the likelihood of, or maximize the amount of, repayment of the Loans and other
Obligations.  Borrower hereby agrees to reimburse Agent on demand for any and
all costs, liabilities and obligations incurred by Agent pursuant to this
Section 11.12.  Each Lender hereby agrees to indemnify Agent upon demand for any
and all costs, liabilities and obligations incurred by Agent pursuant to this
Section 11.12.

Section 11.13Additional Titled Agents.  Except for rights and powers, if any,
expressly reserved under this Agreement to any bookrunner, arranger or to any
titled agent named on the cover page of this Agreement, other than Agent
(collectively, the “Additional Titled Agents”), and except for obligations,
liabilities, duties and responsibilities, if any, expressly assumed under this
Agreement by any Additional Titled Agent, no Additional Titled Agent, in such
capacity, has any rights, powers, liabilities, duties or responsibilities
hereunder or under any of the other Loan Documents.  Without limiting the
foregoing, no Additional Titled Agent shall have nor be deemed to have a
fiduciary relationship with any Lender.  At any time that any Lender serving as
an Additional Titled Agent

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shall have transferred to any other Person (other than any Affiliates) all of
its interests in the Loans and in the Commitment, such Lender shall be deemed to
have concurrently resigned as such Additional Titled Agent.

Article XII.
Miscellaneous

Section 12.01Waiver. No failure on the past of Agent or any Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any 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 remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.

Section 12.02Notices. All notices and other communications provided for herein
and in the other Loan Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement or the other Loan
Documents) shall be given or made in writing by telecopier, e-mail, courier or
U.S. Mail and telecopied, e-mailed, delivered or mailed to the intended
recipient according to the “Notice Information” specified below its name on the
signature pages hereof or in the Loan Documents or, as to any party, at such
other address as shall be designated by such party in a notice to each other
party. Except as otherwise provided in this Agreement or in the other Loan
Documents, all such communications shall be deemed to have been duly given (i)
when transmitted before 3:00 p.m. Houston time on a Business Day (otherwise on
the next succeeding Business Day) by telecopier or e-mail and evidence or
confirmation of receipt is obtained, (ii) when delivered, if personally
delivered or (iii) in the case of a mailed notice, three (3) Business Days after
the date deposited in the mails, postage prepaid, and in each case given or
addressed as aforesaid.

Section 12.03Payment of Expenses, Indemnities. Etc.

(a)Borrower agrees:

(i)whether or not the transactions hereby contemplated are consummated, to pay
all reasonable and documented expenses of Agent in the administration (both
before and after the execution hereof and including advice of counsel as to the
rights and duties of Agent and the Lenders with respect thereto) of, and in
connection with the negotiation, syndication, investigation, preparation,
execution and delivery of, recording or filing of, preservation of rights under,
enforcement of, and refinancing, renegotiation or restructuring of, the Loan
Documents and any amendment, waiver or consent relating thereto (including,
without limitation, reasonable and documented travel, photocopy, mailing,
courier, telephone and other similar expenses of Agent, the cost of
environmental audits, surveys and appraisals at reasonable intervals, the
reasonable fees and disbursements of counsel and other outside consultants for
Agent and, in the case of enforcement, the reasonable fees and disbursements of
counsel for Agent and any of the Lenders); and promptly reimburse Agent for all
reasonable and documented amounts expended, advanced or incurred by Agent or the
Lenders to satisfy any obligation of Borrower under this Agreement or any other
Loan Document, including without limitation, all costs and expenses of
foreclosure;

(ii)TO INDEMNIFY AGENT, ISSUING BANK AND EACH LENDER AND EACH OF THEIR
AFFILIATES AND EACH OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES,
AGENTS, ATTORNEYS, ACCOUNTANTS AND EXPERTS (“INDEMNIFIED PARTIES”) FROM, HOLD
EACH OF THEM HARMLESS AGAINST AND PROMPTLY UPON DEMAND PAY OR REIMBURSE EACH OF
THEM FOR, THE INDEMNITY MATTERS WHICH MAY BE INCURRED BY OR ASSERTED AGAINST OR
INVOLVE ANY OF THEM (WHETHER OR NOT ANY OF THEM IS DESIGNATED A PARTY THERETO)
AS A RESULT OF, ARISING OUT OF OR IN ANY WAY RELATED TO (I) ANY ACTUAL OR
PROPOSED USE BY BORROWER OF THE PROCEEDS OF ANY OF THE LOANS OR LETTERS OF
CREDIT, (II) THE EXECUTION, DELIVERY AND PERFORMANCE OF THE LOAN DOCUMENTS,
(III) THE OPERATIONS OF THE BUSINESS OF BORROWER AND ITS SUBSIDIARIE(S), (IV)
THE FAILURE OF

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BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, OR
WITH ANY GOVERNMENTAL REQUIREMENT, (V) ANY INACCURACY OF ANY REPRESENTATION OR
ANY BREACH OF ANY WARRANTY OF BORROWER OR ANY GUARANTORS SET FORTH IN ANY OF THE
LOAN DOCUMENTS, (VI) THE ISSUANCE, EXECUTION AND DELIVERY OR TRANSFER OF OR
PAYMENT OR FAILURE TO PAY UNDER ANY LETTER OF CREDIT, (VII) THE PAYMENT OF A
DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE,
NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE MANUALLY EXECUTED DRAFT(S)
AND CERTIFICATION(S), (VIII) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO
RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS OR (IX) ANY
OTHER ASPECT OF THE LOAN DOCUMENTS INCLUDING, WITHOUT LIMITATION, THE REASONABLE
FEES AND DISBURSEMENTS OF COUNSEL AND ALL OTHER EXPENSES INCURRED IN CONNECTION
WITH INVESTIGATING, DEFENDING OR PREPARING TO DEFEND ANY SUCH ACTION, SUIT,
PROCEEDING (INCLUDING ANY INVESTIGATIONS, LITIGATION OR INQUIRIES) OR CLAIM AND
INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE ORDINARY NEGLIGENCE OF
ANY INDEMNIFIED PARTY, BUT EXCLUDING ALL INDEMNITY MATTERS ARISING SOLELY BY
REASON OF CLAIMS BETWEEN THE LENDERS OR ANY LENDER AND AGENT OR A LENDER’S
SHAREHOLDERS AGAINST AGENT OR LENDER OR BY REASON OF THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT ON THE PART OF THE INDEMNIFIED PARTY; AND

(iii)TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE INDEMNIFIED PARTIES
FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, COST RECOVERY ACTIONS,
ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND LIABILITIES TO WHICH ANY SUCH
PERSON MAY BECOME SUBJECT (I) UNDER ANY ENVIRONMENTAL LAW APPLICABLE TO BORROWER
OR ANY SUBSIDIARY OR ANY OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE
TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (II)
AS A RESULT OF THE BREACH OR NON-COMPLIANCE BY BORROWER OR ANY SUBSIDIARY WITH
ANY ENVIRONMENTAL LAW APPLICABLE TO BORROWER OR ANY SUBSIDIARY, (III) DUE TO
PAST OWNERSHIP BY 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, (IV) THE PRESENCE, USE, RELEASE,
STORAGE, TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES ON OR AT ANY OF THEIR
PROPERTIES OWNED OR OPERATED BY BORROWER OR ANY SUBSIDIARY OR (V) ANY OTHER
ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS
PROVIDED, HOWEVER, NO INDEMNITY SHALL BE AFFORDED UNDER THIS SECTION
12.03(A)(III) IN RESPECT OF ANY PROPERTY FOR ANY OCCURRENCE ARISING FROM THE
ACTS OR OMISSIONS OF 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).

(b)No Indemnified Party may settle any claim to be indemnified without the
consent of the indemnitor, such consent not to be unreasonably withheld;
provided, that the indemnitor may not reasonably withhold consent to any
settlement that an Indemnified Party proposes, if the indemnitor does not have
the financial ability to pay all its obligations outstanding and asserted
against the indemnitor at that time, including the maximum potential claims
against the Indemnified Party to be indemnified pursuant to this Section 12.03.

(c)In the case of any indemnification hereunder, Agent or Lender, as appropriate
shall give notice to Borrower of any such claim or demand being made against the
Indemnified Party and Borrower

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shall have the non-exclusive right to join in the defense against any such claim
or demand provided that if Borrower provides a defense, the Indemnified Party
shall bear its own cost of defense unless there is a conflict between Borrower
and such Indemnified Party.

(d)THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES
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
INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON
ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO THE EXTENT THAT AN INDEMNIFIED
PARTY IS FOUND TO HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF INDEMNIFICATION SHALL CONTINUE BUT
SHALL ONLY EXTEND TO THE PORTION OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY
REASON OF EVENTS OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
INDEMNIFIED PARTY.

(e)To the fullest extent permitted by applicable law, Borrower shall not assert,
and hereby waives, any claim against any Indemnified Party, 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, the transactions contemplated hereby or thereby, any Loan
or Letter of Credit, or the use of the proceeds thereof.  No Indemnified Party
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.

(f)Borrower’s obligations under this Section 12.03 shall survive any termination
of this Agreement and the payment of the Notes and shall continue thereafter in
full force and effect.

(g)Borrower shall pay any amounts due under this Section 12.03 within thirty
(30) days of the receipt by Borrower of notice of the amount due.

Section 12.04Amendments, Etc. Any provision of this Agreement or any other Loan
Document may be amended, modified or waived with Borrower’s and the Majority
Lenders’ prior written consent; provided that (i) no amendment, modification or
waiver which extends the final maturity of the Loans, extends the two (2)
Business Day deadline set forth in Section 2.10(a) or Section 2.10(d), postpones
the scheduled date of any prepayment required under the Loan Documents,
increases the Aggregate Maximum Credit Amounts, increases the Borrowing Base,
reduces the Monthly Reduction Amount or modifies Section 2.08 in a manner that
results in an increase in the Borrowing Base or reduction in the Monthly
Reduction Amount, forgives the principal amount of any Obligations outstanding
under this Agreement, releases any guarantor of any Obligations or releases all
or substantially all of the Collateral, reduces the interest rate applicable to
the Loans or the fees payable to the Lenders, affects Section 2.03(a), Section
4.02 or Section 4.05 in a manner that would affect the pro-rata sharing of
payments required thereby, Section 10.2(c), this Section 12.04 or Section
12.06(a) or modifies the definitions of “Majority Lenders” or “Required Lenders”
or any other provision that specifies the number or percentage of Lenders
required to waive, amend or modify rights under any Loan Document or make any
determination or grant any consent under any Loan Documents shall be effective
without consent of all Lenders; (ii) no amendment, modification or waiver which
(x) reaffirms or reduces the Borrowing Base, (y) reaffirms or increases the
Monthly Reduction Amount, or (z) modifies Section 2.08 in a manner that results
in a reaffirmation or reduction of the Borrowing Base or reaffirmation or
increase in the Monthly Reduction Amount shall be effective without consent of
the Required Lenders, (iii) no amendment, modification or waiver which increases
the Commitment or Maximum Credit Amount of any Lender shall be effective without
the consent of such Lender; and (iv) no amendment, modification or waiver which
modifies the rights, duties or obligations of Agent shall be effective without
the consent of Agent.

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Section 12.05Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

Section 12.06Assignments and Participations.

(a)Successors and Assigns Generally.  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, except that neither Borrower nor any
other Loan Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of Agent and each
Lender, and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an assignee in accordance with the
provisions of paragraph (b) of this Section, (ii) by way of participation in
accordance with the provisions of paragraph (d) of this Section, or (iii) by way
of pledge or assignment of a security interest subject to the restrictions of
paragraph (f) of this Section (and any other attempted assignment or transfer by
any party hereto shall be null and void).  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, Participants
to the extent provided in paragraph (d) of this Section and, to the extent
expressly contemplated hereby, the Related Parties of each of Agent and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

(b)Assignments by Lenders.  Any Lender may at any time 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); provided that any such assignment shall be subject to the following
conditions:

(i)Minimum Amounts.

(1)in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and/or the Loans at the time owing to it or contemporaneous
assignments to related Approved Funds that equal at least the amount specified
in paragraph (b)(i)(2) of this Section in the aggregate or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum
amount need be assigned; and

(2)in any case not described in paragraph (b)(i)(1) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the applicable Commitment is not then in effect,
the principal outstanding balance of the Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment with respect
to such assignment is delivered to Agent or, if “Trade Date” is specified in the
Assignment, as of the Trade Date) shall not be less than $5,000,000, unless each
of Agent and, so long as no Default has occurred and is continuing, Borrower
otherwise consents.

(ii)Proportionate Amounts.  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 with respect to the Loan or the Commitment
assigned.

(iii)Required Consents.  No consent shall be required for any assignment except
to the extent required by paragraph (b)(i)(2) of this Section and, in addition:

(1)the consent of Borrower (such consent not to be unreasonably withheld or
delayed) shall be required unless (x) a Default has occurred and is continuing
at the time of such assignment, or (y) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund; provided that Borrower shall be
deemed to have consented to any such assignment unless it shall object thereto
by written notice to Agent within five (5) Business Days after having received
notice thereof;

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(2)the consent of Agent (such consent not to be unreasonably withheld or
delayed) shall be required if such assignment is to a Person that is not a
Lender, an Affiliate of such Lender or an Approved Fund with respect to such
Lender; and

(3)the consent of Issuing Bank shall be required (such consent not to be
unreasonably withheld or delayed) shall be required if such assignment is to a
Person that is not a Lender, an Affiliate of such Lender or an Approved Fund
with respect to such Lender.

(iv)Assignment and Assumption.  The parties to each assignment shall execute and
deliver to Agent an Assignment, together with a processing and recordation fee
of $3,500; provided that Agent may, in its sole discretion, elect to waive such
processing and recordation fee in the case of any assignment.

(v)No Assignment to Certain Persons.  No such assignment shall be made to (1)
Borrower or any of Borrower’s Affiliates, Subsidiaries or Unrestricted
Subsidiaries or (2) any Defaulting Lender or any of its Subsidiaries, or any
Person who, upon becoming a Lender hereunder, would constitute any of the
foregoing Persons described in this clause (2).

(vi)No Assignment to Natural Persons.  No such assignment shall be made to a
natural Person.

(vii)Certain Additional Payments.  In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment shall be
effective unless and until, in addition to the other conditions thereto set
forth herein, the parties to the assignment shall make such additional payments
to Agent in an aggregate amount sufficient, upon distribution thereof as
appropriate (which may be outright payment, purchases by the assignee of
participations or subparticipations, or other compensating actions, including
funding, with the consent of Borrower and Agent, the applicable pro rata share
of Loans previously requested but not funded by the Defaulting Lender, to each
of which the applicable assignee and assignor hereby irrevocably consent), to
(1) pay and satisfy in full all payment liabilities then owed by such Defaulting
Lender to Agent, Issuing Bank and each other Lender hereunder (and interest
accrued thereon), and (2) acquire (and fund as appropriate) its full pro rata
share of all Loans and participations in Letters of Credit in accordance with
its Percentage Share.  Notwithstanding the foregoing, in the event that any
assignment of rights and obligations of any Defaulting Lender hereunder shall
become effective under applicable law without compliance with the provisions of
this paragraph, then the assignee of such interest shall be deemed to be a
Defaulting Lender for all purposes of this Agreement until such compliance
occurs.

Subject to acceptance and recording thereof by Agent pursuant to paragraph (c)
of this Section, from and after the effective date specified in each Assignment,
the assignee thereunder shall be a party to this Agreement and, to the extent of
the interest assigned by such Assignment, 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, be released from its
obligations under this Agreement (and, in the case of an Assignment covering all
of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 4.06, 5.01, 5.05 and 12.03 with respect to facts and
circumstances occurring prior to the effective date of such assignment;
provided, that except to the extent otherwise expressly agreed by the affected
parties, no assignment by a Defaulting Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lender’s having
been a Defaulting Lender.  Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (d) of
this Section.

(c)Agent, acting solely for this purpose as an agent of Borrower, shall maintain
a copy of each Assignment delivered to it and a register for the recordation of
the names and addresses of the

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Lenders, and the Commitments of, and principal amounts (and stated interest) of
the Loans owing to, each Lender pursuant to the terms hereof from time to time
(the “Register”).  The entries in the Register shall be conclusive absent
manifest error, and Borrower, Agent and the Lenders shall treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement.  The Register shall be available
for inspection by Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

(d)Participations.  Any Lender may at any time, without the consent of, or
notice to, Borrower or Agent, sell participations to any Person (other than a
natural Person or Borrower or any of Borrower’s Affiliates or Subsidiaries)
(each, a “Participant”) in all or a portion of such Lender’s rights and/or
obligations under this Agreement (including all or a portion of its Commitment
and/or the Loans owing to it); provided that (i) such Lender’s obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
and (iii) Borrower, Agent, Issuing Bank and the Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.  For the avoidance of doubt, each Lender shall
be responsible for the indemnity under Section 11.05 (d) with respect to any
payments made by such Lender to its Participant(s).

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 that requires the consent of all
Lenders that affects such Participant.  Borrower agrees that each Participant
shall be entitled to the benefits of Sections 4.06, 5.01 and 5.05 (subject to
the requirements and limitations therein, including the requirements under
Section 4.06 (it being understood that the documentation required under Section
4.06 shall be delivered to the participating Lender)) to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section; provided that such Participant (A) agrees to be
subject to the provisions of Section 5.06 as if it were an assignee under
paragraph (b) of this Section; and (B) shall not be entitled to receive any
greater payment under Sections 4.06, 5.01 and 5.05, with respect to any
participation, than its participating Lender would have been entitled to
receive, except to the extent such entitlement to receive a greater payment
results from a Regulatory Change that occurs after the Participant acquired the
applicable participation.  Each Lender that sells a participation agrees, at
Borrower's request and expense, to use reasonable efforts to cooperate with
Borrower to effectuate the provisions of Section 5.06 with respect to any
Participant.  To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 4.05(a) as though it were a Lender; provided
that such Participant agrees to be subject to Section 4.05(b) as though it were
a Lender.  Each Lender that sells a participation shall, acting solely for this
purpose as an agent of 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, Agent (in its capacity as Agent) shall
have no responsibility for maintaining a Participant Register.

(e)Certain Pledges.  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; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

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(f)Notwithstanding any other provisions of this Section 12.06, 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 Borrower to file a registration statement with the SEC or to
qualify the Loans under the “Blue Sky” laws of any state.

Section 12.07Defaulting Lenders.

(a)Defaulting Lender Adjustments.  Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then to
the extent permitted by applicable law the following provisions shall apply for
so long as such Lender is a Defaulting Lender:

(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 Required
Lenders.

(ii)Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by Agent for the account of such Defaulting Lender
(whether voluntary or mandatory, at maturity, pursuant to Article X or
otherwise) or received by Agent from a Defaulting Lender pursuant to Section
4.05(b) shall be applied at such time or times as may be determined by Agent as
follows: first, to the payment of any amounts owing by such Defaulting Lender to
Agent hereunder; second, to the payment on a pro rata basis of any amounts owing
by such Defaulting Lender to Issuing Bank hereunder; third, to Cash
Collateralize Issuing Banks’ Fronting Exposure with respect to such Defaulting
Lender in accordance with Section 12.07(e); fourth, as 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 Agent; fifth, if so determined
by Agent and 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 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 12.07(e); sixth, to the payment of any
amounts owing to Agent, the Lenders or Issuing Bank as a result of any judgment
of a court of competent jurisdiction obtained by Agent, any Lender or 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 Borrower as a
result of any judgment of a court of competent jurisdiction obtained by Borrower
against such Defaulting Lender as a result of such Defaulting Lender's breach of
its obligations 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 disbursements
under Letters of Credit 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 Letter of Credit disbursements owed to, all Non-Defaulting Lenders
on a pro rata basis prior to being applied to the payment of any Loans of, or
Letter of Credit disbursements owed to, such Defaulting Lender until such time
as all Loans and funded and unfunded participations in Letters of Credit are
held by the Lenders pro rata in accordance with the Commitments without giving
effect to Section 12.07(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
12.07(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender,
and each Lender irrevocably consents hereto.

(iii)Certain Fees. No Defaulting Lender shall be entitled to receive any unused
Commitment fee pursuant to Section 2.04(a) for any period during which that
Lender is a Defaulting Lender (and Borrower shall not be required to pay any
such fee that otherwise would have been required to have been paid to that
Defaulting Lender);

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(iv)Reallocation of Participations to Reduce Fronting Exposure.  All or any part
of such Defaulting Lender’s participation in Letters of Credit shall be
reallocated among the Non-Defaulting Lenders in accordance with their respective
Percentage Share at such time (calculated without regard to such Defaulting
Lender’s Commitment) but only to the extent that (x) the conditions set forth in
Section 6.02 are satisfied at the time of such reallocation (and, unless
Borrower shall have otherwise notified Agent at such time, Borrower shall be
deemed to have represented and warranted that such conditions are satisfied at
such time), and (y) such reallocation does not cause the aggregate Loans and LC
Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s
Commitment.  Subject to Section 12.18, 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.

(v)Cash Collateral.  If the reallocation described in clause (iv) above cannot,
or can only partially, be effected, Borrower shall, without prejudice to any
right or remedy available to it hereunder or under law, Cash Collateralize
Issuing Bank’s Fronting Exposure in accordance with the procedures set forth in
Section 12.07(e).

(b)Defaulting Lender Cure. If Borrower, Agent and Issuing Bank agree in writing
that a Lender is no longer a Defaulting Lender, 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 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
12.07(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 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, 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.

(d)Replacement of Defaulting Lenders.  If any Lender becomes a Defaulting
Lender, then Borrower may, at its sole expense and effort, upon notice to such
Lender and Agent, require such Lender to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in Section 12.06),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) Borrower shall have received
the prior written consent of Agent (and if any Commitment is being assigned,
Issuing Bank), which consent shall not unreasonably be withheld, and (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in disbursements under Letters of
Credit, 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 Borrower (in the case of all other amounts).  A
Defaulting Lender shall not be required to make any such assignment and
delegation if, prior thereto, the circumstances entitling Borrower to require
such assignment and delegation cease to apply.

(e)Cash Collateral.  At any time that there shall exist a Defaulting Lender,
within one Business Day following the written request of Agent or Issuing Bank
(with a copy to Agent) Borrower shall Cash Collateralize Issuing Bank’s Fronting
Exposure with respect to such Defaulting Lender (determined after giving effect
to Section 12.07(a)(iv) and any Cash Collateral provided by such Defaulting
Lender) in an amount not less than the Minimum Collateral Amount.

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(i)Grant of Security Interest.  Borrower, and to the extent provided by any
Defaulting Lender, such Defaulting Lender, hereby grants to Agent, for the
benefit of 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 (ii) below.  If at any time Agent determines that Cash
Collateral is subject to any right or claim of any Person other than Agent and
Issuing Bank as herein provided, or that the total amount of such Cash
Collateral is less than the Minimum Collateral Amount, Borrower will, promptly
upon demand by Agent, pay or provide to Agent additional Cash Collateral in an
amount sufficient to eliminate such deficiency (after giving effect to any Cash
Collateral provided by the Defaulting Lender).

(ii)Application.  Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under this Section 12.07 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.

(iii)Termination of Requirement.  Cash Collateral (or the appropriate portion
thereof) provided to reduce Issuing Bank’s Fronting Exposure shall no longer be
required to be held as Cash Collateral pursuant to this Section 12.07(e)
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 Agent and Issuing Bank that there exists excess Cash
Collateral; provided that, subject to Section 12.07 the Person providing Cash
Collateral and each 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 Borrower,
such Cash Collateral shall remain subject to the security interest granted
pursuant to the Loan Documents.  

Section 12.08Invalidity. In the event that any one or more of the provisions
contained in any of the Loan Documents, the Letters of Credit or the Letter of
Credit Agreements shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of the Notes, this Agreement or any other
Loan Document.

Section 12.09Counterparts; Delivery of Electronic Signature Page. This Agreement
may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties hereto may execute
this Agreement by signing any such counterpart. Delivery of an executed
signature page of this Agreement and the other Loan Documents by telecopier,
email or other electronic means shall be effective as delivery of an original
executed signature page of this Agreement and such other Loan Documents and
shall be binding on the parties hereto and thereto. Any party delivering an
executed counterpart signature page of this Agreement and any other Loan
Documents by electronic means shall also physically deliver original executed
counterpart signature pages of this Agreement and such other Loan Documents in
the manner and quantity as requested by Agent or Agent’s counsel, but the
failure to physically deliver such original executed counterpart signature pages
shall not affect the validity, enforceability, and binding effect of this
Agreement or such other Loan Documents.

Section 12.10Survival. The obligations of the parties under Section 4.06,
Article V, and Sections 11.05 and 12.03 shall survive the repayment of the Loans
and the termination of the Commitments. 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 Agent’s and the Lenders’ Liens, security interests, rights,
powers and remedies under this Agreement and each of the other Loan Documents
shall continue in full force and effect. In such event, each Loan Document shall
be automatically reinstated and

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Borrower shall take such action as may be reasonably requested by Agent and the
Lenders to effect such reinstatement.

Section 12.11Captions. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.

Section 12.12NO ORAL AGREEMENTS. THE LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT
AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS AND
UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND
THEREOF. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

Section 12.13GOVERNING LAW; SUBMISSION TO JURISDICTION.

(a)THIS AGREEMENT, EACH NOTE AND EACH OTHER LOAN DOCUMENT, AND ALL MATTERS
RELATING HERETO OR THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT
LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL
LAW PERMITS ANY LENDER TO CHARGE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE
STATE WHERE SUCH LENDER IS LOCATED. CH. 346 OF THE TEXAS FINANCE CODE (WHICH
REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY
ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE NOTES.

(b)BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF HARRIS, STATE OF TEXAS AND IRREVOCABLY AGREES THAT,
SUBJECT TO AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN
SUCH COURTS. BORROWER 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 JURISDICTION. THIS SUBMISSION TO
JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE AGENT OR ANY LENDER FROM
OBTAINING JURISDICTION OVER BORROWER, ANY OTHER LOAN PARTY OR ANY OF THE
FOREGOING’S ASSETS IN ANY COURT OTHERWISE HAVING JURISDICTION.

(c)BORROWER HEREBY 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 BORROWER AT ITS
SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF AGENT, ANY LENDER 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 BORROWER OR ITS PROPERTIES IN ANY OTHER
JURISDICTION.

(d)BORROWER, AGENT AND EACH LENDER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND AGREE THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.  BORROWER, AGENT AND EACH

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LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THAT EACH WILL CONTINUE TO RELY ON
THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.  BORROWER, AGENT AND EACH LENDER
WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY
WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS.

Section 12.14Interest. It is the intention of the parties hereto that each
Lender shall conform strictly to usury laws applicable to it. Accordingly, if
the transactions contemplated hereby would be usurious as to any Lender under
laws applicable to it (including the laws of the United States of America and
the State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in any
of the Loan Documents or any agreement entered into in connection with or as
security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Obligations (or, to the extent that the principal amount of the Obligations
shall have been or would thereby be paid in full, refunded by such Lender to
Borrower); and (ii) in the event that the maturity of the Notes is accelerated
by reason of an 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 under
law applicable to any Lender may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or otherwise shall be canceled automatically by such Lender as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Obligations (or, to the
extent that the principal amount of the Obligations shall have been or would
thereby be paid in full, refunded by such Lender to Borrower). All sums paid or
agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the full term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 12.14 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.14. To the extent that Chapter 303 of
the Texas Finance Code is relevant for the purpose of determining the Highest
Lawful Rate, such Lender elects to determine the applicable rate ceiling under
such Chapter by the indicated weekly rate ceiling from time to time in effect.

Section 12.15Confidentiality. In the event that Borrower provides to Agent or
the Lenders confidential information belonging to Borrower, if Borrower shall
(a) denominate any such written information as “confidential” or (b) preface the
dissemination of any information communicated in any manner other than in
writing as “confidential”, Agent and the Lenders shall thereafter maintain such
information in confidence in accordance with the standards of care and diligence
that each utilizes in maintaining its own confidential information. This
obligation of confidence shall not apply to such portions of the information
which (i) are in the public domain, (ii) hereafter become part of the public
domain without Agent or the Lenders breaching their obligation of confidence to
Borrower, (iii) are previously known by Agent or the Lenders from some source
other than Borrower, (iv) are hereafter developed by Agent or the Lenders
without using Borrower’s information, (v) are hereafter obtained by or available
to Agent or the Lenders from a third party who owes no obligation of confidence
to Borrower with respect to such information or through any other means other
than through disclosure by Borrower, (vi) are disclosed with Borrower’s consent,
(vii) must be disclosed either pursuant to any Governmental Requirement or to
Persons regulating the activities of Agent or the Lenders, or (viii) as may be
required by law or regulation or order of any Governmental Authority in any
judicial, arbitration or governmental proceeding. Further,

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Agent or a Lender may disclose any such information to any other Lender, any of
its Affiliates and to its and their Related Parties, any independent petroleum
engineers or consultants, any independent certified public accountants, any
legal counsel employed by such Person in connection with this Agreement or any
other Loan Document, including without limitation, the enforcement or exercise
of all rights and remedies thereunder, or any assignee or participant (including
prospective assignees and participants) in the Loans; provided, however, that
Agent or the Lenders shall receive a confidentiality agreement from the Person
to whom such information is disclosed such that said Person shall have the same
obligation to maintain the confidentiality of such information as is imposed
upon Agent or the Lenders hereunder. Notwithstanding anything to the contrary
provided herein, this obligation of confidence shall cease three (3) years from
the date the information was furnished, unless Borrower requests in writing at
least thirty (30) days prior to the expiration of such three year period, to
maintain the confidentiality of such information for an additional three year
period. Borrower waives any and all other rights it may have to confidentiality
as against Agent and the Lenders arising by contract, agreement, statute or law
except as expressly stated in this Section 12.15.

Section 12.16USA Patriot Act. Each Lender hereby notifies 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 “Act”) is required to obtain, verify and record
information that identifies Borrower, which information includes the name and
address of Borrower and other information that will allow such Lender to
identify Borrower in accordance with the Act.

Section 12.17Amendment and Restatement. Borrower, EO, EF, Sabine, ELP, LUO, BE,
BO, Agent and the Lenders have agreed that this Agreement is an amendment and
restatement of the Existing ESTE Credit Agreement and Existing BE Credit
Agreement in their entirety, and this Agreement is not a novation of the
Existing ESTE Credit Agreement or Existing BE Credit Agreement.  The Liens
securing the Obligations (as defined in the Existing ESTE Credit Agreement) and
the Indebtedness (as defined in the Existing BE Credit Agreement) shall secure
the Obligations, insofar and only insofar as the same cover the Collateral, and
all such Liens against the Collateral (as may be modified to reflect the terms
of the Security Instruments existing on the Closing Date) that secure the
Obligations (as defined in the Existing ESTE Credit Agreement) and the
Indebtedness (as defined in the Existing BE Credit Agreement) are hereby
renewed, extended, and modified to secure the Obligations.

Section 12.18Acknowledgement and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Loan Document may be subject to the write-down and
conversion powers of an EEA Resolution Authority and agrees and consents to, and
acknowledges and agrees to be bound by:

(a)the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liabilities arising hereunder which may be payable to it
by any party hereto that is an EEA Financial Institution; and

(b)the effects of any Bail-In Action on any such liability, including, if
applicable:

(i)a reduction in full or in part or cancellation of any such liability;

(ii)a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent entity,
or a bridge institution that may be issued to it or otherwise conferred on it,
and that such shares or other instruments of ownership will be accepted by it in
lieu of any rights with respect to any such liability under this Agreement or
any other Loan Document; or

(iii)the variation of the terms of such liability in connection with the
exercise of the write-down and conversion powers of any EEA Resolution
Authority.

Section 12.19EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO SPECIFICALLY
AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN

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DOCUMENTS AND AGREES THAT IT IS 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,
CONDITIONS AND EFFECTS 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 RESULT 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.”

[SIGNATURES BEGIN ON NEXT PAGE]

 

79

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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:

 

 

 

EARTHSTONE ENERGY HOLDINGS, LLC

 

 

 

 

 

 

By:

/s/ Christopher E. Cottrell

 

Christopher E. Cottrell

 

 

Executive Vice President, Land and Marketing, and Corporate Secretary

 

Notice Information:

 

1400 Woodloch Forest Drive, Suite 300

The Woodlands, Texas 77380

Telephone No.: (281) 298-4246

Facsimile No.: (832) 823-0478

Attention: Christopher E. Cottrell

 

GUARANTORS:

 

EARTHSTONE OPERATING, LLC,

a Texas limited liability company

EF NON-OP, LLC,

a Texas limited liability company

SABINE RIVER ENERGY, LLC,

a Texas limited liability company

EARTHSTONE LEGACY PROPERTIES, LLC,

a Texas limited liability company

LYNDEN USA OPERATING, LLC,

a Texas limited liability company

BOLD ENERGY III LLC,

a Texas limited liability company

BOLD OPERATING, LLC,

a Texas limited liability company

 

Each By:

/s/ Christopher E. Cottrell

 

 

Christopher E. Cottrell

 

 

Executive Vice President, Land and

 

 

Marketing, and Corporate Secretary

 

Signature Page to Credit Agreement

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AGENT, ISSUING BANK AND LENDER:

 

 

 

BOKF, NA dba BANK OF TEXAS,

as Agent, Issuing Bank and Lender

 

 

 

 

 

 

By:

/s/ Martin W. Wilson

 

 

Martin W. Wilson

 

 

Senior Vice President

 

 

 

Lending Office for Loans:

 

1401 McKinney, Suite 1000

Houston, Texas 77010

 

Notice Information:

 

1401 McKinney, Suite 1000

Houston, Texas 77010

Telephone No.: (713) 289-5820

Facsimile No.: (713) 289-5825

Attention: Martin W. Wilson

 

 

 

 

Signature Page to Credit Agreement

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LENDER:

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Lender

 

 

 

 

 

 

By:

/s/ Jay Buckman

 

 

Jay Buckman

 

 

Director

 

 

 

Lending Office for Loans:

 

Wells Fargo Bank, National Association

1000 Louisiana Street; 9th Floor

Houston, Texas 77002

 

Notice Information:

 

Wells Fargo Bank, National Association

1000 Louisiana Street; 9th Floor

Houston, Texas 77002

Telephone No.: 713.319.1849

Facsimile No.:  713.319.1925

Attention: Jay Buckman

 

 

 

Signature Page to Credit Agreement

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LENDER:

 

 

 

Royal Bank of Canada,

as Lender

 

 

 

 

 

 

By:

/s/ Mark Lumpkin, Jr.

 

 

Mark Lumpkin, Jr.

 

 

Authorized Signatory

 

 

 

Lending Office for Loans:

 

Royal Bank of Canada

2800 Post Oak Boulevard

Houston, Texas 77056

 

Notice Information:

 

Royal Bank of Canada

2800 Post Oak Boulevard

Houston, Texas 77056

Telephone No.: 713-403-5635

Facsimile No.: 713-403-5627

Attention: Mark Lumpkin, Jr.

 

 

 

Signature Page to Credit Agreement

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LENDER:

 

 

 

SunTrust Bank,

as Lender

 

 

 

 

 

 

By:

/s/ Nick Rolf

 

 

Nick Rolf

 

 

Vice President

 

 

 

Lending Office for Loans:

 

SunTrust Bank

3333 Peachtree Rd., NE

Atlanta, Georgia 30326

 

Notice Information:

 

SunTrust Bank

3333 Peachtree Rd., NE, 3rd Floor

Atlanta, Georgia 30326

Telephone No.: 404-439-7462

Attention: Nick Rolf

 

 

 

 

Signature Page to Credit Agreement

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LENDER:

 

 

 

KeyBank National Association,

as Lender

 

 

 

 

 

 

By:

/s/ George E. McKean

 

 

Name: George E. McKean

 

 

Title: Senior Vice President

 

 

 

Lending Office for Loans:

 

KeyBank National Association

Tiedeman Road

Brooklyn, Ohio 44144

 

Notice Information:

 

Suzette Simmons 4900

Tiedeman Road

Brooklyn, Ohio 44144

Telephone 216-813-4812

Facsimile 216-370-5997

Attention: Key Agency Services

 

 

 

Signature Page to Credit Agreement

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LENDER:

 

 

 

IberiaBank,

as Lender

 

 

 

 

 

 

By:

/s/ Stacy Goldstein

 

 

Stacy Goldstein

 

 

Senior Vice President

 

 

 

Lending Office for Loans:

 

IberiaBank

11 Greenway Plaza, Ste 2700

Houston, Texas  77027

 

Notice Information:

 

IberiaBank

11 Greenway Plaza, Ste 2700

Houston, Texas  77046

Telephone 713.624.7726

Facsimile No.: 713.965.0276

Attention: Stacy Goldstein

 

 

 

Signature Page to Credit Agreement

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ANNEX I

 

LIST OF PERCENTAGE SHARES AND MAXIMUM CREDIT AMOUNTS

 

Name of Lender

Percentage Share

Maximum Credit Amount*

BOKF, NA dba Bank of Texas

25.00000%

$125,000,000

Wells Fargo Bank, National Association

20.00000%

$100,000,000

Royal Bank of Canada

15.00000%

$75,000,000

SunTrust Bank

15.00000%

$75,000,000

KeyBank National Association

15.00000%

$75,000,000

IberiaBank

10.00000%

$50,000,000

TOTAL

100.00000%

$500,000,000

 

 

*Subject in all events to the then-effective Borrowing Base.

 

 

Annex 1 to Credit Agreement

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EXHIBIT A

 

FORM OF NOTE

 

FOR VALUE RECEIVED, EARTHSTONE ENERGY HOLDINGS, LLC, a Delaware limited
liability company (“Maker”) hereby promises to pay to the order of
______________________ (herein called “Payee”, which term shall herein in every
instance refer to any owner or holder of this Note), in accordance with the
provisions of the Credit Agreement (as hereinafter defined), the principal
amount of the Loans made by the Payee to the Maker under the Credit Agreement,
together with interest on such principal outstanding until maturity.

 

The date, amount, Type, interest rate, Interest Period and maturity of each Loan
made by Payee to Borrower, and each payment made on account of the principal
thereof, shall be recorded by Payee on its books and, prior to any transfer of
this Note, endorsed by Payee on the schedules attached hereto or any
continuation thereof.

 

This Note is one of the Notes referred to in the Credit Agreement dated as of
May 9, 2017 among Borrower, the Lenders which are or become parties thereto
(including Payee) and BOKF, NA dba Bank of Texas, as Agent and Issuing Bank (as
the same may be amended or supplemented from time to time, the “Credit
Agreement”), and evidences Loans made by the Payee thereunder. Capitalized terms
used in this Note not defined herein have the respective meanings assigned to
them in the Credit Agreement.

 

This Note is issued pursuant to the Credit Agreement and is entitled to the
benefits provided for in the Credit Agreement and the other Loan Documents. The
Credit Agreement provides for the acceleration of the maturity of this Note upon
the occurrence of certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this Note.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF TEXAS.

 

EARTHSTONE ENERGY HOLDINGS, LLC

 

 

 

 

By:

 

Name:

 

Title:

 

 

 

 

 

Exhibit A to Credit Agreement

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EXHIBIT B

 

FORM OF BORROWING, CONTINUATION, AND CONVERSION REQUEST

 

EARTHSTONE ENERGY HOLDINGS, LLC, a Delaware limited liability company
(“Borrower”), pursuant to the Credit Agreement dated as of May 9, 2017, among
Borrower, BOKF, NA dba Bank of Texas, as Agent (“Agent”) for the lenders (the
“Lenders”) which are or become parties thereto, and such Lenders (together with
all amendments or supplements thereto, the “Credit Agreement”), hereby makes the
requests indicated below (unless otherwise defined herein, capitalized terms are
defined in the Credit Agreement):

 

1.Loans:

 

(a)

Aggregate amount of new Loans to be:

$

 

 

 

 

 

(b)

Requested funding date is:

 

 

 

 

 

 

(c)

Borrowings that are to be:

 

 

 

 

 

 

 

 

 

LIBOR Loans:

$

 

 

 

 

 

 

 

 

Base Rate Loans:

$

 

 

 

 

 

 

(d)

Length of Interest Period for LIBOR Loans is:

 

 

 

2.LIBOR Loan Continuation:

 

(a)

Continuation for LIBOR Loans maturing on:

 

 

 

 

 

 

(b)

Aggregate amount to be continued as LIBOR Loans:

$

 

 

 

 

 

(c)

Aggregate amount to be converted to Base Rate Loans:

$

 

 

 

 

 

(d)

Length of Interest Period for continued LIBOR Loans:

 

 

 

3.Conversion of Outstanding Base Rate Loans to LIBOR Loans

 

 

(a)

Convert $________________ of the outstanding Base Rate Loans to LIBOR Loans on
________________ with an Interest Period of ________________.

 

4.Conversion of outstanding LIBOR Loans to Base Rate Loans

 

 

(a)

Convert $________________ of the outstanding LIBOR Loans with an Interest Period
maturing on ________________ to Base Rate Loans.

 

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

 

The undersigned further certifies, represents and warrants on behalf of Borrower
that as of the date of any Loans made pursuant to this request and after giving
effect thereto:

 

(a)no Default shall exist;

(b)no Material Adverse Effect shall have occurred;

Exhibit B to Credit Agreement

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

 

(c)in the case of a Borrowing Request for a Loan, at the time of, and after
giving effect to the making of, such Loan, (i) the Consolidated Cash Balance and
(ii) the pro forma Consolidated Cash Balance as of the end of the Business Day
on which such Loan is made, in each case, shall not exceed the Consolidated Cash
Balance Limit; and

(d)the representations and warranties made by Borrower in Article VII of the
Credit Agreement and by Borrower and the Guarantors in the other Loan Documents
to which they are a party shall be true on and as of the date of the making of
any Loans made pursuant to this request with the same force and effect as if
made on and as of such date and following such new borrowing, except to the
extent such representations and warranties are expressly limited to an earlier
date.

 

EARTHSTONE ENERGY HOLDINGS, LLC

 

 

 

 

By:

 

Name:

 

Title:

 

 

[ATTACH COMPLIANCE CERTIFICATE]

 

 

 

Exhibit B to Credit Agreement

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EXHIBIT C

 

FORM OF COMPLIANCE CERTIFICATE

 

The undersigned hereby certifies that he is the ________________________ of
EARTHSTONE ENERGY HOLDINGS, LLC, a Delaware limited liability company
(“Borrower”) and that as such he is authorized to execute this certificate on
behalf of Borrower. With reference to the Credit Agreement dated as of May 9,
2017, among Borrower, BOKF, NA dba Bank of Texas, as Agent (“Agent”) for the
lenders (the “Lenders”) which are or become a party thereto, and such Lenders
(together with all amendments or supplements thereto being the “Credit
Agreement”), the undersigned represents and warrants as follows (each
capitalized term used herein having the same meaning given to it in the Credit
Agreement unless otherwise specified):

 

(a)The representations and warranties of Borrower contained in Article VII of
the Credit Agreement and of Borrower and Guarantors in the other Loan Documents
and otherwise made in writing by or on behalf of Borrower or any Guarantor
pursuant to the Credit Agreement and the other Loan Documents were true and
correct when made, and are repeated at and as of the time of delivery hereof and
are true and correct at and as of the time of delivery hereof, except to the
extent any such representations and warranties are expressly limited to an
earlier date (which are true and correct as of such earlier date) or the
Majority Lenders have expressly consented in writing to the contrary.

 

(b)Borrower and each Guarantor has performed and complied with all agreements
and conditions contained in the Credit Agreement and in the other Loan Documents
to which it is a party required to be performed or complied with by it prior to
or at the time of delivery hereof.

 

(c)Neither Borrower nor any Subsidiary has incurred any material liabilities,
direct or contingent, since _________________, except those set forth in
Schedule 9.01 to the Credit Agreement and except those allowed by the terms of
the Credit Agreement or consented to by the Lenders in writing.

 

(d)Since _________________, no change has occurred, either in any case or in the
aggregate, in the condition, financial or otherwise, of Borrower or any
Subsidiary which would have a Material Adverse Effect.

 

(e)There exists, and, after giving effect to the loan or loans with respect to
which this certificate is being delivered, will exist, no Default under the
Credit Agreement or any event or circumstance which constitutes, or with notice
or lapse of time (or both) would constitute, an event of default under any loan
or credit agreement, indenture, deed of trust, security agreement or other
agreement or instrument evidencing or pertaining to any Debt of Borrower or any
Subsidiary, or under any material agreement or instrument to which Borrower or
any Subsidiary is a party or by which Borrower or any Subsidiary is bound.

 

(f)The financial statements furnished to Agent with this certificate fairly
present the consolidated financial condition and results of operations of
Borrower and its Consolidated Subsidiaries as at the end of, and for, the
[fiscal quarter] [fiscal year] ending _______________ and such financial
statements have been prepared in accordance with the accounting procedures
specified in the Credit Agreement.

 

(g)Attached hereto are the detailed computations necessary to determine whether
Borrower and its Consolidated Subsidiaries are in compliance with Section 9.12
of the Credit Agreement as of the end of the [fiscal quarter] [fiscal year]
ending ________________.

 

EXECUTED AND DELIVERED this ___ day of ___________________.

 

EARTHSTONE ENERGY HOLDINGS, LLC

 

 

 

 

By:

 

Name:

 

Title:

 

 

 

Exhibit C to Credit Agreement

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EXHIBIT D

 

SECURITY INSTRUMENTS

 

1.

Amended and Restated Guaranty dated as of May 9, 2017, in favor of Agent and
other Beneficiaries, executed by EO, EF, Sabine, ELP, LUO, BE and BO;

 

2.

Amended and Restated Pledge and Security Agreement dated May 9, 2017, in favor
of Agent and other Beneficiaries, executed by Borrower, EO, EF, Sabine, ELP,
LUO, BE and BO;

 

3.

Amended and Restated Deed of Trust, Mortgage, Security Agreement, Fixture
Filing, Assignment of Production and Financing Statement dated effective May 9,
2017, from EF to John Girard, as trustee, for the benefit of BOKF, NA dba Bank
of Texas, as Agent, to be filed in La Salle County, Texas;

 

4.

Amended and Restated Deed of Trust, Mortgage, Security Agreement, Fixture
Filing, Assignment of Production and Financing Statement dated effective May 9,
2017, from Sabine to John Girard, as trustee, for the benefit of BOKF, NA dba
Bank of Texas, as Agent, to be filed in Cherokee, Fayette, Gonzales, Grayson,
Harrison, Marion, Nacogdoches, Panola, Rusk, Shelby and Zapata Counties, Texas;

 

5.

Amended and Restated Mortgage, With Power of Sale, Fixture Filing, As-Extracted
Collateral Filing, Security Agreement, Financing Statement and Assignment of
Production dated effective May 9, 2017, from Sabine to BOKF, NA dba Bank of
Texas, as Agent, to be filed in Custer and Le Flore Counties, Oklahoma;

 

6.

Deed of Trust, Mortgage, Security Agreement, Fixture Filing, Assignment of
Production and Financing Statement dated effective May 9, 2017, from Sabine to
John Girard, as trustee, for the benefit of BOKF, NA dba Bank of Texas, as
Agent, to be filed in Atascosa, Frio, Karnes and Wilson Counties, Texas;

 

7.

Amended and Restated Deed of Trust, Mortgage, Security Agreement, Fixture
Filing, Assignment of Production and Financing Statement dated effective May 9,
2017, from LUO to John Girard, as trustee, for the benefit of BOKF, NA dba Bank
of Texas, as Agent, to be filed in Glasscock, Howard, Martin and Midland
Counties, Texas;

 

8.

Deed of Trust, Mortgage, Security Agreement, Fixture Filing, Assignment of
Production and Financing Statement dated effective May 9, 2017, from LUO to John
Girard, as trustee, for the benefit of BOKF, NA dba Bank of Texas, as Agent, to
be filed in Coke, Dawson, Mitchell and Sterling Counties, Texas;

 

9.

Amended and Restated Deed of Trust, Mortgage, Security Agreement, Fixture
Filing, Assignment of Production and Financing Statement dated effective May 9,
2017, from ELP to John Girard, as trustee, for the benefit of BOKF, NA dba Bank
of Texas, as Agent, to be filed in Webb County, Texas;

 

10.

Amended and Restated Mortgage-Collateral Real Estate Mortgage, Deed of Trust,
Indenture, Security Agreement, Fixture Filing, As-Extracted Collateral Filing,
Financing Statement and Assignment of Production dated effective May 9, 2017,
from ELP to John Girard, as trustee, for the benefit of BOKF, NA dba Bank of
Texas, as Agent, to be filed in Richland and Sheridan Counties, Montana;

 

11.

Amended and Restated Mortgage-Collateral Real Estate Mortgage, Deed of Trust,
Indenture, Security Agreement, Fixture Filing, As-Extracted Collateral Filing,
Financing Statement and Assignment of Production dated effective May 9, 2017,
from ELP to BOKF, NA dba Bank of Texas, as Agent, to be filed in Billings, Dunn,
McKenzie and Williams Counties, North Dakota;

 

12.

Mortgage-Collateral Real Estate Mortgage, Deed of Trust, Indenture, Security
Agreement, Fixture Filing, As-Extracted Collateral Filing, Financing Statement
and Assignment of Production dated effective May 9, 2017, from ELP to BOKF, NA
dba Bank of Texas, as Agent, to be filed in Divide County, North Dakota;

 

13.

Amended and Restated Mortgage, Line of Credit Mortgage, Deed of Trust,
Assignment of As-Extracted Collateral, Security Agreement, Fixture Filing and
Financing Statement dated effective May 9, 2017, from

Exhibit D to Credit Agreement

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

 

BE to John Girard, as trustee, for the benefit of BOKF, NA dba Bank of Texas, as
Agent, to be filed in Midland, Reagan and Upton Counties, Texas;

 

14.

Mortgage, Line of Credit Mortgage, Deed of Trust, Assignment of As-Extracted
Collateral, Security Agreement, Fixture Filing and Financing Statement dated
effective May 9, 2017, from BE to John Girard, as trustee, for the benefit of
BOKF, NA dba Bank of Texas, as Agent, to be filed in Glasscock, Howard and
Martin Counties, Texas;

 

15.

UCC-1 (fixture filing) by Sabine as Debtor and Agent as Secured Party to be
filed in Custer and Le Flore Counties, Oklahoma;

 

16.

UCC-1 (fixture filing) by ELP as Debtor and Agent as Secured Party to be filed
in Richland and Sheridan Counties, Montana;

 

17.

UCC-1 (fixture filing) by ELP as Debtor and Agent as Secured Party to be filed
in Billings, Divide, Dunn, McKenzie and Williams Counties, North Dakota;

 

18.

UCC-1 (all assets) relating to Pledge and Security Agreement by each of (a)
Borrower, (b) EO, (c) EF, (d) Sabine, (e) ELP, (f) LUO, (g) BE and (h) BO as
Debtor and Agent as Secured Party;

 

19.

Letters-in-Lieu executed in blank by EF, Sabine, LUO, ELP and BE; and

 

20.

Deposit Account Control Agreement executed by each of (a) Borrower, (b) EO, (c)
EF, (d) Sabine, (e) ELP, (f) LUO, (g) BE and (h) BO with a grant in favor of
Agent.

 

Exhibit D to Credit Agreement

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

 

 

 

EXHIBIT E

 

FORM OF ASSIGNMENT

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between
[the][each] Assignor identified in item 1 below ([the][each, an] “Assignor”) and
[the][each] Assignee identified in item 2 below ([the][each, an]
“Assignee”).  [It is understood and agreed that the rights and obligations of
[the Assignors][the Assignees] hereunder are several and not
joint.]  Capitalized terms used but not defined herein shall have the meanings
given to them in the Credit Agreement identified below (as amended, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by [the][each]
Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part
of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by Agent as
contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights
and obligations in [its capacity as a Lender][their respective capacities as
Lenders] under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
[the Assignor][the respective Assignors] under the Credit Agreement identified
below (including without limitation any letters of credit and guarantees
included in such Credit Agreement), and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of [the Assignor (in its capacity as a Lender)][the respective Assignors
(in their respective capacities as Lenders)] against any Person, whether known
or unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned by [the][any] Assignor to [the][any] Assignee
pursuant to clauses (i) and (ii) above being referred to herein collectively as
[the][an] “Assigned Interest”).  Each such sale and assignment is without
recourse to [the][any] Assignor and, except as expressly provided in this
Assignment and Assumption, without representation or warranty by [the][any]
Assignor.  

 

1.

Assignor[s]:

 

 

 

 

 

 

 

 

 

 

 

[Assignor [is] [is not] a Defaulting Lender]

 

 

 

 

 

2.

Assignee[s]:

 

 

 

 

 

 

 

 

 

 

 

[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]

 

 

 

 

3.

Borrower:

Earthstone Energy Holdings, LLC

 

 

 

 

 

4.

Agent:

BOKF, NA dba Bank of Texas, as the administrative agent under the Credit
Agreement

 

 

 

 

5.

Credit Agreement:

Credit Agreement dated as of May 9, 2017, among Earthstone Energy Holdings, LLC,
as Borrower, the Lenders, and BOKF, NA dba Bank of Texas, as Agent and Issuing
Bank

 

Exhibit E to Credit Agreement

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

 

6.Assigned Interest[s]:

 

Assignor[s]

Assignee[s]

Aggregate Amount of Commitment/Loans for all Lenders

Amount of Commitment/Loans Assigned

Percentage Assigned of Commitment/
Loans

 

 

$

$

%

 

 

$

$

%

 

 

$

$

%

 

[7.

Trade Date:

 

 

 

 

 

Exhibit E to Credit Agreement

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

 

 

 

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

 

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

 

ASSIGNOR[S]

[NAME OF ASSIGNOR]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

[NAME OF ASSIGNOR]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

ASSIGNEE[S]

[NAME OF ASSIGNEE]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

[NAME OF ASSIGNEE]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Consented to and]1 Accepted:

 

 

 

BOKF, NA dba BANK OF TEXAS, as

  Agent

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Consented to:]2

 

 

 

EARTHSTONE ENERGY HOLDINGS, LLC

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

1 

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

2 

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

Exhibit E to Credit Agreement

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

 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.Representations and Warranties.  

 

1.1Assignor[s].  [The][Each] Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii)
[the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim, (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and (iv) it is [not] a
Defaulting Lender; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document, or (iv) the performance or observance by Borrower,
any of its Subsidiaries or Affiliates or any other Person of any of their
respective obligations under any Loan Document.

 

1.2.Assignee[s].  [The][Each] Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all the requirements to be an assignee under Section 12.06(b)(iii), (v)
and (vi) of the Credit Agreement (subject to such consents, if any, as may be
required under Section 12.06(b)(iii) of the Credit Agreement), (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of [the][the relevant]
Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is
sophisticated with respect to decisions to acquire assets of the type
represented by the Assigned Interest and either it, or the Person exercising
discretion in making its decision to acquire the Assigned Interest, is
experienced in acquiring assets of such type, (v) it has received a copy of the
Credit Agreement, and has received or has been accorded the opportunity to
receive copies of the most recent financial statements delivered pursuant to
Credit Agreement, as applicable, and such other documents and information as it
deems appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase [the][such] Assigned Interest,
(vi) it has, independently and without reliance upon 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 Assignment and
Assumption and to purchase [the][such] Assigned Interest, and (vii) attached to
the Assignment and Assumption is any documentation required to be delivered by
it pursuant to the terms of the Credit Agreement, duly completed and executed by
[the][such] Assignee; and (b) agrees that (i) it will, independently and without
reliance on Agent, [the][any] Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.

 

2.Payments.  From and after the Effective Date, Agent shall make all payments in
respect of [the][each] Assigned Interest (including payments of principal,
interest, fees and other amounts) to [the][the relevant] Assignor for amounts
which have accrued to but excluding the Effective Date and to [the][the
relevant] Assignee for amounts which have accrued from and after the Effective
Date.  Notwithstanding the foregoing, Agent shall make all payments of interest,
fees or other amounts paid or payable in kind from and after the Effective Date
to [the][the relevant] Assignee.

 

3.General Provisions.  This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns.  This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument.  Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption.  This Assignment and Assumption shall be
governed by, and construed in accordance with, the law of the State of Texas.

 

 

 

Exhibit E to Credit Agreement

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

 

EXHIBIT F

 

FORM OF RESERVE REPORT CERTIFICATE

 

The undersigned hereby certifies that he is the _____________________ of
Earthstone Energy Holdings, LLC, a Delaware limited liability company
(“Borrower”) and that as such he is authorized to execute this certificate on
behalf of Borrower.

 

With reference to (i) the Credit Agreement dated as of May 9, 2017, among
Borrower, BOKF, NA dba Bank of Texas, as Agent (“Agent”) for the lenders which
are or become a party thereto (the “Lenders”), and such Lenders (together with
all amendments or supplements thereto being the “Credit Agreement”) and (ii) the
Reserve Report with which this certificate is being delivered (the “Current
Reserve Report”), the undersigned certifies that, to his knowledge and in all
material respects (each capitalized term used herein having the same meaning
given to it in the Credit Agreement unless otherwise specified):

 

 

(a)

the information provided by Borrower in connection with the preparation of the
Current Reserve Report and any other information delivered in connection
therewith by Borrower is true and correct, and any projections based upon such
information have been prepared in good faith based upon assumptions believed by
Borrower to be reasonable, subject to uncertainties inherent in all projections;

 

 

(b)

Borrower [and/or Guarantor] owns good and defensible title to the Oil and Gas
Properties evaluated in the Current Reserve Report and such Properties are free
of all Liens except for Liens permitted by Section 9.02 of the Credit Agreement;

 

 

(c)

except as set forth on Schedule I attached to and made a part of this
certificate, on a net basis there are no gas imbalances, take or pay or other
prepayments with respect to its Oil and Gas Properties evaluated in the Current
Reserve Report which would require Borrower [or Guarantor, as applicable] to
deliver Hydrocarbons produced from such Oil and Gas Properties at some future
time without then or thereafter receiving full payment therefor;

 

 

(d)

except as set forth on Schedule II attached to and made a part of this
certificate, none of the Oil and Gas Properties have been sold since the date of
the last Borrowing Base determination;

 

 

(e)

Schedule III attached to and made a part of this certificate lists the names,
addresses, phone numbers, facsimile numbers, e-mail addresses and contact
individuals for all Purchasers;

 

 

(f)

Schedule IV attached to and made a part of this certificate (i) lists all Oil
and Gas Properties added to and deleted from the Current Reserve Report since
the immediately prior Reserve Report [and any Oil and Gas Properties acquired
and any oil or gas wells drilled or brought on line since the date of the
immediately prior Reserve Report], (ii) shows all changes in working interests
and net revenue interests in the Oil and Gas Properties occurring since the
immediately prior Reserve Report and (iii) the reason for each such change in
working interests and net revenue interests; and

 

 

(g)

except as set forth on Schedule V attached to and made a part of this
certificate, all of the Oil and Gas Properties evaluated by the Current Reserve
Report are Mortgaged Property.

 

EXECUTED AND DELIVERED this ____ day of __________________.

 

EARTHSTONE ENERGY HOLDINGS, LLC

 

 

 

 

By:

 

Name:

 

Title:

 

 

[ATTACH SCHEDULES I - V]

 

 

Exhibit F to Credit Agreement

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

 

EXHIBIT G

 

FORM OF LETTER-IN-LIEU

 

VIA CERTIFIED MAIL

RETURN RECEIPT REQUESTED

 

 

_____________________________

_____________________________

_____________________________

ATTN:_______________________

 

 

Ladies and Gentlemen:

 

Earthstone Energy Holdings, LLC (“Earthstone”), along with its subsidiaries, the
lenders parties thereto (the “Lenders”), and BOKF, NA dba Bank of Texas, as
agent for the Lenders (“Agent”) entered into a Credit Agreement dated as of May
9, 2017. Pursuant to the terms of the Credit Agreement, (i) [Company Name] (the
“Company”), mortgaged its rights, titles and interests in and to the properties
and/or wells listed on the attached Exhibit A (hereinafter referred to as the
“Mortgaged Properties”) to Agent and (ii) the Company has agreed to cause all
proceeds of the Mortgaged Properties due and owing to the Company to be
delivered to a cash management account.

 

Accordingly, please have all payments of proceeds from the Mortgaged Properties
due and owing

to the Company to be submitted to the following address:

 

_____________________________

_____________________________

_____________________________

 

or, if payment of such proceeds is made by wire transfer, pursuant to the
following wire instructions:

 

Name: ____________________________

Account No: _______________________

ABA No. (Routing No.): _____________

Attention: _________________________

 

We request that you continue to remit payment according to these instructions
unless and until modified in writing and signed by both the Company and Agent.
If you should have any questions or need additional information, please contact
Marty Wilson at 713-289-5820 or by written correspondence to Marty Wilson, BOKF,
NA dba Bank of Texas, 1401 McKinney, Suite 1000, Houston, Texas 77010.

 

Please acknowledge your receipt and acceptance of this letter and the
instructions contained herein by completing the information requested in the
Company Acknowledgment on the signature page and signing and returning one copy
of this letter in the envelope provided. Thank you for your cooperation.

 

Executed as of __________________________.

 

[COMPANY]

 

 

 

 

By:

 

Name:

 

Title:

 

Exhibit G to Credit Agreement

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

 

 

BOKF, NA dba BANK OF TEXAS, as Agent

 

 

 

 

By:

 

Name:

 

Title:

 

 

COMPANY ACKNOWLEDGMENT

 

The company to which this letter is addressed has made the requested changes in
its records for revenues effective ______________________.

 

Date:

 

 

 

By:

 

Name:

 

Title:

 

 

 

 

Telephone:

 

Facsimile:

 

 

 

 

Exhibit G to Credit Agreement

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

 

EXHIBIT H-1

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 Credit Agreement dated as of May 9, 2017 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Earthstone Energy Holdings, LLC, as borrower, each lender
from time to time party thereto (the “Lenders”), and BOKF, NA dba Bank of Texas,
as administrative agent for the Lenders (“Agent”) and Issuing Bank.

 

Pursuant to the provisions of Section 4.06 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder
of Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it
is not a controlled foreign corporation related to Borrower as described in
Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished Agent and Borrower with a certificate of its
non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform Borrower and Agent, and (2)
the undersigned shall have at all times furnished Borrower and 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 PARTICIPANT]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Date: ________ __, 20[  ]

 

 

Exhibit H-1 to Credit Agreement

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

 

EXHIBIT H-2

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 Credit Agreement dated as of May 9, 2017 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Earthstone Energy Holdings, LLC, as borrower, each lender
from time to time party thereto (the “Lenders”), and BOKF, NA dba Bank of Texas,
as administrative agent for the Lenders (“Agent”) and Issuing Bank.

  

Pursuant to the provisions of Section 4.06 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 Borrower within the meaning of Section
871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation
related to 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.  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 H-2 to Credit Agreement

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

 

EXHIBIT H-3

U.S. TAX COMPLIANCE CERTIFICATE

 

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

 

Reference is hereby made to the Credit Agreement dated as of May 9, 2017 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Earthstone Energy Holdings, LLC, as borrower, each lender
from time to time party thereto (the “Lenders”), and BOKF, NA dba Bank of Texas,
as administrative agent for the Lenders (“Agent”) and Issuing Bank.

  

Pursuant to the provisions of Section 4.06 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 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 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 (ii) an
IRS Form W-8IMY accompanied by an IRS Form W-8BEN 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 H-3 to Credit Agreement

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

 

EXHIBIT H-4

U.S. TAX COMPLIANCE CERTIFICATE

 

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

 

Reference is hereby made to the Credit Agreement dated as of May 9, 2017 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Earthstone Energy Holdings, LLC, as borrower, each lender
from time to time party thereto (the “Lenders”), and BOKF, NA dba Bank of Texas,
as administrative agent for the Lenders (“Agent”) and Issuing Bank.

 

Pursuant to the provisions of Section 4.06 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 Credit
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 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
Borrower as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished Agent and 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 (ii) an
IRS Form W-8IMY accompanied by an IRS Form W-8BEN 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 Borrower and Agent, and (2) the undersigned shall have at all
times furnished Borrower and 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[  ]