Exhibit 10.1

REFINANCING AMENDMENT

REFINANCING AMENDMENT, dated as of February 10, 2017 (this “Agreement”), by and
among SANDRIDGE ENERGY, INC. (the “Borrower”), ROYAL BANK OF CANADA, as
administrative agent (in such capacity, the “Administrative Agent”), each Lender
under the Existing Credit Agreement (as defined below) party hereto (together
with each other Lender under the Existing Credit Agreement, the “Existing
Lenders”), each Person party hereto providing an Additional Commitment (as
defined below) (including, if any, each Existing Lender in its capacity as such,
a “New Lender” and, together with each other Existing Lender party hereto, the
“Participating Lenders”) and each other Loan Party party hereto.

RECITALS:

WHEREAS, reference is hereby made to the Credit Agreement, dated as of
October 4, 2016 (as amended, restated, amended and restated, supplemented or
otherwise modified from time to time prior to the Refinancing Effective Date (as
defined below), the “Existing Credit Agreement”), among the Borrower, the
lenders or other financial institutions or entities from time to time party
thereto and the Administrative Agent (capitalized terms used but not defined
herein having the meaning provided in the Existing Credit Agreement), pursuant
to which the Lenders provided the Borrower with Commitments in an aggregate
principal amount of $425,000,000 (the “Existing Commitments”);

WHEREAS, the Borrower has requested that the Lenders consent to certain
amendments to the Existing Credit Agreement including, inter alia, an increase
of the Commitments to an aggregate principal amount of $600,000,000 and thereby
refinance the Existing Credit Agreement, which amendments shall be effected by
(i) certain of the Participating Lenders providing additional Commitments in an
aggregate principal amount of $175,000,000 (the “Additional Commitments”) and
(ii) the exchange of the Existing Commitments and the Additional Commitments
and, in each case, the Loans outstanding thereunder on the Refinancing Effective
Date (the “Existing Loans”) for an equal aggregate principal amount of
Commitments (as defined in the Existing Credit Agreement as amended by this
Agreement (the “Credit Agreement”)) (the “Refinancing Commitments”) and Loans
(as defined in the Credit Agreement) (the “Refinancing Loans”);

WHEREAS, reference is hereby made to the Pledge and Security Agreement, dated as
of October 4, 2016 (as amended, restated, amended and restated, supplemented or
otherwise modified from time to time prior to the Refinancing Effective Date (as
defined below), the “Security Agreement”), among the Borrower, the other Loan
Parties party thereto as grantors and the Administrative Agent; and

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

 

1.

New Lenders. Each New Lender (i) confirms that it has received a copy of the
Credit Agreement and the other Loan Documents and the exhibits and schedules
thereto, together with copies of the financial statements referred to therein
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Agreement; (ii) agrees
that it will, subject to the occurrence of the Refinancing Effective Date,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, make its own credit decisions in taking or not taking action under
the Credit Agreement and the other Loan Documents; (iii) subject to the
occurrence of the Refinancing Effective Date, appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Loan Documents as are
delegated to the Administrative

 

1

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

  Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; and (iv) subject to the occurrence of the Refinancing
Effective Date, agrees that it will perform in accordance with their terms all
of the obligations which by the terms of the Credit Agreement and the other Loan
Documents are required to be performed by it as a Lender, as the case may be.

 

2. Amendments. Subject to the occurrence of the Refinancing Effective Date:

 

  (a) Each Person party hereto as a New Lender (including, to the extent
applicable, any Existing Lender under the Existing Credit Agreement as in effect
immediately prior to the effectiveness of this Agreement, in its capacity as a
New Lender) hereby agrees to provide the Additional Commitments set forth
opposite its name on Annex I hereto and, in connection with the foregoing:

(i) The parties hereto acknowledge and agree that (1) the Additional Commitments
provided pursuant to this Agreement as specified in Annex I attached hereto
shall constitute a Commitment under, and as defined in, the Credit Agreement,
(2) the Additional Commitments are (A) subject to the same terms and conditions
as the Commitments, (B) guaranteed by the Guarantors and (C) secured on an equal
priority basis by the same Collateral securing, in each case, the existing
Commitments under the Existing Credit Agreement as in effect immediately prior
to the effectiveness of this Agreement, and (3) the New Lenders specified in
Annex I attached hereto shall constitute Lenders under, and as defined in, the
Credit Agreement.

(ii) (1) Each Existing Lender will automatically and without further act be
deemed to have assigned to each New Lender in respect of the Additional
Commitments, and each such New Lender will automatically and without further act
be deemed to have assumed, a portion of such Existing Lender’s participations
under the Loan Documents in outstanding Letters of Credit such that, after
giving effect to each such deemed assignment and assumption of participations,
the percentage of the aggregate outstanding participations under the Loan
Documents in Letters of Credit held by such New Lender in respect of its
Additional Commitments will equal the percentage of the aggregate Commitments of
all Lenders represented by such New Lender’s Additional Commitment (with such
existing participation in such Letters of Credits by Existing Lenders to be
assigned on a pro rata basis to such New Lenders determined on a Letter of
Credit by Letter of Credit basis) and (2) if, on such date, there are any Loans
outstanding, each of the Existing Lenders shall be deemed to assign to each of
the New Lenders, and each of the New Lenders shall purchase from each of the
Existing Lenders, at par, such interests in the Loans outstanding on such date
as shall be necessary in order that, after giving effect to all such assignments
and purchases, the percentage of the aggregate Loans held by each New Lender in
respect of its Additional Commitment will equal the percentage of the aggregate
Commitments of all Lenders represented by such New Lender’s Additional
Commitment (with such assignments to be made on a pro rata basis to such New
Lenders determined on a Loan by Loan basis) and, in connection with the
foregoing clauses (1) and (2) the Existing Lenders and the New Lenders will make
adjustments among themselves, and payments to each other as needed, with respect
to participations under the Loan Documents in outstanding Letters of Credit,
outstanding Loans and interest, commitment fees and other amounts paid or
payable with respect thereto as shall be necessary, in the opinion of the
Administrative Agent, in order to effect the foregoing; provided that regularly
accruing interest and fees through the Refinancing Effective Date (as well as
amounts owing to any Lender pursuant to Sections 3.01, 3.02, 3.03, 3.04, 3.05 or
10.04 of the Existing Credit Agreement or similar provisions pursuant to the
other Loan Documents) shall be retained by the respective Lenders to which such
amounts were owing and shall not be subject to the assignments sold and
purchased as otherwise required hereby.

 

2

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

  (b) (w) The Existing Credit Agreement is hereby amended and restated in the
form attached hereto as Exhibit A, (x) Schedule 2.01 of the Existing Credit
Agreement is hereby amended and restated in the form attached hereto as Exhibit
B and (y) the Security Agreement is hereby amended as follows:

 

  (1) The third parenthetical in Section 2(c) of the Security Agreement is
hereby amended and restated in its entirety as follows: “(including interests in
any Royalty Trust, payment intangibles, Swap Contracts and rights as
administrative agent or other agent under any loan agreements relating to
Pledged Debt (as defined below))”;

 

  (2) The first parenthetical in Section 2(g)(iv) of the Security Agreement is
hereby amended and restated in its entirety as follows: “(including all
(A) Securities, whether Certificated Securities or Uncertificated Securities,
(B) Security Entitlements, (C) Securities Accounts, (D) Commodity Contracts,
(E) Commodity Accounts and (F) all interests in any Royalty Trust)”;

 

  (3) Section 2 of the Security Agreement is hereby amended by adding the
following new sentence thereto immediately prior to the last sentence thereof
“Notwithstanding anything to the contrary contained herein or in any other Loan
Document, in no event shall any interests in any Royalty Trust constitute
Excluded Personal Property.”; and.

 

  (1) Section 5(i) of the Security Agreement is hereby amended and restated in
its entirety as follows: “Prior to the occurrence of an Event of Default,
clauses (a) through (e) above shall not be applicable to any Collateral except
(i) Pledged Equity constituting certificated securities and (ii) at the request
of the Administrative Agent, interests in any Royalty Trust.”;

and, in connection with the foregoing:

(i) The outstanding amount of Existing Commitments and Existing Loans of each
Participating Lender under the Existing Credit Agreement shall be deemed to be
exchanged for an equal amount Refinancing Commitments and Refinancing Loans,
respectively, under the Credit Agreement, having the terms and subject to the
conditions of Commitments (as defined in the Credit Agreement) and Loans (as
defined in the Credit Agreement). Such exchange shall be effected by book entry
in such manner, and with such supporting documentation, as may be reasonably
determined by the Administrative Agent.

(ii) To the extent there exists any Existing Lender which is not a Participating
Lender (a “Non-Participating Lender”), such Non-Participating Lenders shall be
replaced (and the Existing Commitments and Existing Loans of such
Non-Participating Lenders (the “Reallocated Commitments” and “Reallocated
Loans”, respectively) shall be assumed) by one or more Participating Lenders
pursuant to Section 10.13(iv) of the Credit Agreement as directed by the
Administrative Agent.

 

3. Refinancing Effective Date Conditions. This Agreement will become effective
on the date (the “Refinancing Effective Date”), on which each of the following
conditions have been satisfied (or waived) in accordance with the terms therein:

 

  (a) the Administrative Agent (or its counsel) shall have received a
counterpart of this Agreement from each of (i) the Borrower, (ii) the other Loan
Parties, (iii) Existing Lenders constituting the Required Lenders and (iv) the
New Lenders; provided that the Persons set forth in the foregoing clauses
(iii) and (iv) shall include the Participating Lenders required to effectuate
Section 2(b)(ii) of this Agreement;

 

3

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

  (b) the Administrative Agent shall have received a duly authorized and
executed certificate of a Responsible Officer of each Loan Party dated the
Refinancing Effective Date, certifying (i) that attached thereto is a true and
complete copy of each Organization Document of such Loan Party certified (to the
extent applicable) as of a recent date by the Secretary of State of the state of
its organization, (ii) that attached thereto is a true and complete copy of
resolutions duly adopted by such Loan Party authorizing the execution, delivery
and performance of this Agreement and the transactions contemplated hereby, and
that such resolutions have not been modified, rescinded or amended and are in
full force and effect and (iii) as to the incumbency and specimen signature of
each officer executing Agreement or any other document delivered in connection
herewith on behalf of such Loan Party (together with a certificate of another
Responsible Officer as to the incumbency and specimen signature of the secretary
or assistant secretary executing the certificate in this clause (b));

 

  (c) the Administrative Agent shall have received a certificate as to the good
standing of each Loan Party (in so-called “long-form” (if available)) as of a
recent date, from the applicable Secretary of State (or other applicable
Governmental Authority) for the jurisdiction of each such Loan Party’s
incorporation or organization;

 

  (d) the Administrative Agent shall have received a certificate dated the
Refinancing Effective Date and signed by a Responsible Officer of the Borrower,
confirming compliance with the conditions precedent set forth in Section 3(i),
(j) and (k);

 

  (e) the Administrative Agent shall have received a solvency certificate
substantially in the form of Exhibit F to the Existing Credit Agreement, dated
the Refinancing Effective Date and signed by the chief financial officer of the
Borrower;

 

  (f) the Administrative Agent shall have received, on behalf of itself and the
Lenders, customary written opinions of Kirkland & Ellis, LLP, counsel for the
Loan Parties, addressed to the Administrative Agent and the Participating
Lenders and covering such matters relating to the Loan Parties, this Agreement
and the transactions contemplated hereby as the Administrative Agent shall
reasonably request;

 

  (g) the Administrative Agent and the Participating Lenders shall have received
at least three Business Days prior to the Refinancing Effective Date, the
documentation and information required under applicable “know your customer” and
anti-money laundering rules and regulations, including without limitation, the
information required under Section 10.17 of the Existing Credit Agreement;
provided that the Administrative Agent or any such Lender shall have requested
such documentation and information at least seven days prior to the Refinancing
Effective Date;

 

  (h)

(i) the Administrative Agent shall have received (A) for the account of each
Existing Lenders party hereto, a fee in an amount equal to 0.20% multiplied by
such Existing Lender’s Applicable Percentage of the Borrowing Base (in each
case, after giving effect to this Agreement on the Refinancing Effective Date)
and (B) for the account of each Participating Lender (other than any
Participating Lender which does not provide an Additional Commitment or a
Reallocated Commitment), a fee in an amount equal to 0.50% multiplied by the
difference between (x) such Participating Lender’s Applicable

 

4

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

  Percentage of the Borrowing Base after giving effect to this Agreement on the
Refinancing Effective Date and (y) such Participating Lender’s Applicable
Percentage of the Borrowing Base immediately prior to the effectiveness of this
Agreement and (ii) RBC Capital Markets, as the lead arranger (the “Lead
Arranger”), shall have received all other amounts required to be paid on the
Refinancing Effective Date pursuant to that certain letter agreement, dated as
of February 10, 2017, among the Borrower and Royal Bank of Canada, including the
reimbursement or payment of all reasonable and documented out-of-pocket legal
fees, disbursements and other charges required to be paid thereunder;

 

  (i) each of the representations and warranties of the Borrower and each other
Loan Party contained in this Agreement or in any other Loan Document, or which
are contained in any document furnished at any time under or in connection
herewith or therewith, shall be true and correct in all material respects (or if
such representation or warranty is qualified by or subject to a “materiality”,
“material adverse effect”, “material adverse change” or any similar term or
qualification, such representation or warranty shall be true and correct in all
respects) on and as of the Refinancing Effective Date (and immediately after
giving effect to this Agreement), except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct, in all material respects (or if such representation or
warranty is qualified by or subject to a “materiality”, “material adverse
effect”, “material adverse change” or any similar term or qualification, such
representation or warranty shall be true and correct in all respects), as of
such earlier date;

 

  (j) at the time of, and immediately after giving effect to this Agreement, no
Default or Event of Default shall have occurred and be continuing on such date;
and

 

  (k) at the time of, and immediately after giving effect to this Agreement, no
Default or Event of Default (as such terms are defined in the indenture
governing the Post-Restructuring Convertible Notes) shall have occurred and be
continuing under the Post-Restructuring Convertible Notes.

 

4. Representations and Warranties. By its execution of this Agreement, each Loan
Party hereby represents and warrants that:

 

  (a) such Loan Party has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to execute,
deliver and perform its obligations under this Agreement;

 

  (b) the execution, delivery and performance by such Loan Party of this
Agreement have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (i) contravene the terms of any
of such Person’s Organization Documents; (ii) conflict with or result in any
breach or contravention of, or the creation of any Lien under, or require any
payment to be made under (x) any Contractual Obligation that is material to the
Loan Parties to which such Person is a party or (y) any order, injunction, writ
or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject; or (iii) violate any Law;

 

  (c)

no approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority or any other Person is necessary
or required in connection with (i) the execution, delivery or performance by, or
enforcement against,

 

5

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

  such Loan Party of this Agreement, (ii) the grant by any Loan Party of the
Liens granted by it pursuant to the Collateral Documents, (iii) the perfection
or maintenance of the Liens created under the Collateral Documents (including
the first-priority nature thereof) or (iv) the exercise by the Administrative
Agent or the Lenders of their rights under the Loan Documents or the remedies in
respect of the Collateral pursuant to the Collateral Documents, except for
(A) the authorizations, approvals, actions, notices and filings listed on
Schedule 5.03 to the Credit Agreement, all of which have been duly obtained,
taken, given or made and are in full force and effect, (B) authorizations,
approvals, actions, notices and filings in connection with the enforcement of
pledges of, and the sale of, the Pledged Equity in connection therewith,
(C) authorizations, approvals, actions, notices and filings required in
connection with the additional mortgage and security interests required to be
granted under this Agreement; (D) routine authorizations, approvals, actions,
notices and filings in the ordinary course of business (e.g. tax filings, annual
reports, environmental filings, etc.); (E) authorizations, approvals and
consents necessary in connection with the Borrower’s mineral class leases with
the general land office of the State of Texas; (F) the periodic filing of
continuation statements under the UCC, and (G) authorizations, approvals,
actions, notices and filings the failure of which to obtain, take or make could
not reasonably be expected to have a Material Adverse Effect;

 

  (d) this Agreement has been duly executed and delivered by such Loan Party;

 

  (e) this Agreement constitutes a legal, valid and binding obligation of such
Loan Party, enforceable against such Loan Party in accordance with its terms;
and

 

  (f) both immediately before and after giving effect to the Refinancing
Effective Date, (i) each of the representations and warranties of the Borrower
and each other Loan Party contained in any other Loan Document, or which are
contained in any document furnished at any time under or in connection herewith
or therewith, shall be true and correct in all material respects (or if such
representation or warranty is qualified by or subject to a “materiality”,
“material adverse effect”, “material adverse change” or any similar term or
qualification, such representation or warranty shall be true and correct in all
respects), except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct, in all material respects (or if such representation or warranty is
qualified by or subject to a “materiality”, “material adverse effect”, “material
adverse change” or any similar term or qualification, such representation or
warranty shall be true and correct in all respects), as of such earlier date and
(ii) no Default or Event of Default shall have occurred and be continuing.

 

5. Reaffirmation of the Loan Parties; Reference to and Effect on the Credit
Agreement and the other Loan Documents.

 

  (a)

Each Loan Party hereby consents to the amendment of the Existing Credit
Agreement effected hereby and confirms and agrees that, notwithstanding the
effectiveness of this Agreement, each Loan Document to which such Loan Party is
a party is, and the obligations of such Loan Party contained in the Credit
Agreement, this Agreement or in any other Loan Document to which it is a party
are, and shall continue to be, in full force and effect and are hereby ratified
and confirmed in all respects, in each case as amended by this Agreement. For
greater certainty and without limiting the foregoing, each Loan Party hereby
confirms that the existing security interests granted by such Loan Party in
favor of the Secured Parties pursuant to the Loan Documents in the Collateral
described

 

6

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

  therein shall continue to secure the obligations of the Loan Parties under the
Credit Agreement and the other Loan Documents as and to the extent provided in
the Loan Documents. Except as specifically amended by this Agreement, the Credit
Agreement and the other Loan Documents shall remain in full force.

 

  (b) The execution, delivery and performance of this Agreement shall not
constitute a waiver of any provision of, or operate as a waiver of any right,
power or remedy of the Administrative Agent or Lender under, the Credit
Agreement or any of the other Loan Documents.

 

  (c) On and after the Refinancing Effective Date, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Credit Agreement as amended by this Agreement.

 

6. Amendment, Modification and Waiver. This Agreement may not be amended,
modified or waived except as permitted by Section 10.01 of the Credit Agreement.

 

7. Integration. This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Lead Arranger and/or the
Administrative Agent or the syndication of the Additional Commitments constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. This Agreement shall not constitute a
novation of any amount owing under the Existing Credit Agreement and all amounts
owing in respect of principal, interest, fees and other amounts pursuant to the
Existing Credit Agreement and the other Loan Documents shall, to the extent not
paid or exchanged on or prior to the Refinancing Effective Date, shall continue
to be owing under the Credit Agreement or such other Loan Documents until paid
in accordance therewith.

 

8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

9. Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Agreement shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

10.

Counterparts. This Agreement may be executed in counterparts (and by different
parties hereto in different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. The words “execute”, “execution”, “signed”, “signature” and words of
like import in or related to any document to be signed in connection with this
Agreement and the transactions contemplated hereby (including without limitation
Assignment and Assumptions, amendments or other modifications, Committed Loan
Notices, waivers and consents) shall be deemed to include electronic signatures,
the electronic matching of assignment terms and contract formations on
electronic platforms approved by the Administrative Agent, or the keeping of
records in electronic form, each of which shall be of the same legal

 

7

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

  effect, validity or enforceability as a manually executed signature or the use
of a paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable Law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act; provided that notwithstanding anything contained herein to the
contrary the Administrative Agent is under no obligation to agree to accept
electronic signatures in any form or in any format unless expressly agreed to by
the Administrative Agent pursuant to procedures approved by it.

 

11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.

 

12. Loan Document. On and after the Refinancing Effective Date, this Agreement
shall constitute a “Loan Document” for all purposes of the Credit Agreement and
the other Loan Documents (it being understood that for the avoidance of doubt
this Agreement may be amended or waived solely by the parties hereto as set
forth in Section 6 above).

[Signature Pages Follow]

 

8

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

IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized
officer to execute and deliver this Agreement as of the date first set forth
above.

 

SANDRIDGE ENERGY, INC. By:  

/s/ Julian Bott

Name:

Title:

 

Julian Bott

Executive Vice President and

Chief Financial Officer

 

[SandRidge – Refinancing Amendment]

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

SANDRIDGE HOLDINGS, INC. By:  

/s/ Julian Bott

Name:   Julian Bott Title:   Executive Vice President and   Chief Financial
Officer SANDRIDGE EXPLORATION AND PRODUCTION, LLC By:  

/s/ Julian Bott

Name:   Title:   Executive Vice President and   Chief Financial Officer
SANDRIDGE MIDSTREAM, INC. By:  

/s/ Julian Bott

Name:   Title:   Executive Vice President and   Chief Financial Officer
SANDRIDGE OPERATING COMPANY By:  

/s/ Julian Bott

Name:   Title:   Executive Vice President and   Chief Financial Officer LARIAT
SERVICES, INC. By:  

/s/ Julian Bott

Name:   Title:   Executive Vice President and   Chief Financial Officer INTEGRA
ENERGY, L.L.C. By:  

/s/ Julian Bott

Name:   Title:   Executive Vice President and   Chief Financial Officer

 

[SandRidge – Refinancing Amendment]

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

ROYAL BANK OF CANADA,

as Administrative Agent

By:  

/s/ Susan Khokher

Name:   Susan Khokher Title:   Manager, Agency

 

[SandRidge – Refinancing Amendment]

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

ROYAL BANK OF CANADA,

as a Participating Lender

By:  

/s/ Don J. McKinnerney

Name:   Don J. McKinnerney Title:   Authorized Signatory

 

[SandRidge – Refinancing Amendment]

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

BARCLAYS BANK PLC,

as a Participating Lender

By:  

/s/ Ronnie Glenn

Name:   Ronnie Glenn Title:   Vice President

 

[SandRidge – Refinancing Amendment]

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

MORGAN STANLEY SENIOR FUNDING INC,

as a Participating Lender

By:  

/s/ Michael King

Name:   Michael King Title:   Vice President

MORGAN STANLEY BANK N.A.,

as a Participating Lender

By:  

/s/ Michael King

Name:   Michael King Title:   Authorized Signatory

 

[SandRidge – Refinancing Amendment]

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

CAPITAL ONE, NATIONAL ASSOCIATION,

as a Participating Lender

By:  

/s/ Michael Higgins

Name:   Michael Higgins Title:   Senior Director

 

[SandRidge – Refinancing Amendment]

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

CITIZENS BANK, N.A.,

as a Participating Lender

By:  

/s/ Scott Donaldson

Name:   Scott Donaldson Title:   Senior Vice President

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

GOLDMAN SACHS LENDING PARTNERS LLC,

as a Participating Lender

By:  

/s/ Josh Rosenthal

Name:   Josh Rosenthal Title:   Authorized Signatory

 

[SandRidge – Refinancing Amendment]

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

NATIXIS, NEW YORK BRANCH,

as a Participating Lender

By:  

/s/ Carlos Quinteros

Name:   Carlos Quinteros Title:   Managing Director By:  

/s/ Brice Le Foyer

Name:   Brice Le Foyer Title:   Director

 

[SandRidge – Refinancing Amendment]

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

SUNTRUST BANK,

as a Participating Lender

By:  

/s/ John Kovarik

Name:   John Kovarik Title:   Vice President

 

[SandRidge – Refinancing Amendment]

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

NEXTERA ENERGY MARKETING, LLC,

as a Participating Lender

By:  

/s/ Mark Palanchian

Name:   Mark Palanchian Title:   Vice President & Managing Director

 

[SandRidge – Refinancing Amendment]

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

UBS AG, STAMFORD BRANCH,

as a Participating Lender

By:  

/s/ Houssem Daly

Name:   Houssem Daly Title:   Associate Director By:  

/s/ Craig Pearson

Name:   Craig Pearson Title:   Associate Director

 

[SandRidge – Refinancing Amendment]

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

MACQUARIE BANK LIMITED,

as a Participating Lender

By:  

/s/ Byron den Hertog

Name:   Byron den Hertog Title:   Division Director By:  

/s/ Nathan Booker

Name:   Nathan Booker Title:   Division Director

 

[SandRidge – Refinancing Amendment]

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

Annex I

to Refinancing Amendment

 

New Lender

   Additional Commitment  

Royal Bank of Canada

   $ 24,500,000   

Barclays Bank PLC

   $ 24,500,000   

UBS AG, Stamford Branch

   $ 19,250,000   

SunTrust Bank

   $ 19,250,000   

Natixis, New York Branch

   $ 19,250,000   

Citizens Bank, N.A.

   $ 19,250,000   

Capital One, National Association

   $ 19,250,000   

Morgan Stanley Bank, N.A.

   $ 13,125,000   

Morgan Stanley Senior Funding, Inc.

   $ 11,375,000   

Goldman Sachs Lending Partners LLC

   $ 1,750,000   

NextEra Energy Marketing, LLC

   $ 1,750,000   

Macquarie Bank Limited

   $ 1,750,000      

 

 

 

Total:

   $ 175,000,000      

 

 

 

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

Exhibit A to Refinancing Amendment

 

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of February 10, 2017

among

SANDRIDGE ENERGY, INC.

as the Borrower,

ROYAL BANK OF CANADA,

as Administrative Agent

and

an L/C Issuer,

and

The Other Lenders Party Hereto

 

 

 

RBC CAPITAL MARKETS1,

as Sole Lead Arranger and Sole Book Manager

 

 

1  RBC Capital Markets is the global brand name of the corporate and investment
banking business of Royal Bank of Canada and its affiliates.

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

TABLE OF CONTENTS

 

          Page   ARTICLE I    DEFINITIONS AND ACCOUNTING TERMS   

Section 1.01

  

Defined Terms

     1   

Section 1.02

  

Other Interpretive Provisions

     31   

Section 1.03

  

Accounting Terms

     32   

Section 1.04

  

Petroleum Terms

     32   

Section 1.05

  

Rounding

     33   

Section 1.06

  

Times of Day

     33   

Section 1.07

  

Letter of Credit Amounts

     33   

Section 1.08

  

Available Amount Transactions

     33   

Section 1.09

  

Pro Forma Compliance Calculations

     33    ARTICLE II    THE COMMITMENTS AND CREDIT EXTENSIONS   

Section 2.01

  

Committed Loans

     33   

Section 2.02

  

Committed Borrowings, Conversions and Continuations of Committed Loans

     33   

Section 2.03

  

Letters of Credit

     35   

Section 2.04

  

[Reserved]

     42   

Section 2.05

  

Borrowing Base

     42   

Section 2.06

  

Prepayments

     45   

Section 2.07

  

Termination or Reduction of Commitments

     46   

Section 2.08

  

Repayment of Loans

     47   

Section 2.09

  

Interest

     47   

Section 2.10

  

Fees

     48   

Section 2.11

  

Computation of Interest and Fees

     48   

Section 2.12

  

Evidence of Debt

     48   

Section 2.13

  

Payments Generally; Administrative Agent’s Clawback

     49   

Section 2.14

  

Sharing of Payments by Lenders

     50   

Section 2.15

  

Defaulting Lenders

     51    ARTICLE III    TAXES, YIELD PROTECTION AND ILLEGALITY   

Section 3.01

  

Taxes

     53   

Section 3.02

  

Illegality

     55   

Section 3.03

  

Inability to Determine Rates

     56   

Section 3.04

  

Increased Costs; Reserves on Eurodollar Rate Loans

     56   

Section 3.05

  

Compensation for Losses

     57   

Section 3.06

  

Mitigation Obligations; Replacement of Lenders

     58   

Section 3.07

  

Survival

     58    ARTICLE IV    CONDITIONS PRECEDENT TO CREDIT EXTENSIONS   

Section 4.01

  

Conditions to Existing Credit Agreement

     58   

Section 4.02

  

Conditions to All Credit Extensions

     61    ARTICLE V    REPRESENTATIONS AND WARRANTIES   

Section 5.01

  

Existence, Qualification and Power

     62   

Section 5.02

  

Authorization; No Contravention

     62   

 

i

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

Section 5.03

  

Governmental Authorization; Other Consents

     62   

Section 5.04

  

Binding Effect

     63   

Section 5.05

  

Financial Statements; No Material Adverse Effect

     63   

Section 5.06

  

Litigation

     63   

Section 5.07

  

No Default

     64   

Section 5.08

  

Ownership of Property; Liens

     64   

Section 5.09

  

Environmental Compliance

     64   

Section 5.10

  

Insurance

     64   

Section 5.11

  

Taxes

     65   

Section 5.12

  

ERISA Compliance

     65   

Section 5.13

  

Subsidiaries; Equity Interests; Loan Parties

     65   

Section 5.14

  

Margin Regulations; Investment Company Act

     65   

Section 5.15

  

Disclosure

     66   

Section 5.16

  

Compliance with Laws

     66   

Section 5.17

  

Solvency

     66   

Section 5.18

  

Casualty, Etc

     66   

Section 5.19

  

Labor Matters

     66   

Section 5.20

  

Collateral Documents

     66   

Section 5.21

  

Engineered Oil and Gas Properties

     67   

Section 5.22

  

Sale of Production

     67   

Section 5.23

  

OFAC

     69   

Section 5.24

  

Anti-Corruption Laws

     69   

Section 5.25

  

PATRIOT Act

     69    ARTICLE VI    AFFIRMATIVE COVENANTS   

Section 6.01

  

Financial Statements

     69   

Section 6.02

  

Certificates; Other Information

     71   

Section 6.03

  

Notices

     72   

Section 6.04

  

Payment of Obligations

     73   

Section 6.05

  

Preservation of Existence, Etc

     73   

Section 6.06

  

Maintenance of Properties

     73   

Section 6.07

  

Maintenance of Insurance

     73   

Section 6.08

  

Compliance with Laws

     74   

Section 6.09

  

Books and Records

     74   

Section 6.10

  

Inspection Rights

     74   

Section 6.11

  

Use of Proceeds

     74   

Section 6.12

  

Covenant to Guarantee Obligations and Give Security

     74   

Section 6.13

  

Compliance with Environmental Laws

     76   

Section 6.14

  

Further Assurances

     76   

Section 6.15

  

Production Proceeds

     76   

Section 6.16

  

Anti-Corruption, Anti-Terrorism and Anti-Money Laundering Laws

     77   

Section 6.17

  

Post-Closing Changes

     77   

Section 6.18

  

Accounts

     77    ARTICLE VII    NEGATIVE COVENANTS   

Section 7.01

  

Liens

     78   

Section 7.02

  

Investments

     80   

Section 7.03

  

Indebtedness

     82   

Section 7.04

  

Fundamental Changes

     84   

 

ii

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

Section 7.05

  

Dispositions

     84   

Section 7.06

  

Restricted Payments

     86   

Section 7.07

  

Change in Nature of Business

     87   

Section 7.08

  

Transactions with Affiliates

     87   

Section 7.09

  

Burdensome Agreements

     87   

Section 7.10

  

Use of Proceeds

     87   

Section 7.11

  

Financial Covenants

     87   

Section 7.12

  

Hedge Transactions

     88   

Section 7.13

  

Sanctions

     88   

Section 7.14

  

Anti-Corruption Laws

     89   

Section 7.15

  

Prepayment of Restricted Debt

     89    ARTICLE VIII    EVENTS OF DEFAULT AND REMEDIES   

Section 8.01

  

Events of Default

     89   

Section 8.02

  

Remedies Upon Event of Default

     91   

Section 8.03

  

Application of Funds

     92    ARTICLE IX    ADMINISTRATIVE AGENT   

Section 9.01

  

Appointment and Authority

     93   

Section 9.02

  

Rights as a Lender

     93   

Section 9.03

  

Exculpatory Provisions

     93   

Section 9.04

  

Reliance by Administrative Agent

     94   

Section 9.05

  

Delegation of Duties

     94   

Section 9.06

  

Resignation of Administrative Agent

     94   

Section 9.07

  

Non-Reliance on Administrative Agent and Other Lenders

     95   

Section 9.08

  

No Other Duties, Etc

     95   

Section 9.09

  

Administrative Agent May File Proofs of Claim

     96   

Section 9.10

  

Collateral and Guaranty Matters

     96   

Section 9.11

  

Flood Insurance

     97   

Section 9.12

  

Intercreditor Agreements

     97    ARTICLE X    MISCELLANEOUS   

Section 10.01

  

Amendments, Etc

     98   

Section 10.02

  

Notices; Effectiveness; Electronic Communication

     99   

Section 10.03

  

No Waiver; Cumulative Remedies

     101   

Section 10.04

  

Expenses; Indemnity; Damage Waiver

     101   

Section 10.05

  

Payments Set Aside

     103   

Section 10.06

  

Successors and Assigns

     103   

Section 10.07

  

Treatment of Certain Information; Confidentiality

     107   

Section 10.08

  

Right of Setoff

     108   

Section 10.09

  

Interest Rate Limitation

     108   

Section 10.10

  

Counterparts; Integration; Effectiveness

     109   

Section 10.11

  

Survival of Representations and Warranties

     109   

Section 10.12

  

Severability

     109   

Section 10.13

  

Replacement of Lenders

     109   

Section 10.14

  

Governing Law; Jurisdiction; Etc

     110   

Section 10.15

  

Waiver of Jury Trial

     111   

Section 10.16

  

No Advisory or Fiduciary Responsibility

     111   

 

iii

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

Section 10.17

  

USA PATRIOT Act Notice

     112   

Section 10.18

  

Electronic Execution of Assignments and Certain Other Documents

     112   

Section 10.19

  

Amendment and Restatement

     112   

Section 10.20

  

Keepwell

     112   

Schedules and Exhibits

 

Schedule 2.01

  

Commitments and Applicable Percentages

Schedule 5.03

  

Governmental Authorizations

Schedule 5.06

  

Litigation

Schedule 5.09

  

Environmental Matters

Schedule 5.13

  

Subsidiaries, Other Equity Investments and Loan Party Information

Schedule 5.22

  

Sale of Production

Schedule 7.01

  

Existing Liens

Schedule 7.02

  

Existing Investments

Schedule 7.03

  

Existing Indebtedness

Schedule 10.02

  

Administrative Agent’s Office; Certain Addresses for Notices

Exhibit A

  

Form of Committed Loan Notice

Exhibit B

  

Form of Prepayment Notice

Exhibit C

  

Form of Note

Exhibit D

  

Form of Compliance Certificate

Exhibit E

  

Form of Assignment and Assumption

Exhibit F

  

Form of Solvency Certificate

Exhibit G

  

Form of Guaranty

Exhibit H

  

Form of Mortgage

Exhibit I

  

Form of Security Agreement

Exhibit J

  

Form of Convertible Notes Intercreditor Agreement

 

iv

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

AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of February 10,
2017 among SANDRIDGE ENERGY, INC., a Delaware corporation (the “Borrower”), each
LENDER from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”) and ROYAL BANK OF CANADA., as Administrative Agent and
an L/C Issuer.

PRELIMINARY STATEMENTS:

WHEREAS, the Borrower has requested that the Administrative Agent and the
Lenders amend and restate the Existing Credit Agreement.

WHEREAS, the Administrative Agent and the Lenders are willing to do so on the
terms and conditions set forth herein.

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

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.01 Defined Terms. As used in this Agreement, the following terms shall
have the meanings set forth below:

“Administrative Agent” means Royal Bank of Canada in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

“Administrative Agent Fee Letter” means that certain Administrative Agent Fee
Letter, dated as of October 4, 2016, among the Administrative Agent and the
Borrower.

“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or
account as the Administrative Agent may from time to time notify to the Borrower
and the Lenders.

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

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

“Agent Parties” has the meaning specified in Section 10.02(c).

“Aggregate Commitments” means the Commitments of all the Lenders. As of the
Effective Date, the amount of the Aggregate Commitments is $600,000,000.

“Aggregate Exposure” means, with respect to any Lender, at any time, the sum of
(a) the aggregate Outstanding Amount of the Committed Loans of such Lender plus
(b) such Lender’s Applicable Percentage of the Outstanding Amount of all L/C
Obligations.

“Agreement” means this Credit Agreement, as the same may be further amended from
time to time.

 

1

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

“Applicable Percentage” means with respect to any Lender at any time, the
percentage (carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender’s Commitment at such time. If the commitment of each
Lender to make Committed Loans and the obligation of each L/C Issuer to make L/C
Credit Extensions have been terminated pursuant to Section 8.02 or if the
Aggregate Commitments have expired, then the Applicable Percentage of each
Lender shall be determined based on the Applicable Percentage of such Lender
most recently in effect, giving effect to any subsequent assignments. The
initial Applicable Percentage of each Lender is set forth opposite the name of
such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable.

“Applicable Rate” means, at any date, the applicable percentage per annum set
forth below, based upon the Borrowing Base Utilization Ratio at such date:

 

         Applicable Margin        

Level

   Borrowing Base
Utilization Ratio   Base Rate     Eurodollar Rate +
Letters of Credit     Commitment Fee  

1

   > 90%     3.000 %      4.000 %      0.500 % 

2

   > 75% and < 90%     2.750 %      3.750 %      0.500 % 

3

   > 50% and < 75%     2.500 %      3.500 %      0.500 % 

4

   > 25% and < 50%     2.250 %      3.250 %      0.500 % 

5

   < 25%     2.000 %      3.000 %      0.500 % 

Each change in the Applicable Rate shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change.

“Approved 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.

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

“Arranger” means RBC Capital Markets1 in its capacity as sole lead arranger and
sole book manager in respect of this Agreement.

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.

“Assignment and Assumption” 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 10.06(b)), and accepted by the Administrative Agent, in
substantially the form of Exhibit E or any other form approved by the
Administrative Agent.

“Attributable Indebtedness” means, on any date, (a) in respect of any Capital
Lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a Capital Lease.

 

 

1  RBC Capital Markets is the global brand name of the corporate and investment
banking business of Royal Bank of Canada and its affiliates

 

2

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

“Audited Financial Statements” means the audited consolidated balance sheet of
the Borrower and its Subsidiaries for the fiscal year ended December 31, 2015,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of the Borrower and its Subsidiaries,
including the notes thereto.

“Auto-Extension Letter of Credit” has the meaning specified in
Section 2.03(c)(iii).

“Auto-Reinstatement Letter of Credit” has the meaning specified in
Section 2.03(c)(iv).

“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.07 and (c) the date of termination
of the commitment of each Lender to make Committed Loans and of the obligation
of the L/C Issuers to make L/C Credit Extensions pursuant to Section 8.02.

“Available Amount” means, at any time (the “Reference Date”), the sum of
(without duplication):

(a) $75,000,000; plus

(b) the amount of any capital contributions made in cash after the Closing Date
or Net Cash Proceeds from the issuance of Equity Interests (other than
Disqualified Stock) of the Borrower or any Restricted Subsidiary after the
Closing Date (or issuances after the Closing Date of debt securities that have
been converted into or exchanged for Qualified Stock) received by or contributed
to the Borrower (or any direct or indirect parent thereof and contributed by
such parent to the Borrower) during the period from and including the Business
Day immediately following the Closing Date through and including the Reference
Date, in each case, other than to the extent constituting Cure Proceeds; plus

(c) an amount equal to any returns (including dividends, distributions, returns
of principal, repayments and similar amounts) actually received in cash or Cash
Equivalents, and any Net Cash Proceeds of any sales or other dispositions
actually received, by the Borrower or any of its Subsidiaries in respect of any
Investments made after the Closing Date pursuant to Sections 7.02(c), (h), (i),
and (q); provided that such amount may not exceed the original Investment made
using the Available Amount pursuant to Section 7.02(c), (h), (i), or (q), as
applicable; minus

(d) the aggregate amount of Investments made pursuant to Sections 7.02(c), (h),
(i), and (q), Indebtedness incurred and outstanding pursuant to Sections 7.03(g)
and Section 7.03(h), Restricted Payments made pursuant to Section 7.06(g) and
payments in respect of Restricted Debt made pursuant to clause (iv) of
Section 7.15(a), all during the period commencing on the Closing Date and ending
on the Reference Date (but excluding the intended usage of the Available Amount
on such Reference Date by the particular Investment or Restricted Payment).

“Available Amount Conditions” shall be satisfied, with respect to any
transaction at any time, if (a) no Default or Event of Default shall have
occurred and be continuing or shall result from the applicable transaction;
(b) the Borrower shall be in compliance, on a pro forma basis, with each of the
Financial Covenants set forth in Section 7.11; and (c) after giving effect to
such transaction, the Available Borrowing Base shall not be less than 10.0% of
the Facility Limit.

 

3

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

“Available Borrowing Base” means, at any time of determination, the remainder of
(a) the Facility Limit minus (b) the Total Outstandings.

“Available Commitment” means, at any time of determination, the remainder of
(a) the Facility Limit at such time minus the Total Outstandings.

“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.

“Bankruptcy Code” means Title 11 of the United States Code, or any similar
federal or state law for the relief of debtors.

“Bankruptcy Court” means the United States Bankruptcy Court for the Southern
District of Texas.

“Base Rate” means for any day a fluctuating rate per annum equal to the highest
of (i) the Federal Funds Rate plus 1/2 of 1.00%, (ii) the rate of interest in
effect for such day as publicly announced from time to time by the
Administrative Agent as its “prime rate” and (iii) the Eurodollar Rate for such
day (after giving effect to clause (ii) of the final paragraph of the definition
thereof) plus 1.00% per annum. The “prime rate” is a rate set by the
Administrative Agent based upon various factors including the Administrative
Agent’s costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate. Any change in such prime rate announced by
the Administrative Agent shall take effect at the opening of business on the day
specified in the public announcement of such change.

“Base Rate Loan” means a Committed Loan that bears interest based on the Base
Rate.

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

“Borrower” has the meaning specified in the introductory paragraph hereto.

“Borrower Materials” has the meaning specified in Section 6.02.

“Borrowing Base” means, on any date, either the amount provided for in
Section 2.05(a) or the amount determined in accordance with the provisions of
Section 2.05(b), as the same may be reduced from time to time pursuant to
Sections 2.05(c), (d) and (e).

“Borrowing Base Utilization Ratio” means at any time the ratio (expressed as a
percentage) determined by taking the Total Outstandings and dividing by the
Borrowing Base.

“Borrowing Base Deficiency” means, as of any date, the amount, if any, by which
the Total Outstandings on such date exceeds the Borrowing Base in effect on such
date.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, Oklahoma City, Oklahoma and the State of New York, and, if such day
relates to any Eurodollar Rate Loan, means any such day on which dealings in
Dollar deposits are conducted by and between banks in the London interbank
eurodollar market.

 

4

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

“Capital Lease” means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as a lessee that, in conformity
with GAAP, is, or is required to be, accounted for as a capital lease on the
balance sheet of that Person; provided that leases that are recharacterized as
Capital Leases due to a change in GAAP after the Closing Date shall not be
treated as Capital Leases for any purposes under this Agreement but shall
instead be treated as they would have been in accordance with GAAP as in effect
on the Closing Date.

“Cash Collateral” has the meaning specified in Section 2.03(h).

“Cash Collateralize” has the meaning specified in Section 2.03(h).

“Cash Equivalents” means, at any date of determination, any of the following
types of Investments:

(a) readily marketable obligations issued or directly and fully guaranteed or
insured by the United States or any state, territory or commonwealth of the
United States or any political subsidizations of any such state, territory of
commonwealth of the United States, including any agency or instrumentality
thereof, in each case, having maturities of not more than 24 months from the
date of acquisition thereof; provided that the full faith and credit of the
United States is pledged in support thereof; provided, further, that, for the
avoidance of doubt, treasury securities issued by the United States shall be
deemed to be Cash Equivalents for purposes of this clause (a);

(b) time deposits with, or insured certificates of deposit or bankers’
acceptances of, any commercial bank that (A) is a Lender or (B)(i) is organized
under the laws of the United States, any state thereof or the District of
Columbia or is the principal banking subsidiary of a bank holding company
organized under the laws of the United States, any state thereof or the District
of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the
parent of which issues) commercial paper rated as described in clause (c) of
this definition and (iii) has combined capital and surplus of at least
$500,000,000;

(c) commercial paper issued by any Person organized under the laws of any state
of the United States and rated at least “Prime-1” (or the then equivalent
grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in
each case with maturities of not more than 12 months from the date of
acquisition thereof; and

(d) Investments, classified in accordance with GAAP as current assets of the
Borrower or any of its Restricted Subsidiaries, in money market investment
programs registered under the Investment Company Act of 1940, which are
administered by financial institutions that have the highest rating assigned at
that time from either Moody’s or S&P, and the portfolios of which are limited
solely to Investments of the character, quality and maturity described in
clauses (a), (b) and (c) of this definition;

(e) readily marketable direct obligations issued by any foreign government or
any political subdivision or public instrumentality thereof, in each case rated
at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1”
(or the then equivalent grade) by S&P, in each case with maturities of 24 months
or less from the date of acquisition;

 

5

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

(f) repurchase obligations for underlying securities of the types described in
clauses (a) and (b) entered into with any financial institution or recognized
securities dealer meeting the qualifications specified in clause (b) above; and

(g) investment funds investing at least 90.0% of their assets in funds or
securities of the types described in clauses (a) through (f) above.

“Casualty Event” means any loss, casualty or other insured damage to, or any
nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Engineered Oil and Gas Property of the Borrower or
any of its Restricted Subsidiaries.

“CERCLIS” means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.

“CFC” means a Person that is a controlled foreign corporation under Section 957
of the Code.

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any Law, rule, regulation
or treaty; (b) any change in any Law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline, directive or
order (whether or not having the force of law) by any Governmental Authority or
quasi-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, orders, regulations and directives
thereunder or issued in connection therewith and (y) all requests, rules,
guidelines, orders, regulations 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 “Change in Law”, regardless of the date enacted, adopted or issued.

“Change of Control” means an event or series of events by which:

(a) (1) any Person (other than any Permitted Holder), or Persons (other than one
or more of the Permitted Holders) constituting a “group” (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but
excluding any employee benefit plan of such Person or its Subsidiaries, and any
Person or entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that
such Person or group shall be deemed to have “beneficial ownership” of all
securities that such Person or group has the right to acquire, whether such
right is exercisable immediately or only after the passage of time (such right,
an “option right”)), directly or indirectly, of more than 35% of the Equity
Interests of the Borrower entitled to vote for members of the board of directors
or equivalent governing body of the Borrower on a fully-diluted basis (and
taking into account all such securities that such “Person” or “group” has the
right to acquire pursuant to any option right); or

(b) during any period of 12 consecutive months, a majority of the members of the
board of directors or other equivalent governing body of the Borrower cease to
be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body.

 

6

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

“Closing Date” means October 4, 2016.

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

“Collateral” means all of the “Collateral” and “Mortgaged Property” referred to
in the Collateral Documents and all of the other property that is or is intended
under the terms of the Collateral Documents to be subject to Liens in favor of
the Administrative Agent for the benefit of the Secured Parties. Notwithstanding
anything else to the contrary, “Collateral” shall not include any Building (as
defined in the applicable Flood Insurance Regulation) or Manufactured
(Mobile) Home (as defined in the applicable Flood Insurance Regulation) included
in the definition of “Mortgaged Property” and no Building or Manufactured
(Mobile) Home shall be encumbered by any Mortgage.

“Collateral Documents” means, collectively, the Security Agreement, the
Mortgages, each of the mortgages, collateral assignments, Security Agreement
Supplements, security agreements, pledge agreements or other similar agreements
delivered to the Administrative Agent pursuant to the Security Agreement or
Sections 4.01, 6.12 or 6.14 hereof, and each of the other agreements,
instruments or documents that creates or purports to create a Lien in favor of
the Administrative Agent for the benefit of the Secured Parties.

“Collateral Trust Account” means that certain account established at Wilmington
Trust, National Association by the Borrower to hold $100.00 in trust for
purposes of establishing the trust estate pursuant to the terms of the
Subordinated Collateral Trust Agreement.

“Commitment” means, as to each Lender, its obligation to (a) make Committed
Loans to the Borrower pursuant to Section 2.01 and (b) purchase participations
in L/C Obligations, in an aggregate principal amount at any one time outstanding
not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01
or in the Assignment and Assumption pursuant to which such Lender becomes a
party hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.

“Commitment Fee” means has the meaning specified in Section 2.10(a).

“Committed Borrowing” means a borrowing consisting of simultaneous Committed
Loans of the same Type and, in the case of Eurodollar Rate Loans, having the
same Interest Period made by each of the Lenders pursuant to Section 2.02.

“Committed Loan” has the meaning specified in Section 2.01(a).

“Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other, or (c) a continuation
of Eurodollar Rate Loans, pursuant to Section 2.02(a), which shall be
substantially in the form of Exhibit A or such other form as may be approved by
the Administrative Agent (including any form on an electronic platform or
electronic transmission system as shall be approved by the Administrative
Agent), appropriately completed and signed by a Responsible Officer of the
Borrower.

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

 

7

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

“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.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit D.

“Consolidated” refers to the consolidation of any Person, in accordance with
GAAP, with its properly consolidated subsidiaries. References herein to a
Person’s Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.

“Consolidated EBITDA” means for any period, the Consolidated Net Income of the
Borrower for such period, plus each of the following (without
duplication) determined for the Borrower and its Consolidated Restricted
Subsidiaries on a Consolidated basis for such period: (a) any provision for (or
less any benefit from) income or franchise taxes included in determining
Consolidated Net Income; (b) any interest expense, premium payments, debt
discount and financing fees and expenses of the Borrower or its Restricted
Subsidiaries deducted in determining Consolidated Net Income; (c) any
depreciation, depletion or amortization expense deducted in determining
Consolidated Net Income; (d) any non-cash loss on change in fair value of
derivative instruments deducted in determining Consolidated Net Income; (e) any
other non-cash charge, expense or loss deducted in determining Consolidated Net
Income; and (f) one-time cash expenses and restructuring, severance, termination
and other one time costs, expenses or charges (whether cash or
non-cash) incurred in connection with the acquisition or disposition of any
entity or line of business permitted hereunder, the closure or consolidation of
facilities, the termination or modification of contracts or any benefit or
employee plans, or the institution of cost savings initiatives or other business
optimization or restructuring programs; and minus each of the following (without
duplication) determined for the Borrower and its Consolidated Restricted
Subsidiaries on a Consolidated basis for such period, to the extent included in
determining such Consolidated Net Income for such period: (i) any non-cash gain
on change in fair value of derivative instruments included in determining
Consolidated Net Income; (ii) any interest income included in determining
Consolidated Net Income; and (iii) any other non-cash income or gains included
in determining Consolidated Net Income; provided, however, that in determining
Consolidated Net Income for the purposes of this definition for any period in
which the Borrower or any of its Consolidated Restricted Subsidiaries has
acquired or acquires additional Consolidated Restricted Subsidiaries (whether by
purchase, merger or otherwise) or has acquired or disposed of or acquires or
disposes of producing Oil and Gas Properties, (x) the Consolidated Net Income of
such acquired Consolidated Restricted Subsidiaries shall be included in such
calculation on a pro forma basis as if they had been owned by the Borrower and
its Consolidated Restricted Subsidiaries throughout such period, (y) the
revenues attributable to the oil and gas production from such acquired Oil and
Gas Properties during such period, less the direct operating expenses and
severance and ad valorem taxes incurred with respect to such properties during
such period, shall be included in such calculation on a pro forma basis as if
they had been owned by the Borrower and its Consolidated Restricted Subsidiaries
throughout such period and (z) the revenues attributable to the oil and gas
production from producing Oil and Gas Properties disposed of during such period,
less the direct operating expenses and severance and ad valorem taxes incurred
with respect to such properties during such period, shall be deducted in such
calculation on a pro forma basis as if they had not been owned by the Borrower
and its Consolidated Restricted Subsidiaries throughout such period. Pro forma
adjustments made in connection with Subsidiaries or Oil and Gas Properties
acquired or disposed of shall be consistent with Article 11 of Regulation S-X
and certified by the Borrower’s chief financial officer.

“Consolidated Interest Coverage Ratio” means, as of any date of determination,
the ratio of (a) Consolidated EBITDA for the period of four consecutive fiscal
quarters most recently ended on or prior to such date for which financial
statements have been, or were required to be, delivered pursuant to Section
6.01(a) or (b), as applicable to (b) Consolidated Interest Expense for such
period.

 

8

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

“Consolidated Interest Expense” means, for any period, with respect to the
Borrower and its Restricted Subsidiaries on a Consolidated basis, total cash
interest expense (including that portion attributable to Capital Leases in
accordance with GAAP and capitalized interest) net of cash interest income,
including all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers’ acceptance financing and net costs
under Swap Contracts and other Hedge Transactions, but excluding, for the
avoidance of doubt, (a) amortization of deferred financing costs, debt discounts
or premiums, amendment and consent fees, debt issuance costs, commissions, fees
and expenses, pay-in-kind interest expense, discounted liabilities and any other
amounts of non-cash interest (including as a result of the effects of
acquisition method accounting or push-down accounting), (b) any expensing of
bridge, commitment fees and other financing fees and any other fees related to
the Transactions or any acquisitions after the Closing Date, (c) non-cash
interest expense attributable to the movement of the mark-to-market valuation of
obligations under Swap Contracts, other Hedge Transactions or other derivative
instruments, (d) penalties and interest relating to taxes, (e) any non-recurring
cash interest expense consisting of “additional interest” or “liquidated
damages” with respect to other securities for failure to timely comply with
registration rights obligations, (f) annual agency fees paid to the
administrative agents and collateral agents under any credit facilities or other
debt instruments or documents and (g) any one-time cash costs associated with
breakage in respect of Swap Contracts for interest rates.

“Consolidated Net Income” means, for any period, the net income (or loss) of the
Borrower and its Consolidated Restricted Subsidiaries for such period determined
in accordance with GAAP; provided that the following shall be excluded in
calculating Consolidated Net Income and Consolidated EBITDA: (i) any
extraordinary items of gain or loss; (ii) any gain or loss from the sale of
assets other than in the ordinary course of business; (iii) any non-cash income,
gains, losses or charges resulting from the requirements of SFAS 133 or 143;
(iv) the net income (or loss) of any Royalty Trust, any master limited
partnership or any person accounted for on the equity method, except to the
extent of cash distributions received by the Borrower or a Consolidated
Restricted Subsidiary for such period and (v) any income attributable to
cancellation or early extinguishment of any Indebtedness of the Borrower or a
Consolidated Restricted Subsidiary.

“Consolidated Total Indebtedness” means, as of any date of determination, with
respect to the Borrower and its Restricted Subsidiaries on a Consolidated basis,
the sum of (without duplication) (a) the aggregate principal amount of
Indebtedness of the Borrower and its Restricted Subsidiaries outstanding as of
such date, but solely to the extent consisting of Indebtedness for borrowed
money, obligations in respect of Capital Leases, Synthetic Lease Obligations,
any debt obligations evidenced by bonds, notes, debentures, promissory notes or
similar instruments and any obligations in respect of drawn letters of credit
(which have not been reimbursed within one Business Day after such amount is
drawn), as determined in accordance with GAAP (excluding, for the avoidance of
doubt, all undrawn amounts under revolving credit facilities and letters of
credit and all Swap Obligations) minus (b) up to $30,000,000 of the aggregate
amount of cash and Cash Equivalents of the Borrower and its Restricted
Subsidiaries on such date; provided that Consolidated Total Indebtedness shall
not, in any event, include Indebtedness in respect of obligations under Swap
Contracts (but shall include unpaid termination payments in respect thereof) or
obligations in respect of the Convertible Notes.

“Consolidated Total Net Leverage Ratio” means, as of any date of determination,
the ratio of (a) Consolidated Total Indebtedness on such date to
(b) Consolidated EBITDA for the period of four consecutive fiscal quarters most
recently ended on or prior to such date for which financial statements have
been, or were required to be, delivered pursuant to Section 6.01(a) or (b), as
applicable.

 

9

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

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

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

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Administrative Agent, providing for the Administrative Agent’s
exclusive control of a Deposit Account, Securities Account or Commodity Account,
as applicable, after notice of an Event of Default, executed and delivered by
the Borrower or Subsidiary, as applicable, and the applicable securities
intermediary (with respect to a Securities Account), bank (with respect to a
Deposit Account) or commodity intermediary (with respect to a Commodity
Account), in each case at which such relevant account is maintained.

“Convertible Notes” means the 0.00% Convertible Senior Subordinated Notes due
2020 issued pursuant to that certain Indenture dated October 4, 2016 among the
Chapter 11 Debtors, Wilmington Trust National Association, as Trustee, and
certain other parties thereto, and any Permitted Refinancings thereof.

“Convertible Notes Intercreditor Agreement” means the Intercreditor and
Subordination Agreement executed by Wilmington Trust National Association, as
Trustee, and representative for the holders of the Convertible Notes, the
Administrative Agent and the Borrower and the Guarantors, in substantially the
form attached hereto as Exhibit J, as the same may be amended, restated, amended
and restated, modified or supplemented from time to time in accordance with the
terms hereof and thereof.

“COPAS” means the Council of Petroleum Accountants Societies.

“Credit Extension” means each of the following: (a) a Committed Borrowing and
(b) an L/C Credit Extension.

“Cure Proceeds” has the meaning specified in Section 7.11(c)(ii).

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

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

“Default Rate” means (a) when used with respect to Obligations other than Letter
of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2.00% per
annum; provided, however, that with respect to a Eurodollar Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including any
Applicable Rate) otherwise applicable to such Committed Loan plus 2.00% per
annum and (b) when used with respect to Letter of Credit Fees, a rate equal to
the Applicable Rate plus 2.00% per annum.

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
(i) the Committed Loans within two Business Days of the date such Committed
Loans were required to be

 

10

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

funded hereunder unless such Lender notifies the Administrative Agent and the
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) the
participations in L/C Obligations required to be funded by it hereunder within
two Business Days of the date required to be funded by it hereunder unless such
failure has been cured, (b) has otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within two Business Days of the date when due, unless the subject
of a good faith dispute or unless such failure has been cured, (c) has notified
the Borrower, the Administrative Agent or any L/C Issuer 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 Committed 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), (d) has failed, within three Business Days after written request by
the Administrative Agent or the Borrower, to confirm in writing to the
Administrative Agent and the Borrower that it will comply with its prospective
funding obligations hereunder (provided that such Lender shall cease to be a
Defaulting Lender pursuant to this clause (d) upon receipt of such written
confirmation by the Administrative Agent and the Borrower) or (e) 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 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 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.

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

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

“Determination Date” has the meaning specified in Section 2.05(b).

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction but excluding all
events described in the definition of “Casualty Event” regardless of the value
thereof) of any property by any Person (or the granting of any option or other
right to do any of the foregoing), including any sale, assignment, transfer or
other disposal, with or without recourse, of any notes or accounts receivable or
any rights and claims associated therewith. The issuance of Equity Interests by
any Restricted Subsidiary to any Person other than the Borrower or a
wholly-owned Restricted Subsidiary shall be deemed a Disposition by the Borrower
of its direct or indirect Equity Interest in such Restricted Subsidiary to the
extent of the resulting dilution.

“Disqualified Stock” means any capital stock that, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event (other than a change in control or asset
sale), (a) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof
(other than solely as a result of a change of control or asset sale so long as
any rights of the holders thereof upon the occurrence

 

11

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

of a change of control or asset sale event shall be subject to the prior
repayment in full of the Loans and all other Obligations (other than
(i) contingent indemnification obligations as to which no claim has been
asserted and (ii) Swap Obligations and Treasury Management Services
Agreements)), in whole or in part, on or prior to the date that is 91 days after
the earlier of the latest final maturity of the Committed Loans or the date the
Loans are no longer outstanding, except to the extent that such capital stock is
redeemable with, or solely exchangeable for, any capital stock of such Person
that is not Disqualified Stock, (b) provide for the scheduled payment of
dividends in cash or (c) is or becomes convertible into or exchangeable for
Indebtedness or any Equity Interests that would constitute Disqualified Stock,
in each case, prior to the date that is 91 days after the Maturity Date;
provided that, if such capital stock is issued to any plan for the benefit of
employees of the Borrower or its Subsidiaries or by any such plan to such
employees, such capital stock shall not constitute Disqualified Stock solely
because it may be required to be repurchased by the Borrower or its Subsidiaries
in order to satisfy applicable statutory or regulatory obligations; provided,
further, that any capital stock held by any future, present or former employee,
director, manager or consultant of the Borrower, any of its Subsidiaries or any
of its direct or indirect parent companies or any other entity in which the
Borrower or a Subsidiary has an Investment and is designated in good faith as an
“affiliate” by the board of directors or managers of the Borrower, in each case
pursuant to any equity holders’ agreement, management equity plan or stock
incentive plan or any other management or employee benefit plan or agreement
shall not constitute Disqualified Stock solely because it may be required to be
repurchased by the Borrower or its Subsidiaries.

“Dollar” and “$” mean lawful money of the United States.

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

“EEA Member Country” 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.

“Effective Date” means February 10, 2017.

“Election Notice” has the meaning specified in Section 2.06(b)(ii).

“Electrical Assets” means (i) assets used primarily for the transmission and
delivery of electricity, including electrical substations, power lines and other
electrical infrastructure assets and (ii) Equity Interests of any Person that
has no substantial assets other than assets referred to in clause (i).

“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 10.06(b)(iii), (v), (vi) and (vii) (subject to such
consents, if any, as may be required under Section 10.06(b)(iii)).

“Engineered Oil and Gas Property” means any Oil and Gas Property listed in the
most recent Engineering Report other than any Oil and Gas Property that has been
Disposed of as part of or in connection with any Disposition to a Person other
than a Loan Party that is permitted hereunder or under

 

12

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

any other Loan Document. Notwithstanding anything to the contrary contained
herein, it is understood and agreed that SandRidge E&P’s proportionate share of
the Oil and Gas Properties held by the Royalty Trusts, including all Proved
Reserves and related Hydrocarbons from such Oil and Gas Properties, shall only
constitute “Engineered Oil and Gas Properties” for purposes of calculating the
Borrowing Base pursuant to Section 2.05 and for delivery of the Engineering
Reports pursuant to Sections 6.01(e) and (f).

“Engineering Report” means the Initial Engineering Report and each engineering
report delivered pursuant to Section 2.05 or Section 6.01 setting forth, as of
each December 31 and June 30, as applicable, the Proved Reserves attributable to
the Oil and Gas Properties of the Borrower, the other Loan Parties and the
Royalty Trusts, together with a projection of the rate of production of future
net income, taxes, operating expenses and capital expenditures with respect
thereto as of such date, based upon the economic assumptions consistent with the
Administrative Agent’s lending requirements at the time, and reflecting any Oil
and Gas Hedge Transactions that are in place with respect to such production. To
the extent that two or more engineering firms prepare reports as of the same
date for portions of the properties required to be reported on, such reports
will collectively constitute a single “Engineering Report” for the purposes
hereof.

“Environmental Laws” means any and all Federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

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

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

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests
in) such Person, all of the securities convertible into or exchangeable for
shares of capital stock of (or other ownership or profit interests in) such
Person or warrants, rights or options for the purchase or acquisition from such
Person of such shares (or such other interests), and all of the other ownership
or profit interests in such Person (including partnership, member or trust
interests therein), whether voting or nonvoting, and whether or not such shares,
warrants, options, rights or other interests are outstanding on any date of
determination. For the avoidance of doubt, debt instruments that are convertible
into Equity Interests shall not be deemed to be Equity Interests until they are
so converted.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

 

13

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

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer
Plan; (d) the filing of a notice of intent to terminate, the treatment of a
Pension or Multiemployer Plan amendment as a termination under Section 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.

“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.

“Eurodollar Rate” means:

(a) for any Interest Period with respect to a Eurodollar Rate Loan, the rate per
annum equal to the ICE Benchmark Administration Limited LIBOR rate (“LIBOR”) or
a comparable or successor rate, which rate is approved by the Administrative
Agent, as published on the applicable Reuters screen page (or, if such Reuters
screen page is not available, such other commercially available source providing
such quotations as may be designated by the Administrative Agent from time to
time) at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period; and

(b) for any interest calculation with respect to a Base Rate Loan on any date,
the rate per annum equal to LIBOR, at or about 11:00 a.m., London time
determined two Business Days prior to such date for Dollar deposits with a term
of one month commencing that day.

Notwithstanding the foregoing, (i) to the extent a comparable or successor rate
is approved by the Administrative Agent in connection herewith, the approved
rate shall be applied in a manner consistent with market practice; provided that
to the extent such market practice is not administratively feasible for the
Administrative Agent, such approved rate shall be applied in a manner as
otherwise reasonably determined by the Administrative Agent; and (ii) if the
Eurodollar Rate shall be less than zero, such rate shall be deemed to be zero
for purposes of this Agreement.

“Eurodollar Rate Loan” means a Committed Loan that bears interest at a rate
based on the Eurodollar Rate.

“Event of Default” has the meaning specified in Section 8.01.

“Excluded Accounts” means (a) each account in which all of the deposits consist
solely of amounts utilized to fund payroll, employee benefits (including
medical, dental and employee benefits claims) or tax obligations of the Borrower
and its Restricted Subsidiaries, (b) accounts used solely as zero balance
accounts, (c) any segregated account to the extent such account consists solely
of amounts in respect of oil and gas royalty interests held in a fiduciary,
trust or similar capacity for one or more third parties and (d) other accounts
with funds on deposit not to exceed $2,500,000 in the aggregate for all such
accounts at any time; provided that in no event shall any of the principal
operating accounts of the Borrower or its Restricted Subsidiaries constitute an
Excluded Account.

 

14

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

“Excluded Swap Obligation” means, with respect to any Guarantor, (a) any Swap
Obligation in respect of a Swap Contract if, and to the extent that, and only
for so long as, all or a portion of the guarantee of such Guarantor of, or the
grant by such Guarantor of a security interest to secure, as applicable, such
Swap Obligation (or any guarantee thereof) is or becomes illegal under the
Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any
thereof) by virtue of such Guarantor’s failure to constitute an “eligible
contract participant”, as defined in the Commodity Exchange Act and the
regulations thereunder, at the time the guarantee of (or grant of such security
interest by, as applicable) such Guarantor becomes or would become effective
with respect to such Swap Obligation or (b) any other Swap Obligation designated
as an “Excluded Swap Obligation” of such Guarantor as specified in any agreement
between the relevant Loan Parties and counterparty applicable to such Swap
Obligations, and agreed by the Administrative Agent. If a Swap Obligation arises
under a master agreement governing more than one Swap Contract, such exclusion
shall apply only to the portion of such Swap Obligation that is attributable to
Swap Contracts for which such Guarantee or security interest is or becomes
illegal.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
any L/C Issuer or any other recipient of any payment to be made by or on account
of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by
its overall net income (however denominated), and franchise taxes imposed on it
(in lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located, (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
the Borrower is located, (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 10.13), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party hereto (or designates a new Lending
Office) or is attributable to such Foreign Lender’s failure or inability (other
than as a result of a Change in Law) to comply with Section 3.01(e), except to
the extent that such Foreign Lender (or its assignor, if any) was entitled, at
the time of designation of a new Lending Office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 3.01(a), and (d) any U.S. federal withholding Taxes imposed
under FATCA.

“Existing Credit Agreement” means the Credit Agreement, dated as of October 4,
2016, among the Borrower, each lender party thereto from time to time and Royal
Bank of Canada, as administrative agent and L/C Issuer.

“Facility Limit” means, at any time, the lesser of (a) the Aggregate Commitments
at such time and (b) the Borrowing Base at such time.

“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 intergovernmental
agreements entered into by the United States that implement or modify the
foregoing (together with the portions of any law implementing such
intergovernmental agreements).

“Federal Funds Rate” means, for any day, the rate per annum 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 (a) 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 as so published on the next succeeding Business
Day and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1.00%) charged to the
Administrative Agent on such day on such transactions as determined by the
Administrative Agent.

 

15

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

“Financial Covenant” means each of (a) the Consolidated Total Net Leverage Ratio
covenant set forth in Section 7.11(a) and (b) the Consolidated Interest Coverage
Ratio covenant set forth in Section 7.11(b). The foregoing clauses (a) and
(b) are collectively referred to as the “Financial Covenants”.

“Flood Insurance Regulations” means, collectively, (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 any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes.
For purposes of this definition, the United States, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

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

“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 business.

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

“Granting Lender” has the meaning specified in Section 10.06(g).

“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness payable or performable by another Person (the
“primary obligor”) in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness,
(ii) to purchase or lease property, securities or services for the purpose of
assuring the obligee in respect of such Indebtedness of the payment or
performance of such Indebtedness, (iii) to maintain working capital, equity
capital or any other financial statement condition or

 

16

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

liquidity or level of income or cash flow of the primary obligor so as to enable
the primary obligor to pay such Indebtedness or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part) or (b) any Lien on any assets of such
Person securing any Indebtedness of any other Person, whether or not such
Indebtedness is assumed by such Person (or any right, contingent or otherwise,
of any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.

“Guarantors” means, collectively, (i) SandRidge Holdings, Inc., SandRidge
Exploration and Production, LLC, SandRidge Midstream Inc., SandRidge Operating
Company, Integra Energy, L.L.C. and Lariat Services, Inc. and (ii) each Person
which becomes a Guarantor after the Closing Date pursuant to Section 6.12.

“Guaranty” means the Guaranty executed by the Borrower and the Guarantors in
favor of the Administrative Agent and the other Secured Parties in substantially
the form attached hereto as Exhibit G, as the same may be amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.

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

“Hedge Transaction” means any commodity, interest rate, currency or other swap,
option, collar, futures contract or other contract pursuant to which a Person
hedges risks related to commodity prices, interest rates, currency exchange
rates, securities prices or financial market conditions. Hedge Transactions
expressly include Oil and Gas Hedge Transactions.

“Honor Date” has the meaning specified in Section 2.03(d)(i).

“Hydrocarbons” means oil, gas, casinghead gas, drip gasolines, natural gasoline,
condensate, distillate and all other liquid and gaseous hydrocarbons produced or
to be produced in conjunction therewith, and all products, by-products and all
other substances derived therefrom or the processing thereof, and all other
minerals and substances, including, but not limited to, sulphur, lignite, coal,
uranium, thorium, iron, geothermal steam, water, carbon dioxide, helium and any
and all other minerals, ores or substances of value, and the products and
proceeds therefrom, including, without limitation, all gas resulting from the in
situ combustion of coal or lignite.

“Immaterial Subsidiary” means any Subsidiary of the Borrower with less than
$5,000,000 in total assets on a Consolidated basis.

“Immaterial Title Deficiencies” means, with respect to specified Proved
Reserves, defects or clouds on title, discrepancies in reported net revenue and
working interest ownership percentages, inaccuracies of representations and
warranties in Sections 5.21 and 5.22 that are qualified by reference to this
definition, and other Liens, defects, discrepancies and similar matters which do
not, in the aggregate, reduce the PV9 Pricing of all Proved Reserves of the
Borrower by more than 4.0% of PV9 Pricing of all such Proved Reserves.

 

17

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

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments;

(b) all direct or contingent obligations of such Person arising under letters of
credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;

(c) net obligations of such Person under any Swap Contract;

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business and, in each case, not past due for more than 90 days after the date
on which such trade account payable was created);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;

(f) Capital Leases and Synthetic Lease Obligations;

(g) the mandatory redemption price of all Disqualified Stock of such Person; and

(h) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any Capital Lease or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date. The amount of any non-recourse
Indebtedness described in clause (e) of this definition shall, for the purposes
of this Agreement, be deemed to be equal to the lesser of (i) the aggregate
unpaid amount of such Indebtedness and (ii) the fair market value of the
property or asset encumbered, as determined by such Person in good faith.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitees” has the meaning specified in Section 10.04(b).

“Information” has the meaning specified in Section 10.07.

“Initial Engineering Report” means the engineering report concerning Oil and Gas
Properties of Loan Parties dated as of June 30, 2016, prepared internally by the
Borrower.

“Initial Financial Statements” means (a) the unaudited consolidated balance
sheet and related consolidated income statements and statements of cash flows of
the Borrower and its Restricted Subsidiaries for the fiscal quarter ending at
least 45 days prior to the Closing Date and (b) certain other financial
statements and variance reports that were delivered to the Administrative Agent
prior to the Closing Date in connection with the Transactions.

 

18

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

“Interest Payment Date” means, (a) as to any Committed Loan other than a Base
Rate Loan, the last day of each Interest Period applicable to such Committed
Loan and the Maturity Date; provided, however, that if any Interest Period for a
Eurodollar Rate Loan exceeds three months, the respective dates that fall every
three months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each
March, June, September and December and the Maturity Date.

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or converted to or continued
as a Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the Borrower in its Committed Loan Notice, or such
other period that is twelve months or less requested by the Borrower and
commercially available to all the Lenders; provided that:

(i) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;

(ii) any Interest Period that begins on the last Business Day of a calendar
month (or 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

(iii) no Interest Period shall extend beyond the Maturity Date.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person and any arrangement pursuant to which the investor
Guarantees Indebtedness of such other Person or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute a business unit. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.

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

“Issuer Documents” means with respect to any Letter of Credit, the Letter of
Credit Application, and any other document, agreement and instrument entered
into by the applicable L/C Issuer and the Borrower (or any other Loan Party) or
in favor the applicable L/C Issuer and relating to such Letter of Credit.

“Junior Lien Debt” means Indebtedness (i) of the Borrower and the Guarantors
secured by the Collateral on a junior lien basis on the terms and conditions set
forth in (and with a Junior Lien Representative at all times party to) a Junior
Lien Intercreditor Agreement and not secured by any property or assets of the
Borrower or any of its Subsidiaries other than the Collateral (on such junior
basis) and (ii) as to which a representative of the holders of such
Indebtedness, acting on behalf of such holders, shall have (a) other than in the
case of the Convertible Notes (to the extent otherwise constituting

 

19

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

Junior Lien Debt hereunder), become party to the Junior Lien Intercreditor
Agreement as a Junior Lien Representative (or, to the extent no Junior Lien
Intercreditor Agreement exists at the time of the incurrence of such Junior Lien
Debt, shall have entered into a Junior Lien Intercreditor Agreement with the
Administrative Agent) and (b) become a party to the Convertible Notes
Intercreditor Agreement as “Priority Lien Representative” or a “Subordinated
Representative” (each as defined therein), as applicable.

“Junior Lien Financing Documentation” means any documentation governing any
Junior Lien Debt including, without limitation, any Junior Lien Intercreditor
Agreement.

“Junior Lien Intercreditor Agreement” means an intercreditor agreement in form
and substance reasonably satisfactory to the Administrative Agent, the Majority
Lenders and the Borrower, among the Borrower, the Guarantors and the
Administrative Agent, as a representative of the Secured Parties, and one or
more collateral agents or representatives for the holders of the relevant Junior
Lien Debt (for any issuance, the “Junior Lien Representative”).

“Junior Lien Representative” has the meaning set forth in the definition of
“Junior Lien Intercreditor Agreement”.

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, regulations, ordinances, codes and administrative or
judicial precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and all applicable
administrative orders, licenses, authorizations and permits of, and agreements
with, any Governmental Authority.

“L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Applicable Percentage.

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

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

“L/C Issuer” means (a) Royal Bank of Canada and (b) any other Lender
satisfactory to the Borrower and the Administrative Agent that may agree to
issue Letters of Credit hereunder pursuant to an instrument in form reasonably
satisfactory to such L/C Issuer and the Borrower, in the case of clauses (a) and
(b), in their respective capacities as issuers of Letters of Credit hereunder,
or any successor issuers of Letters of Credit hereunder.

“L/C Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of
computing the amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with
Section 1.07. For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may
still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP,
such Letter of Credit shall be deemed to be “outstanding” in the amount so
remaining available to be drawn.

“Lender” or “Lenders” has the meaning specified in the introductory paragraph
hereto.

 

20

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

“Lender Counterparty” means (i) any counterparty under a Swap Contract that was
a Lender (or an Affiliate of a Lender) at the time such Swap Contract was
entered into and/or (ii) any counterparty under a Treasury Management Services
Agreement that was a Lender (or an Affiliate of a Lender) at the time such
Treasury Management Services Agreement was entered into.

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.

“Letter of Credit” means any standby letter of credit issued hereunder providing
for the payment of cash upon the honoring of a presentation thereunder.

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the applicable L/C Issuer. In the event of any inconsistency between the
provisions of any Letter of Credit Application and the provisions of this
Agreement, the provisions of this Agreement shall prevail.

“Letter of Credit Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).

“Letter of Credit Fee” has the meaning specified in Section 2.03(j).

“Letter of Credit Sublimit” means an amount equal to $20,000,000. The Letter of
Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

“LIBOR” has the meaning set forth in the definition of “Eurodollar Rate”.

“Lien” means any mortgage, pledge, hypothecation, assignment, encumbrance, lien
(statutory or other), charge, or other security interest or preferential
arrangement in the nature of a security interest of any kind or nature
whatsoever (including any conditional sale or other title retention agreement,
any easement, right of way or other encumbrance on title to real property, and
any financing lease having substantially the same economic effect as any of the
foregoing). Notwithstanding anything to the contrary contained herein, in no
event will the deposit of not more than $100.00 into the Collateral Trust
Account on or before the Closing Date be deemed to constitute a Lien hereunder.

“Loan” means an extension of credit by a Lender to the Borrower under Article II
in the form of a Committed Loan.

“Loan Documents” means this Agreement, each Note, each Issuer Document, the
Guaranty, the Collateral Documents, the Convertible Notes Intercreditor
Agreement and any Junior Lien Intercreditor Agreement.

“Loan Parties” means, collectively, the Borrower and each Guarantor.

“Majority Lenders” means, as of any date of determination, Lenders having more
than 50% of the Aggregate Commitments or, if the commitment of each Lender to
make Loans and the obligation of the L/C Issuers to make L/C Credit Extensions
have been terminated pursuant to Section 8.02, Lenders holding in the aggregate
more than 50% of the Total Outstandings (with the aggregate amount of each
Lender’s risk participation and funded participation in L/C Obligations being
deemed “held” by such Lender for purposes of this definition); provided that the
Commitment of, and the portion of the Total Outstandings held or deemed held by,
any Defaulting Lender shall be excluded for purposes of making a determination
of Majority Lenders.

 

21

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

“Master Agreement” has the meaning set forth in the definition of “Swap
Contract”.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, assets, properties, liabilities
or condition (financial or otherwise) of the Borrower and its Restricted
Subsidiaries taken as a whole; (b) a material impairment of (i) the rights and
remedies of the Administrative Agent or the Lenders under the Loan Documents or
(ii) the ability of the Loan Parties to perform their obligations under the Loan
Documents; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against the Loan Parties of the Loan Documents.

“Maturity Date” means March 31, 2020; provided that if such date is not a
Business Day, the Maturity Date shall be the next preceding Business Day.

“Maximum Rate” has the meaning set forth in Section 10.09.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Mortgage” means a mortgage or a deed of trust, deed to secure debt, trust deed,
assignment of as-extracted collateral, fixture filing or other security
documented entered into by the owner of Mortgaged Property and the
Administrative Agent for the benefit of the Secured Parties in respect of that
Mortgaged Property, substantially in the form of Exhibit H hereto (with such
changes as may be necessary to account for local law matters) or otherwise in
such form as agreed between the Borrower and the Administrative Agent, as the
same may be amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.

“Mortgaged Property” means real property and improvements thereto with respect
to which a Mortgage is required to be granted pursuant to Section 4.01(b)(iv),
Section 6.12 or Section 6.14 hereof.

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

“Net Cash Proceeds” means:

(a) with respect to any Disposition by the Borrower or any of its Restricted
Subsidiaries, the excess, if any, of (i) the sum of cash and Cash Equivalents
received in connection with such transaction (including any cash or Cash
Equivalents received by way of deferred payment pursuant to, or by monetization
of, a note receivable or otherwise, but only as and when so received) over
(ii) the sum of (A) the principal amount of any Indebtedness that is secured by
the applicable asset and that is required to be repaid in connection with such
transaction (other than Indebtedness under the Loan Documents), (B) the
reasonable and customary out-of-pocket expenses incurred by the Borrower or such
Restricted Subsidiary in connection with such transaction, (C) income taxes
reasonably estimated to be actually payable within two years of the date of the
relevant transaction as a result of any gain recognized in connection therewith
and (D) the Swap Termination Value, if any, associated with such transaction;
provided that, if the amount of any estimated taxes pursuant to
subclause (C) exceeds the amount of taxes actually required to be paid in cash
in respect of such Disposition, the aggregate amount of such excess shall
constitute Net Cash Proceeds if such aggregate amount exceeds $2,500,000;

 

22

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

(b) with respect to the incurrence or issuance of any Indebtedness by the
Borrower or any of its Restricted Subsidiaries, the excess of (i) the sum of the
cash and Cash Equivalents received in connection with such transaction over
(ii) the underwriting discounts and commissions, and other reasonable and
customary out-of-pocket expenses, incurred by the Borrower or such Restricted
Subsidiary in connection therewith; and

(c) with respect to the termination of any Hedge Transaction by the Borrower or
any of its Restricted Subsidiaries, the excess of (i) the sum of the cash and
Cash Equivalents received in connection with such transaction over (ii) the sum
of (A) the reasonable and customary out-of-pocket expenses incurred by the
Borrower or such Restricted Subsidiary in connection with such transaction and
(B) income taxes reasonably estimated to be actually payable within two years of
the date of the relevant transaction as a result of any gain recognized in
connection therewith; provided that, if the amount of any estimated taxes
pursuant to subclause (B) exceeds the amount of taxes actually required to be
paid in cash in respect of such termination, the aggregate amount of such excess
shall constitute Net Cash Proceeds if such aggregate amount exceeds $2,500,000.

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

“Non-Extension Notice Date” has the meaning set forth in Section 2.03(c)(iii).

“Non-Reinstatement Deadline” has the meaning set forth in Section 2.03(c)(iv).

“Note” means a promissory note made by the Borrower in favor of a Lender
evidencing Committed Loans made by such Lender, substantially in the form of
Exhibit C.

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Committed Loan or Letter of Credit or any Swap
Contract or Treasury Management Services Agreement with a Lender Counterparty,
whether direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against any
Loan Party or any Restricted Subsidiary thereof of any proceeding under any
Debtor Relief Laws naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims in such
proceeding; provided that the term “Obligations” shall not, with respect to any
Guarantor, include any Excluded Swap Obligation with respect to such Guarantor.

“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.

“Oil and Gas Business” means the business of acquiring, exploring, or developing
and operating Oil and Gas Properties and the production, marketing, processing
and transporting of Hydrocarbons therefrom, and providing services to the oil
and gas upstream and midstream segments.

“Oil and Gas Hedge Transaction” means a Hedge Transaction pursuant to which any
Person hedges the price to be received by it for future production of
Hydrocarbons.

“Oil and Gas Properties” means all oil, gas and/or mineral leases, oil, gas or
mineral properties, mineral servitudes and/or mineral rights of any kind
(including, without limitation, mineral fee interests, lease interests, farm-out
interests, overriding royalty and royalty interests, net profits interests, oil
payment interests, production payment interests and other types of mineral
interests), and all oil and gas gathering, treating, storage, processing,
monitoring and handling assets and all other assets directly related thereto.

 

23

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

“Oklahoma Properties” means (a) the office buildings located at (i) 120 Robert
S. Kerr Avenue, Oklahoma City, OK 73102 and (ii) 123 Robert S. Kerr Avenue,
Oklahoma City, OK 73102 and (b) the Broadway-Kerr Parking Garage located at the
northeast corner of the intersection of Broadway Avenue and Robert S. Kerr
Avenue in downtown Oklahoma City.

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

“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.

“Outstanding Amount” means (i) with respect to Committed Loans, on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Committed Loans occurring on such
date; and (ii) with respect to any L/C Obligations on any date, the amount by
which such L/C Obligations exceed the Cash Collateral held by the Administrative
Agent on such date after giving effect to any L/C Credit Extension occurring on
such date and any other changes in the aggregate amount of the L/C Obligations
as of such date, including as a result of any reimbursements by the Borrower of
Unreimbursed Amounts.

“Participant” has the meaning specified in Section 10.06(d).

“Participant Register” has the meaning specified in Section 10.06(d).

“PATRIOT Act” has the meaning specified in Section 5.25.

“PBGC” means the Pension Benefit Guaranty Corporation.

“PCAOB” means the Public Company Accounting Oversight Board.

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

“Permitted Debt Restrictions” means, an instrument or instruments governing
indebtedness which imposes limitations on or requirements with respect to
Indebtedness, Restricted Payments or Liens of the type described in Section 7.09
that are substantially the same as or less restrictive than the corresponding
limitations or requirements, if any, with respect to such matters contained in
any of the Principal Debt Obligations.

 

24

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

“Permitted Holders” means any of (i) GSO / Blackstone Debt Funds Management LLC,
(ii) Fir Tree Partners, (iii) Tyrus Capital Event Master Fund Limited,
(iv) Monarch Alternative Capital LP, (v) EIG Management Company, LLC,
(vi) Guggenheim Partners Investment Management, LLC, (vii) MTP Energy Management
LLC, (viii) Apollo Energy Opportunity Management LLC, (ix) Solus Alternative
Asset Management LP and (x) any Affiliates of, or any funds or partnerships
managed or advised by, any of the foregoing (including those funds or
partnerships managed or advised by the Affiliates of any of the foregoing).

“Permitted Encumbrances” has the meaning specified in the Mortgages.

“Permitted Refinancing” means, in respect of any Indebtedness otherwise
permitted hereunder (the “Refinanced Indebtedness”), any refinancing, refunding,
renewal or extension (any of the foregoing, a “Refinancing”, and any such new
Indebtedness, “Refinancing Indebtedness”) of such Refinanced Indebtedness;
provided that (i) the amount of such Refinanced Indebtedness is not increased at
the time of such Refinancing except by an amount equal to a reasonable premium
or other reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such refinancing and by an amount equal to any existing
commitments unutilized thereunder and the direct or any contingent obligor with
respect thereto is not changed, as a result of or in connection with such
Refinancing, (ii) the terms relating to principal amount, amortization,
collateral (if any) and subordination (if any), and other material terms taken
as a whole, of any such Refinancing Indebtedness, and of any agreement entered
into and of any instrument issued in connection therewith, are no less favorable
taken as a whole in any material respect to the Loan Parties or the Lenders than
the terms of any agreement or instrument governing the Refinanced Indebtedness
and the interest rate applicable to the Refinancing Indebtedness does not exceed
the then applicable market interest rate, (iii) no Default or Event of Default
would result from such Refinancing after giving effect thereto and (iv) such
Refinancing Indebtedness does not mature and requires no scheduled amortization
prior to the 91st day following the Maturity Date.

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

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

“Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

“Platform” has the meaning specified in Section 6.02.

“Pledged Equity” has the meaning specified in the Security Agreement.

“Principal Debt Obligations” means all existing long-term debt issued by the
Borrower including, without limitation, any Junior Lien Debt.

“Proceeding” has the meaning specified in Section 10.04(b).

 

25

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

“Proved Developed Producing Reserves” means, oil and gas reserves that, in
accordance with Petroleum Industry Standards, are classified as both “proved
reserves” and “developed producing reserves”.

“Proved Reserves” means, collectively, oil and gas reserves that, in accordance
with Petroleum Industry Standards, are classified as “proved developed
nonproducing reserves”, “proved developed producing reserves” and/or “proved
undeveloped reserves”.

“PV9 Pricing” means, with respect to any Engineered Oil and Gas Properties or
other Oil and Gas Properties becoming Engineered Oil and Gas Properties, the net
present value, discounted at 9% per annum, of the future net revenues expected
to accrue to the Borrower’s and the other Loan Parties’ collective interests in
such reserves expected to be produced from such Oil and Gas Properties during
the remaining expected economic lives of such reserves made in accordance with
the then existing standards of the Society of Petroleum Engineers (with
appropriate adjustments made for hedging operations) as follows:

(a) for anticipated sales of oil and gas that are fixed in a firm fixed price
sales contract with an investment grade counterparty or a counterparty
guaranteed, or for whom a letter of credit has been issued, by an investment
grade party (or another counterparty approved by the Administrative Agent), the
fixed price or prices provided for in such sales contract during the term
thereof; and

(b) for anticipated sales of oil and gas, if such sales are not under a sales
contract that is described in clause (a) above, for the date of calculation (or,
if such date is not a Business Day, for the first Business Day thereafter), the
prices provided in the most recent price deck provided to the Borrower by the
Administrative Agent, adjusted in each case for historical location and quality
differentials during the twelve months preceding such date of determination.

“Qualified Stock” means Equity Interests which are not Disqualified Stock.

“Reference Date” has the meaning specified in the definition of “Available
Amount”.

“Refinanced Indebtedness” has the meaning set forth in the definition of
“Permitted Refinancing”.

“Refinancing” has the meaning set forth in the definition of “Permitted
Refinancing”.

“Refinancing Indebtedness” has the meaning set forth in the definition of
“Permitted Refinancing”.

“Register” has the meaning specified in Section 10.06(c).

“Regulation T” means Regulation T of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof.

“Regulation U” means Regulation U of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof.

“Regulation X” means Regulation X of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof.

 

26

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

“Registered Public Accounting Firm” has the meaning specified in the Securities
Laws and shall be independent of the Borrower as prescribed by the Securities
Laws.

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

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

“Request for Credit Extension” means (a) with respect to a Committed Borrowing,
conversion or continuation of Committed Loans, a Committed Loan Notice and
(b) with respect to an L/C Credit Extension, a Letter of Credit Application.

“Required Lenders” means, as of any date of determination, Lenders having at
least 66-2/3% of the Aggregate Commitment or, if the commitment of each Lender
to make Committed Loans and the obligation of the L/C Issuers to make L/C Credit
Extensions have been terminated pursuant to Section 8.02, Lenders holding in the
aggregate at least 66-2/3% of the Total Outstandings (with the aggregate amount
of each Lender’s risk participation and funded participation in L/C Obligations
being deemed “held” by such Lender for purposes of this definition); provided
that the Commitment of, and the portion of the Total Outstandings held or deemed
held by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Lenders.

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer or controller of a Loan Party,
and solely for purposes of the delivery of incumbency certificates pursuant to
Section 4.01, the secretary or any assistant secretary of a Loan Party and,
solely for purposes of notices given pursuant to Article II, any other officer
or employee of the applicable Loan Party so designated by any of the foregoing
officers in a notice to the Administrative Agent or any other officer of
employee of the applicable Loan Party designated in or pursuant to an agreement
between the applicable Loan Party and the Administrative Agent. Any document
delivered hereunder that is signed by a Responsible Officer of a Loan Party
shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

“Restricted Debt” has the meaning set forth in Section 7.15(a).

“Restricted Debt Documentation” means any documentation governing any Restricted
Debt (including, in the case of Junior Lien Debt, Junior Lien Financing
Documentation).

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of the Borrower or any Restricted Subsidiary, or any payment (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such capital stock or other Equity Interest,
or on account of any return of capital to the Borrower’s stockholders, partners
or members (or the equivalent Person thereof). For the avoidance of doubt, any
payment of interest (including payment-in-kind interest) made in respect of any
Indebtedness convertible into Equity Interests of the Borrower permitted
hereunder shall not constitute a Restricted Payment.

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

 

27

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

“Restructuring Support Agreement” means that certain Restructuring Support and
Lock-Up Agreement, dated as of May 11, 2016 (as amended, restated, amended and
restated, supplemented or otherwise modified from time to time prior to the date
hereof), by and among the Loan Parties signatory thereto, the Lenders thereto,
certain other holders of claims and interests and the other Persons party
thereto.

“Royalty Trust” means a statutory or business trust, the trustee of which is a
financial institution not affiliated with the Borrower, to which the Borrower or
one or more of its Restricted Subsidiaries conveys, or intends to convey,
royalty interests, net profits interests, or other similar mineral interests in
the production of hydrocarbons from properties to which no value was attributed
in the then most recent determination of the Borrowing Base, in exchange for
units of beneficial interests in the trust and all or part of the cash proceeds
of an underwritten public offering or a similar offering under Rule 144A of the
trust’s units. For the avoidance of doubt, SandRidge Mississippian Trust I,
SandRidge Mississippian Trust II and SandRidge Permian Trust shall each
constitute a Royalty Trust.

“Royalty Trust Redetermination Trigger Event” means the occurrence of any of the
following: (a) any Royalty Trust becomes an obligor (whether direct or indirect)
in respect of any Indebtedness for borrowed money and/or (b) any Royalty Trust
permits the Oil and Gas Properties of such Royalty Trust to become subject to
any Lien other than (x) Liens in favor of unitholders or other counterparties in
connection with entering into joint development agreements or other similar
agreements or (y) any Permitted Encumbrance which does not secure Indebtedness
for borrowed money.

“SandRidge E&P” means SandRidge Exploration and Production LLC.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.

“Sanctions” means any economic or financial sanction or trade embargoes imposed,
administered or enforced from time to time by the United States Government
(including without limitation, OFAC or the United States Department of State),
the United Nations Security Council, the European Union, Her Majesty’s Treasury
of the United Kingdom or other relevant sanctions authority.

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

“Scheduled Determination” has the meaning specified in Section 2.05(b)(i).

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“Secured Parties” means, collectively, the Administrative Agent, the Lenders,
the L/C Issuers, the Lender Counterparties, each co-agent or sub-agent appointed
by the Administrative Agent from time to time pursuant to Section 9.05, and the
other Persons the Obligations owing to which are or are purported to be secured
by the Collateral under the terms of the Collateral Documents.

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

“Securities Laws” means the Securities Act of 1933 and regulations thereunder,
the Securities Exchange Act of 1934 and regulations thereunder, Sarbanes-Oxley
and the applicable accounting and auditing principles, rules, standards and
practices promulgated, approved or incorporated by the SEC or the PCAOB.

 

28

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

“Security Agreement” means the Pledge and Security Agreement entered into by the
Borrower, the other Loan Parties party thereto as grantors and the
Administrative Agent, for the benefit of the Secured Parties, substantially in
the form of Exhibit I hereto, as the same may be amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.

“Security Agreement Supplement” has the meaning specified in the Security
Agreement.

“Solvent” means, with respect to any Person on any date of determination, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person’s ability to pay such debts and liabilities as they mature,
(d) such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person’s property would
constitute an unreasonably small capital and (e) such Person is able to pay its
debts and liabilities, contingent obligations and other commitments as they
mature in the ordinary course of business. The amount of contingent liabilities
at any time shall be computed as the amount that, in the light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

“SPC” has the meaning specified in Section 10.06(g).

“Special Determination” has the meaning specified in Section 2.05(b)(ii).

“Subordinated Collateral Trust Agreement” has the meaning specified in the
Convertible Notes Intercreditor Agreement.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a
contingency) are at the time beneficially owned, or the management of which is
otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Notwithstanding the foregoing, neither
(i) any Royalty Trust nor (ii) any future venture contemplated by
Section 7.02(h) shall be considered to be a “Subsidiary” of the Borrower or any
of its Restricted Subsidiaries for purposes of any Loan Document, except that
any of the foregoing entities may be consolidated with the Borrower or any
Subsidiary for purposes of such Person’s financial statements. Unless otherwise
specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall
refer to a Subsidiary or Subsidiaries of the Borrower.

“Subsidiary Redesignation” has the meaning set forth in the definition of
“Unrestricted Subsidiary”.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and

 

29

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

conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

“Swap Obligation” means, with respect to any Person, any obligation to pay or
perform under any Swap Contract.

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

“Synthetic Lease Obligation” means the monetary obligation of a Person under
(a) a so called synthetic, off—balance sheet or tax retention lease or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

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

“Threshold Amount” means $25,000,000.

“Total Outstandings” means the aggregate Outstanding Amount of all Committed
Loans and all L/C Obligations.

“Transactions” means, collectively, (a) the entering into and effectiveness of
the senior credit facility under this Agreement (including in respect of any
amendment, restatement, amendment and restatement, supplement or modification of
this Agreement), (b) the other transactions related to each of the foregoing and
(c) the payment of the fees and expenses incurred in connection with the
consummation of the foregoing.

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

“Type” means, with respect to a Committed Loan, its character as a Base Rate
Loan or a Eurodollar Rate Loan.

“UCC” means the Uniform Commercial Code as in effect in the State of New York;
provided that, if perfection or the effect of perfection or non-perfection or
the priority of any security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
New York, “UCC” means the Uniform Commercial Code as in effect from time to time
in such other jurisdiction for purposes of the provisions hereof relating to
such perfection, effect of perfection or non-perfection or priority.

 

30

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

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

“United States” and “U.S.” mean the United States of America.

“Unreimbursed Amount” has the meaning specified in Section 2.03(d)(i).

“Unrestricted Subsidiary” means (1) any Subsidiary of the Borrower designated by
the Borrower as an Unrestricted Subsidiary hereunder by written notice to the
Administrative Agent; provided that the Borrower shall only be permitted to so
designate a Subsidiary as an Unrestricted Subsidiary so long as (a) no Default
or Event of Default or Borrowing Base Deficiency has occurred and is continuing
or would result therefrom, (b) immediately after giving effect to such
designation, the Borrower shall be in compliance on a pro forma basis with the
each Financial Covenant set forth in Section 7.11, (c) such Unrestricted
Subsidiary shall be capitalized (to the extent capitalized by the Borrower or
any of its Restricted Subsidiaries) through Investments as permitted by, and in
compliance with, Section 7.02, (d) for purposes of clause (c) such designation
shall be deemed an Investment in an amount equal to the net book value of the
total investment of the Borrower and its Restricted Subsidiaries in such
Unrestricted Subsidiary, and (e) the Borrower shall have delivered to the
Administrative Agent an officer’s certificate executed by a Responsible Officer
of the Borrower, certifying compliance with the requirements of preceding
clauses (a) through (d), and containing the calculations and information
required by the preceding clause (b) and (2) any Subsidiary of an Unrestricted
Subsidiary. The Borrower may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary for purposes of this Agreement (each, a “Subsidiary
Redesignation”); provided that (i) no Default or Event of Default or Borrowing
Base Deficiency has occurred and is continuing or would result therefrom,
(ii) immediately after giving effect to such Subsidiary Redesignation, the
Borrower shall be in compliance on a pro forma basis with each Financial
Covenant set forth in Section 7.11 and (iii) the Borrower shall have delivered
to the Administrative Agent an officer’s certificate executed by a Responsible
Officer of the Borrower, certifying compliance with the requirements of
preceding clauses (i) and (ii), and containing the calculations and information
required by the preceding clause (ii).

“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 1.02 Other Interpretive Provisions. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

(a) 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,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) 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 or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (iii) the words “herein”, “hereof” and
“hereunder”, and words of similar import when used in any Loan Document, shall
be

 

31

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

construed to refer to such Loan Document in its entirety and not to any
particular provision thereof, (iv) all references in a Loan Document to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, the Loan Document in
which such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) 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.

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

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

Section 1.03 Accounting Terms.

(a) Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.

(b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower or the Majority Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith
to amend such ratio or requirement to preserve the original intent thereof in
light of such change in GAAP (subject to the approval of the Majority Lenders);
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) the
Borrower shall provide to the Administrative Agent and the Lenders financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of such
ratio or requirement made before and after giving effect to such change in GAAP;
provided, further, that all terms of an accounting or financial nature used
herein shall be construed, and all computations of amounts and ratios referred
to herein shall be made without giving effect to (i) any election under
Accounting Standards Codification 825-10-25 (previously referred to as Statement
of Financial Accounting Standards 159) (or any other Accounting Standards
Codification or Financial Accounting Standard having a similar result or effect)
to value any Indebtedness or other liabilities of the Borrower or any Subsidiary
at “fair value”, as defined therein and (ii) any treatment of Indebtedness in
respect of convertible debt instruments under Accounting Standards Codification
470-20 (or any other Accounting Standards Codification or Financial Accounting
Standard having a similar result or effect) to value any such Indebtedness in a
reduced or bifurcated manner as described therein, and such Indebtedness shall
at all times be valued at the full stated principal amount thereof.

Section 1.04 Petroleum Terms. As used herein, the terms “proved reserves”,
“proved developed reserves”, “proved developed producing reserves”, “proved
developed nonproducing reserves” and “proved undeveloped reserves” shall be
determined in accordance with Petroleum Industry Standards.

 

32

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

Section 1.05 Rounding. Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

Section 1.06 Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).

Section 1.07 Letter of Credit Amounts. Unless otherwise specified herein, the
amount of a Letter of Credit at any time shall be deemed to be the stated amount
of such Letter of Credit in effect at such time; provided, however, that with
respect to any Letter of Credit that, by its terms or the terms of any Issuer
Document related thereto, provides for one or more automatic increases in the
stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all
such increases, whether or not such maximum stated amount is in effect at such
time.

Section 1.08 Available Amount Transactions. If more than one action occurs on
any given date the permissibility of the taking of which is determined hereunder
by reference to the amount of the Available Amount immediately prior to the
taking of such action, the permissibility of the taking of each such action
shall be determined independently and in no event may any two or more such
actions be treated as occurring simultaneously, i.e., each transaction must be
permitted under the Available Amount as so calculated.

Section 1.09 Pro Forma Compliance Calculations. For purposes of determining the
satisfaction of any provision of this Agreement that requires the Borrower to be
in compliance on a pro forma basis with one or more of the Financial Covenants
during any period during which one or more of such Financial Covenants is not
yet required to be tested, the Borrower shall be required to be in compliance on
a pro forma basis with the initial testing level set forth for any such
Financial Covenant.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

Section 2.01 Committed Loans. Subject to the terms and conditions set forth
herein, each Lender severally, but not jointly, agrees to make loans denominated
in Dollars (each such loan, a “Committed Loan”) to the Borrower from time to
time, on any Business Day during the Availability Period, in an aggregate amount
not to exceed at any time outstanding the amount of such Lender’s Commitment;
provided, however, that after giving effect to any Committed Borrowing and the
application by the Administrative Agent of the proceeds thereof, (i) the Total
Outstandings shall not exceed the Facility Limit and (ii) the Aggregate Exposure
of any Lender shall not exceed the lesser of such Lender’s (A) Commitment and
(B) Applicable Percentage of the Facility Limit. Within the limits of each
Lender’s Commitment, and subject to the other terms and conditions hereof, the
Borrower may borrow under this Section 2.01, prepay under Section 2.06, and
reborrow under this Section 2.01. Committed Loans may be Base Rate Loans or
Eurodollar Rate Loans, as further provided herein.

Section 2.02 Committed Borrowings, Conversions and Continuations of Committed
Loans.

(a) Each Committed Borrowing, each conversion of Committed Loans from one Type
to the other, and each continuation of Eurodollar Rate Loans shall be made upon
the Borrower’s irrevocable notice to the Administrative Agent in the form of a
Committed Loan Notice. Each such Committed Loan Notice must be received by the
Administrative Agent not later than 11:00 a.m. (i) three

 

33

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

Business Days prior to the requested date of any Committed Borrowing of,
conversion to or continuation of Eurodollar Rate Loans or of any conversion of
Eurodollar Rate Loans to Base Rate Loans and (ii) on the Business Day prior to
any Committed Borrowing of Base Rate Loans. Each Committed Borrowing of,
conversion to or continuation of Eurodollar Rate Loans shall be in a principal
amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Except
as provided in Section 2.03(d), each Committed Borrowing of or conversion to
Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple
of $100,000 in excess thereof. Each Committed Loan Notice shall specify
(i) whether the Borrower is requesting a Committed Borrowing, a conversion of
Committed Loans from one Type to the other, or a continuation of Eurodollar Rate
Loans, (ii) the requested date of the Committed Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Committed Loans to be borrowed, converted or continued,
(iv) the Type of Committed Loans to be borrowed or to which existing Committed
Loans are to be converted and (v) if applicable, the duration of the Interest
Period with respect thereto. If the Borrower fails to specify a Type of
Committed Loan in a Committed Loan Notice or if the Borrower fails to give a
timely notice requesting a conversion or continuation, then the applicable
Committed Loans shall be made as, or converted to, Base Rate Loans. Any such
automatic conversion to Base Rate Loans shall be effective as of the last day of
the Interest Period then in effect with respect to the applicable Eurodollar
Rate Loans. If the Borrower requests a Committed Borrowing of, conversion to, or
continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but
fails to specify an Interest Period, it will be deemed to have specified an
Interest Period of one month.

(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall
promptly notify each Lender of the amount of its Applicable Percentage of the
applicable Committed Loans, and if no timely notice of a conversion or
continuation is provided by the Borrower, the Administrative Agent shall notify
each Lender of the details of any automatic conversion to Base Rate Loans
described in the preceding clause (a). In the case of a Committed Borrowing,
each Lender shall make the amount of its Committed Loan available to the
Administrative Agent in immediately available funds at the Administrative
Agent’s Office not later than 1:00 p.m. on the Business Day specified in the
applicable Committed Loan Notice. Upon satisfaction of the applicable conditions
set forth in Section 4.02, the Administrative Agent shall make all funds so
received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the
books of the Administrative Agent with the amount of such funds or (ii) wire
transfer of such funds, in each case in accordance with instructions provided to
(and reasonably acceptable to) the Administrative Agent by the Borrower.

(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued
or converted only on the last day of an Interest Period for such Eurodollar Rate
Loan. During the existence of an Event of Default, no Committed Loans may be
requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Majority Lenders.

(d) The Administrative Agent shall promptly notify the Borrower and the Lenders
of the interest rate applicable to any Interest Period for Eurodollar Rate Loans
upon determination of such interest rate. At any time that Base Rate Loans are
outstanding, the Administrative Agent shall notify the Borrower and the Lenders
of any change in the Administrative Agent’s prime rate used in determining the
Base Rate promptly following the public announcement of such change.

(e) After giving effect to all Committed Borrowings, all conversions of
Committed Loans from one Type to the other, and all continuations of Committed
Loans as the same Type, there shall not be more than ten Interest Periods in
effect with respect to Committed Loans.

 

34

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

Section 2.03 Letters of Credit.

(a) The Letter of Credit Commitment.

(i) Subject to the terms and conditions set forth herein, (A) each L/C Issuer
agrees, in reliance upon the agreements of the Lenders set forth in this
Section 2.03, (1) from time to time on any Business Day during the period from
the Closing Date until the Letter of Credit Expiration Date, to issue Letters of
Credit for the account of the Borrower, and to amend or extend Letters of Credit
previously issued by it, in accordance with clause (c) below and (2) to honor
drawings under the Letters of Credit; and (B) the Lenders severally agree to
participate in Letters of Credit issued for the account of the Borrower and any
drawings thereunder; provided that after giving effect to any L/C Credit
Extension with respect to any Letter of Credit, (x) the Total Outstandings shall
not exceed the Facility Limit, (y) the Aggregate Exposure of any Lender, shall
not exceed the lesser of such Lender’s (I) Commitment and (II) the Applicable
Percentage of the Facility Limit and (z) the Outstanding Amount of the L/C
Obligations shall not exceed the Letter of Credit Sublimit. Each request by the
Borrower for the issuance or amendment of a Letter of Credit shall be deemed to
be a representation by the Borrower that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding sentence.
Within the foregoing limits, and subject to the terms and conditions hereof, the
Borrower’s ability to obtain Letters of Credit shall be fully revolving, and
accordingly the Borrower may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit that have expired or that have been drawn
upon and reimbursed.

(ii) The L/C Issuers shall not issue any Letter of Credit, if:

(A) subject to Section 2.03(c)(iii), the expiry date of such requested Letter of
Credit would occur more than twenty-four months after the date of issuance or
last extension, unless the Majority Lenders have approved such expiry date; or

(B) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Lenders have approved such
expiry date.

(iii) An L/C Issuer shall not be under any obligation to issue any Letter of
Credit if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the applicable L/C Issuer from
issuing such Letter of Credit, or any Law applicable to the applicable L/C
Issuer or any request or directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over the applicable L/C Issuer
shall prohibit, or request that the applicable L/C Issuer refrain from, the
issuance of letters of credit generally or such Letter of Credit in particular
or shall impose upon the applicable L/C Issuer with respect to such Letter of
Credit any restriction, reserve or capital requirement (for which the applicable
L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon the applicable L/C Issuer any unreimbursed loss, cost
or expense which was not applicable on the Closing Date and which the applicable
L/C Issuer in good faith deems material to it;

(B) the issuance of such Letter of Credit would violate one or more policies of
the applicable L/C Issuer applicable to letters of credit generally;

(C) except as otherwise agreed by the Administrative Agent and the applicable
L/C Issuer, such Letter of Credit is in an initial stated amount less than
$50,000;

 

35

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

(D) such Letter of Credit is to be denominated in a currency other than Dollars;
or

(E) a default of any Lender’s obligations to fund under Section 2.01 exists or
any Lender is at such time a Defaulting Lender hereunder, unless the applicable
L/C Issuer has entered into arrangements, including delivery of Cash Collateral,
satisfactory to the applicable L/C Issuer (in its sole discretion) either with
the Borrower or such Lender to eliminate the applicable L/C Issuer’s risk with
respect to such Lender’s Applicable Percentage of the Letter of Credit then
requested to be issued.

(iv) Each L/C Issuer shall not amend any Letter of Credit if such L/C Issuer
would not be permitted at such time to issue such Letter of Credit in its
amended form under the terms hereof.

(v) The L/C Issuers shall be under no obligation to amend any Letter of Credit
if (A) the applicable L/C Issuer would have no obligation at such time to issue
such Letter of Credit in its amended form under the terms hereof or (B) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.

(vi) Each L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith, and the
L/C Issuers shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken or omissions
suffered by the applicable L/C Issuer in connection with Letters of Credit
issued by it or proposed to be issued by it and Issuer Documents pertaining to
such Letters of Credit as fully as if the term “Administrative Agent” as used in
Article IX included the applicable L/C Issuer with respect to such acts or
omissions and (B) as additionally provided herein with respect to the applicable
L/C Issuer.

(b) [Reserved].

(c) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension
and Auto-Reinstatement Letters of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Borrower delivered to the applicable L/C Issuer (with a copy
to the Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the Borrower.
Such Letter of Credit Application must be received by the applicable L/C Issuer
and the Administrative Agent not later than 11:00 a.m. at least three Business
Days (or such later date and time as the Administrative Agent and the applicable
L/C Issuer may agree in a particular instance in their sole discretion) prior to
the proposed issuance date or date of amendment, as the case may be. In the case
of a request for an initial issuance of a Letter of Credit, such Letter of
Credit Application shall specify in form and detail satisfactory to the
applicable L/C Issuer: (A) the proposed issuance date of the requested Letter of
Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry
date thereof; (D) the name and address of the beneficiary thereof; (E) the
documents to be presented by such beneficiary in case of any drawing thereunder;
(F) the full text of any certificate to be presented by such beneficiary in case
of any drawing thereunder; and (G) such other matters as the applicable L/C
Issuer may require. In the case of a request for an amendment of any outstanding
Letter of Credit, such Letter of Credit Application shall specify in form and
detail satisfactory to the applicable L/C Issuer (A) the Letter of Credit to be
amended; (B) the proposed date of amendment thereof (which shall be a Business
Day); (C) the nature of the proposed amendment; and (D) such other matters as
the applicable L/C Issuer may require. Additionally, the Borrower shall furnish
to the applicable L/C Issuer and the Administrative Agent such other documents
and information pertaining to such requested Letter of Credit issuance or
amendment, including any Issuer Documents, as the applicable L/C Issuer or the
Administrative Agent may require.

 

36

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

(ii) Promptly after receipt of any Letter of Credit Application, the applicable
L/C Issuer will confirm with the Administrative Agent (in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from the Borrower and, if not, the applicable L/C Issuer will provide the
Administrative Agent with a copy thereof. Unless the applicable L/C Issuer has
received written notice from any Lender, the Administrative Agent or any Loan
Party, at least one Business Day prior to the requested date of issuance or
amendment of the applicable Letter of Credit, that one or more applicable
conditions contained in Section 4.02 shall not then be satisfied, then, subject
to the terms and conditions hereof, the applicable L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of the Borrower or
enter into the applicable amendment, as the case may be, in each case in
accordance with the applicable L/C Issuer’s usual and customary business
practices. Immediately upon the issuance of each Letter of Credit, each Lender
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the applicable L/C Issuer a risk participation in such Letter of
Credit in an amount equal to the product of such Lender’s Applicable Percentage
times the amount of such Letter of Credit.

(iii) If the Borrower so requests in any applicable Letter of Credit
Application, the applicable L/C Issuer may, in its sole and absolute discretion,
agree to issue a Letter of Credit that has automatic extension provisions (each,
an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension
Letter of Credit must permit the applicable L/C Issuer to prevent any such
extension at least once in each twelve-month period (commencing with the date of
issuance of such Letter of Credit) by giving prior notice to the beneficiary
thereof not later than a day (the “Non-Extension Notice Date”) in each such
twelve-month period to be agreed upon at the time such Letter of Credit is
issued. Unless otherwise directed by the applicable L/C Issuer, the Borrower
shall not be required to make a specific request to the applicable L/C Issuer
for any such extension. Once an Auto-Extension Letter of Credit has been issued,
the Lenders shall be deemed to have authorized (but may not require) the
applicable L/C Issuer to permit the extension of such Letter of Credit at any
time to an expiry date not later than the Letter of Credit Expiration Date;
provided, however, that the applicable L/C Issuer shall not permit any such
extension if (A) the applicable L/C Issuer has determined that it would not be
permitted, or would have no obligation, at such time to issue such Letter of
Credit in its revised form (as extended) under the terms hereof (by reason of
the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise) or
(B) it has received notice (in writing) on or before the day that is seven
Business Days before the Non-Extension Notice Date (1) from the Administrative
Agent that the Majority Lenders have elected not to permit such extension or
(2) from the Administrative Agent, any Lender or the Borrower that one or more
of the applicable conditions specified in Section 4.02 is not then satisfied,
and in each such case directing the applicable L/C Issuer not to permit such
extension.

(iv) If the Borrower so requests in any applicable Letter of Credit Application,
the applicable L/C Issuer may, in its sole and absolute discretion, agree to
issue a Letter of Credit that permits the automatic reinstatement of all or a
portion of the stated amount thereof after any drawing thereunder (each, an
“Auto-Reinstatement Letter of Credit”). Unless otherwise directed by the
applicable L/C Issuer, the Borrower shall not be required to make a specific
request to the applicable L/C Issuer to permit such reinstatement. Once an
Auto-Reinstatement Letter of Credit has been issued, except as provided in the
following sentence, the Lenders shall be deemed to have authorized (but may not
require) the applicable L/C Issuer to reinstate all or a portion of the stated
amount thereof in accordance with the provisions of such Letter of Credit.
Notwithstanding the foregoing, if such Auto-Reinstatement Letter of Credit
permits the applicable L/C Issuer to decline to reinstate all or any portion of
the stated amount thereof after a drawing thereunder by giving notice of such
non-reinstatement within a specified number of days after such drawing (the
“Non-Reinstatement Deadline”), the applicable L/C Issuer shall

 

37

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

not permit such reinstatement if it has received a notice (in writing) on or
before the day that is five Business Days before the Non-Reinstatement Deadline
(A) from the Administrative Agent that the Majority Lenders have elected not to
permit such reinstatement or (B) from the Administrative Agent, any Lender or
the Borrower that one or more of the applicable conditions specified in
Section 4.02 is not then satisfied (treating such reinstatement as an L/C Credit
Extension for purposes of this clause (iv)) and, in each case, directing the
applicable L/C Issuer not to permit such reinstatement.

(v) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the applicable L/C Issuer will also deliver to the Borrower and the
Administrative Agent a true and complete copy of such Letter of Credit or
amendment. On a monthly basis, each L/C Issuer shall deliver to the
Administrative Agent (with a copy to the Borrower) a complete list of all
outstanding Letters of Credit issued by such L/C Issuer.

(d) Drawings and Reimbursements; Funding of Participations.

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the applicable L/C Issuer shall notify the
Borrower and the Administrative Agent thereof. Not later than 11:00 a.m. on the
date of any payment by the applicable L/C Issuer under a Letter of Credit (each
such date, an “Honor Date”), the Borrower shall reimburse the applicable L/C
Issuer through the Administrative Agent in an amount equal to the amount of such
drawing. If the Borrower fails to so reimburse the applicable L/C Issuer by such
time, the Administrative Agent shall promptly notify each Lender of the Honor
Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and
the amount of such Lender’s Applicable Percentage thereof. In such event, the
Borrower shall be deemed to have requested a Committed Borrowing of Base Rate
Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed
Amount, without regard to (A) the minimum and multiples specified in
Section 2.02 for the principal amount of Base Rate Loans and (B) the conditions
set forth in Section 4.02, but subject to the amount of the unutilized portion
(calculated after giving effect to the application by the Administrative Agent
of the proceeds of such Committed Borrowing) of the Aggregate Commitments. Any
notice given by the applicable L/C Issuer or the Administrative Agent pursuant
to this Section 2.03(d)(i) may be given by telephone if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.

(ii) Each Lender shall upon any notice pursuant to Section 2.03(d)(i) make funds
available to the Administrative Agent for the account of the applicable L/C
Issuer at the Administrative Agent’s Office in an amount equal to its Applicable
Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business
Day specified in such notice by the Administrative Agent, whereupon, subject to
the provisions of Section 2.03(d)(iii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Loan to the Borrower in such
amount. The Administrative Agent shall remit the funds so received to the
applicable L/C Issuer.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Committed Borrowing of Base Rate Loans because the conditions set forth in
Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be
deemed to have incurred from the applicable L/C Issuer an L/C Borrowing in the
amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing
shall be due and payable on demand (together with interest) and shall bear
interest at the Default Rate. In such event, each Lender’s payment to the
Administrative Agent for the account of the applicable L/C Issuer pursuant to
Section 2.03(d)(ii) shall be deemed payment in respect of its participation in
such L/C Borrowing and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this Section 2.03.

 

38

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

(iv) Until each Lender funds its Committed Loan or L/C Advance pursuant to this
Section 2.03(d) to reimburse the applicable L/C Issuer for any amount drawn
under any Letter of Credit, interest in respect of such Lender’s Applicable
Percentage of such amount shall be solely for the account of the applicable L/C
Issuer.

(v) Each Lender’s obligation to make Committed Loans or L/C Advances to
reimburse the L/C Issuers for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(d), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may have
against the applicable L/C Issuer, the Borrower or any other Person for any
reason whatsoever; (B) the occurrence or continuance of a Default; or (C) any
other occurrence, event or condition, whether or not similar to any of the
foregoing. Each Lender’s obligation to make Committed Loans pursuant to this
Section 2.03(d) shall not be subject to the conditions set forth in
Section 4.02. No such making of an L/C Advance shall relieve or otherwise impair
the obligation of the Borrower to reimburse the applicable L/C Issuer for the
amount of any payment made by such L/C Issuer under any Letter of Credit,
together with interest as provided herein.

(vi) If any Lender fails to make available to the Administrative Agent for the
account of the applicable L/C Issuer any amount required to be paid by such
Lender pursuant to the foregoing provisions of this Section 2.03(d) by the time
specified in Section 2.03(d)(ii), the applicable L/C Issuer shall be entitled to
recover from such Lender (acting through the Administrative Agent), on demand,
such amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the
applicable L/C Issuer at a rate per annum equal to the greater of the Federal
Funds Rate and a rate determined by the applicable L/C Issuer in accordance with
banking industry rules on interbank compensation. If such Lender pays such
amount (with interest and fees as aforesaid), the amount so paid shall
constitute such Lender’s Committed Loan included in the relevant Committed
Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case
may be. A certificate of the applicable L/C Issuer submitted to any Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.

(vii) In the event the Borrower or any Lender shall have entered into the
arrangements contemplated pursuant to Section 2.03(a)(iii)(E) with respect to
the applicable L/C Issuer’s risk with respect to another Lender’s Applicable
Percentage of any Letter of Credit, the applicable L/C Issuer shall be entitled
immediately to exercise its rights under any such arrangement and apply any
funds received by it as a result thereof to such Lender’s Applicable Percentage
of any Unreimbursed Amount with respect to such Letter of Credit.

(e) Repayment of Participations.

(i) At any time after an L/C Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.03(d), if the Administrative Agent
receives for the account of such L/C Issuer any payment in respect of the
related Unreimbursed Amount or interest thereon (whether directly from the
Borrower or otherwise, including proceeds of Cash Collateral applied thereto by
the Administrative Agent), the Administrative Agent will distribute to such
Lender its Applicable Percentage thereof in the same funds as those received by
the Administrative Agent.

(ii) If any payment received by the Administrative Agent for the account of an
L/C Issuer pursuant to Section 2.03(d)(i) is required to be returned under any
of the circumstances described in Section 10.05 (including pursuant to any
settlement entered into by such L/C Issuer in its

 

39

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

discretion), each Lender shall pay to the Administrative Agent for the account
of such L/C Issuer its Applicable Percentage thereof on demand of the
Administrative Agent, plus interest thereon from the date of such demand to the
date such amount is returned by such Lender, at a rate per annum equal to the
Federal Funds Rate from time to time in effect. The obligations of the Lenders
under this clause (ii) shall survive the payment in full of the Obligations and
the termination of this Agreement.

(f) Obligations Absolute. The obligation of the Borrower to reimburse the L/C
Issuers for each drawing under each Letter of Credit and to repay each L/C
Borrowing shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, setoff, defense or other right
that the Borrower or any Subsidiary may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the applicable L/C Issuer or
any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

(iv) any payment by an L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by an L/C Issuer under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law; or

(v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Borrower or any
Subsidiary.

The Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will immediately notify the applicable L/C Issuer. The Borrower shall
be conclusively deemed to have waived any such claim against the applicable L/C
Issuer and its correspondents unless such notice is given as aforesaid.

(g) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any
drawing under a Letter of Credit, the applicable L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the L/C Issuers,
the Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuers shall be liable to any
Lender for (i) any action taken or omitted in connection herewith at the request
or with the approval of the Lenders or the Majority Lenders, as applicable;
(ii) any action taken or

 

40

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

omitted in the absence of gross negligence or willful misconduct, each as
determined in a final, non-appealable judgment by a court of competent
jurisdiction; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Issuer Document. The Borrower hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the Borrower’s pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. None
of the L/C Issuers, the Administrative Agent, any of their respective Related
Parties nor any correspondent, participant or assignee of the applicable L/C
Issuer shall be liable or responsible for any of the matters described in
clauses (i) through (v) of Section 2.03(f); provided, however, that anything in
such clauses to the contrary notwithstanding, the Borrower may have a claim
against the applicable L/C Issuer, and the applicable L/C Issuer may be liable
to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Borrower which
the Borrower proves were caused by the applicable L/C Issuer’s willful
misconduct or gross negligence or such L/C Issuer’s willful failure, in each
case as determined in a final, non-appealable judgment by a court of competent
jurisdiction, to pay under any Letter of Credit after the presentation to it by
the beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing, the L/C Issuers may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary, and the L/C Issuers shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.

(h) Cash Collateral. Upon the request of the Administrative Agent, (i) if an L/C
Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing or (ii) if, as of the
Letter of Credit Expiration Date, any L/C Obligation for any reason remains
outstanding, the Borrower shall, in each case, immediately Cash Collateralize
the then Outstanding Amount of all L/C Obligations. Sections 2.06 and
8.02(c) set forth certain additional requirements to deliver Cash Collateral
hereunder. For purposes of this Section 2.03, Section 2.06 and Section 8.02(c),
“Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the applicable L/C Issuer and the
Lenders, as collateral for the L/C Obligations, cash or deposit account balances
pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the applicable L/C Issuer (which documents are hereby
consented to by the Lenders). Such cash and deposit account balances are
referred to herein, collectively, as the “Cash Collateral”. Derivatives of such
term have corresponding meanings. The Borrower hereby grants to the
Administrative Agent, for the benefit of the applicable L/C Issuer and the
Lenders, a security interest in all such cash, deposit accounts and all balances
therein and all proceeds of the foregoing. Cash Collateral shall be maintained
in blocked, non-interest bearing deposit accounts at the Administrative Agent.

(i) Applicability of ISP and UCP. Unless otherwise expressly agreed by the
applicable L/C Issuer and the Borrower when a Letter of Credit is issued, the
rules of the ISP shall apply to each Letter of Credit.

(j) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent
for the account of each Lender in accordance with its Applicable Percentage a
Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit
equal to the Applicable Rate times the daily amount available to be drawn under
such Letter of Credit; provided that, in the event the Borrower has entered into
an arrangement with the applicable L/C Issuer with respect to the applicable L/C
Issuer’s risk with respect to any Lender’s obligation to fund its Applicable
Percentage of the Unreimbursed Amount with respect to such Letter of Credit as
contemplated in Section 2.03(a)(iii)(E) hereof, no such Letter of Credit

 

41

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

Fee shall accrue or be deemed to have accrued, or be owing or payable by the
Borrower to the Administrative Agent for the account of such Lender with respect
to such Lender’s Applicable Percentage of such Letter of Credit Fee until such
time as the applicable L/C Issuer determines in its reasonable discretion that
such Lender is no longer a Defaulting Lender. For purposes of computing the
daily amount available to be drawn under any Letter of Credit, the amount of
such Letter of Credit shall be determined in accordance with Section 1.07.
Letter of Credit Fees shall be (i) due and payable on the fifth Business Day
after the end of each March, June, September and December, commencing with the
first such date to occur after the issuance of such Letter of Credit, on the
Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a
quarterly basis in arrears. If there is any change in the Applicable Rate during
any quarter, the daily amount available to be drawn under each Letter of Credit
shall be computed and multiplied by the Applicable Rate separately for each
period during such quarter that such Applicable Rate was in effect.
Notwithstanding anything to the contrary contained herein, (A) upon the request
of the Majority Lenders, while any Event of Default exists and
(B) automatically, upon any Event of Default under Section 8.01(f), all Letter
of Credit Fees shall accrue at the Default Rate.

(k) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuers.
The Borrower shall pay directly to the applicable L/C Issuer for its own account
a fronting fee with respect to each Letter of Credit, at the rate of 0.125% per
annum (but in no event less than $500.00 per annum or $125.00 per quarter) with
respect to each Letter of Credit, computed on the daily amount available to be
drawn under such Letter of Credit on a quarterly basis in arrears, and due and
payable on the fifth Business Day after the end of each March, June, September
and December in respect of the most recently-ended quarterly period (or portion
thereof, in the case of the first payment), commencing with the first such date
to occur after the issuance of such Letter of Credit, on the Letter of Credit
Expiration Date and thereafter on demand. For purposes of computing the daily
amount available to be drawn under any Letter of Credit, the amount of such
Letter of Credit shall be determined in accordance with Section 1.07. In
addition, the Borrower shall pay directly to the applicable L/C Issuer for its
own account the customary issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of such L/C Issuer relating to
letters of credit as from time to time in effect. Such customary fees and
standard costs and charges are due and payable on demand and are nonrefundable.

(l) Conflict with Issuer Documents. In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.

Section 2.04 [Reserved].

Section 2.05 Borrowing Base.

(a) Initial Borrowing Base. During the period from the Effective Date until the
next Determination Date the Borrowing Base shall be $425,000,000, subject to
adjustment or reduction, as applicable, as set forth in Sections 2.05(c),
2.05(d) and 2.05(e).

(b) Subsequent Determinations of the Borrowing Base. Upon each designation of a
new Borrowing Base on a Scheduled Determination or a Special Determination, the
Administrative Agent shall notify the Borrower of the new Borrowing Base which
designation shall take effect immediately on the date such notice is sent (each
such date (including the Closing Date), a “Determination Date”) and shall remain
in effect until, but not including, the next Determination Date. The Borrowing
Base shall be determined in accordance with the following methodology:

(i) By April 1 and October 1 of each year beginning October 1, 2017, the
Borrower shall furnish to the Administrative Agent (with sufficient copies for
each Lender of any information provided on paper, computer disks, or other
tangible media) the Engineering Report then

 

42

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

required under Section 6.01(e) or Section 6.01(f) together with all information,
reports and data that the Administrative Agent requests concerning the
businesses and properties of the Borrower and the other Loan Parties (including
their Oil and Gas Properties and the reserves and production relating thereto).
As promptly as reasonably practicable after receiving such Engineering Report,
information, reports and data, the Administrative Agent shall propose a
Borrowing Base following the procedures set forth in Section 2.05(b)(iii) below.
Each such determination of the Borrowing Base is herein called a “Scheduled
Determination”. If the Borrower does not furnish all such information, reports
and data by the date specified in the first sentence of this clause (i), the
Administrative Agent may nonetheless designate the Borrowing Base at any amount
that Required Lenders determine (or, in the case of an increase, that all the
Lenders determine) and the Borrowing Base may similarly be designated from time
to time thereafter until each Lender receives all such information, reports and
data, whereupon the Lenders shall designate a new Borrowing Base as described
above.

(ii) In addition to Scheduled Determinations, the Borrower may request the
Lenders to make additional determinations of the Borrowing Base twice during any
fiscal year between Scheduled Determinations, and the Administrative Agent also
may (and at the request of the Required Lenders must) request the Lenders to
make an additional determination of the Borrowing Base (x) once during any
fiscal year between Scheduled Determinations and (y) in connection with any
Royalty Trust Redetermination Trigger Event. The Administrative Agent shall give
notice to the Borrower of any such request made by the Administrative Agent to
the Lenders. The Borrower shall submit any such request made by the Borrower to
the Administrative Agent and each Lender and, at the time of such request, the
Borrower shall (A) deliver to the Administrative Agent and each Lender an
updated Engineering Report prepared either by the Borrower or any Approved
Petroleum Engineer and (B) notify the Administrative Agent and each Lender of
the Borrowing Base requested by the Borrower. Any determination of the Borrowing
Base made pursuant to a request under this clause (ii) is herein called a
“Special Determination”. Any Special Determination shall be made by Lenders in
accordance with the procedures set forth in Section 2.05(b)(iii); provided,
however, that the Borrower shall not be required to deliver an updated
Engineering Report to the Administrative Agent and Lenders in connection with
any Special Determination requested by the Administrative Agent.

(iii) The Administrative Agent shall propose to the Lenders a specific Borrowing
Base amount for the Lenders to approve or disapprove, (x) in the case of a
Scheduled Determination, (A) if the Administrative Agent shall have received the
Engineering Report and all information, reports and data requested by it in
connection therewith in a timely manner, then on or before April 15 and October
15th of such year following the date of delivery or (B) if the Administrative
Agent shall not have received the Engineering Report and all information,
reports and data requested by it in connection therewith in a timely manner,
then promptly after the Administrative Agent has received such Engineering
Report and all information, reports and data requested by it in connection
therewith and has had a reasonable opportunity to determine the Borrowing Base
in accordance with Section 2.05(b)(i); and (y) in the case of a Special
Determination, promptly, and in any event, within 15 days after the
Administrative Agent shall have received the Engineering Report and all
information, reports and data requested by it in connection therewith. Within 15
days after the date referred to in the foregoing clause (iii)(x) or (iii)(y), as
applicable, each Lender shall respond to the Administrative Agent in writing,
either approving such proposed amount or setting out a reasonable alternative
amount (based on the criteria described in clause (iv) below), and any Lender’s
failure to respond to such proposal within such time will be deemed a
disapproval of the proposed amount. After receiving such responses or deemed
responses from all Lenders, the Administrative Agent will designate the new
Borrowing Base at the highest amount approved (I) by all Lenders, in the case of
an increase to the then current Borrowing Base, or (II) at the highest amount
approved by the Required Lenders, in the case of a reduction to or continuation
of the then current Borrowing Base.

 

43

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

(iv) Each redetermination of the Borrowing Base pursuant to this Section 2.05
shall be made in good faith by all of the Lenders and the Administrative Agent,
in the exercise of their reasonable discretion and in accordance with their
respective customary and prudent standards for oil and gas lending and credit
transactions as they exist at such time and taking into account any Oil and Gas
Hedge Transactions that are in place with respect to the production of
Hydrocarbons from the Oil and Gas Properties owned by the Borrower and the other
Loan Parties. Without limiting such discretion, Borrower acknowledges and agrees
that the Administrative Agent and the Lenders (A) may make such assumptions
regarding appropriate existing and projected pricing for Hydrocarbons as they
deem appropriate in their discretion, (B) may make such assumptions regarding
projected rates and quantities of future production of Hydrocarbons from the Oil
and Gas Properties owned by the Borrower and the other Loan Parties as they deem
appropriate in their discretion, (C) may consider the projected cash
requirements of the Borrower and its Restricted Subsidiaries, (D) are not
required to consider any asset other than Proved Reserves owned by the Borrower
and the other Loan Parties and (E) may make such other assumptions,
considerations and exclusions as they deem appropriate in the exercise of their
discretion. It is further acknowledged and agreed that the Administrative Agent
and the Lenders may consider such other credit factors as they deem appropriate
in the exercise of their discretion (including, without limitation, the status
of title information with respect to the Borrowing Base Properties as described
in the Engineering Reports and the existence of any other Indebtedness).

(c) Reduction of Borrowing Base Upon Incurrence of Junior Lien Debt and
Unsecured Indebtedness. Upon (x) the issuance or incurrence by the Borrower or
any Restricted Subsidiary of any Junior Lien Debt and/or unsecured Indebtedness
in accordance with Section 7.03(l) (other than to the extent constituting
Refinanced Indebtedness incurred to refinance such Indebtedness, but only to the
extent that the aggregate principal amount of Refinanced Indebtedness incurred
to refinance such Indebtedness does not result in beyond any amounts permitted
pursuant to clause (i) of the proviso to the definition of “Refinanced
Indebtedness”) and/or (y) the creation of a Lien on any property, assets or
revenues of the Borrower or any of its Restricted Subsidiaries securing the
Convertible Notes (or any portion thereof), then, in each case, the Borrowing
Base then in effect shall immediately and automatically be reduced by an amount
equal to the product of 0.25 multiplied by the aggregate principal amount of
such Junior Lien Debt, unsecured Indebtedness or Convertible Notes, as
applicable, (without, for the avoidance of doubt, regard to any original issue
discount); provided that no such adjustment shall be required in connection with
the Convertible Notes outstanding on the Closing Date to the extent such
Convertible Notes are not (nor is any portion thereof) secured in accordance
with their terms.

(d) Reduction of Borrowing Base Upon Hedge Terminations. Upon the completion of
any early termination or unwinding of, or the creation of any off-setting
position in respect of, any Hedge Transaction used in determining the Borrowing
Base on the immediately preceding Determination Date, the effect of which
termination, unwinding or off-setting position, when combined with the effect of
each other such termination, unwinding and/or off-setting position that has
occurred since the immediately preceding Determination Date, would be a
reduction in the Borrowing Base then in effect of 5.0% or more on a pro forma
basis, the Borrowing Base then in effect shall immediately and automatically be
reduced by the Borrowing Base contribution of such Hedge Transaction
contemporaneously with the consummation of such transaction.

(e) Reduction of Borrowing Base Upon Dispositions and Casualty Events. Upon the
completion of any Disposition of, or Casualty Event with respect to, any assets
included in the Borrowing Base on the immediately preceding Determination Date,
the effect of which Disposition or Casualty Event, when combined with the effect
of each other such Disposition and/or Casualty Event that has occurred since the
immediately preceding Determination Date, would be a reduction in the Borrowing
Base then in effect of 5.0% or more on a pro forma basis, the Borrowing Base
then in effect shall immediately and automatically be reduced by the Borrowing
Base contribution of such assets contemporaneously with the consummation of such
Disposition or the occurrence of such Casualty Event, as applicable.

 

44

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

(f) Royalty Trusts. It is understood and agreed that both the initial Borrowing
Base and each subsequent Borrowing Base shall be calculated to include SandRidge
E&P’s proportionate share of the Oil and Gas Properties held by the Royalty
Trusts, including all Proved Reserves and related Hydrocarbons from such Oil and
Gas Properties, in each case, determined and redetermined, as applicable, in
accordance with this Section 2.05; provided, however, that notwithstanding
anything to the contrary contained herein, in no event shall the value
attributable to SandRidge E&P’s proportionate share of the Oil and Gas
Properties held by the Royalty Trusts, in the aggregate, constitute more than
12.5% of the aggregate value of the Proved Reserves used to determine the
Borrowing Base.

Section 2.06 Prepayments.

(a) Optional. The Borrower may, upon written notice to the Administrative Agent,
at any time or from time to time voluntarily prepay Committed Loans in whole or
in part without premium or penalty; provided that (i) such notice must be
received by the Administrative Agent not later than 11:00 a.m. (A) three
Business Days prior to any date of prepayment of Eurodollar Rate Loans and
(B) one Business Day prior to the date of any prepayment of Base Rate Loans;
(ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any
prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding; provided, further, that any
such notice may state that such notice is conditioned upon effectiveness of
other financing or the occurrence of other events, in which case such notice may
be revoked by the Borrower, by notice to the Administrative Agent on or prior to
the date specified therein if such condition is not satisfied. Each such notice
shall be substantially in the form of Exhibit B hereto and specify the date and
amount of such prepayment and the Type(s) of Committed Loans to be prepaid and,
if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of such
Committed Loans. The Administrative Agent will promptly notify each Lender of
its receipt of each such notice, and of the amount of such Lender’s Applicable
Percentage of such prepayment. If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein. Any prepayment of
a Eurodollar Rate Loan shall be accompanied by all accrued interest on the
amount prepaid, together with any additional amounts required pursuant to
Section 3.05. Each such prepayment shall be applied to the Committed Loans of
the Lenders in accordance with their respective Applicable Percentages.

(b) Mandatory.

(i) If for any reason the Total Outstandings at any time exceed the Aggregate
Commitments then in effect, the Borrower shall immediately (x) prepay Committed
Loans in an aggregate principal amount equal to such excess and (y) if any
excess remains after prepaying all Committed Loans as a result of outstanding
L/C Obligations, pay to the Administrative Agent, on behalf of the L/C Issuers
and the Lenders, an aggregate amount equal to such excess in order to Cash
Collateralize such outstanding L/C Obligations.

(ii) Upon any determination of or adjustment to the amount of the Borrowing Base
pursuant to Section 2.05 (other than pursuant to Section 2.05(c), 2.05(d) or
2.05(e)), if a Borrowing Base Deficiency exists, the Borrower shall, within ten
days after being notified of such Borrowing Base Deficiency, provide an
irrevocable written notice (the “Election Notice”) to Lender stating the action
which Borrower proposes to take to remedy such Borrowing Base Deficiency, and
the Borrower shall

 

45

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

thereafter do one or a combination of the following (as elected by the Borrower
pursuant to the Election Notice) in an aggregate amount sufficient to eliminate
such Borrowing Base Deficiency:

(A) within ten days following the delivery (or required delivery) of such
Election Notice, make a prepayment of the Committed Loans (and, if a Borrowing
Base Deficiency remains after prepaying all of the Committed Loans as a result
of outstanding L/C Obligations, pay to the Administrative Agent, on behalf of
the L/C Issuers and the Lenders, an aggregate amount equal to such remaining
deficiency in order to Cash Collateralize such outstanding L/C Obligations);

(B) pay in six equal monthly installments of the Outstanding Amount of the
Committed Loans (and, if a Borrowing Base Deficiency remains after prepaying all
of the Committed Loans as a result of outstanding L/C Obligations, pay to the
Administrative Agent, on behalf of the L/C Issuers and the Lenders, an aggregate
amount equal to such remaining deficiency in order to Cash Collateralize such
outstanding L/C Obligations) over a term and in an amount satisfactory to the
Administrative Agent (but in any event, with the first such monthly installment
to be due on the thirtieth day following delivery of the Election Notice and
each subsequent installment being equal to 1/6 of the aggregate amount of such
Borrowing Base Deficiency due and payable on the dame date in each applicable
subsequent calendar month), by immediately dedicating a sufficient amount of
monthly cash flow from the Oil and Gas Properties of the Borrower and the other
Loan Parties; and/or

(C) within thirty days following the delivery of the Election Notice, grant the
Administrative Agent, on behalf of the Secured Parties, a first-priority Lien,
pursuant to Collateral in form and substance satisfactory to the Administrative
Agent, on additional Oil and Gas Properties not evaluated in the most recently
delivered Engineering Report to the Administrative Agent and with an aggregate
PV9 Pricing attributable thereto sufficient to eliminate such deficiency;
provided that, in no event may the Borrower elect the option specified in this
clause (ii)(C) (in whole or in part) if fewer than ninety-one days remain until
the Maturity Date.

Notwithstanding anything herein to the contrary, all payments required to be
made pursuant to this Section 2.06(b)(ii) must, in any event, be made on or
prior to the Maturity Date. In the event the Borrower fails to provide an
Election Notice to the Administrative Agent within the ten day period referred
to above, the Borrower shall be deemed to have irrevocably elected the option
set forth in clause (ii)(B). The failure of the Borrower to comply with any of
the options elected (including any deemed election) pursuant to the provisions
of this Section 2.06(b)(ii) and specified in such Election Notice (or relating
to such deemed election) shall constitute an immediate Event of Default.

(iii) Upon any adjustment to the amount of the Borrowing Base pursuant to
Section 2.05(c), 2.05(d) or 2.05(e), if a Borrowing Base Deficiency exists, then
the Borrower shall, in each case, within two Business Days after the
consummation or occurrence of the event or events giving rise to such Borrowing
Base adjustment, prepay Committed Loans in an aggregate principal amount equal
to such deficiency and (y) if any deficiency remains after prepaying all
Committed Loans as a result of outstanding L/C Obligations, pay to the
Administrative Agent, on behalf of the L/C Issuers and the Lenders, an aggregate
amount equal to such excess in order to Cash Collateralize such outstanding L/C
Obligations; provided that, notwithstanding anything herein to the contrary, all
payments required to be made pursuant to this Section 2.06(b)(iii) must, in any
event, be made on or prior to the Maturity Date.

Section 2.07 Termination or Reduction of Commitments. The Borrower may, upon
notice to the Administrative Agent, terminate the Aggregate Commitments, or from
time to time permanently

 

46

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

reduce the Aggregate Commitments; provided that (i) any such notice shall be
received by the Administrative Agent not later than 11:00 a.m. three Business
Days prior to the date of termination or reduction, (ii) any such partial
reduction shall be in an aggregate amount of $10,000,000 or any whole multiple
of $1,000,000 in excess thereof, (iii) the Borrower shall not terminate or
reduce the Aggregate Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Total Outstandings would exceed the
Aggregate Commitments and (iv) if, after giving effect to any reduction of the
Aggregate Commitments, the Letter of Credit Sublimit exceeds the amount of the
Aggregate Commitments, such Sublimit shall be automatically reduced by the
amount of such excess; provided, further, that any such notice may state that
such notice is conditioned upon effectiveness of other financing or the
occurrence of other events, in which case such notice may be revoked by the
Borrower by notice to the Administrative Agent on or prior to the date specified
therein if such condition is not satisfied. The Administrative Agent will
promptly notify the Lenders of any such notice of termination or reduction of
the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be
applied to the Commitment of each Lender according to its Applicable Percentage.
All fees accrued until the effective date of any termination of the Aggregate
Commitments shall be paid on the effective date of such termination.

Section 2.08 Repayment of Loans. The Borrower shall repay to the Lenders on the
Maturity Date the aggregate principal amount of Committed Loans outstanding on
such date, together with all accrued but unpaid interest thereon.

Section 2.09 Interest.

(a) Subject to the provisions of clause (b) below, (i) each Eurodollar Rate Loan
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate and (ii) each Base Rate Loan shall bear
interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate.

(b) (1) If any amount of principal of any Committed Loan is not paid when due
(without regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.

(i) If any amount (other than principal of any Committed Loan) payable by the
Borrower under any Loan Document is not paid when due (without regard to any
applicable grace periods), whether at stated maturity, by acceleration or
otherwise, then upon the request of the Majority Lenders, such amount shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.

(ii) (A) Upon the request of the Majority Lenders, while any Event of Default
exists or (B) automatically, while any Event of Default under
Section 8.01(f) exists, the Borrower shall pay interest on the principal amount
of all outstanding Committed Loans hereunder at a fluctuating interest rate per
annum at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.

(iii) Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be due and payable upon demand.

(c) Interest on each Committed Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest

 

47

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

hereunder (including, for the avoidance of doubt, at the Default Rate) shall be
due and payable in accordance with the terms hereof before and after judgment,
and before and after the commencement of any proceeding under any Debtor Relief
Law.

Section 2.10 Fees. In addition to certain fees described in clauses (j) and
(k) of Section 2.03:

(a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Applicable Percentage, a
commitment fee (the “Commitment Fee”) equal to the Applicable Rate times the
daily amount of the Available Borrowing Base. The Commitment Fee shall accrue at
all times during the Availability Period, including at any time during which one
or more of the conditions in Section 4.02 is not met, and shall be due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after the
Closing Date, and on the last day of the Availability Period. The Commitment Fee
shall be calculated quarterly in arrears, and if there is any change in the
Applicable Rate during any quarter, the actual daily amount shall be computed
and multiplied by the Applicable Rate separately for each period during such
quarter that such Applicable Rate was in effect.

(b) Other Fees. (i) The Borrower shall pay to the Arranger and the
Administrative Agent for their own respective accounts fees in the amounts and
at the times specified in the Administrative Agent Fee Letter. Such fees shall
be fully earned when paid and shall not be refundable for any reason whatsoever.

(ii) The Borrower shall pay to the Lenders such fees as shall have been
separately agreed upon in writing in the amounts and at the times so specified.
Such fees shall be fully earned when paid and shall not be refundable for any
reason whatsoever.

Section 2.11 Computation of Interest and Fees. All computations of interest for
Base Rate Loans (if the Base Rate is determined in reliance on clause (ii) of
the definition thereof) shall be made on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more fees or interest, as applicable, being paid than if
computed on the basis of a 365-day year). Interest shall accrue on each
Committed Loan for the day on which the Committed Loan is made, and shall not
accrue on a Committed Loan, or any portion thereof, for the day on which the
Committed Loan or such portion is paid; provided that any Committed Loan that is
repaid on the same day on which it is made shall, subject to Section 2.13(a),
bear interest for one day. Each determination by the Administrative Agent of an
interest rate or fee hereunder shall be conclusive and binding for all purposes,
absent manifest error.

Section 2.12 Evidence of Debt.

(a) The Credit Extensions made by each Lender shall be evidenced by one or more
accounts or records maintained by such Lender and by the Administrative Agent in
the ordinary course of business. The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Credit Extensions made by the Lenders to the Borrower and
the interest and payments thereon. Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the Obligations. In
the event of any conflict between the accounts and records maintained by any
Lender and the accounts and records of the Administrative Agent in respect of
such matters, the accounts and records of the Administrative Agent shall control
in the absence of manifest error. Upon the request of any Lender made through
the Administrative Agent, the Borrower shall execute and deliver to such Lender
(through the Administrative Agent) a Note, which shall evidence such Lender’s
Committed Loans in addition to such accounts or records. Each Lender may attach
schedules to its Note and endorse thereon the date, Type (if applicable), amount
and maturity of its Committed Loans and payments with respect thereto.

 

48

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

(b) In addition to the accounts and records referred to in clause (a), each
Lender and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in Letters of Credit. In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts and
records of any Lender in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error.

Section 2.13 Payments Generally; Administrative Agent’s Clawback.

(a) General. All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrower
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent’s
Office in Dollars and in immediately available funds not later than 2:00 p.m. on
the date specified herein. The Administrative Agent will promptly distribute to
each Lender its Applicable Percentage (or other applicable share as provided
herein) of such payment in like funds as received by wire transfer to such
Lender’s Lending Office. All payments received by the Administrative Agent after
2:00 p.m. shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue. If any payment to be made
by the Borrower shall come due on a day other than a Business Day, payment shall
be made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be.

(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Committed Borrowing of Eurodollar Rate Loans (or, in the
case of any Committed Borrowing of Base Rate Loans, prior to 12:00 noon on the
date of such Committed Borrowing) that such Lender will not make available to
the Administrative Agent such Lender’s share of such Committed Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with Section 2.02 (or, in the case of a Committed
Borrowing of Base Rate Loans, that such Lender has made such share available in
accordance with and at the time required by Section 2.02) and may, in reliance
upon such assumption, make available to the Borrower a corresponding amount. In
such event, if a Lender has not in fact made its share of the applicable
Committed Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount in immediately available funds
with interest thereon, for each day from and including the date such amount is
made available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (A) in the case of a payment to be made by such Lender,
the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation and (B) in the case of a payment to be made by the Borrower, the
interest rate applicable to Base Rate Loans. If the Borrower and such Lender
shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period. If
such Lender pays its share of the applicable Committed Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lender’s
Committed Loan included in such Committed Borrowing. Any payment by the Borrower
shall be without prejudice to any claim the Borrower may have against a Lender
that shall have failed to make such payment to the Administrative Agent.

 

49

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

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

A notice of the Administrative Agent to any Lender or the Borrower with respect
to any amount owing under this clause (b) shall be conclusive, absent manifest
error.

(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to
the Administrative Agent funds for any Committed Loan to be made by such Lender
as provided in the foregoing provisions of this Article II, and such funds are
not made available to the Borrower by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Section 4.02 are not
satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall promptly return such funds (in like funds as received from such
Lender) to such Lender, without interest.

(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to
make Committed Loans, to fund participations in Letters of Credit and to make
payments pursuant to Section 10.04(c) are several and not joint. The failure of
any Lender to make any Committed Loan, to fund any such participation or to make
any payment under Section 10.04(c) on any date required hereunder shall not
relieve any other Lender of its corresponding obligation to do so on such date,
and no Lender shall be responsible for the failure of any other Lender to so
make its Committed Loan, to purchase its participation or to make its payment
under Section 10.04(c).

(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Committed Loan in any particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain
the funds for any Committed Loan in any particular place or manner.

Section 2.14 Sharing of Payments by Lenders. 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 the Committed Loans made by it, or the
participations in L/C Obligations held by it resulting in such Lender’s
receiving payment of a proportion of the aggregate amount of such Committed
Loans or participations and accrued interest thereon greater than its pro rata
share thereof as provided herein, then the Lender receiving such greater
proportion shall (a) notify the Administrative Agent of such fact and
(b) purchase (for cash at face value) participations in the Committed Loans and
subparticipations in L/C 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 Committed Loans and
other amounts owing them; provided that:

(i) if any such participations or subparticipations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and

 

50

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

(ii) the provisions of this Section 2.14 shall not be construed to apply to
(x) any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Committed Loans or subparticipations in L/C Obligations to any assignee or
participant, other than to the Borrower or any Subsidiary thereof (as to which
the provisions of this Section 2.14 shall apply).

The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of the Borrower in the amount of
such participation.

Section 2.15 Defaulting Lenders. Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then,
until such time as such Lender is no longer a Defaulting Lender, to the extent
permitted by applicable Law:

(a) Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article VIII or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 10.08 shall be applied at such time or
times as may be determined by the Administrative Agent as follows: first, to the
payment of any amounts owing by such Defaulting Lender to the Administrative
Agent hereunder; second, to the payment on a pro rata basis of any amounts owing
by such Defaulting Lender to any L/C Issuer hereunder; third, to Cash
Collateralize the L/C Issuers’ Fronting Exposure with respect to such Defaulting
Lender; fourth, as the Borrower may request (so long as no Default or Event of
Default exists), to the funding of any Committed Loans in respect of which such
Defaulting Lender has failed to fund its portion thereof as required by this
Agreement, as determined by the Administrative Agent; fifth, if so determined by
the Administrative Agent and the Borrower, to be held in a deposit account and
released pro rata in order to (x) satisfy such Defaulting Lender’s potential
future funding obligations with respect to Committed Borrowings under this
Agreement and (y) Cash Collateralize the L/C Issuers’ future Fronting Exposure
with respect to such Defaulting Lender with respect to future Letters of Credit
issued under this Agreement; sixth, to the payment of any amounts owing to the
Lenders or the L/C Issuers as a result of any judgment of a court of competent
jurisdiction obtained by any Lender or any L/C Issuer against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under
this Agreement; seventh, so long as no Default or Event of Default exists, to
the payment of any amounts owing to the Borrower as a result of any judgment of
a court of competent jurisdiction obtained by the Borrower against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations 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 Committed Loan or
L/C Advance in respect of which such Defaulting Lender has not fully funded its
appropriate share and (y) such Committed Loans were made or the related Letters
of Credit were issued at a time when the conditions set forth in Section 4.02
were satisfied or waived, such payment shall be applied solely to pay the
Committed Loans of, and L/C Advance owed to, all Non-Defaulting Lenders on a pro
rata basis prior to being applied to the payment of any Committed Loans of, or
L/C Advances owed to, such Defaulting Lender until such time as all Committed
Loans and funded and unfunded participations in L/C Obligations are held by the
Lenders pro rata in accordance with the Commitments under the facility without
giving effect to Section 2.15(d). 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 2.15(a) shall be deemed paid to and redirected by such Defaulting
Lender, and each Lender irrevocably consents hereto.

 

51

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

(b) Certain Fees.

(i) No Defaulting Lender shall be entitled to receive any Commitment Fee for any
period during which that Lender is a Defaulting Lender (and the Borrower shall
not be required to pay any such fee that otherwise would have been required to
have been paid to that Defaulting Lender).

(ii) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees
for any period during which that Lender is a Defaulting Lender only to the
extent allocable to its Applicable Percentage of the stated amount of Letters of
Credit for which it has provided Cash Collateral pursuant to Section 2.15(e).

(iii) With respect to any fee not required to be paid to any Defaulting Lender
pursuant to clause (i) or (ii) above, the Borrower shall (x) pay to each
Non-Defaulting Lender that portion of any such fee otherwise payable to such
Defaulting Lender with respect to such Defaulting Lender’s participation in L/C
Obligations that has been reallocated to such Non-Defaulting Lender pursuant to
clause (c) below, (y) pay to each L/C Issuer the amount of any such fee
otherwise payable to such Defaulting Lender to the extent allocable to such
L/C Issuer’s Fronting Exposure to such Defaulting Lender, and (z) not be
required to pay the remaining amount of any such fee.

(c) Reallocation of Participations to Reduce Fronting Exposure. All or any part
of such Defaulting Lender’s participation in L/C Obligations shall be
reallocated among the Non-Defaulting Lenders in accordance with their respective
Applicable Percentages (calculated without regard to such Defaulting Lender’s
Commitment) but only to the extent that such reallocation does not cause the
Aggregate Exposure of any Non-Defaulting Lender to exceed the lesser of such
Non-Defaulting Lender’s (i) Commitment and (ii) Applicable Percentage of the
Facility Limit. Subject to Section 2.15(g) below, 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.

(d) Cash Collateral. If the reallocation described in clause (c) above cannot,
or can only partially, be effected, the Borrower shall, without prejudice to any
right or remedy available to it hereunder or under Law, Cash Collateralize the
L/C Issuers’ Fronting Exposure in accordance with the procedures set forth in
Section 2.03(h).

(e) Defaulting Lender Cure. If the Borrower, the Administrative Agent and each
L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the
Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth
therein (which may include arrangements with respect to any Cash Collateral),
that Lender will, to the extent applicable, purchase at par that portion of
outstanding Committed Loans of the other Lenders or take such other actions as
the Administrative Agent may determine to be necessary to cause the Committed
Loans and funded and unfunded participations in Letters of Credit to be held pro
rata by the Lenders in accordance with the Commitments under the applicable
facility (without giving effect to Section 2.15(c)), whereupon such Lender will
cease to be a Defaulting Lender; provided that no adjustments will be made
retroactively with respect to fees accrued or payments made by or on behalf of
the Borrower while that Lender was a Defaulting Lender; 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.

 

52

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

(f) New Letters of Credit. So long as any Lender is a Defaulting Lender, no L/C
Issuer shall 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.

(g) Acknowledgement and Consent to Bail-In of EEA Financial Institutions.
Notwithstanding anything to the contrary in any Loan Document or in any other
agreement, arrangement or understanding among any such parties, each party
hereto acknowledges that any liability of any EEA Financial Institution arising
under any Loan Document, to the extent such liability is unsecured, may be
subject to the Write-Down and Conversion Powers of an EEA Resolution Authority
and agrees and consents to, and acknowledges and agrees to be bound by:

(i) 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

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

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

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

(C) 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.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

Section 3.01 Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes or Other Taxes; provided that if the Borrower shall be required by
applicable Law to deduct any Indemnified Taxes (including any Other Taxes) from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.01) the Administrative Agent,
Lender or L/C Issuer, as the case may be, receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall timely pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
Law.

(b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
clause (a) above, the Borrower shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable Law.

(c) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, each Lender and the L/C Issuers, within 10 days after
demand therefor, for the full

 

53

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

amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section 3.01) paid by the Administrative Agent, such Lender or L/C Issuer, as
the case may be, and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or L/C Issuer (with a copy to
the Administrative Agent), or by the Administrative Agent on its own behalf or
on behalf of a Lender or an L/C Issuer, shall be conclusive absent manifest
error.

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

(e) Status of Lenders. Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which the
Borrower is resident for tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable Law or reasonably requested by the
Borrower or the Administrative Agent, such properly completed and executed
documentation prescribed by applicable Law as will permit such payments to be
made without withholding or at a reduced rate of withholding. In addition, any
Lender, if requested by the Borrower or the Administrative Agent, shall deliver
such other documentation prescribed by applicable Law or reasonably requested by
the Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.

Without limiting the generality of the foregoing, in the event that the Borrower
is resident for tax purposes in the United States, any Foreign Lender shall
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but
only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:

(i) duly completed copies of Internal Revenue Service Forms W-8BEN, W-8BEN-E or
applicable W-8 claiming eligibility for benefits of an income tax treaty to
which the United States is a party;

(ii) duly completed copies of Internal Revenue Service Form W-8ECI;

(iii) 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 to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code or (C) a “controlled
foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) duly
completed copies of Internal Revenue Service Forms W-8BEN, W-8BEN-E or
applicable W-8; or

(iv) any other form prescribed by applicable Law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable Law to permit the Borrower to determine the withholding or deduction
required to be made.

 

54

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

Without limiting the generality of the foregoing, in the event that the Borrower
is resident for tax purposes in the United States, if a payment made to a Lender
under any Loan Document would be subject to U.S. federal withholding Tax imposed
by FATCA if such Lender were to fail to comply with the applicable reporting
requirements of FATCA (including those contained in Section 1471(b) or
1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower
and the Administrative Agent at the time or times prescribed by Law and at such
time or times reasonably requested by the Borrower or the Administrative Agent
such documentation prescribed by applicable Law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Administrative Agent as may be
necessary for the Borrower and the Administrative Agent to comply with their
obligations under FATCA and to determine that such Lender has complied with such
Lender’s obligations under FATCA or to determine the amount to deduct and
withhold from such payment. For purposes of determining withholding Taxes
imposed under FATCA, from and after the Closing Date, the Borrower and the
Administrative Agent shall treat (and the Lenders hereby authorize the
Administrative Agent to treat) this Agreement as not qualifying as a
“grandfathered obligation” within the meaning of Treasury Regulation
Section 1.1471-2(b)(2)(i).

(f) Treatment of Certain Refunds. If the Administrative Agent, any Lender or an
L/C Issuer determines, in its sole discretion, that it has received a refund of
any Taxes or Other Taxes as to which it has been indemnified by the Borrower or
with respect to which the Borrower has paid additional amounts pursuant to this
Section 3.01, it shall pay to the Borrower an amount equal to such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by
the Borrower under this Section 3.01 with respect to the Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of the
Administrative Agent, such Lender or such L/C Issuer, as the case may be, and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided that the Borrower, upon the
request of the Administrative Agent, such Lender or such L/C Issuer, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent, such Lender or such L/C Issuer in the event the
Administrative Agent, such Lender or such L/C Issuer is required to repay such
refund to such Governmental Authority. This clause (f) shall not be construed to
require the Administrative Agent, any Lender or any L/C Issuer to make available
its tax returns (or any other information relating to its taxes that it deems
confidential) to the Borrower or any other Person. Notwithstanding anything to
the contrary in this clause (f), in no event will the Administrative Agent or
any Lender be required to pay any amount to the Borrower pursuant to this
clause (f), the payment of which would place the Administrative Agent or such
Lender in a less favorable net after-Tax position than the Administrative Agent
or such Lender would have been in if the indemnification payments or additional
amounts giving rise to such refund had never been paid.

Section 3.02 Illegality. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, or any Governmental Authority has imposed material restrictions
on the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender
to the Borrower through the Administrative Agent, any obligation of such Lender
to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to
Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the Borrower shall,
upon demand from such Lender (with a copy to the Administrative Agent), prepay
or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period therefor, if such Lender
may lawfully continue to maintain such Eurodollar Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted.

 

55

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

Section 3.03 Inability to Determine Rates. If the Majority Lenders determine
that for any reason in connection with any request for a Eurodollar Rate Loan or
a conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan or
(c) the Eurodollar Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to
such Lenders of funding such Committed Loan, the Administrative Agent will
promptly so notify the Borrower and each Lender. Thereafter, the obligation of
the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until
the Administrative Agent (upon the instruction of the Majority Lenders) revokes
such notice. Upon receipt of such notice, the Borrower may revoke any pending
request for a Committed Borrowing of, conversion to or continuation of
Eurodollar Rate Loans or, failing that, will be deemed to have converted such
request into a request for a Committed Borrowing of Base Rate Loans in the
amount specified therein.

Section 3.04 Increased Costs; Reserves on Eurodollar Rate Loans.

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

(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender
(except any reserve requirement contemplated by Section 3.04(e)) or any L/C
Issuer;

(ii) subject any Lender or any L/C Issuer to any tax of any kind whatsoever with
respect to its loans, loan principal, letters of credit, commitments or other
obligations, or its deposits, reserves or other liabilities attributable thereto
(except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the
imposition of, or any change in the rate of, any Excluded Tax payable by such
Lender or L/C Issuer); or

(iii) impose on any Lender or any L/C Issuer or the London interbank market any
other condition, cost or expense affecting this Agreement or Eurodollar Rate
Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making, continuing, converting to or maintaining any Eurodollar Rate
Loan (or of maintaining its obligation to make any such Committed Loan), or to
increase the cost to such Lender or such L/C Issuer 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 or such L/C Issuer hereunder (whether
of principal, interest or any other amount) then, upon request of such Lender or
such L/C Issuer, the Borrower will pay to such Lender or such L/C Issuer, as the
case may be, such additional amount or amounts as will compensate such Lender or
such L/C Issuer, as the case may be, for such additional costs incurred or
reduction suffered.

(b) Capital or Liquidity Requirements. If any Lender or any L/C Issuer
determines that any Change in Law affecting such Lender or such L/C Issuer or
any Lending Office of such Lender or such Lender’s or such L/C Issuer’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 such L/C Issuer’s
capital or

 

56

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

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

(c) Certificates for Reimbursement. A certificate of a Lender or an L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or such
L/C Issuer or its holding company, as the case may be, as specified in
clause (a) or (b) of this Section 3.04 and delivered to the Borrower shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such L/C
Issuer, as the case may be, the amount shown as due on any such certificate
within 10 Business Days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender or any L/C
Issuer to demand compensation pursuant to the foregoing provisions of this
Section 3.04 shall not constitute a waiver of such Lender’s or such L/C Issuer’s
right to demand such compensation; provided that the Borrower shall not be
required to compensate a Lender or an L/C Issuer pursuant to the foregoing
provisions of this Section 3.04 for any increased costs incurred or reductions
suffered more than 180 days prior to the date that such Lender or such L/C
Issuer, as the case may be, notifies the Borrower of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or such L/C
Issuer’s intention to claim compensation therefor (except that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof).

(e) Reserves on Eurodollar Rate Loans. The Borrower shall pay to each Lender, as
long as such Lender shall be required to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits,
additional interest on the unpaid principal amount of each Eurodollar Rate Loan
equal to the actual costs of such reserves allocated to such Committed Loan by
such Lender (as determined by such Lender in good faith, which determination
shall be conclusive absent manifest error), which shall be due and payable on
each date on which interest is payable on such Committed Loan; provided that the
Borrower shall have received at least 10 Business Days’ prior notice (with a
copy to the Administrative Agent) of such additional interest from such Lender.
If a Lender fails to give notice 10 Business Days prior to the relevant Interest
Payment Date, such additional interest shall be due and payable 10 Business Days
from receipt of such notice.

Section 3.05 Compensation for Losses. Upon demand of any Lender (with a copy to
the Administrative Agent) from time to time, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Committed Loan
other than a Base Rate Loan on a day other than the last day of the Interest
Period for such Committed Loan (whether voluntary, mandatory, automatic, by
reason of acceleration, or otherwise) (including, for avoidance of doubt, any
payments pursuant to clause (b) of Section 2.06);

(b) any failure by the Borrower (for a reason other than the failure of such
Lender to make a Committed Loan) to prepay, borrow, continue or convert any
Committed Loan other than a Base Rate Loan on the date or in the amount notified
by the Borrower (including by reason of a revocation of notice of prepayment
pursuant to the further proviso in the first sentence of Section 2.06(a)); or

 

57

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

(c) any assignment of a Eurodollar Rate Loan on a day other than the last day of
the Interest Period therefor as a result of a request by the Borrower pursuant
to Section 10.13; including any loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain such Committed Loan or from
fees payable to terminate the deposits from which such funds were obtained. The
Borrower shall also pay any customary administrative fees charged by such Lender
in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Committed Loan by a
matching deposit or other borrowing in the London interbank eurodollar market
for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded.

Section 3.06 Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.04, or the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to
Section 3.02, then such Lender shall use reasonable efforts to designate a
different Lending Office for funding or booking its Committed 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 3.01 or Section 3.04, as the case may be, in the future, or eliminate
the need for the notice pursuant to Section 3.02, as applicable and (ii) in each
case, would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, the Borrower may replace such Lender in accordance with
Section 10.13.

Section 3.07 Survival. All of the Borrower’s obligations, and any corresponding
Lenders’ obligations, under this Article III shall survive termination of the
Aggregate Commitments and repayment of all other Obligations hereunder.

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

Section 4.01 Conditions to Existing Credit Agreement. The initial Credit
Extension under this Agreement shall become available and this Agreement shall
become effective on the date that each of the following conditions shall have
been satisfied (or waived by each Lender party hereto on the Closing Date):

(a) Loan Documents. The Administrative Agent’s receipt of the following, each of
which shall be originals or telecopies (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party (and, in the case of the Convertible

 

58

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

Notes Intercreditor Agreement, each of the other parties thereto), each dated
the Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance satisfactory
to the Administrative Agent and each of the Lenders: (i) this Agreement,
(ii) the Guaranty, (iii) the Security Agreement, (iv) the Administrative Agent
Fee Letter, (v) the Convertible Notes Intercreditor Agreement and (vi) a Note
executed by the Borrower in favor of each Lender requesting a Note, in each
case, executed by the relevant parties.

(b) Collateral Matters; Title. The Administrative Agent shall have received:

(i) all certificates, agreements or instruments representing or evidencing the
Pledged Equity, if any, accompanied by instruments of transfer and undated stock
powers endorsed in blank;

(ii) UCC financing statements in appropriate form for filing under the UCC and
filings with the United States Patent and Trademark Office and United States
Copyright Office;

(iii) certified copies of UCC, tax and judgment lien searches, bankruptcy and
pending lawsuit searches or equivalent reports or searches, each of a recent
date listing all effective financing statements, lien notices or comparable
documents that name any Loan Party as debtor and that are filed in those states
in which any Loan Party is organized and such other searches that are required
by the Security Agreement or that the Administrative Agent deems necessary or
appropriate, none of which encumber the Collateral covered or intended to be
covered by the Collateral Documents (other than Liens permitted by
Section 7.01);

(iv) duly authorized and executed Mortgages, supplements or assignments of
mortgages, in each case, in form and substance reasonably acceptable to the
Administrative Agent, and which shall be sufficient to grant, evidence and
perfect first-priority Liens with respect to at least 95% of the PV9 Pricing of
the Proved Reserves, in each case, attributable to the Engineered Oil and Gas
Properties included in the Initial Engineering Report (without taking into
account any adjustments for hedging, together with such other assignments,
conveyances, amendments, agreements and other writings each duly authorized and
executed) and such certificates and opinions of counsel with respect thereto, in
each case as the Administrative Agent shall deem necessary or appropriate; and

(v) title information consistent with usual and customary standards for the
geographic regions in which the Engineered Oil and Gas Properties are located,
taking into account the size, scope and number of leases and wells of the
Borrower and the other Loan Parties; provided that that after giving effect to
its receipt of the title information to be provided pursuant to this
clause (b)(v), the Administrative Agent shall be reasonably satisfied with the
title information covering Engineered Oil and Gas Properties comprising at least
70% of the total PV9 Pricing of the Proved Reserves attributable to Oil and Gas
Properties that are subject to a Mortgage granted pursuant to clause (b)(iv)
above.

(c) Corporate Documents; Certificates. The Administrative Agent’s receipt of the
following, in each case, in form and substance reasonably satisfactory to the
Administrative Agent and each of the Lenders:

(i) a duly authorized and executed certificate of a Responsible Officer of each
Loan Party dated the Closing Date, certifying (x) that attached thereto is a
true and complete copy of each Organization Document of such Loan Party
certified (to the extent applicable) as of a recent date by the Secretary of
State of the state of its organization, (y) that attached thereto is a true and
complete copy of resolutions duly adopted by such Loan Party authorizing the
execution, delivery and performance of the Loan Documents to which such Loan
Party is a party and, in the case of the Borrower, the borrowings

 

59

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

hereunder, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect and (z) as to the incumbency and
specimen signature of each officer executing any Loan Document or any other
document delivered in connection herewith on behalf of such Loan Party (together
with a certificate of another Responsible Officer as to the incumbency and
specimen signature of the secretary or assistant secretary executing the
certificate in this clause (b)(i));

(ii) a certificate as to the good standing of each Loan Party (in so-called
“long-form” (if available)) as of a recent date, from the applicable Secretary
of State (or other applicable Governmental Authority) for the jurisdiction of
each such Loan Party’s incorporation or organization;

(iii) a certificate dated the Closing Date and signed by a Responsible Officer
of the Borrower, confirming compliance with the conditions precedent set forth
in Sections 4.01(g), (h), (i), (j) and (n); and

(iv) a solvency certificate in the form of Exhibit F, dated the Closing Date and
signed by the chief financial officer of the Borrower.

(d) Financial Statements; Pro Forma Balance Sheet; Projections. The
Administrative Agent and the Lenders shall have received and shall be satisfied
with the form and substance of the Initial Financial Statements.

(e) Opinions of Counsel. The Administrative Agent shall have received, on behalf
of itself and the Lenders, customary written opinions of (i) Kirkland & Ellis,
LLP, counsel for the Loan Parties and (ii) local counsel for the Loan Parties in
the States of Colorado, Kansas and Oklahoma, in each case, (x) dated the Closing
Date, (y) addressed to the Administrative Agent and the Lenders and (z) covering
such matters relating to the Loan Parties, the Loan Documents and the
Transactions as the Administrative Agent shall reasonably request.

(f) Evidence of Insurance. The Administrative Agent shall have received evidence
that all insurance required to be maintained pursuant to the Loan Documents has
been obtained and is in effect, together with the certificates of insurance,
naming the Administrative Agent, on behalf of the Lenders, as an additional
insured or loss payee, as the case may be, under all insurance policies
maintained with respect to the assets and properties of the Loan Parties that
constitutes Collateral.

(g) Indebtedness. After giving effect to the Transactions and the other
transactions contemplated hereby, the Borrower and its Restricted Subsidiaries
shall not have any outstanding Indebtedness other than (i) the Obligations
pursuant to the Loan Documents and (ii) other Indebtedness permitted to be
incurred and remain outstanding pursuant to Section 7.03.

(h) Representations and Warranties. Each of the representations and warranties
of the Borrower and each other Loan Party contained in Article V of this
Agreement or in any other Loan Document, or which are contained in any document
furnished at any time under or in connection herewith or therewith, shall be
true and correct in all material respects (or if such representation or warranty
is qualified by or subject to a “materiality”, “material adverse effect”,
“material adverse change” or any similar term or qualification, such
representation or warranty shall be true and correct in all respects) on and as
of the date of the Closing Date (and immediately after giving effect to the
Transactions), except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct, in all material respects(or if such representation or warranty is
qualified by or subject to a “materiality”, “material adverse effect”, “material
adverse change” or any similar term or qualification, such representation or
warranty shall be true and correct in all respects), as of such earlier date.

 

60

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

(i) No Default. At the time of, and immediately after giving effect to the
Transactions on the Closing Date and the application of the proceeds of any
Credit Extension pursuant to this Agreement, no Default or Event of Default
shall have occurred and be continuing on such date.

(j) [Reserved].

(k) [Reserved].

(l) USA PATRIOT Act. The Administrative Agent and the Lenders shall have
received at least three Business Days prior to the Closing Date, the
documentation and information required under applicable “know your customer” and
anti-money laundering rules and regulations, including without limitation, the
information required under Section 10.17; provided that the Administrative Agent
or any such Lender shall have requested such documentation and information at
least seven days prior to the Closing Date.

Without limiting the generality of the provisions of Section 9.04, for purposes
of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

Section 4.02 Conditions to All Credit Extensions. The obligation of each Lender
to honor any Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Committed Loans to the other Type, or a
continuation of Eurodollar Rate Loans) is subject to the following conditions
precedent:

(a) After giving effect to such Credit Extension and the application by the
Administrative Agent of the proceeds thereof, (i) the Total Outstandings shall
not exceed the Facility Limit, (ii) the Aggregate Exposure of any Lender shall
not exceed the lesser of such Lender’s (x) Commitment and (y) Applicable
Percentage of the Facility Limit and (iii) the Outstanding Amount of the L/C
Obligations shall not exceed the Letter of Credit Sublimit.

(b) The representations and warranties of the Borrower and each other Loan Party
contained in Article V or any other Loan Document, or which are contained in any
document furnished at any time under or in connection herewith or therewith,
shall be true and correct in all material respects (or if such representation or
warranty is qualified by qualified by or subject to a “materiality”, “material
adverse effect”, “material adverse change” or any similar term or qualification,
such representation or warranty shall be true and correct in all respects) on
and as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct, in all material respects(or if such
representation or warranty is qualified by or subject to a “materiality”,
“material adverse effect”, “material adverse change” or any similar term or
qualification, such representation or warranty shall be true and correct in all
respects), as of such earlier date, and except that for purposes of this
Section 4.02, the representations and warranties contained in clause (a) of
Section 5.05 shall be deemed, from and after the first delivery of financial
statements pursuant thereto, to refer to the most recent statements furnished
pursuant to clause (a) of Section 6.01.

(c) No Default or Event of Default shall exist, or would result from such
proposed Credit Extension or from the application of the proceeds thereof.

 

61

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

(d) The Administrative Agent and, if applicable, the L/C Issuers shall have
received a Request for Credit Extension in accordance with the requirements
hereof.

Each Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Committed Loans to the other Type or a continuation of
Eurodollar Rate Loans) submitted by the Borrower shall be deemed to be a
representation and warranty that the conditions specified in Section 4.02(a),
Section 4.02(b), Section 4.02(c) and Section 4.02(d) have been satisfied on and
as of the date of the applicable Credit Extension.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Borrower, on behalf of itself and each Restricted Subsidiary, represents and
warrants to the Administrative Agent and the Lenders that:

Section 5.01 Existence, Qualification and Power. Each Loan Party and each of its
Restricted Subsidiaries (a) is duly organized or formed, validly existing and,
as applicable, in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all
requisite governmental licenses, authorizations, consents and approvals to
(i) own or lease its assets and carry on its business and (ii) execute, deliver
and perform its obligations under the Loan Documents to which it is a party and
consummate the Transactions, and (c) is duly qualified and is licensed and, as
applicable, in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license; except in each case referred to in
clause (b)(i) or (c), to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect.

Section 5.02 Authorization; No Contravention. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is or
is to be a party have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Person’s Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, or require any
payment to be made under (i) any Contractual Obligation that is material to the
Loan Parties to which such Person is a party or (ii) any order, injunction, writ
or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject; or (c) violate any Law.

Section 5.03 Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with (a) the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document, or for the
consummation of the Transactions, (b) the grant by any Loan Party of the Liens
granted by it pursuant to the Collateral Documents, (c) the perfection or
maintenance of the Liens created under the Collateral Documents (including the
first-priority nature thereof) or (d) the exercise by the Administrative Agent
or the Lenders of their rights under the Loan Documents or the remedies in
respect of the Collateral pursuant to the Collateral Documents, except for
(i) the authorizations, approvals, actions, notices and filings listed on
Schedule 5.03, all of which have been duly obtained, taken, given or made and
are in full force and effect, (ii) authorizations, approvals, actions, notices
and filings in connection with the enforcement of pledges of, and the sale of,
the Pledged Equity in connection therewith, (iii) authorizations, approvals,
actions, notices and filings required in connection with the additional mortgage
and security interests required to be granted under this Agreement; (iv) routine
authorizations, approvals, actions, notices and filings in the ordinary course
of business (e.g. tax filings, annual reports, environmental filings, etc.);
(v) authorizations, approvals and consents necessary in connection with the
Borrower’s mineral class

 

62

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

leases with the general land office of the State of Texas; and (vi) the periodic
filing of continuation statements under the UCC, and (vii) authorizations,
approvals, actions, notices and filings the failure of which to obtain, take or
make could not reasonably be expected to have a Material Adverse Effect.

Section 5.04 Binding Effect. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. This Agreement constitutes, and each
other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable against each Loan Party that
is party thereto in accordance with its terms.

Section 5.05 Financial Statements; No Material Adverse Effect. (a) The Initial
Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; (ii) fairly present in all material respects the financial
condition of the Borrower and its Restricted Subsidiaries as of the date thereof
and their results of operations for the period covered thereby in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (iii) show, in accordance with and as
required by GAAP, all material indebtedness and other material liabilities,
direct or contingent, of the Borrower and its Restricted Subsidiaries as of the
date thereof, including material liabilities for taxes, material commitments and
material Indebtedness.

(b) The unaudited pro forma financial statements delivered by the Borrower
pursuant to Section 4.01(d) have, in each case, been prepared in good faith by
the Borrower, based on the assumptions stated therein (which assumptions are
believed by the Borrower on the Closing Date to be reasonable in light of
current conditions and facts then known to the Borrower), are based on the
information available to the Borrower as of the date of delivery thereof,
accurately reflect all adjustments required to be made to give effect to the
Transactions, and present fairly in all material respects the pro forma
consolidated financial position and results of operations of the Borrower and
its Restricted Subsidiaries as of such date and for such periods, assuming that
the Transactions had occurred on such date or as of the beginning of such
period, as the case may be.

(c) The forecasts of financial performance of the Borrower and its Restricted
Subsidiaries delivered by the Borrower pursuant to Section 4.01(d) have, in each
case, been prepared in good faith by the Borrower and based on assumptions
believed by the Borrower to be reasonable at the time such forecasts were
provided (and on the Closing Date in the case of forecasts provided prior to the
Closing Date) (it being recognized, however, that projections as to future
events are not to be viewed as facts and that actual results during the
period(s) covered by such projections may differ from the projected results and
that such differences may be material and that the Loan Parties make no
representation that such projections will be realized).

(d) Since December 31, 2015, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

Section 5.06 Litigation. There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of the Borrower after due and diligent
investigation, threatened, at law, in equity, in arbitration or before any
Governmental Authority, by or against the Borrower or any of its Subsidiaries or
against any of their properties or revenues that (a) purport to affect or
pertain to this Agreement, any other Loan Document or the consummation of the
Transactions or (b) except as specifically disclosed in Schedule 5.06, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, and there has been no change in the status, or
financial effect on any Loan Party or any Subsidiary thereof, of the matters
described in Schedule 5.06 that could reasonably be expected to have a Material
Adverse Effect.

 

63

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

Section 5.07 No Default. Neither any Loan Party nor any Restricted Subsidiary
thereof is in default under or with respect to, or a party to, any Contractual
Obligation that could, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing or would result from the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

Section 5.08 Ownership of Property; Liens. (a) Each Loan Party and each of its
Restricted Subsidiaries has good record and marketable title in fee simple to,
or valid leasehold interests in, all real property necessary or used in the
ordinary conduct of its business, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(b) The property of each Loan Party and each of its Restricted Subsidiaries is
subject to no Liens, other than Liens permitted by Section 7.01.

Section 5.09 Environmental Compliance. (a) The Loan Parties and their respective
Subsidiaries are in compliance with all existing Environmental Laws and have not
received any claims alleging potential liability or responsibility for violation
of any Environmental Law on their respective businesses, operations and
properties, except as specifically disclosed in Schedule 5.09, such
Environmental Laws and except for such non-compliance or claims that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(b) As of the Closing Date and except (i) as otherwise set forth in
Schedule 5.09 or (ii) to the extent the same could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect: none of the
properties currently or formerly owned or operated by any Loan Party or any of
its Subsidiaries is listed or proposed for listing on the National Priorities
List under 42 USC § 9605(a)(8)(B) or on the CERCLIS or any analogous foreign,
state or local list or is adjacent to any such property; there is no asbestos or
asbestos-containing material on any property currently owned or operated by any
Loan Party or any of its Subsidiaries; and Hazardous Materials have not been
released, discharged or disposed of on any property currently or formerly owned
or operated by any Loan Party or any of its Subsidiaries in quantities or in a
manner as to create Environmental Liability.

(c) As of the Closing Date and except (i) as otherwise set forth in
Schedule 5.09 or (ii) to the extent the same could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect: neither any
Loan Party nor any of its Subsidiaries is undertaking, and has not completed,
either individually or together with other potentially responsible parties, any
investigation or assessment or remedial or response action relating to any
actual or threatened release, discharge or disposal of Hazardous Materials at
any site, location or operation, either voluntarily or pursuant to the order of
any Governmental Authority or the requirements of any Environmental Law that is
reasonably expected to result in material Environmental Liability to any Loan
Party or any of its Subsidiaries; and all Hazardous Materials generated, used,
treated, handled or stored at, or transported to or from, any property currently
or formerly owned or operated by any Loan Party or any of its Subsidiaries have
been disposed of in a manner not reasonably expected to result in material
Environmental Liability to any Loan Party or any of its Subsidiaries.

Section 5.10 Insurance. The properties of the Borrower and its Restricted
Subsidiaries are insured (a) with financially sound and reputable insurance
companies in such amounts, with such limitations or deductibles, against such
risks, and in such form as are customarily maintained by companies of
established repute engaged in the same or similar businesses operating in the
same or

 

64

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

similar locations and/or (b) through a system or systems of self-insurance which
are in accord with sound practices of similarly situated corporations of
established reputation maintaining such systems and with respect to which the
Borrower or such Restricted Subsidiary maintain adequate insurance reserves in
accordance with GAAP and in accordance with sound actuarial and insurance
principles.

Section 5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal,
state and other material tax returns and reports required to be filed, and have
paid all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. Neither the Borrower nor
any Subsidiary has received written notice of any proposed tax assessment
against it that could reasonably be expected to have a Material Adverse Effect.

Section 5.12 ERISA Compliance. (a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal or
state Laws except for such events of noncompliance which could not, in the
aggregate, reasonably be expected to result in a Material Adverse Effect.

(b) There are no pending or, to the best knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could reasonably be expected to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

(c) Except to the extent the same could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect: (i) no ERISA Event has
occurred or is reasonably expected to occur; (ii) no Pension Plan has any
Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with respect
to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate
has engaged in a transaction that could reasonably be expected to be subject to
Section 4069 or 4212(c) of ERISA.

Section 5.13 Subsidiaries; Equity Interests; Loan Parties. As of the Closing
Date, no Loan Party has any Subsidiaries other than those specifically disclosed
in Part (a) of Schedule 5.13, and all of the outstanding Equity Interests in
such Subsidiaries have been validly issued, are (in the case of corporate
securities) fully paid and non-assessable and are owned by a Loan Party in the
amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens
except those created under the Collateral Documents or permitted by
Section 7.01. As of the Closing Date, no Loan Party has any equity investments
in any other corporation or entity other than those specifically disclosed in
Part (b) of Schedule 5.13. Set forth on Part (c) of Schedule 5.13 is a complete
and accurate list of all Loan Parties as of the Closing Date, showing as of the
Closing Date (as to each Loan Party) the jurisdiction of its incorporation, the
address of its principal place of business and its U.S. taxpayer identification
number or, in the case of any non-U.S. Loan Party that does not have a U.S.
taxpayer identification number, its unique identification number issued to it by
the jurisdiction of its incorporation.

Section 5.14 Margin Regulations; Investment Company Act. (a) Neither the making
of any Credit Extension hereunder nor the use of the proceeds thereof will
violate Regulation T, Regulation U or Regulation X.

 

65

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

(b) No Loan Party or Restricted Subsidiary of a Loan Party is an “investment
company” within the meaning of the Investment Company Act of 1940.

Section 5.15 Disclosure. No report, financial statement, certificate or other
information furnished in writing by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the transactions
contemplated hereby and the negotiation of this Agreement or delivered hereunder
or under any other Loan Document (in each case as modified or supplemented by
other information so furnished), when taken together with all other information
previously furnished or that is publicly available, contains as of the date so
furnished any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not materially misleading; provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed by
it to be reasonable at the time. There are no statements or conclusions in any
Engineering Report which are based upon or include, as of the date of such
Engineering Report, misleading information or fail to take into account, as of
the date of such Engineering Report, material information regarding the matters
reported therein, it being understood that projections concerning volumes
attributable to the Oil and Gas Properties and production and cost estimates
contained in each Engineering Report are necessarily based upon professional
opinions, estimates and projections and that the Borrower does not warrant that
such opinions, estimates and projections will ultimately prove to have been
accurate.

Section 5.16 Compliance with Laws. Each Loan Party and each Subsidiary thereof
is in compliance in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

Section 5.17 Solvency. The Loan Parties are, together with their Subsidiaries on
a Consolidated basis, Solvent.

Section 5.18 Casualty, Etc. Neither the businesses nor the properties of any
Loan Party or any of its Restricted Subsidiaries are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 5.19 Labor Matters. There are no collective bargaining agreements or
Multiemployer Plans covering the employees of the Borrower or any of its
Restricted Subsidiaries as of the Closing Date and neither the Borrower nor any
Restricted Subsidiary has suffered any strikes, walkouts, work stoppages or
other material labor difficulty within the last five years that, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

Section 5.20 Collateral Documents. The provisions of the Collateral Documents
are effective to create in favor of the Administrative Agent for the benefit of
the Secured Parties a legal, valid and enforceable first-priority Lien (subject
to Liens permitted by Section 7.01) on all right, title and interest of the
respective Loan Parties in the Collateral described therein. Except as expressly
contemplated hereby and by the Collateral Documents, no filing or other action
will be necessary to perfect or protect such Liens.

 

66

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

Section 5.21 Engineered Oil and Gas Properties.

(a) The Borrower or another Loan Party has good and defensible title to all
Engineered Oil and Gas Properties, free and clear of all Liens except as
permitted pursuant to Section 7.01 and Immaterial Title Deficiencies. With the
exception of Immaterial Title Deficiencies, all such Oil and Gas Properties are
valid, subsisting, and in full force and effect, and all material rentals,
royalties, and other amounts due and payable in respect thereof have been duly
paid. Without regard to any consent or non-consent provisions of any joint
operating agreement covering any of the Loan Parties’ Proved Reserves, and with
the exception of Immaterial Title Deficiencies, the Loan Parties’ share of
(a) the costs for each Engineered Oil and Gas Property is not greater than the
decimal fraction set forth in the most recent Engineering Report, before and
after payout, as the case may be, and described therein by the respective
designations “working interests”, “WI”, “gross working interest”, “GWI” or
similar terms and (b) production from, allocated to, or attributed to each
Engineered Oil and Gas Property is not less than the decimal fraction set forth
in the most recent Engineering Report, before and after payout, as the case may
be, and described therein by the designations “net revenue interest”, “NRI” or
similar terms. Except to the extent constituting an Immaterial Title Deficiency,
each well drilled in respect of each Engineered Oil and Gas Property described
in the Engineering Report (y) is capable of, and is presently, producing
Hydrocarbons in commercial quantities, and the applicable Loan Party is
currently receiving payments for its share of production, with no material funds
in respect of any thereof being presently held in suspense, other than any such
funds being held in suspense pending delivery of appropriate division orders and
other usual and customary suspense accounts, and (z) has been drilled, bottomed,
completed, and operated in compliance in all material respects with all
applicable Laws and no such well which is currently producing hydrocarbons is
subject to any penalty in production by reason of such well having produced in
excess of its allowable production. To the Borrower’s knowledge, there are no
unrecorded assignments or conveyances affecting the Engineered Oil and Gas
Properties or any Loan Party’s interest therein that would result in the
Borrower or its Restricted Subsidiaries having a WI or NRI that is less than the
WI/NRI set forth in the Engineering Report, except the interests of Sierra
Madera CO2 Pipeline LP and Symbol Energy Inc., which constitute Immaterial Title
Deficiencies.

(b) The Engineered Oil and Gas Properties (and all properties unitized
therewith) are, in all material respects, being (and, to the extent the same
could materially and adversely affect the ownership or operation of the
Engineered Oil and Gas Properties after the date hereof, to the applicable Loan
Party’s knowledge, have in the past been) maintained, operated and developed in
a good and workmanlike manner, in accordance with prudent industry standards and
in conformity with all applicable Laws and in conformity with all oil, gas or
other mineral leases and other contracts and agreements forming a part of the
Engineered Oil and Gas Property and in conformity with the Permitted
Encumbrances. No Engineered Oil and Gas Property is subject to having allowable
production after the date hereof 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 date hereof
and none of the wells located on the Engineered Oil and Gas Properties (or
properties unitized therewith) are or will be deviated from the vertical more
than the maximum permitted by applicable Laws, regulations, rules and orders,
and such wells are bottomed under and producing from, with the well bores wholly
within, the Engineered Oil and Gas Properties (or, in the case of wells located
on properties unitized therewith, such unitized properties). There are no dry
holes, or otherwise inactive wells, located on the Engineered Oil and Gas
Properties or on lands pooled or unitized therewith, except for wells that have
been properly plugged and abandoned or for which appropriate plugging and
abandonment has been scheduled. Each Loan Party has all material governmental
licenses and permits reasonably necessary or appropriate to own and operate its
Engineered Oil and Gas Properties, and no Loan Party has received notice in
writing of any material violations in respect of any such licenses or permits.

Section 5.22 Sale of Production. Except (x) as of the Closing Date, as set forth
in Schedule 5.22, or (y) thereafter, as disclosed in writing to the
Administrative Agent and the Lenders and

 

67

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

reflected in the most recent determination of the Borrowing Base, or (z) for
matters that constitute Immaterial Title Deficiencies:

(a) No Engineered Oil and Gas Property is subject to any material contractual or
other arrangement (i) whereby payment for production is or can be deferred for a
substantial period after the month in which such production is delivered (in the
case of oil, not in excess of 60 days, and in the case of gas, not in excess of
90 days) or (ii) whereby payments are made to a Loan Party other than by checks,
drafts, wire transfer advises or other similar writings, instruments or
communications for the immediate payment of money;

(b) (i) No Engineered Oil and Gas Property is subject to any material
contractual or other arrangement for the sale, processing or transportation of
production (or otherwise related to the marketing of production) which cannot be
canceled on 120 days’ (or less) notice and (ii) all material contractual or
other arrangements for the sale, processing or transportation of production (or
otherwise related to the marketing of production) are bona fide arm’s length
transactions made with third parties not affiliated with Loan Parties;

(c) Each Loan Party is presently receiving a price for all production (other
than gas used for operations at a field location) from (or attributable to) each
Engineered Oil and Gas Property covered by a production sales contract or
marketing contract that is computed in accordance with the terms of such
contract, and no Loan Party is having deliveries of production from such
Engineered Oil and Gas Property curtailed substantially below such property’s
delivery capacity, except for curtailments caused (i) by an act or event of
force majeure, or (ii) by routine maintenance requirements in the ordinary
course of business;

(d) No Loan Party, nor, to such Loan Party’s knowledge, any Loan Party’s
predecessors in title, has received prepayments (including payments for gas not
taken pursuant to “take or pay” or other similar arrangements) for any oil, gas
or other hydrocarbons produced or to be produced from any Engineered Oil and Gas
Properties after the date hereof;

(e) No Engineered Oil and Gas Property is subject to any “take or pay” or other
similar arrangement (i) which can be satisfied in whole or in part by the
production or transportation of gas from other properties or (ii) as a result of
which production from any Engineered Oil and Gas Property may be required to be
delivered to one or more third parties without payment (or without full
payment) therefor as a result of payments made, or other actions taken, with
respect to other properties;

(f) There is no Engineered Oil and Gas Property with respect to which any Loan
Party, or, to such Loan Party’s knowledge, any Loan Party’s predecessors in
title, has, prior to the date hereof, taken more (“overproduced”), or less
(“underproduced”), in any material respect, gas from the lands covered thereby
(or pooled or unitized therewith) than its ownership interest in such Engineered
Oil and Gas Property would entitle it to take; and as of the Closing Date,
Schedule 5.22 accurately reflects, in all material respects, for each well or
unit with respect to which such an imbalance is shown thereon to exist,
(i) whether such Loan Party is overproduced or underproduced and (ii) the
volumes (in cubic feet or British thermal units) of such overproduction or
underproduction and the effective date of such information;

(g) No Engineered Oil and Gas Property is subject to a gas balancing arrangement
under which one or more third parties may take a portion of the production
attributable to such Engineered Oil and Gas Property without payment (or without
full payment) therefor as a result of production having been taken from, or as a
result of other actions or inactions with respect to, other properties; and

 

68

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

(h) No Engineered Oil and Gas Property is subject at the present time to any
regulatory refund obligation and, to such Loan Party’s knowledge, no facts exist
which might cause the same to be imposed.

Section 5.23 OFAC.

(a) Neither the Borrower, nor any of its Subsidiaries, nor, to its knowledge,
any director, officer, employee, agent, affiliate or representative thereof, is
an individual or entity that is, or is owned or controlled by any individual or
entity that is (i) currently the subject or target of any Sanctions or
(ii) located, organized or resident in a Designated Jurisdiction.

(b) The Borrower and its Subsidiaries have conducted their businesses in
compliance in all material respects with Sanctions and have instituted and
maintained policies and procedures designed to promote and achieve compliance
with such Sanctions or any Laws related thereto.

Section 5.24 Anti-Corruption Laws. The Borrower and its Subsidiaries have
conducted their businesses in compliance in all material respects with
applicable anti-corruption Laws (including FCPA) and have instituted and
maintained policies and procedures designed to promote and achieve compliance
with such Laws.

Section 5.25 PATRIOT Act. The Borrower and its Subsidiaries are in compliance in
all material respects with all applicable anti-money laundering Laws and
regulations, including without limitation the Bank Secrecy Act, as amended by
Title III of the USA PATRIOT Act (the “PATRIOT Act”).

ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Committed Loan or
other Obligation owing to any Lender or to the Administrative Agent hereunder
shall remain unpaid or unsatisfied, or any Letter of Credit shall remain
outstanding and not fully Cash Collateralized, the Borrower shall, and shall
(except in the case of the covenants set forth in Sections 6.01, 6.02, and
6.03) cause each Restricted Subsidiary to:

Section 6.01 Financial Statements. Deliver to the Administrative Agent and the
Lenders as contemplated by the last paragraph of Section 6.02:

(a) as soon as available, but in any event within 90 days after the end of each
fiscal year of the Borrower, a consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such fiscal year, and the related consolidated
and consolidating statements of income or operations, shareholders’ equity and
cash flows for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all in reasonable detail and prepared
in accordance with GAAP, such consolidated statements to be audited and
accompanied by a report and opinion of a Registered Public Accounting Firm of
nationally recognized standing, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and applicable Securities
Laws and, in the case of any such report and opinion delivered with respect to
the fiscal year of the Borrower ending December 31, 2017 and with respect to
each fiscal year thereafter, shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit (except for any such going concern qualification pertaining to the
maturity of the credit facility provided pursuant to this Agreement within 12
months of the relevant audit) or with respect to the absence of any material
misstatement, and such consolidating statements to be certified by the chief
executive officer, chief

 

69

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

financial officer, treasurer or controller of the Borrower to the effect that
such statements are fairly stated in all material respects when considered in
relation to the consolidated financial statements of the Borrower and its
Subsidiaries;

(b) as soon as available, but in any event within 45 days after the end of each
of the first three fiscal quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such fiscal quarter, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal quarter and for
the portion of the Borrower’s fiscal year then ended, setting forth in each case
in comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail, certified by the chief executive officer, chief
financial officer, treasurer or controller of the Borrower as fairly presenting
in all material respects the financial condition, results of operations,
shareholders’ equity and cash flows of the Borrower and its Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes;

(c) if there shall be any Unrestricted Subsidiaries at the end of any fiscal
period in respect of which any consolidated financial statements referred to in
Sections 6.01(a) and (b) above is delivered, concurrently with such delivery,
the related consolidating financial statements reflecting the adjustments
necessary to eliminate the accounts of such Unrestricted Subsidiaries from such
consolidated financial statements;

(d) as soon as available, but in any event within 90 days after the end of each
fiscal year of the Borrower, an annual business plan and budget of the Borrower
and its Subsidiaries on a Consolidated basis, including forecasts prepared by
management of the Borrower, in form satisfactory to the Administrative Agent and
the Majority Lenders, of consolidated balance sheets and statements of income or
operations of the Borrower and its Subsidiaries on a monthly basis for the
immediately following fiscal year;

(e) by April 1 of each year, commencing April 1, 2017, an Engineering Report
prepared as of the preceding January 1 by one or more of Netherland, Sewell &
Associates, DeGolyer & MacNaughton, or other independent petroleum engineers
chosen by the Borrower and reasonably acceptable to the Administrative Agent,
concerning all Oil and Gas Properties owned by any Loan Party which are located
within the geographic boundaries of the United States and which have
attributable to them Proved Reserves. Such report shall be reasonably
satisfactory to the Administrative Agent, shall be prepared using PV9 Pricing,
shall take into account any “overproduced” status under gas balancing
arrangements, and shall contain information and analysis consistent in form and
scope in all material respects to that contained in the Initial Engineering
Report. Such report shall distinguish (or shall be delivered together with a
certificate from an appropriate officer of the Borrower which
distinguishes) (i) the Oil and Gas Properties owned by each Loan Party and
(ii) those properties treated in the report which are Collateral from those
properties treated in the report which are not Collateral;

(f) by October 1 of each year, commencing October 1, 2016, an Engineering Report
prepared as of the preceding July 1 (or the last day of the preceding calendar
month in the case of a Special Determination) by petroleum engineers who are
employees of the Borrower (or, at the option of Borrower, by the independent
engineers named above or selected in accordance with clause (e) above), together
with an accompanying report on property sales, property purchases and changes in
categories that have occurred since the date of the prior Engineering Report,
both in the same form and scope as the reports in clause (e) above.

As to any information contained in materials furnished pursuant to
Section 6.02(c), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Borrower to furnish the information and
materials described in clauses (a) and (b) above at the times specified therein.

 

70

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

Section 6.02 Certificates; Other Information. Deliver to the Administrative
Agent and the Lenders as contemplated by the last paragraph of this
Section 6.02:

(a) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by the
chief executive officer, chief financial officer, treasurer or controller of the
Borrower;

(b) promptly after any request by the Administrative Agent or any Lender, copies
of any detailed audit reports, management letters or recommendations submitted
to the board of directors (or the audit committee of the board of directors) of
the Borrower by independent accountants in connection with the accounts or books
of the Borrower or any Restricted Subsidiary, or any audit of any of them;

(c) promptly after the same are available, copies of all annual, regular,
periodic and special reports, registration statements and proxy statements which
the Borrower may file or be required to file with the SEC under Sections 13, 14
or 15(d) of the Securities Exchange Act of 1934, or with any national securities
exchange, and in any case not otherwise required to be delivered to the
Administrative Agent pursuant hereto;

(d) promptly after the furnishing thereof, copies of any statement or report
furnished to any holder of debt securities of any Loan Party or any Restricted
Subsidiary thereof pursuant to the terms of any indenture, loan or credit or
similar agreement relating to Indebtedness with a principal amount in excess of
the Threshold Amount and not otherwise required to be furnished to the Lenders
pursuant to Section 6.01 or any other clause of this Section 6.02;

(e) promptly, and in any event within five Business Days after receipt thereof
by any Loan Party or any Subsidiary thereof, copies of each notice or other
correspondence received from the SEC (or comparable agency in any applicable
non-U.S. jurisdiction) concerning any investigation or possible investigation by
such agency regarding financial or other operational results of any Loan Party
or any Subsidiary thereof;

(f) not later than five Business Days after receipt thereof by any Loan Party or
any Restricted Subsidiary thereof, copies of all notices, requests and other
documents (including amendments, waivers and other modifications) so received
under or pursuant to any instrument, indenture, loan or credit or similar
agreement relating to Indebtedness with a principal amount in excess of the
Threshold Amount and regarding or related to any breach or default by any party
thereto or any other event that could reasonably be expected to materially
impair the value of the interests or the rights of any Loan Party or otherwise
have a Material Adverse Effect and, from time to time upon request by the
Administrative Agent, such information and reports regarding such instruments,
indentures and loan and credit and similar agreements as the Administrative
Agent may reasonably request;

(g) promptly after the assertion or occurrence thereof, notice of any action or
proceeding against or of any noncompliance by any Loan Party or any of its
Subsidiaries with any Environmental Law or Environmental Permit that could
(i) reasonably be expected to have a Material Adverse Effect or (ii) cause any
property described in the Mortgages to be subject to any materially adverse
restrictions on ownership, occupancy, use or transferability under any
Environmental Law;

 

71

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

(h) promptly, such additional information regarding the business, financial or
corporate affairs of the Borrower or any Restricted Subsidiary, or compliance
with the terms of the Loan Documents, as the Administrative Agent or any Lender
may from time to time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet at the website address listed on Schedule 10.02 or
(ii) on which such documents are posted on the Borrower’s behalf on an Internet
or intranet website, if any, to which each Lender and the Administrative Agent
have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); provided that: (A) the Borrower shall deliver paper
copies of such documents to the Administrative Agent or any Lender that requests
the Borrower to deliver such paper copies until a written request to cease
delivering paper copies is given by the Administrative Agent or such Lender and
(B) the Borrower shall notify the Administrative Agent and each Lender (by
telecopier, facsimile or electronic mail) of the posting of any such documents
and provide to the Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents. Notwithstanding anything contained
herein, in every instance the Borrower shall be required to provide paper copies
of the Compliance Certificates required by Section 6.02(a) to the Administrative
Agent. Except for such Compliance Certificates, the Administrative Agent shall
have no obligation to request the delivery or to maintain copies of the
documents referred to above, and in any event shall have no responsibility to
monitor compliance by the Borrower with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

The Borrower hereby acknowledges that the Administrative Agent and/or the
Arranger will make available to the Lenders and the L/C Issuers materials and/or
information provided by or on behalf of the Borrower hereunder (collectively,
the “Borrower Materials”) by posting the Borrower Materials on SyndTrak or
another similar electronic system (the “Platform”).

Section 6.03 Notices. Promptly notify the Administrative Agent and each Lender:

(a) of the occurrence of any Default or Event of Default known to any
Responsible Officer, which notice shall specify the nature thereof, the period
of existence thereof and what action the Borrower proposed to take with respect
thereto;

(b) of any matter (other than matters of a general economic or industry-specific
nature) that has resulted or could reasonably be expected to result in a
Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of the Borrower or any Subsidiary;
(ii) any dispute, litigation, investigation, proceeding or suspension between
the Borrower or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Borrower or any Subsidiary, including pursuant to any applicable
Environmental Laws;

(c) of the occurrence of any ERISA Event that would result in a Material Adverse
Effect;

(d) of any material change in accounting policies or financial reporting
practices by the Borrower or any Restricted Subsidiary; and

(e) of the (i) incurrence or issuance of any Indebtedness which would require an
adjustment to the Borrowing Base pursuant to Section 2.05(c), (ii) occurrence of
any Disposition of, or

 

72

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

Casualty Event with respect to, property or assets which would require, or could
reasonably be expected to require, an adjustment to the Borrowing Base pursuant
to Section 2.05(d), (iii) completion of any early termination or unwinding of,
or the creation of any off-setting position in respect of, any Hedge Transaction
which would require, or could reasonably be expected to require, an adjustment
to the Borrowing Base pursuant to Section 2.05(e) and (iv) occurrence of any
Royalty Trust Redetermination Trigger Event.

Each notice pursuant to this Section 6.03 (other than Section 6.03(e)) shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken and proposes to take with respect thereto. Each notice
pursuant to Section 6.03(a) shall describe with particularity any and all
provisions of this Agreement and any other Loan Document that have been
breached.

Section 6.04 Payment of Obligations. Pay and discharge as the same shall become
due and payable, (a) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings diligently conducted and
adequate reserves in accordance with GAAP are being maintained by the Borrower
or such Restricted Subsidiary, except for such amounts that, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect; (b) all lawful claims which, if unpaid, would by Law become a Lien
(other than any Lien permitted exist in accordance with Section 7.01) upon its
property.

Section 6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization except in a transaction permitted by
Section 7.04 or Section 7.05; (b) take all reasonable action to maintain all
rights, privileges, permits, licenses and franchises necessary or desirable in
the normal conduct of its business, except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and
(c) preserve or renew all of its registered patents, trademarks, trade names and
service marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect.

Section 6.06 Maintenance of Properties. (a) Maintain, preserve and protect all
of its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted;
(b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) use the standard of care typical in the
industry in the operation and maintenance of its facilities.

Section 6.07 Maintenance of Insurance. (a) Maintain (at its own
expense) insurance for its property with financially sound and reputable
insurance companies in such amounts, with such limitations or deductibles,
against such risks, and in such form as are customarily maintained by companies
of established repute engaged in the same or similar businesses operating in the
same or similar locations; provided, however, that in lieu of any such
insurance, the Borrower or any of its Restricted Subsidiaries may maintain a
system or systems of self-insurance which are in accord with sound practices of
similarly situated corporations of established reputation maintaining such
systems and with respect to which the Borrower or such Restricted Subsidiary
shall maintain adequate insurance reserves in accordance with GAAP and in
accordance with sound actuarial and insurance principles. All insurance policies
covering Collateral shall be endorsed (i) to provide for payment of losses to
the Administrative Agent as its interests may appear, (ii) to provide that such
policies may not be canceled or reduced or affected in any material manner for
any reason without ten days prior notice to the Administrative Agent, and
(iii) to provide for any other matters specified in any applicable Collateral
Document. Each Loan Party shall at all times maintain insurance against its
liability for injury to persons or property with financially sound

 

73

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

and reputable insurers in such amounts, with such limitations or deductibles,
against such risks, and in such form as are customarily maintained by companies
of established repute engaged in the same or similar businesses operating in the
same or similar locations.

(b) Reimbursement under any liability insurance maintained by Loan Parties
pursuant to this Section 6.07 may be paid directly to the Person who has
incurred the liability covered by such insurance. With respect to any loss
involving damage to Collateral, each Loan Party will make or cause to be made
the necessary repairs to or replacements of such Collateral, and any proceeds of
insurance maintained by each Loan Party pursuant to this Section 6.07 shall be
paid to such Loan Party by the Administrative Agent as reimbursement for the
costs of such repairs or replacements as such repairs or replacements are made
or acquired; provided that the Administrative Agent shall be entitled (but not
obligated) to retain and apply such proceeds as Collateral during the
continuance of any Event of Default.

Section 6.08 Compliance with Laws. Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or
(b) the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.

Section 6.09 Books and Records. (a) Maintain proper books of record and account,
in which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Borrower or such Restricted Subsidiary, as the case
may be and (b) maintain such books of record and account in material conformity
with all applicable requirements of any Governmental Authority having regulatory
jurisdiction over the Borrower or such Restricted Subsidiary, as the case may
be.

Section 6.10 Inspection Rights. Permit representatives and independent
contractors of the Administrative Agent and each Lender to visit and inspect any
of its properties, to examine its corporate, financial and operating records,
and make copies thereof or abstracts therefrom, and to discuss its affairs,
finances and accounts with its directors, officers, and independent public
accountants, all at the expense of the Borrower and at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Borrower; provided, however, that when an Event
of Default exists the Administrative Agent or any Lender (or any of their
respective representatives or independent contractors) may do any of the
foregoing at the expense of the Borrower at any time during normal business
hours and without advance notice.

Section 6.11 Use of Proceeds. The Borrower shall apply the proceeds of the
Credit Extensions for general corporate purposes, including to provide working
capital for the Borrower and its Subsidiaries, the issuance of letters of
credit, capital expenditures and acquisitions by the Borrower and its
Subsidiaries of oil and gas properties and other assets related to the
exploration, production and development of oil and gas properties.

Section 6.12 Covenant to Guarantee Obligations and Give Security. (a) Upon the
formation or acquisition of any new direct or indirect wholly-owned Subsidiary
(excluding (x) any CFC or any Subsidiary that is held directly or indirectly by
a CFC, (y) any Unrestricted Subsidiary and (z) any Immaterial Subsidiary (except
that up to 66% of the Equity Interest in a CFC held directly by the Borrower or
any Subsidiary, other than a Subsidiary described in clause (x), (y) or
(z) above, is subject to pledge as contemplated by clause (ii) below)) by any
Loan Party, then the Borrower shall, at the Borrower’s expense:

(i) within 20 days after such formation or acquisition (or such longer period as
the Administrative Agent may in its discretion approve), cause such Subsidiary,
and cause each direct and indirect parent of such Subsidiary (if it has not
already done so), to duly execute and deliver to the Administrative Agent a
guaranty or guaranty supplement, in form and substance reasonably satisfactory
to the Administrative Agent, guaranteeing the other Loan Parties’ obligations
under the Loan Documents;

 

74

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

(ii) subject in the case of Oil and Gas Properties to Section 6.12(b), within 30
days after such formation or acquisition (or such longer period as the
Administrative Agent may in its discretion approve), cause such Subsidiary and
each direct and indirect parent of such Subsidiary (if it has not already done
so) to duly execute and deliver to the Administrative Agent deeds of trust,
trust deeds, deeds to secure debt, mortgages, leasehold mortgages, leasehold
deeds of trust, Security Agreement Supplements and other security and pledge
agreements, as specified by and in form and substance reasonably satisfactory to
the Administrative Agent (including delivery of all Pledged Equity in and of
such Subsidiary, and other instruments required under the Security
Agreement) securing payment of all the Obligations of such Subsidiary or such
parent, as the case may be, under the Loan Documents and constituting Liens on
all such real and personal properties; provided, however, that notwithstanding
the foregoing, neither the Borrower nor any Subsidiary will be required to grant
a security interest in the Equity Interest of any (i) CFC in excess of 66% of
the Equity Interest of such CFC, (ii) Immaterial Subsidiary or
(iii) Unrestricted Subsidiary;

(iii) subject in the case of Oil and Gas Properties to Section 6.12(b), within
30 days after such formation or acquisition (or such longer period as the
Administrative Agent may in its discretion approve), cause such Subsidiary and
each direct and indirect parent of such Subsidiary (if it has not already done
so) to take whatever action (including the recording of mortgages, the filing of
UCC financing statements, the giving of notices and the endorsement of notices
on title documents) may be necessary or advisable in the opinion of the
Administrative Agent to vest in the Administrative Agent (or in any
representative of the Administrative Agent designated by it) valid and
subsisting Liens on the properties purported to be subject to the deeds of
trust, trust deeds, deeds to secure debt, mortgages, leasehold mortgages,
leasehold deeds of trust, Security Agreement Supplements and security and pledge
agreements delivered pursuant to this Section 6.12, enforceable against all
third parties in accordance with their terms; and

(iv) within 60 days after such formation or acquisition (or such longer period
as the Administrative Agent may in its discretion approve), deliver to the
Administrative Agent, upon the request of the Administrative Agent in its sole
discretion, a signed copy of a favorable opinion, addressed to the
Administrative Agent and the other Secured Parties, of counsel for the Loan
Parties reasonably acceptable to the Administrative Agent as to the matters
contained in clauses (i), (ii) and (iii) above, and as to such other matters as
the Administrative Agent may reasonably request.

(b) If the report or certificate delivered under Section 6.01(e) or
Section 6.01(f) does not confirm that the Obligations are secured by
first-priority Liens covering and encumbering at least 95% of the PV9 Pricing of
the Proved Reserves, in each case, attributable to the Engineered Oil and Gas
Properties (without taking into account any adjustments for hedging), then
(i) within 30 days of the delivery of such report or certificate (or such longer
period as may be appropriate in the sole discretion of the Administrative
Agent), the Loan Parties that own Engineered Oil and Gas Properties shall
execute and deliver mortgages and deeds of trust (or supplements with respect
thereto) in form and substance reasonably acceptable to the Administrative
Agent, together with such other assignments, conveyances, amendments, agreements
and other writings (each duly authorized and executed) and together with such
certificates and opinions of counsel with respect thereto, in each case as the
Administrative Agent shall deem necessary to grant, evidence and perfect the
first-priority Liens on such additional properties required by this
Section 6.12(b) and (ii) upon the request of the Administrative Agent, which
request shall

 

75

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

not be made more than once per calendar year so long as no Default, Event of
Default or Borrowing Base Deficiency is then continuing, evidence of title
reasonably satisfactory to the Administrative Agent with respect to such
additional properties, but only to the extent necessary such that the Borrower
shall have delivered evidence of title covering Engineered Oil and Gas
Properties subject to the Mortgages comprising at least 70% of the total PV9
Pricing of the Proved Reserves attributable to the Engineered Oil and Gas
Properties required by this Section 6.12(b) to be subject to the Mortgages;
provided, however, that the requirements of this Section 6.12(b) shall not apply
to any Oil and Gas Properties as to which the Administrative Agent shall
determine in its reasonable discretion, after consultation with the Borrower,
that the costs and burden of obtaining such evidence of title are excessive in
relation to the value of the benefits afforded thereby.

(c) Notwithstanding anything to the contrary contained herein, SandRidge E&P
shall only be required to pledge its Equity Interests in the Royalty
Trusts. Furthermore, the Royalty Trusts shall not be required to become Loan
Parties and their Oil and Gas Properties shall not be required to become subject
to any mortgage as may otherwise be required under this Section 6.12 or any
Collateral Document.

Section 6.13 Compliance with Environmental Laws. Except as could not reasonably
be expected to result in a Material Adverse Effect, (a) comply, and cause all
lessees and other Persons operating or occupying its properties to comply with
all applicable Environmental Laws and Environmental Permits; (b) obtain and
renew all Environmental Permits necessary for its current operations and
properties; and (c) conduct any investigation, study, sampling and testing, and
undertake any cleanup, removal, remedial or other action necessary to remove and
clean up all Hazardous Materials from any of its properties, in accordance with
the requirements of all applicable Environmental Laws; provided, however, that
neither the Borrower nor any of its Restricted Subsidiaries shall be required to
undertake any such cleanup, removal, remedial or other action to the extent that
its obligation to do so is not required by applicable Environmental Laws or
being contested in good faith and by proper proceedings and appropriate reserves
are being maintained with respect to such circumstances in accordance with GAAP.

Section 6.14 Further Assurances. Promptly upon request by the Administrative
Agent, or any Lender through the Administrative Agent, (a) correct any material
defect or error that may be discovered in any Loan Document or in the execution,
acknowledgment, filing or recordation thereof and (b) do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register any and all
such further acts, deeds, certificates, assurances and other instruments as the
Administrative Agent, or any Lender through the Administrative Agent, may
reasonably require from time to time in order to (i) to the fullest extent
permitted by applicable Law, subject any Loan Party’s or any of its Restricted
Subsidiaries’ properties, assets, rights or interests to the Liens now or
hereafter intended to be covered by any of the Collateral Documents,
(ii) perfect and maintain the validity, effectiveness and priority of any of the
Collateral Documents and any of the Liens intended to be created thereunder and
(iii) assure, convey, grant, assign, transfer, preserve, protect and confirm
more effectively unto the Secured Parties the rights granted or now or hereafter
intended to be granted to the Secured Parties under any Loan Document or under
any other instrument executed in connection with any Loan Document to which any
Loan Party or any of its Restricted Subsidiaries is or is to be a party, and
cause each of its Restricted Subsidiaries to do so.

Section 6.15 Production Proceeds. Notwithstanding that, by the terms of the
various Mortgages, certain Guarantors and Borrower are and will be assigning to
the Administrative Agent and Lenders all of the “Production Proceeds” (as
defined therein) accruing to the property covered thereby, so long as no Event
of Default has occurred such Loan Parties may continue to receive from the
purchasers of production all such Production Proceeds, subject, however, to the
Liens created under the Mortgages,

 

76

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

which Liens are hereby affirmed and ratified. Upon the occurrence of an Event of
Default, the Administrative Agent and Lenders may exercise all rights and
remedies granted under the Mortgages, including the right to obtain possession
of all Production Proceeds then held by Loan Parties or to receive directly from
the purchasers of production all other Production Proceeds. In no case shall any
failure, whether purposed or inadvertent, by the Administrative Agent or Lenders
to collect directly any such Production Proceeds constitute in any way a waiver,
remission or release of any of their rights under the Mortgages, nor shall any
release of any Production Proceeds by the Administrative Agent or Lenders to
Loan Parties constitute a waiver, remission, or release of any other Production
Proceeds or of any rights of the Administrative Agent or Lenders to collect
other Production Proceeds thereafter.

Section 6.16 Anti-Corruption, Anti-Terrorism and Anti-Money Laundering Laws.
Conduct its businesses in compliance in all material respects with all
applicable anti-corruption Laws, applicable anti-terrorism Laws and applicable
anti-money laundering Laws and maintain policies and procedures designed to
promote and achieve compliance with such Laws.

Section 6.17 Post-Closing Changes. The Borrower shall notify the Administrative
Agent within 30 days of any change made to a Loan Party’s name, type of
organization, jurisdiction of organization, organizational identification number
or location from those set forth in the schedules to the Security Agreement.

Section 6.18 Accounts.

(a) Within 45 days after the Closing Date (or such later date as the
Administrative Agent shall reasonably agree), the Loan Parties shall execute and
deliver to the Administrative Agent one or more Control Agreements with respect
to each Deposit Account, Securities Account and Commodity Account (other than to
the extent constituting an Excluded Account) held or maintained by or for the
benefit of a Loan Party on the Closing Date, executed and delivered by a duly
authorized Responsible Officer of such Loan Party in form and substance
reasonably satisfactory to the Administrative Agent and the Borrower, or
otherwise cause such Deposit Account, Securities Account and/or Commodity
Account, as applicable, to become and thereafter remain continually subject to
the “control” (within the meaning of Section 9-104 or Section 9-106 of the UCC,
as applicable) of the Administrative Agent pursuant to arrangements that are
reasonably satisfactory to the Administrative Agent.

(b) The Borrower will, and will cause each other Loan Party to, in connection
with any Deposit Account, Securities Account and Commodity Account (other than
Excluded Accounts, but only for so long as it is an Excluded Account)
established, held, acquired, assumed, or otherwise maintained after the Closing
Date, promptly, but in any event within 45 days of the establishment,
acquisition, or assumption of such account (or, in the case of a Deposit Account
or Securities Account that ceases to be an Excluded Account, within 45 days
after cessation of its status as an Excluded Account) or by such later date as
the Administrative Agent shall reasonably agree, deliver a Control Agreement
executed by a duly authorized Responsible Officer of such Loan Party in form and
substance reasonably satisfactory to the Administrative Agent and the Borrower,
otherwise cause such Deposit Account, Securities Account and/or Commodity
Account, as applicable, to become and thereafter remain continually subject to
the “control” (within the meaning of Section 9-104 or Section 9-106 of the UCC,
as applicable) of the Administrative Agent; provided that, notwithstanding the
foregoing, (x) each such account referred to in this clause (b) shall be
permitted to be maintained as an Excluded Account (and shall comply with the
requirements set forth in such definition), for all periods of time from the
date of establishment, acquisition or assumption thereof by a Loan Party through
the date on which such Control Agreement or other satisfactory control
arrangements are established and (y) other than any Deposit Account, Securities
Account or Commodity Account held by a Lender during such 45 day period, neither
the Company nor any other Restricted Subsidiary shall be permitted to deposit
into or maintain any assets

 

77

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

in any Deposit Account, Securities Account or Commodity Account (other than
Excluded Accounts, but only for so long as it is an Excluded Account) unless
such Deposit Account, Securities Account or Commodity Account is subject to such
a Control Agreement or other satisfactory control arrangement.

ARTICLE VII

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Committed Loan or
other Obligation owing to any Lender or to the Administrative Agent hereunder
shall remain unpaid or unsatisfied, or any Letter of Credit shall remain
outstanding and not fully Cash Collateralized, the Borrower shall not, nor shall
it permit any Restricted Subsidiary to, directly or indirectly:

Section 7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
other than the following:

(a) Liens pursuant to any Loan Document;

(b) Liens existing on the date hereof and listed on Schedule 7.01 and any
renewals or extensions thereof; provided that (i) the property covered thereby
is not changed, (ii) the amount secured or benefited thereby is not increased
except as contemplated by Section 7.03(c), (iii) the direct or any contingent
obligor with respect thereto is not changed, and (iv) any renewal or extension
of the obligations secured or benefited thereby is permitted by Section 7.03(c);

(c) Liens for taxes and other governmental charges not yet due or which are
being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the books
of the applicable Person in accordance with GAAP;

(d) operators’, carriers’, landlords’, suppliers’, workers’, construction,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business which are not overdue for a period of
more than 90 days or which are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are
maintained on the books of the applicable Person;

(e) pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other social security
legislation or other liabilities of a like nature, other than any Lien imposed
by ERISA;

(f) Liens to secure the performance of bids, trade contracts and leases (other
than Indebtedness), licenses, statutory obligations, surety and appeal bonds,
performance bonds, regulatory obligations and other obligations of a like nature
incurred in the ordinary course of business;

(g) (i) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person and (ii) Immaterial Title Deficiencies;

(h) Liens securing judgments for the payment of money not constituting an Event
of Default under Section 8.01(h);

(i) Liens on pipelines and pipeline facilities that arise by operation of law or
other like Liens arising by operation of law in the ordinary course of business
and incident to the exploration,

 

78

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

development, operation and maintenance of Oil and Gas Properties each of which
is in respect of obligations that do not constitute Indebtedness and that are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP;

(j) customary contractual Liens under operating lease agreements or which arise
in the ordinary course of business under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out and
farm-in agreements, division orders, contracts for the sale, transportation or
exchange of oil and natural gas, unitization and pooling declarations and
agreements, area of mutual interest agreements, overriding royalty agreements,
marketing agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the Oil and Gas Business and are for obligations that
do not constitute Indebtedness and that are not delinquent or that are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; provided that any such Lien
referred to in this clause (j) does not materially impair the use of the
property covered by such Lien for the purposes for which such property is held
by the Borrower or any Restricted Subsidiary or materially impair the value of
such property subject thereto;

(k) Permitted Encumbrances;

(l) Liens existing on assets at the time of acquisition thereof, or Liens
existing on assets of any Person at the time such Person became a Subsidiary,
which in each case (i) were not created in contemplation thereof and (ii) do not
encumber Oil and Gas Properties to be included in the Borrowing Base;

(m) UCC financing statements filed in connection with an operating lease under
which the Borrower or a Restricted Subsidiary is the lessee;

(n) [reserved];

(o) Liens on Oklahoma Properties or Electrical Assets securing Indebtedness
permitted by Section 7.03(b) or Section 7.03(c);

(p) [reserved];

(q) Liens securing Indebtedness permitted under Section 7.03(f); provided that
(i) such Liens attach concurrently with or within 270 days after the
acquisition, lease, repair, replacement, construction or improvement (as
applicable) being financed with such Indebtedness, (ii) such Liens do not at any
time encumber any property other than the property financed by such Indebtedness
or the assets subject to such Capital Lease, as applicable, and (iii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired on the date of acquisition;

(r) Liens in favor of banking and other financial institutions arising by
operation of law or otherwise encumbering deposits held by such banking
institution or securities and other financial assets held by such financial
institution (in each case including the right of set-off) and which are within
the general parameters customary in the banking industry or the securities
brokerage industry, as applicable;

 

79

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

(s) Liens not otherwise permitted by this Section 7.01; provided that the
aggregate outstanding principal amount of the obligations secured thereby does
not exceed (as to the Borrower and its Restricted Subsidiaries) $5,000,000 at
any one time; and

(t) Liens to secure (i) the Convertible Notes (to the extent required to be
secured in accordance with their terms); provided that any such Lien granted on
any property is only permitted to the extent that it is junior to a valid and
enforceable first-priority Lien granted on such property to secure the
Obligations (subject to the Convertible Notes Intercreditor Agreement) and
(ii) Junior Lien Debt incurred pursuant to Section 7.03(l); provided that any
such Lien granted on any property is only permitted to the extent that it is
junior to a valid and enforceable first-priority Lien granted on such property
to secure the Obligations (subject to the applicable Junior Lien Intercreditor
Agreement).

Section 7.02 Investments. Make any Investments, except:

(a) Investments held by the Borrower or such Restricted Subsidiary in the form
of Cash Equivalents;

(b) advances to officers, directors and employees of the Borrower and Restricted
Subsidiaries in an aggregate amount not to exceed $500,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;

(c) Investments of the Borrower in any now existing or hereafter acquired
wholly-owned Restricted Subsidiary and Investments of any Restricted Subsidiary
in the Borrower or in another now existing or hereafter acquired wholly-owned
Restricted Subsidiary; provided, however, that (i) in the case of any Investment
made by a Loan Party in any Restricted Subsidiary that is not a Loan Party,
(x) the Borrower shall be in compliance with the Available Amount Conditions at
the time of such Investment and (y) the amount of such Investments shall not, in
the aggregate, exceed the Available Amount at such time and (ii) in the case of
an Investment constituting the acquisition from a third party of a Person which
thereby becomes a wholly-owned Restricted Subsidiary, such Investment is
permitted pursuant to another clause of this Section 7.02;

(d) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;

(e) Investments in Oil and Gas Properties that will, pursuant to such
Investment, become Engineered Oil and Gas Properties (or in Persons at least 60%
of whose assets consist of Oil and Gas Properties that will, pursuant to such
Investment, become Engineered Oil and Gas Properties, and which Persons will
become Loan Parties pursuant to such Investment);

(f) Guarantees permitted by Section 7.03;

(g) Investments received in connection with bankruptcy or reorganization of, or
settlement of delinquent accounts and disputes with, customers and suppliers, in
each case in the ordinary course of business;

(h) Investments (including, without limitation, capital contributions) in
general or limited partnerships or other types of entities (each a
“venture”) entered into by the Borrower or a Restricted Subsidiary with others
in the ordinary course of business; provided that (i) any such venture is
engaged exclusively in oil and gas exploration, development, production,
processing and related

 

80

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

activities, including transportation, (ii) the interest in such venture is
acquired in the ordinary course of business and on fair and reasonable terms,
(iii) the Borrower shall be in compliance with the Available Amount Conditions
at the time of such Investment and (iv) the aggregate net amount of such
Investments does not exceed the Available Amount at such time;

(i) Investments under clause (a) or (c) of the definition thereof in Persons
(which become Loan Parties pursuant to such Investment) or business units,
respectively, in each case whose assets consist solely of oil and gas service
business assets, including drilling rigs, workover rigs, drilling fluids and
other assets involved in providing services to the oil and gas upstream and
midstream segments (and which assets shall become Collateral to the extent
required by the terms of the Loan Documents); provided that (i) the Borrower
shall be in compliance with the Available Amount Conditions at the time of such
Investment and (i) the amount of such Investments shall not, in the aggregate,
exceed the Available Amount at such time;

(j) solely to the extent the Oklahoma Properties are wholly-owned by a
Restricted Subsidiary of the Borrower, Investments made by the Borrower to such
Restricted Subsidiary in an aggregate amount not to exceed the amount of
interest, operating expenses and taxes due and payable by such Restricted
Subsidiary in the ordinary course of business as a direct result of its
ownership of the Oklahoma Properties; provided that the proceeds of such
Investment shall be promptly applied by such Restricted Subsidiary to fund such
interest, operating expense and tax obligations;

(k) Investments for consideration consisting of common stock of the Borrower;

(l) capital stock, promissory notes, and other similar non-cash consideration
received by the Borrower or any of its Restricted Subsidiaries in connection
with any transaction permitted by Section 7.05;

(m) Investments expressly permitted by Section 7.06 (other than Section
7.06(f));

(n) Investments in existence on the Closing Date and, in the case of any
Investment in excess of $1,000,000, listed on Schedule 7.02, and extensions,
renewals, modifications, or restatements or replacements thereof; provided that
no such extension, renewal, modification, restatement or replacement shall
(i) increase the amount of the original Investment or (ii) adversely affect the
interest of the Lenders with respect to such original Investment or the
interests of the Lenders under this Agreement and the other Loan Documents in
any material respect;

(o) Investments in Royalty Trusts;

(p) Investments in Unrestricted Subsidiaries to the extent resulting from
Dispositions permitted by Section 7.05(o);

(q) subject to satisfaction of the Available Amount Conditions, other
Investments not permitted by the foregoing provisions of this Section 7.02 in an
amount not to exceed the Available Amount at such time; and

(r) other Investments in an aggregate amount, as valued at cost at the time each
such Investment is made and including all related commitments for future
Investments, not exceeding $2,000,000.

 

81

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

Section 7.03 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:

(a) Indebtedness under the Loan Documents;

(b) Attributable Indebtedness and Synthetic Lease Obligations created in
connection with the sale-leaseback of the Oklahoma Properties or the Electrical
Assets;

(c) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and
any Permitted Refinancing thereof;

(d) Guarantees of the Borrower or any Guarantor in respect of Indebtedness
otherwise permitted hereunder of the Borrower or any Guarantor;

(e) obligations (contingent or otherwise) of the Borrower or any Restricted
Subsidiary existing or arising under any Swap Contract; provided that (i) such
obligations are (or were) entered into by such Person in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or reasonably
anticipated by such Person, or changes in the value of securities issued by such
Person, and not for purposes of speculation or taking a “market view” and
(ii) such Swap Contract does not contain any provision exonerating the
non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party (other than customary netting
arrangements);

(f) Indebtedness in respect of Capital Leases, Synthetic Lease Obligations and
purchase money obligations for fixed or capital assets within the limitations
set forth in Section 7.01(q); provided, however, that the aggregate principal
amount of all such Indebtedness incurred pursuant to this clause (f) at any one
time outstanding shall not exceed $25,000,000;

(g) Indebtedness of the Borrower or a Restricted Subsidiary owing to the
Borrower or a wholly-owned Restricted Subsidiary; provided that in the case of
any such Indebtedness owing from a Loan Party to a non-Loan Party, (x) the
Borrower shall be in compliance with the Available Amount Conditions at the time
such Indebtedness is issued or incurred and (y) the amount of such Indebtedness
shall not, in the aggregate, exceed the Available Amount at such time;

(h) [reserved];

(i) Indebtedness related to any sale-leaseback transaction with respect to the
Oklahoma Properties;

(j) other Indebtedness in an aggregate principal amount not to exceed $5,000,000
at any time outstanding;

(k) Indebtedness in respect of surety bonds obtained by the Borrower or a
Restricted Subsidiary in the ordinary course of business and supporting other
obligations undertaken by the Borrower or a Restricted Subsidiary in the
ordinary course of business which other obligations do not constitute
Indebtedness;

(l) Indebtedness that constitutes Junior Lien Debt and unsecured Indebtedness
not otherwise permitted by this Section 7.03 in an aggregate principal amount
for all Indebtedness under this clause (l) not to exceed $500,000,000 at any
time outstanding; provided that (1) no Default or Event of Default or Borrowing
Base Deficiency has occurred and is then continuing or would result therefrom,
(2) after giving effect to the incurrence of such Indebtedness, the Borrower
shall be in compliance, on a pro forma basis with the Financial Covenants
contained in Section 7.11, (3) the Borrowing Base shall be adjusted as set forth
in Section 2.05(c), (4) such Indebtedness does not mature and requires no
scheduled

 

82

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

Amortization prior to the 91st day following the Maturity Date, (5) the terms of
such Indebtedness are not materially more onerous, taken as a whole, than the
terms of this Agreement and the other Loan Documents, (6) if any Person
Guarantees such Indebtedness, such Person shall also Guarantee the Obligations
by providing a guaranty or guaranty supplement, in form and substance reasonably
satisfactory to the Administrative Agent and (7) such Indebtedness and any
guarantees and Liens in respect thereof are otherwise on terms and conditions
reasonably acceptable to the Administrative Agent;

(m) Indebtedness of any Person at the time such Person becomes a Restricted
Subsidiary of the Borrower, or is merged or consolidated with or into the
Borrower or any of its Restricted Subsidiaries, in a transaction permitted by
this Agreement, and extensions, renewals, refinancings, refundings and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof (other than any increase not exceeding the amount of
any fees, premium, if any, and financing costs relating to such refinancing);
provided that (i) such Indebtedness (other than any such extension, renewal,
refinancing, refunding or replacement) exists at the time such Person becomes a
Restricted Subsidiary and is not created in contemplation of such event,
(ii) other than Guarantee obligations permitted by clause (d) of this
Section 7.03, neither the Borrower nor any of its other Restricted Subsidiaries
shall be liable for such Indebtedness and (iii) the Borrower is in compliance,
on a pro forma basis after giving effect to the incurrence of such Indebtedness
and the use of proceeds thereof, with the Financial Covenants contained in
Section 7.11;

(n) Indebtedness of the Borrower or any Restricted Subsidiary to the seller
representing all or part of the purchase price of an Investment or acquisition
permitted hereunder, or assumed by the Borrower or any of its Restricted
Subsidiaries in connection therewith, and extensions, renewals, refinancings,
refundings and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof (other than any increase not exceeding the
amount of any fees, premium, if any, and financing costs relating to such
refinancing); provided that (i) as to any such assumed Indebtedness, such
Indebtedness (other than any extension, renewal, refinancing, refunding or
replacement thereof) exists at the time of such acquisition and is not created
in contemplation of such event and (ii) the Borrower is in compliance, on a pro
forma basis after giving effect to the assumption of such Indebtedness, with the
covenants contained in Section 7.11;

(o) Indebtedness arising from judgments or orders in circumstances not
constituting an Event of Default under Section 8.01(h);

(p) Indebtedness in respect of the Convertible Notes issued on the Closing Date
in an aggregate principal amount not to exceed the sum of (x) $300,000,000 plus
(y) any interest that is paid-in-kind and otherwise added to the outstanding
principal amount of such Indebtedness and any interest that is accrued and
unpaid in respect of such Indebtedness; provided that such $300,000,000 amount
in clause (x) above shall increase in connection with any “make-whole event” or
“Corporate Event” such that each $1.00 in outstanding principal amount shall be
increased by $0.783478 to equal $1.783487, as described in the definitive
documentation governing such Convertible Notes as in effect on the Closing Date;

(q) Indebtedness arising from or representing deferred compensation to employees
of the Borrower or its Restricted Subsidiaries that constitute or are deemed to
be Indebtedness under GAAP and that are incurred in the ordinary course of
business;

(r) Indebtedness arising pursuant to clause (e) of the definition thereof as a
result of Liens permitted under Sections 7.01(c), (d), (e), (f) and (j); and

 

83

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

(s) obligations of the Borrower or any Restricted Subsidiary existing or arising
under any Treasury Management Services Agreement.

Section 7.04 Fundamental Changes. Merge, dissolve, liquidate, amalgamate,
consolidate with or into another Person, or Dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except that, so long as no Default exists or would result therefrom:

(a) any Restricted Subsidiary may merge with (i) the Borrower; provided that the
Borrower shall be the continuing or surviving Person or (ii) any one or more
other Restricted Subsidiaries; provided that when any wholly-owned Restricted
Subsidiary is merging with another Restricted Subsidiary, the continuing or
surviving Person shall be a wholly-owned Restricted Subsidiary; provided,
further, that when any Guarantor is merging with another Restricted Subsidiary,
the continuing or surviving Person shall be a Guarantor;

(b) any Restricted Subsidiary may Dispose of all or substantially all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or to another
Restricted Subsidiary (and thereafter dissolve, liquidate or wind-up its
affairs); provided that if the transferor in such a transaction is a
wholly-owned Restricted Subsidiary, then the transferee must either be the
Borrower or a wholly-owned Restricted Subsidiary; provided, further, that if the
transferor in such a transaction is a Guarantor, then the transferee must either
be the Borrower or a Guarantor;

(c) any Disposition of a Restricted Subsidiary expressly permitted by
Section 7.05 may be structured as a merger, consolidation or amalgamation to
which such Restricted Subsidiary is a party and as a result of which such
Restricted Subsidiary ceases to be a Restricted Subsidiary; and

(d) any Investment expressly permitted by Section 7.02 may be structured as a
merger, consolidation or amalgamation; provided that if the Borrower is a party
thereto, the Borrower shall be the continuing or surviving Person; provided,
further, that the continuing or surviving Person shall be the Borrower or a
Guarantor to the extent required by Section 6.12.

Section 7.05 Dispositions. Make any Disposition except:

(a) Dispositions of (i) obsolete or worn out property or assets, whether now
owned or hereafter acquired, in the ordinary course of business or
(ii) equipment that is no longer useful in the conduct of the business of the
Borrower and its Restricted Subsidiaries in the ordinary course of business;

(b) Dispositions of inventory (including Hydrocarbons sold after severance) in
the ordinary course of business;

(c) Dispositions of equipment or real property or other assets (other than
(x) Oil and Gas Properties or (y) Investments in Restricted Subsidiaries) to the
extent that (i) such equipment, property or other asset is exchanged for credit
against the purchase price of similar replacement equipment, property or other
asset or (ii) the proceeds of such Disposition are reasonably promptly applied
to the purchase price of such replacement equipment, property, or other assets;

(d) Dispositions of property or assets by any Restricted Subsidiary to the
Borrower or to a wholly-owned Restricted Subsidiary or by the Borrower to any
wholly-owned Restricted Subsidiary; provided that if the transferor of such
property or assets is a Loan Party, the transferee thereof must be a Loan Party;

 

84

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

(e) Dispositions permitted by Section 7.04(a) or Section 7.04(b);

(f) Dispositions of Electrical Assets;

(g) (1) Dispositions of Oil and Gas Properties which are sold or otherwise
transferred for fair market value to Persons who are not Affiliates of Borrower,
(2) farm-outs of undeveloped acreage and assignments in connection with such
farm-outs or the abandonment, farm-out, exchange or Disposition of Oil and Gas
Properties not containing Proved Reserves and (3) Dispositions of Oil and Gas
Properties to which no value has been attributed by the Administrative Agent in
the most recent determination of the Borrowing Base in the ordinary course of
business; provided that (i) no Default or Event of Default exists at the time of
and after giving effect to any such sale or other transfer of Collateral (other
than Defaults that will be cured upon the application of the proceeds of such
sale or other transfer), (ii) the Borrower must first give at least five
Business Days’ notice to the Administrative Agent of any such sale, (iii) no
Borrowing Base Deficiency shall exist and be continuing immediately prior to the
consummation of such sale or other transfer, (iv) concurrently with such sale or
other transfer the Borrower must pay in full any Borrowing Base Deficiency that
results from the adjustment to the Borrowing Base in connection with such
Disposition pursuant to Section 2.05(e) and (v) for the avoidance of doubt, any
Disposition of Oil and Gas Properties pursuant to this Section 7.05(g) may be
structured as a Disposition of Equity Interests in a Person, substantially all
of whose assets consist of Oil and Gas Properties;

(h) [reserved];

(i) Dispositions of interest in Oil and Gas Properties in respect of Immaterial
Title Deficiencies in order to discharge such Immaterial Title Deficiencies or
an obligation giving rise thereto;

(j) Dispositions of overdue accounts receivable arising in the ordinary course
of business, but only in connection with the compromise or collection thereof;

(k) Dispositions of Investments made pursuant to Sections 7.02(a), (d) and (g);

(l) Dispositions of Oil and Gas Properties to ventures pursuant to
Section 7.02(h); provided that no value was attributed to such Oil and Gas
Properties in the then most recent determination of the Borrowing Base;

(m) Dispositions of assets to Royalty Trusts, and of Equity Interests in Royalty
Trusts;

(n) any Disposition that constitutes an Investment that is permitted pursuant to
Section, 7.02(h), Section 7.02(j) or Section 7.02(q); provided that such
Dispositions may not consist of any Oil and Gas Properties included in the
Borrowing Base;

(o) Dispositions of assets comprising the Loan Parties’ salt water gathering and
disposal business, or of equity interests owned by the Borrower or its
Restricted Subsidiaries in persons that solely own assets of, and conduct the
business of, the Loan Parties’ salt water gathering and disposal business;

(p) Dispositions of the Oklahoma Properties, including without limitation,
Dispositions directly related to any sale-leaseback transaction with respect to
the Oklahoma Properties; and

 

85

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

(q) other Dispositions not exceeding $10,000,000 in the aggregate in any fiscal
year of the Borrower and $30,000,000 in the aggregate at all times prior to the
Maturity Date; provided that such Dispositions may not consist of any Oil and
Gas Properties included in the Borrowing Base; provided, further, that, to the
extent, the Borrower does not utilize all or any portion of the capacity
provided pursuant to this clause (q) in any fiscal year, the Borrower shall be
permitted to carry-forward any such unutilized capacity to the succeeding fiscal
years.

Section 7.06 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment except that, so long as no Default shall have occurred and be
continuing at the time of any action described below or would result therefrom:

(a) each Restricted Subsidiary may make Restricted Payments to the Borrower, the
Guarantors and any other Person that owns an Equity Interest in such Restricted
Subsidiary, ratably according to their respective holdings of the type of Equity
Interest in respect of which such Restricted Payment is being made;

(b) the Borrower and each Restricted Subsidiary may declare and make dividend
payments or other distributions payable solely in the Qualified Stock of such
Person;

(c) the Borrower and each Restricted Subsidiary may purchase, redeem or
otherwise acquire Equity Interests issued by it with the proceeds received from
the substantially concurrent issue of new shares of its Qualified Stock;

(d) the Borrower and each Restricted Subsidiary may make Restricted Payments in
respect of, and in the amount of, any withholding tax obligation related to the
issuance, vesting, repurchase, forfeiture, transfer, liquidation, or
distributions with respect to any equity compensation held by or for the benefit
of the employees, officers or directors of the Borrower or any Restricted
Subsidiary; provided that the aggregate amount of payments under this clause
(d) in any fiscal year of the Borrower shall not exceed $5,000,000; provided,
further, that any Restricted Payments permitted (but not made) pursuant to this
clause (d) in any prior fiscal year may be carried forward to any subsequent
fiscal year (subject to an annual cap of no greater than $10,000,000);

(e) in the ordinary course of its business, the Borrower may make Restricted
Payments pursuant to and in connection with stock option plans or other benefit
plans or arrangements for directors, management, employees or consultants of the
Borrower and its Restricted Subsidiaries;

(f) the Borrower and its Restricted Subsidiaries may make Restricted Payments
constituting purchases by the Borrower or any of its Restricted Subsidiaries of
any other Subsidiary’s capital stock pursuant to a transaction expressly
permitted by Section 7.02 (other than Section 7.02(m));

(g) subject to satisfaction of the Available Amount Conditions, the Borrower and
each Restricted Subsidiary may make Restricted Payments not otherwise permitted
by this Section 7.06 in an amount not to exceed the Available Amount at such
time; and

(h) so long as no Borrowing Base Deficiency has occurred and is continuing or
would result therefrom, the Borrower and each Restricted Subsidiary may make
payments of cash in lieu of the issuance of fractional shares upon the exercise
of options or warrants or upon the conversion or exchange of Equity Interests or
debt securities that are convertible into, or exchangeable for, Equity Interests
of any such Person in accordance with their terms.

 

86

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

Section 7.07 Change in Nature of Business. Engage in any material line of
business substantially different from those lines of business conducted by the
Borrower and its Restricted Subsidiaries on the date hereof or any business
substantially related or incidental thereto.

Section 7.08 Transactions with Affiliates. Enter into any transaction of any
kind with any Affiliate of the Borrower, whether or not in the ordinary course
of business, other than on fair and reasonable terms substantially as favorable
to the Borrower or such Restricted Subsidiary as would be obtainable by the
Borrower or such Restricted Subsidiary at the time in a comparable arm’s length
transaction with a Person other than an Affiliate; provided that the foregoing
restriction shall not apply to (i) transactions between or among (x) the
Borrower and any other Loan Party, (y) a Restricted Subsidiary that is a Loan
Party and any other Restricted Subsidiary that is a Loan Party or (z) a
Restricted Subsidiary that is not a Loan Party and any other Restricted
Subsidiary that is not a Loan Party or (ii) payment of customary cash and
non-cash compensation, including stock option and similar employee benefit
plans, to directors and officers on an arm’s length basis.

Section 7.09 Burdensome Agreements. After the date of this Agreement, enter into
any Contractual Obligation (other than (x) this Agreement or any other Loan
Document and (y) Permitted Debt Restrictions) that (a) limits the ability (i) of
any Restricted Subsidiary to make Restricted Payments to the Borrower or any
Guarantor or to otherwise transfer property to the Borrower or any Guarantor,
(ii) of any Restricted Subsidiary to Guarantee the Indebtedness of the Borrower
or (iii) of the Borrower or any Restricted Subsidiary to create, incur, assume
or suffer to exist Liens on property of such Person to secure any of the Loan
Documents or (b) requires the grant of a Lien to secure an obligation of such
Person if a Lien is granted to secure another obligation of such Person, or
amend any Contractual Obligation existing on the date of this Agreement so as to
impose or make more restrictive such a limitation, in each case other than the
following: (A) any negative pledge incurred or provided in favor of any holder
of Indebtedness permitted under Section 7.03(b) and Section 7.03(f) solely to
the extent any such negative pledge relates to the property financed by or the
subject of such Indebtedness or property subject to a Lien permitted hereunder
which secures such Indebtedness; (B) Swap Contracts and any Guarantee in respect
of such Swap Contracts; (C) any encumbrances or restrictions imposed by reason
of customary provisions contained in leases, licenses, joint ventures agreements
and similar agreements entered into in the ordinary course of business; (D) any
encumbrances or restrictions that are or were created by virtue of any transfer
of, agreement to transfer or option or right with respect to any property,
assets or capital stock not otherwise prohibited by this Agreement; (E) any
restrictions regarding licenses or sublicenses by the Borrower and its
Restricted Subsidiaries of intellectual property in the ordinary course of
business; (F) any restrictions in a Contractual Obligation incurred in the
ordinary course of business and on customary terms which prohibit transfer of
assets subject of the applicable Contractual Obligation; (G) restrictions on
cash or other deposits or net worth imposed by customers, suppliers or, in the
ordinary course of business, other third parties; (H) any restrictions contained
in agreements related to Indebtedness permitted by Section 7.03(e), (m) or (n);
and (I) any restriction contained in a Contractual Obligation relating to
property, an interest in which has been Disposed of to a Royalty Trust, in
accordance with Section 7.05.

Section 7.10 Use of Proceeds. Use the proceeds of any Credit Extension, in
violation of Regulation T, Regulation U or Regulation X.

Section 7.11 Financial Covenants.

(a) Maximum Consolidated Total Net Leverage Ratio. Commencing with the first
full fiscal quarter ending after the Effective Date, permit the Consolidated
Total Net Leverage Ratio as of the end of any fiscal quarter of the Borrower to
exceed 3.50:1.00.

 

87

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

(b) Minimum Consolidated Interest Coverage Ratio. Commencing with the first full
fiscal quarter ending after Effective Date, permit the Consolidated Interest
Coverage Ratio as of the end of any fiscal quarter of the Borrower to be less
than 2.25:1.00.

(c) Right to Cure. In the event the Borrower fails to comply with the
requirements of Section 7.11(a) 7.11(b), then respect to any failure to comply
with Section 7.11(a) or 7.11(b), until the expiration of the tenth Business Day
subsequent to the date the Compliance Certificate for the applicable fiscal
quarter is required to be delivered pursuant to Section 6.02(a), the Borrower
shall be permitted to cure any such failure to comply by requesting that such
Consolidated Total Net Leverage Ratio and/or Consolidated Interest Coverage
Ratio, as applicable, be recalculated by increasing Consolidated EBITDA for the
fiscal quarter most recently ended by an amount equal to the proceeds of common
equity issued by the Borrower or by contributions to the common equity of the
Borrower received by the Borrower on or after the last day of such fiscal
quarter and prior to the expiration of such ten Business Day Period (and such
proceeds, “Cure Proceeds”); provided that the Borrower may not exercise its
right to cure under this Section 7.11(c) more than twice, in the aggregate, in
any four consecutive fiscal quarter period and more than five times, in the
aggregate, prior to the Maturity Date. Any increase in Consolidated EBITDA
pursuant to this Section 7.11(c) shall be taken into account in calculating the
Financial Covenants under Sections 7.11(a) and 7.11(b) for any four-quarter
period that includes the last fiscal quarter of the four-quarter period with
respect to which such cure right was exercise. If after giving effect to the
foregoing recalculations, the Borrower would then be in compliance with the
applicable Financial Covenant or Financial Covenants, the Borrower shall be
deemed to have satisfied the requirements of such Financial Covenant or
Financial Covenants as of the relevant earlier required date of determination
with the same effect as though there had been no failure to comply therewith at
such date, and the applicable breach, Default or Event of Default that had
occurred shall be deemed cured for the purpose of this Agreement and the other
Loan Documents

Section 7.12 Hedge Transactions. Enter into any Oil and Gas Hedge Transactions
which would cause the notional volume of Hydrocarbons for each of crude oil and
natural gas, calculated separately, with respect to which a settlement payment
is calculated under such Oil and Gas Hedge Transactions (other than basis swaps,
floors and puts on volumes hedged pursuant to Swap Contracts) to exceed ninety
percent (90%) of the Borrower’s or such Restricted Subsidiary’s production that
may reasonably be anticipated to be produced from Proved Reserves during the
period from the immediately preceding settlement date (or the commencement of
such Hedge Transaction if there is no prior settlement date) to such settlement
date. Notwithstanding the foregoing, the Loan Parties may purchase commodity
puts and floors without limitation. Calculations in respect of the foregoing
shall cover production for the immediately following 66 month period and be
based on the most recently delivered Engineering Report (subject to certain
adjustments as may be required by acquisitions or dispositions made subsequent
to the date of such Engineering Report) and any additional information
reasonably satisfactory to the Administrative Agent delivered by the Loan
Parties to the Administrative Agent subsequent to the publication of the most
recently delivered Engineering Report.

Section 7.13 Sanctions. Directly or, to the Borrower’s knowledge, indirectly use
the proceeds of any Credit Extension, or lend, contribute or otherwise make
available such proceeds to any Subsidiary, joint venture partner or other
individual or entity, to fund any activities of or business with any individual
or entity that, at the time of such funding, is the subject of Sanctions, or
with or in any country that, at the time of such funding, is a Designated
Jurisdiction, or in any other manner that will result in a violation by any
individual or entity (including any individual or entity participating in the
transaction, whether as Lender, Arranger, Administrative Agent, L/C Issuers, or
otherwise) of Sanctions.

 

88

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

Section 7.14 Anti-Corruption Laws. Directly or, to the Borrower’s knowledge,
indirectly use the proceeds of any Credit Extension for any purpose which would
breach the United States Foreign Corrupt Practices Act of 1977, the UK Bribery
Act 2010, or other similar legislation in other jurisdictions.

Section 7.15 Prepayment of Restricted Debt.

(a) Optionally prepay, redeem, purchase, defease or otherwise satisfy prior to
the scheduled maturity thereof in any manner (it being understood that mandatory
payments shall be permitted to the extent permitted by the applicable provisions
of the intercreditor agreement applicable thereto; provided that no such
mandatory payments shall be made using any funds or proceeds that may otherwise
be reinvested by the Borrower), any Principal Debt Obligations or any other
Indebtedness permitted under Section 7.03(c), Section 7.03(o) or
Section 7.03(l) (collectively, “Restricted Debt”) or make any payment in
violation of any terms of any Restricted Debt Documentation, except (i) with the
proceeds of, or in exchange for, any Refinancing Indebtedness in respect
thereof, (ii) the conversion of any Restricted Debt to Equity Interests (other
than Disqualified Stock) of the Borrower, (iii) the redemption of any Restricted
Debt with the Net Cash Proceeds of any offering of Equity Interests (other than
Disqualified Stock) of the Borrower, (iv) subject to the satisfaction of the
Available Amount Conditions, other prepayments, redemptions, purchases,
defeasances and other payments in respect of Restricted Debt in an amount not to
exceed the Available Amount at such time.

(b) Amend, modify or change in any manner materially adverse to the interests of
the Lenders any term or condition of any Restricted Debt Documentation without
the consent of the Majority Lenders; provided that nothing herein shall limit
the ability of the Company to make payment-in-kind interest payments or
additions to the principal amount in connection with the Convertible Notes as
contemplated by Section 7.03(p).

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

Section 8.01 Events of Default. Any of the following shall constitute an “Event
of Default”:

(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and
as required to be paid herein, any amount of principal of any Committed Loan or
any L/C Obligation; (ii) within three Business Days after the same becomes due,
any interest on any Committed Loan or on any L/C Obligation, or any fee due
hereunder; or (iii) within five Business Days that the same has come due, any
other amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.03(a), Section 6.05(a) (with
respect to the Borrower only), Section 6.11, Section 6.12, Section 6.18 or
Article VII; or

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in clause (a) or (b) above) contained in
any Loan Document on its part to be performed or observed and such failure
continues for 30 days after receipt of written notice from the Administrative
Agent of the occurrence of such failure; or

(d) Representations and Warranties. Any representation, warranty, or
certification made or deemed made by or on behalf of the Borrower or any other
Loan Party herein, in any other Loan Document, or in any document delivered in
connection herewith or therewith shall be incorrect or misleading in any
material respect when made or deemed made; or

 

89

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

(e) Cross-Default. (i) The Borrower or any Restricted Subsidiary (A) fails to
make any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount or (B) fails to observe or
perform any other agreement or condition relating to any such Indebtedness or
Guarantee or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from any event of
default under such Swap Contract as to which the Borrower or any Restricted
Subsidiary (excluding Immaterial Subsidiaries) is the Defaulting Party (as
defined in such Swap Contract) and the Swap Termination Value owed by the
Borrower or such Restricted Subsidiary as a result thereof is greater than the
Threshold Amount; or

(f) Insolvency Proceedings, Etc. Any Loan Party or any of its Restricted
Subsidiaries (excluding Immaterial Subsidiaries) institutes or consents to the
institution of any proceeding under any Debtor Relief Law, or makes a general
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of such Person and the appointment continues undischarged or unstayed for 60
calendar days; or any proceeding under any Debtor Relief Law relating to any
such Person or to all or any material part of its property is instituted without
the consent of such Person and continues undismissed or unstayed for 60 calendar
days, or an order for relief is entered in any such proceeding; or

(g) Inability to Pay Debts; Attachment. (i) The Borrower or any Restricted
Subsidiary (excluding Immaterial Subsidiaries) becomes unable or admits in
writing its inability or fails generally to pay its debts as they become due or
(ii) any writ or warrant of attachment or execution or similar process is issued
or levied against all or any material part of the property of any such Person
and is not released, vacated or fully bonded within 30 days after its issue or
levy; or

(h) Judgments. There is entered against the Borrower or any Restricted
Subsidiary (i) one or more final judgments or orders for the payment of money in
an aggregate amount (as to all such judgments or orders) exceeding the Threshold
Amount (to the extent not covered by independent third-party insurance as to
which the insurer does not dispute coverage) or (ii) any one or more
non-monetary final judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either case,
(A) enforcement proceedings are commenced by any creditor upon such judgment or
order or (B) there is a period of 30 consecutive days during which a stay of
enforcement of such judgment, by reason of a pending appeal or otherwise, is not
in effect; or

(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in a Material Adverse

 

90

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

Effect or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan which has resulted or could reasonably be expected to result
in a Material Adverse Effect; or

(j) Invalidity of Loan Documents. Any material provision of the Loan Documents,
at any time after its execution and delivery and for any reason other than as
expressly permitted hereunder or thereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party or any
other Person contests in any manner the validity or enforceability of any
material provision of the Loan Documents; or any Loan Party denies that it has
any material or further liability or obligation under any material provision of
the Loan Documents, or purports to revoke, terminate or rescind any material
provision of the Loan Documents; or

(k) Change of Control. There occurs any Change of Control;

(l) Collateral Documents. Any Collateral Document after delivery thereof
pursuant to the Security Agreement or Section 4.01, Section 6.12 or Section 6.14
hereof shall for any reason (other than pursuant to the terms thereof) cease to
create a valid and perfected first-priority Lien (subject to Liens permitted by
Section 7.01) on any material portion of the Collateral purported to be covered
by the Collateral Documents;

(m) Convertible Notes Intercreditor Agreement; Junior Lien Financing
Documentation. (i) Any of the Obligations of the Loan Parties under the Loan
Documents for any reason shall cease to be “Priority Lien Obligations” (or any
comparable term) under, and as defined in, the Convertible Notes Intercreditor
Agreement shall, in whole or in part, otherwise cease to be effective or cease
to be legally valid, binding and enforceable against the holders thereof (or any
applicable trustee or representative on behalf of such holders), (ii) any of the
Obligations of the Loan Parties under the Loan Documents for any reason shall
cease to be “First Lien Obligations” (or any comparable term) under, and as
defined in, the Junior Lien Intercreditor Agreement under, and as defined in any
Junior Lien Financing Documentation or (iii) the lien subordination provisions
set forth in any Junior Lien Financing Documentation shall, in whole or in part,
cease to be effective or cease to be legally valid, binding and enforceable
against the holders of any Junior Lien Debt, if applicable; or

Section 8.02 Remedies Upon Event of Default. If any Event of Default occurs and
is continuing, the Administrative Agent shall, at the request of Majority
Lenders, take any or all of the following actions:

(a) declare the commitment of each Lender to make Committed Loans and any
obligation of the L/C Issuers to make L/C Credit Extensions to be terminated,
whereupon such commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Committed Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower;

(c) require that the Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and

(d) exercise on behalf of itself, the Lenders and the L/C Issuers all rights and
remedies available to it, the Lenders and the L/C Issuers under the Loan
Documents;

 

91

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

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code, the
obligation of each Lender to make Committed Loans and any obligation of each L/C
Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid
principal amount of all outstanding Committed Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of, and without the need for notice from, the Administrative Agent or any
Lender.

Section 8.03 Application of Funds. After the exercise of remedies provided for
in Section 8.02 (or after the Committed Loans have automatically become
immediately due and payable and the L/C Obligations have automatically been
required to be Cash Collateralized as set forth in the proviso to Section 8.02),
any amounts received on account of the Obligations shall be applied by the
Administrative Agent in the following order:

(a) First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under
Article III) payable to the Administrative Agent in its capacity as such;

(b) Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal, interest and Letter of
Credit Fees) payable to the Lenders and the L/C Issuers (including fees, charges
and disbursements of counsel to the respective Lenders and the L/C Issuers
(including fees and time charges for attorneys who may be employees of any
Lender or any L/C Issuer) and amounts payable under Article III), ratably among
them in proportion to the respective amounts described in this clause Second
payable to them;

(c) Third, to payment of that portion of the Obligations constituting accrued
and unpaid Letter of Credit Fees and interest on the Committed Loans, L/C
Borrowings and other Obligations, ratably among the Lenders and the L/C Issuers
in proportion to the respective amounts described in this clause Third payable
to them;

(d) Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Committed Loans and L/C Borrowings, amounts payable under Swap
Contracts, amounts payable under Treasury Management Services Agreements, and to
the Administrative Agent for the account of each L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn
amount of Letters of Credit, ratably among the Lenders, the L/C Issuers and the
Lender Counterparties, in proportion to the respective amounts described in this
clause Fourth held by them; and

(e) Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Borrower or as otherwise required by Law.

Subject to Section 2.03(d), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fourth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

 

92

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

ARTICLE IX

ADMINISTRATIVE AGENT

Section 9.01 Appointment and Authority.

(a) Each of the Lenders and each L/C Issuer hereby irrevocably appoints Royal
Bank of Canada to act on its behalf as the Administrative Agent hereunder and
under the other Loan Documents and authorizes the Administrative Agent to take
such actions on its behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto. Except to the extent
Sections 9.01(b) and 9.06 expressly contemplate rights of others, the provisions
of this Article IX are solely for the benefit of the Administrative Agent, the
Lenders and the L/C Issuers, and the Borrower shall not have rights as a third
party beneficiary of any of such provisions.

(b) The Administrative Agent shall also act as the “collateral agent” under the
Loan Documents, and each of the Lenders (in its capacities as a Lender and
potential Lender Counterparty) and each L/C Issuer hereby irrevocably appoints
and authorizes the Administrative Agent to act as the agent of such Lender and
such L/C Issuer for purposes of acquiring, holding and enforcing any and all
Liens on Collateral granted by any of the Loan Parties to secure any of the
Obligations, together with such powers and discretion as are reasonably
incidental thereto. In this connection, the Administrative Agent, as “collateral
agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the
Administrative Agent pursuant to Section 9.05 for purposes of holding or
enforcing any Lien on the Collateral (or any portion thereof) granted under the
Collateral Documents, or for exercising any rights and remedies thereunder at
the direction of the Administrative Agent, shall be entitled to the benefits of
all provisions of this Article IX and Article X (including Section 10.04(c), as
though such co-agents, sub-agents and attorneys-in-fact were the “collateral
agent” under the Loan Documents) as if set forth in full herein with respect
thereto.

Section 9.02 Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.

Section 9.03 Exculpatory Provisions. The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents. Without limiting the generality of the foregoing, the
Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Majority Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents); provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable Law; and

(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Affiliates that
is communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity.

 

93

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

The Administrative 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 the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 8.02 and 10.01) or (ii) in the absence of
its own gross negligence or willful misconduct, in each case as determined in a
final, non-appealable judgment by a court of competent jurisdiction. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until notice describing such Default is given to the Administrative Agent by
the Borrower, a Lender or an L/C Issuer.

The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or the creation,
perfection or priority of any Lien purported to be created by the Collateral
Documents, (v) the value or the sufficiency of any Collateral, or (vi) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

Section 9.04 Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (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. The Administrative 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 Committed Loan, or
the issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or an L/C Issuer, the Administrative Agent may presume
that such condition is satisfactory to such Lender or such L/C Issuer unless the
Administrative Agent shall have received notice to the contrary from such Lender
or such L/C Issuer prior to the making of such Committed Loan or the issuance of
such Letter of Credit. The Administrative Agent may consult with legal counsel
(who may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

Section 9.05 Delegation of Duties. The Administrative 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 the
Administrative Agent. The Administrative 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 IX shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as the Administrative Agent.

Section 9.06 Resignation of Administrative Agent. The Administrative Agent may
at any time give notice of its resignation to the Lenders, the L/C Issuers and
the Borrower. Upon receipt of any such

 

94

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

notice of resignation, the Majority Lenders shall have the right, in
consultation with the Borrower, to appoint a successor, which shall be a bank
with an office in the United States, or an Affiliate of any such bank with an
office in the United States. If no such successor shall have been so appointed
by the Majority Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may (in consultation with the Borrower) on
behalf of the Lenders and the L/C Issuers, appoint a successor Administrative
Agent meeting the qualifications set forth above; provided that if the
Administrative Agent shall notify the Borrower and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (1) the retiring
Administrative 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 the Administrative Agent on behalf of the Lenders or
the L/C Issuers under any of the Loan Documents, the retiring Administrative
Agent shall continue to hold such collateral security until such time as a
successor Administrative Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender and each L/C
Issuer directly, until such time as the Majority Lenders appoint a successor
Administrative Agent as provided for above in this Section 9.06. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent, and the
retiring Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section 9.06). The fees payable
by the Borrower to a successor Administrative Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the retiring Administrative Agent’s resignation hereunder and
under the other Loan Documents, the provisions of this Article IX and
Section 10.04 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while the
retiring Administrative Agent was acting as Administrative Agent.

Any resignation by Royal Bank of Canada as Administrative Agent pursuant to this
Section 9.06 shall also constitute its resignation as an L/C Issuer. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder,
(a) such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring L/C Issuer, (b) the retiring L/C
Issuer shall be discharged from all of their respective duties and obligations
hereunder or under the other Loan Documents, and (c) the successor L/C Issuer
shall issue letters of credit in substitution for the Letters of Credit, if any,
outstanding at the time of such succession or make other arrangements
satisfactory to the retiring L/C Issuer to effectively assume the obligations of
the retiring L/C Issuer with respect to such Letters of Credit.

Section 9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
and each L/C Issuer acknowledges that it has, independently and without reliance
upon the Administrative 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 and decision to enter into this
Agreement. Each Lender and each L/C Issuer also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.

Section 9.08 No Other Duties, Etc. Anything herein to the contrary
notwithstanding, the Arranger shall not have any powers, duties or
responsibilities under this Agreement, except in its capacity (and solely in
such capacity), as applicable, as the Administrative Agent, a Lender or an L/C
Issuer hereunder.

 

95

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

Section 9.09 Administrative Agent 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, the Administrative Agent (irrespective of
whether the principal of any Committed Loan or L/C Obligation shall then be due
and payable as herein expressed or by declaration or otherwise and irrespective
of whether the Administrative Agent shall have made any demand on the
Borrower) shall be entitled and empowered, by intervention in such proceeding or
otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Committed Loans, L/C Obligations 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, the
L/C Issuers and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the L/C
Issuers and the Administrative Agent and their respective agents and counsel and
all other amounts due the Lenders, the L/C Issuers and the Administrative Agent
under Sections 2.03(j) and (k), 2.09 and 10.04) 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 each L/C Issuer to make such payments to the Administrative
Agent and, in the event that the Administrative Agent shall consent to the
making of such payments directly to the Lenders and the L/C Issuers, to pay to
the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its agents
and counsel, and any other amounts due the Administrative Agent under
Sections 2.09 and 10.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or any L/C
Issuer any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or any L/C Issuer to
authorize the Administrative Agent to vote in respect of the claim of any Lender
or any L/C Issuer in any such proceeding.

Section 9.10 Collateral and Guaranty Matters. The Lenders and the L/C Issuers
irrevocably authorize:

(a) and instruct the Administrative Agent to release (and the following shall
automatically be released without any further action on the part of any Person):
any Lien on any property granted to or held by the Administrative Agent under
any Loan Document (i) upon termination of the Aggregate Commitments and payment
in full of all Obligations (other than contingent indemnification obligations,
obligations with respect to Swap Contracts and obligations with respect to
Treasury Management Services Agreements) and the expiration, termination or Cash
Collateralization in full of all Letters of Credit, (ii) which property is
Disposed of or to be Disposed of as part of or in connection with any
Disposition permitted hereunder or under any other Loan Document, (iii) which
property is owned by a Subsidiary at the time it is designated an Unrestricted
Subsidiary, or (iv) subject to Section 10.01, if approved, authorized or
ratified in writing by the Majority Lenders;

 

96

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

(b) and instruct the Administrative Agent to release (and the following
Guarantors shall automatically be released without any further action on the
part of any Person): (i) any Guarantor from its obligations under the Guaranty
if such Person ceases to be a Restricted Subsidiary as a result of a transaction
permitted hereunder and (ii) any Restricted Subsidiary from its obligations
under any Collateral Document upon its designation as an Unrestricted
Subsidiary;

(c) the Administrative Agent, at its option and in its discretion to subordinate
or release any Lien on any property granted to or held by the Administrative
Agent under any Loan Document to the holder of any Lien on such property that is
permitted by Section 7.01(i) or Section 7.01(j); and

(d) and instruct the Administrative Agent to release (and the following shall
automatically be released without any further action on the part of any Person):
any Lien on any property (an interest in which has been Disposed of to a Royalty
Trust) granted to or held by the Administrative Agent under any Loan Document
if, and when, a Lien on such property is granted in favor of such Royalty Trust.

Upon request by the Administrative Agent at any time, the Majority Lenders will
confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property, or to release
any Guarantor from its obligations under the Guaranty pursuant to this
Section 9.10. In each case as specified in this Section 9.10, the Administrative
Agent will, at the Borrower’s expense, execute and deliver to the applicable
Loan Party such documents as such Loan Party may reasonably request to evidence
the release of such item of Collateral from the assignment and security interest
granted under the Collateral Documents or to subordinate its interest in such
item, or to release such Guarantor from its obligations under the Guaranty, in
each case in accordance with the terms of the Loan Documents and this
Section 9.10.

The benefit of the Collateral Documents and of the provisions of this Agreement
relating to any collateral securing the Obligations shall also extend to and be
available to each Lender Counterparty in respect of any Obligations owed to such
Lender Counterparty under any Swap Contract. Except as set forth in Sections
10.01(f), no Lender Counterparty shall have any voting rights under any Loan
Document as a result of the existence of Obligations owed to it under any Swap
Contract.

Section 9.11 Flood Insurance. The Administrative Agent has adopted internal
policies and procedures that address requirements placed on federally regulated
lenders under the Flood Insurance Regulations. The Administrative Agent will
post on the Platform (or otherwise distribute to each lender in the
syndicate) documents that it receives, if any, in connection with the Flood
Insurance Regulations. However, the Administrative Agent reminds each Lender and
Participant in the facility that, pursuant to the Flood Insurance Regulations,
each federally regulated lender (whether acting as a Lender or a Participant in
the facility) is responsible for assuring its own compliance with the Flood
Insurance Regulations.

Section 9.12 Intercreditor Agreements. Each Lender (and each Person that becomes
a Lender hereunder pursuant Section 10.06) hereby irrevocably authorizes and
directors the Administrative Agent to enter into (a) the Convertible Notes
Intercreditor Agreement and (b) any other Junior Lien Intercreditor Agreement on
behalf of such Lender, in each case, as needed to effectuate the transactions
permitted by this Agreement and agrees that the Administrative Agent may take
such actions on its behalf as is contemplated by the terms of such applicable
intercreditor agreement. Without limiting the provisions of Sections 9.03 and
10.04, each Lender hereby consents to the Administrative Agent and any successor
serving in such capacity and agrees not to assert any claim (including as a
result of any conflict of interest) against the Administrative Agent, or any
such successor, arising from the role of the

 

97

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

Administrative Agent or such successor under the Loan Documents or any such
intercreditor agreement so long as it is either acting in accordance with the
terms of such documents and otherwise has not engaged in gross negligence or
willful misconduct (as determined in a final and non-appealable judgment by a
court of competent jurisdiction). In addition, the Administrative Agent to,
without any further consent of any Lender (other than the consent as to the form
of Junior Lien Intercreditor Agreement contemplated by the definition of “Junior
Lien Intercreditor Agreement”), enter into a Junior Lien Intercreditor Agreement
with the collateral agent or other representatives of the holders of
Indebtedness permitted under Section 7.03 that is intended to be secured on a
junior basis to the Liens securing the Obligations, in each case, where such
Indebtedness is secured by Liens permitted under Section 7.01. The
Administrative Agent may rely exclusively on a certificate of a Responsible
Officer of the Borrower as to whether any such other Liens are permitted. The
Convertible Notes Intercreditor Agreement and any Junior Lien Intercreditor
Agreement entered into by the Administrative Agent in accordance with the terms
of this Agreement shall be binding on the Secured Parties.

ARTICLE X

MISCELLANEOUS

Section 10.01 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower or any other Loan Party therefrom, shall be effective unless in writing
signed by the Majority Lenders and the Borrower or the applicable Loan Party, as
the case may be, and acknowledged by the Administrative Agent, and each such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such amendment,
waiver or consent shall:

(a) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written consent of such Lender;

(b) postpone any date fixed by this Agreement or any other Loan Document for any
payment (excluding mandatory prepayments) of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document without the written consent of each Lender directly affected thereby;

(c) reduce the principal of, or the rate of interest specified herein on, any
Committed Loan or L/C Borrowing, or (subject to clause (iii) of the second
proviso to this Section 10.01) any fees or other amounts payable hereunder or
under any other Loan Document without the written consent of each Lender
directly affected thereby; provided, however, that only the consent of the
Majority Lenders shall be necessary to amend the definition of “Default Rate” or
to waive any obligation of the Borrower to pay interest or Letter of Credit Fees
at the Default Rate;

(d) change Section 2.14 or Section 8.03 in a manner that would alter the pro
rata sharing of payments required thereby without the written consent of each
Lender adversely affected thereby;

(e) change any provision of this Section 10.01 or the definition of “Majority
Lenders”, “Required Lenders”, “Applicable Percentage” or any other provision
hereof specifying the number or percentage of Lenders required to amend, waive
or otherwise modify any rights hereunder or make any determination or grant any
consent hereunder without the written consent of each Lender;

(f) amend, modify or waive this Agreement or the Security Agreement so as to
alter the ratable treatment of Obligations arising under the Loan Documents and
Obligations arising under Hedge Transactions or the definition of “Lender
Counterparty”, “Hedge Transactions”, “Obligations” or “Secured Obligations” in a
manner adverse to any Lender Counterparty except with the written consent of
each affected Lender Counterparty;

 

98

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

(g) release all or substantially all of the value of the Guaranty without the
written consent of each Lender;

(h) amend any provision of Section 2.05(c), Section 2.05(d) or Section 2.05(e)
relating to the automatic reduction of the Borrowing Base set forth therein, in
each case without the written consent of the Required Lenders; or

(i) release all or substantially all of the Collateral in any transaction or
series of related transactions, without the written consent of each Lender;

provided, further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by each L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuers under this Agreement or any
Issuer Document relating to any Letter of Credit issued or to be issued by it;
(ii) no amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document; and (iii) Section 10.06(g) may not be amended, waived or
otherwise modified without the consent of each Granting Lender all or any part
of whose Committed Loans are being funded by an SPC at the time of such
amendment, waiver or other modification. Notwithstanding anything to the
contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except as provided in
clauses (a), (b), (c) and (to the extent such Defaulting Lender’s rights are
directly and adversely affected thereby) (e) above.

Notwithstanding the foregoing, no Lender consent is required to effect any
amendment or supplement to the Convertible Notes Intercreditor Agreement, any
Junior Lien Intercreditor Agreement or other intercreditor agreement or
arrangement permitted under this Agreement that is for the purpose of adding any
holders of Junior Lien Debt, as expressly contemplated by the terms of the
Convertible Notes Intercreditor Agreement, such Junior Lien Intercreditor
Agreement or such other intercreditor agreement or arrangement permitted under
this Agreement, as applicable (it being understood that any such amendment or
supplement may make such other changes to the applicable intercreditor agreement
as, in the good faith determination of the Administrative Agent, are required to
effectuate the foregoing; provided that such other changes are not adverse, in
any material respect, to the interests of the Lenders); provided, further, that
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent hereunder or under any other Loan Document without
the prior written consent of the Administrative Agent.

Section 10.02 Notices; Effectiveness; Electronic Communication.

(a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
clause (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopier as follows, and all
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the applicable telephone number, as follows:

(i) if to the Borrower, the Administrative Agent or an L/C Issuer, to the
address, telecopier number, electronic mail address or telephone number
specified for such Person on Schedule 10.02; and

 

99

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

(ii) if to any other Lender, to the address, telecopier number, electronic mail
address or telephone number specified in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in clause (b) below, shall be effective as provided in such clause (b).

(b) Electronic Communications. Notices and other communications to the Lenders
and the L/C Issuers hereunder may be delivered or furnished by electronic
communication (including e mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent; provided that the foregoing
shall not apply to notices to any Lender or any L/C Issuer pursuant to
Article II if such Lender or such L/C Issuer, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article II by electronic communication. The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices
or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement); provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT
PARTIES DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR
THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR
OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED
OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM
VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE
BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent
or any of its Related Parties (collectively, the “Agent Parties”) have any
liability to the Borrower, any Lender, any L/C Issuer or any other Person for
losses, claims, damages, liabilities or expenses of any kind (whether in tort,
contract or otherwise) arising out of the Borrower’s or the Administrative
Agent’s transmission of Borrower Materials through the Internet, except to the
extent that such losses, claims, damages, liabilities or expenses are determined
by a court of competent jurisdiction by a final and non-appealable judgment to
have resulted from the gross negligence or willful misconduct of such Agent
Party; provided, however, that in no event shall any Agent Party have any
liability to the Borrower, any Lender, any L/C Issuer or any other Person for
indirect, special, incidental, consequential or punitive damages (as opposed to
direct or actual damages).

(d) Change of Address, Etc. Each of the Borrower, the Administrative Agent and
the L/C Issuers may change its address, telecopier or telephone number for
notices and other communications

 

100

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

hereunder by notice to the other parties hereto. Each other Lender may change
its address, telecopier or telephone number for notices and other communications
hereunder by notice to the Borrower, the Administrative Agent and each L/C
Issuer. In addition, each Lender agrees to notify the Administrative Agent from
time to time to ensure that the Administrative Agent has on record (i) an
effective address, contact name, telephone number, telecopier number and
electronic mail address to which notices and other communications may be sent
and (ii) accurate wire instructions for such Lender.

(e) Reliance by Administrative Agent, L/C Issuer and Lenders. The Administrative
Agent, the L/C Issuers and the Lenders shall be entitled to rely and act upon
any notices purportedly given by or on behalf of the Borrower even if (i) such
notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein or (ii) the
terms thereof, as understood by the recipient, varied from any confirmation
thereof. The Borrower shall indemnify the Administrative Agent, each L/C Issuer,
each Lender and the Related Parties of each of them from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Borrower. All telephonic notices
to and other telephonic communications with the Administrative Agent may be
recorded by the Administrative Agent, and each of the parties hereto hereby
consents to such recording.

Section 10.03 No Waiver; Cumulative Remedies. No failure by any Person to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by Law.

Section 10.04 Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses. The Borrower shall pay (i) all reasonable out of pocket
expenses incurred by the Administrative Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent), in connection with the syndication of the credit facilities provided for
herein, the preparation, negotiation, execution, delivery and administration of
this Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable out of
pocket expenses incurred by each L/C Issuer in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iii) all out of pocket expenses incurred by the
Administrative Agent, any Lender or any L/C Issuer (including the fees, charges
and disbursements of any counsel for the Administrative Agent, any Lender or any
L/C Issuer), and shall pay all fees and time charges for attorneys who may be
employees of the Administrative Agent, any Lender or any L/C Issuer, in
connection with the enforcement of its rights (A) in connection with this
Agreement and the other Loan Documents, including its rights under this
Section 10.04, or (B) in connection with the Committed Loans made or Letters of
Credit issued hereunder, including all such out of pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Committed
Loans or Letters of Credit.

(b) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and each L/C
Issuer, and each Related Party of any of the foregoing Persons (each such Person
being called an “Indemnitee”) against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses (including
the fees, charges and disbursements of any counsel for any Indemnitee), and
shall indemnify and hold harmless each Indemnitee from all fees and time charges
and disbursements for attorneys who may be employees of any Indemnitee, incurred
by any Indemnitee or asserted against any Indemnitee by

 

101

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

any third party or by the Borrower or any other Loan Party arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder, the consummation of the transactions
contemplated hereby or thereby, or, in the case of the Administrative Agent (and
any sub-agent thereof) and its Related Parties only, the administration of this
Agreement and the other Loan Documents, (ii) any Committed Loan or Letter of
Credit or the use or proposed use of the proceeds therefrom (including any
refusal by any L/C Issuer to honor a demand for payment under a Letter of Credit
if the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), (iii) any actual or alleged presence
or release of Hazardous Materials on or from any property owned or operated by
the Borrower or any of its Subsidiaries, or any Environmental Liability related
in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Borrower or any other Loan Party, and
regardless of whether any Indemnitee is a party thereto, IN ALL CASES, WHETHER
OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE,
CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses (x) are determined by a court
of competent jurisdiction by final and non-appealable judgment to have resulted
from the gross negligence or willful misconduct of such Indemnitee or (y) result
from a claim brought by the Borrower or any other Loan Party against an
Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or
under any other Loan Document, if the Borrower or such Loan Party has obtained a
final and nonappealable judgment in its favor on such claim as determined by a
court of competent jurisdiction. No Loan Party will, without the prior written
consent of the relevant Indemnitee (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened claim, litigation,
investigation or proceeding (any of the foregoing, a “Proceeding”) against an
Indemnitee in respect of which indemnity could have been sought hereunder by
such Indemnitee unless (i) such settlement includes an unconditional release of
such Indemnitee from all liability or claims that are the subject matter of such
Proceeding and (ii) does not include any statement as to any admission.
Notwithstanding the foregoing, no Loan Party shall be liable for any settlement
of any pending or threatened Proceeding effected without the Borrower’s prior
written consent (which consent shall not be unreasonably withheld).

(c) Reimbursement by Lenders. To the extent that the Borrower for any reason
fails to indefeasibly pay any amount required under clause (a) or (b) of this
Section 10.04 to be paid by it to the Administrative Agent (or any sub-agent
thereof), the applicable L/C Issuer or any Related Party of any of the
foregoing, each Lender severally agrees to pay to the Administrative Agent (or
any such sub-agent), the applicable L/C Issuer or such Related Party, as the
case may be, such Lender’s Applicable Percentage (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent (or any such sub-agent) or the
applicable L/C Issuer in its capacity as such, or against any Related Party of
any of the foregoing acting for the Administrative Agent (or any such
sub-agent) or applicable L/C Issuer in connection with such capacity. The
obligations of the Lenders under this clause (c) are subject to the provisions
of Section 2.13(d).

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable Law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Committed Loan or Letter of
Credit or the use of the proceeds thereof. No Indemnitee

 

102

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

referred to in clause (b) above shall be liable for any damages arising from the
use by unintended recipients of any information or other materials distributed
to such unintended recipients by such Indemnitee 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 other than for direct or actual damages resulting from the gross
negligence or willful misconduct of such Indemnitee as determined by a final and
non-appealable judgment of a court of competent jurisdiction.

(e) Payments. All amounts due under this Section 10.04 shall be payable not
later than ten Business Days after demand therefor.

(f) Survival. The agreements in this Section 10.04 shall survive the resignation
of the Administrative Agent and any L/C Issuer, the replacement of any Lender,
the termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations.

Section 10.05 Payments Set Aside. To the extent that any payment by or on behalf
of the Borrower is made to the Administrative Agent, the applicable L/C Issuer
or any Lender, or the Administrative Agent, any L/C Issuer or any Lender
exercises its right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Administrative Agent, such L/C Issuer or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such setoff had not occurred and
(b) each Lender and each L/C Issuer severally agrees to pay to the
Administrative Agent upon demand its applicable share (without duplication) of
any amount so recovered from or repaid by the Administrative Agent, plus
interest thereon from the date of such demand to the date such payment is made
at a rate per annum equal to the Federal Funds Rate from time to time in effect.
The obligations of the Lenders and the L/C Issuers under clause (b) of the
preceding sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.

Section 10.06 Successors and Assigns.

(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 the Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of the Administrative Agent and each Lender and 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 clause (b) of
this Section 10.06, (ii) by way of participation in accordance with the
provisions of clause (d) of this Section 10.06, (iii) by way of pledge or
assignment of a security interest subject to the restrictions of clause (f) of
this Section 10.06, or (iv) to an SPC in accordance with the provisions of
clause (g) of this Section 10.06 (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 clause (d) of this Section 10.06 and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the L/C Issuers 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

 

103

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

its Commitment and the Committed Loans (including for purposes of this
clause (b), participations in L/C Obligations) at the time owing to it);
provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Committed Loans at the time owing to it 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

(B) in any case not described in clause (b)(i)(A) of this Section 10.06, the
aggregate amount of the Commitment (which for this purpose includes Committed
Loans outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Committed Loans of the assigning Lender
subject to each such assignment, determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent or, if a “Trade Date” is specified in the Assignment and Assumption, as of
the Trade Date, shall not be less than $5,000,000 unless each of the
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single assignee (or to an assignee and members
of its Assignee Group) will be treated as a single assignment for purposes of
determining whether such minimum amount has been met.

(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 Committed Loans or the
Commitment assigned;

(iii) Required Consents. No consent shall be required for any assignment except
to the extent required by clause (b)(i)(B) of this Section 10.06 and, in
addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or
delayed) shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a Lender,
an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall
be deemed to have consented to any such assignment unless it shall object
thereto by written notice to the Administrative Agent within five Business Days
after having received notice thereof;

(B) the consent of the Administrative 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 the consent of the L/C Issuers (such consent not to be
unreasonably withheld or delayed) shall be required for any assignment.

(iv) Assignment and Assumption. The parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee per assignment payable by the assignor (subject
to Section 10.13(a)) directly to the Administrative Agent in the amount of
$3,500; provided, however, that the Administrative Agent may, in its sole
discretion, elect to waive such processing and recordation fee in the case of
any assignment. The assignee, if it is not a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

 

104

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

(v) No Assignment to Borrower. No such assignment shall be made to the Borrower
or any of the Borrower’s Affiliates or Subsidiaries.

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

(vii) No Assignment to Defaulting Lenders. No such assignment shall be made to a
Defaulting Lender.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to clause (c) of this Section 10.06, from and after the effective date specified
in each Assignment and Assumption, the assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
clause (b) shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
clause (d) of this Section 10.06.

(c) Register. The Administrative Agent, acting solely for this purpose as a
non-fiduciary agent of the Borrower, shall maintain at the Administrative
Agent’s Office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Committed Loans and L/C Obligations
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 the Borrower, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. The Register shall be available for inspection by the Borrower 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, the Borrower or the Administrative Agent, sell participations to any
Person (other than a natural person or the Borrower or any of the 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 Committed Loans (including such Lender’s
participations in L/C Obligations) 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) the Borrower, the Administrative Agent, the Lenders
and the L/C Issuers shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under this Agreement.

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument

 

105

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

may provide that such Lender will not, without the consent of the Participant,
agree to any amendment, waiver or other modification described in the first
proviso to Section 10.01 that affects such Participant. Subject to clause (e) of
this Section 10.06, the Borrower agrees that each Participant shall be entitled
to the benefits of Sections 3.01, 3.04, and 3.05 to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant to
clause (b) of this Section 10.06. To the extent permitted by Law, each
Participant also shall be entitled to the benefits of Section 10.08 as though it
were a Lender; provided that such Participant agrees to be subject to
Section 2.14 as though it were a Lender.

Each Lender that sells a participation shall, acting solely for this purpose as
a non-fiduciary agent of the Borrower, maintain a register on which it enters
the name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Committed Loans or other
obligations under the Loan Documents (the “Participant Register”); provided that
no Lender shall have any obligation to disclose all or any portion of the
Participant Register (including the identity of any Participant or any
information relating to a Participant’s interest in any commitments, loans,
letters of credit or its other obligations under any Loan Document) to any
Person except to the extent that such disclosure is necessary to establish that
such commitment, loan, letter of credit or other obligation is in registered
form under Section 5f.103-1(c) of the United States Treasury Regulations. The
entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary. For the avoidance of
doubt, the Administrative Agent (in its capacity as Administrative Agent) shall
have no responsibility for maintaining a Participant Register.

(e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or Section 3.04 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.01 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 3.01(e) as though it were a
Lender.

(f) 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 (including
under its Note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank or any
central bank having jurisdiction over such Lender; 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.

(g) Special Purpose Funding Vehicles. Notwithstanding anything to the contrary
contained herein, any Lender (a “Granting Lender”) may grant to a special
purpose funding vehicle identified as such in writing from time to time by the
Granting Lender to the Administrative Agent and the Borrower (an “SPC”) the
option to provide all or any part of any Committed Loan that such Granting
Lender would otherwise be obligated to make pursuant to this Agreement; provided
that (i) nothing herein shall constitute a commitment by any SPC to fund any
Committed Loan and (ii) if an SPC elects not to exercise such option or
otherwise fails to make all or any part of such Committed Loan, the Granting
Lender shall be obligated to make such Committed Loan pursuant to the terms
hereof or, if it fails to do so, to make such payment to the Administrative
Agent as is required under Section 2.13(b)(ii). Each party hereto hereby agrees
that (i) neither the grant to any SPC nor the exercise by any SPC of such option
shall increase the costs or expenses or otherwise increase or change the
obligations of the Borrower under this Agreement (including its obligations
under Section 3.04), (ii) no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement for which a Lender would be

 

106

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

liable, and (iii) the Granting Lender shall for all purposes, including the
approval of any amendment, waiver or other modification of any provision of any
Loan Document, remain the lender of record hereunder. The making of a Committed
Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to
the same extent, and as if, such Committed Loan were made by such Granting
Lender. In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior debt of any SPC, it will not institute against,
or join any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceeding under the
laws of the United States or any State thereof. Notwithstanding anything to the
contrary contained herein, any SPC may (i) with notice to, but without prior
consent of the Borrower and the Administrative Agent and with the payment of a
processing fee to the Administrative Agent in the amount of $3,500, assign all
or any portion of its right to receive payment with respect to any Committed
Loan to the Granting Lender and (ii) disclose on a confidential basis any
non-public information relating to its funding of Committed Loans to any rating
agency, commercial paper dealer or provider of any surety or Guarantee or credit
or liquidity enhancement to such SPC.

(h) Resignation as an L/C Issuer after Assignment. Notwithstanding anything to
the contrary contained herein, if at any time an L/C Issuer assigns all of its
Commitment and Committed Loans pursuant to clause (b) above, such L/C Issuer
may, upon 30 days’ notice to the Borrower and the Lenders, resign as an L/C
Issuer. In the event of any such resignation as L/C Issuer, the Borrower shall
be entitled to appoint from among the Lenders a successor L/C Issuer hereunder
(and any such appointment shall be subject to the acceptance of such appointed
Lender); provided, however, that no failure by the Borrower to appoint any such
successor shall affect the resignation of the exiting L/C Issuer as L/C Issuer.
If such L/C Issuer resigns as L/C Issuer, it shall retain all the rights,
powers, privileges and duties of the L/C Issuer hereunder with respect to all
Letters of Credit outstanding as of the effective date of its resignation as L/C
Issuer and all L/C Obligations with respect thereto (including the right to
require the Lenders to make Base Rate Loans or fund risk participations in
Unreimbursed Amounts pursuant to Section 2.03(d)). Upon the appointment of a
successor L/C Issuer, (i) such successor shall succeed to and become vested with
all of the rights, powers, privileges and duties of the retiring L/C Issuer and
(ii) the successor L/C Issuer shall issue letters of credit in substitution for
the Letters of Credit, if any, outstanding at the time of such succession or
make other arrangements satisfactory to the exiting L/C Issuer to effectively
assume the obligations of exiting L/C Issuer with respect to such Letters of
Credit.

Section 10.07 Treatment of Certain Information; Confidentiality. Each of the
Administrative Agent, the Lenders and each L/C Issuer agrees to maintain the
confidentiality of the Information, except that Information may be disclosed
(a) to its Affiliates and to its and its Affiliates’ respective partners,
directors, officers, employees, agents, advisors and representatives (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable Laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 10.07, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations, (g) to
credit rating agencies, the CUSIP Service Bureau and credit insurers, (h) with
the consent of the Borrower or (i) to the extent such Information (x) becomes
publicly available other than as a result of a breach of this Section 10.07 or
(y) becomes available to the Administrative Agent, any Lender, any L/C Issuer or
any of their respective Affiliates on a non-confidential basis from a source
other than the Borrower.

 

107

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

For purposes of this Section 10.07, “Information” means all information received
from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary
or any of their respective businesses, other than any such information that is
available to the Administrative Agent, any Lender or any L/C Issuer on a
non-confidential basis prior to disclosure by the Borrower or any Subsidiary;
provided that, in the case of information received from the Borrower or any
Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as nonpublic and confidential. Any Person required to maintain
the confidentiality of Information as provided in this Section 10.07 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to confidential information of a similar
nature.

Each of the Administrative Agent, the Lenders and the L/C Issuers acknowledges
that (a) the Information may include material non-public information concerning
the Borrower or a Subsidiary, as the case may be, (b) it has developed
compliance procedures regarding the use of material non-public information and
(c) it will handle such material non-public information in accordance with
applicable Law, including Federal and state securities Laws.

In addition, the Arranger, the Administrative Agent and the Lenders may disclose
the existence of this Agreement and the substantive terms of this Agreement to
market data collectors, similar service providers to the lending industry and
service providers to the Arranger, the Administrative Agent or a Lender, as
applicable, in connection with the administration of this Agreement, the other
Loan Documents and the Commitments.

Section 10.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender, each L/C Issuer 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 such
Lender, such L/C Issuer or any such Affiliate to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement or any other Loan Document to
such Lender or such L/C Issuer, irrespective of whether or not such Lender or
such L/C Issuer shall have made any demand under this Agreement or any other
Loan Document and although such obligations of the Borrower may be contingent or
unmatured or are owed to a branch or office of such Lender or such L/C Issuer
different from the branch or office holding such deposit or obligated on such
indebtedness. The rights of each Lender, each L/C Issuer and their respective
Affiliates under this Section 10.08 are in addition to other rights and remedies
(including other rights of setoff) that such Lender, such L/C Issuer or their
respective Affiliates may have. Each Lender and each L/C Issuer agrees to notify
the Borrower and the Administrative 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.

Section 10.09 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Committed Loans or,
if it exceeds such unpaid principal, refunded to the Borrower. In determining
whether the interest contracted for, charged, or received by the Administrative
Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee,

 

108

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

or premium rather than interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the contemplated term of
the Obligations hereunder.

Section 10.10 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof, supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE
PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof that, when taken together, bear the signatures
of each of the other parties hereto. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy facsimile, photocopy or by sending
a scanned copy by electronic mail shall be effective as delivery of a manually
executed counterpart of this Agreement. To the extent any inconsistency exists
between this Agreement and any other Loan Document, the terms of this Agreement
shall be deemed controlling.

Section 10.11 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Committed Loan or any other Obligation hereunder
shall remain unpaid or unsatisfied or any Letter of Credit shall remain
outstanding.

Section 10.12 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

Section 10.13 Replacement of Lenders. If (i) any Lender requests compensation
under Section 3.04, (ii) the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 3.01, (iii) any Lender is a Defaulting Lender, or (iv) any
Lender is unwilling to approve an increase in the Borrowing Base or other
amendment hereto which has been approved by the Required Lenders but requires
approval of such Lender to be effective, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in, and consents required by,
Section 10.06), all of its interests, rights and obligations under this
Agreement and the related Loan Documents to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that:

(a) the Borrower shall have paid to the Administrative Agent the assignment fee
specified in Section 10.06(b);

 

109

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

(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Committed Loans and L/C Advances, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and under
the other Loan Documents (including any amounts under Section 3.05) from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts);

(c) in the case of any such assignment resulting from a claim for compensation
under Section 3.04 or payments required to be made pursuant to Section 3.01,
such assignment will result in a reduction in such compensation or payments
thereafter;

(d) in the case of an assignment resulting from clause (iv) above, such
assignment will result in effectiveness of such increase or amendment; and

(e) such assignment does not conflict with applicable Laws.

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 the Borrower to require such assignment and delegation
cease to apply.

Each Lender hereby grants to the Administrative Agent an irrevocable power of
attorney (which power is coupled with an interest) to execute and deliver, on
behalf of such Lender as assignor, any Assignment and Assumption necessary to
effectuate any assignment of such Lender’s interests hereunder in the
circumstances contemplated by this Section 10.13.

Section 10.14 Governing Law; Jurisdiction; Etc.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION. EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY
AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK
SITTING IN NEW YORK COUNTY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT
THAT A PARTY HERETO MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANOTHER PARTY
HERETO OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

110

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

(c) WAIVER OF VENUE. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT
REFERRED TO IN CLAUSE (b) OF THIS SECTION 10.14. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

Section 10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.15.

Section 10.16 No Advisory or Fiduciary Responsibility.

In connection with all aspects of each transaction contemplated hereby, the
Borrower acknowledges and agrees that: (i) the credit facility provided for
hereunder and any related arranging or other services in connection therewith
(including in connection with any amendment, waiver or other modification hereof
or of any other Loan Document) are an arm’s-length commercial transaction
between the Borrower and its Affiliates, on the one hand, and the Administrative
Agent, the Arranger and the Lenders, on the other hand, and the Borrower is
capable of evaluating and understanding and understands and accepts the terms,
risks and conditions of the transactions contemplated hereby and by the other
Loan Documents (including any amendment, waiver or other modification hereof or
thereof); (ii) in connection with the process leading to such transaction, the
Administrative Agent, the Arranger and each Lender is and has been acting solely
as a principal and is not the financial advisor, agent or fiduciary, for the
Borrower or any of its Affiliates, stockholders, creditors or employees or any
other Person; (iii) neither the Administrative Agent, the Arranger nor any
Lender has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Borrower with respect to any of the transactions
contemplated hereby or the process leading thereto, including with respect to
any amendment, waiver or other modification hereof or of any other Loan Document
(irrespective of whether the Administrative Agent, the Arranger or any Lender
has advised or is currently advising the Borrower or any of its Affiliates on
other matters) and neither the Administrative Agent nor the Arranger or any
Lender has any obligation to the Borrower or any of its Affiliates with respect
to the transactions contemplated hereby except those obligations expressly set
forth herein and in the other Loan Documents; (iv) the Administrative Agent, the
Arranger, each Lender and their respective Affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the
Borrower and its Affiliates, and neither the Administrative

 

111

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

Agent nor the Arranger or any Lender has any obligation to disclose any of such
interests by virtue of any advisory, agency or fiduciary relationship; and
(v) the Administrative Agent, the Arranger and the Lenders have not provided and
will not provide any legal, accounting, regulatory or tax advice with respect to
any of the transactions contemplated hereby (including any amendment, waiver or
other modification hereof or of any other Loan Document) and the Borrower has
consulted its own legal, accounting, regulatory and tax advisors to the extent
it has deemed appropriate. The Borrower hereby waives and releases, to the
fullest extent permitted by Law, any claims that it may have against the
Administrative Agent, the Arranger and each Lender with respect to any breach or
alleged breach of agency or fiduciary duty in connection with the Transactions.

Section 10.17 USA PATRIOT Act Notice. Each Lender and each L/C Issuer that is
subject to the PATRIOT Act and the Administrative Agent (for itself and not on
behalf of any Lender) hereby notifies the Borrower that pursuant to the
requirements of the PATRIOT Act, it is required to obtain, verify and record
information that identifies the Borrower and the Guarantors, which information
includes the name and address of the Borrower and other information that will
allow such Lender, L/C Issuer or the Administrative Agent, as applicable, to
identify the Borrower in accordance with the PATRIOT Act. The Borrower shall
promptly provide such additional information and documentation reasonably
requested by any Lender, L/C Issuer or the Administrative Agent as may be
necessary for such Lender, L/C Issuer or the Administrative Agent to comply with
its obligations under the PATRIOT Act.

Section 10.18 Electronic Execution of Assignments and Certain Other Documents.
The words “execute”, “execution”, “signed”, “signature” and words of like import
in or related to any document to be signed in connection with this Agreement and
the transactions contemplated hereby (including without limitation Assignment
and Assumptions, amendments or other modifications, Committed Loan Notices,
waivers and consents) shall be deemed to include electronic signatures, the
electronic matching of assignment terms and contract formations on electronic
platforms approved by the Administrative Agent, or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable Law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act; provided that notwithstanding anything contained herein to the contrary the
Administrative Agent is under no obligation to agree to accept electronic
signatures in any form or in any format unless expressly agreed to by the
Administrative Agent pursuant to procedures approved by it.

Section 10.19 Amendment and Restatement. It is the intention of each of the
parties hereto that the Existing Credit Agreement be amended and restated in its
entirety pursuant hereto so as to preserve and continue the perfection and
priority of all Liens securing Indebtedness and Obligations under the Existing
Credit Agreement and that all Indebtedness and Obligations of the Borrower and
the Guarantors hereunder and under the other Loan Documents shall be secured by
the Liens evidenced under the Collateral Documents and that this Agreement does
not constitute a novation or termination of the Indebtedness and Obligations
existing under the Existing Credit Agreement. In addition, unless specifically
amended hereby, each of the Loan Documents shall continue in full force and
effect and that, from and after the Closing Date, all references to the “Credit
Agreement” contained therein shall be deemed to refer to this Agreement. The
Lenders hereby authorize the Administrative Agent to amend and restate each of
the Security Agreement and the Guaranty, in form and substance satisfactory to
the Administrative Agent in order to, among other things, reflect the amendment
and restatement of the Existing Credit Agreement pursuant to this Agreement.

Section 10.20 Keepwell. The Borrower absolutely, unconditionally, and
irrevocably undertakes to provide such funds or other support as may be needed
from time to time by each other Loan Party to

 

112

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

honor all of its obligations under the Guaranty in respect of any Swap
Obligations (provided, however, that the Borrower shall only be liable under
this Section 10.20 for the maximum amount of such liability that can be hereby
incurred without rendering its obligations under this Section 10.20, or
otherwise under this Agreement, voidable under applicable Law relating to
fraudulent conveyance or fraudulent transfer, and not for any greater amount).
The obligations of the Borrower under this Section 10.20 shall remain in full
force and effect until the payment in full of the Obligations and the
termination of this Agreement and the Guaranty. The Borrower intends that this
Section 10.20 constitute, and this Section 10.20 shall be deemed to constitute,
a “keepwell, support, or other agreement” for the benefit of each other Loan
Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange
Act.

 

113

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

Exhibit B

to Refinancing Amendment

Schedule 2.01

Commitments and Applicable Percentages

 

Lender

   Commitment      Applicable Percentage  

Royal Bank of Canada

   $ 84,000,000         14.00 % 

Barclays Bank PLC

   $ 84,000,000         14.00 % 

Morgan Stanley Senior Funding, Inc.

   $ 84,000,000         14.00 % 

UBS AG, Stamford Branch

   $ 66,000,000         11.00 % 

SunTrust Bank

   $ 66,000,000         11.00 % 

Natixis, New York Branch

   $ 66,000,000         11.00 % 

Citizens Bank, N.A.

   $ 66,000,000         11.00 % 

Capital One, National Association

   $ 66,000,000         11.00 % 

Goldman Sachs Lending Partners LLC

   $ 6,000,000         1.00 % 

NextEra Energy Marketing, LLC

   $ 6,000,000         1.00 % 

Macquarie Bank Limited

   $ 6,000,000         1.00 %    

 

 

    

 

 

 

Total

   $ 600,000,000         100 %    

 

 

    

 

 

 

 

114