Exhibit 10.2

Third Amendment to

Second Amended and Restated Credit Agreement and First Amendment to Second

Amended and Restated Pledge and Security Agreement

This Third Amendment to Second Amended and Restated Credit Agreement and First
Amendment to Second Amended and Restated Pledge and Security Agreement (this
“Third Amendment”), dated as of May 1, 2020 (the “Third Amendment Effective
Date”), is among Centennial Resource Production, LLC, a Delaware limited
liability company (the “Borrower”); Centennial Resource Development, Inc., a
Delaware corporation (the “Parent”); each of the other undersigned guarantors
(the “Guarantors”, and together with the Borrower, the “Credit Parties”); each
of the Lenders party hereto; and JPMorgan Chase Bank, N.A., as administrative
agent for the Lenders (in such capacity, together with its successors in such
capacity, the “Administrative Agent”).

R E C I T A L S:

A.    The Borrower, the Administrative Agent and the Lenders are parties to that
certain Second Amended and Restated Credit Agreement dated as of May 4, 2018 (as
amended, restated, amended and restated, supplemented or otherwise modified on
or prior to the date hereof, the “Credit Agreement”), pursuant to which the
Lenders have, subject to the terms and conditions set forth therein, made
certain credit available to and on behalf of the Borrower.

B.    The parties hereto desire to enter into this Third Amendment to amend the
Credit Agreement and the Security Agreement (as defined in the Credit Agreement)
as set forth herein, upon the terms and conditions set forth herein to be
effective as of the Third Amendment Effective Date.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

Section 1.    Defined Terms. Each capitalized term which is defined in the
Credit Agreement, but which is not defined in this Third Amendment, shall have
the meaning ascribed such term in the Credit Agreement, as amended by this Third
Amendment. Unless otherwise indicated, all section references in this Third
Amendment refer to sections of the Credit Agreement as amended by this
Agreement.

Section 2.    Amendments.

2.1    Amendments to Credit Agreement. In reliance on the representations,
warranties, covenants and agreements contained in this Third Amendment, and
subject to the satisfaction of the conditions precedent set forth in Section 3
hereof, the Credit Agreement (other than the signature pages, Annexes, Exhibits
and Schedules thereto) is hereby amended effective as of the Third Amendment
Effective Date by (a) deleting the stricken text (indicated textually in the
same manner as the following example: stricken text) and adding the
double-underlined text (indicated textually in the same manner as the following
example: double-underlined text) as set forth in the pages of the Credit
Agreement attached as Exhibit A hereto and (b) introducing a new Exhibit M to
the Credit Agreement in the form attached as Exhibit B hereto.

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2.2    Amendment to Security Agreement. In reliance on the representations,
warranties, covenants and agreements contained in this Third Amendment, and
subject to the satisfaction of the conditions precedent set forth in Section 3
hereof, the Security Agreement is hereby amended effective as of the Third
Amendment Effective Date by deleting the last sentence of Section 4.10 therein
and replacing it with the following sentence: “Notwithstanding the foregoing,
the Grantors shall have such additional time to deliver the required Deposit
Account Control Agreements as may be permitted by the Administrative Agent in
its sole discretion.”

Section 3.    Conditions Precedent. The effectiveness of this Third Amendment is
subject to the following:

3.1    Counterparts. The Administrative Agent shall have received counterparts
of this Third Amendment from the Credit Parties and each of the Lenders
constituting at least the Majority Lenders.

3.2    Amendment Fees. The Administrative Agent shall have received all fees
owing pursuant to that certain Fee Letter dated as of May 1, 2020 between the
Borrower and the Administrative Agent.

3.3    Other Fees and Expenses. The Administrative Agent shall have received, to
the extent invoiced, all fees and other amounts due and payable to the
Administrative Agent on or prior to the Third Amendment Effective Date.

Section 4.    Miscellaneous.

4.1    Intercreditor Agreement. Each of the Issuing Bank and the Lenders (on
behalf of themselves and their Affiliates) constituting at least the Majority
Lenders hereby authorize and direct the Administrative Agent to enter into, to
the extent contemplated to be entered into pursuant to the Credit Agreement, any
Intercreditor Agreement on behalf of the Secured Parties and without any further
consent, authorization or other action by such Secured Party. The Administrative
Agent shall have the benefit of the provisions of Article XI of the Credit
Agreement with respect to all actions taken by it pursuant to this Section 4.1
or in accordance with the terms of any Intercreditor Agreement to the full
extent thereof. In addition, each of the Issuing Bank and the Lenders (on behalf
of themselves and their Affiliates) constituting at least the Majority Lenders
hereby authorize the Administrative Agent or any such successor (i) to execute
or to enter into amendments of or supplements to, amendments and restatements
of, waivers or other modifications of the Security Instruments, any
Intercreditor Agreement and any additional or replacement intercreditor
agreements, in each case, in order to effect the subordination of, and to
provide for certain additional rights, obligations and limitations in respect
of, any Liens that are junior to the Liens securing the Indebtedness and
incurred as permitted by the Credit Agreement, (ii) to establish certain
relative rights as between the holders of the Indebtedness and the holders of
the Debt secured by such Liens that are junior to the Liens securing the
Indebtedness and (iii) any amendments, supplements or other modifications of any
Security Instrument to add or remove any legend that may be required pursuant to
any Intercreditor Agreement. Each of the Issuing Bank and the Lenders (on behalf
of themselves and their Affiliates) constituting at least the Majority Lenders
hereby irrevocably (i) consents to the treatment of Liens to be provided for
under any Intercreditor Agreement, (ii) agrees that, upon the execution and
delivery thereof, such

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Secured Party will be bound by the provisions of any Intercreditor Agreement as
if it were a signatory thereto and will take no actions contrary to the
provisions of any Intercreditor Agreement, (iii) agrees that no Secured Party
shall have any right of action whatsoever against the Administrative Agent as a
result of any action taken by the Administrative Agent pursuant to this
Section 4.1 or in accordance with the terms of any Intercreditor Agreement and
(iv) authorizes and directs the Administrative Agent to carry out the provisions
and intent of any Intercreditor Agreement.

4.2    Confirmation and Effect. The provisions of the Credit Agreement (as
amended by this Third Amendment) shall remain in full force and effect in
accordance with its terms following the effectiveness of this Third Amendment,
and this Third Amendment shall not constitute a waiver of any provision of the
Credit Agreement or any other Loan Document, except as expressly provided for
herein. Each reference in the Credit Agreement to “this Agreement”, “hereunder”,
“hereof’, “herein”, or words of like import shall mean and be a reference to the
Credit Agreement as amended hereby, and each reference to the Credit Agreement
in any other document, instrument or agreement executed and/or delivered in
connection with the Credit Agreement shall mean and be a reference to the Credit
Agreement as amended hereby.

4.3    Ratification and Affirmation of Credit Parties. Each of the Credit
Parties hereby expressly (a) acknowledges the terms of this Third Amendment,
(b) ratifies and affirms its obligations under the Credit Agreement, the
Guaranty Agreement and the other Loan Documents to which it is a party,
(c) acknowledges, renews and extends its continued liability under the Credit
Agreement, the Guaranty Agreement and the other Loan Documents to which it is a
party, (d) agrees that its guarantee under the Guaranty Agreement and the other
Loan Documents to which it is a party remains in full force and effect with
respect to the Indebtedness as amended hereby, (e) represents and warrants to
the Lenders and the Administrative Agent that each representation and warranty
of such Credit Party contained in the Credit Agreement, the Guaranty Agreement
and the other Loan Documents to which it is a party is true and correct in all
material respects as of the date hereof and after giving effect to this Third
Amendment except (i) to the extent any such representations and warranties are
expressly limited to an earlier date, in which case, on and as of the date
hereof, such representations and warranties shall continue to be true and
correct as of such specified earlier date, and (ii) to the extent that any such
representation and warranty is expressly qualified by materiality or by
reference to Material Adverse Effect, such representation and warranty (as so
qualified) shall continue to be true and correct in all respects, (f) represents
and warrants to the Lenders and the Administrative Agent that the execution,
delivery and performance by such Credit Party of this Third Amendment are within
such Credit Party’s corporate, limited partnership or limited liability company
powers (as applicable), have been duly authorized by all necessary action and
that this Third Amendment constitutes the valid and binding obligation of such
Credit Party enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditor’s rights generally, and (g) represents and warrants to the
Lenders and the Administrative Agent that, after giving effect to this Third
Amendment, no Borrowing Base Deficiency, Default or Event of Default exists.

4.4    Counterparts. This Third Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of this Third Amendment by facsimile or electronic (e.g.
pdf) transmission shall be effective as delivery of a manually executed original
counterpart hereof.

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4.5    No Oral Agreement. This written Third Amendment, the Credit Agreement and
the other Loan Documents executed in connection herewith and therewith represent
the final agreement between the parties and may not be contradicted by evidence
of prior, contemporaneous, or unwritten oral agreements of the parties. There
are no subsequent oral agreements between the parties that modify the agreements
of the parties in the Credit Agreement and the other Loan Documents.

4.6    Governing Law. This Third Amendment (including, but not limited to, the
validity and enforceability hereof) shall be governed by, and construed in
accordance with, the laws of the State of New York.

4.7    Payment of Expenses. The Borrower agrees to pay or reimburse the
Administrative Agent for all of its reasonable out-of-pocket costs and expenses
incurred in connection with this Third Amendment, any other documents prepared
in connection herewith and the transactions contemplated hereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent.

4.8    Severability. Any provision of this Third Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

4.9    Successors and Assigns. This Third Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

[Signature Pages Follow.]

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

 

BORROWER: CENTENNIAL RESOURCE PRODUCTION, LLC, a Delaware limited liability
company By:   /s/ George S. Glyphis Name:   George S. Glyphis Title:   Vice
President, Chief Financial Officer and Assistant Secretary

 

PARENT: CENTENNIAL RESOURCE DEVELOPMENT, INC., a Delaware corporation By:   /s/
George S. Glyphis Name:   George S. Glyphis Title:   Vice President, Chief
Financial Officer and Assistant Secretary

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement

Centennial Resource Production, LLC

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GUARANTORS: ATLANTIC EXPLORATION, LLC, a Delaware limited liability company By:
  /s/ George S. Glyphis Name:   George S. Glyphis Title:   Vice President, Chief
Financial Officer and Assistant Secretary

 

CENTENNIAL RESOURCE MANAGEMENT, LLC, a Delaware limited liability company By:  
/s/ George S. Glyphis Name:   George S. Glyphis Title:   Vice President, Chief
Financial Officer and Assistant Secretary

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement

Centennial Resource Production, LLC

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JPMORGAN CHASE BANK, N.A., as Administrative Agent and a Lender By:   /s/ David
Morris Name:   David Morris Title:   Authorized Officer

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement and First Amendment to Second
Amended and

Restated Pledge and Security Agreement

Centennial Resource Production, LLC

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WELLS FARGO BANK, N.A., as a Lender By:   /s/ Edward Pak Name:   Edward Pak
Title:   Director

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement and First Amendment to Second
Amended and

Restated Pledge and Security Agreement

Centennial Resource Production, LLC

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COMERCIA BANK, as a Lender By:   /s/ Caroline McClurg Name:   Caroline McClurg
Title:   Senior Vice President

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement and First Amendment to Second
Amended and

Restated Pledge and Security Agreement

Centennial Resource Production, LLC

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BMO HARRIS BANK, N.A., as a Lender By:   /s/ Matthew L. Davis Name:   Matthew L.
Davis Title:   Director

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement and First Amendment to Second
Amended and

Restated Pledge and Security Agreement

Centennial Resource Production, LLC

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CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH as a Lender By:   /s/
Donovan C. Broussard Name:   Donovan C. Broussard Title:   Authorized Signatory
By:   /s/ Jacob W. Lewis Name:   Jacob W. Lewis Title:   Authorized Signatory

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement and First Amendment to Second
Amended and

Restated Pledge and Security Agreement

Centennial Resource Production, LLC

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TRUIST BANK, formerly known as BRANCH BANKING AND TRUST COMPANY, as a Lender By:
  /s/ Greg Krablin Name:   Greg Krablin Title:   Senior Vice President

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement and First Amendment to Second
Amended and

Restated Pledge and Security Agreement

Centennial Resource Production, LLC

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ROYAL BANK OF CANADA, as a Lender By:   /s/ Kristan Spivey Name:   Kristan
Spivey Title:   Authorized Signatory

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement and First Amendment to Second
Amended and

Restated Pledge and Security Agreement

Centennial Resource Production, LLC

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CITIBANK, N.A., as a Lender By:   /s/ Jeff Ard Name:   Jeff Ard Title:   Vice
President

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement and First Amendment to Second
Amended and

Restated Pledge and Security Agreement

Centennial Resource Production, LLC

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KEYBANK, NATIONAL ASSOCIATION, as a Lender By:   /s/ George E. McKean Name:  
George E. McKean Title:   Senior Vice President

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement and First Amendment to Second
Amended and

Restated Pledge and Security Agreement

Centennial Resource Production, LLC

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PNC BANK, NATIONAL ASSOCIATION, as a Lender By:   /s/ John Engel Name:   John
Engel Title:   Vice President

Signature Page to Third Amendment to

Second Amended and Restated Credit Agreement and First Amendment to Second
Amended and

Restated Pledge and Security Agreement

Centennial Resource Production, LLC

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EXHIBIT A TO THIRD AMENDMENT – AMENDMENTS TO CREDIT AGREEMENT

[See attached].

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Exhibit A to Third Amendment

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

dated as of May 4, 2018

among

CENTENNIAL RESOURCE PRODUCTION, LLC,

as Borrower,

Any Parent Guarantor Party Hereto,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

and

The Lenders Party Hereto

 

 

JPMORGAN CHASE BANK, N.A.

as Lead Arranger,

WELLS FARGO BANK, N.A., ROYAL BANK OF CANADA AND COMERICA BANK,

as Co-Syndication Agents,

BMO HARRIS BANK, N.A., CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH,

and U.S. Bank National Association,

as Co-Documentation Agents,

and

JPMORGAN CHASE BANK, N.A.,

as Sole Bookrunner

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TABLE OF CONTENTS

 

            Page  

ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS

     7  

Section 1.01

     Terms Defined Above      7  

Section 1.02

     Certain Defined Terms      7  

Section 1.03

     Types of Loans and Borrowings      41  

Section 1.04

     Terms Generally; Rules of Construction      41  

Section 1.05

     Accounting Terms and Determinations; GAAP      41  

Section 1.06

     Interest Rates; LIBOR Notifications.      42  

Section 1.07

     Divisions      42  

ARTICLE II THE CREDITS

     43  

Section 2.01

     Commitment      43  

Section 2.02

     Loans and Borrowings      43  

Section 2.03

     Requests for Borrowings      44  

Section 2.04

     Interest Elections      45  

Section 2.05

     Funding of Borrowings      46  

Section 2.06

     Termination and Reduction of Commitments and Aggregate Maximum Credit
Amounts; Increase, Reduction and Termination of Aggregate Elected Commitment
Amounts      47  

Section 2.07

     Borrowing Base      51  

Section 2.08

     Letters of Credit      53  

ARTICLE III PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

     60  

Section 3.01

     Repayment of Loans      60  

Section 3.02

     Interest      60  

Section 3.03

     Alternate Rate of Interest      62  

Section 3.04

     Prepayments      63  

Section 3.05

     Fees      65  

ARTICLE IV PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS

     67  

Section 4.01

     Payments Generally; Pro Rata Treatment; Sharing of Set-offs      67  

Section 4.02

     Presumption of Payment by the Borrower      68  

Section 4.03

     Certain Deductions by the Administrative Agent      68  

Section 4.04

     Disposition of Proceeds      68  

ARTICLE V INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY

     69  

Section 5.01

     Increased Costs      69  

Section 5.02

     Break Funding Payments      70  

Section 5.03

     Taxes      70  

Section 5.04

     Mitigation Obligations; Replacement of Lenders      74  

Section 5.05

     Illegality      75  

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            Page  

ARTICLE VI CONDITIONS PRECEDENT

     75  

Section 6.01

     Effective Date      75  

Section 6.02

     Each Credit Event      77  

ARTICLE VII REPRESENTATIONS AND WARRANTIES

     78  

Section 7.01

     Organization; Powers      78  

Section 7.02

     Authority; Enforceability      79  

Section 7.03

     Approvals; No Conflicts      79  

Section 7.04

     Financial Condition; No Material Adverse Change      79  

Section 7.05

     Litigation      80  

Section 7.06

     Environmental Matters      80  

Section 7.07

     Compliance with the Laws and Agreements; No Defaults or Borrowing Base
Deficiency      81  

Section 7.08

     Investment Company Act      81  

Section 7.09

     Taxes      81  

Section 7.10

     ERISA      82  

Section 7.11

     Disclosure; No Material Misstatements      82  

Section 7.12

     Insurance      83  

Section 7.13

     Restriction on Liens      83  

Section 7.14

     Subsidiaries      83  

Section 7.15

     Location of Business and Offices      84  

Section 7.16

     Properties; Titles, Etc.      84  

Section 7.17

     Maintenance of Properties      85  

Section 7.18

     Gas Imbalances, Prepayments      85  

Section 7.19

     Marketing of Production      85  

Section 7.20

     Swap Agreements and Qualified ECP Counterparty      86  

Section 7.21

     Use of Loans and Letters of Credit      86  

Section 7.22

     Solvency      86  

Section 7.23

     Anti-Corruption Laws and Sanctions      86  

Section 7.24

     EEA Financial Institutions      87  

ARTICLE VIII AFFIRMATIVE COVENANTS

     87  

Section 8.01

     Financial Statements; Other Information      87  

Section 8.02

     Notices of Material Events      91  

Section 8.03

     Existence; Conduct of Business      92  

Section 8.04

     Payment of Obligations      92  

Section 8.05

     Performance of Obligations under Loan Documents      92  

Section 8.06

     Operation and Maintenance of Properties      92  

Section 8.07

     Insurance      93  

Section 8.08

     Books and Records; Inspection Rights      93  

Section 8.09

     Compliance with Laws      93  

Section 8.10

     Environmental Matters      94  

Section 8.11

     Further Assurances      95  

Section 8.12

     Reserve Reports      95  

Section 8.13

     Title Information      96  

Section 8.14

     Collateral and Guaranty Agreements      97  

Section 8.15

     ERISA Compliance      99  

 

3

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            Page  

Section 8.16

     Unrestricted Subsidiaries      99  

Section 8.17

     Commodity Exchange Act Keepwell Provisions      99  

Section 8.18

     Post-Closing Delivery of Account Control Agreements      100  

ARTICLE IX NEGATIVE COVENANTS

     100  

Section 9.01

     Financial Covenants      100  

Section 9.02

     Debt      101  

Section 9.03

     Liens      102  

Section 9.04

     Dividends and Distributions and Redemptions of Permitted Senior Unsecured
Notes      103  

Section 9.05

     Investments, Loans and Advances      105  

Section 9.06

     Designation and Conversion of Restricted and Unrestricted Subsidiaries     
106  

Section 9.07

     Nature of Business; No International Operations      107  

Section 9.08

     Proceeds of Notes      107  

Section 9.09

     ERISA Compliance      107  

Section 9.10

     Sale or Discount of Receivables      108  

Section 9.11

     Mergers, Etc      108  

Section 9.12

     Sale of Properties and Termination of Swap Agreements      108  

Section 9.13

     Transactions with Affiliates      110  

Section 9.14

     Subsidiaries      110  

Section 9.15

     Negative Pledge Agreements; Dividend Restrictions      111  

Section 9.16

     Gas Imbalances, Take-or-Pay or Other Prepayments      111  

Section 9.17

     Swap Agreements      111  

ARTICLE X EVENTS OF DEFAULT; REMEDIES

     114  

Section 10.01

     Events of Default      114  

Section 10.02

     Remedies      115  

ARTICLE XI THE AGENTS

     117  

Section 11.01

     Appointment; Powers      117  

Section 11.02

     Duties and Obligations of Administrative Agent      117  

Section 11.03

     Action by Administrative Agent      118  

Section 11.04

     Reliance by Administrative Agent      118  

Section 11.05

     Subagents      119  

Section 11.06

     Resignation of Administrative Agent      119  

Section 11.07

     Agents as Lenders      119  

Section 11.08

     No Reliance      120  

Section 11.09

     Administrative Agent May File Proofs of Claim      120  

Section 11.10

     Authority of Administrative Agent to Release Collateral, Liens and
Guarantors      121  

Section 11.11

     Agents      122  

Section 11.12

     Certain ERISA Matters      122  

Section 11.13

     Intercreditor Agreement      124  

ARTICLE XII MISCELLANEOUS

     125  

Section 12.01

     Notices      125  

 

4

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            Page  

Section 12.02

     Waivers; Amendments      126  

Section 12.03

     Expenses, Indemnity; Damage Waiver      127  

Section 12.04

     Successors and Assigns      130  

Section 12.05

     Survival; Revival; Reinstatement      133  

Section 12.06

     Counterparts; Integration; Effectiveness      134  

Section 12.07

     Severability      134  

Section 12.08

     Right of Setoff      135  

Section 12.09

     GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS      135  

Section 12.10

     Headings      136  

Section 12.11

     Confidentiality      136  

Section 12.12

     Interest Rate Limitation      137  

Section 12.13

     EXCULPATION PROVISIONS      138  

Section 12.14

     Collateral Matters; Swap Agreements      139  

Section 12.15

     No Third Party Beneficiaries      139  

Section 12.16

     USA Patriot Act Notice      139  

Section 12.17

     No Advisory or Fiduciary Responsibility      139  

Section 12.18

     Amendment and Restatement      140  

Section 12.19

     True-up Loans      140  

Section 12.20

     Acknowledgement and Consent to Bail-In of EEA Financial Institutions     
141  

Section 12.21

     Exiting Lender      141  

Section 12.22

     Acknowledgment Regarding Any Qualified QFCs      142  

 

5

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ANNEXES, EXHIBITS AND SCHEDULES

 

Annex I

  

Allocation of Maximum Credit Amounts and Elected Commitments

Annex II

  

Existing Letters of Credit

Annex III

  

LC Issuance Limits

Exhibit A

  

Form of Note

Exhibit B

  

Form of Borrowing Request

Exhibit C

  

Form of Interest Election Request

Exhibit D

  

Form of Compliance Certificate

Exhibit E

  

Security Instruments as of the Effective Date

Exhibit F

  

Form of Guaranty Agreement

Exhibit G

  

Form of Security Agreement

Exhibit H

  

Form of Assignment and Assumption

Exhibit I-1

  

Form of U.S. Tax Compliance Certificate (Foreign Lenders; not partnerships)

Exhibit I-2

  

Form of U.S. Tax Compliance Certificate (Foreign Participants; not partnerships)

Exhibit I-3

  

Form of U.S. Tax Compliance Certificate (Foreign Participants; partnerships)

Exhibit I-4

  

Form of U.S. Tax Compliance Certificate (Foreign Lenders; partnerships)

Exhibit J

  

Form of Parent Joinder Agreement

Exhibit K

  

Form of Elected Commitment Increase Certificate

Exhibit L

  

Form of Additional Lender Certificate

Exhibit M

  

Form of Intercreditor Agreement

Schedule 7.05

  

Litigation

Schedule 7.06

  

Environmental Matters

Schedule 7.14

  

Subsidiaries

Schedule 7.18

  

Gas Imbalances

Schedule 7.19

  

Marketing Contracts

Schedule 7.20

  

Swap Agreements

Schedule 9.02

  

Existing Debt

Schedule 9.05

  

Investments

Schedule 9.13

  

Affiliate Transactions

 

6

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THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 4, 2018, is
among: CENTENNIAL RESOURCE PRODUCTION, LLC, a limited liability company duly
formed and existing under the laws of the State of Delaware (the “Borrower”), as
the borrower; the Parent (defined below) from time to time party hereto, as a
parent guarantor; each of the Lenders from time to time party hereto; and
JPMORGAN CHASE BANK, N.A. (in its individual capacity, “JPMorgan”), as
administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the “Administrative Agent”).

R E C I T A L S

A.    The Borrower, the Administrative Agent and the other agents and lenders
party thereto are parties to that certain Amended and Restated Credit Agreement
dated as of October 15, 2014, pursuant to which such lenders provided certain
loans to and extensions of credit on behalf of the Borrower (as renewed,
extended, amended or otherwise modified from time prior to the date hereof, the
“Existing A&R Credit Agreement”).

B.    The parties hereto desire to amend and restate in its entirety the
Existing A&R Credit Agreement in the form of this Agreement to (i) renew and
rearrange the indebtedness outstanding under the Existing A&R Credit Agreement
(but not to repay or pay off any such indebtedness) and (ii) amend certain other
terms of the Existing A&R Credit Agreement in certain respects as provided in
this Agreement.

C.    In consideration of the mutual covenants and agreements herein contained
and of the loans, extensions of credit and commitments hereinafter referred to,
the parties hereto agree that the Existing A&R Credit Agreement is hereby
amended, renewed, extended and restated in its entirety in the form of this
Agreement on (and subject to) the terms and conditions set forth herein. The
parties hereto further agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS

Section 1.01    Terms Defined Above. As used in this Agreement, each term
defined above has the meaning indicated above.

Section 1.02    Certain Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

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

“Act” has the meaning assigned such term in Section 12.16.

“Additional Lender” has the meaning given to such term in Section 2.06(c)(i).

“Additional Lender Certificate” has the meaning given to such term in
Section 2.06(c)(ii)(G).

 

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“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal to the LIBO Rate for such Interest Period multiplied
by the Statutory Reserve Rate.

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

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

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

“Agents” means, collectively, the Administrative Agent, the Arranger, the
Co-Syndication Agents, and the Co-Documentation Agents, and “Agent” shall mean
any of them individually, as the context requires.

“Aggregate Elected Commitment Amounts” at any time shall equal the sum of the
Elected Commitments, as the same may be increased, reduced or terminated
pursuant to Section 2.06(c). As of the Third Amendment Effective Date, the
Aggregate Elected Commitment Amounts are $700,000,000.00.

“Aggregate Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be reduced or terminated pursuant to
Section 2.06.

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

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on
such day plus 1/2 of 1% and (c) the Adjusted LIBO Rate for a one month Interest
Period on such day (or if such day is not a Business Day, the immediately
preceding Business Day) plus 1%, provided that for the purpose of this
definition, the Adjusted LIBO Rate for any day shall be based on the LIBO Screen
Rate (or if the LIBO Screen Rate is not available for such one month Interest
Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such
day. Any change in the Alternate Base Rate due to a change in the Prime Rate,
the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including
the effective date of such change in the Prime Rate, the NYFRB Rate or the
Adjusted LIBO Rate, respectively. If the Alternate Base Rate is being used as an
alternate rate of interest pursuant to Section 3.03 hereof, then the Alternate
Base Rate shall be the greater of clause (a) and (b) above and shall be
determined without reference to clause (c) above. For the avoidance of doubt, if
the Alternate Base Rate is being determined without reference to clause
(c) above and is less than 2.00%, such rate shall be deemed to be 2.00% for
purposes of this Agreement.

“Anti-Corruption Laws” means all state or federal laws, rules, and regulations
applicable to the Parent, the Borrower or any of their Affiliates from time to
time concerning or relating to bribery or corruption, including, without
limitation, the FCPA.

 

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

 

Borrowing Base Utilization Grid

 

Borrowing Base
Utilization Percentage

     £ 25 %      > 25% £ 50 %      > 50% £ 75 %      > 75% £ 90 %      > 90 % 

Eurodollar Loans

     2.000 %      2.250 %      2.500 %      2.750 %      3.000 % 

ABR Loans

     1.000 %      1.250 %      1.500 %      1.750 %      2.000 % 

Commitment Fee Rate

     0.375 %      0. 375 %      0.500 %      0.500 %      0.500 % 

At all times, each change in the Applicable Margin resulting from a change in
the Borrowing Base Utilization Percentage 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.

“Applicable Percentage” means, with respect to any Lender, the percentage of the
Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit
Amount as such percentage is set forth on Annex I; provided that in the case of
Section 2.08(l) when a Defaulting Lender shall exist, “Applicable Percentage” as
used in such Section 2.08(l) shall mean the percentage of the Aggregate Maximum
Credit Amounts (disregarding any Defaulting Lender’s Maximum Credit Amount)
represented by such Lender’s Maximum Credit Amount; provided that for purposes
of this definition, if the Commitments are terminated pursuant to this
Agreement, then each Lender’s Commitment and the total Commitments shall be the
amounts thereof immediately prior to giving effect to any such termination of
such Commitments.

“Approved Counterparty” means each of (a) any Lender or any Affiliate of a
Lender and (b) any other Person if such Person or its credit support provider
with respect to its Swap Agreements with Credit Parties has a long term senior
unsecured debt rating of A-/A3 by S&P or Moody’s (or their equivalent) or
higher.

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

“Approved Petroleum Engineers” means (a) Netherland, Sewell & Associates, Inc.,
(b) Ryder Scott Company Petroleum Consultants, L.P., (c) Miller and Lents, Ltd.
and (d) any other independent petroleum engineers reasonably acceptable to the
Administrative Agent and the Borrower.

“Arranger” means JPMorgan Chase Bank, N.A., in its capacity as sole lead
arranger and sole bookrunner hereunder.

 

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“ASC” means the Financial Accounting Standards Board Accounting Standards
Codification, as in effect from time to time.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 12.04(b)), and accepted by the Administrative Agent, in the form of
Exhibit H or any other form approved by the Administrative Agent.

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

“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 any 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.

“Bank Products” means any of the following bank services: (a) commercial credit
cards, (b) stored value cards, and (c) treasury management services (including,
without limitation, controlled disbursement, automated clearinghouse
transactions, return items, overdrafts and interstate depository network
services).

“Bank Products Provider” means any Lender or Affiliate of a Lender that provides
Bank Products to the Borrower, any Restricted Subsidiary or any Guarantor.

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

“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined
under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

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

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

“Borrowing Base” means at any time an amount equal to the amount determined in
accordance with Section 2.07, as the same may be adjusted from time to time
pursuant to Section 8.13(c) or Section 9.12(e)(v).

“Borrowing Base Deficiency” means, at any time in question, the amount by which
the total Revolving Credit Exposures exceed the Borrowing Base then in effect.

 

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

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

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City or Denver, Colorado are authorized or
required by law to remain closed; and if such day relates to a Borrowing or
continuation of, a payment or prepayment of principal of or interest on, or a
conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice
by the Borrower with respect to any such Borrowing or continuation, payment,
prepayment, conversion or Interest Period, any day which is also a day on which
banks are open for dealings in dollar deposits in the London interbank market.

“Capital Leases” means, in respect of any Person, all leases which shall have
been, or should have been, in accordance with GAAP as in effect on the Effective
Date, recorded as capital leases on the balance sheet of the Person liable
(whether contingent or otherwise) for the payment of rent thereunder; provided
that any obligations of such Person (whether entered into before or after the
Effective Date) that would have been classified as an operating lease pursuant
to GAAP as in effect on the Effective Date will be deemed not to be a Capital
Lease.

“Casualty Event” means any loss, casualty or other insured damage to, or any
nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Parent or any of its Restricted
Subsidiaries having a book value in excess of the Threshold Amount.

“Centennial Resource Development” means Centennial Resource Development, Inc., a
Delaware corporation formerly known as Silver Run Acquisition Corporation.

“Change in Control” means (a) any Person or “group” (within the meaning of Rules
13d-3 and 13d-5 of the Securities Exchange Act) other than Riverstone shall have
acquired beneficial ownership or control of Equity Interests representing more
than 50% of the aggregate ordinary voting power represented by the issued and
outstanding Equity Interests of Centennial Resource Development, (b) the
occupation of a majority of the seats (other than vacant seats) on the board of
directors of Centennial Resource Development by Persons who were neither
(i) nominated, appointed or approved for consideration by shareholders for
election by the board of directors of Centennial Resource Development or
(ii) appointed by directors so nominated, appointed or approved, (c) the failure
of Centennial Resource Development to (i) own more than 50% of the Equity
Interests of the Borrower with ordinary voting power to elect or appoint the
managers of the Borrower or (ii) Control the Borrower, (d) the failure of the
Parent (at any time that the Parent is not the Borrower) to own 100% of the
Equity Interests in the Borrower or (e) the occurrence of a “change of control”
or similar event with respect to any Permitted Junior Lien Debt or Permitted
Senior Unsecured Notes.

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application

 

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thereof by any Governmental Authority after the date of this Agreement or
(c) compliance by any Lender or the Issuing Bank (or, for purposes of
Section 5.01(b), by any lending office of such Lender or by such Lender’s or the
Issuing Bank’s holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement; provided, however, for the purposes of
this Agreement, the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all requests, guidelines or directives in connection therewith or
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision or the United States or foreign regulatory authorities, in
each case, pursuant to Basel III, are deemed to have gone into effect and to
have been adopted after the date of this Agreement.

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

“Co-Documentation Agents” means, collectively, BMO Harris Bank, N.A., Canadian
Imperial Bank of Commerce, New York Branch, and U.S. Bank National Association.

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans and to acquire participations in Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such
Lender’s Revolving Credit Exposure hereunder, as such commitment may be
(a) modified from time to time pursuant to Section 2.06 and (b) modified from
time to time pursuant to assignments by or to such Lender pursuant to
Section 12.04. The amount representing each Lender’s Commitment shall at any
time be the least of (i) such Lender’s Maximum Credit Amount, (ii) such Lender’s
Applicable Percentage of the then effective Borrowing Base and (iii) such
Lender’s Elected Commitment. The total Commitment is the aggregate amount of the
Commitments of all Lenders.

“Commitment Fee Rate” is the rate per annum set forth in the definition of
“Applicable Margin”.

“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, and any
regulations promulgated thereunder.

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

 

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charter or any agreement, instrument or Governmental Requirement applicable to
such Consolidated Restricted Subsidiary or is otherwise restricted or
prohibited, in each case determined in accordance with GAAP; (c) the net income
(or loss) of any Person acquired in a pooling-of-interests transaction for any
period prior to the date of such transaction; (d) any extraordinary, unusual or
non-recurring gains or losses during such period, (e) any non-cash gains or
losses or positive or negative adjustments under ASC 815 as the result of
changes in the fair market value of derivatives; and (f) any gains or losses
attributable to writeups or writedowns of assets, including ceiling test
writedowns.

“Consolidated Restricted Subsidiaries” means any Restricted Subsidiaries that
are Consolidated Subsidiaries.

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

“Consolidated Unrestricted Subsidiaries” means any Unrestricted Subsidiaries
that are Consolidated Subsidiaries.

“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.

“Covered Party” has the meaning assigned to that term in Section 12.22.

“Co-Syndication Agents” means, collectively, Wells Fargo Bank, N.A., Royal Bank
of Canada and Comerica Bank.

“Credit Parties” means, collectively, the Borrower and each Guarantor, and
“Credit Party” means any one of the foregoing.

“Debt” means, for any Person, the sum of the following (without duplication):

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

(b)    all obligations of such Person (whether contingent or otherwise) in
respect of letters of credit, surety or other bonds and similar instruments;

(c)    all accounts payable and all accrued expenses, liabilities or other
obligations of such Person to pay the deferred purchase price of Property or
services;

(d)    all obligations under Capital Leases;

(e)    all obligations under Synthetic Leases;

 

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(f)    all Debt (as defined in the other clauses of this definition) of others
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) a Lien on any Property of such
Person, whether or not such Debt is assumed by such Person;

(g)    all Debt (as defined in the other clauses of this definition) of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the Debt (howsoever such assurance shall be made) to the extent
of the lesser of the amount of such Debt and the maximum stated amount of such
guarantee or assurance against loss;

(h)    all obligations or undertakings of such Person to maintain or cause to be
maintained the financial position or covenants of others and, to the extent
entered into as a means of providing credit support for the obligations of
others and not primarily to enable such Person to acquire any such Property, all
obligations or undertakings of such Person to purchase the Debt or Property of
others;

(i)    obligations to deliver commodities, goods or services, including, without
limitation, Hydrocarbons, in consideration of one or more advance payments (not
including substantially contemporaneous payments), other than gas balancing
arrangements in the ordinary course of business;

(j)    obligations to pay for goods or services even if such goods or services
are not actually received or utilized by such Person (other than obligations
contained in firm transportation or supply agreements or other take or pay
contracts, in each case arising in the ordinary course of business);

(k)    any Debt of a partnership for which such Person is liable either by
agreement, by operation of law or by a Governmental Requirement but only to the
extent of such liability;

(l)    Disqualified Capital Stock; and

(m)    the undischarged balance of any production payment created by such Person
or for the creation of which such Person directly or indirectly received
payment; provided, however, that “Debt” does not include (i) obligations with
respect to surety or performance bonds and similar instruments entered into in
the ordinary course of business in connection with the operation of Oil and Gas
Properties or with respect to appeal bonds, (ii) accounts payable and accrued
expenses, liabilities or other obligations to pay the deferred purchase price of
Property or services, from time to time incurred in the ordinary course of
business which are not greater than one hundred twenty (120) days past the date
of invoice or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP, or
(iii) Bank Products and endorsements of negotiable instruments for collection.
The Debt of any Person shall include all obligations of such Person of the
character described above to the extent such Person remains legally liable in
respect thereof notwithstanding that any such obligation is not included as a
liability of such Person under GAAP.

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

 

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“Defaulting Lender” means, subject to Section 2.08(l)(v), any Lender that
(a) has failed to (i) fund all or any portion of its Loans within two
(2) Business Days of the date such Loans were required to be funded hereunder,
or (ii) pay to the Administrative Agent, any Issuing Bank or any other Lender
any other amount required to be paid by it hereunder (including in respect of
its participation in Letters of Credit) within two (2) Business Days of the date
when due, (b) has notified the Borrower, the Administrative Agent or any Issuing
Bank in writing that it does not intend to comply with its funding obligations
hereunder, or has made a public statement to that effect, (c) has failed, within
three (3) 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
(c) upon receipt of such written confirmation by the Administrative Agent and
the Borrower), or (d) has, or has a direct or indirect parent company that has,
(i) become the subject of a proceeding under any bankruptcy or insolvency laws
or become the subject of a Bail-In Action, or (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; 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. Any determination
by the Administrative Agent that a Lender is a Defaulting Lender under any one
or more of clauses (a) through (d) above shall be conclusive and binding absent
manifest error, and such Lender shall be deemed to be a Defaulting Lender
(subject to Section 2.08(l)(v)) upon delivery of written notice of such
determination to the Borrower, each Issuing Bank and each Lender.

“Default Right” has the meaning assigned to that term in, and shall be
interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as
applicable.

“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt of the type
described in clause (a) of the definition thereof or redeemable for any
consideration other than other Equity Interests (which would not constitute
Disqualified Capital Stock) at the option of the holder thereof, in whole or in
part (but if in part, only with respect to such amount that meets the criteria
set forth in this definition), on or prior to the date that is 91 days after the
Maturity Date at the time of issuance of such Equity Interests; provided that
(i) any Equity Interests that would not constitute Disqualified Capital Stock
but for provisions thereof giving holders thereof (or the holders of any
security into which such Equity Interest is convertible or for which such Equity
Interest is exchangeable) the right to require the issuer thereof to redeem such
Equity Interests upon the occurrence of any change of control or any asset sale
offer occurring prior to the date that is 91 days after the Maturity Date at the
time of issuance of such Equity Interests shall not constitute

 

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Disqualified Capital Stock if such Equity Interest provides that the issuer
thereof will not redeem any such Equity Interest pursuant to such provisions
prior to the date on which there are no Loans, LC Exposure or other obligations
hereunder outstanding and all of the Commitments are terminated and (ii) any
Equity Interests that are issued to any employee or to any plan for the benefit
of employees of the issuer thereof or by any such plan to such employees shall
not constitute Disqualified Capital Stock solely because such Equity Interests
may be required to be repurchased by the issuer thereof as a result of such
employee’s termination, death or disability. “dollars” or “$” refers to lawful
money of the United States of America.

“Domestic Subsidiary” means any Restricted Subsidiary that is organized under
the laws of the United States of America or any state thereof or the District of
Columbia, including, without limitation (except at such times that the Borrower
is the Parent), the Borrower.

“EBITDAX” means, for any period, the sum of Consolidated Net Income for such
period plus (a) without duplication, the following expenses or charges to the
extent deducted from Consolidated Net Income in such period: (i) interest, (ii)
income taxes (however denominated), (iii) depreciation, depletion, amortization
and other similar noncash charges, including, without limitation, any non-cash
compensation charge or expense, including any charge or expense arising from the
grants of stock appreciation or similar rights, stock options, restricted stock,
profits interests or other equity-based incentive awards or other equity-based
compensation, (iv) exploration expenses, including plugging and abandonment
expenses, (v) transaction costs, expenses and charges with respect to the
acquisition or disposition of Oil and Gas Properties or the incurrence,
issuance, repayment, refinancing, amendment, restructuring or other modification
of Debt or issuance of Equity Interests, in each case including any transaction
undertaken but not completed, incurred in such period in an aggregate amount not
to exceed the lesser of (A) $10,000,000 and (B) 5% of EBITDAX, in either case,
in any Reference Period (provided, however, the costs, expenses and charges in
respect of the debt restructuring activities (whether consummated or not) to be
consummated during or around the second fiscal quarter of the 2020 fiscal year
of the Borrower in an aggregate amount not to exceed $12,000,000 shall not count
against such cap), and (vi) costs, fees and expenses incurred by the Credit
Parties in connection with the closing of this Agreement and the Transactions
occurring on or about the Effective Date, minus (b) all noncash income added to
Consolidated Net Income. For the purposes of calculating EBITDAX (including any
component thereof) for any period of four (4) consecutive fiscal quarters (each,
a “Reference Period”) pursuant to any determination of the financial ratio
contained in Section 9.01(a) or (c), if at any time during such Reference Period
the Parent or any Restricted Subsidiary shall have made any Material Disposition
or Material Acquisition, the EBITDAX for such Reference Period shall be
calculated after giving pro forma effect thereto as if such Material Disposition
or Material Acquisition had occurred on the first day of such Reference Period
(such calculations to be reasonably acceptable to the Administrative Agent).

“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 clause (a) or clause (b) of this
definition and is subject to consolidated supervision with its parent.

 

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“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 the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).

“Elected Commitment” means, as to each Lender, the amount set forth opposite
such Lender’s name on Annex I under the caption “Elected Commitment”, as the
same may be increased, reduced or terminated from time to time in connection
with an optional increase, reduction or termination of the Aggregate Elected
Commitment Amounts pursuant to Section 2.06(c).

“Elected Commitment Increase Certificate” has the meaning given to such term in
Section 2.06(c)(ii)(F).

“Election Notice” has the meaning assigned to such term in Section 3.04(c)(ii).

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

“Environmental Laws” means any and all Governmental Requirements pertaining in
any way to health, safety, the environment, the preservation or reclamation of
natural resources, or the management, Release or threatened Release of any
Hazardous Materials, in effect in any and all jurisdictions in which the Parent
or any Restricted Subsidiary is conducting, or at any time has conducted,
business, or where any Property of the Parent or any Restricted Subsidiary is
located, including, the Oil Pollution Act of 1990 (“OPA”), as amended, the Clean
Air Act, as amended, the Comprehensive Environmental, Response, Compensation,
and Liability Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 (“RCRA”), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection Governmental Requirements.

“Environmental Permit” means any permit, registration, license, notice,
approval, consent, exemption, variance, or other authorization required under or
issued pursuant to applicable Environmental Laws.

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

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
and any successor statute, and the rules and regulations promulgated thereunder.

 

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“ERISA Affiliate” means each trade or business (whether or not incorporated)
which together with the Parent or a Restricted Subsidiary would be deemed to be
a “single employer” within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.

“ERISA Event” means (a) a “Reportable Event” described in section 4043 of ERISA
with respect to any Plan, other than a Reportable Event as to which the
provisions of thirty (30) days’ notice to the PBGC are waived, (b) the failure
to satisfy the “minimum funding standard” (as defined in section 412 of the Code
or section 302 of ERISA), whether or not waived, with respect to any Plan,
(c) the filing pursuant to section 412 of the Code or section 302 of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the withdrawal or partial withdrawal of the Parent, a Subsidiary or
any ERISA Affiliate from a Plan during a plan year in which it was a
“substantial employer” as defined in section 4001(a)(2) of ERISA, or the
withdrawal or partial withdrawal of the Parent, a Subsidiary or any ERISA
Affiliate from a Multiemployer Plan, (e) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a termination under
section 4041 of ERISA, (f) the institution of proceedings to terminate a Plan by
the PBGC, (g) receipt of a notice of withdrawal liability pursuant to
Section 4202 of ERISA, (h) the receipt by Parent, a Subsidiary or any ERISA
Affiliate of any notice concerning a determination that a Multiemployer Plan is,
or is expected to be, insolvent within the meaning of Title IV of ERISA, or
(i) any other event or condition which constitutes grounds under section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.

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

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

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

“Excepted Liens” means:

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

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

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

 

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reserves have been maintained in accordance with GAAP; provided that any such
Lien referred to in this clause that is not a statutory Lien arising by
operation of law does not materially impair the use of the Property covered by
such Lien for the purposes for which such Property is held by the Parent or any
Restricted Subsidiary or materially impair the value of such Property subject
thereto;

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

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

(f)    Liens in favor of depository banks arising under documentation governing
deposit accounts which Liens secure the payment of returned items, settlement
item amounts, customary bank fees for maintaining deposit accounts, and similar
items and fees;

(g)    (i) easements, restrictions, servitudes, permits, conditions, covenants,
exceptions, reservations, zoning and land use requirements in any Property of
the Parent or any Restricted Subsidiary for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the removal of
gas, oil, coal or other minerals or timber, and other like and/or usual and
customary purposes, or for the joint or common use of real estate, rights of
way, facilities and equipment, that do not secure any Debt and in the aggregate
do not materially impair the use of such Property for the purposes of which such
Property is held by the Parent or any Restricted Subsidiary or materially impair
the value of such Property subject thereto, and (ii) Immaterial Title
Deficiencies;

(h)    Liens on cash or securities pledged to secure (either directly, or
indirectly by securing letters of credit that in turn secure) performance of
tenders, surety and appeal bonds, government contracts, performance and return
of money bonds, bids, trade contracts, leases, statutory obligations, regulatory
obligations, obligations in respect of workers’ compensation, unemployment
insurance or other forms of governmental benefits or insurance and other
obligations of a like nature incurred in the ordinary course of business;

 

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(i)    title and ownership interests of lessors (including sub-lessors) of
Property leased by such lessors to the Parent or to any Restricted Subsidiary,
Liens and encumbrances encumbering such lessors’ titles and interests in such
property and to which Parent’s or such Restricted Subsidiary’s leasehold
interests may be subject or subordinate, in each case whether or not evidenced
by Uniform Commercial Code financing statement filings or other documents of
record, provided that such Liens do not secure Funded Debt of the Parent or of
any Restricted Subsidiary and do not encumber Property of any Parent or any
Restricted Subsidiary other than the Property that is the subject of such leases
and items located thereon; provided further that any such Lien referred to in
this clause does not materially impair the use of the Property covered by such
Lien for the purposes for which such Property is held by the Parent or any
Restricted Subsidiary or materially impair the value of such Property subject
thereto,

(j)    judgment and attachment Liens not giving rise to an Event of Default
under Section 10.01(k);

(k)    Liens of licensors of software and other intangible Property licensed by
such licensors to the Parent and/or to any Restricted Subsidiary, including,
without limitation, restrictions and prohibitions on encumbrances and
transferability with respect to such Property and the Parent’s and/or such
Restricted Subsidiary’s interests therein imposed by such licenses, and Liens
encumbering such licensors’ titles and interests in such Property and to which
the Parent’s or such Restricted Subsidiary’s license interests may be subject or
subordinate, in each case, whether or not evidenced by Uniform Commercial Code
financing statement filings or other documents of record, provided that such
Liens do not encumber Property of the Parent or of any Restricted Subsidiary
other than the software and other intangible Property that is the subject of
such licenses;

(l)    Liens solely on any cash earnest money deposits made by the Borrower or
any of the Restricted Subsidiaries in connection with any acquisitions permitted
hereunder; and

(m)    Liens on insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto in each case to the extent such
financing is in the Credit Parties’ ordinary course of business; provided, that
(i) no intention to subordinate the first priority Lien granted in favor of the
Administrative Agent and the Lenders is to be hereby implied or expressed by the
permitted existence of such Excepted Liens and (ii) the term “Excepted Liens”
shall not include any Lien securing Debt for borrowed money other than the
Indebtedness.

“Excess Cash” means, at any time, the aggregate cash or cash equivalents of the
Credit Parties (other than Excluded Cash) in excess of $40,000,000.

“Excluded Cash” means (a) any cash to be used to pay obligations of the Credit
Parties then due and owing (or owing within five Business Days) to unaffiliated
third parties (it being agreed and understood that for purposes of this
definition, “affiliate” shall be deemed to exclude any portfolio company of
Riverstone) and with respect to which the Credit Parties have issued (or will
issue) checks or have initiated (or will initiate) wires or ACH transfers in
order to pay such obligations, (b) cash held in (i) accounts designated and used
solely for payroll, payroll taxes or employee wages and benefits, (ii) cash
collateral accounts with respect to Letters of Credit, (iii) trust accounts held
and used exclusively for the payment of taxes of the Credit Parties, and

 

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(iv) suspense or trust accounts held and used exclusively for royalty and
working interest payments owing to third parties, and (c) any cash or cash
equivalents constituting purchase price deposits held in escrow by an
unaffiliated third party pursuant to a binding and enforceable purchase and sale
agreement.

“Excluded Swap Obligation” means, with respect to any Credit Party individually
determined on a Credit Party by Credit Party basis, any Indebtedness in respect
of any Swap Agreement or any other any “swap”, as defined in Section 1(a)(47) of
the Commodities Exchange Act (in this definition, “Swap Indebtedness”) if, and
solely to the extent that, all or a portion of the guarantee by such Credit
Party of, or the grant by such Credit Party of a security interest to secure,
such Swap Indebtedness (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 Credit Party’s failure for any reason to constitute
an “eligible contract participant” as defined in the Commodity Exchange Act at
the time such guarantee or grant of a security interest becomes effective with
respect to such related Swap Indebtedness. If any Swap Indebtedness arises under
a master agreement governing more than one transaction, such exclusion shall
apply only to the portion of such Swap Indebtedness that is attributable to
transactions for which such guarantee or security interest is or becomes
illegal.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of the Borrower or any Guarantor hereunder or under
any other Loan Document, (a) income taxes (however denominated) or franchise
taxes (including Texas margin tax) imposed on (or measured by) its net income by
the United States of America or such other jurisdiction under the laws of which
such recipient is organized or in which its principal office is located or, in
the case of any Lender, in which its applicable lending office is located,
(b) any branch profits taxes imposed by the United States of America or any
similar tax imposed by any other jurisdiction in which the Borrower or any
Guarantor is located, (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 5.04(b)), any
withholding tax that is imposed on amounts payable to such Foreign Lender
pursuant to a law in effect at the time such Foreign Lender becomes a party to
this Agreement (or designates a new lending office) or is attributable to such
Foreign Lender’s failure or inability to comply with Section 5.03(f), except to
the extent that such Foreign Lender (or its assignor, if any) was entitled, at
the time of designation of a new lending office (or assignment), to receive
additional amounts with respect to such withholding tax pursuant to
Section 5.03(a) or Section 5.03(c), and (d) any withholding taxes imposed by
FATCA.

“Existing Letters of Credit” means the letters of credit listed on Annex II
hereto.

“Existing Loan Documents” has the meaning given to the term “Loan Documents” in
the Existing A&R Credit Agreement.

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

 

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“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it. Notwithstanding anything to the contrary
contained herein, in no event shall the Federal Funds Effective Rate be less
than 0%.

“Fee Letter” means that certain Fee Letter dated as of the Effective Date
between JPMorgan and the Borrower.

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

“Financial Statements” means the financial statement or statements referred to
in Section 7.04(a).

“First Amendment” means that certain First Amendment to Second Amended and
Restated Credit Agreement dated as of April 26, 2019, among the Borrower, the
Guarantors party thereto, the Administrative Agent and the Lenders party
thereto.

“First Amendment Effective Date” means April 26, 2019.

“First Lien Leverage Ratio” means as of the last day of any Rolling Period, the
ratio of (a) the aggregate Revolving Credit Exposure as of such day to
(b) EBITDAX for the Rolling Period ending on such day.

“Flood Insurance Regulations” means (a) the National Flood Insurance Act of 1968
as now or hereafter in effect or any successor statute thereto, (b) the Flood
Disaster Protection Act of 1973 as now or hereafter in effect or any successor
statute thereto, (c) 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 (d) 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 located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

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

 

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“Fronting Exposure” means, at any time there is a Defaulting Lender, with
respect to an Issuing Bank, such Defaulting Lender’s LC Exposure other than LC
Exposure as to which such Defaulting Lender’s participation obligation has been
reallocated to other Lenders or cash collateralized in accordance with the terms
hereof.

“Funded Debt” means the principal amount of all Debt other than (a) contingent
obligations in respect of Debt described in clause (b) of the definition of
“Debt”, (b) Debt described in clauses (c), (i), (j), (k), (l) and (m) of the
definition of “Debt”, and (c) Debt described in clauses (f), (g) or (h) of the
definition of “Debt” in respect of Debt of others described in clauses (a) or
(b) of this definition.

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

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

“Governmental Requirement” means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, rules of common law, authorization or other
directive or requirement, whether now or hereinafter in effect, of any
Governmental Authority.

“Guarantors” means the Parent and each Domestic Subsidiary (other than the
Borrower) that guarantees the Indebtedness pursuant to Section 8.14(b).

“Guaranty Agreement” means a Second Amended and Restated Guaranty Agreement
executed by the Guarantors in substantially the form of Exhibit F
unconditionally guarantying, on a joint and several basis, payment of the
Indebtedness, as the same may be amended, modified or supplemented from time to
time.

“Hazardous Material” means any substance regulated or as to which liability
might arise under any applicable Environmental Law including: (a) any chemical,
compound, material, product, byproduct, substance or waste defined as or
included in the definition or meaning of “hazardous substance,” “hazardous
material,” “hazardous waste,” “solid waste,” “toxic waste,” “extremely hazardous
substance,” “toxic substance,” “contaminant,” “pollutant,” or words of similar
meaning or import found in any applicable Environmental Law; (b) Hydrocarbons,
petroleum products, petroleum substances, natural gas, oil, oil and gas waste,
crude oil, and any components, fractions, or derivatives thereof; and
(c) radioactive materials, explosives, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon, infectious or medical wastes.

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

 

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“Hydrocarbon Interests” means all rights, titles, interests and estates in and
to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous
hydrocarbon leases, mineral fee interests, overriding royalty and royalty
interests, net profit interests and production payment interests, including any
reserved or residual interests of whatever nature.

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

“Immaterial Subsidiary” shall mean any Restricted Subsidiary designated by the
Borrower as an Immaterial Subsidiary if and for so long as such Immaterial
Subsidiary, together with all other Immaterial Subsidiaries so designated as
Immaterial Subsidiaries, does not have total assets at such time exceeding
$50,000,000.00 in the aggregate; provided that no Subsidiary may be an
Immaterial Subsidiary if it owns Oil and Gas Properties that are included in the
then effective Borrowing Base.

“Immaterial Title Deficiencies” means minor defects or deficiencies in title
which do not diminish by more than 5% the total value of the Proved Oil and Gas
Properties evaluated in the Reserve Report used in the most recent determination
of the Borrowing Base.

“Impacted Interest Period” has the meaning given to such term in the definition
of “LIBO Rate” contained herein.

“Indebtedness” means any and all amounts owing or to be owing by the Borrower,
the Parent, any other Restricted Subsidiary, or any other Guarantor (whether
direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising): (a) to any
Agent, the Issuing Bank or any Lender under any Loan Document, including,
without limitation, all interest on any of the Loans (including any interest
that accrues after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of any Credit Party (or
could accrue but for the operation of applicable bankruptcy or insolvency laws),
whether or not such interest is allowed or allowable as a claim in any such
case, proceeding or other action); (b) to any Secured Swap Provider under any
Swap Agreement including any Swap Agreement in existence prior to the date
hereof, but excluding any additional transactions or confirmations entered into
after such Secured Swap Provider ceases to be a Lender or an Affiliate of a
Lender and excluding any amounts owing or to be owing under a Swap Agreement
after assignment of such Swap Agreement by a Secured Swap Provider to another
Person that is not a Lender or an Affiliate of a Lender; (c) to any Bank
Products Provider in respect of Bank Products; and (d) all renewals, extensions
and/or rearrangements of any of the above; provided that solely with respect to
any Guarantor that is not an “eligible contract participant” under the Commodity
Exchange Act, Excluded Swap Obligations with respect to such Guarantor shall be
excluded from the “Indebtedness” owing by such Guarantor.

“Indemnified Taxes” means Taxes other than Excluded Taxes and Other Taxes.

 

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“Industry Competitor” means any Person (other than Borrower, any Guarantor or
any of their Affiliates or Subsidiaries) that (a) is identified in writing by
the Borrower to the Administrative Agent and (b) directly or indirectly, is
actively engaged as one of its principal businesses in lease acquisitions,
exploration and production operations or development of oil and gas properties
(including the drilling and completion of producing wells).

“Initial Reserve Report” means, collectively, the reserve reports and other
reserve engineering information provided by the Borrower to the Administrative
Agent and the Lenders prior to the Effective Date and utilized by the
Administrative Agent and the Lenders in determining the initial Borrowing Base
hereunder.

“Intercreditor Agreement” means a customary intercreditor agreement, among the
Administrative Agent, any representatives, agents or trustees of Permitted
Junior Lien Debt, and the other parties party thereto from time to time, in
substantially the form attached hereto as Exhibit M or in such other form as is
in form and substance reasonably acceptable to Administrative Agent and the
Borrower and the Majority Lenders; provided that any Lender which has not
objected to such other form within five (5) Business Days of receipt of a draft
thereof shall be deemed to have approved such other form.

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

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

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

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

 

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

“Interpolated Rate” means, at any time, for any Interest Period, the rate per
annum (rounded to the same number of decimal places as the LIBO Screen Rate)
determined by the Administrative Agent (which determination shall be conclusive
and binding absent manifest error) to be equal to the rate that results from
interpolating on a linear basis between: (a) the LIBO Screen Rate for the
longest period (for which the LIBO Screen Rate is available) that is shorter
than the Impacted Interest Period and (b) the LIBO Screen Rate for the shortest
period (for which the LIBO Screen Rate is available) that exceeds the Impacted
Interest Period, in each case, at such time. If the Interpolated Rate shall be
less than 1.00%, such rate shall be deemed to be 1.00% for the purposes of this
Agreement.

“Investment” means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests in any other
Person (including, without limitation, any “short sale” or any sale of any
securities at a time when such securities are not owned by the Person entering
into such short sale); (b) the making of any deposit with, or advance, loan or
capital contribution to, assumption of Funded Debt of, purchase or other
acquisition of any other Funded Debt of, or other extension of credit to, any
other Person (including the purchase of Property from another Person subject to
an understanding or agreement, contingent or otherwise, to resell such Property
to such Person); (c) the purchase or acquisition (in one or a series of
transactions) of Property (other than Equity Interests) of another Person that
constitutes a business unit both before and after such acquisition; or (d) the
entering into of any guarantee of, or other surety obligation (including the
deposit of any Equity Interests to be sold) with respect to, Funded Debt or
other liability of any other Person and (without duplication) any amount
committed to be advanced, lent or extended to such Person, provided in each case
that accounts receivable (including obligations of joint working interest
owners) arising in the ordinary course of business do not constitute
Investments.

“Issuing Bank” means (a) JPMorgan and (b) any other Lender identified by the
Borrower pursuant to Section 2.08 (and reasonably acceptable to the
Administrative Agent) that agrees to act as an Issuing Bank, in each case in its
capacity as the issuer of Letters of Credit hereunder, and its successors in
such capacity as provided in Section 2.08(i). Any Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by Affiliates
of such Issuing Bank, in which case the term “Issuing Bank” shall include any
such Affiliate with respect to Letters of Credit issued by such Affiliate.

“Issuing Bank Agreement” has the meaning assigned to such term in Section 2.08.

“Junior Debt Payment” has the meaning assigned to such term in Section 9.04(b).

“LC Commitment” means, at any time, the greater of (a) $25,000,000 and (b) 5% of
the Borrowing Base, but, in any event, not greater than the aggregate LC
Issuance Limits of the Issuing Banks.

 

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

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

“LC Issuance Limits” means, with respect to each Issuing Bank, the amount set
forth on Annex III opposite such Issuing Bank’s name, or in the case of any
Lender that becomes an Issuing Bank after the Effective Date as contemplated by
Section 2.08, the amount set forth in an Issuing Bank Agreement executed by such
Lender.

“Lenders” means the Persons listed on Annex I, any Person that shall have become
a party hereto pursuant to an Assignment and Assumption, and any Person that
shall have become a party hereto as an Additional Lender pursuant to
Section 2.06(c), other than, in each case, any such Person that ceases to be a
party hereto pursuant to an Assignment and Assumption.

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

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

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period; provided that
if the LIBO Screen Rate shall not be available at such time for such Interest
Period (an “Impacted Interest Period”) then the LIBO Rate shall be the
Interpolated Rate.

“LIBO Screen Rate” means, for any day and time, with respect to any Eurodollar
Borrowing for any Interest Period, the London interbank offered rate as
administered by ICE Benchmark Administration (or any other Person that takes
over the administration of such rate for dollars for a period equal in length to
such Interest Period) as displayed on such day and time on pages LIBOR01 or
LIBOR02 of the Reuters screen that displays such rate (or, in the event such
rate does not appear on a Reuters page or screen, on any successor or substitute
page on such screen that displays such rate, or on the appropriate page of such
other information service that publishes such rate from time to time as selected
by the Administrative Agent in its reasonable discretion); provided that (other
than for purposes of determining the Interpolated Rate) if the LIBO Screen Rate
as so determined would be less than 1.00%, such rate shall be deemed to be 1.00%
for the purposes of this Agreement.

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a deed of trust, mortgage, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security

 

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purposes or (b) production payments and the like payable out of Oil and Gas
Properties. The term “Lien” shall include encumbrances, easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations, in each
case, where the effect is to secure an obligation owed to, or a claim by, a
Person other than the owner of the Property. For the purposes of this Agreement,
the Parent and its Restricted Subsidiaries shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional sale
agreement, or leases under a financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
in a transaction intended to create a financing.

“Liquidity” means, as of any date of determination, the sum of (a) the aggregate
unused amount of the total Commitments under this Agreement as of such date (but
only to the extent that the Borrower is permitted to borrow such amounts under
the terms of this Agreement including, without limitation, Section 6.02 hereof)
and (b) the aggregate amount of unrestricted cash and cash equivalents of the
Borrower and its Restricted Subsidiaries at such date.

“Loan” means any revolving loan made to the Borrower pursuant to Article II, and
“Loans” means, collectively, two or more such Loans, as the context requires.

“Loan Documents” means this Agreement, the First Amendment, the Second
Amendment, the Third Amendment, the Notes, the Letter of Credit Agreements, the
Letters of Credit, any Intercreditor Agreement, the Fee Letter and the Security
Instruments.

“Majority Lenders” means, (a) if there are less than three Lenders at such time,
all Lenders, and (b) if there are three or more Lenders at such time, (i) at any
time while no Loans or LC Exposure is outstanding, Lenders having greater than
fifty percent (50%) of the Aggregate Maximum Credit Amounts; and (ii) at any
time while any Loans or LC Exposure is outstanding, Lenders holding Revolving
Credit Exposures and unused Commitments representing greater than fifty percent
(50%) of the sum of the outstanding aggregate principal amount of the Loans and
participation interests in Letters of Credit (without regard to any sale by a
Lender of a participation in any Loan under Section 12.04(c)) and unused
Commitments; provided that the Maximum Credit Amounts and the principal amount
of the Loans and participation interests in Letters of Credit of the Defaulting
Lenders (if any) shall be excluded from the determination of Majority Lenders.

“Material Acquisition” means any acquisition of Property or series of related
acquisitions of Property that involves the payment of consideration by the
Parent and/or its Restricted Subsidiaries in excess of a dollar amount equal to
ten percent (10%) of the then effective Borrowing Base; provided that a Material
Acquisition shall not include any acquisition of Oil and Gas Properties to which
no Proved Reserves are attributed or any acquisition of any Equity Interests in
any Unrestricted Subsidiary.

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

 

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“Material Disposition” means any Transfer of Property or series of related
Transfers of property that yields gross proceeds to the Parent or any of its
Restricted Subsidiaries in excess of a dollar amount equal to ten percent (10%)
of the then effective Borrowing Base; provided that a Material Disposition shall
not include any Transfer of Oil and Gas Properties to which no Proved Reserves
are attributed or any Transfer of any Equity Interests in any Unrestricted
Subsidiary.

“Material Indebtedness” means Debt (other than the Loans and Letters of Credit),
or obligations in respect of one or more Swap Agreements, of any one or more of
the Parent and its Restricted Subsidiaries in an aggregate principal amount
exceeding the Threshold Amount. For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of the Parent or any
Restricted Subsidiary in respect of any Swap Agreement at any time shall be the
Swap Termination Value of such Swap Agreement.

“Maturity Date” means May 4, 2023.

“Maximum Credit Amount” means, as to each Lender, the amount set forth opposite
such Lender’s name on Annex I under the caption “Maximum Credit Amounts”, as the
same may be (a) reduced or terminated from time to time in connection with a
reduction or termination of the Aggregate Maximum Credit Amounts pursuant to
Section 2.06(b), (b) modified from time to time pursuant to Section 2.06(c) or
(c) modified from time to time pursuant to any assignment permitted by
Section 12.04(b).

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

“Mortgage Coverage Requirement” means that the Mortgaged Properties (a) must
represent at least 90% (or such greater percentage as is then required to secure
any Permitted Junior Lien Debt at such time) of the total value of the Proved
Oil and Gas Properties evaluated in the most recently completed Reserve Report
after giving effect to exploration and production activities, acquisitions,
dispositions and production and (b) otherwise include any other Oil and Gas
Properties (including, to the extent applicable, any unproven acreage and any
midstream or gathering assets) on which Liens have been granted to secure any
Permitted Junior Lien Debt at such time.

“Mortgaged Property” means any Property owned by the Borrower or any Guarantor
which is subject to the Liens existing and to exist under the terms of any
mortgages or deeds of trust that are Security Instruments.

“Multiemployer Plan” means a multiemployer plan as defined in section 4001(a)(3)
of ERISA under which the Borrower, a Restricted Subsidiary or an ERISA Affiliate
has any obligation or liability.

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

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

 

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

“NYFRB” means the Federal Reserve Bank of New York.

“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective
Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on
such day (or for any day that is not a Business Day, for the immediately
preceding Business Day); provided that if none of such rates are published for
any day that is a Business Day, the term “NYFRB Rate” means the rate for a
federal funds transaction quoted at 11:00 a.m. on such day received by the
Administrative Agent from a federal funds broker of recognized standing selected
by it; provided, further, that if any of the aforesaid rates shall be less than
zero percent, such rate shall be deemed to be zero percent for purposes of this
Agreement.

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

“Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) all rights and
interests incidental to any Hydrocarbon Interests, including, without
limitation, all rights and interests with respect to any presently existing or
future pooled, communitized or unitized acreage which may affect all or any
portion of such Hydrocarbon Interests by virtue of any such Hydrocarbon
Interests being a part thereof (including without limitation all units created
under orders, regulations and rules of any Governmental Authority); (c) all
operating agreements, contracts and other agreements, including production
sharing contracts and agreements, which relate to any Hydrocarbon Interests or
the production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests; (d) all Hydrocarbons in and under
and which may be produced and saved or attributable to any Hydrocarbon
Interests, including all oil in tanks, and all rents, issues, profits, proceeds,
products, revenues and other incomes from or attributable to such Hydrocarbon
Interests; (e) all tenements, hereditaments, appurtenances and Properties in any
manner appertaining, belonging, affixed or incidental to Hydrocarbon Interests
and (f) all Property, real or personal, now owned or hereinafter acquired and
situated upon, used, or held for use in connection with the operating, working
or development of any of such Hydrocarbon Interests (excluding drilling rigs,
automotive equipment, rental equipment or other personal Property which may be
on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil wells, gas wells, injection wells
or other wells, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing. Unless otherwise
expressly provided herein, all references in this Agreement to “Oil and Gas
Properties” refer to Oil and Gas Properties owned by the Parent and its
Restricted Subsidiaries, as the context requires.

“Other Taxes” means any and 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 from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement and any other Loan Document.

 

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“Overnight Bank Funding Rate” means, for any day, the rate comprised of both
overnight federal funds and overnight Eurodollar borrowings by U.S.-managed
banking offices of depository institutions (as such composite rate shall be
determined by the NYFRB as set forth on its public website from time to time)
and published on the next succeeding Business Day by the NYFRB as an overnight
bank funding rate (from and after such date as the NYFRB shall commence to
publish such composite rate).

“Parent” initially means the Borrower. If any Person acquires one hundred
percent (100%) of the outstanding Equity Interests in the Borrower and executes
and delivers a Parent Joinder Agreement to the Administrative Agent, that Person
will become the Parent and the Borrower will automatically cease to be the
Parent. It is agreed and understood that on April 13, 2020, Centennial Resource
Development, Inc., a Delaware corporation, executed and delivered a Parent
Joinder Agreement to this Agreement and became the “Parent” for all purposes of
this Agreement and the Loan Documents.

“Parent Joinder Agreement” means an agreement substantially in the form of
Exhibit J (or otherwise in form and substance acceptable to the Administrative
Agent).

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

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

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Permitted Junior Lien Debt” means (a) secured Debt (other than the
Indebtedness) which (i) may be senior, senior subordinated or subordinated Debt,
(ii) does not provide for any scheduled payment of principal, mandatory
Redemptions or scheduled sinking fund payment on or before the date that is at
least 180 days following the Maturity Date in effect at the time of issuance
(other than provisions requiring Redemption or offers to Redeem in connection
with asset sales or a change in control); (iii) does not contain financial and
negative covenants and events of default that are, taken as a whole, more
restrictive with respect to the Credit Parties than the financial and negative
covenants and Events of Default herein (as determined in good faith by senior
management of the Parent) unless either (x) this Agreement is amended to include
such more restrictive covenants and events of default, taken as a whole (which
such amendment shall be executed among the Administrative Agent and the Borrower
and will not be subject to the requirements of Section 12.02(b)) or (y) such
more restrictive covenants and events of default shall only become applicable
after the termination of this Agreement and (iv) is subject at all times to an
Intercreditor Agreement providing that the Liens securing such obligations shall
rank junior to the Liens securing the Indebtedness, in each case, issued or
incurred by the Borrower and guaranteed by the Guarantors (provided that no
Subsidiary of the Borrower (other than a Guarantor or a Person who becomes a
Guarantor in connection therewith) is an obligor under such Debt) and (b) any
Permitted Refinancing Debt of such Debt.

 

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“Permitted Junior Lien Debt Documents” means all agreements, documents or
instruments issued, executed or delivered by any Credit Party in connection
with, or pursuant to, the incurrence of Permitted Junior Lien Debt.

“Permitted Refinancing Debt” means any Debt (for purposes of this definition,
“new Debt”) of the Parent, Borrower or any Credit Party issued in exchange for,
or the net cash proceeds of which are used to refinance in whole or in part
other Debt (for purposes of this definition, the “Refinanced Debt”) of such
Person; provided that (a) the principal amount of such new Debt does not exceed
the then outstanding principal amount (or accreted value, if applicable) of the
Refinanced Debt (or, if the Refinanced Debt is exchanged or acquired for an
amount less than the principal amount (or accreted value, if applicable) thereof
to be due and payable upon a declaration of acceleration thereof, such lesser
amount) (plus all accrued (including, for purposes of defeasance, future
accrued) and unpaid interest on the Debt so refinanced or exchanged and fees,
expenses, call protection, premiums or original issue discount related to such
exchange or refinancing), (b) if the Refinanced Debt is subordinated in right of
payment to the Indebtedness, such new Debt is subordinated in right of payment
to the Indebtedness, (c) such new Debt has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to maturity of the Refinanced
Debt), (d) such new Debt does not provide for any scheduled payment of
principal, mandatory Redemptions or scheduled sinking fund payment on or before
the date that is at least 180 days following the Maturity Date in effect at the
time of issuance (other than provisions requiring Redemption or offers to Redeem
in connection with asset sales or a change in control), (e) such new Debt does
not contain financial and negative covenants and events of default that are,
taken as a whole, more restrictive with respect to the Credit Parties than the
financial and negative covenants and Events of Default herein (as determined in
good faith by senior management of the Parent) unless either (i) this Agreement
is amended to include such more restrictive covenants and events of default,
taken as a whole (which such amendment shall be executed among the
Administrative Agent and the Borrower and will not be subject to the
requirements of Section 12.02(b)) or (ii) such more restrictive covenants and
events of default shall only become applicable after the termination of this
Agreement and (f) solely with respect to Permitted Junior Lien Debt, such new
Debt shall be subject at all times to an Intercreditor Agreement.

“Permitted Senior Unsecured Notes” means those notes (whether senior, senior
subordinated, or subordinated) that may be issued by the Parent or the Borrower
(or by any Credit Party as co-issuer); provided that such Permitted Senior
Unsecured Notes shall: (a) be unsecured; (b) not provide for any scheduled
payment of principal, mandatory Redemptions or scheduled sinking fund payment on
or before the date that is at least 180 days following the Maturity Date in
effect at the time of issuance (other than provisions requiring Redemption or
offers to Redeem in connection with asset sales or a change in control); and
(c) contain financial and negative covenants and events of default that are,
taken as a whole, no more restrictive with respect to the Credit Parties than
the financial and negative covenants and Events of Default herein (as determined
in good faith by senior management of the Parent).

“Permitted Senior Unsecured Notes Documents” means the Permitted Senior
Unsecured Notes, all guarantees thereof and all other agreements, documents or
instruments executed and delivered by any Credit Party in connection with, or
pursuant to, the issuance of Permitted Senior Unsecured Notes.

 

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“Permitted Tax Distributions” means, (a) with respect to any taxable period
(1) for which the Borrower and/or any of its Subsidiaries are members of a
consolidated, combined, affiliated, unitary or similar income tax group for U.S.
federal and/or applicable state or local income tax purposes, or (2) for which
the Borrower is a partnership or disregarded entity for U.S. federal income tax
purposes that is wholly owned (directly or indirectly) by a C corporation for
U.S. federal and/or applicable state or local income tax purposes, distributions
in an amount not to exceed the amount of any U.S. federal, state and/or local
income taxes that the Borrower and/or its Subsidiaries, as applicable, would
have paid for such taxable period had the Borrower and/or its Subsidiaries, as
applicable, been a stand-alone corporate taxpayer or a standalone corporate
group; provided that distributions pursuant to this clause (a) in respect of an
Unrestricted Subsidiary shall be permitted only to the extent that cash
distributions were made by such Unrestricted Subsidiary to the Borrower or any
of its Restricted Subsidiaries for such purpose, and (b) without duplication of
clause (a) and with respect to any taxable period for which the Borrower is a
partnership or disregarded entity for U.S. federal income tax purposes (other
than a partnership or disregarded entity described in clause (a)(2) above),
distributions to the holders of the Equity Interests of the Borrower, on a pro
rata basis, at such times and in such amounts as necessary to enable Centennial
Resource Development to timely satisfy all of its U.S. federal, state and local
and non-U.S. tax liabilities to the extent attributable to the Borrower and its
Subsidiaries (determined by taking into account any U.S. federal, state and/or
local (as applicable) loss carryforwards and accounting for any limitations on
such loss carryforwards of Centennial Resource Development attributable to its
ownership of the Borrower and its subsidiaries for prior taxable periods).

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

“Plan” means any employee pension benefit plan (other than a Multiemployer
Plan), as defined in section 3(2) of ERISA, that is subject to Title IV of
ERISA, section 302 of ERISA or section 412 of the Code and that (a) is currently
or hereafter sponsored, maintained or contributed to by the Parent, a Restricted
Subsidiary or an ERISA Affiliate or (b) was at any time during the six calendar
years preceding the date hereof, sponsored, maintained or contributed to by the
Parent or a Restricted Subsidiary or an ERISA Affiliate.

“Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by
section 3(42) of ERISA, as amended from time to time.

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

 

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

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

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

“Proved Developed Producing Reserves” or “PDP” means “proved developed producing
oil and gas reserves” as such term is defined by the SEC in its standards and
guidelines.

“Proved Oil and Gas Properties” means Oil and Gas Properties to which Proved
Reserves are attributed. References herein to the “total value” of Proved Oil
and Gas Properties refer to the present value of the PDP that are attributed
thereto in the then most recent Reserve Report plus risk-discounted portions (as
determined by the Administrative Agent) of the present value of the Proved
Reserves other than PDP that attributed thereto in such Reserve Report.

“Proved Reserves” or “Proved” means collectively, “proved oil and gas reserves,”
“proved developed producing oil and gas reserves,” “proved developed
non-producing oil and gas reserves” (consisting of proved developed shut-in oil
and gas reserves and proved developed behind pipe oil and gas reserves), and
“proved undeveloped oil and gas reserves,” as such terms are defined by the SEC
in its standards and guidelines.

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

“Purchase Money Debt” means Debt, the proceeds of which are used to finance the
acquisition, construction, or improvement of inventory, equipment or other
Property in the ordinary course of business; provided, however, that such Debt
is incurred no later than 120 days after such acquisition or the completion of
such construction or improvement.

“QFC” has the meaning assigned to the term “qualified financial contract” in,
and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

“Qualified ECP Counterparty” means, in respect of any Swap Agreement, each
Credit Party that (a) has total assets exceeding $10,000,000 at the time any
guaranty of obligations under such Swap Agreement or grant of the relevant
security interest becomes effective or (b) otherwise constitutes an “eligible
contract participant” under the Commodity Exchange Act and can cause another
Person to qualify as an “eligible contract participant” at such time by entering
into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

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

 

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

“Reference Period” has the meaning assigned to such term in the definition of
“EBITDAX”.

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

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

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

“Release” means any depositing, spilling, leaking, pumping, pouring, placing,
emitting, discarding, abandoning, emptying, discharging, migrating, injecting,
escaping, leaching, dumping, or disposing.

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

“Required Lenders” means, (a) if there are less than three Lenders at such time,
all Lenders, and (b) if there are three or more Lenders at such time, (i) at any
time while no Loans or LC Exposure is outstanding, Lenders having at least
sixty-six and two-thirds percent (66-2/3%) of the Aggregate Maximum Credit
Amounts; and (ii) at any time while any Loans or LC Exposure is outstanding,
Lenders having Revolving Credit Exposures and unused Commitments representing at
least sixty-six and two-thirds percent (66-2/3%) of the sum of the outstanding
aggregate principal amount of the Loans and participation interests in Letters
of Credit (without regard to any sale by a Lender of a participation in any Loan
under Section 12.04(c)) and unused Commitments; provided that the Maximum Credit
Amounts and the principal amount of the Loans and participation interests in
Letters of Credit of the Defaulting Lenders (if any) shall be excluded from the
determination of Required Lenders.

“Reserve Report” means a report, in form and substance reasonably satisfactory
to the Administrative Agent, setting forth, as of the dates set forth in
Section 8.12(a) (or such other date in the event of an Interim Redetermination)
the Proved Reserves attributable to the Oil and Gas Properties of the Credit
Parties, together with a projection of the rate of production and future net
income, taxes, operating expenses and capital expenditures with respect thereto
as of such date, based upon the pricing assumptions consistent with SEC
reporting requirements at the time and reflecting Swap Agreements in place with
respect to such production. To the extent that any Oil and Gas Properties
included in such report are owned by a Credit Party that is not a Qualified ECP
Counterparty, the Borrower or the Parent will identify such Credit Party and
such Oil and Gas Properties to the Administrative Agent. The Initial Reserve
Report is also a “Reserve Report” hereunder.

“Responsible Officer” means, as to any Person, the chief executive officer, the
president, and any Financial Officer of such Person. Unless otherwise specified,
all references to a Responsible Officer herein shall mean a Responsible Officer
of the Parent or the Borrower, as applicable.

 

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“Restricted Payment” means any return of capital, dividend or distribution
(whether in cash, securities or other Property) with respect to any Equity
Interests in the Parent or any of its Restricted Subsidiaries, or any payment
(whether in cash, securities or other Property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests in the
Parent or any of its Restricted Subsidiaries.

“Restricted Subsidiary” means any Subsidiary of the Parent that is not an
Unrestricted Subsidiary, including, without limitation (except at such times
that the Borrower is the Parent), the Borrower.

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

“Riverstone” means Riverstone Investment Group LLC (the “Manager”), Riverstone
Global Energy and Power Fund VI, L.P., Riverstone Non-ECI Partners, L.P., and
Riverstone Energy Limited, together with the parallel investment entities and
alternative investment entities of the foregoing, and any future investment fund
or co-investment fund managed by the Manager or any of its Affiliates, and any
Affiliates of one or more of the foregoing; provided that in no event will any
portfolio company of any of the foregoing be included in the definition of
“Riverstone”.

“Rolling Period” means any period of four (4) consecutive fiscal quarters ending
on the last day of a fiscal quarter.

“Sanctioned Country” means, at any time, a country or territory which is itself
the subject or target of any Sanctions (including without limitation, at the
time of this Agreement, Cuba, Iran, North Korea and Syria).

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by OFAC, the U.S.
Department of the Treasury or the U.S. Department of State, (b) any Person
operating, organized or resident in a Sanctioned Country or (c) any Person owned
or controlled by any such Person or Persons described in the foregoing clauses
(a) or (b).

“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by the U.S. government, including
without limitation those administered by OFAC, the U.S. Department of the
Treasury or the U.S. Department of State.

“S&P” means S&P Global Ratings and any successor thereto that is a nationally
recognized rating agency.

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

 

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“Scheduled Redetermination Date” means April 1st and October 1st of each year,
commencing October 1, 2018, (or such date promptly thereafter as reasonably
practicable).

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

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

“Second Amendment” means that certain Second Amendment to Second Amended and
Restated Credit Agreement dated as of May 1, 2020, among the Borrower, the
Guarantors party thereto, the Administrative Agent and the Lenders party
thereto.

“Secured Parties” means, collectively, the Administrative Agent, the Lenders,
the Issuing Bank, the Bank Products Providers and Secured Swap Providers, and
“Secured Party” means any of them individually.

“Secured Swap Agreement” means any Swap Agreement between the Borrower or any
Subsidiary and any Secured Swap Provider.

“Secured Swap Provider” means any Person (other than the Borrower or any
Subsidiary) that (a) is a Lender or an Affiliate of a Lender on the Effective
Date and is a party to a Swap Agreement with the Borrower or any Restricted
Subsidiary on the Effective Date, (b) hereafter enters into a Swap Agreement
with the Borrower or any Restricted Subsidiary while such Person is a Lender or
an Affiliate of a Lender, or (c) is a Lender or an Affiliate of a Lender at the
time any such Swap Agreement is assigned or transferred to it (by novation or
otherwise) by another Secured Swap Provider. Any Person that at any time is a
Secured Swap Provider with respect to a particular Secured Swap Agreement shall
not thereafter cease to be a Secured Swap Provider with respect to such Secured
Swap Agreement because such Person ceases to be a Lender or an Affiliate of a
Lender, provided that (x) any such Person that ceases to be a Lender or an
Affiliate of a Lender shall not be a Secured Swap Provider with respect to any
Swap Agreement that it thereafter enters into while it is not a Lender or an
Affiliate of a Lender, and (y) any Person that assigns or transfers a Secured
Swap Agreement as contemplated in clause (c) of this definition shall cease to
be a Secured Swap Provider with respect to such Secured Swap Agreement to the
extent of such assignment or transfer.

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

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

“Security Agreement” means a Second Amended and Restated Pledge and Security
Agreement among the Credit Parties and the Administrative Agent in substantially
the form of Exhibit G (or otherwise in form and substance acceptable to the
Administrative Agent) granting Liens and a security interest on the Credit
Parties’ personal property constituting Collateral (as defined therein) in favor
of the Administrative Agent for the benefit of the Secured Parties to secure the
Indebtedness, as the same may be amended, modified, supplemented or restated
from time to time.

 

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“Security Instruments” means the Guaranty Agreement, the Security Agreement,
each of the mortgages, deeds of trust and other agreements or instruments
described in Exhibit E, and any and all other guaranties, mortgages, deeds of
trust, security agreements, pledge agreements, or other agreements or
instruments now or hereafter executed and delivered by the Borrower or any other
Person (other than Notes, Swap Agreements with any Lenders or any Affiliate of a
Lender, or participation or similar agreements between any Lender and any
participant or similar party with respect to any Indebtedness) as security for,
or as a guaranty of, the payment or performance of the Indebtedness, in each
case as such agreement or instrument may be amended, modified, supplemented or
restated from time to time.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any
other Person the accounts of which would be consolidated with those of the
parent in the parent’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other Person of which Equity Interests representing more than 50% of the equity
or more than 50% of the ordinary voting power (irrespective of whether or not at
the time Equity Interests of any other class or classes of such Person shall
have or might have voting power by reason of the happening of any contingency)
are, as of such date, owned, controlled or held by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.

“Subsidiary” means any subsidiary of the Parent, including, without limitation
(except at such times that the Borrower is the Parent), the Borrower.

“Supported QFC” has the meaning assigned to it in Section 12.22.

“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or similar agreement, whether exchange traded,
“over-the-counter” or otherwise, involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any other similar derivative transaction or any
combination of these transactions (including any option to enter into any of the
foregoing); provided that (a) no phantom stock or similar plan providing for
payments only on account of

 

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services provided by current or former directors, officers, employees or
consultants of the Parent or its Subsidiaries shall be a Swap Agreement and
(b) no transaction that is intended to be physically settled (including any sale
of a commodity for a deferred shipment or delivery that is intended to be
physically settled) shall be a Swap Agreement. If multiple transactions are
entered into under a master agreement, each such transaction that constitutes a
Swap Agreement shall be a separate Swap Agreement for the purposes of this
Agreement. For the sole purpose of Section 9.17, the term “Swap Agreement” shall
be deemed to exclude all purchased put options or floors for Hydrocarbons that
are not related to corresponding calls, collars or swaps and with respect to
which neither the Parent nor any Restricted Subsidiary has any payment
obligation other than premiums and charges the total amount of which are fixed
and known at the time such transaction is entered into.

“Swap Termination Value” means, in respect of any one or more Swap Agreements,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Agreements, (a) for any date on or after the
date such Swap Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Agreements, as determined by the
counterparties to such Swap Agreements.

“Synthetic Leases” means, in respect of any Person, all leases which shall have
been, or should have been, in accordance with GAAP, treated as operating leases
on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of United States federal income
taxes, if the lessee in respect thereof is obligated to either purchase for an
amount in excess of, or pay upon early termination an amount in excess of, 80%
of the residual value of the Property subject to such operating lease upon
expiration or early termination of such lease.

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

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

“Third Amendment” means that certain Third Amendment to Second Amended and
Restated Credit Agreement dated as of the Third Amendment Effective Date, among
the Borrower, the Guarantors party thereto, the Administrative Agent and the
Lenders party thereto.

“Third Amendment Effective Date” means May 1, 2020.

“Threshold Amount” means the greater of (i) $32,000,000 and (ii) 4% of the
Borrowing Base then in effect.

“Title Coverage Requirement” means that the Administrative Agent shall have
received satisfactory title information (a) on least 90% (or such greater
percentage for which the Credit Parties are required to deliver satisfactory
title information pursuant to the Junior Lien Debt Documents at such time) of
the total value of the Proved Oil and Gas Properties evaluated in the most
recently completed Reserve Report and (b) that otherwise covers any other Oil
and Gas

 

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Properties (including, to the extent applicable, any unproven acreage and any
midstream or gathering assets) for which the Credit Parties have been required
to provide title information under the Permitted Junior Lien Debt Documents at
such time.

“Total Funded Debt” means, at any date, all Funded Debt of the Parent and the
Consolidated Restricted Subsidiaries on a consolidated basis and, so long as
there are no Loans outstanding on such date, calculated net of unrestricted cash
and cash equivalents, in each case, held by the Borrower and its Restricted
Subsidiaries.

“Total Leverage Ratio” means as of the last day of any Rolling Period, the ratio
of (a) Total Funded Debt as of such day to (b) EBITDAX for the Rolling Period
ending on such day.

“Transactions” means, with respect to (a) the Borrower, the execution, delivery
and performance by the Borrower of this Agreement and each other Loan Document
to which it is a party, the borrowing of Loans, the issuance of Letters of
Credit hereunder, the grant of Liens by the Borrower on Mortgaged Properties
pursuant to the Security Instruments, and (b) each Guarantor, the execution,
delivery and performance by such Guarantor of each Loan Document to which it is
a party, the guaranteeing of the Indebtedness and the other obligations under
the Guaranty Agreement by such Guarantor and such Guarantor’s grant of Liens on
Mortgaged Properties pursuant to the Security Instruments.

“Transfer” has the meaning assigned to such term in Section 9.12.

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

“Unrestricted Subsidiary” means any Subsidiary of the Parent designated as such
on Schedule 7.14 or which the Parent or the Borrower has designated in writing
to the Administrative Agent to be an Unrestricted Subsidiary pursuant to
Section 9.06; provided that in no event may the Borrower be designated as an
Unrestricted Subsidiary.

“Unrestricted Subsidiary Distribution” means any cash dividend or distribution
received by the Parent or any Restricted Subsidiary from any Unrestricted
Subsidiary.

“U.S. Special Resolution Regimes” has the meaning assigned to it in
Section 12.22.

“U.S. Tax Compliance Certificate” has the meaning set forth in Section 5.03(f).

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

“Wholly-Owned Subsidiary” means any Restricted Subsidiary of which all of the
outstanding Equity Interests (other than any directors’ qualifying shares
mandated by applicable

 

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law), on a fully-diluted basis, are owned by the Parent, the Borrower or one or
more of the Wholly-Owned Subsidiaries or are owned by the Parent, the Borrower
and one or more of the Wholly-Owned Subsidiaries, or any combination thereof.

“Withholding Agent” means any Credit Party or the Administrative Agent.

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

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

Section 1.05    Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which Borrower’s independent
certified public accountants concur and which are disclosed to Administrative
Agent on or before the next date on which financial statements are required to
be delivered to the Lenders pursuant to Section 8.01(a);

 

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provided that, unless the Borrower and the Majority Lenders shall otherwise
agree in writing, no such change shall modify or affect the manner in which
compliance with the covenants contained herein is computed such that all such
computations shall be conducted utilizing financial information presented
consistently with prior periods. Notwithstanding anything herein to the
contrary, for the purposes of calculating any of the ratios tested under
Section 9.01, and the components of each of such ratios, all Unrestricted
Subsidiaries, and their subsidiaries (including their assets, liabilities,
income, losses, cash flows, and the elements thereof) shall be excluded, except
for any Unrestricted Subsidiary Distributions (other than Unrestricted
Subsidiary Distributions that have been used or will be used by the Parent to
make distributions under Section 9.04(a)(v)), which shall be deemed to be income
to the Parent or such Restricted Subsidiary when actually received by it.

Section 1.06    Interest Rates; LIBOR Notifications. The interest rate on
Eurodollar Loans is determined by reference to the LIBO Rate, which is derived
from the London interbank offered rate. The London interbank offered rate is
intended to represent the rate at which contributing banks may obtain short-term
borrowings from each other in the London interbank market. In July 2017, the
U.K. Financial Conduct Authority announced that, after the end of 2021, it would
no longer persuade or compel contributing banks to make rate submissions to the
ICE Benchmark Administration (together with any successor to the ICE Benchmark
Administrator, the “IBA”) for purposes of the IBA setting the London interbank
offered rate. As a result, it is possible that commencing in 2022, the London
interbank offered rate may no longer be available or may no longer be deemed an
appropriate reference rate upon which to determine the interest rate on
Eurodollar Loans. In light of this eventuality, public and private sector
industry initiatives are currently underway to identify new or alternative
reference rates to be used in place of the London interbank offered rate. In the
event that the London interbank offered rate is no longer available or in
certain other circumstances as set forth in Section 3.03(b), such
Section 3.03(b) provides a mechanism for determining an alternative rate of
interest. Administrative Agent will notify the Borrower, pursuant to
Section 3.03(b), in advance of any change to the reference rate upon which the
interest rate on Eurodollar Loans is based. However, Administrative Agent does
not warrant or accept any responsibility for, and shall not have any liability
with respect to, the administration, submission or any other matter related to
the London interbank offered rate or other rates in the definition of “LIBO
Rate” or with respect to any alternative or successor rate thereto, or
replacement rate thereof, including without limitation, whether the composition
or characteristics of any such alternative, successor or replacement reference
rate, as it may or may not be adjusted pursuant to Section 3.03(b), will be
similar to, or produce the same value or economic equivalence of, the LIBO Rate
or have the same volume or liquidity as did the London interbank offered rate
prior to its discontinuance or unavailability.

Section 1.07    Divisions. For all purposes under the Loan Documents, in
connection with any division or plan of division under Delaware law (or any
comparable event under a different jurisdiction’s laws): (a) if any asset,
right, obligation or liability of any Person becomes the asset, right,
obligation or liability of a different Person, then it shall be deemed to have
been transferred from the original Person to the subsequent Person, and (b) if
any new Person comes into existence, such new Person shall be deemed to have
been organized on the first date of its existence by the holders of its Equity
Interests at such time.

 

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ARTICLE II

THE CREDITS

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

Section 2.02    Loans and Borrowings.

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

(b)    Types of Loans. Subject to Section 3.03, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.

(c)    Minimum Amounts; Limitation on Number of Borrowings. At the commencement
of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in
an aggregate amount that is an integral multiple of $250,000 and not less than
$500,000. At the time that each ABR Borrowing is made, such Borrowing shall be
in an aggregate amount that is an integral multiple of $100,000 and not less
than $200,000; provided that an ABR Borrowing may be in an aggregate amount that
is equal to the entire unused balance of the total Commitments or that is
required to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.08(e). Borrowings of more than one Type may be outstanding at the same
time, provided that there shall not at any time be more than a total of ten
(10) Eurodollar Borrowings outstanding. Notwithstanding any other provision of
this Agreement, the Borrower shall not be entitled to request, or to elect to
convert or continue, a Loan if the Interest Period requested with respect
thereto would end after the Maturity Date.

(d)    Notes. If requested by a Lender, the Loans made by such Lender shall be
evidenced by a Note, of the Borrower in substantially the form of Exhibit A,
dated, (i) in the case of any Lender party hereto as of the date of this
Agreement, as of the date of this Agreement, (ii) in the case of any Lender that
becomes a party hereto pursuant to an Assignment and Assumption, as of the
effective date of the Assignment and Assumption, or (iii) in the case of any
Lender that becomes a party hereto in connection with an increase in the
Aggregate Elected Commitment Amounts pursuant to Section 2.06(c), as of the
effective date of such increase, in each case, payable to such Lender in a
principal amount equal to its Maximum Credit Amount, as in effect on such date,
and otherwise duly completed. In the event that any Lender’s Maximum Credit
Amount

 

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increases or decreases for any reason (whether pursuant to Section 2.06,
Section 12.04(b) or otherwise), the Borrower shall, upon request of such Lender,
deliver or cause to be delivered, to the extent such Lender is then holding a
Note, on the effective date of such increase or decrease, a new Note, payable to
such Lender in a principal amount equal to its Maximum Credit Amount after
giving effect to such increase or decrease, and otherwise duly completed,
whereupon such Lender will promptly return to the Borrower the Notes so
replaced. The date, amount, Type, interest rate and, if applicable, Interest
Period of each Loan made by each Lender, and all payments made on account of the
principal thereof, shall be recorded by such Lender on its books for its Note.
Failure to make any such recordation shall not affect any Lender’s or the
Borrower’s rights or obligations in respect of such Loans or affect the validity
of any transfer by any Lender of its Note.

Section 2.03    Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., Denver, Colorado
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 10:00 a.m., Denver, Colorado time,
on the date of the proposed Borrowing; provided that no such notice shall be
required for any deemed request of an ABR Borrowing to finance the reimbursement
of an LC Disbursement as provided in Section 2.08(e). Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile or other electronic transmission to the Administrative
Agent (or other communication in writing acceptable to the Administrative Agent)
of a written Borrowing Request in substantially the form of Exhibit B (or such
other form as may be agreed to by the Administrative Agent and the Borrower) and
signed by the Borrower. Each such telephonic and written Borrowing Request shall
specify the following information in compliance with Section 2.02:

(i)    the aggregate amount of the requested Borrowing;

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

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

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

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

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

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s

 

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duration. Each Borrowing Request shall constitute a representation by the
Borrower that the amount of the requested Borrowing shall not cause the total
Revolving Credit Exposures to exceed the total Commitments (i.e., the least of
(A) the Aggregate Maximum Credit Amounts, (B) the then effective Borrowing Base
and (C) the then effective Aggregate Elected Commitment Amounts).

Promptly following receipt of a Borrowing Request in accordance with this
Section 2.03, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loans to be made as part of the
requested Borrowing.

Section 2.04    Interest Elections.

(a)    Conversion and Continuance. Each Borrowing initially shall be of the Type
specified in the applicable Borrowing Request and, in the case of a Eurodollar
Borrowing, shall have an initial Interest Period as specified in such Borrowing
Request. Thereafter, the Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this
Section 2.04. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.

(b)    Interest Election Requests. To make an election pursuant to this
Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or facsimile to the Administrative Agent (or
other communication in writing or electronic transmission acceptable to the
Administrative Agent) of a written Interest Election Request in substantially
the form of Exhibit C (or such other form as may be agreed to by the
Administrative Agent and the Borrower) and signed by the Borrower.

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

(i)    the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to Section 2.04(c)(iii) and (iv) shall
be specified for each resulting Borrowing);

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

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

 

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

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

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

(e)    Effect of Failure to Deliver Timely Interest Election Request and Events
of Default on Interest Election. If the Borrower fails to deliver a timely
Interest Election Request with respect to a Eurodollar Borrowing prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing, then so long as
such Event of Default is continuing: (i) no outstanding Borrowing may be
converted to or continued as a Eurodollar Borrowing (and any Interest Election
Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurodollar Borrowing shall be ineffective) and (ii) unless
repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the
end of the Interest Period applicable thereto.

Section 2.05    Funding of Borrowings.

(a)    Funding by Lenders. Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 12:00 p.m. (noon), Denver, Colorado time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent or any Lender
designated by the Borrower in the applicable Borrowing Request; provided that
ABR Loans made to finance the reimbursement of an LC Disbursement as provided in
Section 2.08(e) shall be remitted by the Administrative Agent to the Issuing
Bank. Nothing herein shall be deemed to obligate any Lender to obtain the funds
for its 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 its Loan in any
particular place or manner.

(b)    Presumption of Funding by the Lenders. Unless the Administrative Agent
shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
Section 2.05(a) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand

 

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such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to the Loans comprising such Borrowing that such Lender failed to fund. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Loan included in such Borrowing. Any payment by the
Borrower pursuant to this Section 2.05(b) 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.

Section 2.06    Termination and Reduction of Commitments and Aggregate Maximum
Credit Amounts; Increase, Reduction and Termination of Aggregate Elected
Commitment Amounts.

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

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

(i)    The Borrower may at any time terminate, or from time to time reduce, the
Aggregate Maximum Credit Amounts; provided that (A) each reduction of the
Aggregate Maximum Credit Amounts shall be in an amount that is an integral
multiple of $500,000 and not less than $500,000, (B) the Borrower shall not
terminate or reduce the Aggregate Maximum Credit Amounts if, (1) after giving
effect to any concurrent prepayment of the Loans in accordance with
Section 3.04(c), the total Revolving Credit Exposures would exceed the total
Commitments or (2) the Aggregate Maximum Credit Amount would be less than
$5,000,000 (unless, with respect to this clause (2), the Aggregate Maximum
Credit Amounts are reduced to $0), and (C) upon any reduction of the Aggregate
Maximum Credit Amounts that would otherwise result in the Aggregate Maximum
Credit Amounts being less than the Aggregate Elected Commitment Amounts, the
Aggregate Elected Commitment Amounts shall be automatically reduced (ratably
among the Lenders in accordance with each Lender’s Applicable Percentage) so
that they equal the Aggregate Maximum Credit Amounts as so reduced.

(ii)    The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Aggregate Maximum Credit Amounts under
Section 2.06(b)(i) at least three Business Days prior to the effective date of
such termination or reduction (or such lesser period as may be reasonably
acceptable to the Administrative Agent), specifying such election and the
effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
notice delivered by the Borrower pursuant to this Section 2.06(b)(ii) shall be
irrevocable; provided that a notice of termination of the Aggregate Maximum
Credit Amounts delivered by the Borrower, or a payoff letter or similar
communication accepted by the Administrative Agent, may state that such notice
is conditioned upon the

 

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effectiveness of other credit facilities or the closing of a specified
transaction, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date of such
termination or reduction) if such condition is not satisfied. Any termination or
reduction of the Aggregate Maximum Credit Amounts shall be permanent and may not
be reinstated. Each reduction of the Aggregate Maximum Credit Amounts shall be
made ratably among the Lenders in accordance with each Lender’s Applicable
Percentage.

(c)    Increases, Reductions and Terminations of Aggregate Elected Commitment
Amounts.

(i)    Subject to the conditions set forth in Section 2.06(c)(ii), the Borrower
may increase the Aggregate Elected Commitment Amounts then in effect by
increasing the Elected Commitment of a Lender or by causing a Person that is
acceptable to the Administrative Agent that at such time is not a Lender to
become a Lender (any such Person that is not at such time a Lender and becomes a
Lender, an “Additional Lender”). Notwithstanding anything to the contrary
contained in this Agreement, in no case shall an Additional Lender be a natural
person, an Industry Competitor, the Borrower or any Affiliate of the Borrower.

(ii)    Any increase in the Aggregate Elected Commitment Amounts shall be
subject to the following additional conditions:

(A)    such increase shall not be less than $15,000,000 unless the
Administrative Agent otherwise consents, and no such increase shall be permitted
if after giving effect thereto the Aggregate Elected Commitment Amounts exceed
the Borrowing Base then in effect;

(B)    following any Scheduled Redetermination Date, the Borrower may not
increase the Aggregate Elected Commitment Amounts more than once before the next
Scheduled Redetermination Date (for the sake of clarity, all increases in the
Aggregate Elected Commitment Amount effective on a single date shall be deemed a
single increase in the Aggregate Elected Commitment Amount for purposes of this
Section 2.06(c)(ii)(B));

(C)    no Default shall have occurred and be continuing on the effective date of
such increase;

(D)    on the effective date of such increase, no Eurodollar Borrowings shall be
outstanding or if any Eurodollar Borrowings are outstanding, then the effective
date of such increase shall be the last day of the Interest Period in respect of
such Eurodollar Borrowings unless the Borrower pays any compensation required by
Section 5.02;

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

(F)    if the Borrower elects to increase the Aggregate Elected Commitment
Amounts by increasing the Elected Commitment of a Lender, the Borrower and such
Lender shall execute and deliver to the Administrative Agent a certificate
substantially in the form of Exhibit K (an “Elected Commitment Increase
Certificate”); and

 

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(G)    if the Borrower elects to increase the Aggregate Elected Commitment
Amounts by causing an Additional Lender to become a party to this Agreement,
then the Borrower and such Additional Lender shall execute and deliver to the
Administrative Agent a certificate substantially in the form of Exhibit L (an
“Additional Lender Certificate”), together with an Administrative Questionnaire
and a processing and recordation fee of $3,500 (provided that the Administrative
Agent may, in its discretion, elect to waive such processing and recordation fee
in connection with any such increase), and the Borrower shall (1) if requested
by the Additional Lender, deliver a Note payable to such Additional Lender in a
principal amount equal to its Maximum Credit Amount, and otherwise duly
completed and (2) pay any applicable fees as may have been agreed to between the
Borrower and the Additional Lender, and, to the extent applicable and agreed to
by the Borrower, the Administrative Agent.

(iii)    Subject to acceptance and recording thereof pursuant to
Section 2.06(c)(iv), from and after the effective date specified in the Elected
Commitment Increase Certificate or the Additional Lender Certificate (or if any
Eurodollar Borrowings are outstanding, then the last day of the Interest Period
in respect of such Eurodollar Borrowings, unless the Borrower has paid any
compensation required by Section 5.02: (A) the amount of the Aggregate Elected
Commitment Amounts shall be increased as set forth therein, and (B) in the case
of an Additional Lender Certificate, any Additional Lender party thereto shall
be a party to this Agreement and have the rights and obligations of a Lender
under this Agreement and the other Loan Documents. In addition, the Lender or
the Additional Lender, as applicable, shall purchase a pro rata portion of the
outstanding Loans (and participation interests in Letters of Credit) of each of
the other Lenders (and such Lenders hereby agree to sell and to take all such
further action to effectuate such sale) such that each Lender (including any
Additional Lender, if applicable) shall hold its Applicable Percentage of the
outstanding Loans (and participation interests) after giving effect to the
increase in the Aggregate Elected Commitment Amounts (and the resulting
modifications of each Lender’s Maximum Credit Amount pursuant to
Section 2.06(c)(iv) or Section 2.06(c)(v)).

(iv)    Upon its receipt of a duly completed Elected Commitment Increase
Certificate or an Additional Lender Certificate, executed by the Borrower and
the Lender or by the Borrower and the Additional Lender party thereto, as
applicable, the processing and recording fee referred to in Section 2.06(c)(ii),
if required, the Administrative Questionnaire referred to in Section 2.06(c)(ii)
and the break-funding payments from the Borrower, if any, required by
Section 5.02, if applicable, the Administrative Agent shall accept such Elected
Commitment Increase Certificate or Additional Lender Certificate and record the
information contained therein in the Register required to be maintained by the
Administrative Agent pursuant to Section 12.04(b)(iv). No increase in the
Aggregate Elected Commitment Amounts shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
Section 2.06(c)(iv).

(v)    Upon any increase in the Aggregate Elected Commitment Amounts pursuant to
Section 2.06(c)(iv), (A) each Lender’s Maximum Credit Amount shall be
automatically deemed amended to the extent necessary so that each such Lender’s
Applicable Percentage equals the percentage of the Aggregate Elected Commitment
Amounts represented by such Lender’s Elected Commitment, in each case after
giving effect to such increase, and (B) Annex I to this Agreement shall be
deemed amended to reflect the Elected Commitment of each Lender (including any
Additional Lender) as thereby increased, any changes in the Lenders’ Maximum
Credit Amounts pursuant to the foregoing clause (A), and any resulting changes
in the Lenders’ Applicable Percentages.

 

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(vi)    The Borrower may from time to time terminate or reduce the Aggregate
Elected Commitment Amounts; provided that (A) each reduction of the Aggregate
Elected Commitment Amounts shall be in an amount that is an integral multiple of
$1,000,000 and not less than $1,000,000 and (B) the Borrower shall not reduce
the Aggregate Elected Commitment Amounts if, after giving effect to any
concurrent prepayment of the Loans in accordance with Section 3.04(c), the total
Revolving Credit Exposures would exceed the Aggregate Elected Commitment Amounts
as reduced.

(vii)    The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Aggregate Elected Commitment Amounts under
Section 2.06(c)(vi) at least three Business Days prior to the effective date of
such termination or reduction (or such lesser period as may be reasonably
acceptable to the Administrative Agent), specifying such election and the
effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
notice delivered by the Borrower pursuant to this Section 2.06(c)(vii) shall be
irrevocable; provided that a notice of termination of the Aggregate Elected
Commitment Amounts delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities or the closing of
a specified transaction, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the specified
effective date of such termination) if such condition is not satisfied. Any
termination or reduction of the Aggregate Elected Commitment Amounts shall be
permanent and may not be reinstated, except pursuant to Section 2.06(c)(i). Each
reduction of the Aggregate Elected Commitment Amounts shall be made ratably
among the Lenders in accordance with each Lender’s Applicable Percentage.

(viii)    Upon any redetermination or other adjustment in the Borrowing Base
pursuant to this Agreement that would otherwise result in the Borrowing Base
becoming less than the Aggregate Elected Commitment Amounts, the Aggregate
Elected Commitment Amounts shall be automatically reduced (ratably among the
Lenders in accordance with each Lender’s Applicable Percentage) so that they
equal such redetermined Borrowing Base (and Annex I shall be deemed amended to
reflect such amendments to each Lender’s Elected Commitment and the Aggregate
Elected Commitment Amounts).

(ix)    Contemporaneously with any increase in the Borrowing Base pursuant to
this Agreement, if (A) the Borrower elects to increase the Aggregate Elected
Commitment Amount and (B) each Lender has consented to such increase in its
Elected Commitment, then the Aggregate Elected Commitment Amount shall be
increased (ratably among the Lenders in accordance with each Lender’s Applicable
Percentage) by the amount requested by the Borrower without the requirement that
any Lender deliver an Elected Commitment Increase Certificate or that the
Borrower pay any amounts under Section 5.02, and Annex I shall be deemed amended
to reflect such amendments to each Lender’s Elected Commitment and the Aggregate
Elected Commitment Amount. The Administrative Agent shall record the information
regarding such increases in the Register required to be maintained by the
Administrative Agent pursuant to Section 12.04(b)(iv).

 

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(x)    If, after giving effect to any reduction in the Aggregate Elected
Commitment Amounts pursuant to this Section 2.06(c), the total Revolving Credit
Exposures exceeds the total Commitments, then the Borrower shall (A) prepay the
Borrowings on the date of such termination or reduction in an aggregate
principal amount equal to such excess, and (B) if any excess remains after
prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(j).

Section 2.07    Borrowing Base.

(a)    Initial Borrowing Base. For the period from and including the Effective
Date to but excluding the first Redetermination Date, the amount of the
Borrowing Base shall be $800,000,000. Notwithstanding the foregoing, the
Borrowing Base may be subject to further adjustments in between Scheduled
Redeterminations from time to time pursuant to Section 2.07(e), Section 8.13(c)
or Section 9.12(e)(v).

(b)    Scheduled and Interim Redeterminations. The Borrowing Base shall be
redetermined periodically on each Scheduled Redetermination Date in accordance
with this Section 2.07 (a “Scheduled Redetermination”), and, subject to
Section 2.07(d), such redetermined Borrowing Base shall become effective and
applicable to the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders on each Scheduled Redetermination Effective Date. In addition, (i) the
Borrower may, by notifying the Administrative Agent thereof, and the
Administrative Agent may, at the direction of the Required Lenders, by notifying
the Borrower thereof, one time between any two successive Scheduled
Redeterminations, each elect to cause the Borrowing Base to be redetermined
between Scheduled Redeterminations in accordance with this Section 2.07 and
(ii) the Borrower may elect, in addition to any such elections permitted to be
made by it pursuant to the foregoing clause (i), by notifying the Administrative
Agent of any Material Acquisition, to cause the Borrowing Base to be
redetermined between Scheduled Redeterminations (each such redetermination
described in clauses (i) and (ii) being an “Interim Redetermination”) in
accordance with this Section 2.07.

(c)    Scheduled and Interim Redetermination Procedure.

(i)    Each Scheduled Redetermination and each Interim Redetermination shall be
effectuated as follows: Upon receipt by the Administrative Agent of (A) the
Reserve Report and the certificate required to be delivered by the Borrower to
the Administrative Agent, in the case of a Scheduled Redetermination, pursuant
to Section 8.12(a) and (c), and, in the case of an Interim Redetermination,
pursuant to Section 8.12(b) and (c), and (B) such other reports, data and
supplemental information, including, without limitation, the information
provided pursuant to Section 8.12(c), as may, from time to time, be reasonably
requested by the Majority Lenders (the Reserve Report, such certificate and such
other reports, data and supplemental information being the “Engineering
Reports”), the Administrative Agent shall evaluate the information contained in
the Engineering Reports and shall, in good faith, propose a new Borrowing Base
(the “Proposed Borrowing Base”) based upon such information and such other
information (including, without limitation, the status of title information with
respect to the Oil and Gas Properties as described in the Engineering Reports
and the existence of any other Debt, the Credit Parties’ other assets,
liabilities, fixed charges, cash flow, business, properties, prospects,

 

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management and ownership, hedged and unhedged exposure to price, price and
production scenarios, interest rate and operating cost changes) as the
Administrative Agent deems appropriate in its sole discretion and consistent
with its normal oil and gas lending criteria for revolving lines of credit at
the particular time. In no event shall the Proposed Borrowing Base exceed the
Aggregate Maximum Credit Amounts;

(ii)    The Administrative Agent shall notify the Borrower and the Lenders of
the Proposed Borrowing Base (the “Proposed Borrowing Base Notice”) after the
Administrative Agent has received complete Engineering Reports from the Borrower
and has had a reasonable opportunity to determine the Proposed Borrowing Base in
accordance with Section 2.07(c)(i); and (iii) Any Proposed Borrowing Base that
would increase the Borrowing Base then in effect must be approved by all of the
Lenders (other than any Defaulting Lenders) as provided in this
Section 2.07(c)(iii); and any Proposed Borrowing Base that would decrease or
maintain the Borrowing Base then in effect must be approved or be deemed to have
been approved by the Required Lenders as provided in this Section 2.07(c)(iii).
Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have
fifteen (15) days to agree with the Proposed Borrowing Base or disagree with the
Proposed Borrowing Base by proposing an alternate Borrowing Base. If, in the
case of any Proposed Borrowing Base that would decrease or maintain the
Borrowing Base then in effect, at the end of such fifteen (15) days, any Lender
has not communicated its approval or disapproval in writing to the
Administrative Agent, such silence shall be deemed to be an approval of the
Proposed Borrowing Base. If, in the case of any Proposed Borrowing Base that
would increase the Borrowing Base then in effect, at the end of such fifteen
(15) days, any Lender has not communicated its approval or disapproval in
writing to the Administrative Agent, such silence shall be deemed to be a
disapproval of the Proposed Borrowing Base. If, at the end of such 15-day
period, all of the Lenders (other than any Defaulting Lenders), in the case of a
Proposed Borrowing Base that would increase the Borrowing Base then in effect,
or the Required Lenders, in the case of a Proposed Borrowing Base that would
decrease or maintain the Borrowing Base then in effect, have approved or, in the
case of a decrease or reaffirmation, deemed to have approved, as aforesaid, then
the Proposed Borrowing Base shall, subject to Section 12.02(b)(ii), become the
new Borrowing Base, effective on the date specified in Section 2.07(d). If,
however, at the end of such 15-day period, all of the Lenders (other than any
Defaulting Lenders) or the Required Lenders, as applicable, have not approved
or, in the case of a decrease or reaffirmation, deemed to have approved, as
aforesaid, then the Administrative Agent shall poll the Lenders to ascertain the
highest Borrowing Base then acceptable to (x) in the case of a decrease or
reaffirmation, a number of Lenders sufficient to constitute the Required Lenders
and (y) in the case of an increase, all of the Lenders (other than any
Defaulting Lenders), and such amount shall, subject to Section 12.02(b)(ii),
become the new Borrowing Base, effective on the date specified in
Section 2.07(d).

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

 

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

(ii)    in the case of an Interim Redetermination, on the Business Day next
succeeding delivery of such notice.

Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Effective Date, the next Interim Redetermination Date or the
next adjustment to the Borrowing Base under Section 2.07(e), Section 8.13(c) or
Section 9.12(e)(v), whichever occurs first. Notwithstanding the foregoing, no
Scheduled Redetermination or Interim Redetermination shall become effective
until the New Borrowing Base Notice related thereto is received by the Borrower.

(e)    Automatic Reduction of Borrowing Base – Issuance of Permitted Senior
Unsecured Notes. Upon any issuance of Permitted Senior Unsecured Notes (other
than Permitted Senior Unsecured Notes that extend, refinance or replace then
existing Permitted Senior Unsecured Notes, up to the sum of (i) the principal
amount of such then existing Permitted Senior Unsecured Notes that are
refinanced or replaced plus (ii) an amount equal to the unpaid accrued interest
and premium thereon and fees and expenses incurred in connection with such
extension, refinancing or replacement), the Borrowing Base shall automatically
be decreased by an amount equal to 25% of the aggregate notional amount of such
Permitted Senior Unsecured Notes issued at such time. Such decrease in the
Borrowing Base shall occur automatically upon the issuance of such Permitted
Senior Unsecured Notes on the date of issuance, without any vote of Lenders or
action by Administrative Agent. Upon any such reduction in the Borrowing Base,
the Administrative Agent shall promptly deliver a New Borrowing Base Notice to
the Borrower and the Lenders.

Section 2.08    Letters of Credit.

(a)    General. Subject to the terms and conditions set forth herein, the
Borrower may request the issuance of dollar denominated Letters of Credit for
its own account or for the account of any of its Restricted Subsidiaries, in a
form reasonably acceptable to the Administrative Agent and the Issuing Bank, at
any time and from time to time during the Availability Period in an amount not
to exceed (i) in the aggregate for all Letters of Credit, the LC Commitment, and
(ii) for any particular Issuing Bank, such Issuing Bank’s LC Issuance Limit;
provided that the Borrower may not request the issuance, amendment, renewal or
extension of Letters of Credit hereunder if a Borrowing Base Deficiency exists
at such time or would exist as a result thereof. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

(b)    Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
The Existing Letters of Credit shall be deemed to have been issued hereunder as
of the Effective

 

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Date. To request the issuance of a Letter of Credit (or the amendment, renewal
or extension of an outstanding Letter of Credit), the Borrower shall hand
deliver or facsimile (or transmit by electronic communication, if arrangements
for doing so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (not less than five (5) Business Days in advance of the
requested date of issuance, amendment, renewal or extension (or such lesser
advance notice as is acceptable to both the Issuing Bank and the Administrative
Agent)) a notice:

(i)    requesting the issuance of a Letter of Credit or identifying the Letter
of Credit to be amended, renewed or extended;

(ii)    specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day);

(iii)    specifying the date on which such Letter of Credit is to expire (which
shall comply with Section 2.08(c));

(iv)    specifying the amount of such Letter of Credit;

(v)    specifying the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit; and (vi) specifying the amount of the then effective Borrowing Base
and the then effective Aggregate Elected Commitment Amounts and whether a
Borrowing Base Deficiency exists at such time, the current total Revolving
Credit Exposures (without regard to the requested Letter of Credit or the
requested amendment, renewal or extension of an outstanding Letter of Credit)
and the pro forma total Revolving Credit Exposures (giving effect to the
requested Letter of Credit or the requested amendment, renewal or extension of
an outstanding Letter of Credit). Each notice shall constitute a representation
and warranty by the Borrower that after giving effect to the requested issuance,
amendment, renewal or extension, as applicable, (x) the LC Exposure shall not
exceed the LC Commitment and (y) the total Revolving Credit Exposures shall not
exceed the total Commitments (i.e., the least of (i) the Aggregate Maximum
Credit Amounts, (ii) the then effective Borrowing Base and (iii) the then
effective Aggregate Elected Commitment Amounts). No letter of credit issued by
the Issuing Bank (if the Issuing Bank is not the Administrative Agent) shall be
deemed to be a “Letter of Credit” issued under this Agreement unless the Issuing
Bank has requested and received written confirmation from the Administrative
Agent that the representations by Borrower contained in the foregoing clauses
(x) and (y) are true and correct.

If requested by the Issuing Bank, the Borrower also shall submit a letter of
credit application on the Issuing Bank’s standard form in connection with any
request for a Letter of Credit; provided that, in the event of any conflict
between such application or any Letter of Credit Agreement and the terms of this
Agreement, the terms of this Agreement shall control.

(c)    Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) (A) in the case of Letters of Credit
issued to the Texas Railroad Commission, the date that is 460 days after the
date of issuance of such Letter of Credit or (B) in the case of all other
Letters of Credit, the date that is one year after the date of the issuance of
such Letter of Credit (or, with respect to each of the foregoing clauses (A) and
(B), in the case of any renewal or extension thereof, one year after such
renewal or extension) and (ii) the date that is five

 

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Business Days prior to the Maturity Date. Each Letter of Credit with a one
(1) year term and each Letter of Credit issued to the Texas Railroad Commission
with a term longer than one (1) year but less than or equal to 460 days may
provide for the renewal thereof for additional one (1) year periods; provided
that no such period shall extend beyond the date described in clause (ii) above.

(d)    Participations. By the issuance of a Letter of Credit (or an amendment to
a Letter of Credit increasing the amount thereof) and without any further action
on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants
to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the
date due as provided in Section 2.08(e), or of any reimbursement payment
required to be refunded to the Borrower for any reason. Each Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
Section 2.08(d) in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default, the existence of a Borrowing Base Deficiency or
reduction or termination of the Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever.

(e)    Reimbursement. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 11:00 a.m., Denver, Colorado time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., Denver, Colorado time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 11:00 a.m., Denver, Colorado time, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to
10:00 a.m., Denver, Colorado time, on the day of receipt, or (ii) the Business
Day immediately following the day that the Borrower receives such notice, if
such notice is not received prior to such time on the day of receipt; provided
that unless the Borrower has notified the Administrative Agent that it intends
to reimburse all or part of such LC Disbursement without using Loan proceeds or
has submitted a Borrowing Request with respect thereto, the Borrower shall,
subject to the conditions to Borrowing set forth herein, be deemed to have
requested, and the Borrower does hereby request under such circumstances, that
such payment be financed with an ABR Borrowing in an equivalent amount and, to
the extent so financed, the Borrower’s obligation to make such payment shall be
discharged and replaced by the resulting ABR Borrowing. If the Borrower fails to
make such payment when due, the Administrative Agent shall notify each Lender of
the applicable LC Disbursement, the payment then due from the Borrower in
respect thereof and such Lender’s Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrower, in
the same manner as provided in Section 2.05 with respect to Loans made by such
Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the Issuing Bank the amounts so received by it from the Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this Section 2.08(e),

 

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the Administrative Agent shall distribute such payment to the Issuing Bank or,
to the extent that Lenders have made payments pursuant to this Section 2.08(e)
to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as
their interests may appear. Any payment made by a Lender pursuant to this
Section 2.08(e) to reimburse the Issuing Bank for any LC Disbursement (other
than the funding of ABR Loans as contemplated above) shall not constitute a Loan
and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.

(f)    Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in Section 2.08(e) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein,
(ii) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit or any Letter of Credit
Agreement, or (iv) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section 2.08(f), constitute a legal or equitable discharge of, or provide a
right of setoff against, the Borrower’s obligations hereunder. Neither the
Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related
Parties shall have any liability or responsibility by reason of or in connection
with the issuance or transfer of any Letter of Credit or any payment or failure
to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of the Issuing
Bank; provided that the foregoing shall not be construed to excuse the Issuing
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower that are caused by the Issuing Bank’s failure to exercise due care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence, bad faith or willful misconduct on the part
of the Issuing Bank (as finally determined by a court of competent
jurisdiction), the Issuing Bank shall be deemed to have exercised all requisite
due care in each such determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

(g)    Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by facsimile) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Lenders with respect to any such LC Disbursement.

 

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(h)    Interim Interest. If the Issuing Bank shall make any LC Disbursement,
then, until the Borrower shall have reimbursed the Issuing Bank for such LC
Disbursement (either with its own funds or a Borrowing under Section 2.08(e)),
the unpaid amount thereof shall bear interest, for each day from and including
the date such LC Disbursement is made to but excluding the date that the
Borrower reimburses such LC Disbursement, at the rate per annum then applicable
to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall be for the
account of the Issuing Bank, except that interest accrued on and after the date
of payment by any Lender pursuant to Section 2.08(e) to reimburse the Issuing
Bank shall be for the account of such Lender to the extent of such payment.

(i)    Replacement of the Issuing Bank. The Issuing Bank may be replaced at any
time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 3.05(b). From and after the effective date of any such replacement,
(i) the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of the Issuing Bank hereunder, the replaced Issuing Bank shall
remain a party hereto and shall continue to have all the rights and obligations
of the Issuing Bank under this Agreement with respect to Letters of Credit
issued by it prior to such replacement, but shall not be required to issue
additional Letters of Credit.

(j)    Cash Collateralization. If (i) any Event of Default shall occur and be
continuing and the Borrower receives notice from the Administrative Agent or the
Majority Lenders demanding the deposit of cash collateral pursuant to this
Section 2.08(j), or (ii) the Borrower is required to pay to the Administrative
Agent the excess attributable to an LC Exposure in connection with any
prepayment pursuant to Section 3.04(c), then the Borrower shall deposit, in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Lenders, an amount in cash equal to (A) in the case
of an Event of Default, the LC Exposure, and (B) in the case of a payment
required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Parent or any Restricted Subsidiary
described in Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to
the Administrative Agent, for the benefit of the Issuing Bank and the Lenders,
an exclusive first priority and continuing perfected security interest in and
Lien on such account and all cash, checks, drafts, certificates and instruments,
if any, from time to time deposited or held in such account, all deposits or
wire transfers made thereto, any and all investments purchased with funds
deposited in such account, all interest, dividends, cash, instruments, financial
assets and other Property from time to time received, receivable or otherwise
payable in respect of, or in exchange for, any or all

 

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of the foregoing, and all proceeds, products, accessions, rents, profits, income
and benefits therefrom, and any substitutions and replacements therefor. The
Borrower’s obligation to deposit amounts pursuant to this Section 2.08(j) shall
be absolute and unconditional, without regard to whether any beneficiary of any
such Letter of Credit has attempted to draw down all or a portion of such amount
under the terms of a Letter of Credit, and, to the fullest extent permitted by
applicable law, shall not be subject to any defense or be affected by a right of
set-off, counterclaim or recoupment which the Parent or any of its Restricted
Subsidiaries may now or hereafter have against any such beneficiary, the Issuing
Bank, the Administrative Agent, the Lenders or any other Person for any reason
whatsoever. Such deposit shall be held as collateral securing the payment and
performance of the Indebtedness. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. Other than any interest earned on the investment of such deposits,
which investments shall be made at the option and sole discretion of the
Administrative Agent (in consultation with the Borrower) and at the Borrower’s
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated, be applied to satisfy other obligations of
the Borrower and the Guarantors under this Agreement or the other Loan
Documents. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, and the Borrower
is not otherwise required to pay to the Administrative Agent the excess
attributable to an LC Exposure in connection with any prepayment pursuant to
Section 3.04(c), then such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.

(k)    Designation of Additional Issuing Banks. From time to time, the Borrower
may designate as additional Issuing Banks one or more Lenders which are
reasonably acceptable to the Administrative Agent that agree to serve in such
capacity as provided herein. The acceptance by a Lender of any appointment as an
Issuing Bank hereunder shall be evidenced by an agreement (an “Issuing Bank
Agreement”), which shall be in a form reasonably satisfactory to the Borrower
and the Administrative Agent, shall set forth the LC Issuance Limit of such
Lender and shall be executed by such Lender, the Borrower and the Administrative
Agent and, from and after the effective date of such Issuing Bank Agreement,
(i) such Lender shall have all the rights and obligations of an Issuing Bank
under this Agreement and the other Loan Documents, (ii) references herein and in
the other Loan Documents to the term “Issuing Bank” shall be deemed to include
such Lender in its capacity as an Issuing Bank, and (iii) such Issuing Bank
shall have the LC Issuance Limit set forth in such Issuing Bank Agreement and
Annex III shall be deemed to be automatically be amended to reflect such LC
Issuance Limit.

(l)    Defaulting Lenders. Notwithstanding any provision of this Agreement to
the contrary, if any Lender becomes a Defaulting Lender then, until such time as
such Lender is no longer a Defaulting Lender, to the extent permitted by
applicable law:

(i)    Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in Section 12.02.

 

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(ii)    Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article X or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 12.08 shall be applied at such time or
times as may be determined by the Administrative Agent as follows: first, to the
payment of any amounts owing by such Defaulting Lender to the Administrative
Agent hereunder; second, to the payment on a pro rata basis of any amounts owing
by such Defaulting Lender to any Issuing Bank hereunder; third, to cash
collateralize the Issuing Banks’ Fronting Exposures with respect to such
Defaulting Lender in accordance with Section 2.08(j); fourth, as the Borrower
may request (so long as no Default or Event of Default exists), to the funding
of any Loan in respect of which such Defaulting Lender has failed to fund its
portion thereof as required by this Agreement, as determined by the
Administrative Agent; fifth, if so determined by the Administrative Agent and
the Borrower, to be held in a deposit account and released pro rata in order to
(x) satisfy such Defaulting Lender’s potential future funding obligations with
respect to Loans under this Agreement and (y) cash collateralize the Issuing
Banks’ future Fronting Exposures with respect to such Defaulting Lender with
respect to future Letters of Credit issued under this Agreement, in accordance
with Section 2.08(j); sixth, to the payment of any amounts owing to the Lenders
or the Issuing Banks as a result of any judgment of a court of competent
jurisdiction obtained by any Lender or the Issuing Banks 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 Loans or LC
Disbursements in respect of which such Defaulting Lender has not fully funded
its appropriate share, and (y) such Loans were made or the related Letters of
Credit were issued at a time when the conditions set forth in Section 6.02 were
satisfied or waived, such payment shall be applied solely to pay the Loans of,
and LC Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis
prior to being applied to the payment of any Loans of, or LC Disbursements owed
to, such Defaulting Lender until such time as all Loans and funded and unfunded
participations in Letters of Credit hereunder are held by the Lenders pro rata
in accordance with the Commitments without giving effect to
Section 2.08(l)(iii). 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 2.08(l)
shall be deemed paid to and redirected by such Defaulting Lender, and each
Lender irrevocably consents hereto.

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

 

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(iv)    Cash Collateral. If the reallocation described in clause (iii) above
cannot, or can only partially, be effected, the Borrower shall, without
prejudice to any right or remedy available to it hereunder or under law, cash
collateralize the Issuing Banks’ Fronting Exposures in accordance with the
procedures set forth in Section 2.08(j).

(v)    Defaulting Lender Cure. If the Borrower, the Administrative Agent and
each Issuing Bank agree in writing that a Lender is no longer a Defaulting
Lender, the Administrative Agent will so notify the parties hereto, whereupon as
of the effective date specified in such notice and subject to any conditions set
forth therein (which may include arrangements with respect to any cash
collateral), that Lender will, to the extent applicable, purchase at par that
portion of outstanding Loans of the other Lenders or take such other actions as
the Administrative Agent may determine to be necessary to cause the Loans and
funded and unfunded participations in Letters of Credit to be held pro rata by
the Lenders in accordance with the Commitments (without giving effect to
Section 2.08(l)(iii), whereupon such Lender will cease to be a Defaulting
Lender; provided that no adjustments will be made retroactively with respect to
fees accrued or payments made by or on behalf of the Borrower while that Lender
was a Defaulting Lender; and provided, further, that except to the extent
otherwise expressly agreed by the affected parties, no change hereunder from
Defaulting Lender to Lender will constitute a waiver or release of any claim of
any party hereunder arising from that Lender’s having been a Defaulting Lender.

(vi)    New Letters of Credit. So long as any Lender is a Defaulting Lender, no
Issuing Bank 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.

(vii)    Termination of a Defaulting Lender. The Borrower may terminate the
unused amount of the Commitment of any Lender that is a Defaulting Lender upon
not less than three (3) Business Days’ prior notice to the Administrative Agent
(which shall promptly notify the Lenders thereof), and in such event the
provisions of Section 2.08(l)(ii) will apply to all amounts thereafter paid by
the Borrower for the account of such Defaulting Lender under this Agreement
(whether on account of principal, interest, fees, indemnity or other amounts);
provided that (i) no Event of Default shall have occurred and be continuing, and
(ii) such termination shall not be deemed to be a waiver or release of any claim
the Borrower, the Administrative Agent, any Issuing Bank, or any Lender may have
against such Defaulting Lender.

ARTICLE III

PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

Section 3.01    Repayment of Loans. The Borrower hereby unconditionally promises
to pay in full to the Administrative Agent, for the account of each Lender, the
then unpaid principal amount of such Lender’s Loans, together with all accrued
interest thereon, on the Termination Date.

Section 3.02    Interest.

 

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

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

(c)    Post-Default Rate. Notwithstanding the foregoing, (i) if any principal of
or interest on any Loan or any fee or other amount payable by the Borrower or
any Guarantor hereunder or under any other Loan Document is not paid when due,
whether at stated maturity, upon acceleration or otherwise, such overdue amount
shall bear interest, after as well as before judgment, at a rate per annum equal
to two percent (2%) plus the rate applicable to ABR Loans as provided in
Section 3.02(a) (including the Applicable Margin but in no event to exceed the
Highest Lawful Rate) and shall be payable on demand by the Administrative Agent,
(ii) if any Event of Default of the type described in Section 10.01(h),
Section 10.01(i) or Section 10.01(j) occurs and is continuing (and only for so
long as it continues), then all outstanding principal, fees and other
obligations under any Loan Document shall automatically bear interest at a rate
per annum equal to two percent (2%) plus the rate applicable to ABR Loans as
provided in Section 3.02(a) (including the Applicable Margin but in no event to
exceed the Highest Lawful Rate) and shall be payable on demand by the
Administrative Agent and (iii) if any Event of Default occurs and is continuing
(and only for so long as it continues) (other than an Event of Default described
in Section 10.01(a), Section 10.01(b), Section 10.01(h), Section 10.01(i) or
Section 10.01(j)), then at the election of the Majority Lenders (or the
Administrative Agent at the direction of Majority Lenders) and after written
notice to the Borrower, all outstanding principal, fees and other obligations
under any Loan Document shall bear interest at a rate per annum equal to two
percent (2%) plus the rate applicable to ABR Loans as provided in
Section 3.02(a) (including the Applicable Margin but in no event to exceed the
Highest Lawful Rate) and shall be payable on demand by the Administrative Agent.

(d)    Interest Payment Dates. Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and on the Termination Date;
provided that (i) interest accrued pursuant to Section 3.02(c) shall be payable
on demand, (ii) in the event of any repayment or prepayment of any Loan (other
than an optional prepayment of an ABR Loan prior to the Termination Date),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment, and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.

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

 

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Section 3.03    Alternate Rate of Interest. (a) If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:

(i)    the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable
(including, without limitation, because the LIBO Screen Rate is not available or
published on a current basis), for such Interest Period; or

(ii)    the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or fax as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (A) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (B) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing
shall be made as an ABR Borrowing.

(b)    If at any time the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that (i) the circumstances set forth
in clause (a)(i) have arisen and such circumstances are unlikely to be temporary
or (ii) the circumstances set forth in clause (a)(i) have not arisen but the
supervisor for the administrator of the LIBO Screen Rate or a Governmental
Authority having jurisdiction over the Administrative Agent has made a public
statement identifying a specific date after which the LIBO Screen Rate shall no
longer be used for determining interest rates for loans, then the Administrative
Agent and the Borrower shall endeavor to establish an alternate rate of interest
to the LIBO Rate that gives due consideration to the then prevailing market
convention for determining a rate of interest for syndicated loans in the United
States at such time, and shall enter into an amendment to this Agreement to
reflect such alternate rate of interest and such other related changes to this
Agreement as may be applicable. Notwithstanding anything to the contrary in
Section 12.02, such amendment shall become effective without any further action
or consent of any other party to this Agreement so long as the Administrative
Agent shall not have received, within five Business Days of the date notice of
such alternate rate of interest is provided to the Lenders, a written notice
from the Required Lenders stating that such Required Lenders object to such
amendment. Until an alternate rate of interest shall be determined in accordance
with this clause (b) (but, in the case of the circumstances described in clause
(ii) of the first sentence of this Section 3.03(b), only to the extent the LIBO
Screen Rate for such Interest Period is not available or published at such time
on a current basis), (x) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective and (y) if any Borrowing Request
requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing; provided that, if such alternate rate of interest shall be less than
one percent, such rate shall be deemed to be one percent for the purposes of
this Agreement.

 

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Section 3.04    Prepayments.

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

(b)    Notice and Terms of Optional Prepayment. The Borrower shall notify the
Administrative Agent by telephone (confirmed by facsimile) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 11:00 a.m., Denver, Colorado time, three Business Days before the date of
prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later
than 10:00 a.m., Denver, Colorado time, on the date of prepayment. Each such
notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a conditional notice of prepayment is given as contemplated by
Section 2.06(b), then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.06(b). Promptly following
receipt of any such notice relating to a Borrowing, the Administrative Agent
shall advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 3.02.

(c)    Mandatory Prepayments.

(i)    If, after giving effect to any termination or reduction of the Aggregate
Maximum Credit Amounts pursuant to Section 2.06(b), the total Revolving Credit
Exposures exceeds the total Commitments, then the Borrower shall (A) prepay the
Borrowings on the date of such termination or reduction in an aggregate
principal amount equal to such excess, and (B) if any excess remains after
prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(j).

(ii)    Upon any redetermination of or adjustment to the amount of the Borrowing
Base in accordance with Section 2.07 (other than Section 2.07(e)) or
Section 8.13(c), if there exists a Borrowing Base Deficiency, then the Borrower
shall within twenty (20) days following receipt of the New Borrowing Base Notice
in accordance with Section 2.07(d) or the date the adjustment occurs (or such
longer period, not to exceed thirty (30) days, acceptable to the Administrative
Agent), provide written notice (the “Election Notice”) to the Administrative
Agent stating the action which the Borrower proposes to take to eliminate such
Borrowing Base Deficiency, and the Borrower shall thereafter, at its option,
either:

(A)    within ten (10) days following its delivery of the Election Notice (or
such longer period, not to exceed 180 days, acceptable to the Administrative
Agent), by instruments reasonably satisfactory in form and substance to the
Administrative Agent, provide the Administrative Agent with additional security
consisting of Oil and Gas Properties with value and quality satisfactory to the
Administrative Agent and the Required Lenders in their sole discretion to
eliminate such Borrowing Base Deficiency,

 

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(B)    within ten (10) days following its delivery of the Election Notice,
prepay without premium or penalty, the Borrowings in an amount sufficient to
eliminate such Borrowing Base Deficiency and, if any Borrowing Base Deficiency
remains after prepaying all of the Borrowings as a result of an LC Exposure, pay
to the Administrative Agent on behalf of the Lenders an amount necessary to
eliminate such remaining Borrowing Base Deficiency to be held as cash collateral
as provided in Section 2.08(j),

(C)    elect to prepay (and thereafter pay), without premium or penalty, the
principal amount of Loans necessary to eliminate such Borrowing Base Deficiency
in not more than six (6) equal monthly installments plus accrued interest
thereon with the first such monthly payment being due within ten (10) days
following its delivery of the Election Notice (and, if any Borrowing Base
Deficiency remains after prepaying all of the Borrowings as a result of an LC
Exposure, pay to the Administrative Agent on behalf of the Lenders an amount
necessary to eliminate such remaining Borrowing Base Deficiency to be held as
cash collateral as provided in Section 2.08(j)), or

(D)    by any combination of prepayment and additional security as provided in
the preceding clauses (A), (B) or (C), eliminate such Borrowing Base Deficiency;
provided that all payments required to be made pursuant to this
Section 3.04(c)(ii) must be made on or prior to the Termination Date.

(iii)    Upon any reduction of the Borrowing Base pursuant to Section 2.07(e) in
connection with issuance of Permitted Senior Unsecured Notes or pursuant to
Section 9.12(e)(v), then if there exists a Borrowing Base Deficiency, the
Borrower shall prepay the Borrowings in an amount sufficient to eliminate such
Borrowing Base Deficiency and, if any Borrowing Base Deficiency remains after
prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount necessary to eliminate
such remaining Borrowing Base Deficiency to be held as cash collateral as
provided in Section 2.08(j). The Borrower shall be obligated to make such
prepayment and/or deposit of cash collateral on the date of the issuance of such
Permitted Senior Unsecured Notes or, with respect to any Transfer or Swap
Monetization pursuant to Section 9.12(e)(v), on the date when it receives
proceeds from such Transfer or Swap Monetization; provided that all payments
required to be made pursuant to this Section 3.04(c)(iii) must be made on or
prior to the Termination Date.

(iv)    Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be
applied first to any ABR Borrowings then outstanding and thereafter to any
Eurodollar Borrowings then outstanding, and if more than one Eurodollar
Borrowing is then outstanding, to each such Eurodollar Borrowing in order of
priority beginning with the Eurodollar Borrowing with the least number of days
remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.

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

 

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(d)    No Premium or Penalty. All prepayments permitted or required under this
Section 3.04 or otherwise under the Loan Documents shall be without premium or
penalty, except as required under Section 5.02.

(e)    Mandatory Prepayment with Excess Cash. If, as of the last Business Day of
any week, commencing with May 8th, 2020, the Credit Parties have Excess Cash as
of the end of such Business Day, the Borrower shall prepay Borrowings on the
immediately following Business Day, which prepayment shall be in an amount equal
to the amount of such Excess Cash as of the end of such immediately preceding
Business Day and, if any Excess Cash remains after the Borrowings are fully
prepaid, the Borrower shall pay to the Administrative Agent on behalf of the
Lenders an amount equal to the lesser of (i) such remaining amount of Excess
Cash and (ii) the amount of LC Exposure to be held as cash collateral as
provided in Section 2.08(j). Each prepayment of Borrowings pursuant to this
Section 3.04(e) shall be applied, first, ratably to any ABR Borrowings then
outstanding, and, second, to any Eurodollar Borrowings then outstanding, and if
more than one Eurodollar Borrowing is then outstanding, to each such Eurodollar
Borrowing in order of priority beginning with the Eurodollar Borrowing with the
least number of days remaining in the Interest Period applicable thereto and
ending with the Eurodollar Borrowing with the most number of days remaining in
the Interest Period applicable thereto. Each prepayment of Borrowings pursuant
to this Section 3.04(e) shall be applied ratably to the Loans included in the
prepaid Borrowings. Prepayments pursuant to this Section 3.04(e) shall be
accompanied by accrued interest to the extent required by Section 3.02.

Section 3.05    Fees.

(a)    Commitment Fees. Subject to Section 3.05(d) below, the Borrower agrees to
pay to the Administrative Agent for the account of each Lender a commitment fee,
which shall accrue at the applicable Commitment Fee Rate on the average daily
amount of the unused amount of the Commitment of such Lender during the period
from and including the date of this Agreement to but excluding the Termination
Date (it being understood that LC Exposure shall constitute usage of the
Commitments for purposes of this Section 3.05(a)). Accrued commitment fees shall
be payable in arrears on the last day of March, June, September and December of
each year and on the Termination Date, commencing on the first such date to
occur after the date hereof. All commitment fees shall be computed on the basis
of a year of 360 days, unless such computation would exceed the Highest Lawful
Rate, in which case interest shall be computed on the basis of a year of 365
days (or 366 days in a leap year), and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

(b)    Letter of Credit Fees. Subject to Section 3.05(d) below, the Borrower
agrees to pay (i) to the Administrative Agent for the account of each Lender a
participation fee with respect to its participations in Letters of Credit, which
shall accrue at the same Applicable Margin used to determine the interest rate
applicable to Eurodollar Loans on the average daily amount of such Lender’s LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the date of this Agreement
to but excluding the later of the date on which such Lender’s Commitment
terminates and the date on which such Lender ceases to have any LC Exposure,
(ii) to the Issuing Bank, for its own account, a fronting fee, which shall
accrue at the rate of 0.125% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements)

 

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during the period from and including the date of this Agreement to but excluding
the later of the date of termination of the Commitments and the date on which
there ceases to be any LC Exposure, provided that in no event shall such fee be
less than $500 during any quarter, and (iii) to the Issuing Bank, for its own
account, its standard fees with respect to the issuance, amendment, renewal or
extension of any Letter of Credit or processing of drawings thereunder.
Participation fees and fronting fees accrued through and including the last day
of March, June, September and December of each year shall be payable on the
third Business Day following such last day, commencing on the first such date to
occur after the date of this Agreement; provided that all such fees shall be
payable on the Termination Date and any such fees accruing after the Termination
Date shall be payable on demand. Any other fees payable to the Issuing Bank
pursuant to this Section 3.05(b) shall be payable within 10 days after demand.
All participation fees and fronting fees shall be computed on the basis of a
year of 360 days, unless such computation would exceed the Highest Lawful Rate,
in which case interest shall be computed on the basis of a year of 365 days (or
366 days in a leap year), and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).

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

(d)    Defaulting Lender Fees. Subject to Section 2.08(l):

(i)    No Defaulting Lender shall be entitled to receive any Defaulting Lender’s
ratable share of the fees described in Section 3.05(a) for any period during
which that Lender is a Defaulting Lender (and the Borrower shall not be required
to pay any such fee that otherwise would have been required to have been paid to
that Defaulting Lender).

(ii)    Each Defaulting Lender shall be entitled to receive such Defaulting
Lender’s ratable share of the fees described in Section 3.05(b) for any period
during which that Lender is a Defaulting Lender only to the extent allocable to
its Applicable Percentage of the stated amount of Letters of Credit for which it
has provided cash collateral pursuant to Section 2.08(j).

(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
Letters of Credit hereunder that has been reallocated to such Non-Defaulting
Lender pursuant to Section 2.08(l)(iii), (y) pay to each Issuing Bank the amount
of any such fee otherwise payable to such Defaulting Lender to the extent
allocable to such Issuing Bank’s Fronting Exposure to such Defaulting Lender,
and (z) not be required to pay the remaining amount of any such fee.

(e)    Borrowing Base Increase Fees. The Borrower agrees to pay to the
Administrative Agent, for the account of each Lender then party to this
Agreement, a Borrowing Base increase fee in an amount to be set forth in a
separate written agreement on the amount of any increase of the Borrowing Base
above the highest previous Borrowing Base in effect during the term of this
Agreement, payable on the effective date of any such increase to the Borrowing
Base.

 

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ARTICLE IV

PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS

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

(a)    Payments by the Borrower. The Borrower shall make each payment required
to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 5.01,
Section 5.02, Section 5.03 or otherwise) prior to 11:00 a.m., Denver, Colorado
time, on the date when due, in immediately available funds, without defense,
deduction, recoupment, set-off or counterclaim. Fees, once paid, shall be fully
earned and shall not be refundable under any circumstances, absent manifest
error. Any amounts received after such time on any date may, in the discretion
of the Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such
payments shall be made to the Administrative Agent at its offices specified in
Section 12.01, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Section 5.01,
Section 5.02, Section 5.03 and Section 12.03 shall be made directly to the
Persons entitled thereto. The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment hereunder shall be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments hereunder shall be made in dollars.

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

(c)    Sharing of Payments by Lenders. If any Lender shall, by exercising any
right of set-off or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Loans or participations in LC
Disbursements resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Loans and participations in LC Disbursements and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Loans and/or participations in LC Disbursements of
other Lenders, as applicable, to the extent necessary so that the benefit of all
such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and/or participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
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sale of a participation in any of its Loans or participations in LC
Disbursements to any assignee or participant, other than to the Parent or any
Restricted Subsidiary or Affiliate thereof (as to which the provisions of this
Section 4.01(c) shall apply). The Borrower consents to the foregoing and agrees,
to the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.

Section 4.02    Presumption of Payment by the Borrower. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

Section 4.03    Certain Deductions by the Administrative Agent. If any Lender
shall fail to make any payment required to be made by it pursuant to
Section 2.05(a), Section 2.08(d), Section 2.08(e) or Section 4.02, or otherwise
hereunder, then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender’s
obligations under such Sections until all such unsatisfied obligations are fully
paid. If at any time prior to the acceleration or maturity of the Loans, the
Administrative Agent shall receive any payment in respect of principal of a Loan
or a reimbursement of an LC Disbursement while one or more Defaulting Lenders
shall be party to this Agreement, the Administrative Agent shall apply such
payment first to the Borrowing(s) for which such Defaulting Lender(s) shall have
failed to fund its pro rata share until such time as such Borrowing(s) are paid
in full or each Lender (including each Defaulting Lender) is owed its Applicable
Percentage of the Loans then outstanding, as applicable. After acceleration or
maturity of the Loans, all principal will be paid ratably as provided in
Section 10.02(c).

Section 4.04    Disposition of Proceeds. The Security Instruments contain
assignments by the Borrower and/or the Guarantors unto and in favor of the
Administrative Agent for the benefit of the Secured Parties of all of the
Borrower’s or each Guarantor’s interest in and to production and all proceeds
attributable thereto which may be produced from or allocated to the Mortgaged
Property. The Security Instruments further provide in general for the
application of such proceeds to the satisfaction of the Indebtedness and other
obligations described therein and secured thereby. Notwithstanding the
assignments contained in such Security Instruments, unless an Event of Default
has occurred and is continuing, (a) the Administrative Agent and the Lenders
will neither notify the purchaser or purchasers of such production nor take any
other action to cause such proceeds to be remitted to the Administrative Agent
or the Lenders, but the Administrative Agent and the Lenders will instead permit
such proceeds to be paid to and used by the Parent and its

 

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Restricted Subsidiaries and (b) the Lenders hereby authorize the Administrative
Agent to take such actions as may be necessary or useful to cause such proceeds
to be paid to the Parent and/or such Restricted Subsidiaries.

ARTICLE V

INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY

Section 5.01    Increased Costs.

(a)    Eurodollar Changes in Law. If any Change in Law shall:

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

(ii)    subject any Lender or the Administrative Agent to any Taxes (other than
(A) Indemnified Taxes, or (B) Excluded Taxes) on its loans, loan principal,
letters of credit, commitments, or other obligations, or its deposits, reserves,
other liabilities or capital attributable thereto; or

(iii)    impose on any Lender or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by such Lender; and the result
of any of the foregoing shall be to increase the cost to such Lender of making
or maintaining any Eurodollar Loan (or of maintaining its obligation to make any
such Loan) or to reduce the amount of any sum received or receivable by such
Lender or the Administrative Agent (whether of principal, interest or otherwise)
with respect to any Eurodollar Loan, then the Borrower will pay to such Lender
or the Administrative Agent such additional amount or amounts as will compensate
such Lender or the Administrative Agent for such additional costs incurred or
reduction suffered.

(b)    Capital Requirements. If any Lender or the Issuing Bank determines that
any Change in Law regarding capital or liquidity requirements has or would have
the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s
capital or on the capital of such Lender’s or the Issuing Bank’s holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such
Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the
Issuing Bank’s holding company with respect to capital adequacy and liquidity),
then from time to time upon receipt of a certificate described in subsection
(c) below, the Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such
reduction suffered.

(c)    Certificates. A certificate of a Lender or the Issuing Bank setting forth
the amount or amounts necessary to compensate such Lender or the Issuing Bank or
its holding company, as the case may be, as specified in Section 5.01(a) or
(b) shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender or the Issuing Bank, as the case may
be, the amount shown as due on any such certificate within thirty (30) days
after receipt thereof.

 

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(d)    Effect of Failure or Delay in Requesting Compensation. Failure or delay
on the part of any Lender or the Issuing Bank to demand compensation pursuant to
this Section 5.01 shall not constitute a waiver of such Lender’s or the Issuing
Bank’s right to demand such compensation; provided that the Borrower shall not
be required to compensate a Lender or the Issuing Bank pursuant to this
Section 5.01 for any increased costs or reductions incurred more than 270 days
prior to the date that such Lender or the Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s or the Issuing Bank’s intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.

Section 5.02    Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower pursuant to Section 5.04(b), then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market.

A certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within thirty
(30) days after receipt thereof.

Section 5.03    Taxes.

(a)    Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower or any Guarantor under any Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the applicable Withholding Agent shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased by the Borrower or any Guarantor as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.03(a)), the Administrative Agent,
Lender or Issuing Bank (as the case may be) receives an amount equal to the sum
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deductions been made, (ii) the applicable Withholding Agent shall make such
deductions and (iii) the applicable Withholding Agent shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.

(b)    Payment of Other Taxes by the Borrower. The Borrower shall 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 Issuing Bank, within ten (10) days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes payable or paid by the Administrative Agent, such Lender or the
Issuing Bank, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section 5.03) 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 of the Administrative Agent, a Lender or
the Issuing Bank as to the amount of such payment or liability under this
Section 5.03 shall be delivered to the Borrower and shall be conclusive absent
manifest error.

(d)    Indemnification by the Lenders. Each Lender shall severally indemnify the
Administrative Agent, within thirty (30) days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that
Borrower has not already indemnified the Administrative Agent for such
Indemnified Taxes and without limiting the obligation of the Borrower to do so),
(ii) any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 12.04(c) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by the Administrative Agent in connection with any Loan
Document, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this paragraph (d).

(e)    Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower or a Guarantor 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.

(f)    Status of Lenders. (i) Any Lender that is entitled to an exemption from
or reduction of withholding tax with respect to payments made under any Loan
Document shall deliver to the Withholding Agent, at the time or times reasonably
requested by the Withholding Agent, such properly completed and executed
documentation reasonably requested by the Withholding Agent as will permit such
payments to be made without withholding or at a reduced

 

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rate of withholding. In addition, any Lender, if reasonably requested by the
Withholding Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Withholding Agent as will enable
the Withholding Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Section 5.03(f)(ii)(A) and (ii)(B) and Section 5.03(g) below) shall
not be required if in the Lender’s reasonable judgment such completion,
execution or submission would subject such Lender to any material unreimbursed
cost or expense or would materially prejudice the legal or commercial position
of such Lender.

(i)    Without limiting the generality of the foregoing, in the event that the
Borrower is a “United States person” as defined in Section 7701(a)(30) of the
Code,

(A)    any Lender that is a “United States person” as defined in
Section 7701(a)(3) of the Code shall deliver to the Withholding Agent on or
prior to the date on which such Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the reasonable request of the Withholding
Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt
from U.S. federal backup withholding tax;

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

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

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

(3)    in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit I-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a
“10 percent shareholder” of the Borrower within the meaning of
Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation”
described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance
Certificate”) and (y) executed copies of IRS Form W-8BEN (or IRS Form W-8BEN-E,
as applicable); or

 

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

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

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

(g)    FATCA. If a payment made to a Lender under this Agreement would be
subject to United States federal withholding tax imposed by FATCA if such Lender
fails to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such
Lender shall deliver to the Withholding Agent, at the time or times prescribed
by law and at such time or times reasonably requested by the Withholding Agent,
such documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Withholding Agent as may be necessary for the
Withholding Agent to comply with its obligations under FATCA, to determine that
such Lender has complied with such Lender’s obligations under FATCA or to
determine the amount to deduct and withhold from such payment. Solely for
purposes of this Section 5.03(g), “FATCA” shall include any amendments made to
FATCA after the date of this Agreement.

(h)    Treatment of Certain Refunds. If the Administrative Agent, a Lender or
the Issuing Bank determines, in its sole discretion exercised in good faith,
that it has received a refund of any Indemnified 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 5.03, 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 5.03 with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund). The Borrower, upon the request of such indemnified party, shall
repay to such indemnified party the amount paid over pursuant to this paragraph
(h) (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) in the event that such

 

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indemnified party is required to repay such refund to such Governmental
Authority. Notwithstanding anything to the contrary in this paragraph (h), in no
event will the indemnified party be required to pay any amount to the Borrower
pursuant to this paragraph (h) to the extent such payment would place the
indemnified party in a less favorable net after-Tax position than the
indemnified party would have been in if the Tax subject to indemnification and
giving rise to such refund had not been deducted, withheld or otherwise imposed
and the indemnification payments or additional amounts with respect to such Tax
had never been paid. This paragraph shall not be construed to require any
indemnified party to make available its Tax returns (or any other information
relating to its Taxes that it deems confidential) to the Borrower or any other
Person.

Section 5.04    Mitigation Obligations; Replacement of Lenders.

(a)    Designation of Different Lending Office. If any Lender requests
compensation under Section 5.01, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 5.03, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 5.01 or Section 5.03, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.

(b)    Replacement of Lenders. If (i) any Lender requests compensation under
Section 5.01, (ii) the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 5.03, (iii) any Lender becomes a Defaulting Lender hereunder,
(iv) Lenders holding 80% or more of the Commitments have provided their consent
to any proposed increase in the Borrowing Base in accordance with the terms of
this Agreement but any Lender has not provided such consent, (v) any Lender has
given notice that it is unable to make or maintain Eurodollar Loans but Lenders
constituting Majority Lenders have not given such notice or (vi) Lenders whose
aggregate Applicable Percentages are 80% or more have provided their consent to
any proposed amendment or waiver of any term or provision of this Agreement or
any Loan Document but any Lender has not provided such consent, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 12.04(b)), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that(A) if
such assignee is not already a Lender, the Borrower shall have received the
prior written consent of the Administrative Agent, which consent shall not
unreasonably be withheld,(B) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in LC
Disbursements, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and(C) in the case of any such assignment resulting from a claim
for compensation under Section 5.01 or payments required to be made pursuant to
Section 5.03, such assignment will result in a reduction in such compensation

 

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

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

ARTICLE VI

CONDITIONS PRECEDENT

Section 6.01    Effective Date. This Agreement, including the obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of Credit (other
than the Existing Letters of Credit) hereunder, shall not become effective until
the date on which each of the following conditions and each of the conditions
under Section 6.02 is satisfied (or waived in accordance with Section 12.02):

(a)    The Administrative Agent, the Arranger and the Lenders shall have
received all commitment, facility and agency fees and all other fees and amounts
due and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder (including, without limitation, the
fees and expenses of Vinson & Elkins L.L.P., counsel to the Administrative
Agent, that have then been invoiced).

(b)    The Administrative Agent shall have received one or more certificates of
a Responsible Officer of the Borrower and each Guarantor setting forth
(i) resolutions of its board of directors (or comparable governing body) with
respect to the authorization of the Borrower or such Guarantor to execute and
deliver the Loan Documents to which it is a party and to enter into the
transactions contemplated in those documents, (ii) the officers of the Borrower
or such Guarantor (y) who are authorized to sign the Loan Documents to which the
Borrower or such Guarantor is a party and (z) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of such authorized officers, and
(iv) the articles or certificate of incorporation and bylaws (or comparable
organizational documents for any Credit Parties that are not corporations) of
the Borrower and such Guarantor, certified as being true and complete. The
Administrative Agent and the Lenders may conclusively rely on such certificates
until the Administrative Agent receives notice in writing from the Borrower to
the contrary.

 

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(c)    The Administrative Agent shall have received certificates of the
appropriate State agencies with respect to the existence, qualification and good
standing of the Borrower and each Guarantor from their respective states of
formation.

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

(e)    The Administrative Agent shall have received duly executed Notes payable
to each Lender requesting a Note in principal amounts equal to its Maximum
Credit Amount, dated as of the date hereof.

(f)    The Administrative Agent shall have received from each signatory thereto
duly executed counterparts (in such number as may be requested by the
Administrative Agent) of the Security Instruments described on Exhibit E. In
connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall:

(i)    be reasonably satisfied that the Security Instruments (A) create first
priority, perfected Liens (subject to Liens permitted under Section 9.03) and
any limitations expressly set out in such Security Instruments) on all Property
purported to be pledged as collateral pursuant to the Security Instruments and
not described in clause (B) below (including, without limitation, all Equity
Interests owned by any Credit Party in the Restricted Subsidiaries), and
(B) create first priority, perfected Liens (subject only to Excepted Liens) on
at least 85% of the total value of the Proved Oil and Gas Properties evaluated
in the Initial Reserve Report; and (ii) have received certificates, if any,
together with undated, blank stock powers for each such certificate,
representing all of the issued and outstanding Equity Interests owned by any
Credit Party in each of the other Credit Parties.

(g)    The Administrative Agent shall have received an opinion of Latham &
Watkins LLP and local counsel in any jurisdictions reasonably requested by the
Administrative Agent, in each case, in form and substance acceptable to the
Administrative Agent and its counsel.

(h)    The Administrative Agent shall have received a certificate of insurance
coverage of the Credit Parties evidencing that the Credit Parties are carrying
insurance in accordance with Section 7.12.

(i)    The Administrative Agent shall have received title information as the
Administrative Agent may reasonably require satisfactory to the Administrative
Agent setting forth the status of title to at least 80% of the total value of
the Proved Oil and Gas Properties evaluated in the Initial Reserve Report.

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

 

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(k)    The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has received
all consents and approvals required by Section 7.03.

(l)    The Administrative Agent shall have received (i) the financial statements
referred to in Section 7.04(a) and (ii) the Initial Reserve Report accompanied
by a certificate covering the matters described in Section 8.12(c).

(m)    The Administrative Agent shall have received appropriate UCC search
certificates and county-level real property record search results reflecting no
prior Liens encumbering the Properties of the Parent and its Restricted
Subsidiaries for each jurisdiction requested by the Administrative Agent; other
than those being assigned or released on or prior to the Effective Date or Liens
permitted by Section 9.03.

(n)    The Administrative Agent shall have received from the Credit Parties, to
the extent requested by the Lenders or the Administrative Agent, all
documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including the USA Patriot Act.

Without limiting the generality of the provisions of Section 11.04, for purposes
of determining compliance with the conditions specified in this Section 6.01,
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 under this Section 6.01 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 Effective Date specifying its objection
thereto. All documents executed or submitted pursuant to this Section 6.01 by
and on behalf of the Parent or any of its Subsidiaries shall be in form and
substance reasonably satisfactory to the Administrative Agent and its counsel.
The obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 12.02) at or
prior to 2:00 p.m., Denver, Colorado time, on May 15, 2018 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate
at such time). The Administrative Agent shall notify the Borrower and the
Lenders of the Effective Date, and such notice shall be conclusive and binding.

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

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

(b)    The representations and warranties of the Borrower and the Guarantors set
forth in this Agreement and in the other Loan Documents shall be true and
correct in all material respects on and as of the date of such Borrowing or the
date of issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent (i) that any such

 

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representations and warranties are expressly limited to an earlier date, in
which case, on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, such
representations and warranties shall continue to be true and correct in all
material respects as of such specified earlier date, and (ii) that any such
representation and warranty is expressly qualified by materiality or by
reference to Material Adverse Effect, in which case such representation and
warranty (as so qualified) shall continue to be true and correct in all
respects.

(c)    The making of such Loan or the issuance, amendment, renewal or extension
of such Letter of Credit, as applicable, would not conflict with, or cause any
Lender or the Issuing Bank to violate or exceed, any applicable Governmental
Requirement.

(d)    The receipt by the Administrative Agent of a Borrowing Request in
accordance with Section 2.03 or a request for a Letter of Credit (or an
amendment, extension or renewal of a Letter of Credit) in accordance with
Section 2.08(b), as applicable.

(e)    At the time of and immediately after giving effect to such Borrowing or
to the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Excess Cash shall exist.

(f)    If (i) such Borrowing or issuance, amendment, renewal or extension of
such Letter of Credit, as applicable, occurs during the period beginning on the
Third Amendment Effective Date and ending on December 31, 2022 and (ii) there is
Permitted Junior Lien Debt outstanding as of such time then, after giving effect
to such Borrowing or issuance, amendment, renewal or extension of such Letter of
Credit, the aggregate Revolving Credit Exposure shall not exceed an amount equal
to (x) the aggregate Commitments minus (y) the lesser of (A) $100,000,000 and
(B) 25% of the aggregate principal amount of Permitted Junior Lien Debt
outstanding at such time.

Each request for a Borrowing and each request for the issuance, amendment,
renewal or extension of any Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as to the
matters specified in Section 6.02(a), Section 6.02(b), Section 6.02(e) and
Section 6.02(f) (if applicable).

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

The Borrower and (to the extent that the Parent is not the Borrower) the Parent
jointly and severally represent and warrant to the Lenders that:

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

 

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

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

Section 7.04    Financial Condition; No Material Adverse Change.

(a)    The Borrower has heretofore furnished or caused to be furnished to the
Lenders (i) Centennial Resource Development’s audited consolidated balance sheet
and statements of operations, shareholders’ equity and cash flows as of and for
the fiscal year ended December 31, 2017 and (ii) the Borrower’s unaudited
consolidated balance sheet and related statements of income and cash flows as of
the end of and for such year, in each case, certified by one of its respective
Financial Officers. Such financial statements present fairly, in all material
respects, the consolidated financial position and income and cash flows of
Centennial Resource Development and the Borrower and its Consolidated
Subsidiaries, respectively, as of such dates and for such periods in accordance
with GAAP, subject to the absence of footnotes in the case of the unaudited
annual financial statements of the Borrower.

(b)    No Material Adverse Effect has occurred since December 31, 2017.

 

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(c)    Neither the Parent nor any Restricted Subsidiary has on the date hereof,
after giving effect to the Transactions, any material Debt (including
Disqualified Capital Stock), any material liabilities for past due taxes, or any
material contingent liabilities, off-balance sheet liabilities or partnership
liabilities that, in each case, would be required by GAAP to be reflected or
noted in audited financial statements except as referred to or reflected or
provided for in the Financial Statements, in Schedule 9.02, or in other written
information provided by any Credit Party to Administrative Agent and the Lenders
prior to the date hereof.

Section 7.05    Litigation. Except as set forth in Schedule 7.05, there are no
actions, suits, investigations or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Parent or the
Borrower, threatened against or affecting the Parent or any Restricted
Subsidiary (i) not fully covered by insurance (except for normal deductibles) as
to which there is a reasonable probability of an adverse determination that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (ii) that involve any
challenge by any Credit Party to the validity or enforceability of any material
provision of any Loan Document (including, without limitation, any provision
relating to the Credit Parties’ obligations to repay the Indebtedness or any
provision relating to the validity or perfection of any Lien created by any Loan
Document).

Section 7.06    Environmental Matters. Except for such matters as set forth on
Schedule 7.06 or that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect:

(a)    the Parent and its Restricted Subsidiaries and each of their respective
Properties and operations thereon are, and within all applicable statute of
limitation periods have been, in compliance with all applicable Environmental
Laws.

(b)    the Parent and its Restricted Subsidiaries have obtained all
Environmental Permits required for their respective operations and each of their
Properties, with all such Environmental Permits being currently in full force
and effect, and none of the Parent or its Restricted Subsidiaries has received
any written notice or otherwise has knowledge that any such existing
Environmental Permit will be revoked or that any application for any new
Environmental Permit or renewal of any existing Environmental Permit will be
protested or denied.

(c)    there are no claims, demands, suits, orders, inquiries, or proceedings
concerning any violation of, or any liability (including as a potentially
responsible party) under, any applicable Environmental Laws that is pending or,
to the Parent’s or the Borrower’s knowledge, threatened against the Parent or
any Restricted Subsidiary or any of their respective Properties or as a result
of any operations at such Properties.

(d)    none of the Properties of the Parent or any Restricted Subsidiary contain
or have contained any: (i) underground storage tanks; (ii) asbestos-containing
materials; (iii) landfills or dumps; (iv) hazardous waste management units as
defined pursuant to RCRA or any comparable state law; or (v) sites on or
nominated for the National Priority List promulgated pursuant to CERCLA or any
state remedial priority list promulgated or published pursuant to any comparable
state law.

 

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(e)    there has been no Release or, to the Parent’s or the Borrower’s
knowledge, threatened Release, of Hazardous Materials at, on, under or from the
Parent’s or any Restricted Subsidiary’s Properties, there are no investigations,
remediations, abatements, removals, or monitorings of Hazardous Materials
required under applicable Environmental Laws at such Properties and, to the
knowledge of the Parent and the Borrower, none of such Properties are adversely
affected by any Release or threatened Release of a Hazardous Material
originating or emanating from any other real property.

(f)    neither the Parent nor any Restricted Subsidiary has received any written
notice asserting an alleged liability or obligation under any applicable
Environmental Laws with respect to the investigation, remediation, abatement,
removal, or monitoring of any Hazardous Materials at, under, or Released or
threatened to be Released from any real properties offsite the Parent’s or any
Restricted Subsidiary’s Properties and, to the Parent’s and the Borrower’s
knowledge, there are no conditions or circumstances that could reasonably be
expected to result in the receipt of such written notice.

(g)    there has been no exposure of any Person or Property to any Hazardous
Materials as a result of or in connection with the operations and businesses of
any of the Parent’s or its Restricted Subsidiaries’ Properties that could
reasonably be expected to form the basis for a claim for damages or
compensation.

(h)    the Parent and its Restricted Subsidiaries have made available to the
Lenders complete and correct copies of all third party environmental site
assessment reports and studies on environmental matters (including matters
relating to any alleged non-compliance with or liability under Environmental
Laws) reasonably requested by the Administrative Agent that are in any of the
Parent’s or the Restricted Subsidiaries’ possession or control and relating to
their respective Properties or operations thereon.

Section 7.07    Compliance with the Laws and Agreements; No Defaults or
Borrowing Base Deficiency.

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

(b)    No Default or Borrowing Base Deficiency has occurred and is continuing.

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

Section 7.09    Taxes. Each of the Parent and its Restricted Subsidiaries has
timely filed or caused to be filed all federal income Tax returns and reports,
and all other material Tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have

 

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been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Parent or such Restricted Subsidiary,
as applicable, has set aside on its books adequate reserves in accordance with
GAAP or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect. The charges, accruals and
reserves on the books of the Parent and its Restricted Subsidiaries in respect
of Taxes and other governmental charges are, in the reasonable opinion of the
Borrower, adequate. Other than Tax Liens permitted by clause (a) of the
definition of “Excepted Liens”, no Tax Lien has been filed and, to the knowledge
of the Parent and the Borrower, no claim is being asserted with respect to any
such Tax or other such governmental charge.

Section 7.10    ERISA. (a) Except for such matters that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect:

(i)    The Parent, its Restricted Subsidiaries and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the Code
regarding each Plan and Multiemployer Plan.

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

(iii)    No ERISA Event has occurred in the six-year period preceding the date
hereof or is reasonably expected to occur.

(iv)    The present value of all accumulated benefit obligations under each Plan
(based on the assumptions used for purposes of Accounting Standards Codification
No. 715: Compensation-Retirement Benefits, or any applicable successor) did not,
as of the date of the most recent financial statements reflecting such amounts,
exceed the fair market value of the assets of such Plan allocable to such
accrued benefits.

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

(vi)    Full payment when due has been made of all amounts which the Parent, its
Restricted Subsidiaries or any ERISA Affiliate is required under the terms of
each Plan, Multiemployer Plan or applicable law to have paid as contributions to
such Plan or Multiemployer Plan.

(b)    None of the Parent or any of its Subsidiaries is an entity deemed to hold
“plan assets” (within the meaning of the Plan Asset Regulations).

Section 7.11    Disclosure; No Material Misstatements. The certificates,
financial statements, reports, and other written information, taken as a whole,
furnished by or on behalf of the Borrower or any Guarantor to the Administrative
Agent and the Lenders in connection with the negotiation of any Loan Document or
included therein or delivered pursuant thereto, do not contain any material
misstatement of fact or omit to state any material fact necessary to make the

 

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statements therein, in the light of the circumstances under which they were or
are made, not misleading as of the date such information is dated or certified;
provided that (a) to the extent any such certificate, statement, report, or
information was based upon or constitutes a forecast or projection, the Parent
and the Borrower jointly and severally represent only that it acted in good
faith and utilized reasonable assumptions at the time such information was
furnished in the preparation of such certificate, statement, report, or
information (it being recognized by the Lenders, however, that projections as to
future events are not to be viewed as facts and that 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 Parent and the Borrower make
no representation that such projections will be realized), (b) with respect to
any financial statements so furnished, the Parent and the Borrower jointly and
severally represent only that (except as noted otherwise therein or as otherwise
customary for non-annual financial statements) such financial statements present
fairly in all material respects the financial condition and results of
operations of the described Persons in accordance with GAAP consistently
applied, and (c) as to statements, information and reports supplied by third
parties, the Parent and the Borrower jointly and severally represent only that
it is not aware of any material misstatement or omission therein. There are no
statements or conclusions in any Reserve Report which are based upon or include
material misleading information or fail to take into account known material
information regarding the matters reported therein, it being understood that
projections concerning volumes attributable to the Oil and Gas Properties of the
Parent and its Restricted Subsidiaries and production and cost estimates
contained in each Reserve Report are necessarily based upon professional
opinions, estimates and projections and that the Parent and its Restricted
Subsidiaries do not warrant that such opinions, estimates and projections will
ultimately prove to have been accurate.

Section 7.12    Insurance. The Parent has, and has caused all of its Restricted
Subsidiaries to have, (a) all insurance policies sufficient for the compliance
by each of them with all material Governmental Requirements and all material
agreements and (b) insurance coverage in such amounts and against such risk that
are usually insured against by companies similarly situated and engaged in the
same or a similar business for the assets and operations of the Parent and its
Restricted Subsidiaries. The Administrative Agent and the Lenders have been
named as additional insureds in respect of such liability insurance policies and
the Administrative Agent has been named as loss payee with respect to Property
loss insurance.

Section 7.13    Restriction on Liens. Neither the Parent nor any of its
Restricted Subsidiaries is a party to any material agreement or arrangement
(other than agreements governing Debt permitted by Section 9.02 which create
Liens permitted by Section 9.03), or subject to any order, judgment, writ or
decree, which either restricts or purports to restrict its ability to grant
Liens to the Administrative Agent for the benefit of the Secured Parties on or
in respect of their Properties to secure the Indebtedness and the Loan
Documents, in each case, except as permitted by Section 9.15.

Section 7.14    Subsidiaries. Except as set forth on Schedule 7.14 or as
disclosed in writing to the Administrative Agent (which shall promptly furnish a
copy to the Lenders), which, upon such disclosure, shall be deemed to be a
supplement to Schedule 7.14, neither the Borrower nor the Parent has any
Subsidiaries (other than, in the case of the Parent, the Borrower) or has any
Foreign Subsidiaries. Schedule 7.14 identifies each Subsidiary as either
Restricted or Unrestricted and, unless otherwise disclosed on such schedule,
each Restricted Subsidiary on such schedule is a Wholly-Owned Subsidiary.

 

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Section 7.15    Location of Business and Offices. The Borrower’s jurisdiction of
organization is the State of Delaware; the name of the Borrower as listed in the
public records of its jurisdiction of organization is Centennial Resource
Production, LLC; and the organizational identification number of the Borrower in
its jurisdiction of organization is 5196860 (or, in each case, as set forth in a
notice delivered to the Administrative Agent pursuant to Section 8.01(m) in
accordance with Section 12.01). The Borrower’s principal place of business and
chief executive offices are located at the address specified in Section 12.01
(or as set forth in a notice delivered pursuant to Section 8.01(m) and
Section 12.01(c)). Each Restricted Subsidiary of the Borrower’s jurisdiction of
organization, name as listed in the public records of its jurisdiction of
organization, organizational identification number in its jurisdiction of
organization, and the location of its chief executive office is stated on
Schedule 7.14 (or as set forth in a notice delivered pursuant to
Section 8.01(m)).

Section 7.16    Properties; Titles, Etc.

(a)    Subject to Immaterial Title Deficiencies, each of the Parent and the
Restricted Subsidiaries has good and defensible title to the Oil and Gas
Properties evaluated in the most recently delivered Reserve Report and good
title to all its material personal Properties, in each case, free and clear of
all Liens except Liens permitted by Section 9.03. After giving full effect to
the Excepted Liens (including Immaterial Title Deficiencies), the Parent or the
Restricted Subsidiary specified as the owner owns the net interests in
production attributable to the Hydrocarbon Interests as reflected in the most
recently delivered Reserve Report, and the ownership of such Properties does not
in any material respect obligate the Parent or such Restricted Subsidiary to
bear the costs and expenses relating to the maintenance, development and
operations of each such Property in an amount in excess of the working interest
of each Property set forth in the most recently delivered Reserve Report that is
not offset by a corresponding proportionate increase in the Parent’s or such
Restricted Subsidiary’s net revenue interest in such Property or in the revenues
therefrom.

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

(c)    The rights and Properties presently owned, leased or licensed by the
Parent and its Restricted Subsidiaries including, without limitation, all
easements and rights of way, include all rights and Properties necessary to
permit the Parent and its Restricted Subsidiaries to conduct their business in
all material respects in substantially the same manner as its business has been
conducted prior to the date hereof, unless the Borrower determines in good faith
that the continued maintenance of such Property is no longer economically
desirable, necessary or useful to the business of the Credit Parties or such
Properties are Transferred in accordance Section 9.12.

 

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(d)    All of the Properties of the Parent and its Restricted Subsidiaries which
are reasonably necessary for the operation of their businesses are in good
working condition and are maintained in accordance with prudent business
standards, ordinary wear and tear excepted.

(e)    The Parent and each Restricted Subsidiary owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual Property
material to its business (including, without limitation, all databases,
geological data, geophysical data, engineering data, seismic data, maps,
interpretations and other technical information material to its business), and
the use thereof by the Parent and such Restricted Subsidiary does not infringe
upon the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

Section 7.17    Maintenance of Properties. Except for such acts or failures to
act as could not be reasonably expected to have a Material Adverse Effect, the
Oil and Gas Properties (and Properties unitized therewith) of the Parent and its
Restricted Subsidiaries have been maintained, operated and developed in a good
and workmanlike manner and in conformity with all Governmental Requirements and
in conformity with the provisions of all leases, subleases or other contracts
comprising a part of the Hydrocarbon Interests and other contracts and
agreements forming a part of the Oil and Gas Properties of the Parent and its
Restricted Subsidiaries. Specifically in connection with the foregoing, except
for those as could not be reasonably expected to have a Material Adverse Effect,
(a) no Oil and Gas Property of the Parent or any Restricted Subsidiary is
subject to having allowable production reduced below the full and regular
allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) and (b) the
wells comprising a part of the Oil and Gas Properties (or Properties unitized
therewith) of the Parent or any Restricted Subsidiary are producing only from
the Oil and Gas Properties (or in the case of wells located on Properties pooled
or unitized therewith, such pooled or unitized Properties) of the Parent or such
Restricted Subsidiary. All pipelines, wells, gas processing plants, platforms
and other material improvements, fixtures and equipment owned in whole or in
part by the Parent or any of its Restricted Subsidiaries that are necessary to
conduct normal operations are being maintained in a state adequate to conduct
normal operations, and with respect to such of the foregoing which are operated
by the Parent or any of its Restricted Subsidiaries, in a manner consistent with
the Parent’s or its Restricted Subsidiaries’ past practices (other than those
the failure of which to maintain in accordance with this Section 7.17 could not
reasonably be expected to have a Material Adverse Effect).

Section 7.18    Gas Imbalances, Prepayments. Except as set forth on Schedule
7.18 or on the most recent certificate delivered pursuant to Section 8.12(c), on
a net basis there are no gas imbalances, take or pay or other prepayments which
would require the Parent or any of its Restricted Subsidiaries to deliver
Hydrocarbons produced from their Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor exceeding 2.5% of the
aggregate annual production of gas from the Oil and Gas Properties of the Parent
and its Restricted Subsidiaries during the most recent calendar year (on an mcf
equivalent basis).

Section 7.19    Marketing of Production. Except for contracts listed and in
effect on the date hereof on Schedule 7.19, or hereafter either disclosed in
writing to the Administrative Agent or included in the most recently delivered
Reserve Report (with respect to all of which contracts the Borrower represents
that the Parent or its Restricted Subsidiaries are receiving a price for all

 

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production sold thereunder which is computed substantially in accordance with
the terms of the relevant contract), no material agreements exist which are not
cancelable on 90 days’ notice or less without penalty or detriment for the sale
of production from the Parent’s or its Restricted Subsidiaries’ Hydrocarbons
(including, without limitation, calls on or other rights to purchase,
production, whether or not the same are currently being exercised) that
(a) pertain to the sale of production at a fixed price and (b) have a maturity
or expiry date of longer than six (6) months.

Section 7.20    Swap Agreements and Qualified ECP Counterparty. Schedule 7.20,
as of the date hereof, and after the date hereof, each report required to be
delivered by the Borrower pursuant to Section 8.01(e), sets forth, a true and
complete list of all Swap Agreements of the Parent and each Restricted
Subsidiary, the material terms thereof (including the type, effective date,
termination date and notional amounts or volumes), the estimated net mark to
market value thereof, as of the end of the most recently ended fiscal quarter
for which such information is available, all credit support agreements (other
than the Loan Documents) relating thereto (including any margin required or
supplied) and the counterparty to each such agreement. The Borrower is a
Qualified ECP Counterparty.

Section 7.21    Use of Loans and Letters of Credit. The proceeds of the Loans
and the Letters of Credit shall be used to renew, amend, modify, and extend
existing indebtedness of the Borrower under the Existing A&R Credit Agreement,
pay fees, commissions and expenses in connection with the foregoing, provide
working capital for exploration and production operations, finance acquisitions
of Oil and Gas Properties permitted hereunder and for general corporate
purposes. The Parent and its Restricted Subsidiaries are not engaged
principally, or as one of its or their important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock (within the meaning of Regulation T, U or X of
the Board). No part of the proceeds of any Loan or Letter of Credit will be used
for any purpose which violates the provisions of Regulations T, U or X of the
Board. The Borrower will not request any Borrowing or Letter of Credit, and the
Borrower shall not use, and shall procure that the Parent and its other
Subsidiaries and its or their respective directors, officers, employees and
agents shall not use, the proceeds of any Borrowing or Letter of Credit (a) in
furtherance of an offer, payment, promise to pay, or authorization of the
payment or giving of money, or anything else of value, to any Person in
violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing
or facilitating any activities, business or transaction of or with any
Sanctioned Person, or in any Sanctioned Country, or (c) in any manner that would
knowingly or negligently result in the violation of any Sanctions applicable to
any party hereto.

Section 7.22    Solvency. After giving effect to the transactions contemplated
hereby (including, for the avoidance of doubt, each Borrowing or issuance of
Letter of Credit hereunder), (a) the Borrower and the Guarantors on a
consolidated basis are not insolvent as such term is used and defined in the
United States Bankruptcy Code and (b) the Borrower and the Guarantors, taken as
a whole, will not have (and will have no reason to believe that it will have
thereafter) unreasonably small capital for the conduct of its business.

Section 7.23    Anti-Corruption Laws and Sanctions. The Parent and the Borrower
have implemented and maintain in effect such policies and procedures, if any, as
they reasonably deem appropriate, in light of their businesses and international
activities (if any), to ensure compliance by the Parent, the Borrower and its
other Subsidiaries and their respective directors, officers,

 

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employees and agents with Anti-Corruption Laws and applicable Sanctions, and the
Parent, the Borrower and its other Subsidiaries and their respective officers
and employees and, to the knowledge of the Parent and the Borrower, their
respective directors and agents, are in compliance with Anti-Corruption Laws and
applicable Sanctions in all material respects. None of (a) the Parent, the
Borrower and its other Subsidiaries or any of their respective directors,
officers or employees, or (b) to the knowledge of the Parent and the Borrower,
any agent of the Parent, the Borrower or any other Subsidiary that will act in
any capacity in connection with or benefit from the credit facility established
hereby, is a Sanctioned Person. No Borrowing or Letter of Credit, use of
proceeds or other transaction contemplated by this Agreement will violate any
Anti-Corruption Law, applicable Sanctions, the Act, or the Trading with the
Enemy Act, as amended. The Parent, the Borrower and its other Subsidiaries are
in compliance in all material respects with the Act.

Section 7.24    EEA Financial Institutions. No Credit Party is an EEA Financial
Institution.

ARTICLE VIII

AFFIRMATIVE COVENANTS

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have been
reimbursed, each of the Borrower and (to the extent that the Parent is not the
Borrower) the Parent covenants and agrees with the Lenders that:

Section 8.01    Financial Statements; Other Information. The Borrower will
furnish or will cause the Parent to furnish to the Administrative Agent (which
shall promptly make a copy thereof available to the Lenders):

(a)    Annual Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than the fifth day after the
date on which such financial statements are required to be filed with the SEC
after giving effect to any permitted extensions pursuant to Rule 12b-25 under
the Securities Exchange Act, commencing with the fiscal year ending December 31,
2018, (i) at any time when Centennial Resource Development (A) owns more than
50% of the Equity Interests of the Borrower with ordinary voting power to elect
or appoint the managers of the Borrower and is not the Parent and (B) owns no
other assets and has no other operations other than those ancillary to its
ownership of such Equity Interests, (1) Centennial Resource Development’s
audited consolidated balance sheet and related statements of operations,
shareholders’ equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by independent public accountants of recognized national
standing or that are otherwise reasonably acceptable to the Administrative Agent
(without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of Centennial Resource
Development and its consolidated subsidiaries on a consolidated basis in
accordance with GAAP consistently applied and (2) the Borrower’s unaudited
consolidated balance sheet and related statements of income and cash flows

 

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as of the end of and for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to the absence of footnotes and (ii) at any other time, as soon
as available, but in any event in accordance with then applicable law and not
later than one hundred twenty (120) days after the end of each fiscal year of
the Parent (or, if the Parent or the Borrower is required to file such financial
statements with the SEC at such time, on or before the fifth day after the date
on which such financial statements are required to be filed with the SEC after
giving effect to any permitted extensions pursuant to Rule 12b-25 under the
Securities Exchange Act), commencing with the fiscal year ending December 31,
2018, the Parent’s audited consolidated balance sheet and related statements of
operations, shareholders’ equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by independent public accountants of
recognized national standing or that are otherwise reasonably acceptable to the
Administrative Agent (without a “going concern” or like qualification or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Parent and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied.

(b)    Quarterly Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than seventy-five (75) days
after the end of each of the first three fiscal quarters of each fiscal year of
the Parent (or, if the Parent or the Borrower is required to file such financial
statements with the SEC at such time, on or before the fifth day after the date
on which such financial statements are required to be filed with the SEC after
giving effect to any permitted extensions pursuant to Rule 12b-25 under the
Securities Exchange Act), commencing with the fiscal quarter ending March 31,
2018, the Parent’s consolidated balance sheet and related statements of
operations and cash flows as of the end of and for such fiscal quarter and the
then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Parent and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.

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

 

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(d)    Certificate of Financial Officer – Consolidating Information. If, at any
time, all of the Consolidated Subsidiaries of the Parent are not Consolidated
Restricted Subsidiaries, then concurrently with any delivery of financial
statements under Section 8.01(a) or Section 8.01(b), a certificate of a
Financial Officer setting forth consolidating spreadsheets that show all
Consolidated Unrestricted Subsidiaries and the eliminating entries, in such form
as would be presentable to the auditors of the Parent.

(e)    Certificate of Financial Officer – Swap Agreements. Concurrently with the
delivery of each Reserve Report hereunder (other than the Initial Reserve
Report), a certificate of a Financial Officer, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth as of a recent date, a
true and complete list of all Swap Agreements of the Parent and each Restricted
Subsidiary, the material terms thereof (including the type, effective date,
termination date and notional amounts or volumes), the estimated net
mark-to-market value therefor, as of the end of the most recently ended fiscal
quarter for which such information is available, any new credit support
agreements relating thereto (other than the Loan Documents), any margin required
or supplied under any credit support document (other than the Loan Documents),
and the counterparty to each such agreement.

(f)    Certificate of Insurer – Insurance Coverage. Concurrently with any
delivery of financial statements under Section 8.01(a), one or more certificates
of insurance coverage from the Parent’s insurance brokers or insurers with
respect to the insurance required by Section 8.07, in form and substance
reasonably satisfactory to the Administrative Agent, and, if requested by the
Administrative Agent, copies of the applicable policies.

(g)    SEC and Other Filings; Reports to Shareholders. If the Parent or any
Restricted Subsidiary becomes a publicly traded company, then promptly after the
same becomes publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by the Parent or any Restricted Subsidiary
with the SEC, or with any national securities exchange, or distributed by the
Parent to its equity holders generally, as the case may be.

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

(i)    Lists of Purchasers. Promptly following the written request of the
Administrative Agent, a list of all Persons (and their addresses for notices)
purchasing Hydrocarbons from the Parent or any Restricted Subsidiary on a basis
other than spot sales.

(j)    Notice of Sales of Hydrocarbon Interests. In the event the Parent or any
Restricted Subsidiary intends to Transfer any Proved Oil and Gas Properties with
a total value with respect to any single sale in excess of $10,000,000, or any
Equity Interests in any Subsidiary in accordance with Section 9.12, reasonable
prior written notice of such Transfer, the anticipated price thereof and the
anticipated date of closing and any other details thereof requested by the
Administrative Agent.

 

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

(l)    Issuance of Permitted Senior Unsecured Notes or Permitted Junior Lien
Debt. In the event the Parent or the Borrower intends to issue Permitted Senior
Unsecured Notes or Permitted Junior Lien Debt, prior written notice of such
intended offering of such Permitted Senior Unsecured Notes or Permitted Junior
Lien Debt, the anticipated amount thereof, and the anticipated date of closing
and promptly when available will furnish a copy of the preliminary offering
memorandum (if any) and the final offering memorandum (if any).

(m)    Information Regarding Borrower and Guarantors. Prompt written notice (and
in any event not less than five (5) days prior thereto (or such lesser time
period as may be reasonably acceptable to the Administrative Agent) in the case
of any change of name or jurisdiction of organization) of any change (i) in the
Borrower or any Guarantor’s corporate name, (ii) in the Borrower or any
Guarantor’s corporate structure, (iii) in the Borrower or any Guarantor’s
jurisdiction of organization or such Person’s organizational identification
number in such jurisdiction of organization, and (iv) in the Borrower or any
Guarantor’s federal taxpayer identification number.

(n)    Production Report and Lease Operating Statements. Concurrently with each
delivery of a certificate pursuant to Section 8.12(c), a report setting forth,
for each calendar month during the then current fiscal year to the date of such
Reserve Report (to the extent production, sales, tax and expense data is then
available), the volume of production and sales attributable to production (and
the prices at which such sales were made and the revenues derived from such
sales) for each such calendar month from the Oil and Gas Properties, and setting
forth the related ad valorem, severance and production taxes and lease operating
expenses attributable thereto and incurred for each such calendar month, and
setting forth the operator of record for the Oil and Gas Properties.

(o)    Notices of Certain Changes. Promptly after the execution thereof, copies
of any amendment, modification or supplement to the certificate or articles of
incorporation or formation, bylaws, certificate or articles of organization,
regulations or limited liability company agreement, any preferred stock
designation or any other organic document of the Parent or any Restricted
Subsidiary if such amendment, modification or supplement is material to the
Lenders.

(p)    Notice of Investments in Unrestricted Subsidiaries and Unrestricted
Subsidiary Distributions. Promptly following the Parent or any Restricted
Subsidiary making any Investment in an Unrestricted Subsidiary after the
Effective Date, the Borrower shall deliver written notice thereof to the
Administrative Agent specifying the name of the Unrestricted Subsidiary in which
such Investment was made, the date of such Investment and the amount of such
Investment. Promptly following any Credit Party’s receipt of any Unrestricted
Subsidiary Distribution after the Effective Date from an Unrestricted Subsidiary
in which a Credit Party has made an Investment after the Effective Date pursuant
to Section 9.05(i), the Borrower shall deliver written notice thereof specifying
the amount of such Unrestricted Subsidiary Distribution, the date on which such
Unrestricted Subsidiary Distribution was received, and whether or not the
proceeds of such Unrestricted Subsidiary Distribution have been or will be used
by the Borrower to make distributions permitted under Section 9.04(a)(v).

 

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(q)    Other Requested Information. Promptly following any reasonable request
therefor, such other information regarding the operations, business affairs and
financial condition of the Parent or any Restricted Subsidiary (including,
without limitation, any Plan and any reports or other information filed with
respect thereto under the Code or under ERISA), or compliance with the terms of
this Agreement or any other Loan Document, or in order to assist the
Administrative Agent and the Lenders in maintaining compliance with the Act, in
each case as the Administrative Agent may reasonably request.

Documents required to be delivered pursuant to Section 8.01(a), Section 8.01(b)
or Section 8.01(g) (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 (a) on which the
Borrower posts such documents, or provides a link thereto on the Borrower’s
public website; or (b) 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: (i) the Borrower
shall deliver paper copies of such documents to the Administrative Agent or any
Lender upon its request to 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 (ii) the Borrower shall notify the Administrative Agent
and each Lender 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. The Administrative Agent shall have no obligation to request
the delivery of or to maintain paper 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 by a Lender for delivery, and each Lender shall
be solely responsible for requesting delivery to it or maintaining its copies of
such documents.

Section 8.02    Notices of Material Events. The Borrower will furnish to the
Administrative Agent (which shall promptly make a copy thereof available to the
Lenders) prompt (and in any event within three Business Days) written notice of
the following:

(a)    the occurrence of any Default;

(b)    the filing or commencement of, or the threat in writing of, any action,
suit, proceeding, investigation or arbitration by or before any arbitrator or
Governmental Authority against or affecting the Parent or any Restricted
Subsidiary not previously disclosed in writing to the Lenders or any material
adverse development in any action, suit, proceeding, investigation or
arbitration (whether or not previously disclosed to the Lenders) that, in either
case, could reasonably be expected to result in a Material Adverse Effect; and

(c)    the occurrence of any condition or event that the senior executive
officers of the Parent have determined to constitute a Material Adverse Effect
in their reasonable discretion.

 

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

Section 8.03    Existence; Conduct of Business. The Parent and the Borrower
will, and will cause each other Restricted Subsidiary to, (a) do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
(i) its legal existence and (ii) the rights, licenses, permits, privileges and
franchises material to the conduct of its business and (b) maintain, if
necessary, its qualification to do business in each other jurisdiction in which
its Oil and Gas Properties are located or the ownership of its Properties
requires such qualification, except where the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect; provided that the
foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 9.11.

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

Section 8.05    Performance of Obligations under Loan Documents. The Borrower
will pay the Loans in accordance with the terms hereof, and the Parent and the
Borrower will, and will cause each other Restricted Subsidiary to, do and
perform every act and discharge all of the obligations to be performed and
discharged by them under the Loan Documents, including, without limitation, this
Agreement, at the time or times and in the manner specified taking into
consideration any grace periods therein.

Section 8.06    Operation and Maintenance of Properties. The Parent and the
Borrower, at their own expense, will, and will cause each other Restricted
Subsidiary to:

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

(b)    keep and maintain all Property material to the conduct of its business in
good working order and condition (ordinary wear and tear excepted), and
preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear and depletion excepted) all of its Oil and Gas
Properties except, in each case, where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.

 

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(c)    promptly pay and discharge, or make reasonable and customary efforts to
cause to be paid and discharged, all delay rentals, royalties, expenses and
indebtedness accruing under the leases or other agreements affecting or
pertaining to its Oil and Gas Properties and will do all other things necessary
to keep unimpaired their rights with respect thereto and prevent any forfeiture
thereof or default thereunder, except where the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.

(d)    promptly perform or make reasonable and customary efforts to cause to be
performed, in accordance with customary industry standards, the obligations
required by each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in its Oil and Gas Properties
and other material Properties, except in each case where the failure to do so
could not reasonably be expected to result in a Material Adverse Effect.

(e)    to the extent a Credit Party is not the operator of any Property, the
Parent and the Borrower shall (or shall cause the applicable Restricted
Subsidiary to) use reasonable efforts to cause the operator to comply with this
Section 8.06, but the failure of the operator so to comply will not constitute a
Default or Event of Default.

Section 8.07    Insurance. The Parent and the Borrower will, and will cause each
other Restricted Subsidiary to, maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations. The Administrative Agent on behalf
of itself and each of the Lenders shall be named as “additional insured” in
respect of such liability insurance policies, and the Administrative Agent shall
be named as a loss payee with respect to property loss insurance for collateral
subject to the Security Instruments and such policies shall provide that the
Administrative Agent shall receive not less than 30 days’ prior notice of
cancellation or non-renewal (or, if less, the maximum advance notice that the
applicable carrier will agree to provide).

Section 8.08    Books and Records; Inspection Rights. The Parent and the
Borrower will, and will cause each other Restricted Subsidiary to, keep proper
books of record and account in which full, true and correct entries in
conformance with GAAP are made of all dealings and transactions in relation to
its business and activities. The Parent and the Borrower will, and will cause
each other Restricted Subsidiary to, permit any representatives designated by
the Administrative Agent, upon reasonable prior notice, to visit and inspect its
Properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants (so long as a member of the Borrower’s senior management team is
present during all such discussions), all at such reasonable times and as often
as reasonably requested, provided that so long as no Event of Default has
occurred and is continuing, such visits and inspections shall not occur more
than once in any 12-month period.

Section 8.09    Compliance with Laws. The Parent and the Borrower will, and will
cause each other Restricted Subsidiary to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
Property, except where the failure to do so,

 

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individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. The Parent and the Borrower will maintain in effect
and enforce such policies and procedures, if any, as they reasonably deem
appropriate, in light of their businesses and international activities (if any),
to ensure compliance by the Parent, the Borrower, the Parent’s other
Subsidiaries and each of their respective directors, officers, employees and
agents with Anti-Corruption Laws and applicable Sanctions.

Section 8.10    Environmental Matters.

(a)    The Parent and the Borrower shall at their sole expense: (i) comply, and
cause their Properties and operations and each other Restricted Subsidiary and
each other Restricted Subsidiary’s Properties and operations to comply, with all
applicable Environmental Laws, to the extent the breach thereof could be
reasonably expected to have a Material Adverse Effect; (ii) not Release or
threaten to Release, and cause each Restricted Subsidiary not to Release or
threaten to Release, any Hazardous Material on, under, about or from any of the
Parent’s or its Restricted Subsidiaries’ Properties or any other property
offsite the Property to the extent caused by the Parent’s or any of its
Restricted Subsidiaries’ operations except in compliance with applicable
Environmental Laws, to the extent such Release or threatened Release could
reasonably be expected to have a Material Adverse Effect; (iii) timely obtain or
file, and cause each other Restricted Subsidiary to timely obtain or file, all
Environmental Permits, if any, required under applicable Environmental Laws to
be obtained or filed in connection with the operation or use of the Parent’s or
its Restricted Subsidiaries’ Properties, to the extent such failure to obtain or
file could reasonably be expected to have a Material Adverse Effect;
(iv) promptly commence and diligently prosecute to completion, and cause each
other Restricted Subsidiary to promptly commence and diligently prosecute to
completion, any assessment, evaluation, investigation, monitoring, containment,
cleanup, removal, repair, restoration, remediation or other remedial obligations
(collectively, the “Remedial Work”) to the extent any Remedial Work is required
or reasonably necessary under applicable Environmental Laws because of or in
connection with the actual or suspected past, present or future Release or
threatened Release of any Hazardous Material on, under, about or from any of the
Parent’s or its Restricted Subsidiaries’ Properties, to the extent failure to do
so could reasonably be expected to have a Material Adverse Effect; (v) conduct,
and cause each other Restricted Subsidiaries to conduct, their respective
operations and businesses in a manner that will not expose any Property or
Person to Hazardous Materials that could reasonably be expected to cause the
Parent or its Restricted Subsidiaries to owe damages or compensation that could
reasonably be expected to cause a Material Adverse Effect; and (vi) establish
and implement, and shall cause each other Restricted Subsidiary to establish and
implement, such procedures as may be necessary to continuously determine and
assure that the Parent’s and its Restricted Subsidiaries’ obligations under this
Section 8.10(a) are timely and fully satisfied, to the extent failure to do so
could reasonably be expected to have a Material Adverse Effect.

(b)    If the Parent or any Restricted Subsidiary receives written notice of any
action, investigation or inquiry by any Governmental Authority or any threatened
demand or lawsuit by any Person against the Parent or its Restricted
Subsidiaries or their Properties, in each case in connection with any
Environmental Laws, the Borrower will within fifteen (15) days after any
Responsible Officer learns thereof give written notice of the same to the
Administrative Agent if the Parent or the Borrower could reasonably anticipate
that such action will result in liability (whether individually or in the
aggregate) in excess of the Threshold Amount, not fully covered by insurance,
subject to normal deductibles.

 

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(c)    In connection with any acquisition by any Credit Party of any Oil and Gas
Property, other than an acquisition of additional interests in Oil and Gas
Properties in which such Credit Party previously held an interest, to the extent
any Credit Party obtains or is provided with same, the Borrower will, and will
cause each other Credit Party to, promptly following any Credit Party’s
obtaining or being provided with the same, deliver to the Administrative Agent
such final and non-privileged material environmental reports of such Oil and Gas
Properties as are reasonably requested by the Administrative Agent, the delivery
of which will not violate any applicable confidentiality agreement entered into
in good faith with an unaffiliated third party.

Section 8.11    Further Assurances.

(a)    The Parent and the Borrower at their sole expense will, and will cause
each other Restricted Subsidiary to, promptly execute and deliver to the
Administrative Agent all such other documents, agreements and instruments
reasonably requested by the Administrative Agent to comply with, cure any
defects or accomplish the conditions precedent, covenants and agreements of the
Parent or any Restricted Subsidiary, as the case may be, in the Loan Documents,
including the Notes, or to further evidence and more fully describe the
collateral intended as security for the Indebtedness, or to correct any
omissions in this Agreement or the Security Instruments, or to state more fully
the obligations secured therein, or to perfect, protect or preserve any Liens
created pursuant to this Agreement or any of the Security Instruments or the
priority thereof, or to make any recordings, file any notices or obtain any
consents, all as may be reasonably necessary or appropriate in connection
therewith.

(b)    The Parent and the Borrower hereby authorize the Administrative Agent to
file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Mortgaged Property and other collateral under
the Security Instruments without the signature of the Parent, the Borrower or
any other Guarantor where permitted by law. A carbon, photographic or other
reproduction of the Security Instruments or any financing statement covering
such Mortgaged Property, collateral or any part thereof shall be sufficient as a
financing statement where permitted by law. The Parent and the Borrower
acknowledge and agree that any such financing statement may describe the
collateral as “all assets” or “all personal property” of the applicable Credit
Party or words of similar effect as may be required by the Administrative Agent.

Section 8.12    Reserve Reports.

(a)    On or before March 1st and September 1st of each year, commencing
September 1, 2018, the Borrower shall furnish to the Administrative Agent and
the Lenders a Reserve Report evaluating the Oil and Gas Properties of the Credit
Parties as of the immediately preceding January 1st and July 1st. The Reserve
Report as of January 1 of each year shall be prepared by one or more Approved
Petroleum Engineers, and each other Reserve Report required hereunder shall be
prepared by or under the supervision of the chief engineer of the Borrower who
shall certify such Reserve Report to have been prepared in accordance with the
procedures used in the immediately preceding January 1 Reserve Report.

 

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(b)    In the event of an Interim Redetermination, the Borrower shall furnish to
the Administrative Agent and the Lenders a Reserve Report prepared by or under
the supervision of the chief engineer of the Borrower who shall certify such
Reserve Report to have been prepared in accordance with the procedures used in
the immediately preceding January 1 Reserve Report. For any Interim
Redetermination requested by the Administrative Agent or the Borrower pursuant
to Section 2.07(b), the Borrower shall provide such Reserve Report with an “as
of” date as required by the Administrative Agent as soon as possible, but in any
event no later than thirty (30) days following the receipt of such request (or,
in the case of an Interim Redetermination requested by the Borrower, such other
date as the Administrative Agent may agree).

(c)    With the delivery of each such Reserve Report, the Borrower shall provide
to the Administrative Agent and the Lenders a certificate of the Borrower
confirming that in all material respects: (i) the Parent and the Borrower acted
in good faith and utilized reasonable assumptions at the time such information
was furnished in the preparation of such Reserve Report and that to their
knowledge there are no statements or conclusions in such Reserve Report which
are based upon or include material misleading information or fail to take into
account material information known to them regarding the matters reported
therein, (ii) the Parent or its Restricted Subsidiaries own good and defensible
title to the Oil and Gas Properties evaluated in such Reserve Report as required
in this Agreement and such Properties are free of all Liens except Liens
permitted by Section 9.03, (iii) except as set forth on an exhibit to the
certificate, on a net basis there are no gas imbalances, take or pay or other
prepayments in excess of the volume specified in Section 7.18 with respect to
its Oil and Gas Properties evaluated in such Reserve Report which would require
the Parent or any Restricted Subsidiary to deliver Hydrocarbons either generally
or produced from such Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor, (iv) none of the Parent’s or any
Restricted Subsidiary’s Proved Oil and Gas Properties have been sold since the
date of the last Borrowing Base determination except as set forth on an exhibit
to the certificate, which certificate shall list all of its Proved Oil and Gas
Properties sold and in such detail as reasonably required by the Administrative
Agent, (v) attached to the certificate is a list of all marketing agreements
entered into subsequent to the later of the date hereof or the most recently
delivered Reserve Report which the Borrower could reasonably be expected to have
been obligated to list on Schedule 7.19 had such agreement been in effect on the
date hereof, (vi) attached thereto is a schedule of the Proved Oil and Gas
Properties evaluated by such Reserve Report that are Mortgaged Properties which
sets out the percentage of the total value of the Proved Oil and Gas Properties
evaluated in such Reserve Report and demonstrates that the total value of such
Proved Oil and Gas Properties is in compliance with Section 8.14(a), and
(vii) to the extent, if any, that any Oil and Gas Properties included in such
report are owned by a Credit Party that is not a Qualified ECP Counterparty,
such Credit Party and such Oil and Gas Properties are specified in such report.

Section 8.13    Title Information.

(a)    On or before the delivery to the Administrative Agent and the Lenders of
each Reserve Report required by Section 8.12(a), the Borrower will deliver title
information in form and substance acceptable to the Administrative Agent
covering enough of the Oil and Gas Properties so that the Administrative Agent
shall have received together with title information previously delivered to the
Administrative Agent, satisfactory title information which satisfies the Title
Coverage Requirement.

 

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

(c)    If the Borrower fails to cure any title defect (excluding Excepted Liens)
requested by the Administrative Agent to be cured within the 60-day period or
the Borrower fails to comply with the requirements to provide acceptable title
information which satisfies the Title Coverage Requirement, such failure shall
not be a Default, but instead the Administrative Agent and/or the Required
Lenders shall have the right to exercise the following remedy in their sole
discretion from time to time, and any failure to so exercise this remedy at any
time shall not be a waiver as to future exercise of the remedy by the
Administrative Agent or the Lenders. Such remedy is to have the Administrative
Agent declare that such unacceptable Mortgaged Property shall not count towards
the Title Coverage Requirement and for the Administrative Agent to send a notice
to the Borrower and the Lenders that the then outstanding Borrowing Base shall
be reduced by an amount as determined by the Required Lenders to cause the
Borrower to be in compliance with the requirement to provide acceptable title
information which satisfies the Title Coverage Requirement. This new Borrowing
Base shall become effective immediately after receipt of such notice.

Section 8.14    Collateral and Guaranty Agreements.

(a)    In connection with each redetermination of the Borrowing Base, the
Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(c)(vi)) to ascertain whether the
Mortgaged Properties satisfy the Mortgage Coverage Requirement. In the event
that the Mortgaged Properties do not satisfy the Mortgage Coverage Requirement,
then the Borrower shall, and shall cause the Parent and its other Restricted
Subsidiaries to, grant, no later than thirty (30) days after delivery of the
certificate required under Section 8.12(c) (or such longer period acceptable to
the Administrative Agent), to the Administrative Agent as security for the
Indebtedness first priority Liens and security interests (subject only, with
respect to priority, to Liens permitted by Section 9.03 (other than
Section 9.03(e))) on additional Oil and Gas Properties of the Credit Parties
that are not already subject to a Lien of the Security Instruments such that
after giving effect thereto, the Mortgaged Properties will satisfy the Mortgage
Coverage Requirement. All such Liens will be created and perfected by and in
accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments, all in form and substance
reasonably satisfactory to the Administrative Agent and in sufficient executed
(and acknowledged where necessary or appropriate) counterparts for recording
purposes. In order to comply with the foregoing, if any Restricted Subsidiary
places a Lien on its Oil and Gas Properties and such Restricted Subsidiary is
not a Guarantor, then it shall become a Guarantor and comply with
Section 8.14(b).

 

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(b)    In the event that (i) the Parent creates or acquires any Restricted
Subsidiary other than an Immaterial Subsidiary (including by designating any
Unrestricted Subsidiary as a Restricted Subsidiary pursuant to the terms hereof)
or (ii) any Domestic Subsidiary incurs or guarantees any Funded Debt, the
Borrower shall, or shall cause the Parent to, promptly cause such Restricted
Subsidiary (if other than the Borrower) to execute and deliver the Guaranty
Agreement and the Security Agreement (or supplements thereto or assumption
agreements thereto, as applicable) pursuant to which such Restricted Subsidiary
shall guarantee the Indebtedness and grant liens and security interests in its
personal property that constitutes Collateral (as defined in the Security
Agreement). In the event that the Parent creates or acquires any Restricted
Subsidiary other than an Immaterial Subsidiary, the Credit Party that owns the
Equity Interests in such new Restricted Subsidiary shall execute and deliver a
supplement to the Security Agreement pursuant to which such Credit Party will
confirm the pledge of all of the Equity Interests of such new Restricted
Subsidiary to secure the Indebtedness. In connection with the foregoing, the
Credit Parties shall (i) deliver original stock certificates, if any, evidencing
the Equity Interests of such new Restricted Subsidiary, together with an
appropriate undated stock power for each certificate duly executed in blank by
the registered owner thereof and (ii) execute and deliver such other additional
closing documents, certificates and legal opinions as shall reasonably be
requested by the Administrative Agent. Parent and Borrower shall cause any
Subsidiary (if other than the Borrower) that guarantees the obligations with
respect to any Permitted Senior Unsecured Notes or Permitted Junior Lien Debt to
become a Guarantor by executing and delivering to the Administrative Agent an
assumption agreement with respect to the Guaranty Agreement.

(c)    The Parent will at all times cause the other material tangible and
intangible assets of the Parent and each Restricted Subsidiary (including,
without limitation, all Swap Agreements) purported to be pledged as collateral
pursuant to the Security Instruments to be or be made subject to a Lien under
the Security Instruments.

(d)    Promptly following the acquisition by any Person of one hundred percent
(100%) of the outstanding Equity Interests in the Borrower, the Borrower will
give notice of such event to the Administrative Agent and the Borrower will
cause such Person to become a party to this Agreement by executing and
delivering a Parent Joinder Agreement to the Administrative Agent. Pursuant to
such Parent Joinder Agreement and the Guaranty Agreement as supplemented
thereby, the Parent will guarantee the Indebtedness. Pursuant to such Parent
Joinder Agreement and the Security Agreement as supplemented thereby, the Parent
will grant liens and security interests in its personal property that
constitutes Collateral (as defined in the Security Agreement), including all of
its Equity Interests in the Borrower to secure the Indebtedness. In connection
with the foregoing, the Parent will (i) deliver the original stock certificates,
if any, evidencing its Equity Interests in the Borrower, together with an
appropriate undated stock power for each certificate duly executed in blank by
Parent and (ii) execute and deliver such other additional closing documents,
certificates and legal opinions as shall reasonably be requested by the
Administrative Agent.

(e)    Notwithstanding any provision in any of the Loan Documents to the
contrary, in no event is any Building (as defined in the applicable Flood
Insurance Regulations) or Manufactured (Mobile) Home (as defined in the
applicable Flood Insurance Regulations) owned by any Credit Party included in
the Mortgaged Property and no Building or Manufactured (Mobile) Home shall be
encumbered by any Security Instrument; provided that (i) the applicable Credit

 

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Party’s interests in all lands and Hydrocarbons situated under any such Building
or Manufactured (Mobile) Home shall not be excluded from the Mortgaged Property
and shall be encumbered by all applicable Security Instruments and (ii) the
Borrower shall not, and shall not permit the Parent nor any of its other
Restricted Subsidiaries to, permit to exist any Lien on any Building or
Manufactured (Mobile) Home except Liens permitted by Section  9.03.

Section 8.15    ERISA Compliance. The Parent and the Borrower will (a) promptly
furnish, and will cause each other Restricted Subsidiary to promptly furnish, to
the Administrative Agent after request therefor by the Administrative Agent,
copies of the most recent annual report with respect to each Plan or any trust
created thereunder, and (b) promptly upon a Responsible Officer of Parent’s
knowledge of (i) the occurrence of any “prohibited transaction,” as described in
section 406 of ERISA or in section 4975 of the Code for which no exception
exists or is available by statute, regulation, administrative exemption, or
otherwise, in connection with any Plan or any trust created thereunder and that
is reasonably expected to result in liability to the Parent or any Restricted
Subsidiary that is expected to have a Material Adverse Effect, (ii) the
occurrence of an ERISA Event that is expected to have a Material Adverse Effect
or (iii) the present value of all accumulated benefit obligations under each
Plan (based on the assumptions used for purposes of Accounting Standards
Codification No. 715: Compensation-Retirement Benefits, or any applicable
successor), as of the date of the most recent financial statements reflecting
such amounts, exceeding the fair market value of the assets of such Plan
allocable to such accrued benefits, if such excess is reasonably expected to
have a Material Adverse Effect, promptly furnish to the Administrative Agent a
written notice specifying the nature thereof, what action the Parent, the
Restricted Subsidiary or the ERISA Affiliate is taking or proposes to take with
respect thereto, and, when known by a Responsible Officer of Parent, any action
taken or proposed by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto.

Section 8.16    Unrestricted Subsidiaries. The Parent and the Borrower will:

(a)    cause the management, business and affairs of each of the Parent and its
Restricted Subsidiaries to be conducted in such a manner (including, without
limitation, by keeping separate books of account, furnishing separate financial
statements of Unrestricted Subsidiaries to creditors and potential creditors
thereof and by not permitting Properties of the Borrower and the Parent and its
other respective Restricted Subsidiaries to be commingled) so that each
Unrestricted Subsidiary that is a corporation will be treated as a corporate
entity separate and distinct from the Parent and the Restricted Subsidiaries;
provided that, notwithstanding the foregoing, the Parent and the Restricted
Subsidiaries may enter into servicing arrangements with Unrestricted
Subsidiaries so long as such arrangements are permitted under Section 9.13.

(b)    not, and not permit any of the Restricted Subsidiaries to, incur, assume,
guarantee or be or become liable for any Funded Debt of any of the Unrestricted
Subsidiaries.

(c)    not permit any Unrestricted Subsidiary to hold any Equity Interest in, or
any Funded Debt of, the Parent or any Restricted Subsidiary.

Section 8.17    Commodity Exchange Act Keepwell Provisions. The Borrower hereby
absolutely, unconditionally and irrevocably undertakes to provide such funds or
other support as may be needed from time to time by each other Credit Party that
is not an “eligible contract

 

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participant” under the Commodity Exchange Act in order for such Credit Party to
honor its obligations under the Guaranty Agreement and any other Loan Documents
with respect to Swap Agreements (provided, however, that the Borrower shall only
be liable under this Section 8.17 for the maximum amount of such liability that
can be hereby incurred without rendering its obligations under this
Section 8.17, or otherwise under this Agreement or any Loan Document, as it
relates to such other Credit Parties, 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 8.17 shall remain in full
force and effect until all Indebtedness is paid in full to the Lenders, the
Administrative Agent, the Issuing Bank and all Secured Swap Providers, and all
of the Lenders’ Commitments are terminated. The Borrower intends that this
Section 8.17 constitute, and this Section 8.17 shall be deemed to constitute, a
“keepwell, support, or other agreement” for the benefit of each other Credit
Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange
Act.

Section 8.18    Post-Closing Delivery of Account Control Agreements.
Notwithstanding the requirements set forth in Section 4.10 of the Security
Agreement, the Credit Parties shall, no later than thirty (30) days after the
Effective Date (or such later date as the Administrative Agent may agree in its
sole discretion), with respect to each Deposit Account, Commodity Account and
Securities Account (each as defined in the Security Agreement) of the Credit
Parties in existence on the Effective Date (other than, in each case, De Minimis
Accounts (as defined in the Security Agreement)), deliver to the Administrative
Agent duly executed Control Agreements (as defined in the Security Agreement) in
accordance with and to the extent required by the Security Agreement. The Credit
Parties shall at all times comply with the terms of Section 4.10 of the Security
Agreement.

ARTICLE IX

NEGATIVE COVENANTS

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, each of the Borrower and (to the extent that the Parent is not the
Borrower) the Parent covenants and agrees with the Lenders that:

Section 9.01    Financial Covenants.

(a)    First Lien Leverage Ratio. The Parent and the Borrower will not permit
the First Lien Leverage Ratio (i) for any Rolling Period ending June 30, 2020
through and including December 31, 2021, to be greater than 2.75 to 1.00 and
(ii) for any Rolling Period ending March 31, 2022 through and including
December 31, 2022, to be greater than 2.50 to 1.00, in each case, as of the last
day of such Rolling Period.

(b)    Current Ratio. The Parent and the Borrower will not permit, as of the
last day of any Rolling Period commencing with the Rolling Period ending
March 31, 2018, the ratio of (i) consolidated current assets of the Parent and
its Consolidated Restricted Subsidiaries (including the unused amount of the
total Commitments (but only to the extent that the Borrower is permitted to
borrow such amount under the terms of this Agreement, including, without

 

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limitation, Section 6.02 hereof), but excluding non-cash assets under ASC 815
and any cash equity proceeds then being held by the Parent or a Restricted
Subsidiary for purposes of making Restricted Payments pursuant to
Section 9.04(a)(v)) to (ii) consolidated current liabilities of the Parent and
its Consolidated Restricted Subsidiaries (excluding non-cash obligations under
ASC 815 and current maturities under this Agreement) to be less than 1.00 to
1.00.

(c)    Total Leverage Ratio. The Parent and the Borrower will not permit the
Total Leverage Ratio (i) for the Rolling Period ending March 31, 2022, to be
greater than 5.00 to 1.00, (ii) for the Rolling Period ending June 30, 2022, to
be greater than 4.75 to 1.00, (iii) for the Rolling Period ending September 30,
2022, to be greater than 4.50 to 1.00, (iv) for the Rolling Period ending
December 31, 2022, to be greater than 4.25 to 1.00, and (v) for any Rolling
Period ending March 31, 2023 or thereafter, to be greater than 4.00 to 1.00, in
each case, as of the last day of such Rolling Period.

Section 9.02    Debt. The Parent and the Borrower will not, and will not permit
any of the other Restricted Subsidiaries to, incur, create, assume or suffer to
exist any Debt, except:

(a)    the Loans or other Indebtedness arising under the Loan Documents or any
guaranty of or suretyship arrangement for the Loans or other Indebtedness
arising under the Loan Documents.

(b)    Debt of the Parent and its Restricted Subsidiaries existing on the date
hereof that is reflected on Schedule 9.02.

(c)    Debt under Capital Leases or that constitutes Purchase Money Debt;
provided that the Debt permitted by this clause (c) shall not exceed, at the
time any such Debt is incurred (and after giving effect to such incurrence), an
aggregate principal amount equal to the greater of (i) $10,000,000 and (ii) 2.5%
of the Borrowing Base in effect at such time.

(d)    intercompany Debt between the Parent and any Restricted Subsidiary or
between Restricted Subsidiaries, provided that such Debt is subordinated to the
Indebtedness as and to the extent provided in the Guaranty Agreement.

(e)    Debt constituting a guaranty by the Parent or by a Restricted Subsidiary
of other Debt permitted to be incurred under this Section 9.02.

(f)    Debt under the Permitted Senior Unsecured Notes and guarantees thereof by
any Credit Party; provided that after giving effect to the issuance thereof, the
application of the proceeds thereof, and any automatic reduction of the
Borrowing Base pursuant to Section 2.07(e) on account thereof: (A) the Parent
shall be in pro forma compliance with Section 9.01 as of the most recently ended
fiscal quarter for which financial statements have been or are required to be
delivered pursuant to Section 8.01(a) or Section 8.01(b) and (B) no Event of
Default or Borrowing Base Deficiency shall exist.

(g)    Debt arising from agreements of the Borrower or any Restricted Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations (including earn-outs), in each case entered into in connection with
Investments in or Transfers of any business, assets or Stock permitted
hereunder.

 

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(h)    Debt of the Borrower or any Restricted Subsidiary consisting of
obligations to pay insurance premiums incurred in the ordinary course of
business.

(i)    other unsecured Funded Debt; provided that the Funded Debt permitted by
this clause (i) shall not exceed, at the time any such Funded Debt is incurred
(and after giving effect to such incurrence), an aggregate principal amount
equal to the greater of (i) $10,000,000 and (ii) 2.5% of the Borrowing Base in
effect at such time.

(j)    Permitted Junior Lien Debt; provided that (i) the amount of Permitted
Junior Lien Debt that is secured by second priority Liens permitted by this
clause (j) shall not exceed an aggregate principal amount equal to $350,000,000,
(ii) such Permitted Junior Lien Debt shall be incurred on or before the
effectiveness of the Scheduled Redetermination scheduled to occur on or about
October 1, 2020, and (iii) such Permitted Junior Lien Debt (other than Permitted
Refinancing Debt in respect of any such Permitted Junior Lien Debt) shall be
issued solely in exchange for, or the net proceeds thereof shall be used solely
to Redeem, Debt under the Permitted Senior Unsecured Notes in a single
transaction or series of substantially contemporaneous related transactions
pursuant to the Borrower’s exchange offer launched on or about April 22, 2020
(as amended or extended from time to time).

(k)    Debt not permitted by the foregoing clauses (a) through (j) which is
approved in writing by the Majority Lenders.

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

(a)    Liens securing the payment of any Indebtedness.

(b)    Excepted Liens.

(c)    Liens securing Capital Leases and Purchase Money Debt permitted by
Section 9.02(c) but only on the Property under lease or the Property purchased,
constructed or improved with such Purchase Money Debt.

(d)    additional Liens on Property (excluding Proved Oil and Gas Properties and
Equity Interests of the Borrower or its Restricted Subsidiaries pledged as
Collateral) so long as the aggregate principal amount of the obligations secured
thereby does not at any time exceed $5,000,000.

(e)    Liens securing any Permitted Junior Lien Debt; provided that such Liens
are (i) subordinate to the Liens in favor of the Administrative Agent securing
the Indebtedness and (ii) subject to the Intercreditor Agreement.

The Liens permitted by this Section 9.03 shall be construed to allow for Liens
on the improvements, fixtures and/or accessions to Property which are permitted
to be subject to such Liens and on the proceeds of such Property (including any
insurance for such property) as determined in accordance with the Uniform
Commercial Code.

 

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Section 9.04    Dividends and Distributions and Redemptions of Permitted Senior
Unsecured Notes or Permitted Junior Lien Debt.

(a)    Dividends and Distributions. The Parent and the Borrower will not, and
will not permit any other Subsidiary to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment to its Equity Interest
holders, except: (i) the Parent may declare and pay dividends with respect to
its Equity Interests payable solely in additional shares of its Equity Interests
(other than Disqualified Capital Stock); (ii) Subsidiaries may declare and make
Restricted Payments ratably with respect to their Equity Interests; (iii) the
Parent may make Restricted Payments pursuant to and in accordance with stock
option plans or other equity incentive or benefit plans for management or
employees of the Parent and its Subsidiaries; (iv) the Parent may make Permitted
Tax Distributions in accordance with the last sentence of this Section 9.04; (v)
the Parent may, substantially contemporaneously with (and in any event within
three (3) Business Days after) its receipt of (A) any Unrestricted Subsidiary
Distribution received directly from any Unrestricted Subsidiary or indirectly
from the Borrower or (B) the proceeds of any Transfer of any Equity Interests in
any Unrestricted Subsidiary, make cash distributions or dividends to its members
in an amount not to exceed the amount of the corresponding Unrestricted
Subsidiary Distribution or such net proceeds, respectively; provided that prior
to or contemporaneously with making such cash distribution or dividend described
in this clause (v), the Borrower shall make a principal payment on the
Borrowings in an aggregate amount equal to (1) the aggregate amount of cash
Investments made by the Parent and/or the Restricted Subsidiaries in such
Unrestricted Subsidiary from and after the Effective Date pursuant to
Section 9.05(i) minus (2) the aggregate amount of principal payments previously
made pursuant to this proviso that were calculated with reference to Investments
made pursuant to Section 9.05(i); (vi) the Borrower may make Restricted Payments
to the Parent; (vii) the declaration and payment of Restricted Payments by the
Borrower or a Restricted Subsidiary to Centennial Resource Development in
amounts required for Centennial Resource Development to pay, in each case
without duplication, (A) franchise, excise and similar taxes, and other fees,
taxes and expenses required to maintain Centennial Resource Development’s
corporate existence; (B) salary, bonus, severance, expense reimbursement and
other benefits payable to, and indemnities provided on behalf of, employees,
directors, officers, members of management, consultants and independent
contractors of Centennial Resource Development and any payroll, social security
or similar taxes payable in respect thereof; (C) general corporate or other
operating, administrative, compliance and overhead costs and expenses (including
expenses relating to auditing and other accounting matters) of Centennial
Resource Development; (D) reasonable (as determined in good faith by the
Borrower) fees and expenses (other than fees and expenses paid to Affiliates of
the Borrower) related to any equity or debt offering of Centennial Resource
Development (whether or not successful); provided that all or substantially all
of the proceeds of such offering are permanently contributed to the capital of
the Borrower; and (E) payments of interest and/or principal on Debt, the
proceeds of which have been contributed to the Borrower or any Restricted
Subsidiary and that has been guaranteed by, or is otherwise, considered Debt of,
the Borrower incurred in accordance with Section 9.02 to the extent such
payments are not otherwise prohibited hereunder, (viii) the non-cash repurchase
of Equity Interests in the Borrower, or the repurchase of Equity Interests in
the Borrower using cash proceeds from a substantially concurrent contribution by
Centennial Resource Development of common equity, capital to the Borrower, in
either case to effect an redemption or exchange pursuant to the terms of the
Borrower’s Limited Liability Company Agreement and (ix) the Parent may make cash
distributions; provided that, in the case of the this

 

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clause (ix) (A) no Default or Event of Default exists or results from the making
of such Restricted Payment, (B) after giving effect to such Restricted Payment,
Liquidity is not less than twenty percent (20%) of the Borrowing Base then in
effect and (C) after giving effect to such Restricted Payment, the ratio of
Total Funded Debt (as of such date) to EBITDAX (for the most recent Rolling
Period for which financial statements have been, or are required to have been,
delivered pursuant to Section 8.01(a) or (b)) shall not exceed 3.00 to 1.00 on a
pro forma basis; provided further that, no distributions pursuant to clause
(v) or this clause (ix) may be made during the period beginning on the Third
Amendment Effective Date and ending on December 31, 2022. Permitted Tax
Distributions may be made quarterly and annually, based on Centennial Resource
Development’s federal income tax filing obligations.

(b)    Redemption of Permitted Senior Unsecured Notes or Permitted Junior Lien
Debt; Amendment of Terms of Permitted Senior Unsecured Notes Documents or
Permitted Junior Lien Debt Documents. The Parent and the Borrower will not, and
will not permit any other Credit Party to, prior to the date that is 180 days
after the Maturity Date:

(i)    call, make or offer to make any optional or voluntary Redemption of or
otherwise optionally or voluntarily Redeem (whether in whole or in part) any
Permitted Senior Unsecured Notes or Permitted Junior Lien Debt (any of the
foregoing, a “Junior Debt Payment”), except that, so long as no Event of Default
exists, the Borrower may make a Junior Debt Payment (x) substantially
contemporaneously with its receipt of (and in an amount up to) any cash proceeds
from an issuance or sale of, or in exchange for, (A) any Permitted Senior
Unsecured Notes, Permitted Junior Lien Debt or Permitted Refinancing Debt or
(B) any Equity Interests in the Parent (other than Disqualified Capital Stock),
(y) from and after January 1, 2023 with cash if after giving effect to such
Junior Debt Payment, (A) Liquidity is not less than twenty percent (20%) of the
Borrowing Base then in effect and (B) the ratio of Total Funded Debt (as of such
date) to EBITDAX (for the most recent Rolling Period for which financial
statements have been, or are required to have been, delivered pursuant to
Section 8.01(a) or (b)) shall not exceed 3.00 to 1.00 on a pro forma basis or
(z) otherwise in an aggregate principal amount up to $50,000,000, if after
giving effect to such Junior Debt Payment pursuant to this clause (z), (A)
Liquidity is not less than twenty-five percent (25%) of the Borrowing Base then
in effect and (B) the ratio of Total Funded Debt (as of such date) to EBITDAX
(for the most recent Rolling Period for which financial statements have been, or
are required to have been, delivered pursuant to Section 8.01(a) or (b)) shall
not exceed 2.50 to 1.00 on a pro forma basis; or

(ii)    amend, modify, waive or otherwise change, consent or agree to any
amendment, modification, waiver or other change to, any of the terms of the
Permitted Senior Unsecured Notes Documents or the Permitted Junior Lien Debt
Documents (except to the extent a new issuance of Permitted Senior Unsecured
Notes, Permitted Junior Lien Debt or Permitted Refinancing Debt, the proceeds of
which were used to Redeem existing Permitted Senior Unsecured Notes or Permitted
Junior Lien Debt pursuant to the foregoing clause (i), would be permitted to
have such terms as so amended, modified, waived or otherwise changed) if the
effect thereof would be to (A) shorten its maturity or average life,
(B) increase the amount of any payment of principal thereof, (C) increase the
rate or shorten any period for payment of interest thereon, or (D) modify or
amend financial or negative covenants or events of default such that the
resulting financial and negative covenants and events of default in respect
thereof, taken as a whole, are more restrictive with respect to the Credit
Parties than the financial and negative covenants and Events of Default in this
Agreement without this Agreement being contemporaneously amended to add similar
provisions (as determined in good faith by senior management of the Parent).

 

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

(a)    Investments as of the Effective Date which are disclosed to the Lenders
in Schedule 9.05.

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

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

(d)    commercial paper maturing within one year from the date of acquisition
thereof rated in the highest grade by S&P, Moody’s or Fitch Investor Service.

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

(f)    shares of any SEC registered 2a-7 money market fund that has net assets
of at least $500,000,000 and the highest rating obtainable from either Moody’s
or S&P.

(g)    Investments (i) made by the Borrower in or to the Guarantors and
(ii) made by the Parent or any Restricted Subsidiary in or to the Borrower or
any Guarantor (in each case including any Person that becomes a Guarantor at or
about the time of such Investment).

(h)    subject to the limits in Section 9.07, Investments of the type described
in clause (c) of the definition of “Investment” in direct ownership interests in
additional Oil and Gas Properties and gas gathering systems related thereto or
related to farm-out, farm-in, joint operating, joint venture or area of mutual
interest agreements, gathering systems, pipelines or other similar arrangements
which are usual and customary in the oil and gas exploration and production
business located within the geographic boundaries of the United States of
America.

(i)    Investments in Unrestricted Subsidiaries, provided that, at the time such
Investment is made, (i) no Default, Event of Default or Borrowing Base
Deficiency exists or results from the making of such Investment, (ii) the
aggregate amount of such Investments (after giving effect to such Investment)
made under this Section 9.05(i) does not exceed the greater of (A) $30,000,000
and (B) 2.5% of the Borrowing Base then in effect, and (iii) after giving effect
to such Investment, the Borrower’s Liquidity is not less than fifteen percent
(15%) of the Borrowing Base then in effect.

 

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(i)    loans or advances to employees, officers or directors (i) in the ordinary
course of business of the Parent or any of its Restricted Subsidiaries, in each
case only as permitted by applicable law or (ii) to finance or fund capital
commitments to purchase Equity Interests in the Parent pursuant to agreements
among the Parent and its Equity Interest holders; provided that the Investments
made pursuant to this clause (j) do not exceed $2,000,000 in aggregate principal
amount at any time outstanding.

(j)    Guarantee obligations permitted by Section 9.02.

(k)    Investments in stock, obligations or securities received in settlement of
debts arising from Investments permitted under this Section 9.05 or from
accounts receivable arising in the ordinary course of business, which
Investments are obtained by the Parent or any Restricted Subsidiary as a result
of a bankruptcy or other insolvency proceeding of, or difficulties in collecting
from, the obligor in respect of such obligations.

(l)    other Investments, provided that at the time such Investment is made (and
after giving effect to such Investment), the aggregate amount of Investments
made under this Section 9.05(l) does not exceed the greater of (i) $20,000,000
and (ii) 2.5% of the Borrowing Base in effect at such time.

(m)    loans or advances by the Borrower or any Restricted Subsidiary to the
Parent to the extent that the Borrower or any Restricted Subsidiary could make a
Restricted Payment pursuant to Section 9.04(a)(vii).

Section 9.06    Designation and Conversion of Restricted and Unrestricted
Subsidiaries.

(a)    Unless designated as an Unrestricted Subsidiary on Schedule 7.14 as of
the date hereof or thereafter, assuming compliance with Section 9.06(b), any
Person that becomes a Subsidiary of the Parent or any of its Restricted
Subsidiaries shall be classified as a Restricted Subsidiary.

(b)    The Borrower may designate by written notification thereof to the
Administrative Agent, any Restricted Subsidiary (other than the Borrower),
including a newly formed or newly acquired Subsidiary, as an Unrestricted
Subsidiary if (i) prior, and after giving effect, to such designation, neither
an Event of Default nor a Borrowing Base Deficiency would exist, (ii) such
designation is deemed to be an Investment in an Unrestricted Subsidiary in an
amount equal to the fair market value as of the date of such designation of the
Parent’s direct and indirect ownership interest in such Subsidiary and such
Investment would be permitted to be made at the time of such designation under
Section 9.05(i), and (iii) such Subsidiary is not a “restricted subsidiary” or
guarantor with respect to any Permitted Senior Unsecured Notes or Permitted
Junior Lien Debt. Except as provided in this Section 9.06(b), no Restricted
Subsidiary may be redesignated as an Unrestricted Subsidiary.

(c)    The Borrower may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary if after giving effect to such designation, (i) the representations
and warranties of the Borrower, the Parent and its other Restricted Subsidiaries
contained in each of the Loan Documents are true and correct on and as of such
date as if made on and as of the date of such

 

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redesignation (or, if stated to have been made expressly as of an earlier date,
were true and correct as of such date), (ii) no Default would exist and
(iii) the Borrower complies with the requirements of Section 8.14, Section 8.16
and Section  9.14.

Section 9.07    Nature of Business; No International Operations. The Parent and
the Borrower will not, and will not permit any other Restricted Subsidiary to,
allow any material change to be made in the character of its business as an
independent oil and gas exploration and production company. From and after the
date hereof, the Parent and its Domestic Subsidiaries will not acquire or make
any other expenditure (whether such expenditure is capital, operating or
otherwise) in or related to, any Oil and Gas Properties not located within the
geographical boundaries of the United States or of the offshore federal waters
of the United States, and the Parent and the Borrower will not, and will not
permit any of the other Restricted Subsidiaries to, enter into marketing
contracts other than in the normal course of, or ancillary to, the exploration
and production business. The Borrower shall at all times remain organized under
the laws of the United States of America or any State thereof or the District of
Columbia.

Section 9.08    Proceeds of Notes. The Parent and the Borrower will not permit
the proceeds of the Notes to be used for any purpose other than those permitted
by Section 7.21. Neither the Parent, the Borrower nor any Person acting on
behalf of the Borrower has taken or will take any action which might cause any
of the Loan Documents to violate Regulations T, U or X or any other regulation
of the Board or to violate Section 7 of the Securities Exchange Act or any rule
or regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect. If requested by the Administrative Agent, the Borrower
will furnish to the Administrative Agent on behalf of any Lender included in
such request, a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 or such other form referred to in Regulation U,
Regulation T or Regulation X of the Board, as the case may be. The Borrower will
not request any Borrowing or Letter of Credit, and the Borrower shall not use,
and shall procure that the Parent and its other Subsidiaries and its or their
respective directors, officers, employees and agents shall not use, the proceeds
of any Borrowing or Letter of Credit (a) in furtherance of an offer, payment,
promise to pay, or authorization of the payment or giving of money, or anything
else of value, to any Person in violation of any Anti-Corruption Laws, (b) for
the purpose of funding, financing or facilitating any activities, business or
transaction of or with any Sanctioned Person, or in any Sanctioned Country, or
(c) in any manner that would knowingly or negligently result in the violation of
any Sanctions applicable to any party hereto.

Section 9.09    ERISA Compliance. The Parent and the Borrower will not, and will
not permit any other Restricted Subsidiary to, at any time:

(a)    engage in any transaction in connection with which the Parent, a
Restricted Subsidiary or any ERISA Affiliate could be subjected to either a
civil penalty assessed pursuant to subsections (c), (i), (l) or (m) of section
502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code, except
where such penalty or tax could not reasonably be expected to have a Material
Adverse Effect.

(b)    fail to make full payment when due of all amounts which, under the
provisions of any Plan, Multiemployer Plan, agreement relating thereto or
applicable law, the Parent, a Restricted Subsidiary or any ERISA Affiliate is
required to pay as contributions thereto, except where such failure could not
reasonably be expected to have a Material Adverse Effect.

 

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Section 9.10    Sale or Discount of Receivables. Except for the sale of
defaulted notes or accounts receivable in connection with the compromise or
collection thereof and not in connection with any financing transaction, the
Parent and the Borrower will not, and will not permit any other Restricted
Subsidiary to, sell (with or without recourse) any of its notes receivable or
accounts receivable to any Person other than Borrower or any Guarantor.

Section 9.11    Mergers, Etc. The Parent and the Borrower will not, and will not
permit any other Restricted Subsidiary to, divide or merge into or with or
consolidate with any other Person, or permit any other Person to divide or merge
into or consolidate with it, or Transfer (whether in one transaction or in a
series of transactions) all or substantially all of its Property to any other
Person (whether now owned or hereafter acquired) (any such transaction, a
“consolidation”), or liquidate or dissolve; provided that (a) any Restricted
Subsidiary (other than the Borrower) may participate in a consolidation with the
Borrower or the Parent (provided that the Borrower or the Parent shall be the
continuing or surviving entity), (b) any Restricted Subsidiary (other than the
Borrower) that does not own any Proved Oil and Gas Property, commodity Swap
Agreements or any Equity Interests in a Subsidiary that directly or indirectly
owns any Proved Oil and Gas Property or commodity Swap Agreements may
participate in a liquidation, (c) the Borrower or any Restricted Subsidiary may
participate in a consolidation with another Restricted Subsidiary (provided that
the Borrower is the continuing or surviving entity if party to such
consolidation) and (d) the Borrower or any Restricted Subsidiary may participate
in a consolidation with another Person that was first designated a Restricted
Subsidiary (and which designation constituted an “Investment” and was permitted
by Section 9.05) at the time of such consolidation); provided that (i) if the
Borrower is party to such consolidation, the Borrower must be the continuing or
surviving entity and (ii) if a Restricted Subsidiary is party to such
consolidation, such Restricted Subsidiary must be the continuing or surviving
entity.

Section 9.12    Sale of Properties and Termination of Swap Agreements. The
Parent and the Borrower will not, and will not permit any other Restricted
Subsidiary to, sell, assign, farmout, convey or otherwise transfer
(collectively, a “Transfer”) any Property to any Person other than a Credit
Party or to enter into any Swap Monetization in respect of commodities except
for:

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

(b)    farmouts of undeveloped acreage and undeveloped depths and Transfers in
connection with such farmouts;

(c)    Transfers of equipment and other personal property that is no longer
necessary for the business of the Parent or such Restricted Subsidiary or is
replaced by equipment or other personal property of at least comparable value
and use;

(d)    Transfers of Oil and Gas Properties to which no Proved Reserves are
attributed, and Transfers of any of the Equity Interests in any Unrestricted
Subsidiary;

(e)    Transfers not permitted under the preceding subsections (a) through (d)
of any other Oil and Gas Property or any interest therein or of Equity Interests
in any Restricted Subsidiary that owns Oil and Gas Properties other than the
Borrower, and Swap Monetizations; provided that

 

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(i)    if a Borrowing Base Deficiency exists at the time of such Transfer or
Swap Monetization, then the cash consideration received by any Credit Party in
respect of such Transfer or Swap Monetization shall be applied first to prepay
Loans and/or cash collateralize LC Exposure until such Borrowing Base Deficiency
is eliminated in full;

(ii)    no Event of Default exists or results from such Transfer or Swap
Monetization;

(iii)    at least 75% of the consideration received in respect of any such
Transfer of Oil and Gas Properties or any interest therein or of any such
Restricted Subsidiary shall be cash, rights with respect to post-closing
settlement or indemnification obligations of the transferee or its Affiliates,
or (provided no Borrowing Base Deficiency will exist after the application of
the cash proceeds of such Transfer) new Oil and Gas Properties acceptable to the
Administrative Agent in its sole discretion acquired, and the total of all such
consideration received in respect of any such Transfer shall be equal to or
greater than the fair market value of the Oil and Gas Properties, interests
therein and/or Restricted Subsidiaries that are the subject of such Transfer as
reasonably determined by the Parent and/or the Borrower (and, if requested by
the Administrative Agent, the Borrower shall deliver a certificate of a
Responsible Officer of the Borrower certifying to such determination);

(iv)    the consideration received in respect of any such Swap Monetization
shall be equal to or greater than the fair market value of the consideration
provided by the Credit Parties in such transaction as reasonably determined by
the Parent and/or the Borrower (and, if requested by the Administrative Agent,
the Borrower shall deliver a certificate of a Responsible Officer of the
Borrower certifying to such determination);

(v)    if the aggregate value (which, for purposes hereof, shall mean the value
the Administrative Agent attributes to such Oil and Gas Property and/or Swap
Agreement for purposes of the most recent determination of the Borrowing Base
(which Borrowing Base was approved by the requisite Lenders in accordance with
Section 2.07)) of such Oil and Gas Properties Transferred, when aggregated with
the Swap Monetization of Swap Agreements pursuant to the terms of this
Agreement, since the later of (A) the last Scheduled Redetermination Date and
(B) the date that the Borrowing Base was last adjusted pursuant to this
Section 9.12(e)(v), is in excess of five percent (5%) of the Borrowing Base,
then the Borrowing Base will be automatically reduced by an amount determined by
the Administrative Agent and approved by the Required Lenders, which
redetermined Borrowing Base shall be effective upon delivery by the
Administrative Agent of the related New Borrowing Base Notice under
Section 2.07(d), and if a Borrowing Base Deficiency exists after such reduction
in the Borrowing Base, the Borrower shall prepay Borrowings in accordance with
Section 3.04(c)(iii);

(vi)    if any such Transfer is of a Restricted Subsidiary (other than
theBorrower) owning Oil and Gas Properties, such Transfer shall include all the
Equity Interests of such Restricted Subsidiary; and (vii) for purposes of this
Section 9.12(e), any Oil and Gas Property owned by a Restricted Subsidiary that
is designated or redesignated as an Unrestricted Subsidiary pursuant to
Section 9.06(b) shall be deemed to be Transferred by such Subsidiary to a Person
that is not a Credit Party at the time of such designation.

 

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For purposes of this Section 9.12, “Swap Monetization” means the liquidation,
monetization, unwinding, termination or transfer (by novation or otherwise) of
any commodity Swap Agreement taken into account by the Lenders in determining
the most recent Borrowing Base, or the amendment of any such Swap Agreement in
any way that could reasonably be expected to reduce the Borrowing Base value
thereof, provided that none of the following shall constitute a Swap
Monetization: (w) the novation of such Swap Agreement from one Credit Party to
another Credit Party, with an Approved Counterparty being the “remaining party”
for purposes of such novation, (x) the novation of such Swap Agreement from the
existing counterparty to an Approved Counterparty, with the Borrower or the
applicable Credit Party being the “remaining party” for purposes of such
novation, (y) the termination of such Swap Agreement at the end of its stated
term, or (z) the early termination of a Swap Agreement if, upon such early
termination, it is replaced, in a substantially contemporaneous transaction,
with one or more Swap Agreements covering Hydrocarbons of the type that were
hedged pursuant to such replaced Swap Agreements with notional volumes, prices
and tenors not less favorable to the Borrower or such Credit Party as those set
forth in such replaced Swap Agreements and without cash payments to any Credit
Party in connection therewith.

Section 9.13    Transactions with Affiliates. The Parent and the Borrower will
not, and will not permit any other Restricted Subsidiary to, enter into any
transaction, including, without limitation, any Transfer of Property or the
rendering of any service, with any Affiliate involving aggregate consideration
in excess of $5,000,000 (other than the Credit Parties) unless such transactions
are otherwise not prohibited under this Agreement and are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable
arm’s length transaction with a Person not an Affiliate, provided that the
restrictions set forth in this Section 9.13 shall not apply to (a) Investments
permitted by Section 9.05, (b) the execution and delivery of any Loan Document,
(c) transactions listed on Schedule 9.13, (d) payments made pursuant to
Section 9.04(a) or otherwise expressly permitted under this Agreement, (e) the
issuance and sale of Equity Interests in the Parent and any amendments to the
terms of any Equity Interests issued by the Parent (excluding in each case any
such Equity Interests that would be, or any amendments that would cause any such
Equity Interests to become, Disqualified Capital Stock, (f) the performance of
employment, equity award, equity option or equity appreciation agreements, plans
or other similar compensation or benefit plans or arrangements entered into by
any Credit Party in the ordinary course of its business with its employees,
officers and directors and (g) reasonable and customary fees and compensation
to, and indemnity provided on behalf of, officers, directors, and employees of
any Credit Party in their capacity as such).

Section 9.14    Subsidiaries. The Parent and the Borrower will not, and will not
permit any other Restricted Subsidiary to, create or acquire any additional
Restricted Subsidiary or redesignate an Unrestricted Subsidiary as a Restricted
Subsidiary unless the Borrower gives prompt written notice to the Administrative
Agent of such creation or acquisition and complies with Section 8.14(b). The
Borrower shall not, and shall not permit the Parent or any other Restricted
Subsidiary to, Transfer any Equity Interests in any Restricted Subsidiary except
in compliance with Section 9.12. Neither the Parent nor any Restricted
Subsidiary shall have any Foreign Subsidiaries. The Parent will not permit any
Person other than the Parent or another Credit Party to own any Equity Interests
in any Guarantor.

 

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Section 9.15    Negative Pledge Agreements; Dividend Restrictions. The Parent
and the Borrower will not, and will not permit any other Restricted Subsidiary
to, create, incur, assume or suffer to exist any contract, agreement or
understanding (other than (a) this Agreement and the Security Instruments,
(b) agreements with respect to Purchase Money Debt or Capital Leases secured by
Liens permitted by Section 9.03(c), but then only with respect to Property which
is the subject of such Capital Lease or Purchase Money Debt, (c) customary
restrictions and conditions with respect to the sale or disposition of Property
or Equity Interests permitted under Section 9.12 pending the consummation of
such sale or disposition, (d) any leases or licenses or similar contracts as
they affect any Property or Lien subject to a lease or license, (e) any
Permitted Senior Unsecured Notes Documents and any Permitted Junior Lien Debt
Documents, and (f) agreements and understandings contained in joint venture
agreements or other similar agreements entered into in the ordinary course of
business in respect to the disposition or distribution of assets of such joint
venture), which in any way prohibits or restricts the granting, conveying,
creation or imposition of any Lien on any of its Property in favor of the
Administrative Agent for the benefit of itself and the Secured Parties, or
restricts any Restricted Subsidiary from paying dividends or making
distributions to the Borrower or any Guarantor.

Section 9.16    Gas Imbalances, Take-or-Pay or Other Prepayments. Except as set
forth on Schedule 7.18 or on the most recent certificate delivered pursuant to
Section 8.12(c), the Parent and the Borrower will not, and will not permit any
other Restricted Subsidiary to, allow gas imbalances, take-or-pay or other
prepayments with respect to the Oil and Gas Properties of the Parent or any
Restricted Subsidiary that would require the Parent or such Restricted
Subsidiary to deliver Hydrocarbons at some future time without then or
thereafter receiving full payment therefor to exceed 2.5% of the aggregate
annual production of gas from the Oil and Gas Properties of the Parent and its
Restricted Subsidiaries during the most recent calendar year (on an mcf
equivalent basis).

Section 9.17    Swap Agreements.

(a)    The Parent and the Borrower will not, and will not permit any other
Restricted Subsidiary to, enter into any Swap Agreements for speculative
purposes. The Parent and the Borrower will not, and will not permit any other
Restricted Subsidiary to, enter into any Swap Agreements with any Person other
than:

(i)    Subject to clause (b) of this Section 9.17, Swap Agreements with an
Approved Counterparty in respect of commodities the notional volumes of which
(when aggregated with other commodity Swap Agreements then in effect) do not
exceed, as of the date such Swap Agreement is entered into (and for each month
during the period during which such Swap Agreement is in effect), 85% of the
reasonably anticipated production of crude oil, natural gas and natural gas
liquids and condensate, calculated separately and, in each case, as such
production is forecast from the Parent’s and its Restricted Subsidiaries’ Oil
and Gas Properties constituting Proved Reserves as set forth on the most recent
Reserve Report delivered pursuant to the terms of this Agreement; provided,
however, that such Swap Agreements shall not, in any case, have a tenor of
greater than five (5) years. It is understood that Swap Agreements in respect of

 

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commodities which may, from time to time, “hedge” the same volumes, but
different elements of commodity risk thereof (such as, for example, basis risk
and price risk), shall not be aggregated together when calculating the foregoing
limitations on notional volumes or for any other purpose of this Section.

(ii)    Upon the signing of a binding purchase and sale agreement for Oil and
Gas Properties (such Oil and Gas Properties, the “Proposed Acquisition
Properties”) between such Credit Party and a third party seller, Swap Agreements
in respect of commodities (a) with an Approved Counterparty, (b) with a tenor
not to exceed three years commencing with the first full month after such Swap
Agreement is executed, and (c) the notional volumes for which do not exceed 85%
of the reasonably anticipated production from the Proposed Acquisition
Properties constituting Proved Reserves for each month from each of crude oil,
natural gas and natural gas liquids and condensate, calculated separately and as
set forth in a reserve report delivered to the Administrative Agent (in form and
detail reasonably acceptable to the Administrative Agent) covering such Proposed
Acquisition Properties; provided that, (x) upon the earlier to occur of (1) the
10th day after such purchase and sale agreement is terminated or any Credit
Party otherwise knows that such purchase and sale agreement shall not be
consummated and (2) the 90th day after the date upon which the applicable
purchase and sale agreement was entered into in each case with such extensions
as agreed to by the Administrative Agent in its sole discretion, all Swap
Agreements entered into under this Section 9.17(a)(ii) that would not otherwise
have been permitted to be entered into under Section 9.17(a)(i) above (at the
time entered into) will be unwound or otherwise terminated, (y) notwithstanding
anything to the contrary herein, the notional volumes for Swap Agreements
entered into under this Section 9.17(a)(ii) (when aggregated with other
commodity Swap Agreements then in effect pursuant to Section 9.17(a)(i) other
than basis differential swaps on volumes already hedged pursuant to other Swap
Agreements) shall not exceed, as of the date such Swap Agreement is executed,
100% of reasonably anticipated production from the Credit Party’s Oil and Gas
Properties constituting Proved Reserves (as set forth in the most recent Reserve
Report delivered pursuant to the terms of this Agreement and excluding, for the
avoidance of doubt, anticipated production from the Proposed Acquisition
Properties) for each month of each of crude oil, natural gas, and natural gas
liquids and condensate, calculated separately and (z) at all times prior to the
closing of the applicable acquisition, when Swap Agreements are outstanding
under this Section 9.17(a)(ii), Liquidity shall be no less than 15% of the
Borrowing Base then in effect.

(iii)    Swap Agreements in respect of interest rates with an Approved
Counterparty, as follows:

(A)    Swap Agreements effectively converting interest rates from fixed to
floating, the notional amounts of which (when aggregated with all other Swap
Agreements of the Parent and its Restricted Subsidiaries then in effect
effectively converting interest rates from fixed to floating) do not exceed 50%
of the then outstanding principal amount of the Credit Parties’ Debt for
borrowed money which bears interest at a fixed rate, and which Swap Agreements
shall not, in any case, have a tenor beyond the maturity date of such Debt, and

(B)    Swap Agreements effectively converting interest rates from floating to
fixed, the notional amounts of which (when aggregated with all other Swap
Agreements of the Parent and its Restricted Subsidiaries then in effect
effectively converting interest rates from

 

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floating to fixed) do not exceed 75% of the then outstanding principal amount of
the Credit Parties’ Debt for borrowed money which bears interest at a floating
rate, and which Swap Agreements shall not, in any case, have a tenor beyond the
maturity date of such Debt.

(b)    Except as otherwise permitted by clause (a)(ii) above, if, after the end
of any calendar quarter, commencing with calendar quarter ending June 30, 2018,
the Borrower determines that the volume of all Swap Agreements in respect of
commodities for which settlement payments were calculated in such calendar
quarter (other than Swap Agreements that “hedge” the same volumes but different
elements of commodity risk) exceeded 100% of actual production of Hydrocarbons
in such calendar quarter, then the Borrower (i) shall promptly notify the
Administrative Agent of such determination and (ii) shall, no later than 30 days
after such determination (or such longer period acceptable to the Administrative
Agent), terminate (only to the extent such terminations are permitted pursuant
to Section 9.12), create off-setting positions, or otherwise unwind or monetize
(only to the extent such unwinds or monetizations are permitted pursuant to
Section 9.12) existing Swap Agreements such that, at such time, future hedging
volumes will not exceed 100% of reasonably anticipated projected production for
the then-current and any succeeding calendar quarters.

(c)    In no event shall any Swap Agreement contain any requirement, agreement
or covenant for the Parent or any Restricted Subsidiary to post collateral,
credit support (including in the form of letters of credit) or margin (other
than pursuant to the Security Instruments) to secure their obligations under
such Swap Agreement.

(d)    The Parent and the Borrower will not, and will not permit any other
Restricted Subsidiary to, terminate or monetize any Swap Agreement in respect of
commodities without the prior written consent of the Required Lenders except to
the extent such terminations are permitted pursuant to Section 9.12.

(e)    For purposes of entering into or maintaining Swap Agreement trades or
transactions under Section 9.17(a)(i) and Section 9.17(b), respectively,
forecasts of reasonably anticipated production from the Parent’s and its
Restricted Subsidiaries’ Proved Reserves as set forth on the most recent Reserve
Report delivered pursuant to the terms of this Agreement shall be deemed to be
updated to account for any increase or decrease therein anticipated because of
information obtained by the Parent or any of its Restricted Subsidiaries and
delivered to the Administrative Agent subsequent to the publication of such
Reserve Report including, without limitation, (i) the Parent’s or any of its
Restricted Subsidiaries’ internal forecasts of production decline rates for
existing wells, (ii) additions to or deletions from anticipated future
production from new wells, (iii) completed dispositions, and (iv) completed
acquisitions coming on stream or failing to come on stream; provided that
(A) any such supplemental information shall be reasonably satisfactory to the
Administrative Agent and (B) if any such supplemental information is delivered,
such information shall be presented on a net basis (i.e., it shall take into
account both increases and decreases in anticipated production subsequent to
publication of the most recent Reserve Report).

 

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ARTICLE X

EVENTS OF DEFAULT; REMEDIES

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

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

(b)    the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in Section 10.01(a)) payable
under any Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of five (5) Business Days.

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

(d)    the Borrower shall fail to give notice of any Default as required under
Section 8.02(a), the Parent, the Borrower or any other Restricted Subsidiary
shall fail to observe or perform any covenant, condition or agreement contained
in Section 8.01(l), Section 8.02(b), Section 8.02(c), Section 8.03(a)(i) (with
respect to the Parent and the Borrower), Section 8.14, Section 8.18 or in
Article IX.

(e)    the Parent, the Borrower or any other Restricted Subsidiary shall fail to
observe or perform any covenant, condition or agreement contained in this
Agreement (other than those specified in Section 10.01(a), Section 10.01(b) or
Section 10.01(d)) or any other Loan Document, and such failure shall continue
unremedied for a period of thirty (30) days after the earlier to occur of (i) a
Responsible Officer of the Parent, the Borrower or any other Restricted
Subsidiary having knowledge of such default, or (ii) receipt of notice thereof
by the Borrower from the Administrative Agent.

(f)    the Parent, the Borrower or any other Restricted Subsidiary shall fail to
make any payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become due and
payable, and such failure to pay shall extend beyond any applicable grace
period.

(g)    any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to

 

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require the Redemption thereof or any offer to Redeem to be made in respect
thereof, prior to its scheduled maturity or require the Parent, the Borrower or
any other Restricted Subsidiary to make a mandatory Redemption offer in respect
thereof.

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

(i)    the Parent, the Borrower or any other Restricted Subsidiary shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in Section 10.01(h),
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Parent, the Borrower or
any other Restricted Subsidiary or for a substantial part of its assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the benefit
of creditors or (vi) take any action for the purpose of effecting any of the
foregoing.

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

(k)    one or more judgments for the payment of money in an aggregate amount in
excess of the Threshold Amount (to the extent not covered by independent third
party insurance as to which the insurer does not dispute coverage) shall be
rendered against the Parent, the Borrower, any other Restricted Subsidiary or
any combination thereof and the same shall not be discharged, vacated or stayed
within thirty (30) days after becoming a final judgment.

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

(m)    a Change in Control shall occur.

(n)    an ERISA Event shall have occurred that, when taken together with all
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect.

Section 10.02    Remedies.

 

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(a)    In the case of an Event of Default other than one described in
Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent may,
and at the request of the Majority Lenders, shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Notes and the Loans then outstanding to be due
and payable in whole (or in part, in which case any principal not so declared to
be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the Borrower
and the Guarantors accrued hereunder and under the Notes and the other Loan
Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in Section 2.08(j)), shall become due and
payable immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor; and in case of an Event of
Default described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), the
Commitments shall automatically terminate and the Notes and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
the other obligations of the Borrower and the Guarantors accrued hereunder and
under the Notes and the other Loan Documents (including, without limitation, the
payment of cash collateral to secure the LC Exposure as provided in
Section 2.08(j)), shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor.

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

(c)    All proceeds realized from the liquidation or other disposition of
collateral or otherwise received after maturity of the Loans, whether by
acceleration or otherwise, shall be applied:

(i)    first, to payment or reimbursement of that portion of the Indebtedness
constituting fees, expenses and indemnities payable to the Administrative Agent
in its capacity as such;

(ii)    second, pro rata to payment or reimbursement of that portion of the
Indebtedness constituting fees, expenses and indemnities payable to the Lenders;

(iii)    third, pro rata to payment of accrued interest on the Loans;

(iv)    fourth, pro rata to payment of principal outstanding on the Loans, LC
Disbursements that have not yet been reimbursed by or on behalf of the Borrower
at such time, and Indebtedness referred to in clause (b) of the definition of
Indebtedness owing to Secured Swap Providers;

(v)    fifth, pro rata to any other Indebtedness;

(vi)    sixth, to serve as cash collateral to be held by the Administrative
Agent to secure the remaining LC Exposure; and

 

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(vii)    seventh, any excess, after all of the Indebtedness shall have been
indefeasibly paid in full in cash, shall be paid to the Borrower or as otherwise
required by any Governmental Requirement.

Notwithstanding the foregoing, amounts received from any Credit Party that is
not an “eligible contract participant” under the Commodity Exchange Act shall
not be applied to any obligations that constitute Excluded Swap Obligations with
respect to such Credit Party (it being understood, that in the event that any
amount is applied to Indebtedness other than Excluded Swap Obligations as a
result of this clause, the Administrative Agent shall make such adjustments as
it determines are appropriate to distributions pursuant to clause fourth above
from amounts received from “eligible contract participants” under the Commodity
Exchange Act to ensure, as nearly as possible, that the proportional aggregate
recoveries with respect to Indebtedness described in clause fourth above by the
holders of any Excluded Swap Obligations are the same as the proportional
aggregate recoveries with respect to other Indebtedness pursuant to clause
fourth above).

ARTICLE XI

THE AGENTS

Section 11.01    Appointment; Powers. Each of the Lenders and the Issuing Bank
hereby irrevocably appoints the Administrative Agent as its agent and authorizes
the Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof and the
other Loan Documents, together with such actions and powers as are reasonably
incidental thereto.

Section 11.02    Duties and Obligations of Administrative Agent. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing (the use of the term “agent” herein and in the other Loan
Documents with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law; rather, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties), (b) the Administrative
Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, and (c) except as
expressly set forth herein, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Parent or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity. The Administrative Agent shall be deemed not to have knowledge of
any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or under any other Loan Document or in connection herewith
or therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any

 

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other agreement, instrument or document, (v) the satisfaction of any condition
set forth in Article VI or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent or as to
those conditions precedent expressly required to be to the Administrative
Agent’s satisfaction, (vi) the existence, value, perfection or priority of any
collateral security or the financial or other condition of the Parent and its
Subsidiaries or any other obligor or guarantor, or (vii) any failure by the
Borrower or any other Person (other than itself) to perform any of its
obligations hereunder or under any other Loan Document or the performance or
observance of any covenants, agreements or other terms or conditions set forth
herein or therein. For purposes of determining compliance with the conditions
specified in Article VI, each Lender 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
written notice from such Lender prior to the proposed closing date specifying
its objection thereto.

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

Section 11.04    Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
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certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon and each of the Borrower, the Lenders
and the Issuing Bank hereby waives the right to dispute the Administrative
Agent’s record of such statement, except in the case of gross negligence, bad
faith or willful misconduct by the Administrative Agent. The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts. The Administrative Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof permitted
hereunder shall have been filed with the Administrative Agent.

Section 11.05    Subagents. The Administrative Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding Sections of this Article XI shall apply to any such subagent
and to the Related Parties of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.

Section 11.06    Resignation of Administrative Agent. Subject to the appointment
and acceptance of a successor Administrative Agent as provided in this
Section 11.06, the Administrative Agent may resign at any time by notifying the
Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the
Majority Lenders shall have the right, in consultation with the Borrower, to
appoint a successor. If no successor shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within thirty
(30) days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank; provided that in no event shall any such successor Administrative
Agent be a Defaulting Lender. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article XI and Section 12.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

Section 11.07    Agents as Lenders. Each bank serving as an 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 an Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Parent or any Subsidiary or other Affiliate
thereof as if it were not an Agent hereunder.

 

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Section 11.08    No Reliance. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Loan Document to which it is a party. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document, any related agreement or any
document furnished hereunder or thereunder. The Agents shall not be required to
keep themselves informed as to the performance or observance by the Parent or
any of its Subsidiaries of this Agreement, the Loan Documents or any other
document referred to or provided for herein or to inspect the Properties or
books of the Parent or its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent or Arranger shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of such Agent or any of
its Affiliates. In this regard, each Lender acknowledges that Vinson & Elkins
L.L.P. is acting in this transaction as special counsel to the Administrative
Agent only, except to the extent otherwise expressly stated in any legal opinion
or any Loan Document. Each other party hereto will consult with its own legal
counsel to the extent that it deems necessary in connection with the Loan
Documents and the matters contemplated therein.

Section 11.09    Administrative Agent May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Parent or any of its Subsidiaries, the Administrative
Agent (irrespective of whether the principal of any Loan shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered, by intervention in such proceeding or
otherwise:

(a)    to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Indebtedness
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 12.03) allowed in such judicial proceeding;
and

(b)    to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such
payments to the Administrative Agent and, in the event that the Administrative
Agent shall consent to the making of such payments directly to the Lenders, to
pay to the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its agents
and counsel, and any other amounts due the Administrative Agent under
Section 12.03.

 

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Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

Section 11.10    Authority of Administrative Agent to Release Collateral, Liens
and Guarantors. By accepting the benefits of the Security Instruments, each
Secured Party hereby acts and agrees as follows:

(a)    each Secured Party hereby authorizes the Administrative Agent to take the
following actions, and the Administrative Agent hereby agrees to take such
actions at the request of the Borrower:

(i)    to release any Lien on any Property granted to or held by Administrative
Agent under any Loan Document:

(A)    to the extent such Property is, or is to be, sold, released or otherwise
disposed of as permitted pursuant to the terms of the Loan Documents; or

(B)    to the extent such Property did not belong to any Credit Party at the
time such Lien was granted, or to the extent the Credit Parties hold interests
in such Property only under a lease that has expired or is about to expire and
which has not been, and is not intended by the Credit Parties to be, renewed or
extended, or to the extent such Property is not a Proved Oil and Gas Property
and was not required to be mortgaged pursuant to the terms of the Loan
Documents; or

(C)    if approved, authorized or ratified in writing by the Majority Lenders
(or, if approval, authorization or ratification by all Lenders is required under
Section 12.02(b), then by all Lenders);

(D)    upon (1) termination of all Commitments, payment in full of all
Indebtedness (other than contingent indemnification obligations for which no
claim has been made) owing to the Administrative Agent, the Issuing Bank and the
Lenders under the Loan Documents and owing to any Secured Swap Provider under
any Secured Swap Agreement (other than any Secured Swap Provider that has
advised the Administrative Agent that the Indebtedness owing to it are otherwise
adequately provided for or novated), and the expiration or termination of all
Letters of Credit (other than Letters of Credit as to which other arrangements
satisfactory to the Administrative Agent and the applicable Issuing Bank have
been made) and (2) termination of all Secured Swap Agreements with Secured Swap
Providers (other than any Secured Swap Provider that has advised the
Administrative Agent that such Secured Swap Agreements are otherwise adequately
provided for or novated); or

(E)    Upon redesignation of a Restricted Subsidiary as an Unrestricted
Subsidiary in accordance with Section 9.06(b);

(ii)    to release any Guarantor from its obligations under any Guaranty
Agreement and any other Loan Document if such Person ceases to be a Restricted
Subsidiary of the Borrower as a result of a transaction permitted under the Loan
Documents;

 

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(iii)    to subordinate (or release) any Lien on any Property granted to or held
by the Administrative Agent under any Loan Document to any Lien on such Property
that is permitted by Section 9.03(c); and (iv) to execute and deliver to the
Borrower, at the Borrower’s sole cost and expense, any and all releases of Liens
and guaranties, termination statements, assignments or other documents necessary
or useful to accomplish or evidence the foregoing.

(b)    Notwithstanding anything contained in any of the Loan Documents to the
contrary, no Person other than the Administrative Agent has any individual right
to realize upon any of the Mortgaged Property or other collateral under the
Security Instruments, to enforce any Liens on Mortgaged Property or any such
other collateral, or to enforce any Guaranty Agreement, and all powers, rights
and remedies under the Security Instruments may be exercised solely by
Administrative Agent on behalf of the Persons secured or otherwise benefitted
thereby.

(c)    By accepting the benefit of the Liens granted pursuant to the Security
Instruments, each Person secured by such Liens that is not a party hereto agrees
to the terms of this Section 11.10 and agrees that, notwithstanding anything to
the contrary in any Secured Swap Agreement or any master agreement or other
agreement relating thereto, each Credit Party is authorized and permitted to
grant and assign to Administrative Agent under the Security Documents security
interests in all Secured Swap Agreements and all rights with respect thereto.

Section 11.11    Agents. No Agent other than the Administrative Agent shall have
any duties, responsibilities or liabilities under this Agreement and the other
Loan Documents other than their duties, responsibilities and liabilities in
their capacity as Lenders hereunder.

Section 11.12    Certain ERISA Matters. (a) Each Lender (x) represents and
warrants, as of the date such Person became a Lender party hereto, to, and
(y) covenants, from the date such Person became a Lender party hereto to the
date such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent, and each Arranger and their respective Affiliates, and
not, for the avoidance of doubt, to or for the benefit of the Parent, the
Borrower or any other Credit Party, that at least one of the following is and
will be true:

(i)    such Lender is not using “plan assets” (within the meaning of the Plan
Asset Regulations) of one or more Benefit Plans in connection with the Loans,
the Letters of Credit or the Commitments,

(ii)    the transaction exemption set forth in one or more PTEs, such as PTE
84-14 (a class exemption for certain transactions determined by independent
qualified professional asset managers), PTE 95-60 (a class exemption for certain
transactions involving insurance company general accounts), PTE 90-1 (a class
exemption for certain transactions involving insurance company pooled separate
accounts), PTE 91-38 (a class exemption for certain transactions involving bank
collective investment funds) or PTE 96-23 (a class exemption for certain
transactions determined by in-house asset managers), is applicable with respect
to such Lender’s entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this
Agreement, and the conditions for exemptive relief thereunder are and will
continue to be satisfied in connection therewith,

 

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(iii)    (A) such Lender is an investment fund managed by a “Qualified
Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B)
such Qualified Professional Asset Manager made the investment decision on behalf
of such Lender to enter into, participate in, administer and perform the Loans,
the Letters of Credit, the Commitments and this Agreement, (C) the entrance
into, participation in, administration of and performance of the Loans, the
Letters of Credit, the Commitments and this Agreement satisfies the requirements
of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best
knowledge of such Lender, the requirements of subsection (a) of Part I of PTE
84-14 are satisfied with respect to such Lender’s entrance into, participation
in, administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement, or

(iv)    such other representation, warranty and covenant as may be agreed in
writing between the Administrative Agent, in its sole discretion, and such
Lender.

(b)    In addition, unless sub-clause (i) in the immediately preceding clause
(a) is true with respect to a Lender or such Lender has not provided another
representation, warranty and covenant as provided in sub-clause (iv) in the
immediately preceding clause (a), such Lender further (x) represents and
warrants, as of the date such Person became a Lender party hereto, to, and
(y) covenants, from the date such Person became a Lender party hereto to the
date such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent, and each Arranger and their respective Affiliates, and
not, for the avoidance of doubt, to or for the benefit of the Parent, the
Borrower or any other Credit Party, that:

(i)    neither the Administrative Agent, or the Arranger or any of their
respective Affiliates is a fiduciary with respect to the assets of such Lender
(including in connection with the reservation or exercise of any rights by the
Administrative Agent under this Agreement, any Loan Document or any documents
related to hereto or thereto),

(ii)    the Person making the investment decision on behalf of such Lender with
respect to the entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this
Agreement is independent (within the meaning of 29 CFR § 2510.3-21, as amended
from time to time) and is a bank, an insurance carrier, an investment adviser, a
broker-dealer or other person that holds, or has under management or control,
total assets of at least $50 million, in each case as described in 29 CFR §
2510.3-21(c)(1)(i)(A)-(E),

(iii)    the Person making the investment decision on behalf of such Lender with
respect to the entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this
Agreement is capable of evaluating investment risks independently, both in
general and with regard to particular transactions and investment strategies
(including in respect of the obligations),

(iv)    the Person making the investment decision on behalf of such Lender with
respect to the entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this
Agreement is a fiduciary under ERISA or the Code, or both, with respect to the
Loans, the Letters of Credit, the Commitments and this Agreement and is
responsible for exercising independent judgment in evaluating the transactions
hereunder, and

 

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(v)    no fee or other compensation is being paid directly to the Administrative
Agent, or the Arranger or any of their respective Affiliates for investment
advice (as opposed to other services) in connection with the Loans, the Letters
of Credit, the Commitments or this Agreement.

(c)    The Administrative Agent, and each Arranger hereby informs the Lenders
that each such Person is not undertaking to provide impartial investment advice,
or to give advice in a fiduciary capacity, in connection with the transactions
contemplated hereby, and that such Person has a financial interest in the
transactions contemplated hereby in that such Person or an Affiliate thereof
(i) may receive interest or other payments with respect to the Loans, the
Letters of Credit, the Commitments and this Agreement, (ii) may recognize a gain
if it extended the Loans, the Letters of Credit or the Commitments for an amount
less than the amount being paid for an interest in the Loans, the Letters of
Credit or the Commitments by such Lender or (iii) may receive fees or other
payments in connection with the transactions contemplated hereby, the Loan
Documents or otherwise, including structuring fees, commitment fees, arrangement
fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees,
administrative agent or collateral agent fees, utilization fees, minimum usage
fees, letter of credit fees, fronting fees, deal-away or alternate transaction
fees, amendment fees, processing fees, term out premiums, banker’s acceptance
fees, breakage or other early termination fees or fees similar to the foregoing.

Section 11.13    Intercreditor Agreement. Each of the Issuing Bank and the
Lenders (on behalf of themselves and their Affiliates) constituting at least the
Majority Lenders hereby authorize and direct the Administrative Agent to enter
into, to the extent contemplated to be entered into pursuant to the Credit
Agreement, any Intercreditor Agreement on behalf of the Secured Parties and
without any further consent, authorization or other action by such Secured
Party. The Administrative Agent shall have the benefit of the provisions of
Article XI of the Credit Agreement with respect to all actions taken by it
pursuant to this Section 11.13 or in accordance with the terms of any
Intercreditor Agreement to the full extent thereof. In addition, each of the
Issuing Bank and the Lenders (on behalf of themselves and their Affiliates)
constituting at least the Majority Lenders hereby authorize the Administrative
Agent or any such successor (i) to execute or to enter into amendments of or
supplements to, amendments and restatements of, waivers or other modifications
of the Security Instruments, any Intercreditor Agreement and any additional or
replacement intercreditor agreements, in each case, in order to effect the
subordination of, and to provide for certain additional rights, obligations and
limitations in respect of, any Liens that are junior to the Liens securing the
Indebtedness and incurred as permitted by the Credit Agreement, (ii) to
establish certain relative rights as between the holders of the Indebtedness and
the holders of the Debt secured by such Liens that are junior to the Liens
securing the Indebtedness and (iii) any amendments, supplements or other
modifications of any Security Instrument to add or remove any legend that may be
required pursuant to any Intercreditor Agreement. Each of the Issuing Bank and
the Lenders (on behalf of themselves and their Affiliates) constituting at least
the Majority Lenders hereby irrevocably (i) consents to the treatment of Liens
to be provided for under any Intercreditor Agreement, (ii) agrees that, upon the
execution and delivery thereof, such Secured Party will be bound by the
provisions of any Intercreditor Agreement as if it were a signatory thereto and
will take no actions contrary to the provisions of any Intercreditor

 

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Agreement, (iii) agrees that no Secured Party shall have any right of action
whatsoever against the Administrative Agent as a result of any action taken by
the Administrative Agent pursuant to this Section or in accordance with the
terms of any Intercreditor Agreement and (iv) authorizes and directs the
Administrative Agent to carry out the provisions and intent of any Intercreditor
Agreement.

ARTICLE XII

MISCELLANEOUS

Section 12.01    Notices.

(a)    Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to Section 12.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by facsimile, as follows:

(i)    if to the Borrower, to it at 1401 17th Street, Suite 1000, Denver,
Colorado 80202, Attention: George Glyphis (gglyphis@centennialresource.com;
Facsimile No. (303) 845-9516);

(ii)    If to the Administrative Agent or Issuing Bank, to it at JPMorgan Chase
Bank, N.A., 10 South Dearborn, Floor 7, IL1 0010, Chicago, Illinois 60603,
Attention of Loan and Agency Services, (Facsimile No. (888) 292-9533), with a
copy to JPMorgan Chase Bank, N.A., 2200 Ross Avenue, Floor 3, Dallas, Texas
75201-2787, Attention of Cathy Johann (Facsimile No. (214) 965-2884), and for
all correspondence other than borrowings, continuation, conversion and Letter of
Credit requests, 1125 17th Street, Floor 3, Denver, Colorado 80202, Attention:
Ryan Fuessel (Facsimile: (832) 487-1765); and

(iii)    if to any other Lender, to it at its address (or facsimile number) set
forth 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 facsimile 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 paragraph (b) below, shall be effective as provided in said
paragraph (b).

(b)    Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent and the applicable Lender; provided that
the foregoing shall not apply to notices by the Borrower to the Administrative
Agent or the Lenders pursuant to Article II, Article III, Article IV and Article
V unless otherwise agreed by the Administrative Agent and the applicable Lender,
if any. 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.

 

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

Section 12.02    Waivers; Amendments.

(a)    No failure on the part of the Administrative Agent, any other Agent, the
Issuing Bank or any Lender to exercise and no delay in exercising, and no course
of dealing with respect to, any right, power or privilege, or any abandonment or
discontinuance of steps to enforce such right, power or privilege, under any of
the Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any of the Loan
Documents preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies of the Administrative
Agent, any other Agent, the Issuing Bank and the Lenders hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or any other Loan Document or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
Section 12.02(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any other Agent, any Lender or the Issuing Bank may
have had notice or knowledge of such Default at the time.

(b)    Subject to Section 2.08(k) and Section 3.03(b), neither this Agreement
nor any provision hereof nor any Security Instrument nor any provision thereof
may be waived, amended or modified except pursuant to an agreement or agreements
in writing entered into by the Borrower and the Majority Lenders or by the
Borrower and the Administrative Agent with the consent of the Majority Lenders;
provided that no such agreement (including, for the avoidance of doubt, any New
Borrowing Base Notice) shall (i) increase the Commitments or the Maximum Credit
Amount of any Lender without the written consent of such Lender, (ii) increase
the Borrowing Base without the written consent of each Lender (other than any
Defaulting Lender), decrease or maintain the Borrowing Base without the consent
of the Required Lenders, or modify Section 2.07(c) in any manner that results in
an increase in the Borrowing Base without the consent of each Lender (other than
any Defaulting Lender); provided that a Borrowing Base redetermination may be
delayed by the Required Lenders (but in no event shall any such Borrowing Base
redetermination be delayed past the next Scheduled Redetermination without the
consent of all Lenders), (iii) reduce the principal amount of any Loan or LC
Disbursement or reduce the rate of interest thereon, or reduce any fees payable
hereunder, or reduce any other Indebtedness hereunder or under any other Loan
Document, without the written consent of each Lender affected thereby provided,
however, that only the consent of the Majority Lenders shall be necessary to
waive any obligation of the Borrower to pay interest or fees at the default rate
of interest provided in Section 3.02(c), (iv) postpone the scheduled date of
payment or prepayment of the principal amount of any Loan or LC Disbursement
(excluding mandatory prepayments pursuant to Section 3.04(c) to the extent that
the event triggering such mandatory prepayment has not yet occurred), or any
interest thereon, or any fees payable hereunder, or any other Indebtedness
hereunder or under any other Loan Document, or reduce the amount of, waive or
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payment, or postpone or extend the Maturity Date or the Termination Date without
the written consent of each Lender affected thereby, (v) change Section 4.01(b)
or Section 4.01(c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (vi) waive or
amend Section 6.01, Section 10.02(c) or Section 12.14 or change the definition
of the terms “Domestic Subsidiary”, “Foreign Subsidiary”, or “Subsidiary”,
without the written consent of each Lender (other than any Defaulting Lender),
(vii) release any Guarantor (except as set forth in Section 11.10 or in the
Guaranty Agreement), release all or substantially all of the collateral (other
than as provided in Section 11.10), or reduce the percentage set forth in
Section 8.14(a) to less than 85%, without the written consent of each Lender
(other than any Defaulting Lender), (viii) change any of the provisions of this
Section 12.02(b) or the definition of “Majority Lenders” or, subject to the
following clause (ix), any other provision hereof specifying the number,
percentage or class of Lenders required to waive, amend or modify any rights
hereunder or under any other Loan Documents or make any determination or grant
any consent hereunder or any other Loan Documents, without the written consent
of each Lender (other than any Defaulting Lender), or (ix) change the definition
of “Majority Lenders” or “Required Lenders” without the written consent of each
Lender (other than any Defaulting Lender); provided, further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, any other Agent, or the Issuing Bank hereunder or under
any other Loan Document without the prior written consent of the Administrative
Agent, such other Agent or the Issuing Bank, as the case may be. Notwithstanding
the foregoing, (w) any supplement to Schedule 7.14 (Subsidiaries) shall be
effective simply by delivering to the Administrative Agent a supplemental
schedule clearly marked as such and, upon receipt, the Administrative Agent will
promptly deliver a copy thereof to the Lenders, (x) the Borrower and the
Administrative Agent may amend this Agreement or any other Loan Document without
the consent of any of the Lenders in order to correct, amend or cure any
ambiguity, omission, inconsistency, illegality or defect therein, or correct any
typographical error or other manifest error in any Loan Document or otherwise
effectuate the intent of the parties hereto, (y) the Administrative Agent and
the Borrower (or other applicable Credit Party) may enter into any amendment,
modification or waiver of this Agreement or any other Loan Document or enter
into any new Loan Document or other agreement or instrument to effect the
granting, perfection, protection, expansion or enhancement of any Lien to
secure, or the guarantee of, the Indebtedness for the benefit of the Secured
Parties or as required by any Governmental Requirement to give effect to,
protect or otherwise enhance the rights or benefits of the Secured Parties under
the Loan Documents, in each case without the consent of any Lender, and (z) the
Administrative Agent and the Borrower (or other applicable Credit Party) may
enter into an amendment, modification or waiver of this Agreement or of any
other Loan Document or enter into any agreement or instrument to join additional
Persons as Credit Parties pursuant to the terms thereof.

Section 12.03    Expenses, Indemnity; Damage Waiver.

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

(b)    THE BORROWER SHALL INDEMNIFY EACH AGENT, EACH ARRANGER, THE ISSUING BANK
AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH
SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND DEFEND AND HOLD EACH
INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, PENALTIES,
LIABILITIES AND RELATED EXPENSES, INCLUDING THE REASONABLE FEES, CHARGES AND
DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST
ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE
EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE
PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF THE
PARENT, THE BORROWER OR ANY OTHER RESTRICTED SUBSIDIARY TO COMPLY WITH THE TERMS
OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL
REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY
WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE
LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN
CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE
PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY THE
ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE
DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT

 

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STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT OF A
DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE,
NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN
CONNECTION THEREWITH, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE
OPERATIONS OF THE BUSINESS OF THE PARENT AND ITS RESTRICTED SUBSIDIARIES BY THE
PARENT AND ITS RESTRICTED SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS
WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY
INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE PARENT OR ANY
RESTRICTED SUBSIDIARY OR ANY OF THEIR PROPERTIES OR OPERATIONS, INCLUDING, THE
PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT,
DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF HAZARDOUS MATERIALS ON OR AT
ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE PARENT OR ANY
RESTRICTED SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE PARENT OR ANY
RESTRICTED SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE PARENT OR ANY RESTRICTED
SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR
PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT
IN PRESENT LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT,
DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT
OR ARRANGEMENT FOR DISPOSAL OF HAZARDOUS MATERIALS ON OR AT ANY OF THE
PROPERTIES OWNED OR OPERATED BY THE PARENT OR ANY RESTRICTED SUBSIDIARY OR ANY
ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY
PROPERTY OWNED OR OPERATED BY THE PARENT OR ANY OF ITS RESTRICTED SUBSIDIARIES,
(xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE PARENT OR ANY OF ITS
RESTRICTED SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY
CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR
PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF
THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY
SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE,
WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL
TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT
FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; provided THAT SUCH INDEMNITY SHALL
NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES (X) ARE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM
THE GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR
(Y) RESULT FROM A CLAIM BROUGHT BY THE BORROWER, THE PARENT OR ANY OF ITS
SUBSIDIARIES AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH

 

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INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, IF THE
BORROWER, THE PARENT OR ANY OF ITS SUBSIDIARIES HAS OBTAINED A FINAL AND
NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF
COMPETENT JURISDICTION. THIS SECTION 12.03(B) SHALL NOT APPLY WITH RESPECT TO
TAXES OTHER THAN ANY TAXES THAT REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING
FROM ANY NON-TAX CLAIM.

(c)    To the extent that the Borrower fails to pay any amount required to be
paid by it to any Agent, the Arranger or the Issuing Bank under Section 12.03(a)
or (b), each Lender severally agrees to pay to such Agent, such Arranger or the
Issuing Bank, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought), of such unpaid amount; provided that the unreimbursed
expense or indemnified loss, claim, damage, liability or related expense, as the
case may be, was incurred by or asserted against such Agent, such Arranger or
the Issuing Bank in its capacity as such.

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

(e)    No Indemnitee shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby, other than to the extent that such
damages are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence, bad faith or
willful misconduct of such Indemnitee.

Section 12.04    Successors and Assigns.

(a)    The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section 12.04. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in Section 12.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement, and except for the foregoing Persons there are no third party
beneficiaries to this Agreement.

(b)    (i) Subject to the conditions set forth in Section 12.04(b)(ii), any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld) of:

 

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

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

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

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

(B)    each total and partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement, including, without limitation, its Commitment, Maximum Credit
Amount, LC Exposure, participations in Letters of Credit, and outstanding Loans;

(C)    the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500;

(D)    the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire; and

(E)    in no event may any Lender assign all or a portion of its rights and
obligations under this Agreement to a natural person, a Defaulting Lender, an
Industry Competitor or to the Borrower or any Affiliate of the Borrower.

(iii)    Subject to Section 12.04(b)(iv) and the acceptance and recording
thereof by the Administrative Agent, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Section 5.01, Section 5.02, Section 5.03 and Section 12.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 12.04 shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 12.04(c).

 

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(iv)    The Administrative Agent, acting solely for this purpose as a
non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy
of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Maximum Credit
Amount and Elected Commitment of, and principal amount (and stated interest) of
the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable
time and from time to time upon reasonable prior notice. In connection with any
changes to the Register, if necessary, the Administrative Agent will reflect the
revisions on Annex I and forward a copy of such revised Annex I to the Borrower,
the Issuing Bank and each Lender.

(v)    Upon its receipt of a duly completed Assignment and Assumption executed
by an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in Section 12.04(b) and any written
consent to such assignment required by Section 12.04(b), the Administrative
Agent shall accept such Assignment and Assumption and record the information
contained therein in the Register. No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this Section 12.04(b).

(c)    (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other Persons (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (C) the Borrower, the Administrative Agent, the Issuing Bank
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement and (D) no participation may be sold to the Borrower, any Affiliate of
the Borrower, any natural person or any Industry Competitor. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 12.02(b) that
affects such Participant. In addition such agreement must provide that the
Participant be bound by the provisions of Section 12.03. Subject to
Section 12.04(c)(ii), the Borrower agrees that each Participant shall be
entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 12.04(b). To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 12.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 4.01(c) as
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Lender. Each Lender that sells a participation shall, acting solely for this
purpose as a non-fiduciary agent of the Borrower, maintain a register on which
it enters the name and address of each Participant and the principal amounts
(and stated interest) of each Participant’s interest in the Loans or other
obligations under 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.

(ii)    Each Participant agrees (A) to be subject to the provisions of
Section 5.03 (subject to the requirements and limitations therein, including the
requirements under Section 5.03(f) (it being understood that the documentation
required under Section 5.03(f) shall be delivered to the participating Lender))
as if it were an assignee under paragraph (b) of this Section; and (B) that it
shall not be entitled to receive any greater payment under Sections 5.01 or
5.03, with respect to any participation, than its participating Lender would
have been entitled to receive, except to the extent such entitlement to receive
a greater payment results from a Change in Law that occurs after the Participant
acquired the applicable participation.

(d)    Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including, without limitation, any pledge or assignment to secure
obligations to a Federal Reserve Bank or other central bank having jurisdiction
over such Lender, and this Section 12.04 shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

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

Section 12.05    Survival; Revival; Reinstatement.

(a)    All covenants, agreements, representations and warranties made by the
Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, any other Agent, the Issuing Bank or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall

 

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continue in full force and effect as long as the principal of or any accrued
interest on any Loan or any fee or any other amount payable under this Agreement
is outstanding and unpaid or any Letter of Credit is outstanding and so long as
the Commitments have not expired or terminated. The provisions of Section 5.01,
Section 5.02, Section 5.03 and Section 12.03 and Article XI shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement, any other Loan Document or any provision hereof or thereof.

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

Section 12.06    Counterparts; Integration; Effectiveness.

(a)    This Agreement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract.

(b)    This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
thereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof and thereof. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

(c)    Except as provided in Section 6.01, this Agreement shall become effective
when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by facsimile or other electronic
transmission (e.g. .pdf) shall be effective as delivery of a manually executed
counterpart of this Agreement.

Section 12.07    Severability. Any provision of this Agreement or any other Loan
Document held to be invalid, illegal or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such invalidity,
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affecting the validity, legality and enforceability of the remaining provisions
hereof or thereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 12.08    Right of Setoff. If an Event of Default shall have occurred and
be continuing, each Lender and each of its Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations (of whatsoever
kind, including, without limitations obligations under Swap Agreements) at any
time owing by such Lender or Affiliate to or for the credit or the account of
the Parent or any Restricted Subsidiary against any of and all the obligations
of the Parent or any Restricted Subsidiary owed to such Lender now or hereafter
existing under this Agreement or any other Loan Document, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
any other Loan Document and although such obligations may be unmatured; provided
that in the event that any Defaulting Lender shall exercise any such right of
setoff, (x) all amounts so set off shall be paid over immediately to the
Administrative Agent for further application in accordance with the provisions
of Sections 2.08(l) and 3.05(d), and, pending such payment, shall be segregated
by such Defaulting Lender from its other funds and deemed held in trust for the
benefit of the Administrative Agent and the Lenders, and (y) the Defaulting
Lender shall provide promptly to the Administrative Agent a statement describing
in reasonable detail the obligations owing to such Defaulting Lender as to which
it exercised such right of setoff. The rights of each Lender under this
Section 12.08 are in addition to other rights and remedies (including other
rights of setoff) which such Lender or its Affiliates may have. Each Lender and
Issuing Bank 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 12.09    GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

(a)    THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT TO THE EXTENT THAT
UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE,
RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH
LENDER IS LOCATED.

(b)    ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT FROM ANY
THEREOF, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY
ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF

 

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ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION
TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING
JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.

(c)    EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS
SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO
SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION). NOTHING HEREIN SHALL AFFECT
THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.

(d)    EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; PROVIDED THAT NOTHING CONTAINED IN THIS SECTION
12.09(d)(ii) SHALL LIMIT THE BORROWER’S INDEMNIFICATION OBLIGATIONS TO THE
EXTENT SET FORTH IN SECTION 12.03 TO THE EXTENT SUCH SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES ARE INCLUDED IN ANY THIRD PARTY CLAIM IN
CONNECTION WITH WHICH SUCH INDEMNITEE IS OTHERWISE ENTITLED TO INDEMNIFICATION
HEREUNDER; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT
OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR
IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY
AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
CONTAINED IN THIS SECTION 12.09.

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

Section 12.11    Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by

 

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any regulatory authority having jurisdiction over such Administrative Agent,
Issuing Bank or Lender, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement or any other Loan Document, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
for the express benefit of the Borrower containing provisions substantially the
same as those of this Section 12.11, to (i) any assignee of or Participant in,
or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any Swap Agreement relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 12.11 or (ii) becomes available to the Administrative Agent, the
Issuing Bank or any Lender on a nonconfidential basis from a source other than
the Borrower. For the purposes of this Section 12.11, “Information” means all
information received from the Parent or any Restricted Subsidiary relating to
the Parent or any Restricted Subsidiary and their businesses, other than any
such information that is available to the Administrative Agent, the Issuing Bank
or any Lender on a nonconfidential basis prior to disclosure by the Parent or a
Restricted Subsidiary; provided that, in the case of information received from
the Parent or any Restricted Subsidiary after the date hereof, such information
is clearly identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this
Section 12.11 shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information. Notwithstanding anything herein to the contrary,
“Information” shall not include, and the Parent, the Parent’s Subsidiaries, the
Administrative Agent, each Lender and the respective Affiliates of each of the
foregoing (and the respective partners, directors, officers, employees, agents,
advisors and other representatives of the aforementioned Persons), and any other
party, may disclose to any and all Persons, without limitation of any kind
(a) any information with respect to the United States federal and state income
tax treatment of the transactions contemplated hereby and any facts that may be
relevant to understanding the United States federal or state income tax
treatment of such transactions (“tax structure”), which facts shall not include
for this purpose the names of the parties or any other person named herein, or
information that would permit identification of the parties or such other
persons, or any pricing terms or other nonpublic business or financial
information that is unrelated to such tax treatment or tax structure, and
(b) all materials of any kind (including opinions or other tax analyses) that
are provided to the Borrower, the Administrative Agent or such Lender relating
to such tax treatment or tax structure.

Section 12.12    Interest Rate Limitation. It is the intention of the parties
hereto that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America, any State therein, or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in any of the Loan Documents or any agreement entered into in connection with or
as security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances

 

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exceed the maximum amount allowed by such applicable law, and any excess shall
be canceled automatically and if theretofore paid shall be credited by such
Lender on the principal amount of the Indebtedness (or, to the extent that the
principal amount of the Indebtedness shall have been or would thereby be paid in
full, refunded by such Lender to the Borrower); and (ii) in the event that the
maturity of the Notes is accelerated by reason of an election of the holder
thereof resulting from any Event of Default under this Agreement or otherwise,
or in the event of any required or permitted prepayment, then such consideration
that constitutes interest under law applicable to any Lender may never include
more than the maximum amount allowed by such applicable law, and excess
interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically by such Lender as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited by such Lender on the principal
amount of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower). All sums paid or agreed to be paid to any Lender for
the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the stated term of the Loans until payment in full so that
the rate or amount of interest on account of any Loans hereunder does not exceed
the maximum amount allowed by such applicable law. If at any time and from time
to time (i) the amount of interest payable to any Lender on any date shall be
computed at the Highest Lawful Rate applicable to such Lender pursuant to this
Section 12.12 and (ii) in respect of any subsequent interest computation period
the amount of interest otherwise payable to such Lender would be less than the
amount of interest payable to such Lender computed at the Highest Lawful Rate
applicable to such Lender, then the amount of interest payable to such Lender in
respect of such subsequent interest computation period shall continue to be
computed at the Highest Lawful Rate applicable to such Lender until the total
amount of interest payable to such Lender shall equal the total amount of
interest which would have been payable to such Lender if the total amount of
interest had been computed without giving effect to this Section 12.12. To the
extent that Chapter 303 of the Texas Finance Code is relevant for the purpose of
determining the Highest Lawful Rate applicable to a Lender, such Lender elects
to determine the applicable rate ceiling under such Chapter by the weekly
ceiling from time to time in effect. Chapter 346 of the Texas Finance Code does
not apply to the Borrower’s obligations hereunder.

Section 12.13    EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO SPECIFICALLY
AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT
AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS
AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL
COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS
ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT
IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF
THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE
VALIDITY OR

 

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ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH
PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

Section 12.14    Collateral Matters; Swap Agreements. The benefit of the
Security Instruments and of the provisions of this Agreement relating to any
collateral securing the Indebtedness shall also extend to and be available to
the Secured Swap Providers, subject to the limitations in the above definition
of “Secured Swap Provider”. No Lender or Affiliate of a Lender shall have any
voting or consent rights under any Loan Document in its capacity as a Secured
Swap Provider or as a result of the existence of obligations owed to it under
any Swap Agreements.

Section 12.15    No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans and the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of the Borrower, and no other Person (including, without limitation, any
Subsidiary of the Parent (other than the Borrower) or any obligor, contractor,
subcontractor, supplier or materialsman) shall have any rights, claims, remedies
or privileges hereunder or under any other Loan Document against the
Administrative Agent, any other Agent, the Issuing Bank or any Lender for any
reason whatsoever. There are no third party beneficiaries other than as
expressly provided herein with respect to Secured Swap Providers, Indemnitees
(as provided in Section 12.03), and Participants (as provided in Section 12.04).

Section 12.16    USA Patriot Act Notice. Each Lender hereby notifies the Parent
and the Borrower that pursuant to the requirements of the USA Patriot Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)) (as amended from time
to time, including any successor statute, the “Act”), it is required to obtain,
verify and record information that identifies the Parent and the Borrower, which
information includes the name and address of the Parent and the Borrower and
other information that will allow such Lender to identify the Parent and the
Borrower in accordance with the Act.

Section 12.17    No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Loan
Document), each of the Parent and the Borrower acknowledges and agrees, and
acknowledges the other Restricted Subsidiaries’ understanding, that: (a) (i) no
fiduciary, advisory or agency relationship between the Parent and its Restricted
Subsidiaries and the Administrative Agent or any Lender is intended to be or has
been created in respect of the transactions contemplated hereby or by the other
Loan Documents, irrespective of whether the Administrative Agent or any Lender
has advised or is advising the Parent or any Restricted Subsidiary on other
matters; (ii) the arranging and other services regarding this Agreement provided
by the Administrative Agent and the Lenders are arm’s-length commercial
transactions between the Parent and its Restricted Subsidiaries, on the one
hand, and the Administrative Agent and the Lenders, on the other hand; (iii) the
Borrower has consulted its own legal, accounting, regulatory and tax advisors to
the extent that it has deemed appropriate; and (iv) the Borrower is capable of
evaluating, and understands and accepts, the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents; and (b) (i)
the Administrative Agent and the Lenders each is and has been acting solely as a
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as expressly agreed in writing by the relevant parties, has not been, is not,
and will not be acting as an advisor, agent or fiduciary for the Parent or any
of its Restricted Subsidiaries, or any other Person; (ii) neither the
Administrative Agent nor the Lenders has any obligation to the Parent or any of
its Restricted Subsidiaries with respect to the transactions contemplated hereby
except those obligations expressly set forth herein and in the other Loan
Documents; and (iii) the Administrative Agent and the Lenders and their
respective Affiliates may be engaged, for their own accounts or the accounts of
customers, in a broad range of transactions that involve interests that differ
from those of the Parent and its Restricted Subsidiaries, and neither the
Administrative Agent nor the Lenders has any obligation to disclose any of such
interests to the Parent or its Restricted Subsidiaries. To the fullest extent
permitted by Law, the Borrower hereby waives and releases any claims that it may
have against the Administrative Agent and the Lenders with respect to any breach
or alleged breach of agency or fiduciary duty in connection with any aspect of
any transaction contemplated hereby.

Section 12.18    Amendment and Restatement. It is the intention of the parties
hereto that this Agreement amends, restates, supersedes and replaces the
Existing A&R Credit Agreement in its entirety; provided, that, (a) such
amendment and restatement shall operate to renew, amend, modify, and extend all
of the rights, duties, liabilities and obligations of the Borrower under the
Existing A&R Credit Agreement and under the Existing Loan Documents, which
rights, duties, liabilities and obligations are hereby renewed, amended,
modified and extended, and shall not act as a novation thereof, and (b) the
Liens securing the Indebtedness under and as defined in the Existing A&R Credit
Agreement and the rights, duties, liabilities and obligations of the Borrower
and the Guarantors under the Existing A&R Credit Agreement and the Existing Loan
Documents to which they are a party shall not be extinguished but shall be
carried forward and shall secure such Indebtedness, obligations and liabilities
as amended, renewed, extended and restated hereby. The parties hereto ratify and
confirm each of the Existing Loan Documents entered into prior to the Effective
Date (but excluding the Existing A&R Credit Agreement) and agree that such
Existing Loan Documents continue to be legal, valid, binding and enforceable in
accordance with their terms (except to the extent amended, restated and/or
superseded in connection with the transactions contemplated hereby), however,
for all matters arising prior to the Effective Date (including the accrual and
payment of interest and fees, and matters relating to indemnification and
compliance with financial covenants), the terms of the Existing A&R Credit
Agreement (as unmodified by this Agreement) shall control and are hereby
ratified and confirmed. The Borrower represents and warrants that, as of the
Effective Date, there are no claims or offsets against, or defenses or
counterclaims to, its obligations (or the obligations of any Guarantor) under
the Existing A&R Credit Agreement or any of the other Existing Loan Documents.

Section 12.19     True-up Loans. Upon the effectiveness of this Agreement,
(a) each Lender who holds Loans in an aggregate amount less than its Applicable
Percentage (after giving effect to this amendment and restatement) of all Loans
shall advance new Loans which shall be disbursed to the Administrative Agent and
used to repay Loans outstanding to each Lender who holds Loans in an aggregate
amount greater than its Applicable Percentage of all Loans, (b) each Lender’s
participation in each Letter of Credit shall be automatically adjusted to equal
its Applicable Percentage (after giving effect to this amendment and
restatement), and (c) such other adjustments shall be made as the Administrative
Agent shall specify so that each Lender’s Revolving Credit Exposure equals its
Applicable Percentage (after giving effect to this amendment and restatement) of
the total Revolving Credit Exposures of all of the Lenders.

 

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Section 12.20    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:

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

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

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

(ii)    a conversion of all, or a portion of, such liability into shares or
other instruments of ownership in such EEA Financial Institution, its parent
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

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

Section 12.21    Exiting Lender. Deutsche Bank AG, New York Branch (the “Exiting
Lender”), hereby sells, assigns, transfers and conveys to the Lenders hereto,
and each of the Lenders hereto hereby purchases and accepts, so much of the
aggregate Commitments under, and Loans outstanding under, the Existing A&R
Credit Agreement such that, after giving effect to this Agreement (a) such
Exiting Lender shall (i) be paid in full in cash for all amounts owing under the
Existing A&R Credit Agreement as agreed and calculated by such Exiting Lender
and the Administrative Agent in accordance with the Existing A&R Credit
Agreement, (ii) cease to be a “Lender” under the Existing A&R Credit Agreement
and the “Loan Documents” as defined therein and (iii) relinquish its rights and
be released from its obligations under the Existing A&R Credit Agreement and the
other “Loan Documents” as defined therein, and (b) the Maximum Credit Amount and
Elected Commitment of each Lender shall be as set forth on Annex I hereto. The
foregoing assignments, transfers and conveyances are without recourse to such
Exiting Lender and without any warranties whatsoever by the Administrative Agent
or such Exiting Lender as to title, enforceability, collectability,
documentation or freedom from liens or encumbrances, in whole or in part, other
than the warranty of such Exiting Lender that it has not previously sold,
transferred, conveyed or encumbered such interests. The assignee Lenders and the
Administrative Agent shall make all appropriate adjustments in payments under
the Existing Credit Agreement, the “Notes” and the other “Loan Documents”
thereunder for periods prior to the adjustment date among themselves. The
Exiting Lender is executing this Agreement for the sole purpose of evidencing
its agreement to this Section 12.21 only and for no other purpose and shall have
no obligations under this Agreement except as set forth in this Section 12.21.

 

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Section 12.22    Acknowledgment Regarding Any Qualified QFCs. To the extent that
the Loan Documents provide support, through a guarantee or otherwise, for Swap
Agreements or any other agreement or instrument that is a QFC (such support “QFC
Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge
and agree as follows with respect to the resolution power of the Federal Deposit
Insurance Corporation under the Federal Deposit Insurance Act and Title II of
the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the
regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in
respect of such Supported QFC and QFC Credit Support (with the provisions below
applicable notwithstanding that the Loan Documents and any Supported QFC may in
fact be stated to be governed by the laws of the State of New York and/or of the
United States or any other state of the United States):

In the event a Covered Entity that is party to a Supported QFC (each, a “Covered
Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime,
the transfer of such Supported QFC and the benefit of such QFC Credit Support
(and any interest and obligation in or under such Supported QFC and such QFC
Credit Support, and any rights in property securing such Supported QFC or such
QFC Credit Support) from such Covered Party will be effective to the same extent
as the transfer would be effective under the U.S. Special Resolution Regime if
the Supported QFC and such QFC Credit Support (and any such interest, obligation
and rights in property) were governed by the laws of the United States or a
state of the United States. In the event a Covered Party or a BHC Act Affiliate
of a Covered Party becomes subject to a proceeding under a U.S. Special
Resolution Regime, Default Rights under the Loan Documents that might otherwise
apply to such Supported QFC or any QFC Credit Support that may be exercised
against such Covered Party are permitted to be exercised to no greater extent
than such Default Rights could be exercised under the U.S. Special Resolution
Regime if the Supported QFC and the Loan Documents were governed by the laws of
the United States or a state of the United States. Without limitation of the
foregoing, it is understood and agreed that rights and remedies of the parties
with respect to a Defaulting Lender shall in no event affect the rights of any
Covered Party with respect to a Supported QFC or any QFC Credit Support.

[SIGNATURES BEGIN NEXT PAGE]

 

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EXHIBIT B TO THIRD AMENDMENT – FORM OF INTERCREDITOR AGREEMENT

[See attached].

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

 

 

 

 

 

 

 

INTERCREDITOR AGREEMENT

dated as of [                    ], 2020 between

JPMorgan Chase Bank, N.A.,

as Priority Lien Agent,

and

UMB Bank, N.A.,

as Second Lien Collateral Agent

and

Third Lien Collateral Agent

 

 

THIS IS THE INTERCREDITOR AGREEMENT REFERRED TO IN (A) THE INDENTURE DATED AS OF
[                    ], 2020, AMONG CENTENNIAL RESOURCE PRODUCTION, LLC, CERTAIN
OF ITS SUBSIDIARIES FROM TIME TO TIME PARTY THERETO, CENTENNIAL RESOURCE
DEVELOPMENT, INC., AS PARENT, AND UMB BANK, N.A., AS SECOND LIEN COLLATERAL
AGENT, (B) THE INDENTURE DATED AS OF [                    ], 2020, AMONG
CENTENNIAL RESOURCE PRODUCTION, LLC, CERTAIN OF ITS SUBSIDIARIES FROM TIME TO
TIME PARTY THERETO, CENTENNIAL RESOURCE DEVELOPMENT, INC., AS PARENT, AND UMB
BANK, N.A., AS THIRD LIEN COLLATERAL AGENT, (C) THE SECOND AMENDED AND RESTATED
CREDIT AGREEMENT, DATED AS OF MAY 4, 2018, AS AMENDED, SUPPLEMENTED, RESTATED OR
OTHERWISE MODIFIED FROM TIME TO TIME, AMONG CENTENNIAL RESOURCE PRODUCTION, LLC,
CENTENNIAL RESOURCE DEVELOPMENT, INC., AS PARENT, THE LENDERS PARTY THERETO FROM
TIME TO TIME AND JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT, (D) THE
OTHER NOTE DOCUMENTS REFERRED TO IN SUCH INDENTURE AND (E) THE OTHER LOAN
DOCUMENTS REFERRED TO IN SUCH CREDIT AGREEMENT.

 

 

 

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TABLE OF CONTENTS

 

          Page  

ARTICLE I

DEFINITIONS

  

Section 1.01

   Construction; Certain Defined Terms      1  

ARTICLE II

LIEN PRIORITIES

  

Section 2.01

   Relative Priorities      12  

Section 2.02

   Prohibition on Marshalling, Etc      14  

Section 2.03

   No New Liens      14  

Section 2.04

   Similar Collateral and Agreements      15  

Section 2.05

   No Duties of Priority Lien Agent      15  

Section 2.06

   No Duties of Second Lien Collateral Agent      16  

ARTICLE III

ENFORCEMENT RIGHTS; PURCHASE OPTION

  

Section 3.01

   Limitation on Enforcement Action      17  

Section 3.02

   Standstill Periods; Permitted Enforcement Action      19  

Section 3.03

   Insurance      20  

Section 3.04

   Notification of Release of Collateral      21  

Section 3.05

   No Interference; Payment Over      22  

Section 3.06

   Purchase Option      24  

ARTICLE IV

OTHER AGREEMENTS

  

Section 4.01

   Release of Liens; Automatic Release of Second Liens and Third Liens      26  

Section 4.02

   Certain Agreements With Respect to Insolvency or Liquidation Proceedings     
27  

Section 4.03

   Reinstatement      34  

Section 4.04

   Refinancings; Additional Second Lien Debt; Additional Third Lien Debt      35
 

Section 4.05

   Amendments to Second Lien Documents and Third Lien Documents      35  

Section 4.06

   Legends      36  

Section 4.07

   Second Lien Secured Parties and Third Lien Secured Parties Rights as
Unsecured Creditors; Judgment Lien Creditor      36  

Section 4.08

   Postponement of Subrogation      37  

Section 4.09

   Acknowledgment by the Secured Debt Representatives      37  

ARTICLE V

GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS

  

Section 5.01

   General      37  

Section 5.02

   Deposit Accounts      39  

ARTICLE VI

APPLICATION OF PROCEEDS; DETERMINATION OF AMOUNTS

  

Section 6.01

   Application of Proceeds      39  

Section 6.02

   Determination of Amounts      40  

 

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ARTICLE VII

NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE;

CONSENT OF GRANTORS; ETC.

  

Section 7.01

  

No Reliance; Information

     40  

Section 7.02

  

No Warranties or Liability

     41  

Section 7.03

  

Obligations Absolute

     42  

Section 7.04

  

Grantors Consent

     43  

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

  

Section 8.01

  

Representations and Warranties of Each Party

     43  

Section 8.02

  

Representations and Warranties of Each Representative

     43  

ARTICLE IX

MISCELLANEOUS

  

Section 9.01

   Notices      43  

Section 9.02

   Waivers; Amendment      44  

Section 9.03

   Actions Upon Breach; Specific Performance      45  

Section 9.04

   Parties in Interest      46  

Section 9.05

   Survival of Agreement      46  

Section 9.06

   Counterparts      46  

Section 9.07

   Severability      46  

Section 9.08

   Governing Law; Jurisdiction; Consent to Service of Process      46  

Section 9.09

   WAIVER OF JURY TRIAL      46  

Section 9.10

   Headings      47  

Section 9.11

   Conflicts      47  

Section 9.12

   Provisions Solely to Define Relative Rights      47  

Section 9.13

   Certain Terms Concerning the Second Lien Collateral Agent and the Third Lien
Collateral Agent      47  

Section 9.14

   Certain Terms Concerning the Priority Lien Agent, the Second Lien Collateral
Agent and the Third Lien Collateral Agent      48  

Section 9.15

   Authorization of Secured Agents      48  

Section 9.16

   Further Assurances      48  

Section 9.17

   Relationship of Secured Parties      48  

Annex and Exhibits

 

Annex I

  

Exhibit A

  

Form of Priority Confirmation Joinder

 

 

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INTERCREDITOR AGREEMENT, dated as of [                    ], 2020 (as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof, this “Agreement”), is by and among JPMORGAN CHASE BANK, N.A., as
administrative agent for the Priority Lien Secured Parties referred to herein
(in such capacity, and together with its successors and assigns in such
capacity, the “Original Priority Lien Agent”), UMB BANK, N.A., as collateral
agent for the Second Lien Secured Parties referred to herein (in such capacity,
and together with its successors in such capacity, the “Original Second Lien
Collateral Agent”), and, as collateral agent for the Third Lien Secured Parties
(referred to herein in such capacity, and together with its successors in such
capacity, the “Original Third Lien Collateral Agent”), CENTENNIAL RESOURCE
DEVELOPMENT, INC., a Delaware corporation (the “Parent”), CENTENNIAL RESOURCE
PRODUCTION, LLC, a Delaware limited liability company (together with its
successors and assigns, the “Company”) and its subsidiaries party hereto.

Reference is made to (a) the Priority Credit Agreement (defined below), (b) the
Second Lien Indenture (defined below) governing the Second Lien Notes (defined
below) and (c) the Third Lien Indenture (defined below) governing the Third Lien
Notes (defined below).

From time to time following the date hereof, the Company may (i) incur
additional Second Lien Obligations (as defined below), including Additional
Second Lien Notes (as defined below), to the extent permitted by the Secured
Debt Documents (as defined below), and in connection therewith the Company and
certain Grantors (defined below), the Second Lien Trustee (defined below) and
the Second Lien Collateral Agent (defined below) have entered into the Second
Lien Collateral Agency Agreement (defined below) and (ii) incur additional Third
Lien Obligations (as defined below), including Additional Third Lien Notes (as
defined below) to the extent permitted by the Secured Debt Documents (as defined
below), and in connection therewith the Company and certain Grantors, the Third
Lien Trustee (defined below) and the Third Lien Collateral Agent (defined below)
have entered into the Third Lien Collateral Agency Agreement (defined below).

In consideration of the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Original Priority Lien Agent (for itself and on behalf of the
Priority Lien Secured Parties), the Original Second Lien Collateral Agent (for
itself and on behalf of the Second Lien Secured Parties) and the Original Third
Lien Collateral Agent (for itself and on behalf of the Third Lien Secured
Parties) agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Construction; Certain Defined Terms. (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
reference herein to any agreement, instrument, other document, statute or
regulation shall be construed as referring to such agreement, instrument, other
document, statute or regulation as from time to time amended, supplemented or
otherwise modified, (ii) any reference herein to any Person shall be construed
to include such Person’s successors and assigns, but shall not be deemed to
include the subsidiaries of such Person unless express reference is made to such
subsidiaries, (iii) the words “herein,” “hereof” and “hereunder,” and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (iv) all references herein to
Articles, Sections and Annexes shall be construed to refer to Articles, Sections
and Annexes of this Agreement, (v) unless otherwise expressly qualified herein,
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 and
(vi) the term “or” is not exclusive.

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(b) All terms capitalized but not defined herein have the meanings assigned to
them in the Priority Credit Agreement as in effect on the date hereof.

(c) All terms used in this Agreement that are defined in Article 1, 8 or 9 of
the New York UCC (whether capitalized herein or not) and not otherwise defined
herein have the meanings assigned to them in Article 1, 8 or 9 of the New York
UCC. If a term is defined in Article 9 of the New York UCC and another Article
of the New York UCC, such term shall have the meaning assigned to it in Article
9 of the New York UCC.

(d) Unless otherwise set forth herein, all references herein to (i) the Second
Lien Collateral Agent shall be deemed to refer to the Second Lien Collateral
Agent in its capacity as collateral trustee under the Second Lien Collateral
Agency Agreement and (ii) the Third Lien Collateral Agent shall be deemed to
refer to the Third Lien Collateral Agent in its capacity as collateral trustee
under the Third Lien Collateral Agency Agreement.

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

“Accounts” has the meaning assigned to such term in Section 3.01(a).

“Additional Second Lien Notes” has the meaning given to the term “Additional
Notes” in the Second Lien Indenture as in effect on the date hereof.

“Additional Third Lien Notes” has the meaning given to the term “Additional
Notes” in the Third Lien Indenture as in effect on the date hereof.

“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, “control,”
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise. For purposes of this definition, the terms
“controlling,” “controlled by” and “under common control with” have correlative
meanings.

“Bank Product” means each and any of the following bank services provided to the
Company, any other Grantor or any subsidiary thereof by any holder of Priority
Lien Debt or any Affiliate thereof: (a) commercial credit cards, (b) stored
value cards and (c) Treasury Management Arrangements (including, without
limitation, controlled disbursement, automated clearinghouse transactions,
return items, overdrafts and interstate depository network services) and (d) all
other similar products as defined in any Credit Facility.

“Bank Product Obligations” means any and all obligations of the Company or any
other Grantor, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), in connection with any Bank
Product.

“Bankruptcy Code” means Title 11 of the United States Code.

“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or
foreign law for the relief of debtors.

 

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“Board of Directors” means: (a) with respect to a corporation, the board of
directors of the corporation; (b) with respect to a partnership, the Board of
Directors of the general partner of the partnership; and (c) with respect to any
other Person, the board or committee of such Person serving a similar function.

“Borrowing Base” has the meaning set forth in the Second Lien Indenture as in
effect on the date hereof, and any component definition used therein has the
meaning set forth in the Second Lien Indenture as of the date hereof.

“Business Day” means each day that is not a Saturday, Sunday or other day on
which banking institutions in Denver, Colorado or in New York, New York are
authorized or required by law to close.

“Capital Stock” means (a) in the case of a corporation, corporate stock; (b) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock; (c) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or membership interests or
membership units; and (d) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.

“Class” means (a) in the case of Priority Lien Debt, the Priority Lien Debt,
taken together, (b) in the case of Second Lien Debt, every Series of Second Lien
Debt, taken together and (c) in the case of Third Lien Debt, every Series of
Third Lien Debt, taken together.

“Collateral” means all of the assets and property of any Grantor, whether real,
personal or mixed, constituting Priority Lien Collateral, Second Lien Collateral
and/or Third Lien Collateral.

“Company” has the meaning assigned to such term in the preamble hereto.

“Credit Facility” means, one or more debt facilities (including the Priority
Credit Agreement) or other credit agreements, indentures, commercial paper
facilities or other forms of debt financing, in each case, with banks or other
institutional lenders, accredited investors or institutional investors providing
for revolving credit loans, term loans, term debt, debt securities, capital
market financings, private placements, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified or Refinanced in any manner (whether upon
or after termination or otherwise), in whole or in part from time to time.

“DIP Financing” has the meaning assigned to such term in Section 4.02(b).

“DIP Financing Liens” has the meaning assigned to such term in Section 4.02(b).

“DIP Lenders” has the meaning assigned to such term in Section 4.02(b).

“Discharge of Priority Lien Obligations” means the occurrence of all of the
following:

(a) termination or expiration of all commitments to extend credit that would
constitute Priority Lien Debt;

(b) payment in full in cash of the principal of and interest and premium (if
any) on all Priority Lien Debt (including all interest, fees and expenses
accrued after the commencement of any Insolvency or Liquidation Proceeding
whether or not allowed or allowable in such proceeding), fees and premium (if
any) on all Priority Lien Obligations (other than any undrawn letters of
credit), in each case excluding any Excess Priority Lien Obligations;

 

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(c) discharge or cash collateralization (at the lower of (i) 105% of the
aggregate undrawn amount and (ii) the percentage of the aggregate undrawn amount
required for release of Liens under the terms of the applicable Priority Lien
Document) of all outstanding letters of credit constituting Priority Lien
Obligations and the aggregate fronting and similar fees which may accrue thereon
through the stated expiry of such letters of credit;

(d) payment in full in cash of obligations in respect of Hedging Obligations
constituting Priority Lien Obligations (and, with respect to any particular
Hedge Obligations, payment in full in cash of all such obligations or such other
arrangements as have been made (and communicated to the Priority Lien Agent)
pursuant to the terms of the Priority Credit Agreement) other than such Hedging
Obligations that have been novated or collateralized to the extent required by
the terms thereof; and

(e) payment in full in cash of all other Priority Lien Obligations, including
without limitation, Bank Product Obligations, that are outstanding and unpaid at
the time the Priority Lien Debt is paid in full in cash (other than any
obligations for taxes, costs, indemnifications, reimbursements, damages and
other liabilities in respect of which no claim or demand for payment has been
made at or prior to such time), in each case excluding any Excess Priority Lien
Obligations;

provided that, if, at any time after the Discharge of Priority Lien Obligations
has occurred, the Company enters into any Priority Lien Document evidencing a
Priority Lien Obligation which incurrence thereof is not prohibited by the
applicable Secured Debt Documents, then such Discharge of Priority Lien
Obligations shall automatically be deemed not to have occurred for all purposes
of this Agreement with respect to such new Priority Lien Obligations (other than
with respect to any actions taken as a result of the occurrence of such first
Discharge of Priority Lien Obligations), and, from and after the date on which
the Company designates such indebtedness as Priority Lien Debt in accordance
with this Agreement, the obligations under such Priority Lien Document shall
automatically and without any further action be treated as Priority Lien
Obligations for all purposes of this Agreement, including for purposes of the
Lien priorities and rights in respect of Collateral set forth in this Agreement,
any Second Lien Obligations shall be deemed to have been at all times Second
Lien Obligations and at no time Priority Lien Obligations and any Third Lien
Obligations shall be deemed to have been at all times Third Lien Obligations and
at no time Priority Lien Obligations or Second Lien Obligations. For the
avoidance of doubt, a Refinancing as contemplated by Section 4.04 shall not be
deemed to cause a Discharge of Priority Lien Obligations.

“Discharge of Second Lien Obligations” means the occurrence of all of the
following:

(a) payment in full in cash of the principal of and interest (including all
interest accrued thereon after the commencement of any Insolvency or Liquidation
Proceeding) and premium (if any) on all Second Lien Debt, in each case excluding
any Excess Second Lien Obligations;

(b) payment in full in cash of all other Second Lien Obligations that are
outstanding and unpaid at the time the Second Lien Debt is paid in full in cash
(other than any obligations for taxes, costs, indemnifications, reimbursements,
damages and other liabilities in respect of which no claim or demand for payment
has been made at or prior to such time), in each case excluding any Excess
Second Lien Obligations;

provided that, if at any time after the Discharge of Second Lien Obligations has
occurred, the Company enters into any Second Lien Document evidencing a Second
Lien Obligation which incurrence is not prohibited by the applicable Secured
Debt Documents, then such Discharge of Second Lien Obligations

 

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shall automatically be deemed not to have occurred for all purposes of this
Agreement with respect to such new Second Lien Obligations (other than with
respect to any actions taken as a result of the occurrence of such first
Discharge of Second Lien Obligations), and, from and after the date on which the
Company designates such indebtedness as Second Lien Debt in accordance with this
Agreement, the obligations under such Second Lien Document shall automatically
and without any further action be treated as Second Lien Obligations for all
purposes of this Agreement, including for purposes of the Lien priorities and
rights in respect of Collateral set forth in this Agreement, any Third Lien
Obligations shall be deemed to have been at all times Third Lien Obligations and
at no time Second Lien Obligations. For the avoidance of doubt, a Refinancing as
contemplated by Section 4.04 shall not be deemed to cause a Discharge of Second
Lien Obligations.

“Disposition” shall mean any sale, lease, exchange, assignment, license,
contribution, transfer or other disposition. “Dispose” shall have a correlative
meaning.

“Excess Priority Lien Obligations” means Obligations constituting Priority Lien
Obligations for the principal amount of indebtedness (including letters of
credit and letter of credit reimbursement obligations) under the Priority Credit
Agreement and/or any other Credit Facility pursuant to which Priority Lien Debt
has been issued to the extent that such Obligations for principal, letters of
credit and letter of credit reimbursement obligations are in excess of the
amount in clause (a) of the definition of “Priority Lien Cap.”

“Excess Second Lien Obligations” means Obligations constituting Second Lien
Obligations for the principal amount of indebtedness under the Second Lien
Indenture and/or any other Second Lien Document (including letters of credit and
reimbursement obligations) pursuant to which Second Lien Debt has been issued to
the extent that such Obligations for principal, letters of credit and
reimbursement obligations are in excess of the amount in clause (a) of the
definition of “Priority Lien Cap” as such term is defined in the Third Lien
Indenture Agreement as in effect on the date hereof.

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

“Grantor” means the Company, Parent, and each subsidiary of the Company that
shall have granted any Lien in favor of any of the Priority Lien Agent, the
Second Lien Collateral Agent or the Third Lien Collateral Agent on any of its
assets or properties to secure any of the Secured Obligations.

“Hedging Obligations” means, with respect to any specified Person, the
obligations of such Person under (a) interest rate swap agreements (whether from
fixed to floating or from floating to fixed), interest rate cap agreements and
interest rate collar agreements; (b) other agreements or arrangements designed
to manage interest rates or interest rate risk; and (c) Oil and Gas Hedging
Contracts.

“Hydrocarbon Interests” means all rights, titles, interests and estates now or
hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or
other liquid or gaseous Hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.

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

 

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“Insolvency or Liquidation Proceeding” means:

(a) any case commenced by or against the Company or any other Grantor under the
Bankruptcy Code or any other Bankruptcy Law, any other proceeding for the
reorganization, recapitalization or adjustment or marshalling of the assets or
liabilities of the Company or any other Grantor, any receivership or assignment
for the benefit of creditors relating to the Company or any other Grantor or any
similar case or proceeding relative to the Company or any other Grantor or its
creditors, as such, in each case whether or not voluntary;

(b) any liquidation, dissolution, marshalling of assets or liabilities or other
winding up of or relating to the Company or any other Grantor, in each case
whether or not voluntary and whether or not involving bankruptcy or insolvency;
or

(c) any other proceeding of any type or nature in which substantially all claims
of creditors of the Company or any other Grantor are determined and any payment
or distribution is or may be made on account of such claims.

“Lien” means, with respect to any asset, any mortgage, lien (statutory or
otherwise), pledge, hypothecation, charge, security interest or encumbrance of
any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to give a security interest therein and any filing of or agreement to
give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction.

“Modified ACNTA” has the meaning set forth in the Second Lien Indenture as in
effect on the date hereof, and any component definition used therein has the
meaning set forth in the Second Lien Indenture as of the date hereof.

“New York UCC” means the Uniform Commercial Code as from time to time in effect
in the State of New York.

“Obligations” means any principal (including reimbursement obligations and
obligations to provide cash collateral with respect to letters of credit whether
or not drawn), interest, premium (if any), fees, indemnifications,
reimbursements, expenses and other liabilities payable under the documentation
governing any indebtedness (including, to the extent legally permitted, all
interest, fees, indemnifications, reimbursements, expenses and other liabilities
accrued thereon after the commencement of any Insolvency or Liquidation
Proceeding at the rate, including any applicable post-default rate even if not
enforceable, allowable or allowed as a claim in such proceeding).

“Officer” means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary, any Senior Vice President, any Vice President or any Assistant Vice
President of such Person.

“Officers’ Certificate” means a certificate signed on behalf of the Company by
any Officers of the Company.

“Oil and Gas Business” means (i) the acquisition, exploration, development,
production, operation and disposition of interests in oil, gas and other
Hydrocarbon properties, (ii) the gathering, marketing, treating, processing (but
not refining), storage, selling and transporting of any production from such
interests or properties, (iii) any business relating to exploration for or
development, production, treatment,

 

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processing (but not refining), storage, transportation or marketing of oil, gas
and other minerals and products produced in association therewith and (iv) any
activity that is ancillary to or necessary or appropriate for the activities
described in clauses (i) through (iii) of this definition.

“Oil and Gas Hedging Contracts” means any puts, cap transactions, floor
transactions, collar transactions, forward contract, commodity swap agreement,
commodity option agreement or other similar agreement or arrangement in respect
of Hydrocarbons to be used, produced, processed or sold by the Company or any of
its Restricted Subsidiaries that are customary in the Oil and Gas Business and
designed to protect such Person against fluctuation in Hydrocarbons prices and
not for speculative purposes.

“Original Priority Lien Agent” has the meaning assigned to such term in the
preamble hereto.

“Original Second Lien Collateral Agent” has the meaning assigned to such term in
the preamble hereto.

“Original Third Lien Collateral Agent” has the meaning assigned to such term in
the preamble hereto.

“Parent” has the meaning assigned to such term in the preamble hereto.

“Person” means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

“Priority Confirmation Joinder” means an agreement substantially in the form of
Exhibit A.

“Priority Credit Agreement” means the Second Amended and Restated Credit
Agreement, dated as of May 4, 2018, among the Company as borrower, the Original
Priority Lien Agent, and the lenders party thereto from time to time and the
other agents named therein, including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, and, in
each case, as amended, restated, modified, Refinanced in any manner (whether
upon or after termination or otherwise), in whole or in part, from time to time.

“Priority Lien” means a first-priority Lien (subject in priority as permitted
under each applicable Secured Debt Document) granted by the Company or any other
Grantor in favor of the Priority Lien Agent, at any time, upon any property of
the Company or any Grantor to secure Priority Lien Obligations (including Liens
on such collateral under security documents associated with any Credit
Facility).

“Priority Lien Agent” means the Original Priority Lien Agent and any other
agent, collateral agent, trustee or other representative to which Priority Liens
have been granted in favor of all Priority Lien Secured Parties or which
otherwise has been designated to act as Priority Lien Agent on behalf of all
Priority Lien Secured Parties (written notice of which has been provided to the
Second Lien Collateral Agent and Third Lien Collateral Agent), in each case,
together with its successors or assigns in such capacity.

“Priority Lien Cap” means, as of any date, (a) the aggregate principal amount of
all indebtedness (including any interest paid-in-kind) outstanding at any time
under the Priority Credit Agreement (with outstanding letters of credit being
deemed to have a principal amount equal to the stated amount thereof, whether or
not drawn) equal to the greatest of (i) $700.0 million, (ii) the Borrowing Base
in effect under the Priority Credit Agreement at the time of incurrence, and
(iii) (A) 20.0% of the Company’s Modified ACNTA at the time of incurrence of
such indebtedness plus (B) $65.0 million plus (b) the amount of all Hedging
Obligations, to the extent such Hedging Obligations are secured by the Priority
Liens, plus (c) the amount of all Bank Product Obligations, to the extent such
Bank Product Obligations are secured by the Priority Liens, plus (d) the amount
of accrued and unpaid interest (excluding any interest paid-in-kind) and
outstanding fees, to the extent such Obligations are secured by the Priority
Liens.

 

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“Priority Lien Collateral” shall mean all “Collateral”, as defined in the
Priority Credit Agreement or any other Priority Lien Document, and any other
assets of any Grantor now or at any time hereafter subject to Liens which
secure, but only to the extent securing, any Priority Lien Obligation.

“Priority Lien Debt” means the indebtedness under the Priority Credit Agreement
(including letters of credit and letter of credit reimbursement obligations with
respect thereto (with outstanding letters of credit being deemed to have a
principal amount equal to the stated amount thereof)) and all additional
indebtedness secured by a Priority Lien and with respect to which the
requirements of Section 4.04 have been (or are deemed) satisfied.

“Priority Lien Documents” means the Priority Credit Agreement, the Priority Lien
Security Documents, and any additional indenture, supplemental indenture, Credit
Facility or other agreement governing each other Series of Priority Lien Debt
and all other loan documents, notes, guarantees, instruments and agreements
governing or evidencing, or executed or delivered in connection with, any other
Series of Priority Lien Obligations.

“Priority Lien Obligations” means the Priority Lien Debt and all other
Obligations in respect of or in connection with Priority Lien Debt together with
Hedging Obligations and the Bank Product Obligations, in each case to the extent
that such Obligations are secured by Priority Liens. For the avoidance of doubt,
Hedging Obligations shall only constitute Priority Lien Obligations to the
extent that such Hedging Obligations are secured under the terms of the Priority
Credit Agreement and Priority Lien Security Documents. Notwithstanding any other
provision hereof, the term “Priority Lien Obligations” will include accrued
interest, fees, costs, and other charges incurred under the Priority Credit
Agreement and the other Priority Lien Documents, whether incurred before or
after commencement of an Insolvency or Liquidation Proceeding, and whether or
not allowable in an Insolvency or Liquidation Proceeding. To the extent that any
payment with respect to the Priority Lien Obligations (whether by or on behalf
of the Company, as proceeds of security, enforcement of any right of set-off, or
otherwise) is declared to be fraudulent or preferential in any respect, set
aside, or required to be paid to a debtor in possession, trustee, receiver, or
similar Person, then the obligation or part thereof originally intended to be
satisfied will be deemed to be reinstated and outstanding as if such payment had
not occurred.

“Priority Lien Secured Parties” means, at any time, the Priority Lien Agent,
each lender or issuing bank under the Priority Credit Agreement, each holder,
provider or obligee of any Hedging Obligations and Bank Product Obligations that
is a lender under the Priority Credit Agreement or an Affiliate (as defined
herein or in the Priority Credit Agreement) thereof and is a secured party (or a
party entitled to the benefits of the security) under any Priority Lien
Document, the beneficiaries of each indemnification obligation undertaken by any
Grantor under any Priority Lien Document, each other Person that provides
letters of credit, guarantees or other credit support related thereto under any
Priority Lien Document and each other holder of, or obligee in respect of, any
Priority Lien Obligations, in each case to the extent designated as a secured
party (or a party entitled to the benefits of the security) under any Priority
Lien Document outstanding at such time.

“Priority Lien Security Documents” means all security agreements, pledge
agreements, collateral assignments, mortgages, deeds of trust, collateral agency
agreements, control agreements or other grants or transfers for security
executed and delivered by the Company or any other Grantor creating (or
purporting to create) a Priority Lien upon Collateral in favor of ay Priority
Lien Agent, in each case, as amended, modified, renewed, restated or replaced,
in whole or in part, from time to time, in accordance with its terms and the
provisions hereof.

 

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

“Refinance” means, with respect to any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease, discharge or retire, or to issue
other indebtedness in exchange or replacement for, such Indebtedness, in each
case in whole or in part. “Refinanced” and “Refinancing” shall have correlative
meanings.

“Second Lien” means a second-priority Lien (subject in priority as permitted
under each applicable Secured Debt Document) granted by a Second Lien Document
to the Second Lien Collateral Agent, at any time, upon any Collateral by any
Grantor to secure Second Lien Obligations.

“Second Lien Cap” has the meaning assigned to “Priority Lien Cap” as such term
is defined in the Third Lien Indenture Agreement as in effect on the date
hereof.

“Second Lien Collateral” shall mean all “Collateral”, as defined in any Second
Lien Document, and any other assets of any Grantor now or at any time hereafter
subject to Liens which secure, but only to the extent securing, any Second Lien
Obligations.

“Second Lien Collateral Agency Agreement” means the Collateral Agency Agreement,
dated as of [                    ], 2020, among the Company, the other Grantors
from time to time party thereto, the Second Lien Trustee, the other Second Lien
Representatives from time to time party thereto and the Second Lien Collateral
Agent, as amended, restated, adjusted, waived, renewed, extended, supplemented
or otherwise modified from time to time, in accordance with each applicable
Second Lien Document.

“Second Lien Collateral Agent” means the Original Second Lien Collateral Agent
and any other agent, collateral agent, trustee or other representative to which
Second Liens have been granted in favor of all Second Lien Secured Parties or
which otherwise has been designated to act as Second Lien Collateral Agent on
behalf of all Second Lien Secured Parties (written notice of which has been
provided to the Priority Lien Agent and Third Lien Collateral Agent), in each
case, together with its successors or assigns in such capacity.

“Second Lien Debt” means the Second Lien Notes issued on the date hereof and
guarantees thereof and all additional indebtedness (including Additional Second
Lien Notes) secured by a Second Lien and with respect to which the requirements
of Section 4.04 have been (or are deemed) satisfied.

“Second Lien Documents” means the Second Lien Notes, the guarantees thereof, the
Second Lien Indenture, the Second Lien Security Documents and any additional
indenture, supplemental indenture, Credit Facility or other agreement governing
each other Series of Second Lien Debt.

“Second Lien Indenture” means that certain indenture governing the Second Lien
Notes, dated as of date hereof, among the Company, the Grantors party thereto
from time to time, the Second Lien Collateral Agent and the Second Lien Trustee,
as amended, restated, adjusted, waived, renewed, extended, supplemented or
otherwise modified from time to time in accordance with the terms hereof
(including any supplements executed in connection with the issuance of any
additional Series of Second Lien Debt under the Second Lien Indenture) unless
restricted by the terms of this Agreement.

“Second Lien Notes” means (i) the Company’s 8.0% Senior Secured Notes due 2025
issued on the date hereof, and (ii) any Additional Notes for which the
requirements of Section 3.8 of the Second Lien Collateral Agency Agreement have
been satisfied.

 

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“Second Lien Obligations” means Second Lien Debt and all other Obligations in
respect thereof.

“Second Lien Purchasers” has the meaning assigned to such term in Section 3.06.

“Second Lien Representative” means (a) in the case of the Second Lien Notes, the
Second Lien Trustee, and (b) in the case of any other Series of Second Lien
Debt, the trustee, agent or representative of the holders of such Series of
Second Lien Debt who (a) is appointed as a Second Lien Representative (for
purposes related to the administration of the security documents) pursuant to
the indenture, credit agreement or other agreement governing such Series of
Second Lien Debt, together with its successors in such capacity, and (b) has
become party to the Second Lien Collateral Agency Agreement by executing a
joinder in the form required under the Second Lien Collateral Agency Agreement.

“Second Lien Secured Parties” means each holder of Second Lien Obligations.

“Second Lien Security Documents” means the Second Lien Collateral Agency
Agreement, each joinder agreement required by the Collateral Agency Agreement,
and all other security agreements, pledge agreements, collateral assignments,
mortgages, deeds of trust, collateral agency agreements, control agreements or
other grants or transfers for security executed and delivered by the Company or
any Grantor creating (or purporting to create) a Second Lien upon Collateral in
favor of the Collateral Agent, in each case, as amended, modified, renewed,
restated or replaced, in whole or in part, from time to time, in accordance with
its terms and the provisions.

“Second Lien Standstill Period” has the meaning assigned to such term in
Section 3.02(a)(i).

“Second Lien Trustee” means UMB Bank, N.A., in its capacity as trustee under the
Second Lien Indenture, and together with its successors in such capacity.

“Secured Debt Documents” means the Priority Lien Documents, the Second Lien
Documents and the Third Lien Documents.

“Secured Debt Representative” means the Priority Lien Agent, the Second Lien
Collateral Agent and the Third Lien Collateral Agent.

“Secured Obligations” means the Priority Lien Obligations, the Second Lien
Obligations and the Third Lien Obligations.

“Secured Parties” means the Priority Lien Secured Parties, the Second Lien
Secured Parties and the Third Lien Secured Parties.

“Security Documents” means the Priority Lien Security Documents, the Second Lien
Security Documents and the Third Lien Security Documents.

“Series of Priority Lien Debt” means, severally, indebtedness under the Priority
Lien Credit Agreement and each other issue or series of Priority Lien Debt for
which a single transfer register is maintained.

“Series of Second Lien Debt” means, severally, the Second Lien Notes and each
other issue or series of Second Lien Debt for which a single transfer register
is maintained.

“Series of Secured Debt” means the Priority Lien Debt, each Series of Second
Lien Debt and each Series of Third Lien Debt.

 

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“Series of Third Lien Debt” means, severally, the Third Lien Notes and each
other issue or series of Third Lien Debt for which a single transfer register is
maintained.

“Standstill Period” means the Second Lien Standstill Period, the Third Lien
First Standstill Period and the Third Lien Second Standstill Period, as
applicable.

“subsidiary” means, with respect to any specified Person: (1) any corporation,
association, limited liability company or other business entity (other than a
partnership) of which more than 50% of the total voting power of Voting Stock is
at the time owned or controlled, directly or through another subsidiary, by that
Person or one or more of the other subsidiaries of that Person (or a combination
thereof); and (2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a subsidiary of such Person or
(b) the only general partners of which are that Person or one or more
subsidiaries of that Person (or any combination thereof), or (c) as to which
such Person and its subsidiaries are entitled to receive more than 50% of the
assets of such partnership upon its dissolution.

“Third Lien” means a third-priority Lien (subject in priority as permitted under
each applicable Secured Debt Document) granted by a Third Lien Document to the
Third Lien Collateral Agent, at any time, upon any Collateral by any Grantor to
secure Third Lien Obligations.

“Third Lien Collateral” shall mean all “Collateral”, as defined in any Third
Lien Document, and any other assets of any Grantor now or at any time hereafter
subject to Liens which secure, but only to the extent securing, any Third Lien
Obligations.

“Third Lien Collateral Agency Agreement” means the Collateral Agency Agreement,
dated as of [                    ], 2020, among the Company, the other Grantors
from time to time party thereto, the Third Lien Trustee, the other Third Lien
Representatives from time to time party thereto and the Third Lien Collateral
Agent, as amended, restated, adjusted, waived, renewed, extended, supplemented
or otherwise modified from time to time, in accordance with each applicable
Third Lien Document.

“Third Lien Collateral Agent” means the Original Third Lien Collateral Agent and
any other agent, collateral agent, trustee or other representative to which
Third Liens have been granted in favor of all Third Lien Secured Parties or
which otherwise has been designated to act as Third Lien Collateral Agent on
behalf of all Third Lien Secured Parties (written notice of which has been
provided to the Priority Lien Agent and Second Lien Collateral Agent), in each
case, together with its successors or assigns in such capacity appointed in
accordance with the terms of the Third Lien Collateral Agency Agreement.

“Third Lien Debt” means the Third Lien Notes issued on the date hereof and
guarantees thereof and all additional indebtedness (including Additional Third
Lien Notes) secured by a Third Lien and with respect to which the requirements
of Section 4.04 have been (or are deemed) satisfied.

“Third Lien Documents” means the Third Lien Notes, the guarantees thereof, the
Third Lien Indenture, the Third Lien Security Documents and any additional
indenture, supplemental indenture, Credit Facility or other agreement governing
each other Series of Third Lien Debt.

“Third Lien First Standstill Period” has the meaning assigned to such term in
Section 3.02(a)(ii).

“Third Lien Indenture” means that certain indenture governing the Third Lien
Notes, dated as of the date hereof, among the Company, the Grantors party
thereto from time to time, the Third Lien Collateral Agent and the Third Lien
Trustee, as amended, restated, adjusted, waived, renewed, extended, supplemented
or otherwise modified from time to time in accordance with the terms hereof
(including any supplements executed in connection with the issuance of any
Series of Third Lien Debt under the Third Lien Indenture) unless restricted by
the terms of this Agreement.

 

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“Third Lien Notes” means (i) the Company’s 8.00% Senior Secured Notes due 2027
issued on the date hereof, and (ii) any Additional Third Lien Notes for which
the requirements of Section 3.8 of the Third Lien Collateral Agency Agreement
have been satisfied.

“Third Lien Obligations” means Third Lien Debt and all other Obligations in
respect thereof.

“Third Lien Representative” means (a) in the case of the Third Lien Notes, the
Third Lien Trustee and (b) in the case of any other Series of Third Lien Debt,
the trustee, agent or representative of the holders of such Series of Third Lien
Debt who (i) is appointed as a Third Lien Representative (for purposes related
to the administration of the security documents) pursuant to the indenture,
credit agreement or other agreement governing such Series of Third Lien Debt,
together with its successors in such capacity, and (ii) has become party to the
Third Lien Collateral Agency Agreement by executing a joinder in the form
required under the Third Lien Collateral Agency Agreement.

“Third Lien Second Standstill Period” has the meaning assigned to such term in
Section 3.02(b).

“Third Lien Secured Parties” means each holder of Third Lien Obligations.

“Third Lien Security Documents” means the Third Lien Collateral Agency
Agreement, each joinder agreement required by the Third Lien Collateral Agency
Agreement, and all other security agreements, pledge agreements, collateral
assignments, mortgages, deeds of trust, collateral agency agreements, control
agreements or other grants or transfers for security executed and delivered by
the Company or any Grantor creating (or purporting to create) a Third Lien upon
Collateral in favor of the Third Lien Collateral Agent, in each case, as
amended, modified, renewed, restated or replaced, in whole or in part, from time
to time, in accordance with its terms and the provisions.

“Third Lien Trustee” means UMB Bank, N.A., in its capacity as trustee under the
Third Lien Indenture, and together with its successors in such capacity.

“TIA” means the Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date hereof.

“Treasury Management Arrangement” means any agreement or other arrangement
governing the provision of treasury or cash management services, including
deposit accounts, overdraft, credit or debit card, funds transfer, automated
clearinghouse, zero balance accounts, returned check concentration, controlled
disbursement, lockbox, account reconciliation and reporting and trade finance
services and other cash management services.

“Voting Stock” of any Person as of any date means the Capital Stock of such
Person that is at the time entitled (without regard to the occurrence of any
contingency) to vote in the election of the Board of Directors of such Person.

ARTICLE II

LIEN PRIORITIES

Section 2.01 Relative Priorities. (a) The grant of the Priority Liens pursuant
to the Priority Lien Documents, the grant of the Second Liens pursuant to the
Second Lien Documents and the grant of the Third Liens pursuant to the Third
Lien Documents create three separate and distinct Liens on the Collateral.

 

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(b) Notwithstanding anything contained in this Agreement, the Priority Lien
Documents, the Second Lien Documents, the Third Lien Documents or any other
agreement or instrument or operation of law to the contrary, or any other
circumstance whatsoever and irrespective of (i) how a Lien was acquired (whether
by grant, possession, statute, operation of law, subrogation, or otherwise),
(ii) the time, manner, or order of the grant, attachment or perfection of a
Lien, (iii) any conflicting provision of the New York UCC or other applicable
law, (iv) any defect in, or non-perfection, setting aside, or avoidance of, a
Lien or a Priority Lien Document, a Second Lien Document or a Third Lien
Document, (v) the modification of a Priority Lien Obligation, a Second Lien
Obligation or a Third Lien Obligation, or (vi) the subordination of a Lien on
Collateral securing a Priority Lien Obligation to a Lien securing another
obligation of the Company or other Person that is permitted under the Priority
Lien Documents as in effect on the date hereof or securing a DIP Financing, or
the subordination of a Lien on Collateral securing a Second Lien Obligation to a
Lien securing another obligation of the Company or other Person (other than a
Priority Lien Obligation) that is permitted under the Second Lien Documents as
in effect on the date hereof, each of the Second Lien Collateral Agent, on
behalf of itself and the other Second Lien Secured Parties, and the Third Lien
Collateral Agent, on behalf of itself and the other Third Lien Secured Parties,
hereby agrees that (i) any Priority Lien on any Collateral now or hereafter held
by or for the benefit of any Priority Lien Secured Party shall be senior in
right, priority, operation, effect and all other respects to (A) any and all
Second Liens on any Collateral, subject to Section 6.01, and (B) any and all
Third Liens on any Collateral, subject to Section 6.01, (ii) any Second Lien on
any Collateral now or hereafter held by or for the benefit of any Second Lien
Secured Party shall be (A) junior and subordinate in right, priority, operation,
effect and all other respects to any and all Priority Liens on any Collateral,
subject to Section 6.01 and (B) senior in right, priority, operation, effect and
all other respects to any and all Third Liens on any Collateral, subject to
Section 6.01 and (iii) any Third Lien on any Collateral now or hereafter held by
or for the benefit of any Third Lien Secured Party shall be junior and
subordinate in right, priority, operation, effect and all other respects to
(A) any and all Priority Liens on any Collateral, subject to Section 6.01, and
(B) any and all Second Liens on any Collateral, subject to Section 6.01.

(c) It is acknowledged that, subject to Section 6.01, (i) the aggregate amount
of the Priority Lien Obligations may be increased from time to time pursuant to
the terms of the Priority Lien Documents, (ii) a portion of the Priority Lien
Obligations consists or may consist of indebtedness that is revolving in nature,
and the amount thereof that may be outstanding at any time or from time to time
may be increased or reduced and subsequently reborrowed, and (iii) (A) the
Priority Lien Documents may be replaced, restated, supplemented, restructured or
otherwise amended or modified from time to time and (B) the Priority Lien
Obligations may be increased, extended, renewed, Refinanced or otherwise
amended, restated or modified from time to time, in the case of the foregoing
(A) and (B) all without affecting the subordination of the Second Liens or Third
Liens hereunder or the provisions of this Agreement defining the relative rights
of the Priority Lien Secured Parties, the Second Lien Secured Parties and the
Third Lien Secured Parties. The lien priorities provided for herein shall not be
altered or otherwise affected by any amendment, modification, supplement,
extension, increase, renewal, restatement or Refinancing of any of the Priority
Lien Obligations (or any part thereof), the Second Lien Obligations (or any part
thereof) or the Third Lien Obligations (or any part thereof), by the release of
any Collateral or of any guarantees for any Priority Lien Obligations or by any
action that any Secured Debt Representative or Secured Party may take or fail to
take in respect of any Collateral.

(d) It is acknowledged that, subject to Section 6.01, (i) the aggregate amount
of the Second Lien Obligations may be increased from time to time pursuant to
the terms of the Second Lien Documents, (ii) a portion of the Second Lien
Obligations consists or may consist of indebtedness that is revolving in nature,
and the amount thereof that may be outstanding at any time or from time to time
may be increased or reduced and subsequently reborrowed, and (iii) (A) the
Second Lien Documents may be replaced, restated, supplemented, restructured or
otherwise amended or modified from time to time and (B) the Second Lien
Obligations may be increased, extended, renewed, Refinanced or otherwise
amended,

 

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restated or modified from time to time, in the case of the foregoing (A) and (B)
all without affecting the subordination of the Third Liens hereunder or the
provisions of this Agreement defining the relative rights of the Second Lien
Secured Parties and the Third Lien Secured Parties. The lien priorities provided
for herein shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, increase, renewal, restatement or
Refinancing of any of the Priority Lien Obligations (or any part thereof), the
Second Lien Obligations (or any part thereof) or the Third Lien Obligations (or
any part thereof), by the release of any Collateral or of any guarantees for any
Second Lien Obligations or by any action that any Secured Debt Representative or
Secured Party may take or fail to take in respect of any Collateral.

Section 2.02 Prohibition on Marshalling, Etc. (a) Until the Discharge of
Priority Lien Obligations, the Second Lien Collateral Agent will not assert any
marshalling, appraisal, valuation, or other similar right that may otherwise be
available to a junior secured creditor.

(b) Until the Discharge of Priority Lien Obligations and the Discharge of Second
Lien Obligations, the Third Lien Collateral Agent will not assert any
marshalling, appraisal, valuation, or other similar right that may otherwise be
available to a junior secured creditor.

Section 2.03 No New Liens. The parties hereto agree that, (a) so long as the
Discharge of Priority Lien Obligations has not occurred, none of the Grantors
shall, nor shall any Grantor permit any of its subsidiaries to, (i) grant or
permit any additional Liens on any asset of such Grantor or subsidiary to secure
any Third Lien Obligation, or take any action to perfect any additional Liens,
unless it has granted, or substantially concurrently therewith grants (or offers
to grant), a Lien on such asset of such Grantor or subsidiary to secure (A) the
Priority Lien Obligations and has taken all actions required to perfect such
Liens and (B) the Second Lien Obligations and has taken all actions (or takes
all actions) required to perfect such Liens; provided, however, the refusal or
inability of the Priority Lien Agent or the Second Lien Collateral Agent to
accept such Lien will not prevent the Third Lien Collateral Agent from taking
the Lien, (ii) grant or permit any additional Liens on any asset of such Grantor
or subsidiary to secure any Second Lien Obligation, or take any action to
perfect any additional Liens, unless it has granted, or substantially
concurrently therewith grants (or offers to grant) or, in the case of clause
(ii)(B), grants within 20 Business Days thereafter, a Lien on such asset of such
Grantor or subsidiary to secure (A) the Priority Lien Obligations and has taken
all actions required to perfect such Liens and (B) the Third Lien Obligations
and has taken all actions (or takes all actions) required to perfect such Liens;
provided, however, the refusal or inability of the Priority Lien Agent or the
Third Lien Collateral Agent to accept such Lien will not prevent the Second Lien
Collateral Agent from taking the Lien or (iii) grant or permit any additional
Liens on any asset of such Grantor or subsidiary to secure any Priority Lien
Obligation, or take any action to perfect any additional Liens, unless it has
granted, or substantially concurrently therewith grants (or offers to grant) or
grants within 20 Business Days thereafter, a Lien on such asset of such Grantor
or subsidiary to secure (A) the Second Lien Obligations and has taken all
actions (or takes all actions) required to perfect such Liens and (B) the Third
Lien Obligations and has taken all actions (or takes all actions) required to
perfect such Liens; provided, however, the refusal or inability of the Second
Lien Collateral Agent or the Third Lien Collateral Agent to accept such Lien
will not prevent the Priority Lien Agent from taking the Lien and (b) after the
Discharge of Priority Lien Obligations but prior to the Discharge of Second Lien
Obligations, none of the Grantors shall, nor shall any Grantor permit any of its
subsidiaries to, (i) grant or permit any additional Liens on any asset of such
Grantor or subsidiary to secure any Second Lien Obligation, or take any action
to perfect any additional Liens, unless it has granted, or substantially
concurrently therewith grants (or offers to grant) or grants within 20 Business
Days thereafter, a Lien on such asset of such Grantor or subsidiary to secure
the Third Lien Obligations and has taken all actions (or takes all actions)
required to perfect such Liens; provided, however, the refusal or inability of
the Third Lien Collateral Agent to accept such Lien will not prevent the Second
Lien Collateral Agent from taking the Lien or (ii) grant or permit any
additional Liens on any asset of such Grantor or subsidiary to secure any Third
Lien Obligations unless it has granted, or substantially concurrently therewith
grants (or offers to grant), a Lien on such asset of such

 

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Grantor or subsidiary to secure the Second Lien Obligations and has taken all
actions required to perfect such Liens; provided, however, the refusal or
inability of the Second Lien Collateral Agent to accept such Lien will not
prevent the Third Lien Collateral Agent from taking the Lien, with each such
Lien as described in clauses (a) and (b) of this Section 2.03 to be subject to
the provisions of this Agreement. To the extent that the provisions of the
immediately preceding sentence are not complied with for any reason, without
limiting any other right or remedy available to the Priority Lien Agent, the
other Priority Lien Secured Parties, the Second Lien Collateral Agent or the
other Second Lien Secured Parties, each of the Second Lien Collateral Agent, for
itself and on behalf of the other Second Lien Secured Parties and the Third Lien
Collateral Agent, for itself and on behalf of the other Third Lien Secured
Parties, agrees that any amounts received by or distributed to any Second Lien
Secured Party or Third Lien Secured Party, as applicable, pursuant to or as a
result of any Lien granted in contravention of this Section 2.03 shall be
subject to Section 3.05(b).

Section 2.04 Similar Collateral and Agreements. The parties hereto acknowledge
and agree that it is their intention that the Priority Lien Collateral, the
Second Lien Collateral and the Third Lien Collateral be identical. In
furtherance of the foregoing, the parties hereto agree (a) to cooperate in good
faith in order to determine, upon any reasonable request by the Priority Lien
Agent, the Second Lien Collateral Agent or the Third Lien Collateral Agent, the
specific assets included in the Priority Lien Collateral, the Second Lien
Collateral and the Third Lien Collateral, the steps taken to perfect the
Priority Liens, the Second Liens and the Third Liens thereon and the identity of
the respective parties obligated under the Priority Lien Documents, the Second
Lien Documents and the Third Lien Documents in respect of the Priority Lien
Obligations, the Second Lien Obligations and the Third Lien Obligations,
respectively, (b) that the Second Lien Security Documents creating Liens on the
Collateral shall be in all material respects the same forms of documents as the
respective Priority Lien Security Documents creating Liens on the Collateral
other than (i) with respect to the priority nature of the Liens created
thereunder in such Collateral, (ii) such other modifications to such Second Lien
Security Documents which are less restrictive than the corresponding Priority
Lien Security Documents, (iii) provisions in the Second Lien Security Documents
which are solely applicable to the rights and duties of the Second Lien
Collateral Agent and/or the Second Lien Trustee, and (iv) with such deletions or
modifications of representations, warranties and covenants as are customary with
respect to security documents establishing Liens securing debt securities sold
in similar private transactions that are not subject to the registration
requirements of the Securities Act, (c) that the Third Lien Security Documents
creating Liens on the Collateral shall be in all material respects the same
forms of documents as the respective Priority Lien Security Documents and Second
Lien Security Documents creating Liens on the Collateral other than (i) with
respect to the priority nature of the Liens created thereunder in such
Collateral, (ii) such other modifications to such Third Lien Security Documents
which are less restrictive than the corresponding Priority Lien Security
Documents and Second Lien Security Documents, (iii) provisions in the Third Lien
Security Documents which are solely applicable to the rights and duties of the
Third Lien Collateral Agent, and (iv) with such deletions or modifications of
representations, warranties and covenants as are customary with respect to
security documents establishing Liens securing debt securities sold in similar
private transactions that are not subject to the registration requirements of
the Securities Act, (d) that at no time shall there be any Grantor that is an
obligor in respect of the Second Lien Obligations that is not also an obligor in
respect of the Priority Lien Obligations and (e) that at no time shall there be
any Grantor that is an obligor in respect of the Third Lien Obligations that is
not also an obligor in respect of the Priority Lien Obligations and the Second
Lien Obligations.

Section 2.05 No Duties of Priority Lien Agent. Each of the Second Lien
Collateral Agent, for itself and on behalf of each Second Lien Secured Party,
and the Third Lien Collateral Agent, for itself and on behalf of each Third Lien
Secured Party, acknowledges and agrees that neither the Priority Lien Agent nor
any other Priority Lien Secured Party shall have any duties or other obligations
to any such Second Lien Secured Party or Third Lien Secured Party with respect
to any Collateral, other than to transfer to the Second Lien Collateral Agent
any remaining Collateral and any proceeds of the sale or other Disposition

 

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of any such Collateral remaining in its possession following the associated
Discharge of Priority Lien Obligations, in each case without representation or
warranty on the part of the Priority Lien Agent or any Priority Lien Secured
Party. In furtherance of the foregoing, each Second Lien Secured Party and Third
Lien Secured Party acknowledges and agrees that until the Discharge of Priority
Lien Obligations (subject to the terms of Section 3.02, including the rights of
the Second Lien Secured Parties and the Third Lien Secured Parties following the
expiration of any applicable Standstill Period), the Priority Lien Agent shall
be entitled, for the benefit of the Priority Lien Secured Parties, to sell,
transfer or otherwise Dispose of or deal with such Collateral, as provided
herein and in the Priority Lien Documents, without regard to (a) any Second Lien
or any rights to which the Second Lien Collateral Agent or any Second Lien
Secured Party would otherwise be entitled as a result of such Second Lien or
(b) any Third Lien or any rights to which the Third Lien Collateral Agent or any
Third Lien Secured Party would otherwise be entitled as a result of such Third
Lien. Without limiting the foregoing, each of the Second Lien Collateral Agent,
for itself and on behalf of each Second Lien Secured Party and the Third Lien
Collateral Agent, for itself and on behalf of each Third Lien Secured Party
agrees that neither the Priority Lien Agent nor any other Priority Lien Secured
Party shall have any duty or obligation first to marshal or realize upon any
type of Collateral, or to sell, Dispose of or otherwise liquidate all or any
portion of such Collateral, in any manner that would maximize the return to the
Second Lien Secured Parties or the Third Lien Secured Parties, notwithstanding
that the order and timing of any such realization, sale, Disposition or
liquidation may affect the amount of proceeds actually received by the Second
Lien Secured Parties or the Third Lien Secured Parties, as applicable, from such
realization, sale, Disposition or liquidation. Each of the Second Lien
Collateral Agent, for itself and on behalf of each Second Lien Secured Party and
the Third Lien Collateral Agent, for itself and on behalf of each Third Lien
Secured Party, hereby waives any claim any Second Lien Secured Party or any
Third Lien Secured Party may now or hereafter have against the Priority Lien
Agent or any other Priority Lien Secured Party arising out of any actions which
the Priority Lien Agent or any other Priority Lien Secured Parties take or omit
to take (including actions with respect to the creation, perfection or
continuation of Liens on any Collateral, actions with respect to the foreclosure
upon, sale, release or depreciation of, or failure to realize upon, any of the
Collateral, and actions with respect to the collection of any claim for all or
any part of the Priority Lien Obligations from any account debtor, guarantor or
any other party) in accordance with this Agreement and the Priority Lien
Documents or the valuation, use, protection or release of any security for the
Priority Lien Obligations.

Section 2.06 No Duties of Second Lien Collateral Agent. The Third Lien
Collateral Agent, for itself and on behalf of each Third Lien Secured Party,
acknowledges and agrees that neither the Second Lien Collateral Agent nor any
other Second Lien Secured Party shall have any duties or other obligations to
such Third Lien Secured Party with respect to any Collateral, other than to
transfer to the Third Lien Collateral Agent any remaining Collateral and any
proceeds of the sale or other Disposition of any such Collateral remaining in
its possession following the associated Discharge of Second Lien Obligations
(provided such discharge of Second Lien Obligations occurs after the Discharge
of Priority Lien Obligations), in each case without representation or warranty
on the part of the Second Lien Collateral Agent or any Second Lien Secured
Party. In furtherance of the foregoing, the Third Lien Collateral Agent, for
itself and on behalf of each Third Lien Secured Party acknowledges and agrees
that after the Discharge of Priority Lien Obligations and until the Discharge of
Second Lien Obligations (subject to the terms of Section 3.02, including the
rights of the Third Lien Secured Parties following expiration of the Third Lien
Second Standstill Period), the Second Lien Collateral Agent shall be entitled,
for the benefit of the Second Lien Secured Parties, to sell, transfer or
otherwise Dispose of or deal with such Collateral, as provided herein and in the
Second Lien Documents, without regard to any Third Lien or any rights to which
the Third Lien Collateral Agent or any Third Lien Secured Party would otherwise
be entitled as a result of such Third Lien. Without limiting the foregoing, each
Third Lien Secured Party agrees that neither the Second Lien Collateral Agent
nor any other Second Lien Secured Party shall have any duty or obligation first
to marshal or realize upon any type of Collateral, or to sell, Dispose of or
otherwise liquidate all or any portion of such Collateral, in any manner that
would maximize the return to the Third Lien Secured Parties, notwithstanding

 

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that the order and timing of any such realization, sale, Disposition or
liquidation may affect the amount of proceeds actually received by the Third
Lien Secured Parties from such realization, sale, Disposition or liquidation.
Following the Discharge of Second Lien Obligations, the Third Lien Collateral
Agent and the other Third Lien Secured Parties may, subject to any other
agreements binding on the Third Lien Collateral Agent or such other Third Lien
Secured Parties, assert their rights under the New York UCC or otherwise to any
proceeds remaining following a sale, Disposition or other liquidation of
Collateral by, or on behalf of the Third Lien Secured Parties. The Third Lien
Collateral Agent, for itself and on behalf of each Third Lien Secured Party,
hereby waives any claim such Third Lien Secured Party may now or hereafter have
against the Second Lien Collateral Agent or any other Second Lien Secured Party
arising out of any actions which the Second Lien Collateral Agent or the Second
Lien Secured Parties take or omit to take (including actions with respect to the
creation, perfection or continuation of Liens on any Collateral, actions with
respect to the foreclosure upon, sale, release or depreciation of, or failure to
realize upon, any of the Collateral, and actions with respect to the collection
of any claim for all or any part of the Second Lien Obligations from any account
debtor, guarantor or any other party) in accordance with this Agreement and the
Second Lien Documents or the valuation, use, protection or release of any
security for the Second Lien Obligations.

ARTICLE III

ENFORCEMENT RIGHTS; PURCHASE OPTION

Section 3.01 Limitation on Enforcement Action. (a) Prior to the Discharge of
Priority Lien Obligations, each of the Second Lien Collateral Agent, for itself
and on behalf of each Second Lien Secured Party, and the Third Lien Collateral
Agent, for itself and on behalf of each Third Lien Secured Party, hereby agrees
that, subject to Section 3.05(b) and Section 4.07, none of the Second Lien
Collateral Agent, any other Second Lien Secured Party, the Third Lien Collateral
Agent or any other Third Lien Secured Party shall commence any judicial or
nonjudicial foreclosure proceedings with respect to, seek to have a trustee,
receiver, liquidator or similar official appointed for or over, attempt any
action to take possession of, exercise any right, remedy or power with respect
to, or otherwise take any action to enforce its interest in or realize upon, or
take any other action available to it in respect of, any Collateral under any
Second Lien Security Document or Third Lien Security Document, as applicable,
applicable law or otherwise (including but not limited to any right of setoff),
it being agreed that only the Priority Lien Agent, acting in accordance with the
applicable Priority Lien Documents, shall have the exclusive right (and whether
or not any Insolvency or Liquidation Proceeding has been commenced), to take any
such actions or exercise any such remedies, in each case, without any
consultation with or the consent of the Second Lien Collateral Agent, any other
Second Lien Secured Party, the Third Lien Collateral Agent or any other Third
Lien Secured Party. In exercising rights and remedies with respect to the
Collateral, the Priority Lien Agent and the other Priority Lien Secured Parties
may enforce the provisions of the Priority Lien Documents and exercise remedies
thereunder, all in such order and in such manner as they may determine in their
sole discretion and regardless of whether such exercise and enforcement is
adverse to the interest of any Second Lien Secured Party or Third Lien Secured
Party. Such exercise and enforcement shall include the rights of an agent
appointed by them to Dispose of Collateral upon foreclosure, to incur expenses
in connection with any such Disposition and to exercise all the rights and
remedies of a secured creditor under the Uniform Commercial Code, the Bankruptcy
Code or any other Bankruptcy Law. Without limiting the generality of the
foregoing, the Priority Lien Agent will have the exclusive right to deal with
that portion of the Collateral consisting of deposit accounts and securities
accounts (collectively “Accounts”), including exercising rights under control
agreements with respect to such Accounts. Each of the Second Lien Collateral
Agent, for itself and on behalf of the other Second Lien Secured Parties and the
Third Lien Collateral Agent, for itself and on behalf of the other Third Lien
Secured Parties, hereby acknowledges and agrees that no covenant, agreement or
restriction contained in any Second Lien Security Document, any other Second
Lien Document, any Third Lien Security Document or any other Third Lien
Document, as applicable, shall be deemed to restrict in any way the rights and
remedies of the Priority Lien Agent or the other Priority Lien

 

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Secured Parties with respect to the Collateral as set forth in this Agreement.
Notwithstanding the foregoing, subject to Section 3.05, each of the Second Lien
Collateral Agent, on behalf of the Second Lien Secured Parties, and the Third
Lien Collateral Agent, on behalf of the Third Lien Secured Parties, may, but
will have no obligation to, take all such actions (not adverse to the Priority
Liens or the rights of the Priority Lien Agent and the Priority Lien Secured
Parties) it deems necessary to perfect or continue the perfection of the Second
Liens in the Collateral or to create, preserve or protect (but not enforce) the
Second Liens in the Collateral or to perfect or continue the perfection of the
Third Liens in the Collateral or to create, preserve or protect (but not
enforce) the Third Liens in the Collateral, as applicable. Nothing herein shall
limit the right or ability of the Second Lien Secured Parties or any Third Lien
Secured Parties to (i) purchase (by credit bid or otherwise) all or any portion
of the Collateral in connection with any enforcement of remedies by the Priority
Lien Agent to the extent that, and so long as, the Priority Lien Secured Parties
receive payment in full in cash of all Priority Lien Obligations (other than
Excess Priority Lien Obligations) after giving effect thereto; provided that the
Third Lien Secured Parties may only purchase all or any portion of the
Collateral pursuant to this clause (i), so long as they provide payment in full
in cash of all Second Lien Obligations (other than Excess Second Lien
Obligations) or (ii) file a proof of claim with respect to the Second Lien
Obligations or the Third Lien Obligations, as applicable, to the extent
permitted pursuant to Section 3.02.

(b) Following the Discharge of Priority Lien Obligations but prior to the
Discharge of Second Lien Obligations, the Third Lien Collateral Agent, for
itself and on behalf of each Third Lien Secured Party, hereby agrees that,
subject to Section 3.05(b) and Section 4.07, neither the Third Lien Collateral
Agent nor any other Third Lien Secured Party shall commence any judicial or
nonjudicial foreclosure proceedings with respect to, seek to have a trustee,
receiver, liquidator or similar official appointed for or over, attempt any
action to take possession of, exercise any right, remedy or power with respect
to, or otherwise take any action to enforce its interest in or realize upon, or
take any other action available to it in respect of, any Collateral under any
Third Lien Security Document, applicable law or otherwise (including but not
limited to any right of setoff), it being agreed that only the Second Lien
Collateral Agent, acting in accordance with the applicable Second Lien
Documents, shall have the exclusive right (and whether or not any Insolvency or
Liquidation Proceeding has been commenced), to take any such actions or exercise
any such remedies, in each case, without any consultation with or the consent of
the Third Lien Collateral Agent or any other Third Lien Secured Party. In
exercising rights and remedies with respect to the Collateral following the
Discharge of Priority Lien Obligations and until the Discharge of Second Lien
Obligations, the Second Lien Collateral Agent and the other Second Lien Secured
Parties may enforce the provisions of the Second Lien Documents and exercise
remedies thereunder, all in such order and in such manner as they may determine
in their sole discretion and regardless of whether such exercise and enforcement
is adverse to the interest of any Third Lien Secured Party. Such exercise and
enforcement following the Discharge of Priority Lien Obligations and until the
Discharge of Second Lien Obligations shall include the rights of an agent
appointed by them to Dispose of Collateral upon foreclosure, to incur expenses
in connection with any such Disposition and to exercise all the rights and
remedies of a secured creditor under the Uniform Commercial Code, the Bankruptcy
Code or any other Bankruptcy Law. Without limiting the generality of the
foregoing, following the Discharge of Priority Lien Obligations and until the
Discharge of Second Lien Obligations the Second Lien Collateral Agent will have
the exclusive right to deal with the Accounts, including exercising rights under
control agreements with respect to such Accounts. The Third Lien Collateral
Agent, for itself and on behalf of the other Third Lien Secured Parties, hereby
acknowledges and agrees that no covenant, agreement or restriction contained in
any Third Lien Security Document or any other Third Lien Document shall be
deemed to restrict in any way the rights and remedies of the Second Lien
Collateral Agent or the other Second Lien Secured Parties with respect to the
Collateral as set forth in this Agreement. Notwithstanding the foregoing,
subject to Section 3.05, the Third Lien Collateral Agent may, but will have no
obligation to, on behalf of the Third Lien Secured Parties, take all such
actions (not adverse to the Second Liens or the rights of the Second Lien
Collateral Agent and the Second Lien Secured Parties) it deems necessary to
perfect or continue the perfection of the Third Liens in the Collateral or to
create, preserve or protect (but not enforce) the Third Liens in the Collateral.

 

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Section 3.02 Standstill Periods; Permitted Enforcement Action. (a) Prior to the
Discharge of Priority Lien Obligations and notwithstanding the foregoing
Section 3.01, both before and during an Insolvency or Liquidation Proceeding:

(i) after a period of 180 days has elapsed (which period will be tolled during
any period in which the Priority Lien Agent is not entitled, on behalf of the
Priority Lien Secured Parties, to enforce or exercise any rights or remedies
with respect to any Collateral as a result of (A) any injunction issued by a
court of competent jurisdiction or (B) the automatic stay or any other stay or
prohibition in any Insolvency or Liquidation Proceeding) since the date on which
the Second Lien Collateral Agent has delivered to the Priority Lien Agent
written notice of the acceleration of any Second Lien Debt (the “Second Lien
Standstill Period”), the Second Lien Collateral Agent and the other Second Lien
Secured Parties may enforce or exercise any rights or remedies with respect to
any Collateral; provided, however that notwithstanding the expiration of the
Second Lien Standstill Period or anything in the Second Lien Collateral Agency
Agreement or the Second Lien Documents to the contrary, in no event may the
Second Lien Collateral Agent or any other Second Lien Secured Party enforce or
exercise any rights or remedies with respect to any Collateral, or commence,
join with any Person at any time in commencing, or petition for or vote in favor
of any resolution for, any such action or proceeding, if the Priority Lien Agent
on behalf of the Priority Lien Secured Parties or any other Priority Lien
Secured Party shall have commenced, and shall be diligently pursuing, the
enforcement or exercise of any rights or remedies with respect to the Collateral
or any such action or proceeding (prompt written notice thereof to be given to
the Second Lien Representatives by the Priority Lien Agent); provided, further,
that, at any time after the expiration of the Second Lien Standstill Period, if
neither the Priority Lien Agent nor any other Priority Lien Secured Party shall
have commenced and be diligently pursuing the enforcement or exercise of any
rights or remedies with respect to any material portion of the Collateral or any
such action or proceeding, and the Second Lien Collateral Agent shall have
commenced the enforcement or exercise of any rights or remedies with respect to
any material portion of the Collateral or any such action or proceeding, then
for so long as the Second Lien Collateral Agent is diligently pursuing such
rights or remedies, none of any Priority Lien Secured Party, the Priority Lien
Agent, any Third Lien Secured Party or the Third Lien Collateral Agent shall
take any action of a similar nature with respect to such Collateral, or
commence, join with any Person at any time in commencing, or petition for or
vote in favor of any resolution for, any such action or proceeding; and

(ii) after a period of 270 days has elapsed (which period will be tolled during
any period in which the Priority Lien Agent is not entitled, on behalf of the
Priority Lien Secured Parties, to enforce or exercise any rights or remedies
with respect to any Collateral as a result of (A) any injunction issued by a
court of competent jurisdiction or (B) the automatic stay or any other stay or
prohibition in any Insolvency or Liquidation Proceeding) since the date on which
the Third Lien Collateral Agent has delivered to the Priority Lien Agent written
notice of the acceleration of any Third Lien Debt (the “Third Lien First
Standstill Period”), the Third Lien Collateral Agent and the other Third Lien
Secured Parties may enforce or exercise any rights or remedies with respect to
any Collateral; provided, however that notwithstanding the expiration of the
Third Lien First Standstill Period or anything in the Third Lien Collateral
Agency Agreement to the contrary, in no event may the Third Lien Collateral
Agent or any other Third Lien Secured Party enforce or exercise any rights or
remedies with respect to any Collateral, or commence, join with any Person at
any time in commencing, or petition for or vote in favor of any resolution for,
any such action or proceeding, if (I) the Priority Lien Agent on behalf of the
Priority Lien Secured Parties or any other Priority Lien Secured Party or
(II) the Second Lien Collateral Agent on behalf of the Second Lien Secured
Parties or any other Second Lien Secured Party shall have commenced, and shall
be diligently pursuing, the enforcement or exercise of any rights or remedies
with respect to the

 

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Collateral or any such action or proceeding (prompt written notice thereof to be
given to the Third Lien Representatives by the Priority Lien Agent or the Second
Lien Collateral Agent, as applicable); provided, further, that, at any time
after the expiration of the Third Lien First Standstill Period, if none of any
Priority Lien Secured Party, the Priority Lien Agent, any Second Lien Secured
Party or the Second Lien Collateral Agent shall have commenced and be diligently
pursuing the enforcement or exercise of any rights or remedies with respect to
any material portion of the Collateral or any such action or proceeding, and the
Third Lien Collateral Agent shall have commenced the enforcement or exercise of
any rights or remedies with respect to any material portion of the Collateral or
any such action or proceeding, then for so long as the Third Lien Collateral
Agent is diligently pursuing such rights or remedies, none of any Priority Lien
Secured Party, the Priority Lien Agent, any Second Lien Secured Party or the
Second Lien Collateral Agent shall take any action of a similar nature with
respect to such Collateral, or commence, join with any Person at any time in
commencing, or petition for or vote in favor of any resolution for, any such
action or proceeding.

(b) Following the Discharge of Priority Lien Obligations but prior to the
Discharge of Second Lien Obligations and notwithstanding the foregoing
Section 3.01, both before and during an Insolvency or Liquidation Proceeding,
after a period of 180 days has elapsed (which period will be tolled during any
period in which the Second Lien Collateral Agent is not entitled, on behalf of
the Second Lien Secured Parties, to enforce or exercise any rights or remedies
with respect to any Collateral as a result of (A) any injunction issued by a
court of competent jurisdiction or (B) the automatic stay or any other stay or
prohibition in any Insolvency or Liquidation Proceeding) since the date on which
the Third Lien Collateral Agent has delivered to the Second Lien Collateral
Agent written notice of the acceleration of any Third Lien Debt (the “Third Lien
Second Standstill Period”), the Third Lien Collateral Agent and the other Third
Lien Secured Parties may enforce or exercise any rights or remedies with respect
to any Collateral; provided, however that notwithstanding the expiration of the
Third Lien Second Standstill Period or anything in the Third Lien Collateral
Agency Agreement to the contrary, in no event may the Third Lien Collateral
Agent or any other Third Lien Secured Party enforce or exercise any rights or
remedies with respect to any Collateral, or commence, join with any Person at
any time in commencing, or petition for or vote in favor of any resolution for,
any such action or proceeding, if the Second Lien Collateral Agent on behalf of
the Second Lien Secured Parties or any other Second Lien Secured Party shall
have commenced, and shall be diligently pursuing, the enforcement or exercise of
any rights or remedies with respect to the Collateral or any such action or
proceeding (prompt written notice thereof to be given to the Third Lien
Representatives by the Second Lien Collateral Agent); provided, further, that,
at any time after the expiration of the Third Lien Second Standstill Period, if
neither the Second Lien Collateral Agent nor any other Second Lien Secured Party
shall have commenced and be diligently pursuing the enforcement or exercise of
any rights or remedies with respect to any material portion of the Collateral or
any such action or proceeding, and the Third Lien Collateral Agent shall have
commenced the enforcement or exercise of any rights or remedies with respect to
any material portion of the Collateral or any such action or proceeding, then
for so long as the Third Lien Collateral Agent is diligently pursuing such
rights or remedies, neither any Second Lien Secured Party nor the Second Lien
Collateral Agent shall take any action of a similar nature with respect to such
Collateral, or commence, join with any Person at any time in commencing, or
petition for or vote in favor of any resolution for, any such action or
proceeding.

Section 3.03 Insurance. (a) Unless and until the Discharge of Priority Lien
Obligations has occurred (subject to the terms of Section 3.02, including the
rights of the Second Lien Secured Parties and the Third Lien Secured Parties
following expiration of any applicable Standstill Period), the Priority Lien
Agent shall have the sole and exclusive right, subject to the rights of the
Grantors under the Priority Lien Documents, to adjust and settle claims in
respect of Collateral under any insurance policy in the event of any loss
thereunder and to approve any award granted in any condemnation or similar
proceeding (or any deed in lieu of condemnation) affecting the Collateral.
Unless and until the Discharge of Priority Lien Obligations has occurred, and
subject to the rights of the Grantors under the Priority Lien Documents, all

 

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proceeds of any such policy and any such award (or any payments with respect to
a deed in lieu of condemnation) in respect to the Collateral shall be paid to
the Priority Lien Agent pursuant to the terms of the Priority Lien Documents
(including for purposes of cash collateralization of commitments, letters of
credit and Hedging Obligations). If the Second Lien Collateral Agent, any Second
Lien Secured Party, the Third Lien Collateral Agent or any Third Lien Secured
Party shall, at any time, receive any proceeds of any such insurance policy or
any such award or payment in contravention of the foregoing, it shall pay such
proceeds over to the Priority Lien Agent. In addition, if by virtue of being
named as an additional insured or loss payee of any insurance policy of any
Grantor covering any of the Collateral, the Second Lien Collateral Agent, any
other Second Lien Secured Party, the Third Lien Collateral Agent or any other
Third Lien Secured Party shall have the right to adjust or settle any claim
under any such insurance policy, then unless and until the Discharge of Priority
Lien Obligations has occurred, the Second Lien Collateral Agent, any such Second
Lien Secured Party, the Third Lien Collateral Agent and any such Third Lien
Secured Party shall follow the instructions of the Priority Lien Agent, or of
the Grantors under the Priority Lien Documents to the extent the Priority Lien
Documents grant such Grantors the right to adjust or settle such claims, with
respect to such adjustment or settlement (subject to the terms of Section 3.02,
including the rights of the Second Lien Secured Parties and the Third Lien
Secured Parties following expiration of any applicable Standstill Period).

(b) Following the Discharge of Priority Lien Obligations but prior to the
Discharge of Second Lien Obligations (subject to the terms of Section 3.02,
including the rights of the Third Lien Secured Parties following expiration of
the Third Lien Second Standstill Period), the Second Lien Collateral Agent shall
have the sole and exclusive right, subject to the rights of the Grantors under
the Second Lien Documents, to adjust and settle claims in respect of Collateral
under any insurance policy in the event of any loss thereunder and to approve
any award granted in any condemnation or similar proceeding (or any deed in lieu
of condemnation) affecting the Collateral. Unless and until the Discharge of
Second Lien Obligations has occurred, and subject to the rights of the Grantors
under the Second Lien Documents, all proceeds of any such policy and any such
award (or any payments with respect to a deed in lieu of condemnation) in
respect to the Collateral shall be paid to the Second Lien Collateral Agent
pursuant to the terms of the Second Lien Documents and, after the Discharge of
Second Lien Obligations has occurred, to the Third Lien Collateral Agent to the
extent required under the Third Lien Documents and then, to the extent no Third
Lien Obligations are outstanding, to the owner of the subject property, to such
other Person as may be entitled thereto or as a court of competent jurisdiction
may otherwise direct. If the Third Lien Collateral Agent or any Third Lien
Secured Party shall, at any time following the Discharge of Priority Lien
Obligations but prior to the Discharge of Second Lien Obligations, receive any
proceeds of any such insurance policy or any such award or payment in
contravention of the foregoing, it shall pay such proceeds over to the Second
Lien Collateral Agent. In addition, if by virtue of being named as an additional
insured or loss payee of any insurance policy of any Grantor covering any of the
Collateral, the Third Lien Collateral Agent or any other Third Lien Secured
Party shall have the right to adjust or settle any claim under any such
insurance policy, then unless and until the Discharge of Second Lien Obligations
has occurred, the Third Lien Collateral Agent and any such Third Lien Secured
Party shall follow the instructions of the Second Lien Collateral Agent, or of
the Grantors under the Second Lien Documents to the extent the Second Lien
Documents grant such Grantors the right to adjust or settle such claims, with
respect to such adjustment or settlement (subject to the terms of Section 3.02,
including the rights of the Third Lien Secured Parties following expiration of
the Third Lien Second Standstill Period).

Section 3.04 Notification of Release of Collateral. Each of the Priority Lien
Agent, the Second Lien Collateral Agent and the Third Lien Collateral Agent
shall give the other Secured Debt Representatives prompt written notice of the
Disposition by it of, and Release by it of the Lien on, any Collateral. Such
notice shall describe in reasonable detail the subject Collateral, the parties
involved in such Disposition or Release, the place, time manner and method
thereof, and the consideration, if any, received therefor; provided, however,
that the failure to give any such notice shall not in and of itself in any way
impair the effectiveness of any such Disposition or Release.

 

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Section 3.05 No Interference; Payment Over.

(a) No Interference. (i) The Second Lien Collateral Agent, for itself and on
behalf of each Second Lien Secured Party, agrees that each Second Lien Secured
Party (i) will not take or cause to be taken any action the purpose or effect of
which is, or could be, to make any Second Lien pari passu with, or to give such
Second Lien Secured Party any preference or priority relative to, any Priority
Lien with respect to the Collateral or any part thereof, (ii) will not challenge
or question in any proceeding the validity or enforceability of any Priority
Lien Obligations or Priority Lien Document, or the validity, attachment,
perfection or priority of any Priority Lien, or the validity or enforceability
of the priorities, rights or duties established by the provisions of this
Agreement, (iii) will not take or cause to be taken any action the purpose or
effect of which is, or could be, to interfere, hinder or delay, in any manner,
whether by judicial proceedings or otherwise, any sale, transfer or other
Disposition of the Collateral by any Priority Lien Secured Party or the Priority
Lien Agent in any enforcement action, (iv) shall have no right to (A) direct the
Priority Lien Agent or any other Priority Lien Secured Party to exercise any
right, remedy or power with respect to any Collateral or (B) consent to the
exercise by the Priority Lien Agent or any other Priority Lien Secured Party of
any right, remedy or power with respect to any Collateral, (v) will not
institute any suit or assert in any suit or Insolvency or Liquidation Proceeding
any claim against the Priority Lien Agent or other Priority Lien Secured Party
seeking damages from or other relief by way of specific performance,
instructions or otherwise with respect to, and neither the Priority Lien Agent
nor any other Priority Lien Secured Party shall be liable for, any action taken
or omitted to be taken by the Priority Lien Agent or other Priority Lien Secured
Party with respect to any Priority Lien Collateral, (vi) will not seek, and
hereby waives any right, to have any Collateral or any part thereof marshaled
upon any foreclosure or other Disposition of such Collateral, (vii) will not
attempt, directly or indirectly, whether by judicial proceedings or otherwise,
to challenge the enforceability of any provision of this Agreement, (viii) will
not object to forbearance by the Priority Lien Agent or any Priority Lien
Secured Party, and (ix) will not assert, and hereby waives, to the fullest
extent permitted by law, any right to demand, request, plead or otherwise assert
or claim the benefit of any marshalling, appraisal, valuation or other similar
right that may be available under applicable law with respect to the Collateral
or any similar rights a junior secured creditor may have under applicable law;
and

(ii) The Third Lien Collateral Agent, for itself and on behalf of each Third
Lien Secured Party, agrees that each Third Lien Secured Party (i) will not take
or cause to be taken any action the purpose or effect of which is, or could be,
to make any Third Lien pari passu with, or to give such Third Lien Secured Party
any preference or priority relative to, any Priority Lien or Second Lien with
respect to the Collateral or any part thereof, (ii) will not challenge or
question in any proceeding the validity or enforceability of any Priority Lien
Obligations, Priority Lien Document, Second Lien Obligations or Second Lien
Document, or the validity, attachment, perfection or priority of any Priority
Lien or Second Lien, or the validity or enforceability of the priorities, rights
or duties established by the provisions of this Agreement, (iii) will not take
or cause to be taken any action the purpose or effect of which is, or could be,
to interfere, hinder or delay, in any manner, whether by judicial proceedings or
otherwise, any sale, transfer or other Disposition of the Collateral by any
Priority Lien Secured Party or the Priority Lien Agent acting on their behalf or
by any Second Lien Secured Party or the Second Lien Collateral Agent in each
case in any enforcement action, (iv) shall have no right to (A) direct the
Priority Lien Agent, any other Priority Lien Secured Party, the Second Lien
Collateral Agent or any other Second Lien Secured Party to exercise any right,
remedy or power with respect to any Collateral or (B) consent to the exercise by
the Priority Lien Agent, any other Priority Lien Secured Party, the Second Lien
Collateral Agent or any other Second Lien Secured Party of any right, remedy or
power with respect to any Collateral, (v) will not institute any suit or assert
in any suit or Insolvency or Liquidation Proceeding any claim against the
Priority Lien Agent, any

 

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other Priority Lien Secured Party, the Second Lien Collateral Agent or any other
Second Lien Secured Party seeking damages from or other relief by way of
specific performance, instructions or otherwise with respect to, and none of the
Priority Lien Agent, any other Priority Lien Secured Party, the Second Lien
Collateral Agent or any other Second Lien Secured Party shall be liable for, any
action taken or omitted to be taken by the Priority Lien Agent, any other
Priority Lien Secured Party, the Second Lien Collateral Agent or any other
Second Lien Secured Party with respect to any Priority Lien Collateral or Second
Lien Collateral, as applicable, (vi) will not seek, and hereby waives any right,
to have any Collateral or any part thereof marshaled upon any foreclosure or
other Disposition of such Collateral, (vii) will not attempt, directly or
indirectly, whether by judicial proceedings or otherwise, to challenge the
enforceability of any provision of this Agreement, (viii) will not object to
forbearance by the Priority Lien Agent, any Priority Lien Secured Party, the
Second Lien Collateral Agent or any Second Lien Secured Party and (ix) will not
assert, and hereby waives, to the fullest extent permitted by law, any right to
demand, request, plead or otherwise assert or claim the benefit of any
marshalling, appraisal, valuation or other similar right that may be available
under applicable law with respect to the Collateral or any similar rights a
junior secured creditor may have under applicable law.

(b) Payment Over. (i) Each of the Second Lien Collateral Agent, for itself and
on behalf of each other Second Lien Secured Party, and the Third Lien Collateral
Agent, for itself and on behalf of each other Third Lien Secured Party, hereby
agrees that if any Second Lien Secured Party or Third Lien Secured Party, as
applicable, shall obtain possession of any Collateral or shall realize any
proceeds or payment in respect of any Collateral, pursuant to the exercise of
any rights or remedies with respect to the Collateral under any Second Lien
Security Document or Third Lien Security Document, as applicable, or by the
exercise of any rights available to it under applicable law or in any Insolvency
or Liquidation Proceeding, to the extent permitted hereunder, at any time prior
to the Discharge of Priority Lien Obligations secured, or intended to be
secured, by such Collateral, then it shall hold such Collateral, proceeds or
payment in trust for the Priority Lien Agent and the other Priority Lien Secured
Parties and transfer such Collateral, proceeds or payment, as the case may be,
to the Priority Lien Agent as promptly as practicable. Furthermore, the Second
Lien Collateral Agent or the Third Lien Collateral Agent, as applicable, shall,
at the Grantors’ expense, promptly send written notice to the Priority Lien
Agent upon receipt of such Collateral proceeds or payment by any Second Lien
Secured Party or Third Lien Secured Party, as applicable, proceeds or payment
and if directed by the Priority Lien Agent within five days after receipt by the
Priority Lien Agent of such written notice, shall deliver such Collateral,
proceeds or payment to the Priority Lien Agent in the same form as received,
with any necessary endorsements, or as court of competent jurisdiction may
otherwise direct. The Priority Lien Agent is hereby authorized to make any such
endorsements as agent for the Second Lien Collateral Agent, any other Second
Lien Secured Party, the Third Lien Collateral Agent or any other Third Lien
Secured Party, as applicable. Each of the Second Lien Collateral Agent, for
itself and on behalf of each other Second Lien Secured Party, and the Third Lien
Collateral Agent, for itself and on behalf of each other Third Lien Secured
Party, agrees that if, at any time, it obtains written notice that all or part
of any payment with respect to any Priority Lien Obligations previously made
shall be rescinded for any reason whatsoever, it will promptly pay over to the
Priority Lien Agent any payment received by it and then in its possession or
under its direct control in respect of any such Priority Lien Collateral and
shall promptly turn any such Collateral then held by it over to the Priority
Lien Agent, and the provisions set forth in this Agreement will be reinstated as
if such payment had not been made, until the Discharge of Priority Lien
Obligations. All Second Liens and Third Liens will remain attached to and
enforceable against all proceeds so held or remitted, subject to the priorities
set forth in this Agreement. Anything contained herein to the contrary
notwithstanding, this Section 3.05(b) shall not apply to any proceeds of
Collateral realized in a transaction not prohibited by the Priority Lien
Documents and as to which the possession or receipt thereof by the Second Lien
Collateral Agent, any other Second Lien Secured Party, the Third Lien Collateral
Agent or any other Third Lien Secured Party, as applicable, is otherwise
permitted by the Priority Lien Documents.

 

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(ii) The Third Lien Collateral Agent, for itself and on behalf of each other
Third Lien Secured Party, hereby agrees that if any Third Lien Secured Party
shall obtain possession of any Collateral or shall realize any proceeds or
payment in respect of any Collateral, pursuant to the exercise of any rights or
remedies with respect to the Collateral under any Third Lien Security Document
or by the exercise of any rights available to it under applicable law or in any
Insolvency or Liquidation Proceeding, to the extent permitted hereunder, at any
time following the Discharge of Priority Lien Obligations but prior to the
Discharge of Second Lien Obligations secured, or intended to be secured, by such
Collateral, then it shall hold such Collateral, proceeds or payment in trust for
the Second Lien Collateral Agent and the other Second Lien Secured Parties and
transfer such Collateral, proceeds or payment, as the case may be, to the Second
Lien Collateral Agent reasonably promptly after obtaining written notice from
the Second Lien Secured Parties that it has possession of such Collateral or
proceeds or payments in respect thereof. Furthermore, the Third Lien Collateral
Agent shall, at the Grantors’ expense, promptly send written notice to the
Second Lien Collateral Agent upon receipt of such Collateral by any Third Lien
Secured Party, proceeds or payment and if directed by the Second Lien Collateral
Agent within five days after receipt by the Second Lien Collateral Agent of such
written notice, shall deliver such Collateral, proceeds or payment to the Second
Lien Collateral Agent in the same form as received, with any necessary
endorsements, or as court of competent jurisdiction may otherwise direct. The
Second Lien Collateral Agent is hereby authorized to make any such endorsements
as agent for the Third Lien Collateral Agent or any other Third Lien Secured
Party. The Third Lien Collateral Agent, for itself and on behalf of each other
Third Lien Secured Party, agrees that if, at any time, it obtains written notice
that all or part of any payment with respect to any Second Lien Obligations
previously made shall be rescinded for any reason whatsoever, it will promptly
pay over to the Second Lien Collateral Agent any payment received by it and then
in its possession or under its direct control in respect of any such Second Lien
Collateral and shall promptly turn any such Collateral then held by it over to
the Second Lien Collateral Agent, and the provisions set forth in this Agreement
will be reinstated as if such payment bad not been made, until the Discharge of
Second Lien Obligations. All Third Liens will remain attached to and enforceable
against all proceeds so held or remitted, subject to the priorities set forth in
this Agreement. Anything contained herein to the contrary notwithstanding, this
Section 3.05(b) shall not apply to any proceeds of Collateral realized in a
transaction not prohibited by the Second Lien Documents and as to which the
possession or receipt thereof by the Third Lien Collateral Agent or any other
Third Lien Secured Party is otherwise permitted by the Second Lien Documents.

Section 3.06 Purchase Option.

(a) Notwithstanding anything in this Agreement to the contrary, on or at any
time after (i) the commencement of an Insolvency or Liquidation Proceeding or
(ii) the acceleration of the Priority Lien Obligations, each of the holders of
the Second Lien Debt and each of their respective designated Affiliates (the
“Second Lien Purchasers”) will have the right, at their sole option and election
(but will not be obligated), at any time upon prior written notice to the
Priority Lien Agent, to purchase from the Priority Lien Secured Parties (A) all
(but not less than all) Priority Lien Obligations, including the assumption of
all unfunded commitments, other than any Priority Lien Obligations constituting
Excess Priority Lien Obligations and (B) if applicable, Obligations (including
principal, unpaid interest, fees, reasonable attorneys’ fees and legal expenses,
but excluding contingent indemnification obligations for which no claim or
demand for payment has been made at or prior to such time) provided by any of
the Priority Lien Secured Parties in connection with a DIP Financing that are
outstanding on the date of such purchase. Promptly following the receipt of such
notice, the Priority Lien Agent will deliver to the Second Lien Trustee a
statement of the amount of Priority Lien Debt, other Priority Lien Obligations
(other than any Priority Lien Obligations constituting Excess Priority Lien
Obligations) and DIP Financing (including unpaid interest, fees, expenses and
other obligations in respect of such DIP Financing) provided by any of the
Priority Lien Secured Parties, if any, then outstanding and the amount of the
cash collateral requested by the Priority Lien Agent to be delivered pursuant to
Section 3.06(b)(ii) below. The right to purchase provided for in this

 

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Section 3.06 will expire unless, within 10 Business Days after the receipt by
the Second Lien Trustee of such notice from the Priority Lien Agent, the Second
Lien Trustee delivers to the Priority Lien Agent an irrevocable commitment of
the Second Lien Purchasers to purchase all (but not less than all) (A) of the
Priority Lien Obligations, including assumption of all unfunded commitments,
other than any Priority Lien Obligations constituting Excess Priority Lien
Obligations and (B) if applicable, Obligations (including principal, unpaid
interest, fees, reasonable attorneys’ fees and legal expenses, but excluding
contingent indemnification obligations for which no claim or demand for payment
has been made at or prior to such time) provided by any of the Priority Lien
Secured Parties in connection with a DIP Financing and to otherwise complete
such purchase on the terms set forth under this Section 3.06.

(b) On the date specified by the Second Lien Trustee (on behalf of the Second
Lien Purchasers) in such irrevocable commitment (which shall not be less than
five Business Days nor more than 20 Business Days, after the receipt by the
Priority Lien Agent of such irrevocable commitment), the Priority Lien Secured
Parties shall sell to the Second Lien Purchasers all (but not less than all)
Priority Lien Obligations, including the assumption of all unfunded commitments,
other than any Priority Lien Obligations constituting Excess Priority Lien
Obligations and, if applicable, Obligations provided by any of the Priority Lien
Secured Parties in connection with a DIP Financing that are outstanding on the
date of such sale, subject to any required approval of any Governmental
Authority then in effect, if any, and only if on the date of such sale, the
Priority Lien Agent receives the following:

(i) payment in cash, as the purchase price for all Priority Lien Obligations
sold in such sale, of an amount equal to the full par value amount of (A) all
Priority Lien Obligations (other than outstanding letters of credit as referred
to in clause (ii) below) other than any Priority Lien Obligations constituting
Excess Priority Lien Obligations and (B) if applicable, all Obligations (and
related obligations, including unpaid interest, fees and expenses) provided by
any of the Priority Lien Secured Parties in connection with a DIP Financing then
outstanding (including principal, unpaid interest, fees, reasonable attorneys’
fees and legal expenses, but excluding contingent indemnification obligations
for which no claim or demand for payment has been made at or prior to such
time); provided that in the case of Hedging Obligations that constitute Priority
Lien Obligations the Second Lien Purchasers shall cause the applicable
agreements governing such Hedging Obligations to be assigned and novated or, if
such agreements have been terminated, such purchase price shall include an
amount equal to the sum of any unpaid amounts then due in respect of such
Hedging Obligations, calculated using the market quotation method and after
giving effect to any netting arrangements;

(ii) a cash collateral deposit in such amount as the Priority Lien Agent
determines is reasonably necessary to secure the payment of any outstanding
letters of credit constituting Priority Lien Obligations that may become due and
payable after such sale (but not in any event in an amount greater than one
hundred five percent (105%) of the amount then reasonably estimated by the
Priority Lien Agent to be the aggregate outstanding amount of such letters of
credit at such time), which cash collateral shall be (A) held by the Priority
Lien Agent as security solely to reimburse the issuers of such letters of credit
that become due and payable after such sale and any fees and expenses incurred
in connection with such letters of credit and (B) returned to the Second Lien
Trustee (except as may otherwise be required by applicable law or any order of
any court or other Governmental Authority) promptly after the expiration or
termination from time to time of all payment contingencies affecting such
letters of credit; and

(iii) any agreements, documents or instruments which the Priority Lien Agent may
reasonably request pursuant to which the Second Lien Trustee and the Second Lien
Purchasers in such sale expressly assume and adopt all of the obligations of the
Priority Lien Agent and the Priority Lien Secured Parties under the Priority
Lien Documents and in connection with the Obligations (including principal,
unpaid interest, reasonable attorneys’ fees and legal expenses, but excluding
contingent

 

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indemnification obligations for which no claim or demand for payment has been
made at or prior to such time) provided by any of the Priority Lien Secured
Parties in connection with a DIP Financing on and after the date of the purchase
and sale and the Second Lien Trustee (or any other representative appointed by
the holders of a majority in aggregate principal amount of the Second Lien Notes
then outstanding) becomes a successor agent thereunder.

(c) Such purchase of the Priority Lien Obligations, including the assumption of
all unfunded commitments, and, if applicable, the Obligations provided by any of
the Priority Lien Secured Parties in connection with a DIP Financing shall be
made on a pro rata basis among the Second Lien Purchasers giving notice to the
Priority Lien Agent of their interest to exercise the purchase option hereunder
according to each such Second Lien Purchaser’s portion of the Second Lien Debt
outstanding on the date of purchase or such portion as such Second Lien
Purchasers may otherwise agree among themselves. Such purchase price and cash
collateral shall be remitted by wire transfer in federal funds to such bank
account of the Priority Lien Agent as the Priority Lien Agent may designate in
writing to the Second Lien Collateral Agent for such purpose. Interest shall be
calculated to but excluding the Business Day on which such sale occurs if the
amounts so paid by the Second Lien Purchasers to the bank account designated by
the Priority Lien Agent are received in such bank account prior to 12:00 noon,
New York City time, and interest shall be calculated to and including such
Business Day if the amounts so paid by the Second Lien Purchasers to the bank
account designated by the Priority Lien Agent are received in such bank account
later than 12:00 noon, New York City time.

(d) Such sale shall be expressly made without representation or warranty of any
kind by the Priority Lien Secured Parties as to the Priority Lien Obligations,
the Collateral or otherwise and without recourse to any Priority Lien Secured
Party, except that the applicable Priority Lien Secured Party shall represent
and warrant severally as to the Priority Lien Obligations, including the
assumption of all unfunded commitments, and, if applicable, the Obligations
provided by any of the Priority Lien Secured Parties in connection with a DIP
Financing then owing to it: (i) that such applicable Priority Lien Secured Party
owns such Priority Lien Obligations; and (ii) that such applicable Priority Lien
Secured Party has the necessary corporate or other governing authority to assign
such interests.

(e) After such sale becomes effective, the outstanding letters of credit will
remain enforceable against the issuers thereof and will remain secured by the
Priority Liens upon the Collateral in accordance with the applicable provisions
of the Priority Lien Documents as in effect at the time of such sale, and the
issuers of letters of credit will remain entitled to the benefit of the Priority
Liens upon the Collateral and sharing rights in the proceeds thereof in
accordance with the provisions of the Priority Lien Documents as in effect at
the time of such sale, as fully as if the sale of the Priority Lien Debt had not
been made, but only the Person or successor agent to whom the Priority Liens are
transferred in such sale will have the right to foreclose upon or otherwise
enforce the Priority Liens and only the Second Lien Purchasers in the sale will
have the right to direct such Person or successor as to matters relating to the
foreclosure or other enforcement of the Priority Liens.

ARTICLE IV

OTHER AGREEMENTS

Section 4.01 Release of Liens; Automatic Release of Second Liens and Third
Liens. (a) Prior to the Discharge of Priority Lien Obligations, each of the
Second Lien Collateral Agent, for itself and on behalf of each other Second Lien
Secured Party, and the Third Lien Collateral Agent, for itself and on behalf of
each other Third Lien Secured Party, agrees that, in the event the Priority Lien
Agent or the requisite Priority Lien Secured Parties under the Priority Lien
Documents release the Priority Lien on any Collateral, each of the Second Lien
and Third Lien on such Collateral shall terminate and be released automatically
and without further action if (i) such release is permitted under the Second
Lien Documents

 

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and the Third Lien Documents, as applicable, (ii) such release is effected in
connection with the Priority Lien Agent’s foreclosure upon, or other exercise of
rights or remedies with respect to, such Collateral, or (iii) such release is
effected in connection with a sale or other Disposition of any Collateral (or
any portion thereof) under Section 363 of the Bankruptcy Code or any other
provision of the Bankruptcy Code if the requisite Priority Lien Secured Parties
under the Priority Lien Documents shall have consented to such sale or
Disposition of such Collateral; provided that, in the case of each of clauses
(i), (ii) and (iii), the Second Liens and Third Liens on such Collateral shall
attach to (and shall remain subject and subordinate to all Priority Liens
securing Priority Lien Obligations, subject to Section 6.01 and, in the case of
the Third Liens, shall remain subject and subordinate to (I) all Priority Liens
securing Priority Lien Obligations, subject to Section 6.01 and (II) all Second
Liens securing Second Lien Obligations) any proceeds of a sale, transfer or
other Disposition of Collateral not paid to the Priority Lien Secured Parties or
that remain after the Discharge of Priority Lien Obligations.

(b) Following the Discharge of Priority Lien Obligations but prior to the
Discharge of Second Lien Obligations, the Third Lien Collateral Agent, for
itself and on behalf of each other Third Lien Secured Party, agrees that, in the
event the Second Lien Collateral Agent or the requisite Second Lien Secured
Parties under the Second Lien Documents release the Second Lien on any
Collateral, the Third Lien on such Collateral shall terminate and be released
automatically and without further action if (i) such release is permitted under
the Third Lien Documents, (ii) such release is effected in connection with the
Second Lien Collateral Agent’s foreclosure upon, or other exercise of rights or
remedies with respect to, such Collateral, or (iii) such release is effected in
connection with a sale or other Disposition of any Collateral (or any portion
thereof) under Section 363 of the Bankruptcy Code or any other provision of the
Bankruptcy Code if the Second Lien Collateral Agent or the requisite Second Lien
Secured Parties under the Second Lien Documents shall have consented to such
sale or Disposition of such Collateral; provided that, in the case of each of
clauses (i), (ii) and (iii), the Third Liens on such Collateral shall attach to
(and shall remain subject and subordinate to all Second Liens securing Second
Lien Obligations) any proceeds of a sale, transfer or other Disposition of
Collateral not paid to the Second Lien Secured Parties or that remain after the
Discharge of Second Lien Obligations.

(c) Each of the Second Lien Collateral Agent and the Third Lien Collateral Agent
agrees to execute and deliver (at the sole cost and expense of the Grantors) all
such releases and other instruments as shall reasonably be requested by the
Priority Lien Agent or the Second Lien Collateral Agent, as applicable, to
evidence and confirm any release of Collateral provided for in this
Section 4.01.

Section 4.02 Certain Agreements With Respect to Insolvency or Liquidation
Proceedings. (a) The parties hereto acknowledge that this Agreement is a
“subordination agreement” under Section 510(a) of the Bankruptcy Code and shall
continue in full force and effect, notwithstanding the commencement of any
Insolvency or Liquidation Proceeding by or against the Parent, the Company, any
other Grantor or any of their subsidiaries. All references in this Agreement to
the Parent, the Company or any subsidiary of the Company or any other Grantor
will include such Person or Persons as a debtor-in-possession and any receiver
or trustee for such Person or Persons in an Insolvency or Liquidation
Proceeding. For the purposes of this Section 4.02, unless otherwise provided
herein, clauses (b) through and including (o) shall be in full force and effect
prior to the Discharge of Priority Lien Obligations and clauses (p) through and
including (cc) shall be in full force and effect following the Discharge of
Priority Lien Obligations but prior to the Discharge of Second Lien Obligations.

(b) If the Parent, the Company, any other Grantor or any of their subsidiaries
shall become subject to any Insolvency or Liquidation Proceeding and shall, as
debtor(s)-in-possession, or if any receiver or trustee for such Person or
Persons shall, move for approval of financing (“DIP Financing”) to be provided
by one or more lenders (the “DIP Lenders”) under Section 364 of the Bankruptcy
Code or the use of cash collateral under Section 363 of the Bankruptcy Code,
(i) the Second Lien Collateral Agent, for

 

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itself and on behalf of each Second Lien Secured Party, agrees that neither it
nor any other Second Lien Secured Party and (ii) the Third Lien Collateral
Agent, for itself and on behalf of each Third Lien Secured Party, agrees that
neither it nor any other Third Lien Secured Party, will raise any objection,
contest or oppose, and each Second Lien Secured Party and Third Lien Secured
Party will waive any claim such Person may now or hereafter have, to any such
financing or to the Liens on the Collateral securing the same (“DIP Financing
Liens”), or to any use, sale or lease of cash collateral that constitutes
Collateral or to any grant of administrative expense priority under Section 364
of the Bankruptcy Code, unless (A) the Priority Lien Agent or the Priority Lien
Secured Parties oppose or object to such DIP Financing or such DIP Financing
Liens or such use of cash collateral, (B) the maximum principal amount of
indebtedness permitted under such DIP Financing exceeds the sum of (I) the
amount of Priority Lien Obligations refinanced with the proceeds thereof (not
including the amount of any Excess Priority Lien Obligations) and (II) the
greater of (x) $100.0 million and (y) 15% of the sum of (i) the Borrowing Base
as in effect at such time and (ii) the amount of any Borrowing Base deficiency
existing at such time, or (C) the terms of such DIP Financing provide for the
sale of a substantial part of the Collateral or require the confirmation of a
plan of reorganization containing specific terms or provisions (other than
repayment in cash of such DIP Financing on the effective date thereof). To the
extent such DIP Financing Liens are senior to, or rank pari passu with, the
Priority Liens, (1) the Second Lien Collateral Agent will, for itself and on
behalf of the other Second Lien Secured Parties, subordinate the Second Liens on
the Collateral to the Priority Liens, to such DIP Financing Liens and to any
carve-out in connection with such Insolvency or Liquidation Proceeding, so long
as the Second Lien Collateral Agent, on behalf of the Second Lien Secured
Parties, retains Liens on all the Collateral, including proceeds thereof arising
after the commencement of any Insolvency or Liquidation Proceeding, with the
same priority relative to the Priority Liens and the Third Liens as existed
prior to the commencement of the case under the Bankruptcy Code and (2) the
Third Lien Collateral Agent will, for itself and on behalf of the other Third
Lien Secured Parties, subordinate the Third Liens on the Collateral to the
Priority Liens, the Second Liens, to such DIP Financing Liens and to any
carve-out in connection with such Insolvency or Liquidation Proceeding, so long
as the Third Lien Collateral Agent, on behalf of the Third Lien Secured Parties,
retains Liens on all the Collateral, including proceeds thereof arising after
the commencement of any Insolvency or Liquidation Proceeding, with the same
priority relative to the Priority Liens and the Second Liens as existed prior to
the commencement of the case under the Bankruptcy Code.

(c) Prior to the Discharge of Priority Lien Obligations, without the consent of
the Priority Lien Agent, in its sole discretion, each of the Second Lien
Collateral Agent, for itself and on behalf of each Second Lien Secured Party and
the Third Lien Collateral Agent, for itself and on behalf of each Third Lien
Secured Party, agrees not to propose, support or enter into any DIP Financing
(unless the Priority Lien Secured Parties have declined or otherwise failed to
enter into a DIP Financing).

(d) Each of the Second Lien Collateral Agent, for itself and on behalf of each
Second Lien Secured Party and the Third Lien Collateral Agent, for itself and on
behalf of each Third Lien Secured Party, agrees that it will not object to,
oppose or contest (or join with or support any third party objecting to,
opposing or contesting) a sale or other Disposition, a motion to sell or Dispose
or the bidding procedure for such sale or Disposition of any Collateral (or any
portion thereof) under Section 363 of the Bankruptcy Code or any other provision
of the Bankruptcy Code if the requisite Priority Lien Secured Parties under the
Priority Lien Documents shall have consented to such sale or Disposition, such
motion to sell or Dispose or such bidding procedure for such sale or Disposition
of such Collateral and all Priority Liens, Second Liens and Third Liens will
attach to the proceeds of the sale in the same respective priorities as set
forth in this Agreement.

(e) Each of the Second Lien Collateral Agent, for itself and on behalf of each
other Second Lien Secured Party and the Third Lien Collateral Agent, for itself
and on behalf of each other Third Lien Secured Party, waives any claim that may
be had against the Priority Lien Agent or any other Priority

 

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Lien Secured Party arising out of any DIP Financing Liens (that is granted in a
manner that is consistent with this Agreement), request for adequate protection
or administrative expense priority under Section 364 of the Bankruptcy Code.

(f) The Second Lien Collateral Agent, for itself and on behalf of each other
Second Lien Secured Party, agrees that neither the Second Lien Collateral Agent
nor any other Second Lien Secured Party and the Third Lien Collateral Agent, for
itself and on behalf of each other Third Lien Secured Party, agrees that neither
the Third Lien Collateral Agent nor any other Third Lien Secured Party, will
file or prosecute in any Insolvency or Liquidation Proceeding any motion for
adequate protection (or any comparable request for relief) based upon their
interest in the Collateral, nor object to, oppose or contest (or join with or
support any third party objecting to, opposing or contesting) (i) any request by
the Priority Lien Agent or any other Priority Lien Secured Party for adequate
protection or (ii) any objection by the Priority Lien Agent or any other
Priority Lien Secured Party to any motion, relief, action or proceeding based on
the Priority Lien Agent or Priority Lien Secured Parties claiming a lack of
adequate protection, except that

(A) the Second Lien Secured Parties may:

(I) freely seek and obtain relief granting adequate protection in the form of a
replacement lien co-extensive in all respects with, but subordinated (as set
forth in Section 2.01) to, and with the same relative priority to the Priority
Liens and the Third Liens as existed prior to the commencement of the Insolvency
or Liquidation Proceeding, all Liens granted in the Insolvency or Liquidation
Proceeding to, or for the benefit of, the Priority Lien Secured Parties; and

(II) freely seek and obtain any relief upon a motion for adequate protection (or
any comparable relief), without any condition or restriction whatsoever, at any
time after the Discharge of Priority Lien Obligations; and

(B) the Third Lien Secured Parties may:

(I) freely seek and obtain relief granting adequate protection in the form of a
replacement lien co-extensive in all respects with, but subordinated (as set
forth in Section 2.01) to, and with the same relative priority to the Priority
Liens and the Second Liens as existed prior to the commencement of the
Insolvency or Liquidation Proceeding, all Liens granted in the Insolvency or
Liquidation Proceeding to, or for the benefit of, the Priority Lien Secured
Parties and the Second Lien Secured Parties; and

(II) freely seek and obtain any relief upon a motion for adequate protection (or
any comparable relief), without any condition or restriction whatsoever, at any
time after the Discharge of Priority Lien Obligations and the Discharge of
Second Lien Obligations.

(g) Each of the Second Lien Collateral Agent, for itself and on behalf of each
of the other of the Second Lien Secured Parties and the Third Lien Collateral
Agent, for itself and on behalf of each of the other Third Lien Secured Parties,
waives any claim it or any such other Second Lien Secured Party or Third Lien
Secured Party, as applicable, may now or hereafter have against the Priority
Lien Agent or any other Priority Lien Secured Party (or their representatives)
arising out of any election by the Priority Lien Agent or any Priority Lien
Secured Parties, in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b) of the Bankruptcy Code.

 

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(h) The Second Lien Collateral Agent, for itself and on behalf of each other
Second Lien Secured Party, agrees that in any Insolvency or Liquidation
Proceeding, neither the Second Lien Collateral Agent nor any other Second Lien
Secured Party and the Third Lien Collateral Agent, for itself and on behalf of
each other Third Lien Secured Party, agrees that in any Insolvency or
Liquidation Proceeding, neither the Third Lien Collateral Agent nor any other
Third Lien Secured Party, shall support or vote to accept any plan of
reorganization or disclosure statement of the Company, any other Grantor or any
of their subsidiaries unless (i) such plan is accepted by the Class of Priority
Lien Secured Parties in accordance with Section 1126(c) of the Bankruptcy Code
or otherwise provides for the payment in full in cash of all Priority Lien
Obligations (including all post-petition interest approved by the bankruptcy
court, fees and expenses and cash collateralization of all letters of credit) on
the effective date of such plan of reorganization, or (ii) such plan provides on
account of the Priority Lien Secured Parties for the retention by the Priority
Lien Agent, for the benefit of the Priority Lien Secured Parties, of the Liens
on the Collateral securing the Priority Lien Obligations, and on all proceeds
thereof whenever received, and such plan also provides that any Liens retained
by, or granted to, the Second Lien Collateral Agent and the Third Lien
Collateral Agent are only on property securing the Priority Lien Obligations and
shall have the same relative priority with respect to the Collateral or other
property, respectively, as provided in this Agreement with respect to the
Collateral. Except as provided herein, each of the Second Lien Secured Parties
and the Third Lien Secured Parties shall remain entitled to vote their claims in
any such Insolvency or Liquidation Proceeding.

(i) The Second Lien Collateral Agent, for itself and on behalf of each other
Second Lien Secured Party, agrees that, subject to the provisions of
Section 3.02, neither the Second Lien Collateral Agent nor any other Second Lien
Secured Party and the Third Lien Collateral Agent, for itself and on behalf of
each other Third Lien Secured Party, agrees that neither the Third Lien
Collateral Agent nor any other Third Lien Secured Party, shall seek relief,
pursuant to Section 362(d) of the Bankruptcy Code or otherwise, from the
automatic stay of Section 362(a) of the Bankruptcy Code or from any other stay
or other prohibition in any Insolvency or Liquidation Proceeding in respect of
the Collateral without the prior written consent of the Priority Lien Agent.

(j) The Second Lien Collateral Agent, for itself and on behalf of each other
Second Lien Secured Party, agrees that neither the Second Lien Collateral Agent
nor any other Second Lien Secured Party and the Third Lien Collateral Agent, for
itself and on behalf of each other Third Lien Secured Party, agrees that neither
the Third Lien Collateral Agent nor any other Third Lien Secured Party, shall
oppose or seek to challenge any claim by the Priority Lien Agent or any other
Priority Lien Secured Party for allowance or payment in any Insolvency or
Liquidation Proceeding of Priority Lien Obligations consisting of post-petition
interest, fees or expenses or cash collateralization of all letters of credit to
the extent of the value of the Priority Liens (it being understood that such
value will be determined without regard to the existence of the Second Liens or
the Third Liens on the Collateral) subject to the Priority Lien Cap. Neither
Priority Lien Agent nor any other Priority Lien Secured Party shall oppose or
seek to challenge any claim by the Second Lien Collateral Agent, any other
Second Lien Secured Party, the Third Lien Collateral Agent or any other Third
Lien Secured Party for allowance or payment in any Insolvency or Liquidation
Proceeding of Second Lien Obligations or Third Lien Obligations, as applicable,
consisting of post-petition interest, fees or expenses to the extent of the
value of the Second Liens or the Third Liens, as applicable, on the Collateral;
provided that if the Priority Lien Agent or any other Priority Lien Secured
Party shall have made any such claim, such claim (i) shall have been approved or
(ii) will be approved contemporaneously with the approval of any such claim by
the Second Lien Collateral Agent or any Second Lien Secured Party or the Third
Lien Collateral Agent or any Third Lien Secured Party, as applicable.

(k) Without the express written consent of the Priority Lien Agent, none of the
Second Lien Collateral Agent, any other Second Lien Secured Party, the Third
Lien Collateral Agent or any other Third Lien Secured Party shall (or shall join
with or support any third party in opposing, objecting to or

 

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contesting, as the case may be), in any Insolvency or Liquidation Proceeding
involving any Grantor, (i) oppose, object to or contest the determination of the
extent of any Liens held by any of Priority Lien Secured Party or the value of
any claims of any such holder under Section 506(a) of the Bankruptcy Code or
(ii) oppose, object to or contest the payment to the Priority Lien Secured Party
of interest, fees or expenses under Section 506(b) of the Bankruptcy Code.

(l) Notwithstanding anything to the contrary contained herein, if in any
Insolvency or Liquidation Proceeding a determination is made that any Lien
encumbering any Collateral is not enforceable for any reason, then each of the
Second Lien Collateral Agent for itself and on behalf of each other Second Lien
Secured Party and the Third Lien Collateral Agent, for itself and on behalf of
each other Third Lien Secured Party, agrees that, any distribution or recovery
they may receive in respect of any Collateral shall be segregated and held in
trust and forthwith paid over to the Priority Lien Agent for the benefit of the
Priority Lien Secured Parties in the same form as received without recourse,
representation or warranty (other than a representation of the Second Lien
Collateral Agent or the Third Lien Collateral Agent, as applicable, that it has
not otherwise sold, assigned, transferred or pledged any right, title or
interest in and to such distribution or recovery) but with any necessary
endorsements or as a court of competent jurisdiction may otherwise direct. Each
of the Second Lien Collateral Agent, for itself and on behalf of each other
Second Lien Secured Party and the Third Lien Collateral Agent, for itself and on
behalf of each other Third Lien Secured Party, hereby appoints the Priority Lien
Agent, and any officer or agent of the Priority Lien Agent, with full power of
substitution, the attorney-in-fact of each Second Lien Secured Party and Third
Lien Secured Party for the limited purpose of carrying out the provisions of
this Section 4.02(l) and taking any action and executing any instrument that the
Priority Lien Agent may deem necessary or advisable to accomplish the purposes
of this Section 4.02(l), which appointment is irrevocable and coupled with an
interest.

(m) Each of the Second Lien Collateral Agent, for itself and on behalf of each
other Second Lien Secured Party and the Third Lien Collateral Agent, for itself
and on behalf of each other Third Lien Secured Party, hereby agrees that the
Priority Lien Agent shall have the exclusive right to credit bid the Priority
Lien Obligations and further that none of the Second Lien Collateral Agent, any
other Second Lien Secured Party, the Third Lien Collateral Agent or any other
Third Lien Secured Party shall (or shall join with or support any third party in
opposing, objecting to or contesting, as the case may be) oppose, object to or
contest such credit bid by the Priority Lien Agent.

(n) Without the consent of the Priority Lien Agent in its sole discretion, each
of the Second Lien Collateral Agent, for itself and on behalf of each other
Second Lien Secured Party and the Third Lien Collateral Agent, for itself and on
behalf of each other Third Lien Secured Party, agrees it will not file or join
an involuntary bankruptcy petition or claim or seek the appointment of an
examiner or a trustee for the Parent, the Company, any other Grantor or any of
their subsidiaries.

(o) Each of the Second Lien Collateral Agent, for itself and on behalf of each
other Second Lien Secured Party and the Third Lien Collateral Agent, for itself
and on behalf of each other Third Lien Secured Party, waives any right to assert
or enforce any claim under Section 506(c) or 552 of the Bankruptcy Code as
against any Priority Lien Secured Party or any of the Collateral, except as
expressly permitted by this Agreement.

(p) If the Parent, the Company, any other Grantor or any of their subsidiaries
shall become subject to any Insolvency or Liquidation Proceeding and shall, as
debtor(s)-in-possession, move for approval of DIP Financing to be provided by
one or more DIP Lenders under Section 364 of the Bankruptcy Code or the use of
cash collateral under Section 363 of the Bankruptcy Code, the Third Lien
Collateral Agent, for itself and on behalf of each Third Lien Secured Party,
agrees that neither it nor any other Third Lien Secured Party will raise any
objection, contest or oppose, and each Third Lien Secured

 

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Party will waive any claim such Person may now or hereafter have, to any such
financing or to the DIP Financing Liens on the Collateral securing the same, or
to any use, sale or lease of cash collateral that constitutes Collateral or to
any grant of administrative expense priority under Section 364 of the Bankruptcy
Code, unless (i) the Second Lien Collateral Agent or the Second Lien Secured
Parties oppose or object to such DIP Financing or such DIP Financing Liens or
such use of cash collateral or (ii) the maximum principal amount of indebtedness
permitted under such DIP Financing exceeds the sum of (I) the amount of Second
Lien Obligations refinanced with the proceeds thereof (not including the amount
of any Excess Second Lien Obligations) and (II) the greater of (x)
$100.0 million and (y) 15% of the principal amount of Second Lien Obligations
outstanding at such time. To the extent such DIP Financing Liens are senior to,
or rank pari passu with, the Second Liens, the Third Lien Collateral Agent will,
for itself and on behalf of the other Third Lien Secured Parties, subordinate
the Third Liens on the Collateral to the Second Liens, to such DIP Financing
Liens and to any carve-out in connection with such Insolvency or Liquidation
Proceeding, so long as the Third Lien Collateral Agent, on behalf of the Third
Lien Secured Parties, retains Liens on all the Collateral, including proceeds
thereof arising after the commencement of any Insolvency or Liquidation
Proceeding, with the same priority relative to the Priority Liens and the Second
Liens as existed prior to the commencement of the case under the Bankruptcy
Code.

(q) [reserved].

(r) The Third Lien Collateral Agent, for itself and on behalf of each Third Lien
Secured Party, agrees that it will not object to, oppose or contest (or join
with or support any third party objecting to, opposing or contesting) a sale or
other Disposition, a motion to sell or Dispose or the bidding procedure for such
sale or Disposition of any Collateral (or any portion thereof) under Section 363
of the Bankruptcy Code or any other provision of the Bankruptcy Code if the
Second Lien Collateral Agent or the requisite Second Lien Secured Parties under
the Second Lien Documents shall have consented to such sale or Disposition, such
motion to sell or Dispose or such bidding procedure for such sale or Disposition
of such Collateral and all Second Liens and Third Liens will attach to the
proceeds of the sale in the same respective priorities as set forth in this
Agreement.

(s) The Third Lien Collateral Agent, for itself and on behalf of each other
Third Lien Secured Party, waives any claim that may be had against the Second
Lien Collateral Agent or any other Second Lien Secured Party arising out of any
DIP Financing Liens (granted in a manner that is consistent with this Agreement)
or administrative expense priority under Section 364 of the Bankruptcy Code.

(t) The Third Lien Collateral Agent, for itself and on behalf of each other
Third Lien Secured Party, agrees that neither the Third Lien Collateral Agent
nor any other Third Lien Secured Party will file or prosecute in any Insolvency
or Liquidation Proceeding any motion for adequate protection (or any comparable
request for relief) based upon their interest in the Collateral, nor object to,
oppose or contest (or join with or support any third party objecting to,
opposing or contesting) (i) any request by the Second Lien Collateral Agent or
any other Second Lien Secured Party for adequate protection or (ii) any
objection by the Second Lien Collateral Agent or any other Second Lien Secured
Party to any motion, relief, action or proceeding based on the Second Lien
Collateral Agent or Second Lien Secured Parties claiming a lack of adequate
protection, except that the Third Lien Secured Parties may:

(A) freely seek and obtain relief granting adequate protection in the form of a
replacement lien co-extensive in all respects with, but subordinated (as set
forth in Section 2.01) to, with the same relative priority to the Second Liens
as existed prior to the commencement of the Insolvency or Liquidation
Proceeding, all Liens granted in the Insolvency or Liquidation Proceeding to, or
for the benefit of, the Second Lien Secured Parties; and

 

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(B) freely seek and obtain any relief upon a motion for adequate protection (or
any comparable relief), without any condition or restriction whatsoever, at any
time after the Discharge of Second Lien Obligations.

(u) The Third Lien Collateral Agent, for itself and on behalf of each of the
other of the Third Lien Secured Parties, waives any claim the Third Lien
Collateral Agent or any such other Third Lien Secured Party may now or hereafter
have against the Second Lien Collateral Agent or any other Second Lien Secured
Party (or their representatives) arising out of any election by the Second Lien
Collateral Agent or any Second Lien Secured Parties, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b) of
the Bankruptcy Code.

(v) The Third Lien Collateral Agent, for itself and on behalf of each other
Third Lien Secured Party, agrees that in any Insolvency or Liquidation
Proceeding, neither the Third Lien Collateral Agent nor any other Third Lien
Secured Party shall support or vote for any plan of reorganization or disclosure
statement of the Company, any other Grantor or their subsidiaries unless
(i) such plan is accepted by the Class of Second Lien Secured Parties in
accordance with Section 1126(c) of the Bankruptcy Code or otherwise provides for
the payment in full in cash of all Second Lien Obligations (including all
post-petition interest, fees and expenses) on the effective date of such plan of
reorganization, or (ii) such plan provides on account of the Second Lien Secured
Parties for the retention by the Second Lien Collateral Agent, for the benefit
of the Second Lien Secured Parties, of the Liens on the Collateral securing the
Second Lien Obligations, and on all proceeds thereof whenever received, and such
plan also provides that any Liens retained by, or granted to, the Third Lien
Collateral Agent are only on property securing the Second Lien Obligations and
shall have the same relative priority with respect to the Collateral or other
property, respectively, as provided in this Agreement with respect to the
Collateral. Except as provided herein, the Third Lien Secured Parties shall
remain entitled to vote their claims in any such Insolvency or Liquidation
Proceeding.

(w) The Third Lien Collateral Agent, for itself and on behalf of each other
Third Lien Secured Party, hereby agrees that until the Discharge of Second Lien
Obligations has occurred, neither Third Lien Collateral Agent nor any Third Lien
Secured Party shall seek relief, pursuant to Section 362(d) of the Bankruptcy
Code or otherwise, from the automatic stay of Section 362(a) of the Bankruptcy
Code or from any other stay or other prohibition in any Insolvency or
Liquidation Proceeding in respect of the Collateral, without the prior written
consent of the Second Lien Collateral Agent.

(x) The Third Lien Collateral Agent, for itself and on behalf of each other
Third Lien Secured Party, agrees that neither Third Lien Collateral Agent nor
any other Third Lien Secured Party shall oppose or seek to challenge any claim
by the Second Lien Collateral Agent or any other Second Lien Secured Party for
allowance or payment in any Insolvency or Liquidation Proceeding of Second Lien
Obligations consisting of post-petition interest, fees or expenses to the extent
of the value of the Second Liens (it being understood that such value will be
determined without regard to the existence of the Third Liens on the
Collateral). Neither Second Lien Collateral Agent nor any other Second Lien
Secured Party shall oppose or seek to challenge any claim by the Third Lien
Collateral Agent or any other Third Lien Secured Party for allowance or payment
in any Insolvency or Liquidation Proceeding of Third Lien Obligations consisting
of post-petition interest, fees or expenses to the extent of the value of the
Third Liens on the Collateral; provided that if the Second Lien Collateral Agent
or any other Second Lien Secured Party shall have made any such claim, such
claim (i) shall have been approved or (ii) will be approved contemporaneously
with the approval of any such claim by the Third Lien Collateral Agent or any
Third Lien Secured Party.

(y) Without the express written consent of the Second Lien Collateral Agent,
neither Third Lien Collateral Agent nor any other Third Lien Secured Party shall
(or shall join with or support any

 

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third party in opposing, objecting to or contesting, as the case may be), in any
Insolvency or Liquidation Proceeding involving any Grantor, (i) oppose, object
to or contest the determination of the extent of any Liens held by any of Second
Lien Secured Party or the value of any claims of any such holder under
Section 506(a) of the Bankruptcy Code or (ii) oppose, object to or contest the
payment to the Second Lien Secured Party of interest, fees or expenses under
Section 506(b) of the Bankruptcy Code.

(z) Notwithstanding anything to the contrary contained herein, if in any
Insolvency or Liquidation Proceeding a determination is made that any Lien
encumbering any Collateral is not enforceable for any reason, then the Third
Lien Collateral Agent for itself and on behalf of each other Third Lien Secured
Party, agrees that, any distribution or recovery they may receive in respect of
any Collateral shall be segregated and held in trust and forthwith paid over to
the Second Lien Collateral Agent for the benefit of the Second Lien Secured
Parties in the same form as received without recourse, representation or
warranty (other than a representation of the Third Lien Collateral Agent that it
has not otherwise sold, assigned, transferred or pledged any right, title or
interest in and to such distribution or recovery) but with any necessary
endorsements or as a court of competent jurisdiction may otherwise direct. The
Third Lien Collateral Agent, for itself and on behalf of each other Third Lien
Secured Party, hereby appoints the Second Lien Collateral Agent, and any officer
or agent of the Second Lien Collateral Agent, with full power of substitution,
the attorney-in-fact of each Third Lien Secured Party for the limited purpose of
carrying out the provisions of this Section 4.02(z) and taking any action and
executing any instrument that the Second Lien Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Section 4.02(z), which
appointment is irrevocable and coupled with an interest.

(aa) The Third Lien Collateral Agent, for itself and on behalf of each other
Third Lien Secured Party, hereby agrees that the Second Lien Collateral Agent
shall have the exclusive right to credit bid the Second Lien Obligations and
further that neither the Third Lien Collateral Agent nor any other Third Lien
Secured Party shall (or shall join with or support any third party in opposing,
objecting to or contesting, as the case may be) oppose, object to or contest
such credit bid by the Second Lien Collateral Agent.

(bb) Without the consent of the Second Lien Collateral Agent in its sole
discretion, the Third Lien Trustee, for itself and on behalf of each other Third
Lien Secured Party, agrees it will not file an involuntary bankruptcy claim or
seek the appointment of an examiner or a trustee for the Parent, the Company or
any of its subsidiaries.

(cc) The Third Lien Collateral Agent, for itself and on behalf of each other
Third Lien Secured Party, waives any right to assert or enforce any claim under
Section 506(c) or 552 of the Bankruptcy Code as against any Second Lien Secured
Party or any of the Collateral, except as expressly permitted by this Agreement.

Section 4.03 Reinstatement. If any Priority Lien Secured Party is required in
any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise
pay to the estate of any Grantor any amount (a “Recovery”) for any reason
whatsoever, then the Priority Lien Obligations shall be reinstated to the extent
of such Recovery and the Priority Lien Secured Parties shall be entitled to a
reinstatement of Priority Lien Obligations with respect to all such recovered
amounts. Each of the Second Lien Collateral Agent, for itself and on behalf of
each other Second Lien Secured Party, and the Third Lien Collateral Agent, for
itself and on behalf of each other Third Lien Secured Party, agrees that if, at
any time, a Second Lien Secured Party or a Third Lien Secured Party, as
applicable, receives notice of any Recovery, the Second Lien Collateral Agent,
any other Second Lien Secured Party, the Third Lien Collateral Agent or any
other Third Lien Secured Party, as applicable, shall promptly pay over to the
Priority Lien Agent any payment received by it and then in its possession or
under its control in respect of any Collateral subject to any Priority Lien
securing such Priority Lien Obligations and shall promptly turn any Collateral
subject to any such Priority Lien then held by it over to the Priority Lien
Agent, and the provisions set forth in this

 

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Agreement shall be reinstated as if such payment had not been made. If this
Agreement shall have been terminated prior to any such Recovery, this Agreement
shall be reinstated in full force and effect, and such prior termination shall
not diminish, release, discharge, impair or otherwise affect the obligations of
the parties hereto from such date of reinstatement. Any amounts received by the
Second Lien Collateral Agent, any other Second Lien Secured Party, the Third
Lien Collateral Agent or any other Third Lien Secured Party and then in its
possession or under its control on account of the Second Lien Obligations or
Third Lien Obligations, as applicable, after the termination of this Agreement
shall, in the event of a reinstatement of this Agreement pursuant to this
Section 4.03, be held in trust for and paid over to the Priority Lien Agent for
the benefit of the Priority Lien Secured Parties for application to the
reinstated Priority Lien Obligations until the discharge thereof. This
Section 4.03 shall survive termination of this Agreement.

Section 4.04 Refinancings; Additional Priority Lien Debt, Second Lien Debt and
Third Lien Debt. Any of the Priority Lien Obligations, the Second Lien
Obligations or the Third Lien Obligations may be Refinanced with, and the
Company may otherwise incur additional Priority Lien Obligations, Second Lien
Obligations and Third Lien Obligations, as the case may be, in each case without
notice to, or the consent of, any Secured Party, all without affecting the Lien
priorities with respect to such indebtedness provided for herein or the other
provisions hereof; provided, that:

(a) each of the Priority Lien Agent, the Second Lien Collateral Agent and the
Third Lien Collateral Agent shall receive on or prior to any incurrence of such
Priority Lien Obligations, Second Lien Obligations or Third Lien Obligations:

(i) an Officers’ Certificate from the Company (A) stating that the incurrence
thereof is permitted to be incurred with such lien priority under each
applicable Secured Debt Document; and (B) designating such indebtedness as
“Priority Lien Debt”, “Second Lien Debt” or “Third Lien Debt”, as applicable,
for the purposes of the Secured Debt Documents and this Agreement; provided that
no Series of Secured Debt may be designated as more than one of Priority Lien
Debt, Second Lien Debt or Third Lien Debt; and (C) stating that the requirements
of Section 4.06 have been satisfied;

(ii) a Priority Confirmation Joinder, executed and delivered by an authorized
agent, trustee or other representative on behalf of the holders or lenders of
any such additional Priority Lien Obligations, Second Lien Obligations or Third
Lien Obligations, designating such Person as an additional holder of Secured
Obligations hereunder; and

(iii) evidence that the Company has duly authorized, executed (if applicable)
and recorded (or caused to be recorded) in each appropriate governmental office
all relevant filings and recordations deemed necessary by the Company and the
holder of such additional Priority Lien Obligations, Second Lien Obligations or
Third Lien Obligations, as applicable, or its Secured Debt Representative, to
ensure that the additional Priority Lien Obligations, Second Lien Obligations or
Third Lien Obligations are secured by the Collateral in accordance with the
applicable Security Documents (provided that such filings and recordings may be
authorized, executed and recorded following any incurrence on a post-closing
basis if permitted by the applicable Secured Debt Representative).

For the avoidance of doubt, the deliveries set forth in clauses (i) through
(iii) of Section 4.04(a) shall not be required (and shall be deemed satisfied)
in connection with an issuance of Additional Notes constituting Second Lien
Notes or Third Lien Notes.

Section 4.05 Amendments to Second Lien Documents and Third Lien Documents.

(a) Prior to the Discharge of Priority Lien Obligations, without the prior
written consent of the Priority Lien Agent, no Second Lien Document or Third
Lien Document may be amended,

 

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supplemented, restated or otherwise modified and/or refinanced or entered into
to the extent such amendment, supplement, restatement or modification and/or
refinancing, or the terms of any new Second Lien Document or Third Lien
Document, as applicable, would (i) adversely affect the lien priority rights of
the Priority Lien Secured Parties or the rights of the Priority Lien Secured
Parties to receive payments owing pursuant to the Priority Lien Documents,
(ii) except as otherwise provided for in this Agreement, add any Liens on any
additional property granted under the Second Lien Security Documents or the
Third Lien Security Documents, unless such additional property is added as
collateral under the Priority Lien Documents (iii) confer any additional rights
on the Second Lien Collateral Agent, any other Second Lien Secured Party, the
Third Lien Collateral Agent or any other Third Lien Secured Party in a manner
adverse to the Priority Lien Secured Parties, or (iv) contravene the provisions
of this Agreement or the Priority Lien Documents.

(b) Prior to the Discharge of Second Lien Obligations, without the prior written
consent of the Second Lien Collateral Agent, no Third Lien Document may be
amended, supplemented, restated or otherwise modified and/or refinanced or
entered into to the extent such amendment, supplement, restatement or
modification and/or refinancing, or the terms of any new Third Lien Document, as
applicable, would (i) adversely affect the lien priority rights of the Second
Lien Secured Parties or the rights of the Second Lien Secured Parties to receive
payments owing pursuant to the Second Lien Documents, (ii) except as otherwise
provided for in this Agreement, add any Liens on any additional property granted
under the Third Lien Security Documents, unless such additional property is
added as collateral under the Second Lien Documents (iii) confer any additional
rights on the Third Lien Collateral Agent or any other Third Lien Secured Party
in a manner adverse to the Second Lien Secured Parties, or (iv) contravene the
provisions of this Agreement or the Second Lien Documents.

Section 4.06 Legends. Each of

(a) the Priority Lien Agent acknowledges with respect to the Priority Credit
Agreement and the Priority Lien Security Documents,

(b) the Second Lien Collateral Agent acknowledges with respect to (i) the Second
Lien Indenture and the Second Lien Security Documents, and (ii) the Additional
Second Lien Notes, if any, and

(c) the Third Lien Collateral Agent acknowledges with respect to (i) the Third
Lien Indenture and the Third Lien Security Documents, if any, and (ii) the
Additional Third Lien Notes, if any, that

the Second Lien Indenture, the Third Lien Indenture, the Additional Second Lien
Notes (if any), the Additional Third Lien Notes (if any), the Second Lien
Documents (other than control agreements to which both the Priority Lien Agent
and the Second Lien Collateral Agent are parties), the Third Lien Documents
(other than control agreements to which the Priority Lien Agent or the Second
Lien Collateral Agent, as applicable, and the Third Lien Collateral Agent are
parties) and each associated Security Document (other than control agreements to
which both the Priority Lien Agent and the Second Lien Collateral Agent are
parties or, in the case of Third Lien Security Documents, other than control
agreements to which the Priority Lien Agent or the Second Lien Collateral Agent,
as applicable, and the Third Lien Collateral Agent are parties) granting any
security interest in the Collateral will contain the appropriate legend set
forth on Annex I.

Section 4.07 Second Lien Secured Parties and Third Lien Secured Parties Rights
as Unsecured Creditors; Judgment Lien Creditor. Both before and during an
Insolvency or Liquidation Proceeding, any of the Second Lien Secured Parties and
the Third Lien Secured Parties may take any actions and exercise any and all
rights that would be available to a holder of unsecured claims; provided,
however, that the

 

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Second Lien Secured Parties and the Third Lien Secured Parties may not take any
of the actions prohibited by Section 3.05(a) or Section 4.02 or any other
provisions in this Agreement; provided, further, that in the event that any of
the Second Lien Secured Parties or Third Lien Secured Parties becomes a judgment
lien creditor in respect of any Collateral as a result of its enforcement of its
rights as an unsecured creditor with respect to the Second Lien Obligations or
the Third Lien Obligations, as applicable, such judgment lien shall be subject
to the terms of this Agreement for all purposes (including in relation to the
Priority Lien Obligations and the Second Lien Obligations, as applicable) as the
Second Liens and Third Liens, as applicable, are subject to this Agreement.

Section 4.08 Postponement of Subrogation. (a) Each of the Second Lien Collateral
Agent, for itself and on behalf of each other Second Lien Secured Party, and the
Third Lien Collateral Agent, for itself and on behalf of each other Third Lien
Secured Party, hereby agrees that no payment or distribution to any Priority
Lien Secured Party pursuant to the provisions of this Agreement shall entitle
any Second Lien Secured Party or Third Lien Secured Party to exercise any rights
of subrogation in respect thereof until, in the case of the Second Lien Secured
Parties, the Discharge of Priority Lien Obligations, and in the case of the
Third Lien Secured Parties, the Discharge of Priority Lien Obligations and
Discharge of Second Lien Obligations shall each have occurred. Following the
Discharge of Priority Lien Obligations, but subject to the reinstatement as
provided in Section 4.03, each Priority Lien Secured Party will execute such
documents, agreements, and instruments as any Second Lien Secured Party may
reasonably request to evidence the transfer by subrogation to any such Person of
an interest in the Priority Lien Obligations resulting from payments or
distributions to such Priority Lien Secured Party by such Person, so long as all
costs and expenses (including all reasonable legal fees and disbursements)
incurred in connection therewith by such Priority Lien Secured Party are paid by
such Person upon request for payment thereof.

(b) Following the Discharge of Priority Lien Obligations but prior to the
Discharge of Second Lien Obligations, the Third Lien Collateral Agent, for
itself and on behalf of each other Third Lien Secured Party, agrees that no
payment or distribution to any Second Lien Secured Party pursuant to the
provisions of this Agreement shall entitle any Third Lien Secured Party to
exercise any rights of subrogation in respect thereof. Following the Discharge
of Second Lien Obligations, but subject to the reinstatement as provided in
Section 4.03, each Second Lien Secured Party will execute such documents,
agreements, and instruments as any Third Lien Secured Party may reasonably
request to evidence the transfer by subrogation to any such Person of an
interest in the Second Lien Obligations resulting from payments or distributions
to such Second Lien Secured Party by such Person, so long as all costs and
expenses (including all reasonable legal fees and disbursements) incurred in
connection therewith by such Second Lien Secured Party are paid by such Person
upon request for payment thereof.

Section 4.09 Acknowledgment by the Secured Debt Representatives. Each of the
Priority Lien Agent, for itself and on behalf of the other Priority Lien Secured
Parties, the Second Lien Collateral Agent, for itself and on behalf of the other
Second Lien Secured Parties, and the Third Lien Collateral Agent, for itself and
on behalf of the other Third Lien Secured Parties, hereby acknowledges that this
Agreement is a material inducement to enter into a business relationship, that
each has relied on this Agreement to enter into the Priority Credit Agreement,
the Second Lien Indenture and the Third Lien Indenture, as applicable, and all
documentation related thereto, and that each will continue to rely on this
Agreement in their related future dealings.

ARTICLE V

GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS

Section 5.01 General. (a) Prior to the Discharge of Priority Lien Obligations,
the Priority Lien Agent agrees that if it shall at any time hold a Priority Lien
on any Collateral that can be perfected by the possession or control of such
Collateral or of any Account in which such Collateral is held, and if such

 

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Collateral or any such Account is in fact in the possession or under the control
of the Priority Lien Agent, the Priority Lien Agent will serve as gratuitous
bailee for (i) the Second Lien Collateral Agent for the sole purpose of
perfecting the Second Lien of the Second Lien Collateral Agent on such
Collateral and (ii) the Third Lien Collateral Agent for the sole purpose of
perfecting the Third Lien of the Third Lien Collateral Agent on such Collateral.
It is agreed that the obligations of the Priority Lien Agent and the rights of
the Second Lien Collateral Agent, the other Second Lien Secured Parties, the
Third Lien Collateral Agent and the other Third Lien Secured Parties in
connection with any such bailment arrangement will be in all respects subject to
the provisions of Article II. Notwithstanding anything to the contrary herein,
the Priority Lien Agent will be deemed to make no representation as to the
adequacy of the steps taken by it to perfect the Second Lien or Third Lien on
any such Collateral and shall have no responsibility, duty, obligation or
liability to the Second Lien Collateral Agent, any other Second Lien Secured
Party, the Third Lien Collateral Agent or any other Third Lien Secured Party or
any other Person for such perfection or failure to perfect, it being understood
that the sole purpose of this Article is to enable the Second Lien Secured
Parties to obtain a perfected Second Lien and the Third Lien Secured Parties to
obtain a perfected Third Lien in such Collateral to the extent, if any, that
such perfection results from the possession or control of such Collateral or any
such Account by the Priority Lien Agent. The Priority Lien Agent acting pursuant
to this Section 5.01 shall not have by reason of the Priority Lien Security
Documents, the Second Lien Security Documents, the Third Lien Security
Documents, this Agreement or any other document or theory, a fiduciary
relationship in respect of any Priority Lien Secured Party, the Second Lien
Collateral Agent, any Second Lien Secured Party, the Third Lien Collateral Agent
or any Third Lien Secured Party. Subject to Section 4.03, from and after the
Discharge of Priority Lien Obligations, the Priority Lien Agent shall take all
such actions in its power as shall reasonably be requested by the Second Lien
Collateral Agent (at the sole cost and expense of the Grantors) to transfer
possession or control of such Collateral or any such Account (in each case to
the extent the Second Lien Collateral Agent has a Lien on such Collateral or
Account after giving effect to any prior or concurrent releases of Liens) to the
Second Lien Collateral Agent for the benefit of all Second Lien Secured Parties.

(b) Following the Discharge of Priority Lien Obligations but prior to the
Discharge of Second Lien Obligations, the Second Lien Collateral Agent agrees
that if it shall at any time hold a Second Lien on any Collateral that can be
perfected by the possession or control of such Collateral or of any Account in
which such Collateral is held, and if such Collateral or any such Account is in
fact in the possession or under the control of the Second Lien Collateral Agent,
the Second Lien Collateral Agent will serve as gratuitous bailee for the Third
Lien Collateral Agent for the sole purpose of perfecting the Third Lien of the
Third Lien Collateral Agent on such Collateral. It is agreed that the
obligations of the Second Lien Collateral Agent and the rights of the Third Lien
Collateral Agent and the other Third Lien Secured Parties in connection with any
such bailment arrangement will be in all respects subject to the provisions of
Article II. Notwithstanding anything to the contrary herein, the Second Lien
Collateral Agent will be deemed to make no representation as to the adequacy of
the steps taken by it to perfect the Third Lien on any such Collateral and shall
have no responsibility, duty, obligation or liability to the Third Lien
Collateral Agent or any other Third Lien Secured Party or any other Person for
such perfection or failure to perfect, it being understood that the sole purpose
of this Article is to enable the Third Lien Secured Parties to obtain a
perfected Third Lien in such Collateral to the extent, if any, that such
perfection results from the possession or control of such Collateral or any such
Account by the Second Lien Collateral Agent. The Second Lien Collateral Agent
acting pursuant to this Section 5.01 shall not have by reason of the Second Lien
Security Documents, the Third Lien Security Documents, this Agreement or any
other document or theory, a fiduciary relationship in respect of any Second Lien
Secured Party, the Third Lien Collateral Agent or any Third Lien Secured Party.
Subject to Section 4.03, from and after the Discharge of Second Lien
Obligations, the Second Lien Collateral Agent shall take all such actions in its
power as shall reasonably be requested by the Third Lien Collateral Agent (at
the sole cost and expense of the Grantors) to transfer possession or control of
such Collateral or any such Account (in each case to the extent the Third Lien
Collateral Agent has a Lien on such Collateral or Account after giving effect to
any prior or concurrent releases of Liens) to the Third Lien Collateral Agent
for the benefit of all Third Lien Secured Parties.

 

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Section 5.02 Deposit Accounts. (a) Prior to the Discharge of Priority Lien
Obligations, to the extent that any Account is under the control of the Priority
Lien Agent at any time, the Priority Lien Agent will act as gratuitous bailee
for (i) the Second Lien Collateral Agent for the purpose of perfecting the Liens
of the Second Lien Secured Parties and (ii) the Third Lien Collateral Agent for
the purpose of perfecting the Liens of the Third Lien Secured Parties in such
Accounts and the cash and other assets therein as provided in Section 3.01 (but
will have no duty, responsibility or obligation to the Second Lien Secured
Parties or the Third Lien Secured Parties (including, without limitation, any
duty, responsibility or obligation as to the maintenance of such control, the
effect of such arrangement or the establishment of such perfection) except as
set forth in the last sentence of this Section 5.02(a)). Unless the Second Liens
on such Collateral shall have been or concurrently are released, after the
occurrence of Discharge of Priority Lien Obligations, the Priority Lien Agent
shall, at the request of the Second Lien Collateral Agent, cooperate with the
Grantors and the Second Lien Collateral Agent (at the expense of the Grantors)
in permitting control of any other Accounts to be transferred to the Second Lien
Collateral Agent (or for other arrangements with respect to each such Accounts
satisfactory to the Second Lien Collateral Agent to be made).

(b) Following the Discharge of Priority Lien Obligations but prior to the
Discharge of Second Lien Obligations, to the extent that any Account is under
the control of the Second Lien Collateral Agent at any time, the Second Lien
Collateral Agent will act as gratuitous bailee for the Third Lien Collateral
Agent for the purpose of perfecting the Liens of the Third Lien Secured Parties
in such Accounts and the cash and other assets therein as provided in
Section 3.01 (but will have no duty, responsibility or obligation to the Third
Lien Secured Parties (including, without limitation, any duty, responsibility or
obligation as to the maintenance of such control, the effect of such arrangement
or the establishment of such perfection) except as set forth in the last
sentence of this Section 5.02(b)). Unless the Third Liens on such Collateral
shall have been or concurrently are released, after the occurrence of Discharge
of Second Lien Obligations, the Second Lien Collateral Agent shall, at the
request of the Third Lien Collateral Agent, cooperate with the Grantors and the
Third Lien Collateral Agent (at the expense of the Grantors) in permitting
control of any other Accounts to be transferred to the Third Lien Collateral
Agent (or for other arrangements with respect to each such Accounts satisfactory
to the Third Lien Collateral Agent to be made).

ARTICLE VI

APPLICATION OF PROCEEDS; DETERMINATION OF AMOUNTS

Section 6.01 Application of Proceeds. (a) Prior to the Discharge of Priority
Obligations, and regardless of whether an Insolvency or Liquidation Proceeding
has been commenced, Collateral or Proceeds received in connection with the
enforcement or exercise of any rights or remedies with respect to any portion of
the Collateral will be applied:

(i) first, to the payment in full in cash of all Priority Lien Obligations that
are not Excess Priority Lien Obligations,

(ii) second, to the payment in full in cash of all Second Lien Obligations that
are not Excess Second Lien Obligations,

(iii) third, to the payment in full in cash of all Third Lien Obligations,

 

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(iv) fourth, to the payment in full in cash of all Excess Priority Lien
Obligations,

(v) fifth, to the payment in full in cash of all Excess Second Lien Obligations,
and

(vi) sixth, to the Company or as otherwise required by applicable law.

(b) Following the Discharge of Priority Obligations but prior to the Discharge
of Second Lien Obligations, and regardless of whether an Insolvency or
Liquidation Proceeding has been commenced, Collateral or Proceeds received in
connection with the enforcement or exercise of any rights or remedies with
respect to any portion of the Collateral will be applied:

(i) first, to the payment in full of all Second Lien Obligations that are not
Excess Second Lien Obligations,

(ii) second, to the payment in full of all Third Lien Obligations,

(iii) third, to the payment in full of the Excess Priority Lien Obligations;

(iv) fourth, to the payment in full in cash of all Excess Second Lien
Obligations, and

(v) fifth, to the Company or as otherwise required by applicable law.

Section 6.02 Determination of Amounts. Whenever a Secured Debt Representative
shall be required, in connection with the exercise of its rights or the
performance of its obligations hereunder, to determine the existence or amount
of any Priority Lien Obligations, Second Lien Obligations or Third Lien
Obligations (or the existence of any commitment to extend credit that would
constitute any such obligations), Second Lien Obligations or Third Lien
Obligations, or the existence of any Lien securing any such obligations, or the
Collateral subject to any such Lien, it may request that such information be
furnished to it in writing by the other Secured Debt Representatives and shall
be entitled to make such determination on the basis of the information so
furnished; provided, however, that if a Secured Debt Representative shall fail
or refuse reasonably promptly to provide the requested information, the
requesting Secured Debt Representative shall be entitled to make any such
determination by such method as it may, in the exercise of its good faith
judgment, determine, including by reliance upon a certificate of the Company.
Each Secured Debt Representative may rely conclusively, and shall be fully
protected in so relying, on any determination made by it in accordance with the
provisions of the preceding sentence (or as otherwise directed by a court of
competent jurisdiction) and shall have no liability to the Parent, the Company,
any other Grantor or any of their subsidiaries, any Secured Party or any other
Person as a result of such determination.

ARTICLE VII

NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE;

CONSENT OF GRANTORS; ETC.

Section 7.01 No Reliance; Information. The Priority Lien Secured Parties, the
Second Lien Secured Parties and the Third Lien Secured Parties shall have no
duty to disclose to any Third Lien Secured Party, Second Lien Secured Party or
to any Priority Lien Secured Party, as the case may be, any information relating
to the Company or any of the other Grantors or their subsidiaries, or any other
circumstance bearing upon the risk of non-payment of any of the Priority Lien
Obligations, the Second Lien Obligations or the

 

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Third Lien Obligations, as the case may be, that is known or becomes known to
any of them or any of their Affiliates. In the event any Priority Lien Secured
Party, any Second Lien Secured Party or any Third Lien Secured Party, in its
sole discretion, undertakes at any time or from time to time to provide any such
information to, any Third Lien Secured Party, any Second Lien Secured Party or
any Priority Lien Secured Party, as the case may be, it shall be under no
obligation (a) to make, and shall not make or be deemed to have made, any
express or implied representation or warranty, including with respect to the
accuracy, completeness, truthfulness or validity of the information so provided,
(b) to provide any additional information or to provide any such information on
any subsequent occasion or (c) to undertake any investigation.

Section 7.02 No Warranties or Liability.

(a) The Priority Lien Agent, for itself and on behalf of the other Priority Lien
Secured Parties, acknowledges and agrees that, except for the representations
and warranties set forth in Article VIII, (i) neither the Second Lien Collateral
Agent nor any other Second Lien Secured Party has made any express or implied
representation or warranty, including with respect to the execution, validity,
legality, completeness, collectability or enforceability of any of the Second
Lien Documents, the ownership of any Collateral or the perfection or priority of
any Liens thereon and (ii) neither the Third Lien Collateral Agent nor any other
Third Lien Secured Party has made any express or implied representation or
warranty, including with respect to the execution, validity, legality,
completeness, collectability or enforceability of any of the Third Lien
Documents, the ownership of any Collateral or the perfection or priority of any
Liens thereon.

(b) The Second Lien Collateral Agent, for itself and on behalf of the other
Second Lien Secured Parties, acknowledges and agrees that, except for the
representations and warranties set forth in Article VIII, (i) neither the
Priority Lien Agent nor any other Priority Lien Secured Party has made any
express or implied representation or warranty, including with respect to the
execution, validity, legality, completeness, collectability or enforceability of
any of the Priority Lien Documents, the ownership of any Collateral or the
perfection or priority of any Liens thereon and (ii) neither the Third Lien
Collateral Agent nor any other Third Lien Secured Party has made any express or
implied representation or warranty, including with respect to the execution,
validity, legality, completeness, collectability or enforceability of any of the
Third Lien Documents, the ownership of any Collateral or the perfection or
priority of any Liens thereon.

(c) The Third Lien Collateral Agent, for itself and on behalf of the other Third
Lien Secured Parties, acknowledges and agrees that, except for the
representations and warranties set forth in Article VIII, (i) neither the
Priority Lien Agent nor any other Priority Lien Secured Party has made any
express or implied representation or warranty, including with respect to the
execution, validity, legality, completeness, collectability or enforceability of
any of the Priority Lien Documents, the ownership of any Collateral or the
perfection or priority of any Liens thereon and (ii) neither the Second Lien
Collateral Agent nor any other Second Lien Secured Party has made any express or
implied representation or warranty, including with respect to the execution,
validity, legality, completeness, collectability or enforceability of any of the
Second Lien Documents, the ownership of any Collateral or the perfection or
priority of any Liens thereon.

(d) The Priority Lien Agent and the other Priority Lien Secured Parties shall
have no express or implied duty to the Second Lien Collateral Agent, any other
Second Lien Secured Party, the Third Lien Collateral Agent or any other Third
Lien Secured Party, the Second Lien Collateral Agent and the other Second Lien
Secured Parties shall have no express or implied duty to the Priority Lien
Agent, any other Priority Lien Secured Party, the Third Lien Collateral Agent or
any other Third Lien Secured Party, and the Third Lien Collateral Agent shall
have no express or implied duty to the Priority Lien Agent, any

 

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other Priority Lien Secured Party, the Second Lien Collateral Agent or any other
Second Lien Secured Party, to act or refrain from acting in a manner which
allows, or results in, the occurrence or continuance of a default or an event of
default under any Priority Lien Document, any Second Lien Document and any Third
Lien Document (other than, in each case, this Agreement), regardless of any
knowledge thereof which they may have or be charged with.

(e) Each of the Second Lien Collateral Agent, for itself and on behalf of each
other Second Lien Secured Party and the Third Lien Collateral Agent, for itself
and on behalf of each other Third Lien Secured Party, hereby waives any claim
that may be had against the Priority Lien Agent or any other Priority Lien
Secured Party arising out of any actions which the Priority Lien Agent or such
Priority Lien Secured Party takes or omits to take (including actions with
respect to the creation, perfection or continuation of Liens on any Collateral,
actions with respect to the foreclosure upon, sale, release or depreciation of,
or failure to realize upon, any Collateral, and actions with respect to the
collection of any claim for all or only part of the Priority Lien Obligations
from any account debtor, guarantor or any other party) in accordance with this
Agreement and the Priority Lien Documents or the valuation, use, protection or
release of any security for such Priority Lien Obligations. The Third Lien
Collateral Agent, for itself and on behalf each other Third Lien Secured Party,
hereby waives any claim that may be had against the Second Lien Collateral Agent
or any other Second Lien Secured Party arising out of any actions which the
Second Lien Collateral Agent or such Second Lien Secured Party takes or omits to
take following the Discharge of Priority Lien Obligations but prior to the
Discharge of Second Lien Obligations (including actions with respect to the
creation, perfection or continuation of Liens on any Collateral, actions with
respect to the foreclosure upon, sale, release or depreciation of, or failure to
realize upon, any Collateral, and actions with respect to the collection of any
claim for all or only part of the Second Lien Obligations from any account
debtor, guarantor or any other party) in accordance with this Agreement and the
Second Lien Documents or the valuation, use, protection or release of any
security for such Second Lien Obligations.

Section 7.03 Obligations Absolute. The Lien priorities provided for herein and
the respective rights, interests, agreements and obligations hereunder of the
Priority Lien Agent and the other Priority Lien Secured Parties, the Second Lien
Collateral Agent and the other Second Lien Secured Parties, and the Third Lien
Collateral Agent and the other Third Lien Secured Parties shall remain in full
force and effect irrespective of:

(a) any lack of validity or enforceability of any Secured Debt Document;

(b) any change in the time, place or manner of payment of, or in any other term
of (including the Refinancing of), all or any portion of the Priority Lien
Obligations, it being specifically acknowledged that a portion of the Priority
Lien Obligations consists or may consist of indebtedness that is revolving in
nature, and the amount thereof that may be outstanding at any time or from time
to time may be increased or reduced and subsequently reborrowed;

(c) any amendment, waiver or other modification, whether by course of conduct or
otherwise, of any Secured Debt Document;

(d) the securing of any Priority Lien Obligations, Second Lien Obligations or
Third Lien Obligations with any additional collateral or guarantees, or any
exchange, release, voiding, avoidance or non-perfection of any security interest
in any Collateral or any other collateral or any release of any guarantee
securing any Priority Lien Obligations, Second Lien Obligations or Third Lien
Obligations;

(e) the commencement of any Insolvency or Liquidation Proceeding in respect of
the Company, any other Grantor or any of their subsidiaries; or

 

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(f) any other circumstances that otherwise might constitute a defense available
to, or a discharge of, the Company, any other Grantor or any of their
subsidiaries in respect of the Priority Lien Obligations, the Second Lien
Obligations or the Third Lien Obligations.

Section 7.04 Grantors Consent. Each Grantor hereby consents to the provisions of
this Agreement and the intercreditor arrangements provided for herein and agrees
that the obligations of the Grantors under the Secured Debt Documents will in no
way be diminished or otherwise affected by such provisions or arrangements
(except as expressly provided herein).

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

Section 8.01 Representations and Warranties of Each Party. Each party hereto
represents and warrants to the other parties hereto as follows:

(a) Such party is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has all requisite power and
authority to enter into and perform its obligations under this Agreement.

(b) This Agreement has been duly executed and delivered by such party.

(c) The execution, delivery and performance by such party of this Agreement
(i) do not require any consent or approval of, registration or filing with or
any other action by any Governmental Authority of which the failure to obtain
could reasonably be expected to have a Material Adverse Effect, (ii) will not
violate any applicable law or regulation or any order of any Governmental
Authority or any indenture, agreement or other instrument binding upon such
party which could reasonably be expected to have a Material Adverse Effect and
(iii) will not violate the charter, by-laws or other organizational documents of
such party.

Section 8.02 Representations and Warranties of Each Representative. Each of the
Priority Lien Agent, the Second Lien Collateral Agent and the Third Lien
Collateral Agent represents and warrants to the other parties hereto that it is
authorized under the Priority Credit Agreement, the Second Lien Collateral
Agency Agreement and the Third Lien Collateral Agency Agreement, as the case may
be, to enter into this Agreement.

ARTICLE IX

MISCELLANEOUS

Section 9.01 Notices. All notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:

(a) if to the Original Priority Lien Agent, to it at:

JPMorgan Chase Bank, N.A.

10 South Dearborn, Floor 7, IL1 0010

Chicago, Illinois 60603

Attention of Loan and Agency Services

Facsimile No. (888) 292-9533

 

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with a copy to:

JPMorgan Chase Bank, N.A.

2200 Ross Avenue, Floor 3

Dallas, Texas 75201-2787

Attention of David Morris

Facsimile No. (214) 965-2884

(b) if to the Original Second Lien Collateral Agent, to it at:

UMB Bank, N.A.

5555 San Felipe Street, Suite 810

Houston, Texas 77056

Attention of Corporate Trust Department

Email: Mauri.Cowen@umb.com

(c) if to any other Secured Debt Representative, to such address as specified in
the Priority Confirmation Joinder.

Any party hereto may change its address or facsimile number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt (if a Business Day) and on the next Business Day thereafter (in all
other cases) if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01. As agreed to in writing among the Company, the Priority Lien
Agent, the Second Lien Collateral Agent and the Third Lien Collateral Agent from
time to time, notices and other communications may also be delivered by e-mail
to the e-mail address of a representative of the applicable person provided from
time to time by such person.

Section 9.02 Waivers; Amendment. (a) No failure or delay on the part of any
party hereto in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the parties hereto are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any party therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) of this Section 9.02, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any party hereto in any case shall
entitle such party to any other or further notice or demand in similar or other
circumstances.

(b) Neither this Agreement nor any provision hereof may be terminated, waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by each Secured Debt Representative; provided, however, that this
Agreement may be amended from time to time as provided in Section 4.04. Any
amendment of this Agreement that is proposed to be effected without the consent
of a Secured Debt Representative as permitted by the proviso to the preceding
sentence shall be submitted to such Secured Debt Representative for its review
at least five Business Days prior to the proposed effectiveness of such
amendment.

 

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(c) Notwithstanding anything else to the contrary herein, neither this Agreement
nor any provision hereof may be terminated, waived, amended or modified without
the prior written consent of the Company if such termination, waiver, amendment
or modification would be adverse to the rights, interests or obligations of the
Parent, the Company or its subsidiaries party hereto.

Section 9.03 Actions Upon Breach; Specific Performance. (a) (i) Prior to the
Discharge of Priority Lien Obligations, if any Second Lien Secured Party or
Third Lien Secured Party, contrary to this Agreement, commences or participates
in any action or proceeding against any Grantor or the Collateral, such Grantor,
with the prior written consent of the Priority Lien Agent, may interpose as a
defense or dilatory plea the making of this Agreement, and any Priority Lien
Secured Party may intervene and interpose such defense or plea in its or their
name or in the name of such Grantor and (ii) following the Discharge of Priority
Lien Obligations but prior to the Discharge of Second Lien Obligations, if any
Third Lien Secured Party, contrary to this Agreement, commences or participates
in any action or proceeding against any Grantor or the Collateral, such Grantor,
with the prior written consent of the Second Lien Collateral Agent, may
interpose as a defense or dilatory plea the making of this Agreement, and any
Second Lien Secured Party may intervene and interpose such defense or plea in
its or their name or in the name of such Grantor.

(b) (i) Prior to the Discharge of Priority Lien Obligations, should any Second
Lien Secured Party or Third Lien Secured Party, contrary to this Agreement, in
any way take, attempt to or threaten to take any action with respect to the
Collateral (including any attempt to realize upon or enforce any remedy with
respect to this Agreement), or take any other action in violation of this
Agreement or fail to take any action required by this Agreement, the Priority
Lien Agent or any other Priority Lien Secured Party (in its own name or in the
name of the relevant Grantor) or the relevant Grantor, with the prior written
consent of the Priority Lien Agent, (A) may obtain relief against such Second
Lien Secured Party or Third Lien Secured Party, as applicable, by injunction,
specific performance and/or other appropriate equitable relief, it being
understood and agreed by each of the Second Lien Collateral Agent on behalf of
each Second Lien Secured Party and the Third Lien Collateral Agent on behalf of
each Third Lien Secured Party that (I) the Priority Lien Secured Parties’
damages from its actions may at that time be difficult to ascertain and may be
irreparable, and (II) each Second Lien Secured Party and Third Lien Secured
Party waives any defense that the Grantors and/or the Priority Lien Secured
Parties cannot demonstrate damage and/or be made whole by the awarding of
damages, and (B) shall be entitled to damages, as well as reimbursement for all
reasonable and documented costs and expenses incurred in connection with any
action to enforce the provisions of this Agreement and (ii) following the
Discharge of Priority Lien Obligations but prior to the Discharge of Second Lien
Obligations, should any Third Lien Secured Party, contrary to this Agreement, in
any way take, attempt to or threaten to take any action with respect to the
Collateral (including any attempt to realize upon or enforce any remedy with
respect to this Agreement), or take any other action in violation of this
Agreement or fail to take any action required by this Agreement, the Second Lien
Collateral Agent or any other Second Lien Secured Party (in its own name or in
the name of the relevant Grantor) or the relevant Grantor, with the prior
written consent of the Second Lien Collateral Agent, (A) may obtain relief
against such Third Lien Secured Party by injunction, specific performance and/or
other appropriate equitable relief, it being understood and agreed by the Third
Lien Collateral Agent on behalf of each Third Lien Secured Party that (I) the
Second Lien Secured Parties damages from its actions may at that time be
difficult to ascertain and may be irreparable, and (II) each Third Lien Secured
Party waives any defense that the Grantors and/or the Second Lien Secured
Parties cannot demonstrate damage and/or be made whole by the awarding of
damages, and (B) shall be entitled to damages, as well as reimbursement for all
reasonable and documented costs and expenses incurred in connection with any
action to enforce the provisions of this Agreement.

 

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Section 9.04 Parties in Interest. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, as well as the other Secured Parties, all of whom are intended to be
bound by, and to be third party beneficiaries of, this Agreement.

Section 9.05 Survival of Agreement. All covenants, agreements, representations
and warranties made by any party in this Agreement shall be considered to have
been relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement.

Section 9.06 Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original but all of which when taken together shall
constitute a single contract. Delivery of an executed signature page to this
Agreement by facsimile or other electronic transmission (e.g. .pdf) shall be as
effective as delivery of a manually signed counterpart of this Agreement.

Section 9.07 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. The
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

Section 9.08 Governing Law; Jurisdiction; Consent to Service of Process.
(a) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATION LAW).

(b) Each party hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State court or, to the extent permitted by 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 shall affect any right that any party hereto may otherwise have to
bring any action or proceeding relating to this Agreement in the courts of any
jurisdiction.

(c) Each party hereto hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section 9.08. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

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

Section 9.09 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A

 

46

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TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 9.10 Headings. Article, Section and Annex headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

Section 9.11 Conflicts. In the event of any conflict or inconsistency between
the provisions of this Agreement and the provisions of any Secured Debt
Documents, the provisions of this Agreement shall control; provided, however,
that if any of the provisions of the Second Lien Security Documents or Third
Lien Security Documents limit, qualify or conflict with the duties imposed by
the provisions of the TIA (if any), in each case, the TIA shall control.

Section 9.12 Provisions Solely to Define Relative Rights. The provisions of this
Agreement are and are intended solely for the purpose of defining the distinct
and separate relative rights of the Priority Lien Secured Parties, the Second
Lien Secured Parties and the Third Lien Secured Parties. None of the Company,
any other Grantor or any other creditor thereof shall have any rights or
obligations hereunder, except as expressly provided in this Agreement (provided
that nothing in this Agreement (other than Sections 4.01, 4.02, 4.04, or 4.05)
is intended to or will amend, waive or otherwise modify the provisions of the
Priority Credit Agreement, the Second Lien Indenture or the Third Lien
Indenture, as applicable), and except as expressly provided in this Agreement
neither the Company nor any other Grantor may rely on the terms hereof (other
than Sections 4.01, 4.02, 4.04, or 4.05, Article VII and Article IX). Nothing in
this Agreement is intended to or shall impair the obligations of the Company or
any other Grantor, which are absolute and unconditional, to pay the Obligations
under the Secured Debt Documents as and when the same shall become due and
payable in accordance with their terms. Notwithstanding anything to the contrary
herein or in any Secured Debt Document, the Grantors shall not be required to
act or refrain from acting pursuant to this Agreement, any Priority Lien
Document, any Second Lien Document or any Third Lien Document with respect to
any Collateral in any manner that would cause a default under any Priority Lien
Document.

Section 9.13 Certain Terms Concerning the Second Lien Collateral Agent and the
Third Lien Collateral Agent. (a) The Second Lien Collateral Agent is executing
and delivering this Agreement solely in its capacity as such and pursuant to
direction set forth in the Second Lien Collateral Agency Agreement; and in so
doing, the Second Lien Collateral Agent shall not be responsible for the terms
or sufficiency of this Agreement for any purpose. The Second Lien Collateral
Agent shall have no duties or obligations under or pursuant to this Agreement
other than such duties and obligations as may be expressly set forth in this
Agreement as duties and obligations on its part to be performed or observed. In
entering into this Agreement, or in taking (or forbearing from) any action under
or pursuant to the Agreement, the Second Lien Collateral Agent shall have and be
protected by all of the rights, immunities, indemnities and other protections
granted to it under the Second Lien Indenture and the other Second Lien
Documents (including without limitation Article 5 and Section 7.8 of the Second
Lien Collateral Agency Agreement).

(b) The Third Lien Collateral Agent is executing and delivering this Agreement
solely in its capacity as such and pursuant to direction set forth in the Third
Lien Collateral Agency Agreement; and in so doing, the Third Lien Collateral
Agent shall not be responsible for the terms or sufficiency of this

 

47

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Agreement for any purpose. The Third Lien Collateral Agent shall have no duties
or obligations under or pursuant to this Agreement other than such duties and
obligations as may be expressly set forth in this Agreement as duties and
obligations on its part to be performed or observed. In entering into this
Agreement, or in taking (or forbearing from) any action under or pursuant to the
Agreement, the Third Lien Collateral Agent shall have and be protected by all of
the rights, immunities, indemnities and other protections granted to it under
any Third Lien Indenture and the Third Lien Documents.

Section 9.14 Certain Terms Concerning the Priority Lien Agent, the Second Lien
Collateral Agent and the Third Lien Collateral Agent. None of the Priority Lien
Agent, the Second Lien Collateral Agent or the Third Lien Collateral Agent shall
have any liability or responsibility for the actions or omissions of any other
Secured Party, or for any other Secured Party’s compliance with (or failure to
comply with) the terms of this Agreement. None of the Priority Lien Agent, the
Second Lien Collateral Agent or the Third Lien Collateral Agent shall have
individual liability to any Person if it shall mistakenly pay over or distribute
to any Secured Party (or the Company) any amounts in violation of the terms of
this Agreement, so long as the Priority Lien Agent, the Second Lien Collateral
Agent or the Third Lien Collateral Agent, as the case may be, is acting in good
faith. Each party hereto hereby acknowledges and agrees that each of the
Priority Lien Agent, the Second Lien Collateral Agent and the Third Lien
Collateral Agent is entering into this Agreement solely in its capacity under
the Priority Lien Documents, the Second Lien Documents and the Third Lien
Documents, respectively, and not in its individual capacity. (a) The Priority
Lien Agent shall not be deemed to owe any fiduciary duty to (i) the Second Lien
Collateral Agent or any other Second Lien Representative or any other Second
Lien Secured Party or (ii) the Third Lien Collateral Agent or any other Third
Lien Representative or any other Third Lien Secured Party; (b) the Second Lien
Collateral Agent shall not be deemed to owe any fiduciary duty to (i) the
Priority Lien Agent or any other Priority Lien Secured Party or (ii) the Third
Lien Collateral Agent or any other Third Lien Representative or any other Third
Lien Secured Party; and (c) the Third Lien Collateral Agent shall not be deemed
to owe any fiduciary duty to (i) the Priority Lien Agent or any other Priority
Lien Secured Party or (ii) the Second Lien Collateral Agent or any other Second
Lien Representative or any other Second Lien Secured Party.

Section 9.15 Authorization of Secured Agents. By accepting the benefits of this
Agreement and the other Priority Lien Security Documents, each Priority Lien
Secured Party authorizes the Priority Lien Agent to enter into this Agreement
and to act on its behalf as collateral agent hereunder and in connection
herewith. By accepting the benefits of this Agreement and the other Second Lien
Security Documents, each Second Lien Secured Party authorizes the Second Lien
Collateral Agent to enter into this Agreement and to act on its behalf as
collateral agent hereunder and in connection herewith. By accepting the benefits
of this Agreement and the other Third Lien Security Documents, each Third Lien
Secured Party authorizes the Third Lien Collateral Agent to enter into this
Agreement and to act on its behalf as collateral agent hereunder and in
connection herewith.

Section 9.16 Further Assurances. Each of the Priority Lien Agent, for itself and
on behalf of the other Priority Lien Secured Party, the Second Lien Collateral
Agent, for itself and on behalf of the other Second Lien Secured Parties, the
Third Lien Collateral Agent, for itself and on behalf of the other Third Lien
Secured Parties, and each Grantor party hereto, for itself and on behalf of its
subsidiaries, agrees that it will execute, or will cause to be executed, any and
all further documents, agreements and instruments, and take all such further
actions, as may be required under any applicable law, or which the Priority Lien
Agent, the Second Lien Collateral Agent or the Third Lien Collateral Agent may
reasonably request, to effectuate the terms of this Agreement, including the
relative Lien priorities provided for herein.

Section 9.17 Relationship of Secured Parties. Nothing set forth herein shall
create or evidence a joint venture, partnership or an agency or fiduciary
relationship among the Secured Parties. None of the Secured Parties nor any of
their respective directors, officers, agents or employees shall be responsible
to

 

48

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any other Secured Party or to any other Person for any Grantor’s solvency,
financial condition or ability to repay the Priority Lien Obligations, the
Second Lien Obligations or the Third Lien Obligations, or for statements of any
Grantor, oral or written, or for the validity, sufficiency or enforceability of
the Priority Lien Documents, the Second Lien Documents or the Third Lien
Documents, or any security interests granted by any Grantor to any Secured Party
in connection therewith. Each Secured Party has entered into its respective
financing agreements with the Grantors based upon its own independent
investigation, and none of the Priority Lien Agent, the Second Lien Collateral
Agent or the Third Lien Collateral Agent makes any warranty or representation to
the other Secured Debt Representatives or the Secured Parties for which it acts
as agent nor does it rely upon any representation of the other agents or the
Secured Parties for which it acts as agent with respect to matters identified or
referred to in this Agreement.

[SIGNATURES BEGIN NEXT PAGE]

 

49

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

 

JPMORGAN CHASE BANK, N.A., as Priority
Lien Agent

By:  

 

Name:   Title:  

Signature Page

Intercreditor Agreement

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

UMB BANK, N.A.,

as Second Lien Collateral Agent and

as Third Lien Collateral Agent

By:  

 

Name:   Title:  

Signature Page

Intercreditor Agreement

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

ACKNOWLEDGED AND AGREED AS OF THE
DATE FIRST ABOVE WRITTEN: CENTENNIAL RESOURCE PRODUCTION, LLC

By:  

 

Name:  

 

Title:  

 

Parent: CENTENNIAL RESOURCE DEVELOPMENT, INC.

By:  

 

Name:  

 

Title:  

 

Guarantors: ATLANTIC EXPLORATION, LLC

By:  

 

Name:  

 

Title:  

 

CENTENNIAL RESOURCE MANAGEMENT, LLC

By:  

 

Name:  

 

Title:  

 

Signature Page

Intercreditor Agreement

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

Signature Page

Intercreditor Agreement

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

ANNEX I

Provision for Second Lien Documents and the Third Lien Documents

Reference is made to the Intercreditor Agreement, dated as of
[                    ], 2020, between JPMORGAN CHASE BANK, N.A., as Priority
Lien Agent (as defined therein), UMB BANK, N.A., as Second Lien Collateral Agent
(as defined therein) and as Third Lien Collateral Agent (as defined therein),
Centennial Resource Development, Inc., as parent, and Centennial Resource
Production, LLC, as borrower, and certain of its subsidiaries (the
“Intercreditor Agreement”). Each holder of [Second Lien Obligations][Third Lien
Obligations], by its acceptance of such [Second Lien Obligations][ Third Lien
Obligations] i) consents to the subordination of Liens provided for in the
Intercreditor Agreement, ii) agrees that it will be bound by, and will take no
actions contrary to, the provisions of the Intercreditor Agreement and iii)
authorizes and instructs the [Second/Third] Lien Collateral Agent on behalf of
each [Second/Third] Lien Secured Party (as defined therein) to enter into the
Intercreditor Agreement as [Second/Third] Lien Collateral Agent on behalf of
such [Second/Third] Lien Secured Parties. The foregoing provisions are intended
as an inducement to the lenders under the Priority Credit Agreement to extend
credit to the Company and such lenders are intended third party beneficiaries of
such provisions and the provisions of the Intercreditor Agreement.

Provision for all Priority Lien Security Documents, Second Lien Security
Documents and Third Lien Security Documents that Grant a Security Interest in
Collateral

Reference is made to the Intercreditor Agreement, dated as of
[                    ], 2020, between JPMORGAN CHASE BANK, N.A., as Priority
Lien Agent (as defined therein), and UMB BANK, N.A., as Second Lien Collateral
Agent (as defined therein) and as Third Lien Collateral Agent (as defined
therein), Centennial Resource Development, Inc., as parent, and Centennial
Resource Production, LLC, as borrower, and certain of its subsidiaries (the
“Intercreditor Agreement”). Each Person that is secured hereunder, by accepting
the benefits of the security provided hereby, [(i) consents (or is deemed to
consent), to the subordination of Liens provided for in the Intercreditor
Agreement,]1 [(i)][(ii)] agrees (or is deemed to agree) that it will be bound
by, and will take no actions contrary to, the provisions of the Intercreditor
Agreement, [(ii)][(iii)] authorizes (or is deemed to authorize) the [Priority
Lien Agent] [Second Lien Collateral Agent] [Third Lien Collateral Agent] on
behalf of such Person to enter into, and perform under, the Intercreditor
Agreement and [(iii)][(iv)] acknowledges (or is deemed to acknowledge) that a
copy of the Intercreditor Agreement was delivered, or made available, to such
Person.

Notwithstanding any other provision contained herein, this Agreement, the Liens
created hereby and the rights, remedies, duties and obligations provided for
herein are subject in all respects to the provisions of the Intercreditor
Agreement and, to the extent provided therein, the applicable Security Documents
(as defined in the Intercreditor Agreement). In the event of any conflict or
inconsistency between the provisions of this Agreement and the Intercreditor
Agreement, the provisions of the Intercreditor Agreement shall control.

 

1 

This bracketed language would not apply to the Priority Lien Security Documents.

 

Annex I - 1

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

EXHIBIT A

to Intercreditor Agreement

[FORM OF]

PRIORITY CONFIRMATION JOINDER

Reference is made to the Intercreditor Agreement, dated as of
[                    ], 2020 (as amended, supplemented, amended and restated or
otherwise modified and in effect from time to time, the “Intercreditor
Agreement”) between JPMORGAN CHASE BANK, N.A., as Priority Lien Agent for the
Priority Lien Secured Parties (as defined therein), and UMB BANK, N.A., as
Second Lien Collateral Agent for the Second Lien Secured Parties (as defined
therein) and as Third Lien Collateral Agent for the Third Lien Secured Parties
(as defined therein).

Capitalized terms used but not otherwise defined herein shall have the meaning
set forth in the Intercreditor Agreement. This Priority Confirmation Joinder is
being executed and delivered pursuant to Section 4.04 of the Intercreditor
Agreement as a condition precedent to the debt for which the undersigned is
acting as representative being entitled to the rights and obligations of being
[Additional [Second/Third] Lien Obligations] under the Intercreditor Agreement.

1. Joinder. The undersigned, [                    ], a [                    ],
(the “New Representative”) as [trustee] [collateral trustee] [administrative
agent] [collateral agent] under that certain [describe applicable indenture,
credit agreement or other document governing the Priority, Second or Third Lien
Obligations] hereby:

(a) represents that the New Representative has been authorized to become a party
to the Intercreditor Agreement on behalf of the [Priority Lien Secured Parties]
[Second Lien Secured Parties] [Third Lien Secured Parties] as [the Priority Lien
Agent] [the Second Lien Collateral Agent] [the Third Lien Collateral Agent]
[Secured Debt Representative] [Second Lien Representative] [Third Lien
Representative] [authorized agent, trustee or other representative on behalf of
the holders or lenders of any additional Second Lien Obligations] [authorized
agent, trustee or other representative on behalf of the holders or lenders of
any additional Third Lien Obligations] under the Intercreditor Agreement for all
purposes thereof on the terms set forth therein, and to be bound by the terms of
the Intercreditor Agreement as fully as if the undersigned had executed and
delivered the Intercreditor Agreement as of the date thereof; and

(b) agrees that its address for receiving notices pursuant to the Intercreditor
Agreement shall be as follows:

[Address];

2. Priority Confirmation.

[Option A: to be used if additional debt constitutes a Series of Priority Lien
Debt] The undersigned New Representative, on behalf of itself and each Priority
Lien Secured Party for which the undersigned is acting as [Administrative Agent]
hereby agrees, for the benefit of all Secured Parties and each future Secured
Debt Representative, and as a condition to being treated as Priority Lien
Obligations under the Intercreditor Agreement, that the New Representative is
bound by the provisions of the Intercreditor Agreement, including the provisions
relating to the ranking of Priority Liens. [or]

[Option B: to be used if additional debt constitutes a Series of Second Lien
Debt] The undersigned New Representative, on behalf of itself and each holder of
Obligations in respect of the Series of Second

 

Exhibit A - 1

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

Lien Debt for which the undersigned is acting as [Second Lien
Representative][Second Lien Collateral Agent] hereby agrees, for the benefit of
all Secured Parties and each future Secured Debt Representative, and as a
condition to being treated as Secured Debt under the Intercreditor Agreement,
that:

(a) all Second Lien Obligations will be and are secured equally and ratably by
all Second Liens at any time granted by the Company or any other Grantor to
secure any Obligations in respect of such Series of Second Lien Debt, whether or
not upon property otherwise constituting Collateral for such Series of Second
Lien Debt, and that all such Second Liens will be enforceable by the Second Lien
Collateral Agent with respect to such Series of Second Lien Debt for the benefit
of all Second Lien Secured Parties equally and ratably;

(b) the New Representative and each holder of Obligations in respect of the
Series of Second Lien Debt for which the undersigned is acting as [Second Lien
Representative] [Second Lien Collateral Agent] are bound by the provisions of
the Intercreditor Agreement, including the provisions relating to the ranking of
Priority Liens, Second Liens and Third Liens and the order of application of
proceeds from enforcement of Priority Liens, Second Liens and Third Liens; and

(c) [the New Representative and each holder of Obligations in respect of the
Series of Second Lien Debt for which the undersigned is acting as Second Lien
Representative appoints the Second Lien Collateral Agent and consents to the
terms of the Intercreditor Agreement and the performance by the Second Lien
Collateral Agent of, and directs the Second Lien Collateral Agent to perform,
its obligations under the Intercreditor Agreement and the Second Lien Collateral
Agency Agreement, together with all such powers as are reasonably incidental
thereto]. [or]

[Option C: to be used if additional debt constitutes a Series of Third Lien
Debt] The undersigned New Representative, on behalf of itself and each holder of
Obligations in respect of the Series of Third Lien Debt for which the
undersigned is acting as [Third Lien Representative][Third Lien Collateral
Agent] hereby agrees, for the benefit of all Secured Parties and each future
Secured Debt Representative, and as a condition to being treated as Secured Debt
under the Intercreditor Agreement, that:

(a) all Third Lien Obligations will be and are secured equally and ratably by
all Third Liens at any time granted by the Company or any other Grantor to
secure any Obligations in respect of such Series of Third Lien Debt, whether or
not upon property otherwise constituting Collateral for such Series of Third
Lien Debt, and that all such Third Liens will be enforceable by the Third Lien
Collateral Agent with respect to such Series of Third Lien Debt for the benefit
of all Third Lien Secured Parties equally and ratably;

(b) the New Representative and each holder of Obligations in respect of the
Series of Third Lien Debt for which the undersigned is acting as [Third Lien
Representative] [Third Lien Collateral Agent] are bound by the provisions of the
Intercreditor Agreement, including the provisions relating to the ranking of
Priority Liens, Second Liens and Third Liens and the order of application of
proceeds from enforcement of Priority Liens, Second Liens and Third Liens; and

[(c) the New Representative and each holder of Obligations in respect of the
Series of Third Lien Debt for which the undersigned is acting as Third Lien
Representative appoints the Third Lien Collateral Agent and consents to the
terms of the Intercreditor Agreement and the performance by the Third Lien
Collateral Agent of, and directs the Third Lien Collateral Agent to perform, its
obligations under the Intercreditor Agreement and the Third Lien Collateral
Agency Agreement, together with all such powers as are reasonably incidental
thereto.]2

 

 

2 

Necessary only in the case of an incurrence of Additional Third Lien Notes.

 

Exhibit A - 2

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

3. Full Force and Effect of Intercreditor Agreement. Except as expressly
supplemented hereby, the Intercreditor Agreement shall remain in full force and
effect.

4. Governing Law and Miscellaneous Provisions. The provisions of Article IX of
the Intercreditor Agreement will apply with like effect to this Priority
Confirmation Joinder.

5. Expenses. The Company agrees to reimburse each Secured Debt Representative
for its reasonable out of pocket expenses in connection with this Priority
Confirmation Joinder, including the reasonable fees, other charges and
disbursements of counsel.

 

Exhibit A - 3

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

IN WITNESS WHEREOF, each of the Company and the undersigned New Representative
have caused this Priority Confirmation Joinder to be executed by their
respective officers or representatives as of [                    , 20    ].

 

[insert name of New Representative]

By:  

 

Name:  

 

Title:  

 

CENTENNIAL RESOURCE PRODUCTION, LLC

By:  

 

Name:  

 

Title:  

 

 

Exhibit A - 4