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Exhibit 10.1
 
 
__________________________________________________________________________
 

 
$250,000,000 REVOLVING LOAN
 
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
 
dated as of
 
April 13, 2011
 
among
 
MAGNUM HUNTER RESOURCES CORPORATION,
as Borrower,
 
BANK OF MONTREAL,
as Administrative Agent,
 
THE LENDERS PARTY HERETO,
 
CAPITAL ONE, N.A.,
as Syndication Agent
 
and
 
AMEGY BANK NATIONAL ASSOCIATION,
KEYBANK NATIONAL ASSOCIATION
and
UBS SECURITIES LLC,
as Co-Documentation Agents
 
*****
 
BMO CAPITAL MARKETS,
 
as Lead Arranger and Sole Bookrunner
 

 
__________________________________________________________________________
 

 

 
 

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TABLE OF CONTENTS
 
ARTICLE I Definitions and Accounting Matters
1
Section 1.01
Terms Defined Above
1
Section 1.02
Certain Defined Terms
1
Section 1.03
Types of Loans and Borrowings
22
Section 1.04
Terms Generally; Rules of Construction
22
Section 1.05
Accounting Terms and Determinations; GAAP
23
   
ARTICLE II The Credits
23
Section 2.01
Commitments
23
Section 2.02
Loans and Borrowings
23
Section 2.03
Requests for Borrowings
24
Section 2.04
Interest Elections
25
Section 2.05
Funding of Borrowings
26
Section 2.06
Changes in the Aggregate Maximum Credit Amounts
27
Section 2.07
Borrowing Base
29
Section 2.08
Letters of Credit
32
   
ARTICLE III Payments of Principal and Interest; Prepayments; Fees
37
Section 3.01
Repayment of Loans
37
Section 3.02
Interest
37
Section 3.03
Alternate Rate of Interest
38
Section 3.04
Prepayments
38
Section 3.05
Fees
40
   
ARTICLE IV Payments; Pro Rata Treatment; Sharing of Set-offs.
41
Section 4.01
Payments Generally; Pro Rata Treatment; Sharing of Set-offs
41
Section 4.02
Presumption of Payment by the Borrower
42
Section 4.03
Certain Deductions by the Administrative Agent
42
Section 4.04
Disposition of Proceeds
43
   
ARTICLE V Increased Costs; Break Funding Payments; Taxes; Illegality; Defaulting
Lenders
43
Section 5.01
Increased Costs
43
Section 5.02
Break Funding Payments
44
Section 5.03
Taxes
44
Section 5.04
Mitigation Obligations
46
Section 5.05
Illegality
47
Section 5.06
Defaulting Lenders
47
   
ARTICLE VI Conditions Precedent
48
Section 6.01
Conditions to Effectiveness
48
Section 6.02
Subsequent Borrowing Base Increase Date
51
Section 6.03
Each Credit Event
53
    ARTICLE VII Representations and Warranties 54

 
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Section 7.01
Organization; Powers
54
Section 7.02
Authority; Enforceability
54
Section 7.03
Approvals; No Conflicts
54
Section 7.04
Financial Condition; No Material Adverse Change
55
Section 7.05
Litigation
55
Section 7.06
Environmental Matters
56
Section 7.07
Compliance with the Laws and Agreements; No Defaults
57
Section 7.08
Investment Company Act
57
Section 7.09
Taxes
57
Section 7.10
ERISA
57
Section 7.11
Disclosure; No Material Misstatements
58
Section 7.12
Insurance
58
Section 7.13
Restriction on Liens
58
Section 7.14
Subsidiaries
59
Section 7.15
Location of Business and Offices
59
Section 7.16
Properties; Titles, Etc
59
Section 7.17
Maintenance of Properties
60
Section 7.18
Gas Imbalances, Prepayments
60
Section 7.19
Marketing of Production
61
Section 7.20
Swap Agreements
61
Section 7.21
Use of Loans and Letters of Credit
61
Section 7.22
Solvency
61
   
ARTICLE VIII Affirmative Covenants
61
Section 8.01
Financial Statements; Ratings Change; Other Information
62
Section 8.02
Notices of Material Events
64
Section 8.03
Existence; Conduct of Business
65
Section 8.04
Payment of Obligations
65
Section 8.05
Performance of Obligations under Loan Documents
65
Section 8.06
Operation and Maintenance of Properties
65
Section 8.07
Insurance
66
Section 8.08
Books and Records; Inspection Rights
66
Section 8.09
Compliance with Laws
66
Section 8.10
Environmental Matters
66
Section 8.11
Further Assurances
67
Section 8.12
Reserve Reports
68
Section 8.13
Title Information
69
Section 8.14
Additional Collateral
70
Section 8.15
ERISA Compliance
70
Section 8.16
New Subsidiary Requirements
70
   
ARTICLE IX Negative Covenants
71
Section 9.01
Financial Covenants
71
Section 9.02
Debt
72
Section 9.03
Liens
73
Section 9.04
Restricted Payments
73
Section 9.05
Investments, Loans and Advances
74

 
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Section 9.06
Nature of Business; International Operations
76
Section 9.07
Limitation on Leases
76
Section 9.08
Proceeds of Notes/Loans
77
Section 9.09
Sale or Discount of Receivables
77
Section 9.10
Mergers, Etc
77
Section 9.11
Sale of Assets
77
Section 9.12
Environmental Matters
78
Section 9.13
Transactions with Affiliates
78
Section 9.14
Subsidiaries
79
Section 9.15
Subsidiary Obligations and Preferred Stock
79
Section 9.16
Negative Pledge Agreements; Dividend Restrictions
79
Section 9.17
Gas Imbalances, Take-or-Pay or Other Prepayments
79
Section 9.18
Swap Agreements
80
Section 9.19
Sale and Leaseback Transactions
81
   
ARTICLE X Events of Default; Remedies
81
Section 10.01
Events of Default
81
Section 10.02
Remedies
83
   
ARTICLE XI The Administrative Agent
84
Section 11.01
Appointment; Powers
84
Section 11.02
Duties and Obligations of Administrative Agent
84
Section 11.03
Action by Administrative Agent
84
Section 11.04
Reliance by Administrative Agent
85
Section 11.05
Subagents
85
Section 11.06
Resignation or Removal of Administrative Agent
86
Section 11.07
Administrative Agent as Lender
86
Section 11.08
No Reliance
86
Section 11.09
Authority to Release Collateral and Liens
87
Section 11.10
The Arranger, the Syndication Agent and the Co-Documentation Agents
87
Section 11.11
Filing of Proofs of Claim
87
   
ARTICLE XII Miscellaneous
88
Section 12.01
Notices
88
Section 12.02
Waivers; Amendments
89
Section 12.03
Expenses, Indemnity; Damage Waiver
90
Section 12.04
Successors and Assigns
92
Section 12.05
Survival; Revival; Reinstatement
95
Section 12.06
Counterparts; Integration; Effectiveness
95
Section 12.07
Severability
96
Section 12.08
Right of Setoff
96
Section 12.09
Governing Law; Jurisdiction; Consent to Service of Process
96
Section 12.10
Headings
97
Section 12.11
Confidentiality
97
Section 12.12
Exculpation Provisions
98
Section 12.13
No Third Party Beneficiaries
98
Section 12.14
Collateral Matters; Swap Agreements
99
Section 12.15
USA Patriot Act Notice
99
Section 12.16
Interest Rate Limitation
99

 
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Annex 1
List of Maximum Credit Amounts
   
Exhibit A
Form of Note
Exhibit B
Form of Borrowing Request
Exhibit C
Form of Interest Election Request
Exhibit D
Form of Compliance Certificate
Exhibit F-1
Form of Security Agreement
Exhibit F-2
Form of Guaranty
Exhibit G
Form of Assignment and Assumption
Exhibit H
Form of New Lender Agreement
Exhibit I
Form of Maximum Credit Amount Increase Agreement
   
Schedule 1.01
Additional Unrestricted Subsidiaries as of the Effective Date
Schedule 7.01
Corporate Organizational Chart
Schedule 7.05
Litigation
Schedule 7.14
Subsidiaries
Schedule 7.16
Properties
Schedule 7.18
Gas Imbalances
Schedule 7.19
Marketing Contracts
Schedule 7.20
Swap Agreements
Schedule 9.02
Debt
Schedule 9.03
Liens
Schedule 9.05
Investments
Schedule 9.16
PRC Williston LLC Agreement

 
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THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 13, 2011
(the “Effective Date”), is among MAGNUM HUNTER RESOURCES CORPORATION, a Delaware
corporation (the “Borrower”), each of the Lenders from time to time party
hereto, BANK OF MONTREAL (in its individual capacity, “BOM”), as administrative
agent for the Lenders (in such capacity, together with its successors in such
capacity, the “Administrative Agent”), CAPITAL ONE, N.A., as Syndication Agent
and AMEGY BANK NATIONAL ASSOCIATION, KEYBANK NATIONAL ASSOCIATION and UBS
SECURITIES LLC, as Co-Documentation Agents.
 
R E C I T A L S
 
A.           The Borrower is a party to that certain Amended and Restated Credit
Agreement dated February 12, 2010 (as amended, the “Prior Agreement”) among the
Borrower, the lenders party thereto, Capital One, N.A., as Syndication Agent and
Bank of Montreal, as administrative agent.
 
B.           The Borrower, the Administrative Agent and the Lenders mutually
desire to amend and restate the Prior Agreement in its entirety.
 
C.           In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree that the Prior Agreement is amended and
restated in its entirety as follows:
 
ARTICLE I
Definitions and Accounting Matters
Section 1.01Terms Defined Above.
 
As used in this Agreement, each term defined above has the meaning indicated
above.
 
Section 1.02Certain 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.
 
“Acquisition Agreements” means, collectively, (i) the NGAS Acquisition Agreement
and (ii) the NuLoch Acquisition Agreement, and “Acquisition Agreement” means any
one of them.
 
“Acquisitions” means, collectively, (i) the NGAS Acquisition and (ii) the NuLoch
Acquisition, and “Acquisition” means any one of them.
 
“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
 

 
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“Administrative Agent” has the meaning given in the introductory paragraph.
 
“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.
 
“Affected Loans” has the meaning assigned to such term in ‎Section 5.05.
 
“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
 
“Aggregate Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be increased, reduced or terminated
pursuant to Section 2.06.  The initial Aggregate Maximum Credit Amount of the
Lenders is $250,000,000.
 
“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 Federal Funds Effective
Rate in effect on such day plus ½ of 1% and (c) the LIBO Rate for a one month
interest period in effect on such day plus 1%.  Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the
LIBO Rate shall be effective from and including the effective day of such change
in the Prime Rate, the Federal Funds Effective Rate and the LIBO Rate,
respectively.
 
“Applicable Margin” means, for any day, with respect to any ABR Loan or
Eurodollar Loan, or with respect to the Commitment Fee Rate, as the case may be,
the rate per annum set forth in the Borrowing Base Utilization Grid below based
upon the Borrowing Base Utilization Percentage then in effect:
 
Borrowing Base Utilization Grid
Borrowing Base Utilization Percentage
<33%
>33%, but <66%
>66%
ABR Loans
1.25%
1.75%
2.25%
Eurodollar Loans
2.25%
2.75%
3.25%
Commitment Fee Rate
0.50%
0.50%
0.50%

Each change in the Applicable Margin shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change; provided, however, if at any time
the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a), then
the “Applicable Margin” means the rate per annum set forth on the grid when the
Borrowing Base Utilization Percentage is at its highest level; provided further
that the Applicable Margin shall revert to the previous Applicable Margin upon
the Borrower’s delivery of such Reserve Report.
 
“Applicable Percentage” means, with respect to any Lender, the percentage of the
Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit
Amount as such percentage is set forth on Annex I or in an Assignment and
Assumption Agreement, as the case may be.
 

 
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“Approved Counterparty” means (a) any Lender or any Affiliate of a Lender or (b)
any other Person whose long term senior unsecured debt rating at the time of
entry into the applicable Swap Agreement is A-/A3 by S&P or Moody’s (or their
equivalent) or higher.
 
“Approved Fund” means (a) a CLO or (b) with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor.
 
“Approved Petroleum Engineers” means an independent petroleum engineer or
engineers proposed by the Borrower and approved by the Administrative Agent.
 
“Arranger” means BMO Capital Markets, in its capacity as lead arranger and sole
bookrunner hereunder.
 
“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 G or any other form approved by the Administrative Agent.
 
“Availability Period” means the period from and including the Effective Date to
but excluding the Termination Date.
 
“Board” means the Board of Governors of the Federal Reserve System of the United
States of America or any successor Governmental Authority.
 
“BOM” has the meaning given in the introductory paragraph.
 
“Borrower” has the meaning given in the introductory paragraph.
 
“Borrowing” means Loans of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.
 
“Borrowing Base” means at any time an amount equal to the amount determined in
accordance with ‎Section 2.07, as the same may be adjusted from time to time
pursuant to Section 8.13(c) or ‎Section 9.11.
 
“Borrowing Base Utilization Percentage” means, as of any day, the fraction
expressed as a percentage, the numerator of which is the sum of the Credit
Exposures of the Lenders on such day, and the denominator of which is the
Borrowing Base in effect on such day.
 
“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with ‎Section 2.03.
 

 
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“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Houston, Texas, are authorized or required by law to
remain closed; and if such day relates to a Borrowing or continuation of, a
payment or prepayment of principal of or interest on, or a conversion of or
into, or the Interest Period for, a Eurodollar Loan or a notice by the Borrower
with respect to any such Borrowing or continuation, payment, prepayment,
conversion or Interest Period, any day which is also a day on which dealings in
dollar deposits are carried out in the London interbank market.
 
“Capital Leases” means, in respect of any Person, all leases that shall have
been, or should have been, in accordance with GAAP, recorded as capital leases
on the balance sheet of the Person liable (whether contingent or otherwise) for
the payment of rent thereunder.
 
“Casualty Event” means any loss, casualty or other insured damage to, or any
nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Borrower or any of its Subsidiaries
having a fair market value in excess of $2,000,000.
 
“Change in Control” means the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect
on the Effective Date) of Equity Interests representing more than twenty-five
percent (25%) of the aggregate ordinary voting power represented by the issued
and outstanding Equity Interests of the Borrower.
 
“Change in Law” means (a) the adoption of any law, rule or regulation after the
Effective Date, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
Effective Date 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 Effective Date; provided, that
notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith shall be deemed to be a
“Change in Law”, regardless of the date enacted, adopted or issued.
 
“CLO” means any Person (other than a natural Person) that is engaged in making,
purchasing, holding or otherwise investing in bank loans and similar extensions
of credit in the ordinary course of its business and is administered or managed
by a Lender or an Affiliate of such Lender.
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and any successor statute.
 
“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans and to acquire participations in Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such
Lender’s Credit Exposure hereunder, as such commitment may be (a) modified from
time to time pursuant to ‎Sections 2.06, 2.09 and 10.02 and (b) modified from
time to time pursuant to assignments by or to such Lender pursuant to
‎Section 12.04(b), and “Commitments” means the aggregate amount of the
Commitments of all the Lenders.  The amount representing each Lender’s
Commitment shall at any time be the lesser of (i) such Lender’s Maximum Credit
Amount and (ii) such Lender’s Applicable Percentage of the then effective
Borrowing Base.
 

 
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“Commitment Fee Rate” has the meaning set forth in the definition of “Applicable
Margin”.
 
“Consolidated Net Income” means with respect to the Borrower and the Restricted
Subsidiaries, for any period, the aggregate of the net income (or loss) of the
Borrower and the Restricted Subsidiaries after allowances for Taxes payable by
the Borrower and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded from such net income (to the extent otherwise included therein) the
following: (a) the net income of any Person in which the Borrower or any
Restricted Subsidiary has an interest (which interest does not cause the net
income of such other Person to be consolidated with the net income of the
Borrower and the Restricted Subsidiaries in accordance with GAAP), except to the
extent of the amount of dividends or distributions actually paid in cash during
such period by such other Person to the Borrower or to a Restricted Subsidiary,
as the case may be; (b) any extraordinary gains or losses (excluding any
unrealized gains and losses under FAS 133) during such period; and (c) any gains
or losses (excluding any unrealized gains and losses under FAS 133) attributable
to writeups or writedowns of assets; and provided further that if the Borrower
or any Restricted Subsidiary shall acquire or dispose of any Property during
such period in an aggregate amount that equals or exceeds ten percent (10%) of
the Borrowing Base then in effect, then Consolidated Net Income shall be
calculated after giving pro forma effect to such acquisition or disposition, as
if such acquisition or disposition had occurred on the first day of such period.
 
“Consolidated Subsidiaries” means each Subsidiary of the Borrower (whether now
existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Borrower in accordance with GAAP.
 
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.  For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 40% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to “control” such other Person.  “Controlling” and
“Controlled” have meanings correlative thereto.
 
“Credit Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Loans and LC Exposure at such
time.
 

 
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“Debt” means, for any Person, the sum of the following (without
duplication):  (a) all obligations of such Person for borrowed money or
evidenced by bonds, bankers’ acceptances, debentures, notes or other similar
instruments; (b) all obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, surety or other bonds and similar
instruments; (c) all accounts payable and all accrued expenses, liabilities or
other obligations of such Person to pay the deferred purchase price of Property
or services; (d) all obligations under Capital Leases; (e) all obligations under
Synthetic Leases; (f) all Debt (as defined in the other clauses of this
definition) of others secured by a Lien on any Property of such Person, whether
or not such Debt is assumed by such Person; (g) all Debt (as defined in the
other clauses of this definition) of others guaranteed by such Person or in
which such Person otherwise assures a creditor against loss of the Debt
(howsoever such assurance shall be made) to the extent of the lesser of the
amount of such Debt and the maximum stated amount of such guarantee or assurance
against loss; (h) all obligations or undertakings of such Person to maintain or
cause to be maintained the financial position or covenants of others or to
purchase the Debt or Property of others; (i) obligations to deliver commodities,
goods or services, including, without limitation, Hydrocarbons, in consideration
of one or more advance payments, other than gas balancing arrangements in the
ordinary course of business; (j) any Debt of a partnership for which such Person
is liable either by agreement, by operation of law or by a Governmental
Requirement but only to the extent of such liability; (k) Disqualified Capital
Stock; and (l) the undischarged balance of any production payment created by
such Person or for the creation of which such Person directly or indirectly
received payment.  The Debt of any Person shall include all obligations of such
Person of the character described above to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
not included as a liability of such Person under GAAP.
 
“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
 
“Defaulting Lender” means any Lender, as determined by the Administrative Agent,
that (a) has failed, within three Business Days of the date required to be
funded by it hereunder, to fund (i) any portion of its Loans or (ii)
participations in Letters of Credit, unless, in the case of clause (i), such
Lender notifies the Administrative Agent in writing that such failure is a
result of such Lender’s good faith determination that a condition precedent to
funding (specifically identified and including the particular default, if any)
has not been satisfied, (b) notified the Borrower, the Administrative Agent, or
the Issuing Bank in writing that it does not intend to comply with any of its
funding obligations under this Agreement or has made a public statement to the
effect that it does not intend to comply with its funding obligations under this
Agreement (unless such writing or public statement indicates that such position
is based upon such Lender’s good faith determination that a condition precedent
to funding (specifically identified and including the particular default, if
any) cannot be satisfied) or generally under other agreements in which it
commits to extend credit, (c) failed, within three Business Days after request
by the Administrative Agent, to confirm in writing that it will comply with the
terms of this Agreement relating to its obligations to fund prospective Loans
and participations in then outstanding Letters of Credit, provided that such
Lender will cease to be a Defaulting Lender pursuant to this clause (c) upon the
Administrative Agent’s receipt of such written confirmation in form and
substance satisfactory to it, (d) otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within three Business Days of the date when due, unless the subject
of a good faith dispute, or (e) (i) become or is insolvent or has a parent
company that has become or is insolvent or (ii) become the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or custodian,
appointed for it, including the Federal Deposit Insurance Corporation or any
other federal or state regulatory authority acting in such a capacity, or has
taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that
has become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or custodian appointed for it, including the Federal Deposit Insurance
Corporation or any other federal or state regulatory authority acting in such a
capacity, or has taken any action in furtherance of, or indicating its consent
to, approval of or acquiescence in any such proceeding or appointment; provided
that a Lender shall not be considered a Defaulting Lender solely by virtue of
any ownership interest, or the acquisition of any ownership interest, in such
Lender by a Governmental Authority or instrumentality thereof, provided,
further, that such ownership interest does not result in or provide such Lender
with immunity from the jurisdiction of courts within the United States or from
the enforcement of judgments or writs of attachment on its assets or permit such
Lender (or such Governmental Authority or instrumentality) to reject, repudiate,
disavow or disaffirm any contracts or agreements made by such Lender.
 

 
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“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated; provided, however, Disqualified Capital Stock shall not include
Series C or Series D preferred stock permitted under Section 9.02, so long as
any dividends paid with respect thereto comply with the provisions of Section
9.04.
 
“dollars” or “$” refers to lawful money of the United States of America.
 
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
the United States of America or any state thereof or the District of Columbia.
 
“EBITDAX” means, for any period, the sum of Consolidated Net Income for such
period calculated on a trailing four quarter basis plus the following expenses
or charges to the extent deducted from Consolidated Net Income in such period:
interest, income Taxes, depreciation, depletion, amortization, expenses
associated with the exploration of Oil and Gas Properties, all non-cash charges
and adjustments (including stock-based compensation, impairment of asset values,
non-cash adjustments to derivative carrying values, non-cash adjustments to
asset retirement obligations and other similar items as from time to time
required under GAAP) and all non-recurring expenses, minus all non-cash income
added to Consolidated Net Income.  Notwithstanding the foregoing, EBITDAX shall
be Consolidated Net Income plus the aforementioned expenses or charges (i) for
the most recently ended quarter multiplied by four (4) with respect to the
quarter ended June 30, 2011, (ii) for the most recently ended two (2) quarters
multiplied by two (2) with respect to the quarter ended September 30, 2011, and
(iii) for the most recently ended three (3) quarters multiplied by four-thirds
(4/3) with respect to the quarter ended December 31, 2011.  With respect to the
NGAS Acquisition and the NuLoch Acquisition, EBITDAX shall be calculated on a
pro forma basis as if such Acquisitions had taken place as of the beginning of
the quarter during which such Acquisitions take place.
 

 
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“Effective Date” means the date first written above.
 
“Engineering Reports” has the meaning assigned such term in ‎Section 2.07(c)(i).
 
“Environmental Laws” means any and all Governmental Requirements pertaining in
any way to health, safety, the environment or the preservation or reclamation of
natural resources, in effect in any and all jurisdictions in which the Borrower
or any Subsidiary is conducting or at any time has conducted business, or where
any Property of the Borrower or any Restricted Subsidiary is located, including
without limitation, the Oil Pollution Act of 1990 (“OPA”), as amended, the Clean
Air Act, as amended, the Comprehensive Environmental, Response, Compensation,
and Liability Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 (“RCRA”), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection Governmental Requirements.  The term
“oil” shall have the meaning specified in OPA, the terms “hazardous substance”
and “release” (or “threatened release”) have the meanings specified in CERCLA,
the terms “solid waste” and “disposal” (or “disposed”) have the meanings
specified in RCRA and the term “oil and gas waste” shall have the meaning
specified in Section 91.1011 of the Texas Natural Resources Code (“Section
91.1011”); provided, however, that (a) in the event either OPA, CERCLA, RCRA or
Section 91.1011 is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date of
such amendment and (b) to the extent the laws of the state or other jurisdiction
in which any Property of the Borrower or any Subsidiary is located establish a
meaning for “oil,” “hazardous substance,” “release,” “solid waste,” “disposal”
or “oil and gas waste” which is broader than that specified in either OPA,
CERCLA, RCRA or Section 91.1011, such broader meaning shall apply.
 
“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
 
“ERISA Affiliate” means each trade or business (whether or not incorporated)
that, together with the Borrower or a Subsidiary is treated as a “single
employer” under Section 414(b) or (c) of the Code, or solely for the proposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
 

 
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“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30 day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
 
“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.
 
“Eureka Hunter” means Eureka Hunter Pipeline, LLC, a Delaware limited liability
company.
 
“Eureka Hunter Pipeline” means that certain pipeline system (as it may exist
from time to time, including any expansions thereof) for the gathering and
transportation of natural gas in Ohio and West Virginia commonly known as the
Eureka Hunter Pipeline.
 
“Eureka Hunter Pipeline J.V.” means a joint venture that may be formed between
Eureka Hunter Pipeline Partners and a third party to own and operate the Eureka
Hunter Pipeline, subject to approval by the Administrative Agent acting
reasonably.
 
“Eureka Hunter Pipeline Partners” means Eureka Hunter Pipeline Partners, LLC, a
Delaware limited liability company.
 
“Event of Default” has the meaning assigned such term in ‎Section 10.01.
 

 
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“Excepted Liens” means (a) Liens for Taxes, assessments or other governmental
charges or levies which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (b) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (c) statutory landlord’s liens, operators’,
vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’,
workers’, materialmen’s, construction or other like Liens arising by operation
of law in the ordinary course of business or incident to the exploration,
development, operation and maintenance of Oil and Gas Properties each of which
is in respect of obligations that are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (d) contractual Liens that arise
in the ordinary course of business under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, division orders, contracts for the sale, transportation or exchange
of oil and natural gas, unitization and pooling declarations and agreements,
area of mutual interest agreements, overriding royalty agreements, marketing
agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP
(or, with respect to royalty interests, such liens will not reasonably be
expected to result in a Material Adverse Effect), provided that any such Lien
referred to in this clause does not materially impair the use of the Property
covered by such Lien for the purposes for which such Property is held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (e) Liens arising solely by virtue of any statutory or common
law provision relating to banker’s liens, rights of set-off or similar rights
and remedies and burdening only deposit accounts or other funds maintained with
a creditor depository institution, provided that no such deposit account is a
dedicated cash collateral account or is subject to restrictions against access
by the depositor in excess of those set forth by regulations promulgated by the
Board and no such deposit account is intended by Borrower or any of its
Subsidiaries to provide collateral to the depository institution; (f) easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in any Property of the Borrower or any Subsidiary for the purpose
of roads, pipelines, transmission lines, transportation lines, distribution
lines for the removal of gas, oil, coal or other minerals or timber, and other
like purposes, or for the joint or common use of real estate, rights of way,
facilities and equipment, which in the aggregate do not materially impair the
use of such Property for the purposes of which such Property is held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (g) Liens on cash or securities pledged to secure performance
of tenders, surety and appeal bonds, government contracts, performance and
return of money bonds, bids, trade contracts, leases, statutory obligations,
regulatory obligations and other obligations of a like nature incurred in the
ordinary course of business; (h) judgment and attachment Liens not giving rise
to an Event of Default, provided that any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have been
finally terminated or the period within which such proceeding may be initiated
shall not have expired and no action to enforce such Lien has been commenced;
and (i) Liens arising from UCC financing statement filings regarding operating
leases entered into by the Borrower and the Subsidiaries in the ordinary course
of business covering only the Property under lease; provided, further that Liens
described in clauses (a) through (e) shall remain Excepted Liens only for so
long as no action to enforce such Lien has been commenced and no intention to
subordinate the first priority Lien granted in favor of the Administrative Agent
and the Lenders is to be hereby implied or expressed by the permitted existence
of such Excepted Liens.
 

 
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“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 hereunder or under any other Loan
Document, (a) income or franchise taxes 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 is
located and (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 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 to comply with ‎Section
5.03(e), except to the extent that such Foreign Lender (or its assignor, if any)
was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts with respect to such withholding tax
pursuant to ‎Section 5.03(a) or ‎Section 5.03(c).
 
“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, New York or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
 
“Fee Letter” means the letter agreement dated January 13, 2011, among the
Borrower, the Administrative Agent and the Arranger pertaining to certain fees
payable to the Administrative Agent and the Arranger.
 
“Financial Officer” means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person.  Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of the Borrower.
 
“Financial Statements” means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries referred to in ‎Section 7.04(a).
 
“Foreign Lender” means any Lender that is 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 Subsidiary that is not a Domestic Subsidiary.
 
“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time subject to the terms and conditions set
forth in ‎Section 1.05.
 
“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government over the
Borrower, any Subsidiary, any of their Properties, the Administrative Agent, the
Issuing Bank or any Lender.
 
“Governmental Requirement” means any applicable law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
 

 
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“Guaranty” means the Amended and Restated Guaranty executed by the Guarantors of
even date herewith, as amended, in the form of Exhibit F-2 attached hereto.
 
“Guarantor” means all Restricted Subsidiaries of Borrower.
 
“Hall Houston Debt” means the obligations of the Borrower with respect to
contingent liabilities retained by the Borrower in connection with the sale of
limited partner interests in Hall Houston Exploration II LP.
 
“Highest Lawful Rate” means, as to any Lender, the maximum non-usurious interest
rate, if any (or, if the context so requires, an amount calculated at such
rate), that at any time or from time to time may be contracted for, taken,
reserved, charged, or received by such Lender under applicable laws with respect
to an obligation, as such laws are presently in effect or, to the extent allowed
by applicable law, as such laws may hereafter be in effect and which allow a
higher maximum non-usurious interest rate than such laws now allow.  The
determination of the Highest Lawful Rate shall, to the extent required by
applicable law, take into account as interest paid, taken, received, charged,
reserved or contracted for any and all relevant payments or charges under the
Loan Documents.
 
“Hydrocarbon Interests” means all rights, titles, interests and estates now or
hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or
other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.
 
“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all
products refined or separated therefrom.
 
“Indemnified Taxes” means Taxes other than Excluded Taxes.
 
“Initial Reserve Report” means (i) with respect to the Borrower, the Reserve
Report effective as of December 31, 2010 issued to the Borrower by Cawley,
Gillespie & Associates, Inc., (ii) with respect to NGAS and upon completion of
the NGAS Acquisition, the Reserve Report effective as of December 31, 2010
issued to NGAS by Wright & Company, Inc. dated January 21, 2011 and (iii) with
respect to NuLoch and upon completion of the NuLoch Acquisition, the Reserve
Report dated February 15, 2011 issued by AJM Petroleum Consultants.
 

 
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“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with ‎Section 2.04.
 
“Interest Expense” means, for any applicable period, the aggregate cash interest
expense (both accrued and paid and net of interest income paid during such
period to the Borrower and its Restricted Subsidiaries) of the Borrower and its
Restricted Subsidiaries for such applicable period, including the portion of any
payments made in respect of Capital Leases allocable to interest expense.
 
“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of
each March, June, September and December and (b) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period.
 
“Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three, six or twelve
months thereafter, as the Borrower may elect; provided, that (a) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period.  For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
 
“Interim Redetermination” means any redetermination of the Borrowing Base under
‎Section 2.07(b)(ii) or Section 2.07(b)(iii).
 
“Interim Redetermination Date” means the date on which a Borrowing Base that has
been redetermined pursuant to an Interim Redetermination becomes effective as
provided in ‎Section 2.07(d).
 
“Investment” means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including, without
limitation, any “short sale” or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale) or any
capital contribution to any other Person; (b) the making of any deposit with, or
advance, loan or capital contribution to, assumption of Debt of, purchase or
other acquisition of any other Debt or equity participation or interest in, or
other extension of credit to, any other Person (including the purchase of
Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person); or (c) the
entering into of any guarantee of, or other contingent obligation (including the
deposit of any Equity Interests to be sold) with respect to, Debt or other
liability of any other Person and (without duplication) any amount committed to
be advanced, lent or extended to such Person.
 

 
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“Issuing Bank” means Bank of Montreal, in its capacity as the issuer of Letters
of Credit hereunder, and its successors in such capacity as provided
herein.  The Issuing Bank may, in its discretion, arrange for one or more
Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case
the term “Issuing Bank” shall include any such Affiliate with respect to Letters
of Credit issued by such Affiliate.
 
“LC Commitment” at any time means Ten Million Dollars ($10,000,000).
 
“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit issued by the Issuing Bank.
 
“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time.  The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.
 
“Lenders” means the Persons listed on Annex I, any Person that shall have become
a party hereto pursuant to an Assignment and Assumption, other than any such
Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.
 
“Letter of Credit” means any letter of credit issued pursuant to this Agreement.
 
“Letter of Credit Agreements” means all letter of credit applications and other
agreements (including any amendments, modifications or supplements thereto)
submitted by the Borrower, or entered into by the Borrower, with the Issuing
Bank relating to any Letter of Credit issued by the Issuing Bank.
 
“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Reuters BBA Libor Rates LIBOR01 (or on any
successor or substitute page of such service, or any successor to or substitute
for such service, providing rate quotations comparable to those currently
provided on such page of such service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period; provided, in no event shall the LIBO Rate be less than
1%.  In the event that such rate is not available at such time for any reason,
then the LIBO Rate with respect to such Eurodollar Borrowing for such Interest
Period shall be the rate at which dollar deposits of $5,000,000 and, in each
case, for a maturity comparable to such Interest Period are offered by the
principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
 

 
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“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) royalties, production payments and the like payable
out of Oil and Gas Properties.  The term “Lien” shall include easements,
restrictions, servitudes, permits, conditions, covenants, encroachments,
exceptions or reservations.  For the purposes of this Agreement, the Borrower
and its Subsidiaries shall be deemed to be the owner of any Property which it
has acquired or holds subject to a conditional sale agreement, or leases under a
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person in a transaction intended to
create a financing.
 
“Liquidate” means, with respect to any Swap Agreement, (a) the sale, assignment,
novation, unwind or termination of all or any part of such Swap Agreement or (b)
the creation of an offsetting position against all or any part of such Swap
Agreement; provided that, a Swap Agreement shall not be considered “Liquidated”
for the purposes of this Agreement if, upon the occurrence of any of the events
described in clauses (a) and (b), such Swap Agreement is replaced simultaneously
with a new Swap Agreement containing substantially the same terms and provisions
as the prior Swap Agreement.  The term “Liquidated” has a correlative meaning
thereto.
 
“Loan Documents” means this Agreement, the Notes, the Letter of Credit
Agreements, the Letters of Credit, the Security Instruments and the Guaranties.
 
“Loan Parties” means the Borrower and each Subsidiary that is a party to any
Loan Document.
 
“Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement.
 
“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, Property or condition (financial or otherwise) of the Borrower and
the Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform
any of its obligations under any Loan Document, (c) the validity or
enforceability of any Loan Document or (d) the rights and remedies of or
benefits available to the Administrative Agent, the Issuing Bank or any Lender
under any Loan Document.
 
“Material 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 Borrower and its Subsidiaries in an aggregate principal amount exceeding
$3,000,000.  For purposes of determining Material Indebtedness, the “principal
amount” of the obligations of the Borrower or any Subsidiary in respect of any
Swap Agreement at any time shall be the maximum aggregate amount (giving effect
to any netting agreements) that the Borrower or such Subsidiary would be
required to pay if such Swap Agreement were terminated at such time.
 
“Maturity Date” means April 13, 2016.
 

 
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“Maximum Credit Amount” means, as to each Lender, the amount set forth opposite
such Lender’s name on Annex I under the caption “Maximum Credit Amounts,” as the
same may be (a) modified from time to time pursuant to ‎Sections 2.06 or 10.02
or (b) modified from time to time pursuant to any assignment permitted by
‎Section 12.04(b).
 
“Maximum Credit Amount Increase Agreement” means an agreement entered into by a
Lender, the Borrower and the Administrative Agent pursuant to Section
2.06(c)(iv), in substantially the form of Exhibit I.
 
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that
is a nationally recognized rating agency.
 
“Mortgaged Property” means any Property owned by the Borrower or any Restricted
Subsidiary that is subject to the Liens existing and to exist under the terms of
the Security Instruments.
 
“Mortgages” means all mortgages and deeds of trust executed in connection
herewith.
 
“Multiemployer Plan” means a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
 
“New Borrowing Base Notice” has the meaning assigned such term in ‎Section
2.07(d).
 
“New Lender” has the meaning assigned to such term in Section 2.06(c)(iii).
 
“New Lender Agreement” means an agreement entered into by a New Lender, the
Borrower and the Administrative Agent pursuant to Section 2.06(c)(iii), in
substantially the form of Exhibit H.
 
“NGAS” means NGAS Resources, Inc., a British Columbia corporation.
 
“NGAS Acquisition” means the acquisition by the Borrower of NGAS pursuant to the
NGAS Acquisition Agreement.
 
“NGAS Acquisition Agreement” means that certain Arrangement Agreement dated
December 23, 2010, between NGAS and the Borrower, as amended from time to time
with the prior written consent of the Administrative Agent not to be
unreasonably withheld.
 
“Notes” means the promissory notes of the Borrower described in ‎Section 2.02(d)
and being substantially in the form of Exhibit A, together with all amendments,
modifications, replacements, extensions and rearrangements thereof.
 
“NuLoch” means NuLoch Resources, Inc., a corporation existing under the laws of
the Province of Alberta.
 
“NuLoch Acquisition” means the acquisition by the Borrower of NuLoch pursuant to
the NuLoch Acquisition Agreement.
 

 
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“NuLoch Acquisition Agreement” means that certain Arrangement Agreement dated
January 19, 2011 among NuLoch, the Borrower and MHR Exchangeco Corporation, as
amended from time to time with the prior written consent of the Administrative
Agent not to be unreasonably withheld.
 
“Obligations” means, without duplication, (i) all Debt evidenced hereunder, (ii)
the obligation of the Loan Parties for the payment of the fees payable hereunder
or under the other Loan Documents, (iii) all other obligations and liabilities
of the Borrower to any Person relating to Swap Agreements between the Borrower
or any Subsidiary and such Person initially entered into while such Person was a
Lender under the Prior Agreement or this Agreement or an Affiliate of a Lender
under the Prior Agreement or this Agreement, and (iv) all other obligations and
liabilities (monetary or otherwise, whether absolute or contingent, matured or
unmatured) of the Loan Parties to the Administrative Agent, the Issuer and the
Lenders, including reimbursement obligations with respect to LC Disbursements,
in each case now existing or hereafter incurred under, arising out of or in
connection with any Loan Document, and to the extent that any of the foregoing
includes or refers to the payment of amounts deemed or constituting interest,
only so much thereof as shall have accrued, been earned and which remains unpaid
at each relevant time of determination.
 
“Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) Properties now or
hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of Hydrocarbon Interests; (d) all operating
agreements, contracts and other agreements, including production sharing
contracts and agreements, which relate to any of Hydrocarbon Interests or the
production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under
and which may be produced and saved or attributable to the Hydrocarbon
Interests, including all oil in tanks, and all rents, issues, profits, proceeds,
products, revenues and other incomes from or attributable to Hydrocarbon
Interests; (f) all tenements, hereditaments, appurtenances and Properties in any
manner appertaining, belonging, affixed or incidental to Hydrocarbon Interests
and (g) all Properties, rights, titles, interests and estates described or
referred to above, including any and all Property, real or personal, now owned
or hereinafter acquired and situated upon, used, held for use or useful in
connection with the operating, working or development of any of such Hydrocarbon
Interests or Property (excluding drilling rigs, automotive equipment, rental
equipment or other personal Property which may be on such premises for the
purpose of drilling a well or for other similar temporary uses) and including
any and all oil wells, gas wells, injection wells or other wells, buildings,
structures, fuel separators, liquid extraction plants, plant compressors, pumps,
pumping units, field gathering systems, tanks and tank batteries, fixtures,
valves, fittings, machinery and parts, engines, boilers, meters, apparatus,
equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
and rods, surface leases, rights-of-way, easements and servitudes together with
all additions, substitutions, replacements, accessions and attachments to any
and all of the foregoing.
 
“Other 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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“Participant” has the meaning set forth in ‎Section 12.04(c)(i).
 
“Patriot Act” has the meaning set forth in ‎Section 12.15.
 
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA, and any successor entity performing similar functions.
 
“PDP” means, with respect to the Oil and Gas Properties, properties that are
categorized as “Proved Reserves” that are both “Developed” and “Producing” as
such terms are defined in the Definitions for Oil and Gas Reserves as
promulgated by the Society of Petroleum Engineers (or any generally recognized
successor) as in effect as the time in question.
 
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
 
“Plan” means any employee pension benefit plan (other than a Multiemployer
Plan), subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
 
“Potential NGAS Liquidation” means the possible liquidation of NGAS into a
Delaware limited liability company that is a Wholly-Owned Subsidiary following
the NGAS Acquisition as described in NGAS’s proxy statement relating to the NGAS
Acquisition, subject to the approval of the Administrative Agent acting
reasonably.
 
“Prime Rate” means the rate of interest per annum publicly announced from time
to time by BOM as its prime rate in effect at its principal office in New York,
New York; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.  Such rate is set
by the Administrative Agent as a general reference rate of interest, taking into
account such factors as the Administrative Agent may deem appropriate; it being
understood that many of the Administrative Agent’s commercial or other loans are
priced in relation to such rate, that it is not necessarily the lowest or best
rate actually charged to any customer and that the Administrative Agent may make
various commercial or other loans at rates of interest having no relationship to
such rate.
 
“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
cash, securities, accounts and contract rights.
 
“Proposed Borrowing Base” has the meaning assigned to such term in ‎Section
2.07(c)(i).
 
“Proposed Borrowing Base Notice” has the meaning assigned to such term in
‎Section 2.07(c)(ii).
 

 
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“Redemption” means with respect to any Debt, the repurchase, redemption,
prepayment, repayment or defeasance (or the segregation of funds with respect to
any of the foregoing) of such Debt.  “Redeem” has the correlative meaning
thereto.
 
“Redetermination Date” means, with respect to any Scheduled Redetermination or
any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to ‎Section 2.07(d).
 
“Register” has the meaning assigned such term in ‎Section 12.04(b)(iv).
 
“Regulation D” means Regulation D of the Board, as the same may be amended,
supplemented or replaced from time to time.
 
“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors (including attorneys, accountants and experts) of such Person and such
Person’s Affiliates.
 
“Remedial Work” has the meaning assigned such term in ‎Section 8.10(a).
 
“Required Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least sixty-six and two thirds percent (66 2/3%)
of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC
Exposure is outstanding, Lenders holding at least sixty-six and two thirds
percent (66 2/3%) of the outstanding aggregate principal amount of the Loans or
participation interests in Letters of Credit (without regard to any sale by a
Lender of a participation in any Loan under ‎Section 12.04(c)).
 
“Reserve Report” means a report, in form and substance reasonably satisfactory
to the Administrative Agent, setting forth, as of each December 31st or June
30th (or such other date in the event of an Interim Redetermination), the oil
and gas reserves attributable to the proved Oil and Gas Properties of the
Borrower and the Restricted Subsidiaries, together with a projection of the rate
of production and future net income, taxes, operating expenses and capital
expenditures with respect thereto as of such date, based upon the pricing
assumptions consistent with SEC reporting requirements at the time, or, in the
case of the Initial Reserve Report for NuLoch, upon the pricing assumptions set
forth therein, and reflecting Swap Agreements in place with respect to such
production, and shall include each of the Initial Reserve Reports.
 
“Responsible Officer” means, as to any Person, the Chief Executive Officer, the
Chief Operating Officer, the President, any Financial Officer or any Vice
President of such Person.  Unless otherwise specified, all references to a
Responsible Officer herein shall mean a Responsible Officer of the Borrower.
 
“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any Equity Interests in the
Borrower or any Restricted Subsidiary, or any payment (whether in cash,
securities or other Property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such Equity Interests in the Borrower or any Restricted
Subsidiary or any option, warrant or other right to acquire any such Equity
Interests in the Borrower or any Restricted Subsidiary.
 

 
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“Restricted Subsidiary” means any Subsidiary that is not an Unrestricted
Subsidiary.
 
“Scheduled Redetermination” has the meaning assigned such term in ‎Section
2.07(b)(i).
 
“Scheduled Redetermination Date” means the date on which a Borrowing Base that
has been redetermined pursuant to a Scheduled Redetermination becomes effective
as provided in ‎Section 2.07(d).
 
“SEC” means the U.S. Securities and Exchange Commission or any successor
Governmental Authority.
 
“Security Agreement” means the Amended and Restated Security and Pledge
Agreement executed by Borrower and the Guarantors of even date herewith, as
amended, substantially in the form of Exhibit F-1 attached hereto.
 
“Security Instruments” means the mortgages, deeds of trust and other agreements,
instruments or certificates, and any and all other agreements, instruments,
certificates or certificates now or hereafter executed and delivered by the
Borrower or any other Person (other than Swap Agreements with the Lenders or any
Affiliate of a Lender or participation or similar agreements between any Lender
and any other lender or creditor with respect to any Obligations pursuant to
this Agreement) in connection with, or as security for the payment or
performance of the Obligations, the Notes, this Agreement, or reimbursement
obligations under the Letters of Credit, as such agreements may be amended,
modified, supplemented or restated from time to time, including, without
limitation, the Security Agreement and Mortgages.
 
“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.
 
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
Eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board).  Such reserve percentages shall include those
imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to
constitute Eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
 
“Subsequent Borrowing Base Increase Date” means each date on which the Borrowing
Base is increased pursuant to Section 2.07(a) as a result of the consummation of
any Acquisition after the Effective Date.
 
“Subsidiary” means (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or Controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner.  Unless otherwise indicated herein, each reference to the term
“Subsidiary” shall mean a Subsidiary of the Borrower.
 

 
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“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement, whether exchange
traded, “over-the-counter” or otherwise, involving, or settled by reference to,
one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any combination
of these transactions; provided that no stock incentive, stock option, phantom
stock or similar plan or program providing for stock-based awards or payments to
current or former directors, officers, employees or consultants of the Borrower
or the Subsidiaries, shall be considered to be a Swap Agreement.
 
“Synthetic Leases” means, in respect of any Person, all leases which shall have
been, or should have been, in accordance with GAAP, treated as operating leases
on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
Obligations for borrowed money for purposes of U.S. federal income taxes, if the
lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.
 
“Taxes” means 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.
 
“Total Proved Reserves” means, with respect to the Oil and Gas Properties, the
sum of (a) PDP Oil and Gas Properties, (b) Oil and Gas Properties that are
categorized as “Proved Developed Nonproducing Reserves”, and (c) Oil and Gas
Properties that are categorized as “Proved Undeveloped Reserves”, in each case,
as said two latter terms are defined in the Definitions for Oil and Gas Reserves
as promulgated by the Society of Petroleum Engineers (or any generally
recognized successor) as in effect at the time in question.
 
“Transactions” means the execution, delivery and performance by the Borrower of
this Agreement, each other Loan Document to which it is a party, the borrowing
of Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder, and the grant of Liens by the Borrower on Mortgaged Properties and
other Properties pursuant to the Security Instruments.
 
“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.
 

 
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“UCC” means the Uniform Commercial Code in effect from time to time in the State
of New York, or, where applicable as to specific Property, any other relevant
state.
 
“Unrestricted Subsidiary” means (i) any Subsidiary that at the time of
determination shall have been designated as an Unrestricted Subsidiary by the
Borrower in the manner provided below (and shall not have been subsequently
designated as a Restricted Subsidiary), (ii) any Subsidiary of an Unrestricted
Subsidiary and (iii) the following additional entities: (A) Alpha Hunter
Drilling, LLC, (B) Hunter Disposal, LLC, (C) Hunter Real Estate, LLC, (D) Eureka
Hunter Pipeline, LLC, (E) Eureka Hunter Pipeline Partners, LLC, (F) MHR
Acquisition Company II, LLC, (G) MHR Acquisition Company III, LLC and (H) the
Persons listed on Schedule 1.01 (except to the extent any such Person has been
subsequently designated as a Restricted Subsidiary).  The Borrower may from time
to time designate any Subsidiary (including a newly-created or newly acquired
Subsidiary) (other than a Subsidiary that, immediately after such designation,
shall hold any Debt or Equity Interest in the Borrower or any Restricted
Subsidiary) as an Unrestricted Subsidiary, and may designate any Unrestricted
Subsidiary as a Restricted Subsidiary so long as, immediately after giving
effect to such designation, no Default shall have occurred and be
continuing.  Any designation by the Borrower pursuant to this definition shall
be made in an officer’s certificate delivered to the Administrative Agent and
containing a certification that such designation is in compliance with the terms
of this definition.
 
“Wholly-Owned Subsidiary” means any Subsidiary of which all of the outstanding
Equity Interests (other than any directors’ qualifying shares mandated by
applicable law), on a fully-diluted basis, are owned by the Borrower or one or
more of the Wholly-Owned Subsidiaries or by the Borrower and one or more of the
Wholly-Owned Subsidiaries; provided that, for purposes of this Agreement, and
for the avoidance of doubt, PRC Williston, LLC, during such times as the
Borrower owns all of the Equity Interests therein, shall be deemed a
Wholly-Owned Subsidiary, notwithstanding the non-controlling interests in such
Subsidiary recorded for accounting purposes as reflected in the Borrower’s
Financial Statements.
 
Section 1.03 Types of Loans and Borrowings.  For purposes of this Agreement,
Loans and Borrowings, respectively, may be classified and referred to by Type
(e.g., a “Eurodollar Loan” or a “Eurodollar Borrowing”).
 
Section 1.04 Terms Generally; Rules of Construction.  The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.  The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”.  The word “will” shall be construed to have the same meaning and
effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any law shall be construed as referring to such law
as amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, (c) any reference herein to any Person shall be construed to
include such Person’s successors and assigns (subject to the restrictions
contained herein), (d) the words “herein”, “hereof” and “hereunder”, and words
of similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (e) with respect to the
determination of any time period, the word “from” means “from and including” and
the word “to” means “to and including” and (f) any reference herein to Articles,
Sections, Annexes, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Annexes, Exhibits and Schedules to, this
Agreement.  On the Subsequent Borrowing Base Increase Date, the Borrower may
revise any or all of the Schedules 7.01, 7.05, 7.14, 7.16, 7.18, 7.19, 7.20,
9.02, 9.03 and 9.05 with the consent of the Administrative Agent (not to be
unreasonably withheld or delayed) to reflect changes to any of such Schedules
relating to NGAS or NuLoch, as the case may be, as a result of any Acquisition
occurring after the Effective Date.  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.
 

 
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Section 1.05                      Accounting Terms and Determinations;
GAAP.  Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished to the Administrative Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis
consistent with the Financial Statements except for changes in which Borrower’s
independent certified public accountants concur and which are disclosed to
Administrative Agent on the next date on which financial statements are required
to be delivered to the Lenders pursuant to ‎Section 8.01(a); provided that,
unless the Borrower and the Required Lenders shall otherwise agree in writing,
no such change shall modify or affect the manner in which compliance with the
covenants contained herein is computed such that all such computations shall be
conducted utilizing financial information presented consistently with prior
periods.
 
ARTICLE II
The Credits
Section 2.01 Commitments.  Subject to the terms and conditions set forth herein,
each Lender agrees to make Loans to the Borrower during the Availability Period
in an aggregate principal amount that will not result in (a) such Lender’s
Credit Exposure exceeding such Lender’s Commitment or (b) the total 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 2.02Loans 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.
 

 
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(c)           Minimum Amounts; Limitation on Number of Borrowings.  At the
commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $500,000.  At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $500,000; provided that an ABR Borrowing
may be in an aggregate amount that is equal to the entire unused balance of the
total Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.08(e).  Borrowings of more than one
Type may be outstanding at the same time; provided that there shall not at any
time be more than a total of 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,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
 
(d)           Notes.  Any Lender may request that Loans made by it be evidenced
by a single promissory note.  In such event, the Borrower shall prepare, execute
and deliver to such Lender a promissory note payable to the order of such Lender
in substantially the form of Exhibit A, dated, in the case of (i) any Lender
party hereto as of the Effective Date, as of the Effective Date, (ii) any Lender
that becomes a party hereto pursuant to an Assignment and Assumption, as of the
effective date of the Assignment and Assumption, payable to the order of such
Lender in a principal amount equal to its Maximum Credit Amount as in effect on
such date, and otherwise duly completed.  If any Lender’s Maximum Credit Amount
increases or decreases for any reason (whether pursuant to ‎Section 2.06,
‎Section 12.04(b) or otherwise), the Borrower shall deliver or cause to be
delivered on the effective date of such increase or decrease, a new Note payable
to the order of any Lender who requested a Note hereunder in a principal amount
equal to its Maximum Credit Amount after giving effect to such increase or
decrease, and otherwise duly completed, and such Lender agrees to promptly
thereafter return the previously issued Note held by such Lender marked canceled
or otherwise similarly defaced.  The date, amount, Type, interest rate and, if
applicable, Interest Period of each Loan made by each Lender that receives a
Note, and all payments made on account of the principal thereof, shall be
recorded by such Lender on its books for its Note, and, prior to any transfer,
may be endorsed by such Lender on a schedule attached to such Note or any
continuation thereof or on any separate record maintained by such
Lender.  Failure to make any such notation or to attach a schedule shall not
affect any Lender’s or the Borrower’s rights or obligations in respect of such
Loans or affect the validity of such transfer by any Lender of its Note.
 
Section 2.03 Requests for Borrowings.  To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone or by written
Borrowing Request in substantially the form of Exhibit B and signed by the
Borrower (a “written Borrowing Request”):  (a) in the case of a Eurodollar
Borrowing, not later than 12:00 noon, New York, New York time, three Business
Days before the date of the proposed Borrowing or (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., New York, New York time, on the Business
Day of the proposed Borrowing; provided that no such notice shall be required
for any deemed request of an ABR Borrowing to finance the reimbursement of an LC
Disbursement as provided in ‎Section 2.08(e).  Each telephonic and written
Borrowing Request shall be irrevocable and each telephonic Borrowing Request
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Borrowing Request.  Each such telephonic and written
Borrowing Request shall specify the following information in compliance with
‎Section 2.02:
 

 
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(i)           the aggregate amount of the requested Borrowing;
 
(ii)           the date of such Borrowing, which shall be a Business Day;
 
(iii)           whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
 
(iv)           in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by the
definition of the term “Interest Period”;
 
(v)           the amount of the then effective Borrowing Base, the current total
Credit Exposures (without regard to the requested Borrowing) and the pro forma
total Credit Exposures (giving effect to the requested Borrowing); and
 
(vi)           the location and number of the Borrower’s account to which funds
are to be disbursed, which shall comply with the requirements of ‎Section 2.05.
 
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration.  Each Borrowing
Request shall constitute a representation that the amount of the requested
Borrowing shall not cause the total Credit Exposures to exceed the total
Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and the
then effective Borrowing Base).  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
Loan to be made as part of the requested Borrowing.
 
Section 2.04Interest Elections.
 
(a)           Conversion and Continuance.  Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this ‎Section 2.04.  The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
 
(b)           Interest Election Requests.  To make an election pursuant to this
‎Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone or by a written Interest Election Request in substantially
the form of Exhibit C and signed by the Borrower (a “written Interest Election
Request”) by the time that a Borrowing Request would be required under ‎Section
2.03 if the Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election.  Each telephonic and
written Interest Election Request shall be irrevocable and each telephonic
Interest Election Request shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent.
 

 
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(c)           Information in Interest Election Requests.  Each telephonic and
written Interest Election Request shall specify the following information in
compliance with ‎Section 2.02:
 
(i)           the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to Section 2.04(c)(iii) and
(iv) shall be specified for each resulting Borrowing);
 
(ii)           the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
 
(iii)           whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
 
(iv)           if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term “Interest
Period”.
 
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.
 
(d)           Notice to Lenders by the Administrative Agent.  Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.
 
(e)           Effect of Failure to Deliver Timely Interest Election Request and
Events of Default on Interest Election.  If the Borrower fails to deliver a
timely Interest Election Request with respect to a Eurodollar Borrowing prior to
the end of the Interest Period applicable thereto, then, unless such Borrowing
is repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing:  (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
(and any Interest Election Request that requests the conversion of any Borrowing
to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.
 
Section 2.05Funding of Borrowings.
 
(a)           Funding by Lenders.  Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 2:00 p.m., New York, New York time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders.  The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York,
New York and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Loans made to finance the reimbursement of an LC Disbursement
as provided in ‎Section 2.08(e) shall be remitted by the Administrative Agent to
the Issuing Bank that made such LC Disbursement.
 

 
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(b)           Presumption of Funding by the Lenders.  Unless the Administrative
Agent shall have received notice from a Lender prior to the time such Lender is
required to fund its share of a Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) above and may, in reliance upon
such assumption, make available to the Borrower a corresponding amount.  In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans.  If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Loan included in such Borrowing.
 
Section 2.06Changes in the Aggregate Maximum Credit Amounts.
 
 (a)           Scheduled Termination of Commitments.  Unless previously
terminated, the Commitments shall terminate on the Maturity Date.  If at any
time the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or
reduced to zero, then the Commitments shall terminate on the effective date of
such termination or reduction.
 
(b)           Optional Termination and Reduction of Aggregate Maximum Credit
Amounts.
 
(i)           The Borrower may at any time terminate, or from time to time
reduce, the Aggregate Maximum Credit Amounts; provided that (1) each reduction
of the Aggregate Maximum Credit Amounts shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000 and (2) the
Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if,
after giving effect to any concurrent prepayment of the Loans in accordance with
Section 3.04(c)‎, the total Credit Exposures would exceed the total Commitments.
 
(ii)           The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Aggregate Maximum Credit Amounts under
‎Section 2.06(b)(i) at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof.  Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof.  Each notice delivered by the
Borrower pursuant to this ‎Section 2.06(b)(ii) shall be irrevocable.  Any
termination or reduction of the Aggregate Maximum Credit Amounts shall be
permanent and may not be reinstated.  Each reduction of the Aggregate Maximum
Credit Amounts shall be made ratably among the Lenders in accordance with each
Lender’s Applicable Percentage.
 

 
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(c)           Increase of Aggregate Maximum Credit Amounts.
 
(i)           If no Default, Event of Default or Material Adverse Effect shall
have occurred and be continuing, the Borrower may at any time during the
Availability Period request one or more increases of the Aggregate Maximum
Commitment Amounts by notice to the Administrative Agent in writing of the
amount of such proposed increase (an “Increase Notice”); provided, however, that
(i) the Maximum Credit Amount of any Lender may not be increased without such
Lender’s consent, (ii) the minimum amount of any such increase shall be
$5,000,000 and (iii) the amount of the Aggregate Maximum Credit Amounts, after
giving effect to any such increase, shall not exceed $325,000,000.
 
(ii)           Following any Increase Notice, the Borrower may, in its sole
discretion, but with the consent of the Administrative Agent as to any Person
that is not at such time a Lender, offer to any existing Lender or to one or
more additional banks or financial institutions the opportunity to participate
in all or a portion of the increased Aggregate Maximum Credit Amounts pursuant
to paragraph (iii) or (iv) below, as applicable, by notifying the Administrative
Agent.  Promptly and in any event within five (5) Business Days after receipt of
such notice from the Borrower of its desire to offer such unsubscribed Aggregate
Maximum Credit Amounts to certain existing Lenders, to the additional banks or
financial institutions identified therein or to such existing Lenders,
additional banks or financial institutions identified by the Administrative
Agent and approved by the Borrower, the Administrative Agent shall notify such
proposed lenders of the opportunity to participate in all or a portion of such
unsubscribed portion of the Aggregate Maximum Credit Amounts.
 
(iii)           Any additional bank or financial institution that the Borrower
selects to offer a participation and that agrees to participate in the increased
Aggregate Maximum Credit Amounts shall notify the Administrative Agent of its
agreement to participate in the increased Aggregate Maximum Credit Amounts
within five (5) Business Days of the date the Administrative Agent’s notice
described above in paragraph (ii) above is sent and shall execute and deliver to
the Administrative Agent a New Lender Agreement setting forth its Maximum Credit
Amount and, upon the effectiveness of such New Lender Agreement, such bank or
financial institution (a “New Lender”) shall become a Lender for all purposes
and to the same extent as if originally a party hereto and shall be bound by and
entitled to the benefits of this Agreement and the signature pages hereof shall
be deemed to be amended to add the name of such New Lender and Annex 1 and the
definition of Aggregate Maximum Credit Amounts in Section 1.01 shall be deemed
amended to increase the Aggregate Maximum Credit Amounts by the Maximum Credit
Amount of such New Lender; provided that the Maximum Credit Amount of any New
Lender shall be in an amount not less than $5,000,000.
 

 
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(iv)           Any Lender that accepts an offer to it by the Borrower to
increase its Maximum Credit Amount pursuant to this Section 2.06(c) shall, in
each case, execute and deliver to the Administrative Agent a Maximum Credit
Amount Increase Agreement, whereupon such Lender shall be bound by and entitled
to the benefits of this Agreement with respect to the full amount of its Maximum
Credit Amount as so increased, and Annex 1 and the definition of Aggregate
Maximum Credit Amounts in Section 1.01 shall be deemed to reflect such increase.
 
(v)           The effectiveness of any New Lender Agreement or Maximum Credit
Amount Increase Agreement shall be contingent upon receipt by the Administrative
Agent of such corporate resolutions of the Borrower authorizing such increase,
in form and substance reasonably satisfactory to the Administrative Agent.
 
(vi)           If any bank or financial institution becomes a New Lender
pursuant to paragraph (iii) above or any Lender’s Maximum Credit Amount is
increased pursuant to paragraph (iv) above, additional Loans made on or after
the effectiveness thereof (the “Re-Allocation Date”) shall be made pro rata
based on their respective Commitments in effect on or after such Re-Allocation
Date (except to the extent that any such pro rata borrowings would result in any
Lender making an aggregate principal amount of Loans in excess of its
Commitment, in which case such excess amount will be allocated to, and made by,
such New Lender and/or Lenders with such increased Maximum Credit Amounts to the
extent of, and pro rata, based on their respective Commitments), and
continuations of Loans outstanding on the last day of the Interest Period
applicable thereto, or in the case of ABR Loans, on the date of such increase,
and the making of new Loans of the same Type shall be made pro rata based upon
the respective Commitments in effect on and after such Re-Allocation Date.
 
(vii)           If on any Re-Allocation Date there is an unpaid principal amount
of Eurodollar Loans, such Eurodollar Loans shall remain outstanding with the
respective holders thereof until the expiration of their respective Interest
Periods (unless the Borrower elects to prepay any thereof in accordance with the
applicable provisions of this Agreement), and interest on and repayments of such
Eurodollar Loans will be paid thereon to the respective Lenders holding such
Eurodollar Loans pro rata based on the respective principal amounts thereof
outstanding.
 
Section 2.07Borrowing 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 $145,000,000; provided, if any of the Acquisitions
are not consummated and closed contemporaneously with the Effective Date, the
Borrowing Base shall be automatically reduced as follows:
 
FAILURE
TO CLOSE
REDUCTION OF
BORROWING BASE
NGAS Acquisition
$45,000,000
NuLoch Acquisition
$25,000,000

 
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Upon the consummation and closing of any Acquisition after the Effective Date
and satisfaction of the conditions set forth in Section 6.02, the Borrowing Base
shall be automatically increased by the amount set forth above opposite the
applicable Acquisition; provided that in no event shall the Borrowing Base
exceed $145,000,000 prior to the first Redetermination Date.  In addition, the
Borrowing Base may be subject to further adjustments from time to time pursuant
to ‎Section 8.13(c) or ‎Section 9.11.
 
(b)           Scheduled and Interim Redeterminations.
 
(i)           The Borrowing Base shall be redetermined semi-annually on or
around November 1st and May 1st in accordance with this Section 2.07 (a
“Scheduled Redetermination”) with the first Scheduled Redetermination to take
place November 1, 2011, and, subject to Section 2.07(d), such redetermined
Borrowing Base shall become effective and applicable to the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders on or around November 1st
and May 1st of each year.
 
(ii)           The Administrative Agent may or shall, at the direction of the
Required Lenders, by notifying the Borrower thereof, one time during any
six-month period, elect to cause the Borrowing Base to be redetermined between
Scheduled Redeterminations in accordance with this ‎Section 2.07.
 
(iii)           The Borrower may elect to redetermine the Borrowing Base, by
notifying the Administrative Agent thereof, one time during any six-month
period, that it elects to cause the Borrowing Base to be redetermined between
Scheduled Redeterminations in accordance with this Section 2.07.
 
(c)           Scheduled and Interim Redetermination Procedure.
 
(i)           Each Scheduled Redetermination and each Interim Redetermination
shall be effectuated as follows:  upon receipt by the Administrative Agent of
(1) the Reserve Report and the certificate required to be delivered by the
Borrower, in the case of a Scheduled Redetermination, pursuant to Section
8.12(a) and ‎(c), and, in the case of an Interim Redetermination, pursuant to
Section 8.12(b) and ‎(c), and (2) 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
Required Lenders (the Reserve Report, such certificate and such other reports,
data and supplemental information being the “Engineering Reports”), the
Administrative Agent shall evaluate the information contained in the Engineering
Reports and shall, in good faith, propose a new Borrowing Base (such amount
being the “Proposed Borrowing Base”) based upon such information and such other
information (including, without limitation, the status of title information with
respect to the Oil and Gas Properties as described in the Engineering Reports
and the existence of any other Debt) as the Administrative Agent deems
appropriate in its sole discretion and consistent with its normal oil and gas
lending criteria as it exists at the particular time.  In no event shall the
Proposed Borrowing Base exceed the Aggregate Maximum Credit Amounts.
 

 
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(ii)           The Administrative Agent shall notify the Borrower and the
Lenders of the Proposed Borrowing Base (the “Proposed Borrowing Base Notice”):
 
(1)           in the case of a Scheduled Redetermination (A) if the
Administrative Agent shall have received the Engineering Reports and other
information required to be delivered by the Borrower pursuant to ‎Section
8.12(a) and ‎(c) in a timely and complete manner, then on or before October 15th
and April 15th of such year following the date of delivery or (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 promptly after the Administrative Agent has received
complete Engineering Reports and other information from the Borrower and has had
a reasonable opportunity to determine the Proposed Borrowing Base in accordance
with Section 2.07(c)(i), and in any event, within fifteen (15) days after the
Administrative Agent has received the required Engineering Reports; and
 
(2)           in the case of an Interim Redetermination, promptly, and in any
event, within fifteen (15) days after the Administrative Agent has received the
required Engineering Reports.
 
(iii)           Any Proposed Borrowing Base that would increase the Borrowing
Base then in effect must be approved or deemed to have been approved by all of
the Lenders as provided in this ‎Section 2.07(c)(iii) and any Proposed Borrowing
Base that would decrease or maintain the Borrowing Base then in effect must be
approved or be deemed to have been approved by the 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, 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, at the end of such 15-day period, all of the
Lenders, in the case of a Proposed Borrowing Base that would increase the
Borrowing Base then in effect, or the Required Lenders, in the case of a
Proposed Borrowing Base that would decrease or maintain the Borrowing Base then
in effect, have approved or been deemed to have approved, as aforesaid, then the
Proposed Borrowing Base shall become the new Borrowing Base, effective on the
date specified in ‎Section 2.07(d).  If, however, at the end of such 15-day
period, all of the Lenders or the Required Lenders, as applicable, have not
approved or been deemed to have approved, as aforesaid, then the Administrative
Agent shall (i) notify the Borrower of the Proposed Borrowing Base and which
Lenders have not approved or been deemed to have approved the Proposed Borrowing
Base and (ii) poll the Lenders to ascertain the highest Borrowing Base then
acceptable to a number of Lenders sufficient to constitute the Required Lenders
for purposes of this ‎Section 2.07 and, so long as such amount does not increase
the Borrowing Base then in effect, such amount shall become the new Borrowing
Base, effective on the date specified in ‎Section 2.07(d).
 

 
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(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 (or amounts, as applicable) shall become the new
Borrowing Base, effective and applicable to the Borrower, the Administrative
Agent, the Issuing Bank and the Lenders:
 
(i)           in the case of a Scheduled Redetermination, (1) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to ‎‎Section 8.12(a) and ‎‎(c) in a timely
and complete manner, then on the November 1st or May 1st, as applicable,
following such New Borrowing Base Notice, or (2) if the Administrative Agent
shall not have received the Engineering Reports required to be delivered by the
Borrower pursuant to ‎Section 8.12(a) and ‎‎(c) in a timely and complete manner,
then on the Business Day next succeeding delivery of such New Borrowing Base
Notice; and
 
(ii)           in the case of an Interim Redetermination, on the Business Day
next succeeding delivery of such New Borrowing Base Notice.
 
Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under ‎Section 8.13(c) or Section 9.11,
whichever occurs first.  Notwithstanding the foregoing, no Scheduled
Redetermination or Interim Redetermination shall become effective until the New
Borrowing Base Notice related thereto is received by the Borrower.
 
(e)           Reductions of Borrowing Base Related to Swap Agreements.  If any
Swap Agreement to which the Borrower or any Subsidiary is a party is Liquidated
and which was used by the Lenders to establish the Borrowing Base, and the total
termination value payable by the Borrower in respect of all such Liquidated Swap
Agreements in any period between any two Scheduled Redetermination Dates exceeds
five percent (5%) of the then effective Borrowing Base, then, contemporaneously
therewith, the Borrowing Base then in effect shall be reduced by an amount equal
to the value, if any, assigned to the Liquidated portion of all such Swap
Agreements so terminated during such period, as determined by the Required
Lenders.
 
Section 2.08Letters of Credit.
 
 (a)           General.  Subject to the terms and conditions set forth herein,
the Borrower may request the Issuing Bank to issue Letters of Credit in dollars
for its own account or for the account of any of its Restricted Subsidiaries, in
a form reasonably acceptable to the Administrative Agent and the Issuing Bank,
at any time and from time to time during the Availability Period.  In the event
of any inconsistency between the terms and conditions of this Agreement and the
terms and conditions of any Letter of Credit Agreement, the terms and conditions
of this Agreement shall control.
 
(b)           Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions.  To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (not less than three (3) Business Days in
advance of the requested date of issuance, amendment, renewal or extension) a
notice: (i) requesting the issuance of a Letter of Credit or identifying the
outstanding Letter of Credit issued by the Issuing Bank to be amended, renewed
or extended; (ii) specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day); (iii) specifying the date on which
such Letter of Credit is to expire (which shall comply with Section 2.08(c));
(iv) specifying the amount of such Letter of Credit; (v) specifying the name and
address of the beneficiary thereof and such other information as shall be
necessary to prepare, amend, renew or extend such Letter of Credit; and (vi)
specifying the amount of the then effective Borrowing Base (without regard to
the requested Letter of Credit or the requested amendment, renewal or extension
of an outstanding Letter of Credit) and the pro forma total Credit Exposures
(giving effect to the requested Letter of Credit or the requested amendment,
renewal or extension of an outstanding Letter of Credit).  If requested by the
Issuing Bank, the Borrower shall submit a letter of credit application on the
Issuing Bank’s standard form in connection with any request for a Letter of
Credit.  A Letter of Credit shall be issued, amended, renewed or extended only
if (and with respect to each notice provided by the Borrower above and any
issuance, amendment, renewal or extension of each Letter of Credit, the Borrower
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (1) the LC Exposure shall not exceed
the LC Commitment and (2) the total Credit Exposures shall not exceed the total
Commitments (i.e. the lesser of the Aggregate Maximum Credit Amounts and the
then effective Borrowing Base).
 

 
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(c)           Expiration Date.  Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date; provided, however, that
any Letter of Credit with a one-year tenor may provide for the renewal thereof
for additional one-year periods (which shall in no event extend beyond the date
referred to in clause (ii) above).
 
(d)           Participations.  By the issuance of a Letter of Credit (or an
amendment to an existing Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Bank that issues such
Letter of Credit or the Lenders, the Issuing Bank that issues a Letter of Credit
hereunder hereby grants to each Lender, and each Lender hereby acquires from the
Issuing Bank, a participation in such Letter of Credit equal to such Lender’s
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit.  In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of the Issuing Bank that issues a Letter of Credit
hereunder, such Lender’s Applicable Percentage of each LC Disbursement made by
the Issuing Bank and not reimbursed by the Borrower on the date due as provided
in ‎Section 2.08(e), or of any reimbursement payment required to be refunded to
the Borrower for any reason.  Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this Section 2.08(d)‎ in
respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.
 

 
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(e)           Reimbursement.  If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit issued by the Issuing Bank, the Borrower shall
reimburse such LC Disbursement by paying to the Administrative Agent an amount
equal to such LC Disbursement not later than 12:00 noon, New York, New York
time, on the date that such LC Disbursement is made, if the Borrower shall have
received notice of such LC Disbursement prior to 10:00 a.m., New York, New York
time, on such date, or, if such notice has not been received by the Borrower
prior to such time on such date, then not later than 12:00 noon, New York, New
York time, on (i) the Business Day that the Borrower receives such notice, if
such notice is received prior to 10:00 a.m., New York, New York time, on the day
of receipt, or (ii) the Business Day immediately following the day that the
Borrower receives such notice, if such notice is not received prior to such time
on the day of receipt; provided that if such LC Disbursement is not less than
$1,000,000, the Borrower shall, subject to the conditions to Borrowing set forth
herein, be deemed to have requested, and the Borrower does hereby request under
such circumstances, that such payment be financed with an ABR Borrowing in an
equivalent amount and, to the extent so financed, the Borrower’s obligation to
make such payment shall be discharged and replaced by the resulting ABR
Borrowing.  If the Borrower fails to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrower in respect thereof and such Lender’s
Applicable Percentage thereof.  Promptly following receipt of such notice, each
Lender shall pay to the Administrative Agent its Applicable Percentage of the
payment then due from the Borrower, in the same manner as provided in ‎Section
2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply,
mutatis mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the Issuing Bank that issued such
Letter of Credit the amounts so received by it from the Lenders.  Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this ‎Section 2.08(e), the Administrative Agent shall distribute
such payment to the Issuing Bank that issued such Letter of Credit or, to the
extent that Lenders have made payments pursuant to this ‎Section 2.08(e) to
reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their
interests may appear.  Any payment made by a Lender pursuant to this ‎Section
2.08(e) to reimburse the Issuing Bank for any LC Disbursement (other than the
funding of ABR Loans as contemplated above) shall not constitute a Loan and
shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.
 
(f)           Obligations Absolute.  The Borrower’s obligation to reimburse LC
Disbursements as provided in ‎Section 2.08(e) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit issued by the Issuing Bank against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit or
any Letter of Credit Agreement, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this ‎Section 2.08(f), constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower’s obligations
hereunder.  Neither the Administrative Agent, the Lenders nor the Issuing Bank,
nor any of their Related Parties shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof.  The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised all
requisite care in each such determination.  In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank that issued such Letter
of Credit may, in its sole reasonable discretion, either accept and make payment
upon such documents without responsibility for further investigation, regardless
of any notice or information to the contrary, or refuse to accept and make
payment upon such documents if such documents are not in strict compliance with
the terms of such Letter of Credit.
 

 
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(g)           Disbursement Procedures.  The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit issued by the Issuing Bank.  The
Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether the
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse the Issuing Bank and the Lenders with
respect to any such LC Disbursement.
 
(h)           Interim Interest.  If the Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under Section
2.08(e)), the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans.  Interest accrued pursuant to this Section 2.08(h)‎
shall be for the account of the Issuing Bank, except that interest accrued on
and after the date of payment by any Lender pursuant to ‎Section 2.08(e) to
reimburse the Issuing Bank shall be for the account of such Lender to the extent
of such payment.
 
(i)           Replacement of an Issuing Bank.  The Issuing Bank may be replaced
or resign at any time by written agreement among the Borrower, the
Administrative Agent, such resigning or replaced Issuing Bank and, in the case
of a replacement, the successor Issuing Bank.  The Administrative Agent shall
notify the Lenders of any such resignation or replacement of the Issuing
Bank.  At the time any such resignation or replacement shall become effective,
the Borrower shall pay all unpaid fees accrued for the account of the resigning
or replaced Issuing Bank pursuant to ‎Section 3.05(b).  In the case of the
replacement of an Issuing Bank, from and after the effective date of such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the replaced Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to the term
“Issuing Bank” shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require.  After the resignation or replacement of an Issuing Bank
hereunder, the resigning or replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such resignation or replacement, but shall not be required to issue additional
Letters of Credit.
 

 
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(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 Required 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, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by ‎Section 3.04(c)‎, the amount of such excess as provided in
‎Section 3.04(c)‎, as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower or any Restricted Subsidiary
described in ‎Section 10.01(h) or ‎Section 10.01(i).  The Borrower hereby grants
to the Administrative Agent, for the benefit of the Issuing Bank and the
Lenders, an exclusive first priority and continuing perfected security interest
in and Lien on such account and all cash, checks, drafts, certificates and
instruments, if any, from time to time deposited or held in such account, all
deposits or wire transfers made thereto, any and all investments purchased with
funds deposited in such account, all interest, dividends, cash, instruments,
financial assets and other Property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any or all of the
foregoing, and all proceeds, products, accessions, rents, profits, income and
benefits therefrom, and any substitutions and replacements therefor.  The
Borrower’s obligation to deposit amounts pursuant to this Section 2.08(j)‎ shall
be absolute and unconditional, without regard to whether any beneficiary of any
such Letter of Credit has attempted to draw down all or a portion of such amount
under the terms of a Letter of Credit, and, to the fullest extent permitted by
applicable law, shall not be subject to any defense or be affected by a right of
set-off, counterclaim or recoupment which the Borrower or any of its
Subsidiaries may now or hereafter have against any such beneficiary, the Issuing
Bank, the Administrative Agent, the Lenders or any other Person for any reason
whatsoever.  Such deposit shall be held as collateral securing the payment and
performance of the Borrower’s obligations under this Agreement and the other
Loan Documents in a “securities account” (within the meaning of Article 8 of the
UCC) over which the Administrative Agent shall have “control” (within the
meaning of the UCC).  Notwithstanding the foregoing, the Borrower may direct the
Administrative Agent and the “securities intermediary” (within the meaning of
the UCC) to invest amounts credited to the securities account, at the Borrower’s
risk and expense, in Investments described in Section 9.05(c)‎ through
(f)‎.  Interest or profits, if any, on such investments shall accumulate in such
account.  Moneys in such account shall be applied by the Administrative Agent to
reimburse, on a pro rata basis, the Issuing Bank for LC Disbursements for which
it has not been reimbursed and, to the extent not so applied, shall be held for
the satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated, be
applied to satisfy other obligations of the Borrower under this Agreement or the
other Loan Documents.  If the Borrower is required to provide an amount of cash
collateral hereunder as a result of the occurrence of an Event of Default, and
the Borrower is not otherwise required to pay to the Administrative Agent the
excess attributable to an LC Exposure in connection with any prepayment pursuant
to ‎Section 3.04(c), then such amount (to the extent not applied as aforesaid)
shall be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.
 

 
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ARTICLE III
Payments of Principal and Interest; Prepayments; Fees
 
Section 3.01 Repayment of Loans.  The Borrower hereby unconditionally promises
to pay to the Administrative Agent for the account of each Lender the then
unpaid principal amount of each Loan on the Termination Date.
 
Section 3.02Interest.
 
(a)           ABR Loans.  The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.
 
(b)           Eurodollar Loans.  The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.
 
(c)           Post-Default Rate.  Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by the
Borrower hereunder or under any other Loan Document is not paid when due,
whether at stated maturity, upon acceleration or otherwise, such overdue amount
shall bear interest, after as well as before judgment, at a rate per annum equal
to two percent (2%) plus the rate applicable to ABR Loans as provided in
‎Section 3.02(a), but in no event to exceed the Highest Lawful Rate.
 
(d)           Interest Payment Dates.  Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and on the
Termination Date; provided that (i) interest accrued pursuant to ‎Section
3.02(c) shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than an optional prepayment of an ABR Loan prior
to the Termination Date), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment, and (iii)
in the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.
 

 
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(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.
 
Section 3.03 Alternate Rate of Interest.  If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:
 
(a)           the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest
Period; or
 
(b)           the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest Period;
 
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
 
Section 3.04Prepayments.
 
(a)           Optional Prepayments.  The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with ‎Section 3.04(b).
 
(b)           Notice and Terms of Optional Prepayment.  The Borrower shall
notify the Administrative Agent by telephone (confirmed by telecopy) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing,
not later than 12:00 noon, New York, New York time, three Business Days before
the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing,
not later than 12:00 noon, New York, New York time, on the Business Day of
prepayment.  Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid.  Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof.  Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in ‎Section 2.02.  Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be
accompanied by accrued interest to the extent required by ‎Section 3.02.
 

 
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(c)           Mandatory Prepayments.
 
(i)           If (A) after giving effect to any termination or reduction of the
Aggregate Maximum Credit Amounts pursuant to Section 2.06(b)‎, the total Credit
Exposures exceed the total Commitments or (B) after giving effect to any
reduction of the Borrowing Base pursuant to Section 2.07(e), the total Credit
Exposures exceed the Borrowing Base, then the Borrower shall (1) prepay the
applicable Borrowings on the date of such termination or reduction in an
aggregate principal amount equal to such excess, and (2) 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 the total Credit Exposures exceed the redetermined or
adjusted Borrowing Base, then the Borrower shall (A) prepay the Borrowings 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).  The Borrower shall
be obligated to pay all of such prepayment and/or deposit of cash collateral
amount within forty-five (45) days following its receipt of the New Borrowing
Base Notice in accordance with Section 2.07(d)‎ or the date the adjustment
occurs; provided that all payments required to be made pursuant to this Section
3.04(c)(ii) must be made on or prior to the Termination Date.
 
(iii)           Upon any adjustments to the Borrowing Base pursuant to Section
9.11, if the total Credit Exposures exceed the Borrowing Base as adjusted, then
the Borrower shall (A) prepay the Borrowings 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).  The Borrower shall be obligated to
make such prepayment and/or deposit of cash collateral on the date it receives
cash proceeds as a result of such disposition or such incurrence of Debt;
provided that all payments required to be made pursuant to this
Section 3.04(c)(iii)‎ must be made on or prior to the Termination Date.
 
(iv)           Each prepayment of Borrowings pursuant to this ‎Section 3.04(c)
shall be applied to outstanding Borrowings as directed by the Borrower or, if no
such direction is given, first, ratably to any ABR Borrowings then outstanding,
and, second, to any Eurodollar Borrowings then outstanding, and if more than one
Eurodollar Borrowing is then outstanding, to each such Eurodollar Borrowing in
order of priority beginning with the Eurodollar Borrowing with the least number
of days remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.
 

 
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(v)           Each prepayment of Borrowings pursuant to this ‎Section 3.04(c)
shall be applied ratably to the Loans included in the prepaid
Borrowings.  Prepayments pursuant to this ‎Section 3.04(c) shall be accompanied
by accrued interest to the extent required by ‎Section 3.02.
 
(d)           No Premium or Penalty.  Prepayments permitted or required under
this ‎Section 3.04 shall be without premium or penalty, except as required under
‎Section 5.02.
 
Section 3.05Fees.
 
 (a)           Commitment Fees.  The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the applicable Commitment Fee Rate on the average daily amount
of the unused Commitment of such Lender during the period from and including the
Effective Date to but excluding the Termination Date.  Accrued commitment fees
shall be payable in arrears on the last day of March, June, September and
December of each year and on the Termination Date, commencing on the first such
date to occur after the Effective Date.  All commitment fees shall be computed
on the basis of a year of 360 days, unless such computation would exceed the
Highest Lawful Rate, in which case such fees shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
 
(b)           Letter of Credit Fees.  The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date on which such Lender’s Commitment terminates and the date on
which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank, for
its own account, a fronting fee, of 0.375% face amount of each Letter of Credit
upon its issuance, provided that in no event shall such fee be less than $500,
and (iii) to the Issuing Bank, for its own account, its standard and customary
fees with respect to the issuance, amendment, renewal or extension of any Letter
of Credit issued by the Issuing Bank or processing of drawings
thereunder.  Participation fees and fronting fees accrued through and including
the last day of March, June, September and December of each year shall be
payable on the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date and fronting fees with respect
to any Letter of Credit shall be payable at the time of issuance of such Letter
of Credit; provided that all such fees shall be payable on the Termination Date
and any such fees accruing after the Termination Date shall be payable on
demand.  Any other fees payable to an Issuing Bank pursuant to this
‎Section 3.05(b) shall be payable within 10 days after demand.  All
participation fees shall be computed on the basis of a year of 360 days, unless
such computation would exceed the Highest Lawful Rate, in which case interest
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and shall be payable for the actual number of days elapsed (including the
first day but excluding the last day).
 

 
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(c)           Administrative Agent Fees.  The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times specified in the Fee Letter, or otherwise separately agreed upon
between the Borrower and the Administrative Agent.
 
(d)           Borrowing Base Fees.  The Borrower agrees to pay to the
Administrative Agent, for the account of each Lender then party to this
Agreement, ratably in accordance with its Applicable Percentage, (i) a Borrowing
Base fee equal to the amount described in the Fee Letter, payable on the
Effective Date and (ii) a Borrowing Base increase fee equal to an amount to be
agreed upon by the Administrative Agent and the Borrower at the time of any
increase of the Borrowing Base on the amount of such increase over the highest
Borrowing Base previously in effect, payable on the effective date of any such
increase to the Borrowing Base.
 
ARTICLE IV
Payments; Pro Rata Treatment; Sharing of Set-offs.
 
Section 4.01Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
 
 (a)           Payments by the Borrower.  The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under ‎Section 5.01,
Section 5.02, Section 5.03 or otherwise) prior to 12:00 noon, New York, New York
time, on the date when due, in dollars that constitute immediately available
funds, without defense, deduction, recoupment, set-off or counterclaim.  Fees,
once paid, shall not be refundable under any circumstances absent manifest error
(e.g., as a result of a clerical mistake).  Any amounts received after such time
on any date may, in the discretion of the Administrative Agent, be deemed to
have been received on the next succeeding Business Day for purposes of
calculating interest thereon.  All such payments shall be made to the
Administrative Agent at its offices located at 3 Times Square, 27th Floor, New
York, New York 10036, except payments to be made directly to an Issuing Bank as
expressly provided herein and except that payments pursuant to ‎Section 5.01,
Section 5.02, Section 5.03 and ‎Section 12.03 shall be made directly to the
Persons entitled thereto.  The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof.  If any payment hereunder shall be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such
extension.  All payments hereunder shall be made in dollars.
 
(b)           Application of Insufficient Payments.  If at any time insufficient
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal and unreimbursed LC Disbursements then
due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such parties.
 

 
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(c)           Sharing of Payments by Lenders.  If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this ‎Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this Section 4.01(c)‎ shall apply).  The Borrower consents to the foregoing
and agrees, to the extent it may effectively do so under applicable law, that
any Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
 
Section 4.02 Presumption of Payment by the Borrower.  Unless the Administrative
Agent shall have received notice from the Borrower prior to the date on which
any payment is due to the Administrative Agent for the account of the Lenders or
the Issuing Bank that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due.  In such event, if the Borrower has not in fact made such payment, then
each of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or the Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
 
Section 4.03 Certain Deductions by the Administrative Agent.  If any Lender
shall fail to make any payment required to be made by it pursuant to
Section 2.05(a), 2.08(d) or (e), 4.02 or 12.03(c), then the Administrative Agent
may, in its discretion and notwithstanding any contrary provision hereof, (i)
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender and for the benefit of the Administrative Agent or the
Issuing Bank to satisfy such Lender’s obligations under such Sections until all
such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts
in a segregated account as cash collateral for, and application to, any future
funding obligations of such Lender under such Sections; in the case of each of
(i) and (ii) above, in any order as determined by the Administrative Agent in
its discretion.
 

 
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Section 4.04 Disposition of Proceeds.  The Security Instruments contain an
assignment by the Borrower to and in favor of the Administrative Agent for the
benefit of the Lenders and the other Persons named therein of all of the
Borrower’s interest in and to production and all proceeds attributable thereto
that may be produced from or allocated to the Mortgaged Property.  The Security
Instruments further provide in general for the application of such proceeds to
the satisfaction of the Obligations and other obligations described therein and
secured thereby.  Notwithstanding the assignment contained in such Security
Instruments, until the occurrence of an Event of Default, (a) the Administrative
Agent and the Lenders agree that they will neither notify the purchaser or
purchasers of such production nor take any other action to cause such proceeds
to be remitted to the Administrative Agent or the Lenders, but the Lenders will
instead permit such proceeds to be paid to the Borrower and its Restricted
Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to
take such actions as may be necessary to cause such proceeds to be paid to the
Borrower and/or such Restricted Subsidiaries.
 
ARTICLE V
Increased Costs; Break Funding Payments; Taxes; Illegality; Defaulting Lenders
 
Section 5.01Increased 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)           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 (whether of principal, interest or otherwise), then
the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender 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 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), then from time
to time the Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such
reduction suffered.
 

 
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(c)           Certificates.  A certificate of a Lender or the Issuing Bank
setting forth the amount or amounts necessary to compensate such Lender or the
Issuing Bank or its holding company, as the case may be, as specified in
‎Section 5.01(a) or (b) and reasonably detailed calculations therefor shall be
delivered to the Borrower and shall be conclusive absent manifest error.  The
Borrower shall pay such Lender or the Issuing Bank, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.
 
(d)           Effect of Failure or Delay in Requesting Compensation.  Failure or
delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this ‎Section 5.01 shall not constitute a waiver of such Lender’s or
the Issuing Bank’s right to demand such compensation; provided that the Borrower
shall not be required to compensate a Lender or an Issuing Bank pursuant to this
‎‎Section 5.01 for any increased costs or reductions incurred more than 90 days
prior to the date that such Lender or the Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s or the Issuing Bank’s intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 90-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
 
Section 5.02 Break Funding Payments.  In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan into an ABR Loan other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower pursuant to ‎Section 5.04(b), then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event.  In the case of a Eurodollar Loan, such loss, cost
or expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the Eurodollar market.  A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this ‎‎Section 5.02 and reasonably detailed calculations therefor
shall be delivered to the Borrower and shall be conclusive absent manifest
error.  The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
 
Section 5.03Taxes.
 

 
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(a)           Payments Free of Taxes.  Any and all payments by or on account of
any obligation of the Borrower 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 Borrower shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased
as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 5.03(a)‎), the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall 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 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes 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 an 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)           Evidence of Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
 
(e)           Foreign Lenders.  Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement or any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
 
(f)           Tax Refunds.  If the Administrative Agent or a Lender determines,
in its reasonable discretion, that it has received a refund of any Taxes or
Other Taxes as to which it has been indemnified by the Borrower or with respect
to which the Borrower has paid additional amounts pursuant to this ‎Section
5.03, it shall pay over such refund to the Borrower (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 Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent or such
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental
Authority.  This ‎Section 5.03 shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.
 

 
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Section 5.04Mitigation Obligations.
 
(a)           Designation of Different Lending Office.  If any Lender requests
compensation under ‎Section 5.01, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 5.03, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to ‎Section 5.01 or Section 5.03, as the case may be, in the future and (ii)
would not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.
 
(b)           Replacement of Lenders.  If (i) any Lender requests compensation
under ‎Section 5.01, (ii) the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to ‎Section 5.03, (iii) any Lender becomes a Defaulting Lender, or (iv)
any Lender has not approved (or is not deemed to have approved) an increase in
the Borrowing Base proposed by the Administrative Agent pursuant to
‎Section 2.07(c)(iii), then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, (A) require such Lender
to assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in ‎Section 12.04(b)), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment) or (B) require such Lender to be removed as a Lender under this
Agreement and the other Loan Documents with a corresponding reduction in the
Aggregate Maximum Credit Amount equal to the Maximum Credit Amount of such
Lender; provided that, (1) in the case of a required assignment of interest, the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (2) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans and participations in LC Disbursements, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts) and (3) in the case of any such
assignment resulting from a claim for compensation under Section 5.01 or
payments required to be made pursuant to ‎Section 5.03, such assignment will
result in a reduction in such compensation or payments.  A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such  assignment and delegation cease to apply.
 
 
 
 
 

 
 
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Section 5.05 Illegality.  Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender or its applicable lending
office to honor its obligation to make or maintain Eurodollar Loans either
generally or having a particular Interest Period hereunder, then (a) such Lender
shall promptly notify the Borrower and the Administrative Agent thereof and such
Lender’s obligation to make such Eurodollar Loans shall be suspended (the
“Affected Loans”) until such time as such Lender may again make and maintain
such Eurodollar Loans and (b) all Affected Loans which would otherwise be made
by such Lender shall be made instead as ABR Loans (and, if such Lender so
requests by notice to the Borrower and the Administrative Agent, all Affected
Loans of such Lender then outstanding shall be automatically converted into ABR
Loans on the date specified by such Lender in such notice) and, to the extent
that Affected Loans are so made as (or converted into) ABR Loans, all payments
of principal which would otherwise be applied to such Lender’s Affected Loans
shall be applied instead to its ABR Loans.
 
Section 5.06 Defaulting Lenders.  Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:
 
(a)           fees shall cease to accrue on the unfunded portion of the
Commitment of such Defaulting Lender pursuant to Section 3.05;
 
(b)           the Maximum Credit Amount and Credit Exposure of such Defaulting
Lender shall not be included in determining whether all Lenders or the Required
Lenders have taken or may take any action hereunder (including any consent to
any amendment or waiver pursuant to Section 12.02), provided that any waiver,
amendment or modification requiring the consent of all Lenders or each affected
Lender which affects such Defaulting Lender differently than other affected
Lenders shall require the consent of such Defaulting Lender;
 
(c)           if any LC Exposure exists at the time a Lender becomes a
Defaulting Lender then:
 
(i)           all or any part of such LC Exposure shall be reallocated among the
non-Defaulting Lenders in accordance with their respective Applicable
Percentages but only to the extent (x) the sum of all non-Defaulting Lenders’
Credit Exposures does not exceed the total of all non-Defaulting Lenders’
Maximum Credit Amounts and (y) the conditions set forth in Section 6.03 are
satisfied at such time; and
 
(ii)           if the reallocation described in clause (i) above cannot, or can
only partially, be effected, the Borrower shall within one Business Day
following notice by the Administrative Agent cash collateralize such Defaulting
Lender’s LC Exposure (after giving effect to any partial reallocation pursuant
to clause (i) above) in accordance with the procedures set forth in
Section 2.08(j) for so long as such LC Exposure is outstanding;
 
(iii)           if the Borrower cash collateralizes any portion of such
Defaulting Lender’s LC Exposure pursuant to clause (ii) above, the Borrower
shall not be required to pay any fees to such Defaulting Lender pursuant to
Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure during the
period such Defaulting Lender’s LC Exposure is cash collateralized;
 

 
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(iv)           if the LC Exposure of the non-Defaulting Lenders is reallocated
pursuant to clause (i) above, then the fees payable to the Lenders pursuant to
Section 3.05 shall be adjusted in accordance with such non-Defaulting Lenders’
Applicable Percentages; or
 
(v)           if any Defaulting Lender’s LC Exposure is neither cash
collateralized nor reallocated pursuant to this Section 5.06(c), then, without
prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder,
all commitment fees that otherwise would have been payable to such Defaulting
Lender (solely with respect to the portion of such Defaulting Lender’s
Commitment that was utilized by such LC Exposure) and letter of credit fees
payable under Section 3.05(b) with respect to such Defaulting Lender’s LC
Exposure shall be payable to the Issuing Bank until such LC Exposure is cash
collateralized and/or reallocated; and
 
(d)           so long as any Lender is a Defaulting Lender, the Issuing Bank
shall not be required to issue, amend or increase any Letter of Credit, unless
it is satisfied that the related LC Exposure will be 100% covered by the
Commitments of the non-Defaulting Lenders and/or cash collateral will be
provided by the Borrower in accordance with Section 5.06(c), and participating
interests in any such newly issued or increased Letter of Credit shall be
allocated among non-Defaulting Lenders in a manner consistent with
Section 5.06(c)(i) (and Defaulting Lenders shall not participate therein).
 
(e)           In the event that the Administrative Agent, the Borrower and the
Issuing Bank each agrees that a Defaulting Lender has adequately remedied all
matters that caused such Lender to be a Defaulting Lender, then the LC Exposure
of the Lenders shall be readjusted to reflect the inclusion of such Lender’s
Commitment and on such date such Lender shall purchase at par such of the Loans
of the other Lenders as the Administrative shall determine may be necessary in
order for such Lender to hold such Loans in accordance with its Applicable
Percentage.
 
ARTICLE VI
Conditions Precedent
 
Section 6.01 Conditions to Effectiveness.  This Agreement shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with ‎Section 12.02):
 
(a)           The Administrative Agent, the Arranger and the Lenders shall have
received all fees and other amounts due and payable hereunder and under the Fee
Letter, including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder.
 

 
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(b)           The Administrative Agent shall have received a certificate of the
Secretary, an Assistant Secretary or other authorized officer of each Loan Party
setting forth (i) resolutions of its board of directors or similar governing
authority with respect to the authorization of such Loan Party to execute and
deliver the Loan Documents to which it is a party, to enter into the
Transactions to which it is a party and consummate the Acquisitions to which it
is a party, (ii) the officers of such Loan Party (y) who are authorized to sign
the Loan Documents to which such Loan Party is a party and (z) who will, until
replaced by another officer or officers duly authorized for that purpose, act as
its representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the Transactions,
(iii) specimen signatures of such authorized officers, and (iv) the articles or
certificate of incorporation and bylaws or similar organizational documents of
such Loan Party, certified as being true and complete.  To the extent a Loan
Party previously delivered a certificate complying with the foregoing sentence,
the Administrative Agent shall have received from such Loan Party a certificate
of the Secretary, Assistant Secretary or other authorized officer of such Loan
Party certifying that the documents and certificates attached to such previously
delivered certificate and relating to such Loan Party’s formation and
organization remain in full force and effect without any amendment thereto,
provided that, notwithstanding the foregoing, each Loan Party shall be required
to deliver the resolutions described in clause (i) above.  The Administrative
Agent and the Lenders may conclusively rely on such certificate until the
Administrative Agent receives notice in writing from the Borrower to the
contrary.
 
(c)           The Administrative Agent shall have received certificates of the
appropriate State agencies with respect to the existence, qualification and good
standing of each Loan Party.
 
(d)           The Administrative Agent shall have received a compliance
certificate which shall be substantially in the form of Exhibit D, duly and
properly executed by a Responsible Officer and dated as of December 31, 2010
(which certificate was delivered in connection with the Prior Agreement).
 
(e)           The Administrative Agent shall have received from each party
hereto counterparts (in such number as may be requested by the Administrative
Agent) of this Agreement signed on behalf of such party.
 
(f)           The Administrative Agent shall have received duly executed Notes
payable to the order of each Lender that has requested a Note in a principal
amount equal to its Maximum Credit Amount dated as of the Effective Date.
 
(g)           The Administrative Agent shall have received from each party
thereto duly executed counterparts (in such number as may be requested by the
Administrative Agent) of the Security Instruments and the Guaranty.
 
(h)           The Administrative Agent shall have received the opinions of Mayer
Brown LLP, special counsel to the Borrower, Daily & Woods, P.L.L.C., special
Arkansas and Oklahoma counsel to the Borrower and PennStuart, special Virginia
counsel to the Borrower, together with opinions or other assurances as the
Administrative Agent may request relating to the Security Instruments covering
the Mortgaged Properties located in Canada, in each case, in form and substance
satisfactory to Administrative Agent.
 

 
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(i)           The Administrative Agent shall have received a certificate of
insurance coverage of the Borrower evidencing that the Borrower is carrying
insurance in accordance with ‎Section 7.12.
 
(j)           The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has (i)
received all consents and approvals required by ‎Section 7.03 and (ii) has no
other Debt in respect of borrowed money.
 
(k)           The Administrative Agent shall have received the financial
statements referred to in ‎Section 7.04(a).
 
(l)           The Administrative Agent shall have received title information as
it may reasonably require setting forth the status of title to at least 80% of
the total value of the proved Oil and Gas Properties evaluated in the Initial
Reserve Report.
 
(m)           The Administrative Agent shall be reasonably satisfied with the
environmental condition of the Oil and Gas Properties of the Borrower and its
Subsidiaries.
 
(n)           The Administrative Agent shall have received the Initial Reserve
Report for the Oil and Gas Properties, accompanied by a certificate covering the
matters described in Section 8.12(c).
 
(o)           The Administrative Agent shall have received appropriate UCC
search certificates reflecting no prior Liens encumbering the Properties of the
Borrower for each of the following jurisdictions: Delaware, Louisiana, North
Dakota, Ohio, Texas, West Virginia, Kentucky and any other 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.
 
(p)           The Borrower and the Restricted Subsidiaries shall have (i) a
current ratio (as described in Section 9.01(a)) of greater than 1.0 to 1.0, and
(ii) minimum liquidity of not less than $10,000,000; “liquidity” as used herein
shall mean the sum of all cash, cash equivalents and availability under the
Borrowing Base.
 
(q)           The Administrative Agent shall have received satisfactory evidence
of the existence of Swap Agreements of the Borrower identified on Schedule 7.20.
 
(r)           The Administrative Agent shall have received such other documents
as the Administrative Agent or its special counsel may reasonably request.
 
(s)           With respect to any Acquisition closing contemporaneously with the
Effective Date, the following conditions precedent shall apply in addition to
the other conditions precedent set forth in this Section 6.01:
 
(i)           The Security Instruments and Guaranty shall include the Oil and
Gas Properties acquired pursuant to such Acquisition to the extent required by
Section 6.03(f), and any Person acquired or formed (to the extent any such
Person is a Restricted Subsidiary), respectively, in connection with such
Acquisition.
 

 
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(ii)           The certificate referenced in item (j) above shall include
certifications by such Responsible Officer that (A) the Borrower has received
all governmental and third party approvals necessary or, in the discretion of
the Administrative Agent, required in connection with such Acquisition and (B)
the Person(s) acquired as a result of such Acquisition has no other Debt in
respect of borrowed money or Swap Agreements, except as allowed by Section 9.02
hereof.
 
(iii)           The Administrative Agent shall have received satisfactory
audited consolidated financial statements of the Person(s) acquired as a result
of such Acquisition.
 
(iv)           The Borrower shall have received a pro forma balance sheet as of
December 31, 2010, prepared after giving effect to such Acquisition as if such
Acquisition had occurred as of December 31, 2010.
 
(v)           The Administrative Agent shall be reasonably satisfied with the
title and environmental condition of the Oil and Gas Properties acquired as a
result of such Acquisition.
 
(vi)           The Initial Reserve Report referenced in item (n) above shall
include the Oil and Gas Properties acquired as a result of such Acquisition.
 
(vii)           The Administrative Agent shall have received a duly executed
copy of the applicable Acquisition Agreement and any other documents relating to
such Acquisition as the Administrative Agent shall reasonably request.
 
(viii)           Such Acquisition shall be consummated contemporaneously with
the Effective Date and substantially consistent with the terms and conditions of
the applicable Acquisition Agreement, without waiver or amendment of any
material terms thereof not otherwise approved by the Administrative Agent.
 
(ix)           The Administrative Agent shall be satisfied that no “Company
Material Adverse Effect”, as defined in the applicable Acquisition Agreement,
shall have occurred.
 
(x)           With respect to the NGAS Acquisition only, the transportation
contract with Seminole Energy Services, LLC shall have been amended
substantially as contemplated in the letter of intent referenced in the NGAS
Acquisition Agreement.
 
Section 6.02 Subsequent Borrowing Base Increase Date.  The obligation of the
Administrative Agent and the Lenders to increase the Borrowing Base as
contemplated in Section 2.07(a) upon the consummation of any Acquisition after
the Effective Date shall be subject to satisfaction of the following conditions
precedent:
 
(a)           The Administrative Agent, the Arranger and the Lenders shall have
received all fees and other amounts due and payable hereunder and under the Fee
Letter, including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder.
 

 
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(b)           The Administrative Agent shall have received Security Instruments
covering the Oil and Gas Properties acquired in connection with such Acquisition
to the extent required by Section 6.03(f) and a Guaranty covering the Person(s)
acquired or formed in connection with such Acquisition (to the extent any such
Person is a Restricted Subsidiary).
 
(c)           The Administrative Agent shall have received an opinion of counsel
to the Borrower licensed in the state or province in which any new Security
Instruments will be filed with respect to the Oil and Gas Properties acquired as
a result of such Acquisition, in form and substance satisfactory to the
Administrative Agent.
 
(d)           The Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that (i) the Borrower has
received all governmental and third party approvals necessary or, in the
discretion of the Administrative Agent, required in connection with such
Acquisition and (ii) the Person(s) acquired as a result of such Acquisition has
no other Debt in respect of borrowed money or Swap Agreements, except as allowed
by Section 9.02 hereof.
 
(e)           The Administrative Agent shall have received satisfactory audited
consolidated financial statements of the Person acquired as a result of such
Acquisition.
 
(f)           The Borrower shall have received a pro forma balance sheet as of
December 31, 2010, prepared after giving effect to such Acquisition as if such
Acquisition had occurred as of December 31, 2010.
 
(g)           The Administrative Agent shall be reasonably satisfied with the
title and environmental condition of the Oil and Gas Properties acquired as a
result of such Acquisition.
 
(h)           The Administrative Agent shall have received the Initial Reserve
Report for the Oil and Gas Properties acquired as a result of such Acquisition,
accompanied by a certificate covering the matters described in Section 8.12(c).
 
(i)           The Borrower and the Restricted Subsidiaries shall have (i) a
current ratio (as described in Section 9.01(a)) of greater than 1.0 to 1.0, it
being agreed that for purposes of this clause (i) the current assets and
liabilities of any Person acquired as a result of such Acquisition that is a
Restricted Subsidiary shall be the current assets and liabilities as shown on
such Person’s most recent quarterly financial statements, and (ii) minimum
liquidity of not less than $10,000,000; “liquidity” as used herein shall mean
the sum of all cash, cash equivalents and availability under the Borrowing Base.
 
(j)           The Administrative Agent shall have received a duly executed copy
of the applicable Acquisition Agreement and any other documents relating to such
Acquisition as the Administrative Agent shall reasonably request.
 
(k)           Such Acquisition shall be consummated contemporaneously with the
Subsequent Borrowing Base Increase Date and substantially consistent with the
terms and conditions of the applicable Acquisition Agreement, without waiver or
amendment of any material terms thereof not otherwise approved by the
Administrative Agent.
 

 
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(l)           The Administrative Agent shall be satisfied that no “Company
Material Adverse Effect”, as defined in the applicable Acquisition Agreement,
shall have occurred.
 
(m)           With respect to the NGAS Acquisition only, the transportation
contract with Seminole Energy Services, LLC shall have been amended
substantially as contemplated in the letter of intent referenced in the NGAS
Acquisition Agreement.
 
(n)           No Default, Event of Default or Material Adverse Effect shall have
occurred and be continuing.
 
(o)           The representations and warranties of the Borrower set forth in
this Agreement and in the other Loan Documents shall be true and correct on and
as of the Subsequent Borrowing Base Increase Date, except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, on and as of the Subsequent Borrowing Base Increase Date, such
representations and warranties shall continue to be true and correct as of such
specified earlier date.
 
Section 6.03 Each Credit Event.  The obligation of each Lender to make a Loan on
the occasion of any Borrowing (including the initial funding), and of the
Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject
to the satisfaction of the following conditions:
 
(a)           At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
 
(b)           At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no event, development or condition that has or could
reasonably be expected to have a Material Adverse Effect shall have occurred.
 
(c)           The representations and warranties of the Borrower set forth in
this Agreement and in the other Loan Documents shall be true and correct on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, such
representations and warranties shall continue to be true and correct as of such
specified earlier date.
 
(d)           The making of such Loan or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, would not conflict with, or
cause any Lender or the Issuing Bank to violate or exceed, any applicable
Governmental Requirement, and no Change in Law shall have occurred, and no
litigation shall be pending or threatened, which does or, with respect to any
threatened litigation, seeks to, enjoin, prohibit or restrain, the making or
repayment of any Loan, the issuance, amendment, renewal, extension or repayment
of any Letter of Credit or any participations therein or the consummation of the
transactions contemplated by this Agreement or any other Loan Document.
 

 
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(e)           The receipt by the Administrative Agent of a Borrowing Request in
accordance with ‎Section 2.03 or a request for a Letter of Credit in accordance
with ‎Section 2.08(b), as applicable.
 
(f)           In connection with the execution and delivery of the Security
Instruments, the Administrative Agent shall be reasonably satisfied that the
Security Instruments create first priority, perfected Liens (subject only to
Excepted Liens identified in clauses (a) to (d) and (f) of the definition
thereof, but subject to the provisos at the end of such definition) on at least
80% of the total value of the proved Oil and Gas Properties evaluated in the
most recent Reserve Report delivered by the Borrower pursuant to this Agreement.
 
Each request for a Borrowing and each issuance, amendment, renewal or extension
of any Letter of Credit shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
Sections 6.01(l) and 6.02(a) through (d).
 
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
 
Section 7.01 Organization; Powers.  Each of the Borrower and the 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.  Schedule
7.01 is an accurate corporate organizational chart of Borrower and its
Subsidiaries showing the ownership of all Equity Interests in such Persons.
 
Section 7.02 Authority; Enforceability.  The Transactions to be entered into by
each Loan Party are within such Loan Party’s corporate powers and have been duly
authorized by all necessary corporate and, if required, stockholder action
(including, without limitation, any action required to be taken by any class of
directors of such Loan Party or any other Person, whether interested or
disinterested, in order to ensure the due authorization of the
Transactions).  Each Loan Document to which any Loan Party is a party has been
duly executed and delivered by such Loan Party and constitutes a legal, valid
and binding obligation of such Loan Party enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
 
Section 7.03 Approvals; No Conflicts.  The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority or any other third Person (including shareholders or any
class of directors, whether interested or disinterested, of any Loan Party or
any other Person), nor is any such consent, approval, registration, filing or
other action necessary for the validity or enforceability of any Loan Document
or the consummation of the transactions contemplated thereby, except such as
have been obtained or made and are in full force and effect other than (i) the
recording and filing of the Security Instruments as required by this Agreement
and (ii) those third party approvals or consents which, if not made or obtained,
would not cause a Default hereunder, could not reasonably be expected to have a
Material Adverse Effect or do not have an adverse effect on the enforceability
of the Loan Documents, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of the Borrower or any
Subsidiary or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon the Borrower or any Subsidiary or its Properties, or give rise to a right
thereunder to require any payment to be made by the Borrower or such Subsidiary
and (d) will not result in the creation or imposition of any Lien on any
Property of the Borrower or any Subsidiary (other than the Liens created by the
Loan Documents).
 

 
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Section 7.04Financial Condition; No Material Adverse Change.
 
(a)           The Borrower has heretofore furnished to the Lenders its audited
consolidated balance sheet and statement of income, stockholders equity and cash
flows as of and for the fiscal year ended December 31, 2010 (including a pro
forma balance sheet showing NGAS and NuLoch as Consolidated Subsidiaries), all
(other than the pro forma balance Sheet) reported on by a firm of independent
public accountants acceptable to the Administrative Agent.  Such audited
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of the Borrower and its
Consolidated Subsidiaries as of such dates and for such periods in accordance
with GAAP.
 
(b)           Since December 31, 2010, (i) there has been no event, development
or circumstance that has had or could reasonably be expected to have a Material
Adverse Effect and (ii) the business of the Borrower and its Subsidiaries has
been conducted only in the ordinary course consistent with past business
practices.
 
(c)           Except as set forth on Schedule 9.02 or in a certificate delivered
pursuant to ‎Section 8.01(d), neither the Borrower nor any Subsidiary has on the
Effective Date any material Debt (including Disqualified Capital Stock) or any
material contingent liabilities, off-balance sheet liabilities or partnerships,
material liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments.
 
Section 7.05Litigation.
 
(a)           Except as set forth on Schedule 7.05, there are no actions, suits,
investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened in
writing against or affecting the Borrower or any Subsidiary (i) as to which
there is a reasonable possibility of an adverse determination that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (ii) that involve any Loan Document or
the Transactions.
 

 
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(b)           Since the Effective Date, there has been no change in the status
of the matters disclosed in Schedule 7.05 that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
 
Section 7.06 Environmental Matters.  Except as could not reasonably be expected
to have a Material Adverse Effect (or with respect to (c), (d) and (e) below,
where the failure to take such actions could not be reasonably expected to have
a Material Adverse Effect), to the knowledge of Borrower:
 
(a)           neither any Property of the Borrower or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court or
Governmental Authority or any Environmental Laws;
 
(b)           no Property of the Borrower or any Subsidiary nor the operations
currently conducted thereon or by any prior owner or operator of such Property
or operation, are in violation of or subject to any existing, pending or
threatened action, suit, investigation, inquiry or proceeding by or before any
court or Governmental Authority or to any remedial obligations under
Environmental Laws;
 
(c)           all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required to be obtained or filed in connection with the
operation or use of any and all Property of the Borrower and each Subsidiary,
including, without limitation, past or present treatment, storage, disposal or
release of a hazardous substance, oil and gas waste or solid waste into the
environment, have been duly obtained or filed, and the Borrower and each
Subsidiary are in compliance with the terms and conditions of all such notices,
permits, licenses and similar authorizations;
 
(d)           all hazardous substances, solid waste and oil and gas waste, if
any, generated at any and all Property of the Borrower or any Subsidiary have in
the past been transported, treated and disposed of in accordance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment, and all such
transport carriers and treatment and disposal facilities have been and are
operating in compliance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and are not the subject of any existing, pending or threatened
action, investigation or inquiry by any Governmental Authority in connection
with any Environmental Laws;
 
(e)           the Borrower has taken all steps reasonably necessary to determine
and has determined that no oil, hazardous substances, solid waste or oil and gas
waste, have been disposed of or otherwise released and there has been no
threatened release of any oil, hazardous substances, solid waste or oil and gas
waste on or to any Property of the Borrower or any Subsidiary except in
compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment;
 
(f)           to the extent applicable, all Property of the Borrower and each
Subsidiary currently satisfies all design, operation, and equipment requirements
imposed by the OPA, and the Borrower does not have any reason to believe that
such Property, to the extent subject to the OPA, will not be able to maintain
compliance with the OPA requirements during the term of this Agreement; and
 

 
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(g)           neither the Borrower nor any Subsidiary has any known contingent
liability or Remedial Work in connection with any release or threatened release
of any oil, hazardous substance, solid waste or oil and gas waste into the
environment.
 
Section 7.07 Compliance with the Laws and Agreements; No Defaults.  Except as
could not be reasonably be expected to have a Material Adverse Effect:
 
(a)           each of the Borrower and each Subsidiary is in compliance with all
Governmental Requirements applicable to it or its Property and all agreements
and other instruments binding upon it or its Property, and possesses all
licenses, permits, franchises, exemptions, approvals and other governmental
authorizations necessary for the ownership of its Property and the conduct of
its business, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect;
 
(b)           neither the Borrower nor any Subsidiary is in default nor has any
event or circumstance occurred which, but for the expiration of any applicable
grace period or the giving of notice, or both, would constitute a default or
would require the Borrower or a Subsidiary to Redeem or make any offer to Redeem
under any indenture, note, credit agreement or instrument pursuant to which any
Material Indebtedness is outstanding or by which the Borrower or any Subsidiary
or any of their Properties is bound; and
 
(c)           no Default has occurred and is continuing.
 
Section 7.08 Investment Company Act.  Neither the Borrower nor any Subsidiary is
an “investment company” or a company “controlled” by an “investment company,”
within the meaning of, or subject to regulation under, the Investment Company
Act of 1940, as amended.
 
Section 7.09 Taxes.  Each of the Borrower and its Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves in accordance with GAAP or (b) to the
extent that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.  The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of Taxes and other governmental charges
are, in the reasonable opinion of the Borrower, adequate.  No Tax Lien relating
to Taxes described in the first sentence of this Section 7.09 has been filed
and, to the knowledge of the Borrower, no claim is being asserted with respect
to any such Tax or other such governmental charge.
 
Section 7.10 ERISA.  No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.  The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $250,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $250,000 the fair market value of
the assets of all such underfunded Plans.
 

 
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Section 7.11 Disclosure; No Material Misstatements.  The Borrower has disclosed
to the Administrative Agent and the Lenders all agreements, instruments and
corporate or other restrictions to which it or any of its Subsidiaries is
subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect.  To the knowledge of Borrower, taken as a whole, none of the other
reports, financial statements, certificates or other information furnished by or
on behalf of the Borrower or any Subsidiary to the Administrative Agent or any
Lender or any of their Affiliates in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or under any other
Loan Document (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected financial information, prospect information, geological and
geophysical data and engineering projections, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.  To the knowledge of Borrower there is no fact
peculiar to the Borrower or any Subsidiary which could reasonably be expected to
have a Material Adverse Effect or in the future is reasonably likely to have a
Material Adverse Effect and which has not been set forth in this Agreement or
the Loan Documents or the other documents, certificates and statements furnished
to the Administrative Agent or the Lenders by or on behalf of the Borrower or
any Subsidiary prior to, or on, the Effective Date in connection with the
transactions contemplated hereby.  There are no statements or conclusions known
to the Borrower in any Reserve Report which are based upon or include misleading
information or fail to take into account material information regarding the
matters reported therein, it being understood that projections concerning
volumes attributable to the Oil and Gas Properties and production and cost
estimates contained in each Reserve Report are necessarily based upon
professional opinions, estimates and projections and that the Borrower and the
Subsidiaries do not warrant that such opinions, estimates and projections will
ultimately prove to have been accurate.
 
Section 7.12 Insurance.  The Borrower has, and has caused all its Subsidiaries
to have, (a) all insurance policies sufficient for the compliance by each of
them with all material Governmental Requirements and all material agreements and
(b) insurance coverage in at least amounts and against such risk (including,
without limitation, public liability) that are usually insured against by
companies similarly situated and engaged in the same or a similar business for
the assets and operations of the Borrower and its 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 Borrower nor any of the
Restricted Subsidiaries is a party to any material agreement or arrangement
(other than Capital Leases creating Liens permitted by Section 9.03(c), but then
only on the Property subject of such Capital Lease), 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 and the Lenders on or in
respect of their Properties to secure the Obligations and the Loan Documents.
 

 
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Section 7.14 Subsidiaries.  Schedule 7.14 sets forth the name of, and the
ownership interest of the Borrower in, each Subsidiary of the Borrower (which
Schedule includes the Subsidiaries acquired or expected to be acquired in
connection with the Acquisitions).  As of the Effective Date there are no
Unrestricted Subsidiaries other than the Subsidiaries set forth in clause (iii)
of the definition of “Unrestricted Subsidiaries” in Section 1.01.
 
Section 7.15 Location of Business and Offices.  The Borrower’s jurisdiction of
organization is Delaware; the name of the Borrower as listed in the public
records of Delaware is Magnum Hunter Resources Corporation; and the
organizational identification number of the Borrower in Delaware is 2758331 (or,
in each case, as set forth in a notice delivered to the Administrative Agent
pursuant to ‎Section 8.01(l) in accordance with ‎Section 12.01).  Each
Subsidiary’s jurisdiction of organization, name as listed in the public records
of its jurisdiction of organization and organizational identification number in
its jurisdiction of organization is stated on Schedule 7.14 (or as set forth in
a notice delivered pursuant to ‎Section 8.01(l)).
 
Section 7.16Properties; Titles, Etc.
 
(a)           Except as disclosed in Schedule 7.16, each of the Borrower and the
Restricted Subsidiaries has good and defensible title to the proved Oil and Gas
Properties evaluated in the most recently delivered Reserve Report (excluding,
to the extent this representation and warranty is deemed to be made after the
Effective Date, any such Oil and Gas Properties sold or transferred in
compliance with ‎Section 9.11) and good title to all its personal Properties, in
each case, free and clear of all Liens except Liens permitted by Section
9.03.  After giving full effect to the Excepted Liens, the Borrower or the
Restricted Subsidiary specified as the owner owns the net interests in
production attributable to the Hydrocarbon Interests as reflected in the most
recently delivered Reserve Report, and the ownership of such Properties shall
not in any material respect obligate the Borrower or such Restricted Subsidiary
to bear the costs and expenses relating to the maintenance, development and
operations of each such Property in an amount in excess of the working interest
of each Property set forth in the most recently delivered Reserve Report that is
not offset by a corresponding proportionate increase in the Borrower’s or such
Restricted Subsidiary’s net revenue interest in such Property.
 
(b)           All material leases and agreements necessary for the conduct of
the business of the Borrower and the Subsidiaries are valid and subsisting, in
full force and effect, and there exists no default or event or circumstance
which with the giving of notice or the passage of time or both would give rise
to a default under any such lease or leases, which could reasonably be expected
to result in a Material Adverse Effect.
 

 
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(c)           The rights and Properties presently owned, leased or licensed by
the Borrower and the Subsidiaries including, without limitation, all easements
and rights of way, include all rights and Properties necessary to permit the
Borrower and the Subsidiaries to conduct their business in all material respects
in the same manner as its business has been conducted prior to the Effective
Date.
 
(d)           All of the material Properties of the Borrower and the
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.
 
(e)           The Borrower and each Subsidiary owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual Property
material to its business, and the use thereof by the Borrower and such
Subsidiary does not infringe upon the rights of any other Person, except for any
such infringements that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect.  The Borrower and its
Subsidiaries either own or have valid licenses or other rights to use all
databases, geological data, geophysical data, engineering data, seismic data,
maps, interpretations and other technical information used in their businesses
as presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons, with
such exceptions as could not reasonably be expected to have a Material Adverse
Effect.
 
Section 7.17 Maintenance of Properties.  Except for such acts or failures to act
as could not be reasonably expected to have a Material Adverse Effect, the Oil
and Gas Properties (and Properties unitized therewith) have been maintained,
operated and developed in a good and workmanlike manner and in conformity with
all Government Requirements and in conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon Interests and
other contracts and agreements forming a part of the Oil and Gas
Properties.  Specifically in connection with the foregoing, except for those as
could not be reasonably expected to have a Material Adverse Effect, (i) no Oil
and Gas Property is subject to having allowable production reduced below the
full and regular allowable (including the maximum permissible tolerance) because
of any overproduction (whether or not the same was permissible at the time) and
(ii) to the knowledge of Borrower,  none of the wells comprising a part of the
Oil and Gas Properties (or Properties unitized therewith) is deviated from the
vertical more than the maximum permitted by Government Requirements, and such
wells are, in fact, bottomed under and are producing from, and the well bores
are wholly within, the Oil and Gas Properties (or in the case of wells located
on Properties unitized therewith, such unitized Properties).  All pipelines,
wells, gas processing plants, platforms and other material improvements,
fixtures and equipment owned in whole or in part by the Borrower or any of its
Subsidiaries that are necessary to conduct normal operations are being
maintained in a state adequate to conduct normal operations, and with respect to
such of the foregoing that are operated by the Borrower or any of its
Subsidiaries, in a manner consistent with the Borrower’s or its Subsidiaries’
past practices (other than those the failure of which to maintain in accordance
with this ‎Section 7.17 could not reasonably be expect to have a Material
Adverse Effect).
 
Section 7.18 Gas Imbalances, Prepayments.  As of the Effective Date, except as
set forth on Schedule 7.18 or on the most recent certificate delivered pursuant
to ‎Section 8.12(c), on a net basis there are no gas imbalances, take or pay or
other prepayments which would require the Borrower or any of the Restricted
Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor
exceeding 500 mmcf equivalent in the aggregate.
 

 
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Section 7.19 Marketing of Production.  Except for contracts listed and in effect
on the Effective Date on Schedule 7.19, and thereafter either disclosed in
writing to the Administrative Agent or included in the most recently delivered
Reserve Report (with respect to all of which contracts the Borrower represents
that it or its Subsidiaries are receiving a price for all production sold
thereunder which is computed substantially in accordance with the terms of the
relevant contract and are not having deliveries curtailed substantially below
the subject Property’s delivery capacity), no material agreements exist which
are not cancelable on 60 days notice or less without penalty or detriment for
the sale of production from the Borrower’s or the Restricted Subsidiaries’
Hydrocarbons (including, without limitation, calls on or other rights to
purchase, production, whether or not the same are currently being exercised)
that (a) pertain to the sale of production at a fixed price and (b) have a
maturity or expiry date of longer than six (6) months from the Effective Date.
 
Section 7.20 Swap Agreements.  Schedule 7.20, as of the Effective Date, and
after the Effective Date, each report required to be delivered by the Borrower
pursuant to Section 8.01(d), sets forth, a true and complete list of all Swap
Agreements of the Borrower and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.
 
Section 7.21 Use of Loans and Letters of Credit.  The proceeds of the Loans and
the Letters of Credit shall be used (i) to provide working capital for
exploration and production, midstream trading and marketing operations, (ii) for
general corporate purposes of the Borrower and its Subsidiaries, including the
acquisition of exploration and production and midstream properties, (iii) to
refinance the Prior Agreement, and (iv) to finance the Acquisitions.  The
Borrower and its Subsidiaries are not engaged principally, or as one of its or
their important activities, in the business of extending credit for the purpose,
whether immediate, incidental or ultimate, of buying or carrying margin stock
(within the meaning of Regulation T, U or X of the Board).  No part of the
proceeds of any Loan or Letter of Credit will be used for any purpose which
violates the provisions of Regulations T, U or X of the Board.
 
Section 7.22 Solvency.  Before and after giving effect to the Transactions, (a)
the aggregate assets, at a fair valuation, of the Borrower and its Subsidiaries,
taken as a whole, will exceed the aggregate Debt of the Borrower on a
consolidated basis, as the Debt becomes absolute and matures, (b) none of the
Borrower nor any Subsidiary will have incurred or intended to incur, and will
not believe that it will incur, Debt beyond its ability to pay such Debt as such
Debt becomes absolute and matures and (c) none of the Borrower nor any
Subsidiary will have (nor will have any reason to believe that it will have
thereafter) unreasonably small capital for the conduct of its business.
 
ARTICLE VIII
Affirmative Covenants
 
Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
 

 
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Section 8.01 Financial Statements; Ratings Change; Other Information .  The
Borrower will furnish to the Administrative Agent and each Lender:
 
(a)           Annual Financial Statements.  As soon as available, but in any
event in accordance with then applicable law and not later than 90 days after
the end of each fiscal year of the Borrower, its audited consolidated (and, if
there are any Unrestricted Subsidiaries, consolidating) balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by a firm of independent
public accountants proposed by Borrower and approved by the Administrative Agent
(without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied.
 
(b)           Quarterly Financial Statements.  As soon as available, but in any
event in accordance with then applicable law and not later than 45 days after
the end of each of the first three fiscal quarters of each fiscal year of the
Borrower, its consolidated (and, if there are any Unrestricted Subsidiaries,
consolidating) balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
one of its Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.
 
(c)           Certificate of Financial Officer – Compliance.  Concurrently with
any delivery of financial statements under ‎Section 8.01(a) or Section 8.01(b),
a certificate of a Financial Officer in substantially the form of Exhibit D
hereto (i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with ‎Section 8.13(b) and Section 9.01 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the audited financial statements referred to in Section 7.04
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate.
 
(d)           Certificate of Financial Officer – Swap Agreements.  Concurrently
with the delivery of each Reserve Report hereunder, a certificate of a Financial
Officer, in form and substance reasonably satisfactory to the Administrative
Agent, setting forth as of a recent date, a true and complete list of all Swap
Agreements of the Borrower and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark-to-market value therefor, any new credit support
agreements relating thereto not listed on Schedule 7.20, any margin required or
supplied under any credit support document, and the counterparty to each such
agreement.
 

 
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(e)           Certificate of Insurer – Insurance Coverage.  Concurrently with
any delivery of financial statements under Section 8.01(a), a certificate of
insurance coverage from each insurer with respect to the insurance required by
‎Section 8.07, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, all copies of the
applicable policies.
 
(f)           Other Accounting Reports.  Promptly upon receipt thereof, a copy
of each other report or letter (except standard and customary correspondence)
submitted to the Borrower or any of its Subsidiaries by independent accountants
in connection with any annual, interim or special audit made by them of the
books of the Borrower or any such Subsidiary, and a copy of any response by the
Borrower or any such Subsidiary, or the board of directors of the Borrower or
any such Subsidiary, to such letter or report.
 
(g)           SEC and Other Filings; Reports to Shareholders.  Promptly after
the same become publicly available, copies of all periodic and other reports,
proxy statements and other materials filed by the Borrower or any Subsidiary
with the SEC, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be.
 
(h)           Notices Under Material Instruments.  Promptly after the furnishing
thereof, copies of any financial statement, report or notice furnished to or by
any Person pursuant to the terms of any preferred stock designation, indenture,
loan or credit or other similar agreement, 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.  Concurrently with the delivery of any
Reserve Report to the Administrative Agent pursuant to Section 8.12, a list of
Persons purchasing Hydrocarbons from the Borrower or any Subsidiary accounting
for at least 80% of the revenues resulting from the sale of all Hydrocarbons in
the one year period prior to the “as of” date of such Reserve Report.
 
(j)           Notice of Sales of Oil and Gas Properties.  In the event the
Borrower or any Restricted Subsidiary intends to sell, transfer, assign or
otherwise dispose of any Oil or Gas Properties or any Equity Interests in any
Restricted Subsidiary owning Oil and Gas Properties, in either case, having a
fair market value in excess of 5% of the Borrowing Base then in effect in
accordance with Section 9.11‎, prior written notice of such disposition, the
anticipated price thereof and the anticipated date of closing.
 
(k)           Notice of Casualty Events.  Prompt written notice, and in any
event within five (5) Business Days, of the occurrence of any Casualty Event or
the commencement of any action or proceeding that could reasonably be expected
to result in a Casualty Event.
 
(l)           Information Regarding the Loan Parties.  Prompt written notice
(and in any event within ten (10) Business Days prior thereto) of any change,
other than the Potential NGAS Liquidation, (i) in any Loan Party’s corporate
name or in any trade name used to identify the Borrower in the conduct of its
business or in the ownership of its Properties, (ii) in any Loan Party’s
identity or corporate structure or in the jurisdiction in which such Loan Party
is incorporated or formed, (iii) in any Loan Party’s jurisdiction of
organization or any Loan Party’s organizational identification number in such
jurisdiction of organization, and (iv) in any Loan Party’s federal taxpayer
identification number.
 

 
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(m)           Production Report and Lease Operating Statements.  Within 30 days
after the end of each calendar month, a report setting forth, for each calendar
month during the then current fiscal year to date, the volume of production and
sales attributable to production (and the prices at which such sales were made
and the revenues derived from such sales) for each such calendar month from the
Oil and Gas Properties, and setting forth the related ad valorem, severance and
production taxes and lease operating expenses attributable thereto and incurred
for each such calendar month.
 
(n)           Notices of Certain Changes.  Promptly, but in any event within
five (5) Business Days after the execution thereof, copies of any amendment,
modification or supplement to the certificate or articles of incorporation,
by-laws, any preferred stock designation or any other organic document of the
Borrower or any Subsidiary.
 
(o)           Other Requested Information.  Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of the Borrower or any Subsidiary (including, without
limitation, any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA), or compliance with the terms of this
Agreement or any other Loan Document, as the Administrative Agent or any Lender
may reasonably request.
 
Section 8.02 Notices of Material Events.  The Borrower will furnish to the
Administrative Agent prompt written notice of the following:
 
(a)           the occurrence of any Default;
 
(b)           the filing or commencement of, or the threat in writing of, any
action, suit, proceeding, investigation or arbitration by or before any
arbitrator or Governmental Authority against the Borrower or any Affiliate
thereof not previously disclosed in writing to the Lenders or any material
adverse development in any action, suit, proceeding, investigation or
arbitration previously disclosed to the Lenders that, if adversely determined,
could reasonably be expected to result in a Material Adverse Effect;
 
(c)           the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect; and
 
(d)           any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
 
Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
 

 
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Section 8.03Existence; Conduct of Business.  The Borrower will, and will cause
each Subsidiary to, do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence and the rights,
licenses, permits, privileges and franchises material to the conduct of its
business and maintain, if necessary, its qualification to do business in each
other jurisdiction in which its Oil and Gas Properties are located or the
ownership of its Properties requires such qualification, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect and except for the Potential NGAS Liquidation; provided that the
foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under ‎Section 9.10.
 
Section 8.04 Payment of Obligations.  The Borrower will, and will cause each
Subsidiary to, pay its obligations, including Tax liabilities of the Borrower
and all of its Subsidiaries before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings and the Borrower or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance with
GAAP or (b) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect or result in the
seizure or levy of any material Property of the Borrower or any Subsidiary.
 
Section 8.05 Performance of Obligations under Loan Documents.  The Borrower will
pay the Loans and the Notes according to the reading, tenor and effect thereof,
and the Borrower will, and will cause each Subsidiary to, do and perform every
act and discharge all of the obligations to be performed and discharged by them
under the Loan Documents, including, without limitation, this Agreement, at the
time or times and in the manner specified.
 
Section 8.06 Operation and Maintenance of Properties.  Except, in each case,
where the failure to comply could not reasonably be expected to have a Material
Adverse Effect, the Borrower, at its own expense, will, and will cause each
Subsidiary to:
 
(a)           operate its Oil and Gas Properties and other material Properties
or cause such Oil and Gas Properties and other material Properties to be
operated in accordance with the practices of the industry and in compliance with
all applicable contracts and agreements and in compliance with all Governmental
Requirements, including, without limitation, applicable pro ration requirements
and Environmental Laws, and all applicable laws, rules and regulations of every
other Governmental Authority from time to time constituted to regulate the
development and operation of its Oil and Gas Properties and the production and
sale of Hydrocarbons and other minerals therefrom;
 
(b)           keep and maintain all Property material to the conduct of its
business in good working order and condition (ordinary wear and tear excepted),
preserve, maintain and keep in good repair, working order and efficiency
(ordinary wear and tear excepted) all of its material producing Oil and Gas
Properties and other material Properties, including, without limitation, all
equipment, machinery and facilities;
 
(c)           promptly pay and discharge, or make reasonable and customary
efforts to cause to be paid and discharged, all delay rentals, royalties,
expenses and obligations accruing under the leases or other agreements affecting
or pertaining to its proved producing Oil and Gas Properties and will do all
other things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder;
 

 
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(d)           promptly perform or make reasonable and customary efforts to cause
to be performed, in accordance with industry standards, the obligations required
by each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its proved producing Oil and Gas
Properties and other material Properties;
 
(e)           operate its Oil and Gas Properties and other material Properties
or cause or make reasonable and customary efforts to cause such Oil and Gas
Properties and other material Properties to be operated in accordance with the
practices of the industry and in material compliance with all applicable
contracts and agreements and in compliance in all material respects with all
Governmental Requirements; and
 
(f)           to the extent the Borrower is not the operator of any Property,
the Borrower shall use reasonable efforts to cause the operator to comply with
this Section 8.06.
 
Section 8.07 Insurance.  The Borrower will, and will cause each Subsidiary to,
maintain, with financially sound and reputable insurance companies, insurance in
such amounts and against such risks as are customarily maintained by companies
engaged in the same or similar businesses operating in the same or similar
locations.  The loss payable clauses or provisions in said insurance policy or
policies insuring any of the collateral for the Loans shall be endorsed in favor
of and made payable to the Administrative Agent as its interests may appear and
such policies shall name the Administrative Agent and the Lenders as “additional
insureds” and provide that the insurer will endeavor to give at least 30 days
prior notice of any cancellation to the Administrative Agent.
 
Section 8.08 Books and Records; Inspection Rights.  The Borrower will, and will
cause each Subsidiary to, keep proper books of record and account in which full,
true and correct entries are made of all dealings and transactions in relation
to its business and activities.  The Borrower will, and will cause each
Subsidiary to, permit any representatives designated by the Administrative Agent
or any Lender, upon reasonable prior notice, to visit and inspect its
Properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times during normal business hours and as
often as reasonably requested on an individual and aggregate basis.
 
Section 8.09 Compliance with Laws.  The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
 
Section 8.10Environmental Matters.
 

 
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(a)           The Borrower shall at its sole expense: (i) comply, and shall
cause its Properties and operations and each Subsidiary and each Subsidiary’s
Properties and operations to comply, with all applicable Environmental Laws, the
breach of which could be reasonably expected to have a Material Adverse Effect;
(ii) not dispose of or otherwise release, and shall cause each Subsidiary not to
dispose of or otherwise release, any oil, oil and gas waste, hazardous
substance, or solid waste on, under, about or from any of the Borrower’s or its
Subsidiaries’ Properties or any other Property to the extent caused by the
Borrower’s or any of its Subsidiaries’ operations except in compliance with
applicable Environmental Laws, the disposal or release of which could reasonably
be expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each Subsidiary to timely obtain or file, all notices, permits,
licenses, exemptions, approvals, registrations or other authorizations, if any,
required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of the Borrower’s or its Subsidiaries’
Properties, which failure to obtain or file could reasonably be expected to have
a Material Adverse Effect; promptly commence and diligently prosecute to
completion, and shall cause each Subsidiary to promptly commence and diligently
prosecute to completion, any assessment, evaluation, investigation, monitoring,
containment, cleanup, removal, repair, restoration, remediation or other
remedial obligations (collectively, the “Remedial Work”) in the event any
Remedial Work is required or reasonably necessary under applicable Environmental
Laws because of or in connection with the actual or suspected past, present or
future disposal or other release of any oil, oil and gas waste, hazardous
substance or solid waste on, under, about or from any of the Borrower’s or its
Subsidiaries’ Properties, which failure to commence and diligently prosecute to
completion could reasonably be expected to have a Material Adverse Effect; and
(iv) establish and implement, and shall cause each Subsidiary to establish and
implement, such reasonable procedures as may be necessary to assure that the
Borrower’s and its Subsidiaries’ obligations under this ‎Section 8.10(a) are
timely and fully satisfied, which failure to establish and implement could
reasonably be expected to have a Material Adverse Effect.
 
(b)           The Borrower will promptly, but in no event later than five
Business Days of the occurrence of a triggering event, notify the Administrative
Agent in writing of any threatened action, investigation or inquiry by any
Governmental Authority or any threatened demand or lawsuit by any landowner or
other third party against the Borrower or its Subsidiaries or their Properties
of which the Borrower has knowledge in connection with any applicable
Environmental Laws (excluding routine testing and corrective action) if the
Borrower reasonably anticipates that such action could reasonably result in a
Material Adverse Effect.
 
(c)           The Borrower will, and will cause each Subsidiary to, undertake
reasonable environmental audits in connection with any future acquisitions of
producing Oil and Gas Properties.
 
Section 8.11Further Assurances.
 
(a)           The Borrower at its expense will, and will cause each Subsidiary
to, promptly execute and deliver to the Administrative Agent all such other
documents, agreements and instruments reasonably requested by the Administrative
Agent to comply with, cure any defects or accomplish the conditions precedent,
covenants and agreements of the Borrower or any Subsidiary, as the case may be,
in the Loan Documents, including the Notes, or to further evidence and more
fully describe the collateral intended as security for the Obligations, or to
correct any omissions in this Agreement or the Security Instruments, or to state
more fully the obligations secured therein, or to perfect, protect or preserve
any Liens created pursuant to this Agreement or any of the Security Instruments
or the priority thereof, or to make any recordings, file any notices or obtain
any consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith.
 

 
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(b)           The Borrower hereby authorizes the Administrative Agent to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Mortgaged Property.  A carbon, photographic
or other reproduction of the Security Instruments or any financing statement
covering the Mortgaged Property or any part thereof shall be sufficient as a
financing statement where permitted by law.
 
Section 8.12Reserve Reports.
 
(a)           Promptly after January 1st of each calendar year and in any event
before April 1st of each calendar year, and promptly after July 1st of each
calendar year, commencing July 1, 2011, and in any event before October 1st of
each year, the Borrower shall furnish to the Administrative Agent and the
Lenders a Reserve Report.  The Reserve Report as of January 1st of each year and
the Reserve Report delivered in connection with the first redetermination of the
Borrowing Base after the Effective Date shall be prepared by Borrower or an
Approved Petroleum Engineer and audited by one or more Approved Petroleum
Engineers, and the July 1st Reserve Report of each year shall be prepared by or
under the supervision of the chief engineer of the Borrower.  In each case, the
chief engineer of Borrower shall certify such Reserve Report is based on
information that was prepared in good faith based upon assumptions believed to
be reasonable at the time and to have been prepared in accordance with the
procedures used in the immediately preceding Reserve Report.
 
(b)           In the event of an Interim Redetermination, except in connection
with the first redetermination, the Borrower shall furnish to the Administrative
Agent and the Lenders a Reserve Report prepared by or under the supervision of
the chief engineer of the Borrower who shall certify such Reserve Report to be
based on information that was prepared in good faith based upon assumptions
believed to be reasonable at the time and to have been prepared in accordance
with the procedures used in the immediately preceding Reserve Report.  For any
Interim Redetermination requested by the Administrative Agent or the Borrower
pursuant to ‎Section 2.07(b)(ii) or Section 2.07(b)(iii), the Borrower shall
provide such Reserve Report with an “as of” date as required by the
Administrative Agent as soon as possible, but in any event no later than
forty-five (45) days following the receipt of such request.
 
(c)           With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that to his knowledge, after reasonable
investigation, in all material respects: (i) the information contained in the
Reserve Report and any other information delivered in connection therewith is
based on information that was prepared in good faith based upon assumptions
believed to be reasonable at the time, (ii) the Borrower or its Subsidiaries
owns good and defensible title to the proved Oil and Gas Properties evaluated in
such Reserve Report and such Properties are free of all Liens except for Liens
permitted by ‎Section 9.03, (iii) except as set forth on an exhibit to the
certificate, on a net basis there are no gas imbalances, take or pay or other
prepayments in excess of the volume specified in ‎Section 7.18 with respect to
its Oil and Gas Properties evaluated in such Reserve Report which would require
the Borrower or any Subsidiary to deliver Hydrocarbons either generally or
produced from such Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor, (iv) none of the Borrower’s and its
Subsidiaries’ 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 Effective Date or the most recently
delivered Reserve Report which the Borrower could reasonably be expected to have
been obligated to list on Schedule 7.19 had such agreement been in effect on the
Effective Date and (vi) attached thereto is a schedule of the proved Oil and Gas
Properties evaluated by such Reserve Report that are Mortgaged Properties and
demonstrating the percentage of the Borrowing Base that the value of such
Mortgaged Properties represent.
 

 
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Section 8.13Title Information.
 
(a)           On or before the delivery to the Administrative Agent and the
Lenders of each Reserve Report required by Section 8.12(a)‎, the Borrower will
deliver title information in form and substance acceptable to the Administrative
Agent covering enough of the proved Oil and Gas Properties evaluated by such
Reserve Report that were not included in the immediately preceding Reserve
Report, so that the Administrative Agent shall have received together with title
information previously delivered, satisfactory title information on at least 80%
of the total value of the proved Oil and Gas Properties evaluated by such
Reserve Report.
 
(b)           If the Borrower has provided title information for additional
Properties under ‎Section 8.13(a), the Borrower shall, within 60 days of notice
from the Administrative Agent that title defects or exceptions exist with
respect to such additional Properties, either (i) cure any such title defects or
exceptions (including defects or exceptions as to priority) which are not
permitted by ‎Section 9.03 raised by such information, (ii) substitute
acceptable Mortgaged Properties with no title defects or exceptions except for
Excepted Liens (other than Excepted Liens described in clauses (e), (g) and (h)
of such definition) having an equivalent value or (iii) deliver title
information in form and substance acceptable to the Administrative Agent so that
they shall have received, together with title information previously delivered,
satisfactory title information on at least 80% of the value of the Oil and Gas
Properties evaluated by such Reserve Report.
 
(c)           If the Borrower is unable to cure any title defect requested to be
cured within the 60-day period or the Borrower does not comply with the
requirement to provide acceptable title information covering 80% of the value of
the Oil and Gas Properties evaluated in the most recent Reserve Report, such
default 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.  To the extent that the Administrative
Agent or the Required Lenders are not satisfied with title to any Mortgaged
Property after the 60-day period has elapsed, such unacceptable Mortgaged
Property shall not count towards the 80% requirement and the Administrative
Agent may send a notice to the Borrower and the Lenders that the then
outstanding Borrowing Base shall be reduced by an amount as determined by the
Required Lenders to cause the Borrower to be in compliance with the requirement
to provide acceptable title information on 80% of the total value of the Oil and
Gas Properties.  This new Borrowing Base shall become effective immediately
after receipt of such notice.
 

 
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Section 8.14 Additional Collateral.  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)) to ascertain
whether the Mortgaged Properties represent at least 80% of the total value of
the proved Oil and Gas Properties owned by Borrower and the Restricted
Subsidiaries and evaluated in the most recently completed Reserve Report after
giving effect to exploration and production activities, acquisitions,
dispositions and production.  In the event that the Mortgaged Properties do not
represent at least 80% of such total value evaluated in the most recently
completed Reserve Report, then the Borrower shall, and shall cause its
Restricted Subsidiaries to, grant to the Administrative Agent as security for
the Obligations a first-priority Lien interest (subject only to Excepted Liens
of the type described in clauses (a) to (d) and (f) of the definition thereof,
but subject to the provisos at the end of such definition) on additional Oil and
Gas Properties not already subject to a Lien of the Security Instruments such
that after giving effect thereto, the Mortgaged Properties will represent at
least 80% of the total value of the Oil and Gas Properties evaluated in the most
recently delivered Reserve Report.  All such Liens will be created and perfected
by and in accordance with the provisions of mortgages, deeds of trust, security
agreements and financing statements or other Security Instruments, all in form
and substance satisfactory to the Administrative Agent and in sufficient
executed (and acknowledged where necessary or appropriate) counterparts for
recording purposes.
 
Section 8.15 ERISA Compliance.  In addition to and without limiting the
generality of Section 8.09, the Borrower shall and shall cause each of its
Subsidiaries to (a) comply in all material respects with all applicable
provisions of ERISA and the regulations and published interpretations thereunder
with respect to all employee benefit plans (as defined in ERISA), (b) not take
any action or fail to take action the result of which could be (i) a liability
to the PBGC (other than liability for PBGC premiums) or (ii) a past due
liability to any Multiemployer Plan, (c) not participate in any prohibited
transaction that could result in any material civil penalty under ERISA or any
tax under the Code, (d) operate each employee benefit plan in such a manner that
will not incur any material tax liability under Section 4980B of the Code or any
liability to any qualified beneficiary as defined in Section 4980B of the Code
except to the extent such failure to comply could not reasonably be expected to
have Material Adverse Effect and (e) furnish to the Administrative Agent upon
the Administrative Agent’s request such additional information about any
employee benefit plan as may be reasonably requested by the Administrative
Agent.
 
Section 8.16 New Subsidiary Requirements.  Concurrently with the acquisition or
formation of any subsidiary which is to be a Restricted Subsidiary and in any
event prior to or concurrently with the Borrower’s advancing or contributing any
amounts to or into such Restricted Subsidiary (other than de minimis
organizational costs such as filing fees), the Borrower shall cause to be
delivered to the Administrative Agent (i) the Guaranty and a Security Agreement
executed by such Restricted Subsidiary, (ii) a Security Agreement covering the
Equity Interests of such Restricted Subsidiary, (iii) stock certificates or
other instruments representing all the Equity Interests of such Restricted
Subsidiary and stock powers and instruments of transfer, endorsed in blank, with
respect to such stock certificates or other instruments, or, if any Equity
Interests pledged pursuant to such Security Agreement are uncertificated
securities, confirmation and evidence satisfactory to the Administrative Agent
that the security interest in such uncertificated securities has been
transferred to and perfected by the Administrative Agent in accordance with the
UCC, (iv) all documents and instruments, including UCC Financing Statements
(Form UCC-1), required by law or reasonably requested by the Administrative
Agent to be filed, registered or recorded to create or perfect the Liens
intended to be created under each Security Agreement, (v) UCC searches, all
dated reasonably close to the date of the Security Agreements and in form and
substance satisfactory to the Administrative Agent, and evidence reasonably
satisfactory to the Administrative Agent that any Liens indicated in such UCC
searches are Excepted Liens or have been released, (vi) the corporate
resolutions or similar approval documents of such Restricted Subsidiary
approving the execution and delivery of the Guaranty and the Security Agreement
by such Restricted Subsidiary, (vii) the corporate resolutions or similar
approval documents of the Borrower or other Loan Party approving the execution
and delivery of the Security Agreement by the Borrower or other Loan Party, and
(viii) the legal opinion reasonably acceptable to the Administrative Agent,
opining favorably on the execution, delivery and enforceability of the Guaranty
and the Security Agreements and otherwise being in form and substance reasonably
satisfactory to the Administrative Agent and its counsel.
 

 
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ARTICLE IX
Negative Covenants
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
 
Section 9.01Financial Covenants.
 
(a)           Current Ratio.  Commencing with the fiscal quarter ending March
31, 2011, the Borrower will not permit, as of the last day of any fiscal
quarter, its ratio of (i) consolidated current assets of the Borrower and the
Restricted Subsidiaries (including the unused amount of the total Commitments,
but excluding non-cash assets under FAS 133) to (ii) consolidated current
liabilities of the Borrower and the Restricted Subsidiaries (excluding non-cash
obligations under FAS 133) to be less than 1.0 to 1.0.
 
(b)           Interest Coverage Ratio.  The Borrower will not permit, as of the
last day of any fiscal quarter commencing with the fiscal quarter ending
June 30, 2011, its ratio of (i) EBITDAX of the Borrower and the Restricted
Subsidiaries for the trailing four quarter period then ended to (ii) actual cash
interest paid by the Borrower and the Restricted Subsidiaries during such period
to be less than 2.5 to 1.0.
 
(c)           Total Debt to EBITDAX.  Commencing with the fiscal quarter ending
June 30, 2011, the Borrower will not permit, as of the last day of any fiscal
quarter, its ratio of (i) total Debt of the Borrower and the Restricted
Subsidiaries as of such date to (ii) EBITDAX of the Borrower and the Restricted
Subsidiaries for the trailing four quarter period then ended to exceed 4.5 to
1.0 commencing with the fiscal quarter ending June 30, 2011 through the quarter
ending September 30, 2011, and 4.0 to 1.0 commencing with the quarter ending
December 31, 2011 and thereafter.
 

 
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Section 9.02 Debt.  The Borrower will not, and will not permit any Subsidiary
to, incur, create, assume or suffer to exist any Debt, except:
 
(a)           the Notes or other Obligations arising under the Loan Documents or
any guaranty of or suretyship arrangement for the Notes or other Obligations
arising under the Loan Documents;
 
(b)           Debt of the Borrower and its Subsidiaries existing on the
Effective Date that is reflected in the Financial Statements and described on
Schedule 9.02;
 
(c)           accounts payable and accrued expenses, liabilities or other
obligations to pay the deferred purchase price of Property or services, from
time to time incurred in the ordinary course of business which are not greater
than ninety (90) days past the date of invoice or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP;
 
(d)           Debt under Capital Leases or nonrecourse purchase money Debt in
respect of equipment purchases not to exceed $10,000,000 at any time;
 
(e)           Debt associated with worker’s compensation claims, performance,
bid, surety or similar bonds or surety obligations required by Governmental
Requirements or third parties in connection with the operation of the Oil and
Gas Properties;
 
(f)           intercompany Debt between (i) the Borrower and any Restricted
Subsidiary or between Restricted Subsidiaries to the extent permitted by
Sections 9.05(g), (q) or (s) or (ii) Unrestricted Subsidiaries or Debt owing to
the Borrower and/or any Restricted Subsidiaries by Unrestricted Subsidiaries,
when combined with Investments permitted by Section 9.05(p) in Unrestricted
Subsidiaries, not to exceed $2,000,000 in the aggregate at any time outstanding;
provided that such Debt is not held, assigned, transferred, negotiated or
pledged to any Person other than the Borrower or one of its Wholly-Owned
Subsidiaries;
 
(g)           endorsements of negotiable instruments for collection in the
ordinary course of business;
 
(h)           Debt arising under take-or-pay agreements or gas balancing
agreements which do not give rise to liability in the aggregate on a
consolidated basis for the Borrower in excess of $2,000,000 at any one time
outstanding;
 
(i)           Debt incurred in the ordinary course of Borrower’s business in
connection with Swap Agreements provided they are permitted under ‎Section 9.18
of this Agreement;
 
(j)           Debt of Unrestricted Subsidiaries for which neither the Borrower
nor any Restricted Subsidiary shall be liable as an obligor, under any guarantee
or otherwise;
 

 
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(k)           obligations with respect to Series C preferred stock issued by the
Borrower prior to the Effective Date, so long as any dividends with respect
thereto comply with the provisions of Section 9.04;
 
(l)           obligations with respect to Series D preferred stock issued by the
Borrower under the certificate of designations therefor filed by the Borrower
with the Secretary of State of Delaware, so long as any dividends with respect
thereto comply with the provisions of Section 9.04;
 
(m)           Debt of Alpha Hunter Drilling, LLC, Hunter Real Estate, LLC and
Triad Hunter LLC owing to Wesbanco Bank, Inc. and guaranteed by the Borrower in
an amount not to exceed $5,000,000 in the aggregate which Debt shall be on terms
and conditions reasonably satisfactory to the Administrative Agent and have
terms and conditions no more restrictive that the terms and conditions set forth
in this Agreement;
 
(n)           the Hall Houston Debt in an amount not to exceed $640,695 at any
one time outstanding; and
 
(o)           other Debt not to exceed $3,000,000 in the aggregate at any one
time outstanding.
 
Section 9.03 Liens.  The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any of its Properties
(now owned or hereafter acquired), except:
 
(a)           Liens securing the payment of any Obligations;
 
(b)           Excepted Liens;
 
(c)           Liens securing Capital Leases or purchase money Debt permitted by
‎Section 9.02(d) but only on the Property under lease;
 
(d)           Liens described on Schedule 9.03;
 
(e)           Liens on Property not constituting collateral for the Obligations
and not otherwise permitted by the foregoing clauses of this ‎Section 9.03;
provided that the aggregate principal or face amount of all Debt secured under
this clause (d) shall not exceed $500,000 at any time;
 
(f)           Liens in favor of Lenders securing Debt permitted by Section
9.02(i); and
 
(g)           Liens on the assets of Unrestricted Subsidiaries securing Debt
permitted under Sections 9.02(j) and (m).
 
Section 9.04 Restricted Payments.  The Borrower will not, and will not permit
any Restricted Subsidiary to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, return any capital to its stockholders or
make any distribution of its Property to its Equity Interest holders, except:
 

 
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(a)           Restricted Subsidiaries may declare and pay dividends ratably with
respect to their Equity Interests;
 
(b)           the Borrower may declare and pay dividends on its Series C and
Series D preferred stock permitted hereunder, so long as (i) no Event of Default
exists at the time of, or is caused by, such payment, (ii) after giving effect
to such payment, availability under the Borrowing Base is equal to or greater
than the greater of (x) five percent (5%) of the Borrowing Base then in effect
and (y) $5,000,000, and (iii) such dividends do not exceed $20,000,000 in any
calendar year;
 
(c)           the Borrower may (i) issue Series D preferred stock in exchange
for outstanding Series C preferred stock (and pay cash in lieu of fractional
shares in connection with such exchange), (ii) redeem its Series C preferred
stock with the proceeds of an equity issuance by the Borrower, (iii) redeem its
Series D preferred stock with the proceeds of an equity issuance by the Borrower
and (iv) issue common stock in exchange for outstanding Series C and Series D
preferred stock (and pay cash in lieu of fractional shares in connection with
such exchange); and
 
(d)           the Borrower may (i) so long as no Event of Default is occurring,
make payments to directors, officers, members of management, employees or
consultants of the Borrower or any Subsidiary (or their transferees, estates or
beneficiaries under their estates) upon their death, disability, retirement,
severance or termination of employment or service for the acquisition by the
Borrower from such Persons of Equity Interests in the Borrower, provided that
the aggregate cash consideration paid for all such payments shall not exceed
$500,000 in any calendar year, and (ii) make cashless repurchases of securities
that are deemed to occur upon the exercise or vesting of options, rights or
shares of stock held by directors, officers, members of management, employees or
consultants of the Borrower or any Subsidiary to the extent such securities
represent a portion of the exercise price of or withholding taxes attributable
to such options, rights or shares.
 
Section 9.05 Investments, Loans and Advances.  The Borrower will not, and will
not permit any 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 reflected in the Financial Statements or 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 creation thereof;
 
(d)           commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by S&P or Moody’s;
 
(e)           deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000 (as of the date
of such bank or trust company’s most recent financial reports) and has a short
term deposit rating of no lower than A2 or P2, as such rating is set forth from
time to time, by S&P or Moody’s, respectively or, in the case of any Foreign
Subsidiary, a bank organized in a jurisdiction in which the Foreign Subsidiary
conducts operations having assets in excess of $500,000,000 (or its equivalent
in another currency);
 

 
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(f)           deposits in money market funds investing exclusively in
Investments described in ‎Section 9.05(c), ‎Section 9.05(d) or ‎Section 9.05(e);
 
(g)           Investments made by the Borrower in or to any Restricted
Subsidiary or by any Restricted Subsidiary in or to another Restricted
Subsidiary (except as set forth in clause (q) or (s) below) in an aggregate
amount at any one time outstanding not to exceed $3,000,000;
 
(h)           subject to the limits in Section 9.06, Investments in direct
ownership interests in additional Oil and Gas Properties, gas gathering,
processing and transportation systems and all other assets contemplated by the
permitted business of Borrower located within the geographic boundaries of the
United States of America and Canada;
 
(i)           entry into operating agreements, working interests, royalty
interests, mineral leases, processing agreements, farm-out agreements, contracts
for the sale, transportation or exchange of oil and natural gas, unitization
agreements, pooling arrangements, area of mutual interest agreements, production
sharing agreements or other similar or customary agreements, transactions,
properties, interests or arrangements, and Investments and expenditures in
connection therewith or pursuant thereto, in each case made or entered into in
the ordinary course of the oil and gas business, excluding, however, Investments
in other Persons; provided, however, that none of the foregoing shall involve
the incurrence of any Debt not permitted by ‎Section 9.02;
 
(j)           loans and advances to directors, officers and employees in
connection with the acquisition of Equity Interests in the Borrower or any
Restricted Subsidiary and loans and advances to directors, officers and
employees permitted by applicable law not to exceed $500,000 in the aggregate at
any time;
 
(k)           travel advances in the ordinary course of business;
 
(l)           repurchase agreements of a commercial bank in the United States
and Canada if the commercial paper of such bank or of the bank holding company
of which such bank is a wholly owned subsidiary is rated in the highest rating
categories of S&P, Moody’s, or any other rating agency satisfactory to the
Required Lenders, that are fully secured by securities described in Section
9.04;
 
(m)           Investments in stock of publicly traded companies not to exceed
$100,000 in the aggregate outstanding at any time;
 
(n)           Investments arising from the endorsement of financial instruments
in the ordinary course of business;
 

 
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(o)           Investments by Unrestricted Subsidiaries in other Unrestricted
Subsidiaries;
 
(p)           Investments by the Borrower or any Restricted Subsidiaries in
Unrestricted Subsidiaries (except as set forth in clause (q) below), when
combined with Debt owing by Unrestricted Subsidiaries to the Borrower and/or any
Restricted Subsidiaries under Section 9.02(f), not to exceed $2,000,000 in the
aggregate at any time outstanding;
 
(q)           Investments in Eureka Hunter or Eureka Hunter Pipeline Partners
(or another direct or indirect Subsidiary of Eureka Hunter), whether such
Subsidiaries are Restricted Subsidiaries or Unrestricted Subsidiaries, in an
aggregate amount at any one time outstanding not to exceed, in the aggregate in
any calendar year, (i) the Investments in such Persons existing on the Effective
Date as set forth on Schedule 9.05 and (ii) $2,000,000; provided that to the
extent the Borrower reasonably determines that funds in excess of such amount
are necessary for the construction, operation, maintenance or expansion of the
Eureka Hunter Pipeline or any related natural gas processing plants, the
Borrower may distribute such excess funds to Eureka Hunter, Eureka Hunter
Pipeline Partners or such other Subsidiary for the purpose of paying any such
construction, operation, maintenance or expansion expenses of the Eureka Hunter
Pipeline or such natural gas processing plants, so long as (A) such funds are
net cash proceeds from the offering of common or preferred equity securities by
the Borrower on or after January 1, 2011 and (B) after giving effect to such
distribution, availability under the Borrowing Base is equal or greater than 5%
of the Borrowing Base then in effect;
 
(r)           To the extent the Eureka Hunter Pipeline is owned by Eureka Hunter
Pipeline J.V. and prior to the occurrence and continuance of an Event of
Default, investments by Eureka Hunter Pipeline Partners in Eureka Hunter
Pipeline J.V., not to exceed the amount the Borrower is permitted to invest in
Eureka Hunter and Eureka Hunter Pipeline Partners pursuant to Section 9.05(q);
and
 
(s)           Investments made by the Borrower in PRC Williston, LLC (i) prior
to the Effective Date as reflected on Schedule 9.05 and (ii) on or after the
Effective Date, in an aggregate amount not to exceed $5,000,000.
 
Section 9.06 Nature of Business; International Operations.  The Borrower will
not, and will not permit any Subsidiary to, allow any material change to be made
in the character of its business as an independent oil and gas exploration and
production company with midstream, marketing and trading components, including
gathering systems, processing plants, pipelines and related equipment and
facilities, including the Eureka Hunter Pipeline.  From and after the Effective
Date, the Borrower and its Subsidiaries will not acquire or make any other
expenditure (whether such expenditure is capital, operating or otherwise) in or
related to, any Oil and Gas Properties not located within the geographical
boundaries or territorial waters of the United States or Canada.
 
Section 9.07 Limitation on Leases.  The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist any obligation for
the payment of rent or hire of Property of any kind whatsoever (real or personal
but excluding Capital Leases and leases of Hydrocarbon Interests), under leases
or lease agreements which would cause the aggregate amount of all payments made
by the Borrower and the Subsidiaries pursuant to all such leases or lease
agreements, including, without limitation, any residual payments at the end of
any lease, to exceed $2,000,000 in any period of twelve (12) consecutive
calendar months during the life of such leases.
 

 
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Section 9.08 Proceeds of Notes/Loans.  The Borrower will not permit the Loans or
the proceeds of the Notes to be used for any purpose other than those permitted
by ‎Section 7.21.  Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulations T, U or X or any other regulation of the Board
or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect.  If requested by the Administrative Agent, the
Borrower will furnish to the Administrative Agent and each Lender a statement to
the foregoing effect in conformity with the requirements of FR Form U-1 or such
other form referred to in Regulation U, Regulation T or Regulation X of the
Board, as the case may be.
 
Section 9.09 Sale or Discount of Receivables.  Except for receivables obtained
by the Borrower or any Subsidiary out of the ordinary course of business or the
settlement of joint interest billing accounts in the ordinary course of business
or discounts granted to settle collection of accounts receivable or the sale of
defaulted accounts arising in the ordinary course of business in connection with
the compromise or collection thereof and not in connection with any financing
transaction, neither the Borrower nor any Subsidiary will discount or sell (with
or without recourse) to any other Person that is not the Borrower any of its
notes receivable or accounts receivable.
 
Section 9.10 Mergers, Etc.  Neither the Borrower nor any Subsidiary will merge
into or with or consolidate with any other Person, or sell, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its Property to any other Person (any such transaction, a
“consolidation”); provided that (a) any Subsidiary may participate in a
consolidation with the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or any Restricted Subsidiary (provided that
such Restricted Subsidiary shall be the continuing or surviving Person) and any
Unrestricted Subsidiary may merge with another Unrestricted Subsidiary and (b)
in the case of an Unrestricted Subsidiary merging into Borrower, no Default or
Event of Default shall result.
 
Section 9.11 Sale of Assets.  The Borrower will not, and will not permit any
Subsidiary to, sell, assign, farm-out, convey or otherwise transfer any asset,
including, without limitation, Property containing proved reserves constituting
a portion of the Borrowing Base except for:
 
(a)           the sale of Hydrocarbons in the ordinary course of business;
 
(b)           farmouts, sales or other dispositions of undeveloped acreage and
assignments in connection with such transactions;
 
(c)           the sale or transfer of equipment in the ordinary course of
business or that is no longer necessary for the business of the Borrower or such
Subsidiary or is replaced by equipment of at least comparable value and use;
 

 
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(d)           the sale or other disposition (including Casualty Events) of any
Oil and Gas Property or any interest therein or any Restricted Subsidiary owning
Oil and Gas Properties; provided that
 
(1)           100% of the consideration received in respect of such sale or
other disposition shall be cash,
 
(2)           the consideration received in respect of such sale or other
disposition shall be equal to or greater than the fair market value of the Oil
and Gas Property, interest therein or the Restricted Subsidiary subject of such
sale or other disposition (as reasonably determined by the board of directors of
the Borrower and, if requested by the Administrative Agent, the Borrower shall
deliver a certificate of a Responsible Officer of the Borrower certifying to
that effect),
 
(3)           if such sale or other disposition of Oil and Gas Property or
Restricted Subsidiary owning Oil and Gas Properties included in the most
recently delivered Reserve Report during any period between two successive
Scheduled Redetermination Dates has a fair market value in excess of 5% of the
Borrowing Base then in effect, as determined by the Required Lenders,
individually or in the aggregate, the Borrowing Base shall be reduced, effective
immediately upon such sale or disposition, by an amount equal to the value, if
any, assigned such Property in the most recently delivered Reserve Report and
 
(4)           if any such sale or other disposition is of a Restricted
Subsidiary owning Oil and Gas Properties, such sale or other disposition shall
include all the Equity Interests of such Restricted Subsidiary.
 
(e)           sales and other dispositions of Properties not regulated by the
foregoing provisions of this ‎Section 9.11‎ having a fair market value not to
exceed $1,000,000 during any 6-month period, and the sale, trade or other
disposition of seismic, geologic or other data, licenses and similar rights or
assets; and
 
(f)           sales, transfers and dispositions to the Borrower or a Restricted
Subsidiary.
 
Section 9.12 Environmental Matters.  The Borrower will not, and will not permit
any Subsidiary to, cause or permit any of its Property to be in violation of, or
do anything or permit anything to be done which will subject any such Property
to any Remedial Work under any applicable Environmental Laws, assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property where such
violations or remedial obligations could reasonably be expected to have a
Material Adverse Effect.
 
Section 9.13 Transactions with Affiliates.  The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property or the rendering
of any service, with any Affiliate (other than the Loan Parties) unless such
transactions are otherwise permitted 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 and other than
reasonable and customary director, officer and employee compensation (including
bonuses and severance) and other benefits (including retirement, health, stock
option and other benefit plans and indemnification arrangements for the benefit
of Borrower’s or any Subsidiary’s officers, directors and employees entered into
in the ordinary course of business and in good faith or to the extent approved
in good faith by the board of directors of the Borrower. 
 

 
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Section 9.14 Subsidiaries.  The Borrower shall not, and shall not permit any
Subsidiary to, create or acquire any additional Subsidiary unless the Borrower
gives prior written notice to the Administrative Agent of such creation or
acquisition.  The Borrower shall not, and shall not permit any Subsidiary to,
sell, assign or otherwise dispose of any Equity Interests in any Subsidiary
except in compliance with ‎Section 9.11.  Neither the Borrower nor any
Subsidiary shall acquire or form any Foreign Subsidiaries, except those certain
Foreign Subsidiaries acquired or formed in connection with the NuLoch
Acquisition or other Subsidiaries organized under Canadian law.
 
Section 9.15 Subsidiary Obligations and Preferred Stock.  The Borrower will not
and will not permit any of Subsidiary to issue preferred stock or create, incur
or assume any Debt, except for preferred stock and Debt, in each case permitted
under ‎Section 9.02.
 
Section 9.16 Negative Pledge Agreements; Dividend Restrictions.  The Borrower
will not, and will not permit any Restricted Subsidiary to, create, incur,
assume or suffer to exist any contract, agreement or understanding which in any
way prohibits or restricts the granting, conveying, creation or imposition of
any Lien on any of its Property in favor of the Administrative Agent and the
Lenders or restricts any Loan Party from paying dividends or making
distributions to any other Loan Party, or which requires the consent of or
notice to other Persons in connection therewith; provided, however, that the
preceding restrictions will not apply to encumbrances or restrictions arising
under or by reason of (a) this Agreement or the Security Instruments, (b) any
leases or licenses or similar contracts as they affect any Property or Lien
subject to a lease or license, (c) any contract, agreement or  understanding
creating Liens on Capital Leases permitted by ‎Section 9.03(c) (but only to the
extent related to the Property on which such Liens were created), (d) any
restriction with respect to a Subsidiary imposed pursuant to an agreement
entered into for the direct or indirect sale or disposition of all or
substantially all the equity or Property of such Subsidiary (or the Property
that is subject to such restriction) pending the closing of such sale or
disposition, (e) the agreement described on Schedule 9.16 or (f) customary
provisions with respect to the distribution of Property in joint venture
agreements.
 
Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments.  The Borrower
will not allow gas imbalances, take-or-pay or other prepayments with respect to
the Oil and Gas Properties of the Borrower or any Restricted Subsidiary that
would require the Borrower or such Restricted Subsidiary to deliver Hydrocarbons
at some future time without then or thereafter receiving full payment therefor
to exceed 500 mmcf equivalent in the aggregate at all times except for such
amounts that are covered by adequate reserves, which reserves (or the future
cash flow therefrom) are excluded from the most recent Reserve Report.
 

 
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Section 9.18Swap Agreements.  
 
(a)           The Borrower will not, and will not permit any Subsidiary to,
enter into any Swap Agreements with any Person other than:
 
(i)           Swap Agreements in respect of commodities (A) with an Approved
Counterparty and (B) the notional volumes for which (when aggregated with other
commodity Swap Agreements in effect for the same year or years as such Swap
Agreement, other than basis differential swaps on volumes already hedged
pursuant to other Swap Agreements) do not exceed, as of the date such Swap
Agreement is executed, for each of crude oil and natural gas, calculated
separately, (1) 80% of the reasonably anticipated production of its Total Proved
Reserves for each month during the period in which such Swap Agreement is in
effect, and (2) the following percentage of the most recent production as
provided in the report most recently delivered by the Borrower pursuant to
Section 8.01(m) for the same year or years such Swap Agreements is in effect:
 
2011
-
100%
2012
-
90%
2013-2015
-
75%
Thereafter
-
50%;

(ii)           Swap Agreements in respect of interest rates with an Approved
Counterparty, as follows:  (A) Swap Agreements effectively converting interest
rates from fixed to floating, the notional amounts of which (when aggregated
with all other Swap Agreements of the Borrower and its Subsidiaries then in
effect effectively converting interest rates from fixed to floating) do not
exceed 75% of the then outstanding principal amount of the Borrower’s fixed rate
Debt for borrowed money and (B) Swap Agreements effectively converting interest
rates from floating to fixed, the notional amounts of which (when aggregated
with all other Swap Agreements of the Borrower and its Subsidiaries then in
effect effectively converting interest rates from floating to fixed) do not
exceed 75% of the then outstanding principal amount of the Borrower’s Debt for
borrowed money which bears interest at a floating rate; and
 
(iii)           Swap Agreements with respect to which Debt is allowed pursuant
to Section 9.01.
 
In no event shall any Swap Agreement to which the Borrower or any Subsidiary is
a party contain any requirement, agreement or covenant for the Borrower or any
Subsidiary to post cash or other collateral or margin to secure their
obligations under such Swap Agreement or to cover market exposures.
 
(b)           Notwithstanding the provisions of Section 2.07(e), the Borrower
will not, and will not permit any Subsidiary to, terminate, cancel or otherwise
cease to be a party to existing Swap Agreements to the extent the termination
value, as determined by the Administrative Agent in its sole discretion, of any
such terminated Swap Agreement, on a net basis considering all other Swap
Agreements so terminated during the period between any two Scheduled
Redetermination Dates (including any new Swap Agreements entered into
hereafter), would exceed five percent (5%) of the then effective Borrowing Base.
 

 
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(c)           For purposes of this Section 9.18, put options and price floors
shall not be considered to the Swap Agreements.
 
Section 9.19 Sale and Leaseback Transactions.  The Borrower will not, and will
not permit any of its Restricted Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereinafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
sold or transferred.
 
ARTICLE X
Events of Default; Remedies
 
Section 10.01 Events of Default.  One or more of the following events shall
constitute an “Event of Default”:
 
(a)           the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof, by acceleration or otherwise.
 
(b)           the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in ‎Section 10.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three (3)
Business Days.
 
(c)           any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in or in connection with any Loan Document or
any amendment or modification of any Loan Document or waiver under such Loan
Document, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with any Loan Document or any amendment
or modification thereof or waiver thereunder, shall prove to have been incorrect
when made or deemed made in any material respect.
 
(d)           the Borrower or any Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in ‎Section 8.01(h), ‎Section
8.01(l), ‎Section 8.02, ‎Section 8.03, Section 8.12, ‎Section 8.15 or in
‎ARTICLE IX (other than Section 9.02, Section 9.03 and Section 9.18).
 
(e)           any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in Section 10.01(a), ‎Section 10.01(b) or Section 10.01(d)) or any other Loan
Document, and such failure shall continue unremedied for a period of 30 days
after the earlier to occur of (i) notice thereof from the Administrative Agent
to the Borrower (which notice will be given at the request of any Lender) or
(ii) a Responsible Officer of the Borrower or such Subsidiary otherwise becoming
aware of such default.
 

 
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(f)           the Borrower or any 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 if the
effect of such event is to cause, or (with the giving of any notice or the lapse
of time or both) to permit the holder or holders of such Debt (or a trustee or
agent on behalf of such holder or holders) to cause, such Debt to become due
prior to its stated maturity.
 
(g)           any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
Redemption thereof or any offer to Redeem to be made in respect thereof, prior
to its scheduled maturity or require the Borrower or any Subsidiary to make an
offer in respect thereof.
 
(h)           an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Subsidiary or its debts, or of a substantial
part of its assets, under any  Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be
entered.
 
(i)           the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in Section 10.01(h), (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing.
 
(j)           the Borrower or any 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 $3,000,000 (to the extent not covered by independent third
party insurance provided by insurers of the highest claims paying rating or
financial strength as to which the insurer does not dispute coverage and is not
subject to an insolvency proceeding) shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain undischarged for
a period of 60 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of the Borrower or any Subsidiary to enforce any such
judgment.
 

 
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(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 shall be repudiated, or cease to create a valid and
perfected Lien of the priority required thereby on any of the collateral
purported to be covered thereby, except to the extent permitted by the terms of
this Agreement, or the Borrower or any Subsidiary or any of their Affiliates
shall so state in writing.
 
(m)           an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect.
 
(n)           a Change in Control shall occur.
 
Section 10.02Remedies.
 
(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 Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or different
times: (i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Notes and the Loans then outstanding
to be due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder and under the Notes and the other
Loan Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in ‎Section 2.08(j)), shall become due and
payable immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor; and in case of an Event of
Default described in ‎Section 10.01(h), ‎Section 10.01(i) or ‎Section 10.01(j),
the Commitments shall automatically terminate and the Notes and the principal of
the Loans then outstanding, together with accrued interest thereon and all fees
and the other obligations of the Borrower accrued hereunder and under the Notes
and the other Loan Documents (including, without limitation, the payment of cash
collateral to secure the LC Exposure as provided in ‎Section 2.08(j)), shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
 
(b)           In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.
 
(c)           All proceeds realized from the liquidation or other disposition of
collateral or otherwise received after maturity of the Loans or the Notes,
whether by acceleration or otherwise, shall be applied:  first, to reimbursement
of expenses and indemnities provided for in this Agreement and the Security
Instruments; second, to accrued interest on the Loans; third, to fees; fourth,
pro rata to principal outstanding on the Loans and Obligations referred to in
clause (iii) of the definition of Obligations owing to a Lender or an Affiliate
of a Lender; fifth, to any other Obligations; sixth, to serve as cash collateral
to be held by the Administrative Agent to secure the LC Exposure; and any excess
shall be paid to the Borrower or as otherwise required by any Governmental
Requirement.
 

 
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ARTICLE XI
The Administrative Agent
Section 11.01Appointment; Powers.
 
Each of the Lenders and the Issuing Bank hereby irrevocably (subject to
Section 11.06) appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof and the
other Loan Documents, together with such actions and powers as are reasonably
incidental thereto.
 
Section 11.02 Duties and Obligations of Administrative Agent.  The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents.  Without limiting the generality of
the foregoing, the Administrative Agent (a) shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) shall not have any duty to take any discretionary action
or exercise any discretionary powers, except as provided in ‎Section 11.03, and
(c) except as expressly set forth herein, shall not have any duty to disclose,
and shall not be liable for the failure to disclose, any information relating to
the Borrower or any of its Subsidiaries that is communicated to or obtained by
the bank serving as the Administrative Agent or any of its Affiliates in any
capacity.  The Administrative Agent shall be deemed not to have knowledge of any
Default unless and until written notice thereof is given to it by the Borrower
or a Lender, and shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or under any other
Loan Document or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or in any other Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document, (v) the satisfaction of any condition
set forth in ‎ARTICLE VI or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to it or as to those conditions
precedent specifically required to be to its satisfaction, (vi) the existence,
value, perfection or priority of any collateral security or the financial or
other condition of the Borrower and its Subsidiaries or any other obligor or
guarantor, or (vii) any failure by the Borrower or any other Person (other than
itself) to perform any of its obligations hereunder or under any other Loan
Document or the performance or observance of any covenants, agreements or other
terms or conditions set forth herein or therein.
 

 
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Section 11.03 Action by Administrative Agent.  The Administrative Agent shall
not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby
that it is required to exercise in writing as directed by the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in ‎Section 12.02) and in all cases it shall be
fully justified in failing or refusing to act hereunder or under any other Loan
Documents unless it shall (a) receive written instructions from the Required
Lenders or the Lenders, as applicable, (or such other number or percentage 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 shall be binding on all of the Lenders.  If a Default has
occurred and is continuing, then the Administrative Agent shall take such action
with respect to such Default as shall be directed by the requisite Lenders in
the written instructions (with indemnities) described in this ‎Section 11.03,
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Lenders.  In no
event, however, shall the Administrative Agent be required to take any action
which exposes the Administrative Agent to personal liability or which is
contrary to this Agreement, the Loan Documents or applicable law.  If a Default
has occurred and is continuing, the Arranger shall not have any obligation to
perform any act in respect thereof.  The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders or the Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02), and otherwise the Administrative Agent shall not be
liable for any action taken or not taken by it hereunder or under any other Loan
Document or under any other document or instrument referred to or provided for
herein or therein or in connection herewith or therewith including its own
ordinary negligence, except for its own gross negligence or willful misconduct.
 
Section 11.04 Reliance by Administrative Agent.  The Administrative Agent shall
be entitled to rely upon, and shall not incur any liability for relying upon,
any notice, request, certificate, consent, statement, instrument, document or
other writing believed by it to be genuine and to have been signed or sent by
the proper Person.  The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Borrower, the Lenders and the Issuing Bank hereby waives the right to dispute
the Administrative Agent’s record of such statement, except in the case of gross
negligence or willful misconduct by the Administrative Agent.  The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.  The Administrative Agent
may deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
permitted hereunder shall have been filed with the Administrative Agent.
 
Section 11.05 Subagents.  The Administrative Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by it.  The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties.  The exculpatory provisions of the preceding
Sections of this ‎ARTICLE XI shall apply to any such sub-agent and to the
Related Parties of the Administrative Agent and any such sub-agent, and shall
apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative
Agent.
 

 
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Section 11.06 Resignation or Removal of Administrative Agent.  Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this ‎Section 11.06, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Borrower, and the Administrative
Agent may be removed at any time with or without cause by the Required
Lenders.  Upon any such resignation or removal, the Required Lenders shall have
the right, in consultation with and upon the approval of the Borrower (so long
as no Event of Default has occurred and is continuing), which approval shall not
be unreasonably withheld, to appoint a successor.  If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation or removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank.  Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder.  The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor.  After the Administrative Agent’s
resignation hereunder, the provisions of this ‎ARTICLE XI and ‎Section 12.03
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as
Administrative Agent.
 
Section 11.07 Administrative Agent as Lender.  Each bank serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.
 
Section 11.08 No Reliance.  Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and each other Loan
Document to which it is a party.  Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.  The Administrative
Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower or any of its Subsidiaries of this Agreement, the
Loan Documents or any other document referred to or provided for herein or to
inspect the Properties or books of the Borrower or its Subsidiaries.  Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, neither the
Administrative Agent nor the Arranger shall have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower (or any of its Affiliates) which
may come into the possession of the Administrative Agent or any of its
Affiliates.  In this regard, each Lender acknowledges that Andrews Kurth LLP is
acting in this transaction as special counsel to the Administrative Agent only,
except to the extent otherwise expressly stated in any legal opinion or any Loan
Document.  Each other party hereto will consult with its own legal counsel to
the extent that it deems necessary in connection with the Loan Documents and the
matters contemplated therein.
 

 
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Section 11.09 Authority to Release Collateral and Liens.  Each Lender and the
Issuing Bank hereby authorizes the Administrative Agent to release any
collateral that is permitted to be sold or released pursuant to the terms of the
Loan Documents.  Each Lender and the Issuing Bank hereby authorizes the
Administrative Agent to execute and deliver to the Borrower, at the Borrower’s
sole cost and expense, any and all releases of Liens, termination statements,
assignments or other documents reasonably requested by the Borrower in
connection with any sale or other disposition of Property to the extent such
sale or other disposition is permitted by the terms of ‎Section 9.11 or is
otherwise authorized by the terms of the Loan Documents.
 
Section 11.10 The Arranger, the Syndication Agent and the Co-Documentation
Agents.  None of the Arranger, the Syndication Agent or the Co-Documentation
Agents shall have any duties, responsibilities or liabilities under this
Agreement and the other Loan Documents other than, in the case of any Persons
that are also Lenders, their duties, responsibilities and liabilities in their
capacities as Lenders hereunder.
 
Section 11.11 Filing of Proofs of Claim.  In case of any Default or Event of
Default under ‎Section 10.01(g), Section 10.01(h) or Section 10.01(i), the
Administrative Agent (regardless of whether the principal of any Loan or LC
Exposure shall then be due and payable and regardless of whether the
Administrative Agent has made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise:
 
(a)           to (i) file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans, LC Exposure and
all other Obligations that is owing and unpaid and (ii) file such other
documents as may be necessary or advisable in order to have the claims of the
Lenders and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the
Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders, the Administrative Agent under ‎Section 3.03 and
‎Section 12.03) allowed in such judicial proceeding; and
 
(b)           to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same.
 
Each Lender hereby authorizes any custodian, receiver, assignee, trustee,
conservator, sequestrator or other similar official in any such judicial
proceeding: (i) to make such payments to the Administrative Agent; and (ii) if
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under‎ ‎Section 3.03 and ‎Section 12.03.  Nothing contained
herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender or to authorize the Administrative Agent to vote in
respect of the claim of any Lender in any such proceeding.  Each Lender retains
its right to file and prove a claim separately.
 

 
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ARTICLE XII
Miscellaneous
 
Section 12.01Notices.
 
(a)           Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to ‎Section 12.01(b)), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
 
(i)           if to the Borrower, to it at Magnum Hunter Resources Corporation,
777 Post Oak Blvd., Suite 650, Houston, Texas 77056, Attention Ronald D. Ormand
(Telecopy No. 832-369-6992;
 
(ii)           if to the Administrative Agent, to it at Bank of Montreal, 700
Louisiana Street, Suite 4400, Houston, Texas 77002, Attention Gumaro Tijerina
(Telecopy No. 713-223-4007, with a copy to 600 Travis, Suite 4200, Houston,
Texas 77002, Attention Tom Perich (Telecopy No. (713) 220-7175;
 
(iii)           if to any other Lender, in its capacity as such, or any other
Lender in its capacity as an Issuing Bank, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
 
(b)           Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to ‎ARTICLE II, ARTICLE III, ARTICLE IV and ‎ARTICLE V
unless otherwise agreed by the Administrative Agent and the applicable
Lender.  The Administrative Agent or the Borrower may, in its discretion, agree
to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of
such procedures may be limited to particular notices or communications.
 
(c)           Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto.  All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
 

 
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Section 12.02Waivers; Amendments.
 
(a)           No failure on the part of the Administrative Agent, the Issuing
Bank or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege, or any abandonment or
discontinuance of steps to enforce such right, power or privilege, under any of
the Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any of the Loan
Documents preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.  The rights and remedies of the Administrative
Agent, the Issuing Bank and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have.  No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall
in any event be effective unless the same shall be permitted by Section
12.02(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
 
(b)           Neither this Agreement nor any provision hereof 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 Required Lenders or by the Borrower and the Administrative Agent with
the consent of the Required Lenders; provided that no such agreement shall (i)
increase the Commitment or the Maximum Credit Amount of any Lender without the
written consent of such Lender, (ii) increase the Borrowing Base without the
written consent of each Lender, decrease or maintain the Borrowing Base without
the consent of the Required Lenders, or modify ‎Section 2.07 without the consent
of each Lender, (iii) reduce the principal amount of any Loan or LC Disbursement
or reduce the rate of interest thereon, or reduce any fees payable hereunder, or
reduce any other Obligations hereunder or under any other Loan Document, without
the written consent of each Lender affected thereby, (iv) postpone the scheduled
date of payment of the principal amount of any Loan or LC Disbursement, or any
interest thereon, or any fees payable hereunder, or any other Obligations
hereunder or under any other Loan Document, or reduce the amount of, waive or
excuse any such payment, or postpone or extend the Termination Date without the
written consent of each Lender affected thereby, (v) change ‎Section 4.01(b) or
Section 4.01(c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (vi) waive or
amend Section 8.14, without the written consent of each Lender, (vii) release
any of the collateral (other than as provided in ‎Section 11.09), or reduce the
percentage set forth in Section 8.14 to less than 85%, without the written
consent of each Lender, or (viii) change any of the provisions of this
‎Section 12.02(b) or the definition of “Required Lenders” or any other provision
hereof specifying the number or percentage of Lenders required to waive, amend
or modify any rights hereunder or under any other Loan Documents or make any
determination or grant any consent hereunder or any other Loan Documents,
without the written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent or the Issuing Bank hereunder or under any other Loan
Document without the prior written consent of the Administrative Agent or the
Issuing Bank, as the case may be.  Notwithstanding the foregoing, any supplement
to Schedule 7.14 (Subsidiaries) shall be effective simply by delivering to the
Administrative Agent a supplemental schedule clearly marked as such and, upon
receipt, the Administrative Agent will promptly deliver a copy thereof to the
Lenders.
 

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

 
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(b)           The Borrower shall indemnify the Arranger, the Administrative
Agent, the Issuing Bank and each Lender, and each Related Party of any of the
foregoing persons (each such person being called an “Indemnitee”) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the reasonable fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto or the parties to any other Loan Document of their respective
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or by any other Loan Document, (ii) the failure of the
Borrower or any Subsidiary to comply with the terms of any Loan Document,
including this Agreement, or with any Governmental Requirement, (iii) any
inaccuracy of any representation or any breach of any warranty or covenant of
the Borrower set forth in any of the Loan Documents or any instruments,
documents or certifications delivered in connection therewith, (iv) any loan or
Letter of Credit or the use of the proceeds therefrom, including, without
limitation, (A) any refusal by the Issuing Bank to honor a demand for payment
under a Letter of Credit issued by the Issuing Bank if the documents presented
in connection with such demand do not strictly comply with the terms of such
Letter of Credit, or (B) the payment of a drawing under any Letter of Credit
notwithstanding the non-compliance, non-delivery or other improper presentation
of the documents presented in connection therewith, (v) the operations of the
business of the Borrower and its Subsidiaries by the Borrower and its
Subsidiaries, (vi) any assertion that the Lenders were not entitled to receive
the proceeds received pursuant to the Security Instruments, (vii) any
Environmental Law applicable to the Borrower or any Subsidiary or any of their
properties, including without limitation, the presence, generation, storage,
release, threatened release, use, transport, disposal, arrangement of disposal
or treatment of oil, oil and gas wastes, solid wastes or hazardous substances on
any of their properties, (viii) the breach or non-compliance by the Borrower or
any Subsidiary with any Environmental Law applicable to the Borrower or any
Subsidiary, (ix) the past ownership by the Borrower or any Subsidiary of any of
their properties or past activity on any of their properties which, though
lawful and fully permissible at the time, could result in present liability, (x)
the presence, use, release, storage, treatment, disposal, generation, threatened
release, transport, arrangement for transport or arrangement for disposal of
oil, oil and gas wastes, solid wastes or hazardous substances on or at any of
the properties owned or operated by the Borrower or any Subsidiary or any actual
or alleged presence or release of hazardous materials on or from any property
owned or operated by the Borrower or any of its Subsidiaries, (xi) any
environmental liability related in any way to the Borrower or any of its
Subsidiaries, (xii) any other environmental, health or safety condition in
connection with the Loan Documents, or (xiii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any indemnitee is a party thereto, and such Indemnity shall extend to each
Indemnitee notwithstanding the sole or concurrent negligence of every kind or
character whatsoever, whether active or passive, whether an affirmative act or
an omission, including without limitation, all types of negligent conduct
identified in the restatement (second) of torts of one or more of the
Indemnitees or by reason of strict liability imposed without fault on any one or
more of the Indemnitees; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (a) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee, (b) relate to agreements,
or obligations to which Borrower and its Subsidiaries are not parties,
(c) relate to claims between or among any of the Lenders, the Administrative
Agent, the Arranger or any of their shareholders, partners or members, or (d)
relate to laws, rules or regulations affecting the Lenders, the Administrative
Agent or the Arranger and not the Borrower or its Subsidiaries, or (e) in
respect of any property for any occurrence arising from the acts or omissions of
the Administrative Agent or any Lender during the period after which such
Person, its successors or assigns shall have obtained possession of such
property (whether by foreclosure or deed in lieu of foreclosure, as
mortgagee-in-possession or otherwise).
 

 
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(c)           To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent or the Issuing Bank under ‎Section
12.03(a) or ‎(b), each Lender severally agrees to pay to the Administrative
Agent or the Issuing Bank, as the case may be, such Lender’s Applicable
Percentage (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Issuing Bank in its capacity as such.
 
(d)           To the extent permitted by applicable law, the Borrower and the
Indemnified Parties shall not assert, and hereby waive, any claim against each
other, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby or thereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.
 
(e)           All amounts due under this ‎Section 12.03 shall be payable
promptly after written demand therefor.
 
Section 12.04Successors 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.
 
(b)           (i)           Subject to the conditions set forth in ‎Section
12.04(b)(ii), any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitment and the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld or delayed) of:  (1) the
Borrower, provided that no consent of the Borrower shall be required for an
assignment to a Lender that is not a Defaulting Lender, an Affiliate of a Lender
that is not a Defaulting Lender, an Approved Fund or, if an Event of Default has
occurred and is continuing, any other assignee, provided further that the
Borrower shall be deemed to have consented to any such assignment unless it
shall object thereto by written notice to the Administrative Agent within five
Business Days after having received written notice thereof; and (2) the
Administrative Agent, provided that no such consent shall be required for an
assignment to an assignee that is a Lender that is not a Defaulting Lender
immediately prior to giving effect to such assignment.
 

 
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(ii)           Assignments shall be subject to the following additional
conditions:  (1) except in the case of an assignment to a Lender or an Affiliate
of a Lender or an assignment of the entire remaining amount of the assigning
Lender’s Commitment, the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $10,000,000, and the Commitments of any assigning
Lender remaining a party hereto after giving effect to the assignment shall be
at least $10,000,000, unless, in each case, each of the Borrower, the
Administrative Agent otherwise consents, provided that no such consent of the
Borrower shall be required if an Event of Default has occurred and is
continuing;  (2) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement; (3) 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; (4) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire and shall deliver notice of the Assignment and Assumption to the
Borrower; and (5) in the case of an assignment to a CLO, the assigning Lender
shall retain the sole right to approve any amendment, modification or waiver of
any provision of this Agreement, provided that the Assignment and Assumption
between such Lender and such CLO may provide that such Lender will not, without
the consent of such CLO, agree to any amendment, modification or waiver
described in the first proviso to ‎Section 12.02 that affects such CLO.
 
(iii)           Subject to ‎Section 12.04(b)(iv) and the acceptance and
recording thereof, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Section 5.01, ‎Section 5.02, Section 5.03 and ‎Section 12.03).  Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does
not comply with this Section 12.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 12.04(c).
 
(iv)           The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Maximum Credit Amount of, and principal amount
of the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.  In connection with any
changes to the Register, if necessary, the Administrative Agent will reflect the
revisions on Annex I and forward a copy of such revised Annex I to the Borrower,
the Issuing Bank and each Lender.
 

 
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(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)           ii)           Any Lender may, without the consent of the Borrower,
the Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (1) such Lender’s
obligations under this Agreement shall remain unchanged, (2) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (3) the Borrower, the Administrative Agent, the Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement.  Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the proviso to
Section 12.02 that affects such Participant.  In addition such agreement must
provide that the Participant be bound by the provisions of ‎Section
12.03.  Subject to Section 12.04(c)(ii), the Borrower agrees that each
Participant shall be entitled to the benefits of Section 5.01, Section 5.02 and
‎Section 5.03 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to ‎Section 12.04(b).  To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 12.08
as though it were a Lender, provided such Participant agrees to be subject to
‎Section 4.01(c) as though it were a Lender.
 
(ii)           A Participant shall not be entitled to receive any greater
payment under Section 5.01 or ‎Section 5.03 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower’s prior written consent.  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
‎Section 5.03 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 5.03(e) as though it were a Lender.
 
(d)           Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this ‎Section 12.04(d) shall not apply to any such
pledge or assignment of a security interest; provided that no such 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.
 

 
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(e)           Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Borrower to file a registration statement with the
SEC or to qualify the Loans under the “Blue Sky” laws of any state.
 
Section 12.05Survival; Revival; Reinstatement.
 
(a)           All covenants, agreements, representations and warranties made by
the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated.  The provisions of Section 5.01, Section 5.02, ‎Section 5.03 and
‎Section 12.03 and ‎ARTICLE XI shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement, any other Loan
Document or any provision hereof or thereof.
 
(b)           To the extent that any payments on the Obligations or proceeds of
any collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent’s, and the Lenders’ Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect.  In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent or the Lenders to effect such
reinstatement.
 
Section 12.06Counterparts; Integration; Effectiveness.
 
(a)           This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.
 
(b)           This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Arranger and the Administrative
Agent constitute the entire 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.
 

 
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(c)           Except as provided in ‎Section 6.01(a), this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
 
Section 12.07 Severability.  Any provision of this Agreement or any other Loan
Document held to be invalid, illegal or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
 
Section 12.08 Right of Setoff.  If an Event of Default shall have occurred and
be continuing, each Lender 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 Borrower or any Subsidiary against any of and all the obligations of the
Borrower or any 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.  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.
 
Section 12.09Governing Law; Jurisdiction; Consent to Service of Process.
 
(a)           This Agreement and the Loan Documents shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to any choice-of-law provisions that would require the application of the law of
another jurisdiction; provided, to the extent any of the Security Instruments
recite that they are governed by the law of another jurisdiction, or any action
or event taken thereunder (such as foreclosure of the Mortgaged Property)
requires application of or compliance with the law of another jurisdiction, such
provisions and concepts shall apply.
 
(b)           Any legal action or proceeding with respect to the Loan Documents
shall be brought in the courts of the Supreme Court of the State of New York
sitting in New York County and of the United States District Court of the
Southern District of New York, and, by execution and delivery of this Agreement,
each party hereby accepts for itself and (to the extent permitted by law) in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts.  Each party hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective
jurisdictions.  This submission to jurisdiction is non-exclusive and does not
preclude a party from obtaining jurisdiction over another party in any court
otherwise having jurisdiction.
 

 
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(c)           Each party irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to it at the
address specified in ‎Section 12.01 or such other address as is specified
pursuant to Section 12.01 (or its assignment and assumption), such service to
become effective thirty (30) days after such mailing.  Nothing herein shall
affect the right of a party or any holder of a note to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against another party in any other jurisdiction.
 
(d)           Each party hereby (i) irrevocably and unconditionally waives, to
the fullest extent permitted by law, trial by jury in any legal action or
proceeding relating to this Agreement or any other Loan Document and for any
counterclaim therein; (ii) irrevocably waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any such
litigation any special, exemplary, punitive or consequential damages, or damages
other than, or in addition to, actual damages; (iii) certifies that no party
hereto nor any representative or agent of counsel for any party hereto has
represented, expressly or otherwise, or implied that such party would not, in
the event of litigation, seek to enforce the foregoing waivers, and (iv)
acknowledges that it has been induced to enter into this Agreement, the Loan
Documents 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 any regulatory authority or self-regulatory body; provided
Borrower has been given reasonable advance notice thereof and been afforded an
opportunity to limit or protest the disclosure, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process;
provided Borrower has been given reasonable advance notice thereof and been
afforded an opportunity to limit or protest the disclosure, (d) to any other
party to this Agreement or any other Loan Document, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 12.11, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any Swap Agreement
relating to the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section 12.11 or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Borrower.  For the purposes
of this Section 12.11, “Information” means all information received from the
Borrower or any Subsidiary relating to the Borrower or any Subsidiary and their
businesses, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by the Borrower or a Subsidiary;.  Any Person required to
maintain the confidentiality of Information as provided in this Section 12.11
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential
information.  Notwithstanding anything herein to the contrary, any party hereto
(and each employee, representative or other agent of such party) may disclose
without limitation of any kind, any information with respect to the “tax
treatment” and “tax structure” (in each case, within the meaning of Treasury
Regulation Section 1.6011-4) of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to that party relating to such tax treatment or tax structure; provided
that with respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transactions,
as well as other information, this sentence shall only apply to such portions of
the document or similar item that relate to the tax treatment or tax structure
of the transactions contemplated hereby.
 

 
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Section 12.12 Exculpation Provisions.  Each of the parties hereto specifically
agrees that it has a duty to read this Agreement and the other Loan Documents
and agrees that it is charged with notice and knowledge of the terms of this
Agreement and the other Loan Documents; that it has in fact read this Agreement
and is fully informed and has full notice and knowledge of the terms and
conditions of this Agreement; that it has been represented by independent legal
counsel of its choice throughout the negotiations preceding its execution of
this Agreement and the other Loan Documents; and has received the advice of its
attorney in entering into this Agreement and the other Loan Documents; and that
it recognizes that certain of the terms of this Agreement and the other Loan
Documents may result, subject to the terms hereof and thereof and applicable
law, in one party assuming the liability inherent in some aspects of the
transaction and relieving the other party of its responsibility for such
liability.  Each party hereto agrees and covenants that it will not contest the
validity or enforceability of any exculpatory provision of this Agreement and
the other loan documents on the basis that the party had no notice or knowledge
of such provision or that the provision is not “conspicuous.”
 
Section 12.13 No Third Party Beneficiaries.  This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans and the Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of the Borrower, and no other Person (including, without limitation, any
Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or
materialmen) shall have any rights, claims, remedies or privileges hereunder or
under any other Loan Document against the Administrative Agent, the Issuing Bank
or any Lender for any reason whatsoever.  There are no third party
beneficiaries.
 

 
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Section 12.14 Collateral Matters; Swap Agreements.  The benefit of the Security
Instruments and of the provisions of this Agreement relating to any collateral
securing the Obligations shall also extend to and be available to those Lenders
or their Affiliates which are counterparties to any Swap Agreement with the
Borrower or any of its Subsidiaries on a pro rata basis in respect of any
obligations of the Borrower or any of its Subsidiaries which arise under any
such Swap Agreement so long as such Person or its Affiliate was a Lender under
the Prior Agreement or this Agreement at the time of entering into such Swap
Agreement.  No Lender or any Affiliate of a Lender shall have any voting rights
under any Loan Document as a result of the existence of obligations owed to it
under any such Swap Agreements.
 
Section 12.15 USA Patriot Act Notice.  Each Lender hereby notifies the Borrower
that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the
Patriot Act.
 
Section 12.16 Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan or
reimbursement obligation, together with all fees, charges and other amounts that
are treated as interest on such Loan or reimbursement obligation under
applicable law (collectively the “Charges”), shall exceed the Highest Lawful
Rate that may be contracted for, charged, taken, received or reserved by the
Lender holding such Loan or reimbursement obligation in accordance with
applicable law, the rate of interest payable in respect of such Loan or
reimbursement obligation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Highest Lawful Rate and, to the extent lawful,
the interest and Charges that would have been payable in respect of such Loan or
reimbursement obligation but were not payable as a result of the operation of
this Section shall be cumulated and the interest and Charges payable to such
Lender in respect of other Loans, reimbursement obligations or periods shall be
increased (but not above the Highest Lawful Rate therefor) until such cumulated
amount shall have been received by such Lender and in the event that,
notwithstanding the foregoing, under any circumstances the aggregate amounts
taken, reserved, charged, received or paid on the Loans include amounts which by
applicable law are deemed interest which would exceed the Highest Lawful Rate,
then such excess shall be deemed to be a mistake and each Lender receiving same
shall credit the same on the principal of its Loans (or if such Loans shall have
been paid in full, refund said excess to the Borrower).  In the event that the
maturity of the Obligations are accelerated by reason of any election of the
holder thereof resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest may never include more than the Highest
Lawful Rate, and excess interest, if any, provided for in this Agreement or
otherwise shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on the Obligations (or,
if the applicable Loans shall have been paid in full, refunded to the Borrower
of such interest).  The provisions of this Section shall control over all other
provisions of this Agreement or the other Loan Documents which may be in
apparent conflict herewith.
 
[Signatures Begin Next Page]
 

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

 
BORROWER:

MAGNUM HUNTER RESOURCES
CORPORATION,
a Delaware corporation

By:  \s\ Ronald D. Ormand
Ronald D. Ormand
Executive Vice President and Chief Financial Officer

 
 
 
 
 
 
 
 
 
 
 

 
Signature Page to Credit Agreement
 
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ADMINISTRATIVE AGENT,
BANK OF MONTREAL
ISSUING BANK AND LENDER:
           
By:  \s\ Gumaro Tijerina
 
Gumaro Tijerina
 
Director

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

Signature Page to Credit Agreement
 
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SYNDICATION AGENT AND
CAPITAL ONE, NATIONAL ASSOCIATION
LENDER:
           
By:   \s\ Nancy M. Mak
 
Nancy M. Mak
 
Vice President

CO-DOCUMENTATION AGENT
AMEGY BANK NATIONAL ASSOCIATION
AND LENDER:
               
By:  \s\ Mark Serice
 
Mark Serice
 
Senior Vice President

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Signature Page to Credit Agreement
 
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LENDERS:

KEYBANK NATIONAL ASSOCIATION

By:   \s\ David Morris
  David Morris
  Vice President

 
 
 
 
 
 
 
 
 
 
 
 

 
Signature Page to Credit Agreement
 
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LENDER:
UBS LOAN FINANCE LLC
             
By:    \s\ Irja R. Otsa
 
Irja R. Otsa
 
Associate Director
             
By:   \s\ Mary E. Evans
 
Mary E. Evans
 
Associate Director

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Signature Page to Credit Agreement
 
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LENDER:
CITIBANK, N.A.
           
 
By:   \s\ Angela McCracken
 
Angela McCracken
 
Vice President

 
 
 
 
 
 
 
 
 
 

 
Signature Page to Credit Agreement
 
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LENDER:
DEUTSCHE BANK TRUST COMPANY AMERICAS
             
By:     \s\ Michael Getz
 
Michael Getz
 
Vice President
             
By:    \s\ Erin Morrissey
 
Erin Morrissey
 
Director

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Signature Page to Credit Agreement
 
-106-

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LENDER:
UNION BANK, N.A.
             
By:    \s\ Paul E. Cornell
 
Paul E. Cornell
 
Senior Vice President

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Signature Page to Credit Agreement
 
-107-

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LENDER:
CREDIT SUISSE AG, Cayman Islands Branch
             
By:   \s\ Nupur Kumar
 
Nupur Kumar
 
Vice President
             
By:   \s\ Rahul Parmar
 
Rahul Parmar
 
Associate

 
 

 

Signature Page to Credit Agreement
 
-108-

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