exhibit10_14.htm


    
      

    

    EXECUTION
      VERSION


     

    


     

    Amended
      and Restated Credit Agreement

    


    Dated
      as of

    August
      6, 2007

    


    among

    


    McMoRan
      Exploration Co.,

    As
      Parent,

     

    McMoRan
      Oil & Gas LLC,

    as
      Borrower,

    


    JPMorgan
      Chase Bank, N.A.,

    as
      Administrative Agent,

    


    Merrill
      Lynch Capital,

    a
      division of Merrill Lynch Business Financial Services,
      Inc.

    as
      SyndicationAgent,

    


    BNP
      Paribas,

    As
      Documentation Agent,

    


    and

    


    The
      Lenders Party Hereto

    


     

    


     

    Joint
      Lead Arrangers and Joint Book Runners

     

    J.P.
      Morgan Securities
      Inc.                                                                                                                                                                   
Merrill Lynch Capital,

                                                                                                                                                                                      
a
      division of Merrill Lynch Business Financial Services,
      Inc.

     

    


     


    
      
                     

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    


     

    TABLE
      OF CONTENTS

     

    Page


    
      	
              ARTICLE
                I

              DEFINITIONS
                AND ACCOUNTING MATTERS

            
	
              Section
                1.01

              Section
                1.02

              Section
                1.03

              Section
                1.04

              Section
                1.05

            	
              Terms
                Defined Above

              Certain
                Defined Terms

              Types
                of Loans and Borrowings

              Terms
                Generally; Rules of Construction

              Accounting
                Terms and Determinations:  GAAP

            	
              1

              1

              19

              19

              20

            
	
              ARTICLE
                II

              THE
                CREDITS

            
	
              Section
                2.01

              Section
                2.02

              Section
                2.03

              Section
                2.04

              Section
                2.05

              Section
                2.06

              Section
                2.07

              Section
                2.08

            	
              Commitments

              Loans
                and borrowings

              Requests
                for Borrowings

              Interest
                Elections

              Funding
                of Borrowings

              Termination
                and Reduction of Aggregate Maximum Credit Amounts

              Borrowing
                Base

              Letters
                of Credit

            	
              20

              21

              21

              22

              23

              24

              25

              27

            
	
              ARTICLE
                III

              PAYMENTS
                OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

            
	
              Section
                3.01

              Section
                3.02

              Section
                3.03

              Section
                3.04

              Section
                3.05

            	
              Repayment
                of Loans

              Interest

              Alternate
                Rate of Interest

              Prepayments

              Fees

            	
              31

              32

              32

              33

              34

            
	
              ARTICLE
                IV

              PAYMENTS;
                PRO RATA TREATMENT; SHARING OF SET-OFFS

            
	
              Section
                4.01

              Section
                4.02

              Section
                4.03

              Section
                4.04

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

              Presumption
                of Payment by the Borrower

              Certain
                Deductions by the Administrative Agent

              Disposition
                of Proceeds

            	
              35

              36

              36

              37

            
	
              ARTICLE
                V

              INCREASED
                COSTS; BREAK FUNDING PAYMENTS; TAXES

            
	
              Section
                5.01

              Section
                5.02

              Section
                5.03

              Section
                5.04

            	
              Increased
                Costs

              Break
                Funding Payments

              Taxes

              Designation
                of Different Lending Office

               

            	
              37

              38

              38

              40

               

            


    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

     

    
      	 
              
              Section
                5.05

            	 
              
              Replacement
                of Lenders

            	 
              
              40

            
	
              ARTICLE
                VI

              CONDITIONS
                PRECEDENT

            
	
              Section
                6.01

              Section
                6.02

            	
              Effective
                Date

              Each
                Credit Event

            	
              41

              44

            
	
              ARTICLE
                VII

              REPRESENTATIONS
                AND WARRANTIES

            
	
              Section
                7.01

              Section
                7.02

              Section
                7.03

              Section
                7.04

              Section
                7.05

              Section
                7.06

              Section
                7.07

              Section
                7.08

              Section
                7.09

              Section
                7.10

              Section
                7.11

              Section
                7.12

              Section
                7.13

              Section
                7.14

              Section
                7.15

              Section
                7.16

              Section
                7.17

              Section
                7.18

              Section
                7.19

              Section
                7.20

              Section
                7.21

              Section
                7.22

            	
              Organization;
                Powers

              Authority;
                Enforceability

              Approvals;
                No Conflicts

              Financial
                Condition; No Material Adverse Change

              Litigation

              Environmental
                Matters

              Compliance
                with the Laws and Agreements; No Defaults

              Investment
                Company Act

              Taxes

              ERISA

              Disclosure;
                No Material Misstatements

              Insurance

              Restriction
                on Liens

              Subsidiaries

              Location
                of Business and Offices

              Properties;
                Titles, Etc.

              Maintenance
                of Properties

              Gas
                Imbalances, Prepayments

              Marketing
                of Production

              Swap
                Agreements

              Use
                of Loans and Letters of Credit

              Solvency

            	
              45

              45

              45

              45

              46

              46

              47

              47

              48

              48

              49

              49

              49

              50

              50

              50

              51

              51

              51

              52

              52

              52

            
	
              ARTICLE
                VIII

              AFFIRMATIVE
                COVENANTS

            


    

    


    
      	
              Section
                8.01

              Section
                8.02

              Section
                8.03

              Section
                8.04

              Section
                8.05

              Section
                8.06

              Section
                8.07

              Section
                8.08 

              Section
                8.09

              Section
                8.10

              Section
                8.11

              Section
                8.12

              Section
                8.13

            	
              Financial  Statements;
                Other Information

              Notices
                of Material Events

              Existence;
                Conduct of Business

              Payment
                of Obligations

              Performance
                of Obligations under Loan Documents

              Operation
                and Maintenance of Properties

              Insurance

              Books
                and Records; Inspection Rights

              Compliance
                with Laws

              Environmental
                Matters

              Further
                Assurances

              Reserve
                Reports

              Title
                Information

            	
              52

              55

              55

              55

              56

              56

              56

              57

              57

              57

              58

              58

              59

            


    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    

      
        	
                Section
                  8.14

                Section
                  8.15

                Section
                  8.16

                Section
                  8.17

                Section
                  8.18

              	
                Additional
                  Collateral; Additional Guarantors

                ERISA
                  Compliance

                Unrestricted
                  Subsidiaries

                Marketing
                  activities

                Swap
                  Agreements

              	
                60

                61

                61

                62

                62

              


      

    

     

    
      	
              ARTICLE
                IX

              NEGATIVE
                COVENANTS

            
	
              Section
                9.01

              Section
                9.02

              Section
                9.03

              Section
                9.04

              Section
                9.05

              Section
                9.06

              Section
                9.07

              Section
                9.08

              Section
                9.09

              Section
                9.10

              Section
                9.11

              Section
                9.12

              Section
                9.13

              Section
                9.14

              Section
                9.15

              Section
                9.16

              Section
                9.17

              Section
                9.18

              Section
                9.19

            	
              Financial
                Covenants

              Debt

              Liens

              Dividends,
                Distributions and Redemptions

              Investments,
                Loans and Advances

              Nature
                of Business; International Operations

              Proceeds
                of Notes

              ERISA
                Compliance

              Sale
                or Discount of Receivables

              Mergers,
                Etc.

              Sale
                of Properties

              Environmental
                Matters

              Transactions
                with Affiliates

              Subsidiaries

              Negative
                Pledge Agreements; Dividend Restrictions

              Gas
                Imbalances, take-or-Pay or Other Prepayments

              Swap
                Agreements

              Acquisition
                Documents

              Unrestricted
                Subsidiaries

            	
              62

              63

              65

              65

              66

              67

              67

              68

              69

              69

              69

              69

              70

              70

              70

              70

              70

              71

              71

            
	
              ARTICLE
                X

              EVENTS
                OF DEFAULT; REMEDIES

            
	
              Section
                10.01

              Section
                10.02

            	
              Events
                of Default

              Remedies

            	
              71

              73

            
	
              ARTICLE
                XI

              THE
                ADMINISTRATIVE AGENT

            
	
              Section
                11.02

              Section
                11.03

              Section
                11.04

              Section
                11.05

              Section
                11.06

              Section
                11.07

              Section
                11.08

              Section
                11.09

              Section
                11.10

              Section
                11.11

               

            	
              Duties
                and Obligations of Administrative Agent

              Action
                by Administrative Agent

              Reliance
                by Administrative Agent

              Subagents

              Resignation
                of Administrative Agent

              Agents
                as Lenders

              No
                Reliance

              Administrative
                Agent May File Proofs of Claim

              Authority
                of Administrative Agent to Release collateral and Liens

              The
                Arrangers and the Agents

            	
              74

              75

              76

              76

              76

              76

              76

              77

              78

              78

            


    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	
              ARTICLE
                XII

              MISCELLANEOUS

            
	
              Section
                12.01

              Section
                12.02

              Section
                12.03

              Section
                12.04

              Section
                12.05

              Section
                12.06

              Section
                12.07

              Section
                12.08

              Section
                12.09

              Section
                12.10

              Section
                12.11

              Section
                12.12

              Section
                12.13

              Section
                12.14

              Section
                12.15

              Section
                12.16

            	
              Notices

              Waivers;
                Amendments

              Expenses,
                Indemnity; Damage Waiver

              Successors
                and Assigns

              Survival;
                Revival; Reinstatement

              Counterparts;
                Integration; Effectiveness

              Severability

              Right
                of Setoff

              GOVERNING
                LAW; JURISDICTION; CONSENT TO SERVICE  PROCESS

              Headings

              Confidentiality

              Interest
                Rate Limitation

              Collateral
                Matters; Swap Agreements

              No
                Third Party Beneficiaries

              Acknowledgements

              USA
                Patriot Act Notice

            	
              78

              78

              80

              82

              84

              85

              85

              85

              86

              87

              87

              87

              88

              88

              88

              88

            


    

    

      
        
          
                 

          

          
          

        

        
          iv

          
            

          

        

        
          
          

        

      



     

    ANNEXES,
      EXHIBITS AND SCHEDULES

     

     

    


     

    Annex
      I                                List
      of Maximum Credit Amounts

    


    Exhibit
      A                                Form
      of Note

    Exhibit
      B                               
 Form of Borrowing Request

    Exhibit
      C                                
Form of Interest Election Request

    Exhibit
      D                                Form
      of Compliance Certificate

    Exhibit
      E                                
Form of Legal Opinion of Jones Walker, special counsel to
      theBorrower

    Exhibit
      F-1                              Security
      Instruments

    Exhibit
      F-2                              Form
      of Guaranty and Collateral Agreement

    Exhibit
      G                                
Form of Assignment and Assumption

    Exhibit
      H                                Form
      of Exemption Certificate

    Exhibit
      I                                 
Form of Intercreditor Agreement

    


    Schedule
      1.02                        Approved
      Counterparties

    Schedule
      1.02(b)                   Preferential
      Purchase Right Properties

    Schedule
      7.05                        Litigation

    Schedule
      7.10(d)                   ERISA
      Plan

    Schedule
      7.10(f)                    Under-funded
      ERISA Plan

    Schedule
      7.12                        Insurance

    Schedule
      7.14                        Subsidiaries

    Schedule
      7.16                        Title
      Exceptions

    Schedule
      7.18                        Gas
      Imbalances

    Schedule
      7.19                        Marketing
      Contracts

    Schedule
      7.20                        Swap
      Agreements

    Schedule
      9.02                        Existing
      Debt

    Schedule
      9.03                        Existing
      Liens

    Schedule
      9.05                        Investments

    



    
      
             

        
        

      

      
        v

        
          

        

      

      
        
        

      

    


    THIS
      AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 6, 2007, is
      among: McMoRan Exploration Co., a Delaware corporation (the “Parent”),
      McMoRan Oil & Gas LLC, a Delaware limited liability company (the
“Borrower”); each of the Lenders from time to time party hereto; JPMorgan
      Chase Bank, N.A. (in its individual capacity,
“JPMorgan”), as administrative agent for the Lenders (in such
      capacity,
      together with its successors in such capacity, the “Administrative
      Agent”); Merrill Lynch Capital, a division of Merrill Lynch Business
      Financial Services, Inc., as syndication agent for the Lenders (in such
      capacity, together with its successors in such capacity, the “Syndication
      Agent”); and BNP Paribas, as documentation agent for the Lenders (in such
      capacity, together with its successors in such capacity, a “Documentation
      Agent”)

     

    R
      E C I T A L S

     

    A.           The
      Borrower, the Administrative Agent, the lenders and others party thereto entered
      into that certain Credit Agreement dated as of April 19, 2006 (as amended prior
      to the Effective Date, the “Existing Credit Agreement”) pursuant to which
      the lenders party thereto made certain loans to and extensions of credit
      available on behalf of the Borrower.

     

    B.           The
      Parent and the Borrower have requested that the Administrative Agent, the
      Syndication Agent, the Documentation Agents and the Lenders, and each has agreed
      to, amend, restate, and increase the Existing Credit Agreement to make certain
      loans and extensions of credit to the Borrower subject to the terms and
      conditions of this Agreement.

     

    C.           In
      consideration of the mutual covenants and agreements herein contained and of
      the
      loans, extensions of credit and commitments hereinafter referred to, the parties
      hereto agree as follows:

     

    ARTICLE
      I

    Definitions
      and Accounting Matters

     

    


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

     

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

     

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

     

    “Acquisition”
      means the acquisition of certain oil, gas and mineral Properties pursuant to
      the
      terms and conditions of the Acquisition Documents.

     

    “Acquisition
      Agreement” means the Purchase and Sale Agreement between Seller and
      Borrower, as Buyer, dated June 20, 2007, to be effective July 1,
      2007.

     

    “Acquisition
      Documents” means (a) the Acquisition Agreement, (b) the P&A Escrow
      Agreement, (c) the Transition Services Agreement, (d) the Title Indemnity
      Agreement and (e) all bills of sale, assignments, agreements, instruments and
      documents executed and delivered in connection therewith, in each case, as
      amended from time to time in accordance with Section 9.18.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Acquisition
      Properties” means the Oil and Gas Properties and other properties acquired
      by the Borrower pursuant to the Acquisition Documents.

     

    “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
      1/16 of 1%) equal to (a)
      the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve
      Rate.

     

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

     

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

     

    “Agents”
      means, collectively, the Administrative Agent, the Syndication Agent and the
      Documentation Agent; and “Agent” shall mean any of the Administrative Agent, the
      Syndication Agent or any Documentation Agent, as the context
      requires.

     

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

     

    “Aggregated
      Subsidiaries” means any group of Subsidiaries which in the aggregate would
      constitute a Significant Subsidiary.

     

    “Agreement”
      means this Amended and Restated Credit Agreement, dated as of August 6, 2007,
      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 greater of (a)
      the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate
      in
      effect on such day plus 1⁄2 of 1%.  Any change in the Alternate Base
      Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
      shall
      be effective from and including the effective date of such change in the Prime
      Rate or the Federal Funds Effective Rate, respectively.

     

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

    


     

    
      	
              
                Borrowing

                Base
                  Utilization Percentage

              

            	
              
                Eurodollar

                Loans

              

            	
              
                ABR

                Loans

              

            	
              
                Commitment
                  

                Fee
                  Rate

              

            
	
              >
                115%

            	
              275
                b.p.

            	
              125
                b.p.

            	
              50
                b.p.

            
	
              >
                100% and < 115%

            	
              250
                b.p.

            	
              100
                b.p.

            	
              50
                b.p.

            
	
              >
                90% and < 100%

            	
              225
                b.p.

            	
              75
                b.p.

            	
              50
                b.p.

            
	
              >
                75% and < 90%

            	
              200
                b.p.

            	
              50
                b.p.

            	
              50
                b.p.

            
	
              >
                50% and < 75%

            	
              175
                b.p.

            	
              25
                b.p.

            	
              37.5
                b.p.

            
	
              <
                50%

            	
              150
                b.p.

            	
              0
                b.p.

            	
              37.5
                b.p.

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Each
      change in the Applicable Margin and the Commitment Fee Rate shall apply during
      the period commencing on the effective date of a change in the Borrowing Base
      Utilization Percentage and ending on the date immediately preceding the
      effective date of the next such change, provided, however, that 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.  Notwithstanding
      anything to the contrary herein contained, for the period from the Effective
      Date until November 1, 2007, the Applicable Margin shall be based upon the
      Borrowing Base Utilization Percentage grid and in no event shall the Applicable
      Margin be less than 250 b.p. for Eurodollar Loans, 100 b.p. for ABR Loans and
      50
      b.p. for the Commitment Fee Rate.

     

    “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.

     

    “Approved
      Counterparty” means (a) any Lender or any Affiliate of a Lender, (b) any
      other Person whose long term senior unsecured debt rating at the time a
      particular Swap Agreement transaction is entered into is A/A2 by S&P or
      Moody’s (or their equivalent) or higher, or (c) with regard to Swap Agreements
      in respect of commodities, and subject to the conditions set forth therein,
      any
      other Person listed on Schedule 1.02.

     

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

     

    “Arrangers”
      means J.P. Morgan Securities Inc. and Merrill Lynch Capital, a division of
      Merrill Lynch Business Financial Services, Inc., in their capacities as the
      joint lead arrangers and joint book runners hereunder.

     

    “Assignee”
      has the meaning set forth in Section 12.04(b).

     

    “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.

     

    “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 2.08(k), Section 8.13(c), Section 8.13(d) or Section
      9.11(d). Prior to April 1, 2009, the Borrowing Base and Conforming Borrowing
      Base (defined below) shall be two separate and distinct determinations under
      Section 2.07; provided, that, on and after April 1, 2009, there shall only
      be a
      single determination under Section 2.07 of the Borrowing Base.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Borrowing
      Base Deficiency” occurs if at any time the total Revolving Credit Exposures
      exceeds the Borrowing Base then in effect.

     

    “Borrowing
      Base Utilization Percentage” means, as of any day, the fraction expressed as
      a percentage, the numerator of which is the sum of the Revolving Credit
      Exposures of the Lenders on such day, and the denominator of which is (i) prior
      to April 1, 2009, the Conforming Borrowing Base in effect on such day and (ii)
      on and after April 1, 2009, 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.

     

    “Bridge
      Credit Agreement” means the Credit Agreement, dated as of Effective Date,
      among the Parent, as borrower, the lenders party thereto from time to time,
      JPMorgan Chase Bank, N.A., as administrative agent, and Merrill Lynch, Pierce,
      Fenner & Smith Incorporated, as syndication agent, as the same may be
      amended from time to time in accordance with Section 9.04(b).

     

    “Bridge
      Loans” means the senior term loans in favor of the Parent under the Bridge
      Credit Agreement in an aggregate principal amount not to exceed
      $800,000,000.

     

    “Business
      Day” means any day that is not a Saturday, Sunday or other day on which
      commercial banks in New York City or 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 which 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 any Loan Party having a fair market
      value
      in excess of $1,000,000.

     

    “Change
      in Control” means (a) 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 date hereof), of Equity Interests representing more than 35% of the
      aggregate ordinary voting power represented by the issued and outstanding Equity
      Interests of the Parent, (b) occupation of a majority of the seats (other than
      vacant seats) on the board of directors of the Parent by Persons who were
      neither (i) nominated by the board of directors of the Parent nor (ii) appointed
      by directors so nominated, or (c) the failure of the Parent to at any time
      own,
      directly or indirectly, beneficially or of record, 100% of all of the issued
      and
      outstanding Equity Interests of the Borrower.

     

    “Change
      in Law” means (a) the adoption of any law, rule or regulation after the date
      of this Agreement, (b) any change in any law, rule or regulation or in the
      interpretation or application thereof by any Governmental Authority after the
      date of this Agreement or (c) compliance by any Lender or the Issuing Bank
      (or,
      for purposes of Section 5.01(b)), by any lending
      office of such Lender or by such Lender’s or the Issuing Bank’s holding company,
      if any) with any request, guideline or directive (whether 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    or
      not
      having the force of law) of any Governmental Authority made or issued after
      the
      date of this Agreement.

     

    “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 Revolving
      Credit Exposure hereunder, as such commitment may be (a) reduced or terminated
      from time to time pursuant to Section 2.06 and (b)
      modified from time to time pursuant to assignments by or to such Lender pursuant
      to Section 12.04(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
      such Lender’s Maximum Credit Amount and such Lender’s Applicable Percentage of
      the then effective Borrowing Base.  As of the Effective Date, the
      aggregate Commitments of the Lenders are $700,000,000.

     

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

     

    “Conduit
      Lender” means any special purpose corporation organized and administered by
      any Lender for the purpose of making Loans otherwise required to be made by
      such
      Lender and designated by such Lender in a written instrument delivered to the
      Administrative Agent and the Borrower; provided, that the designation by
      any Lender of a Conduit Lender shall not relieve the designating Lender of
      any
      of its obligations under this Agreement if, for any reason, its Conduit Lender
      fails to meet any such obligations, and the designating Lender (and not the
      Conduit Lender) shall have the sole right and responsibility to deliver all
      consents and waivers required or requested under this Agreement with respect
      to
      its Conduit Lender, and provided, further, that no Conduit Lender
      shall (a) be entitled to receive any greater amount pursuant to Section 5.01,
      5.02, 5.03 or 12.03 than the designating Lender would have been entitled to
      receive in respect of the extensions of credit made by such Conduit Lender
      or
      (b) be deemed to have any Commitment.

     

    “Conforming
      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 2.08(k), Section 8.13(c), Section 8.13(d) or Section
      9.11(d).

     

    “Consolidated
      Net Income” means with respect to the Parent and the Consolidated
      Subsidiaries, for any period, the aggregate of the net income (or loss) of
      the
      Parent and the Consolidated Subsidiaries after allowances for taxes for such
      period determined on a consolidated basis in accordance with GAAP; provided
      that
      there shall be excluded from such net income (to the extent otherwise included
      therein) the following: (a) the net income of any Person in which the Parent
      or
      any Consolidated Subsidiary has an interest (which interest does not cause
      the
      net income of such other Person to be consolidated with the net income of the
      Parent and the Consolidated Subsidiaries in accordance with GAAP), except to
      the
      extent of the amount of dividends or distributions actually paid in cash during
      such period by such other Person to the Parent or to a Consolidated Subsidiary,
      as the case may be; (b) the net income (but not loss) during such period of
      any
      Consolidated Subsidiary to the extent that the declaration or payment of
      dividends or similar distributions or transfers or loans by that Consolidated
      Subsidiary is not at the time permitted by operation of the terms of its charter
      or any agreement, instrument or Governmental Requirement applicable to such
      Consolidated Subsidiary or is otherwise restricted or prohibited, in each case
      determined in accordance with GAAP; (c) any extraordinary non-cash gains or
      losses during such period; (d) non-cash gains or losses under FAS 133 resulting
      from the net change in Parent’s mark to market portfolio of commodity price risk
      management activities during that period; (e) any gains or losses attributable
      to writeups or writedowns of assets, including ceiling test writedowns; (f)
      any
      non-cash gains or losses attributable to any non-cash impairment charges
      resulting from the application of Statement of 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Financial
      Accounting Standards No. 142 and No. 144 and any amortization of intangibles
      pursuant to Statement of Financial Accounting Standards No. 141; (g) any net
      after-tax income or loss from discontinued operations and any net after-tax
      gain
      or loss on disposal of discontinued operations; (h) the cumulative effect of
      a
      change in accounting principles; (i) fees, premiums and
      expenses
      incurred in connection with the Transactions, this Agreement, the Loan
      Documents, the Bridge Loans, the Senior Notes, the Acquisition and the repayment
      of Debt under the Second Lien Term Loan Agreement up to $25,000,000 in the
      aggregate and (j) any non-cash
      compensation
      expense under FAS 142R recognized from grants of stock appreciation or similar
      rights, stock options, restricted stock, restricted stock units or other rights
      to officers, directors and employees of such Person or any of its Restricted
      Subsidiaries, provided that if such non-cash expense subsequently becomes a
      cash
      expense, it will be included in the period during which it became a cash
      expense; provided that for the purposes of calculating Consolidated Net
      Income for any period of four consecutive fiscal quarters (each, a “Reference
      Period”"), if during such Reference Period (or, in the case of pro forma
      calculations, during the period from the last day of such Reference Period
      to
      and including the date as of which such calculation is made) the Borrower or
      any
      Restricted Subsidiary shall have made a Material Disposition or Material
      Acquisition, Consolidated Net Income for such Reference Period shall be
      calculated after giving pro forma effect thereto as if such Material Disposition
      or Material Acquisition occurred on the first day of such Reference Period
      (with
      the Reference Period for the purposes of pro forma calculations being the most
      recent period of  four consecutive fiscal quarters for which the
      relevant financial information is available). As used in this definition,
“Material Acquisition” means any acquisition of property or series of related
      acquisitions of property that involves consideration in excess of $10,000,000;
      and “Material Disposition” means any sale, transfer or other disposition of
      property or series of related sales, transfers or other dispositions of property
      that yields gross proceeds to the Borrower or any Restricted Subsidiary in
      excess of $10,000,000.

    


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

     

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

     

    “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 (or for
      which the holder of such Debt has an existing right, contingent or otherwise,
      to
      be secured by) a Lien on any Property of such Person, whether or not such Debt
      is assumed by such Person; (g) all Debt (as defined in the other clauses of
      this
      definition) of others guaranteed by such Person or in which such Person
      otherwise assures a creditor against loss of the Debt (howsoever such assurance
      shall be made) but only 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) obligations to pay for goods or services even if such
      goods or services are not actually received or utilized by such Person; (k)
      any
      Debt of a partnership for which such Person is liable either by agreement,
      by


     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    operation
      of law or by a Governmental Requirement but only to the extent of such
      liability; (l) Disqualified Capital Stock; and (m) the undischarged balance
      of
      any production payment created by such Person or for the creation of which
      such
      Person directly or indirectly received payment.  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.

     

    “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, requires the payment of dividends (other than
      dividends payable solely in Equity Interests which do not otherwise constitute
      Disqualified Capital Stock) or 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, preferred Equity Interests which would be Disqualified Capital Stock
      solely by virtue of a requirement to pay dividends in cash shall not be
      Disqualified Capital Stock to the extent the cash proceeds thereof are used
      to
      repay or redeem Bridge Loans or Exchange Notes; and provided further, however,
      preferred Equity Interests which would be Disqualified Capital Stock solely
      by
      virtue of a requirement to pay dividends in cash shall not be Disqualified
      Capital Stock to the extent the cash proceeds thereof are used to make an
      Investment in an Unrestricted Subsidiary under Section
      9.05(l).  Notwithstanding the preceding sentence, any Equity Interest
      that would constitute Disqualified Capital Stock solely because the holders
      thereof have the right to require the Person to repurchase such Equity Interests
      upon the occurrence of a change of control or an asset sale, shall not
      constitute Disqualified Capital Stock.

     

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

     

    “Domestic
      Subsidiary” means any Restricted Subsidiary of the Parent 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 plus
      the following expenses or charges to the extent deducted from Consolidated
      Net
      Income in such period: interest, income taxes, depreciation, depletion,
      amortization, exploration expenses and other similar noncash charges, minus
      all
      noncash income added to Consolidated Net Income.

     

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

     

    “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
      Restricted 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 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    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 Restricted 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.

     

    “Equity
      Issuance” means the issuance, sale or other disposition after the Effective
      Date by the Parent of its Equity Interests.

     

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

     

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

     

    “ERISA
      Event” means (a) a “Reportable Event” described in section 4043 of ERISA and
      the regulations issued thereunder, (b) the withdrawal of the Parent, any Loan
      Party or any ERISA Affiliate from a Plan during a plan year in which it was
      a
“substantial employer” as defined in section 4001(a)(2) of ERISA, (c) the filing
      of a notice of intent to terminate a Plan or the treatment of a Plan amendment
      as a termination under section 4041 of ERISA, (d) the institution of proceedings
      to terminate a Plan by the PBGC, (e) receipt of a notice of withdrawal liability
      pursuant to Section 4202 of ERISA, (f) any other event or condition which might
      constitute grounds under section 4042 of ERISA for the termination of, or the
      appointment of a trustee to administer, any Plan or (g) on and after the
      effectiveness of the Pension Act, a determination that a Plan is, or is expected
      to be, in “at risk” status (as defined n 303(i)(4) of ERISA or 430(i)(4) of the
      Code).

     

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

     

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

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    “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
      which arise in the ordinary course of business under operating agreements,
      joint
      venture agreements, oil and gas partnership agreements, oil and gas leases,
      farm-out agreements, division orders, contracts for the sale, transportation
      or
      exchange of oil and natural gas, unitization and pooling declarations and
      agreements, area of mutual interest agreements, overriding royalty agreements,
      marketing agreements, processing agreements, net profits agreements, development
      agreements, gas balancing or deferred production agreements, injection,
      repressuring and recycling agreements, salt water or other disposal agreements,
      seismic or other geophysical permits or agreements, and other agreements which
      are usual and customary in the oil and gas business and are for claims which
      are
      not delinquent or which are being contested in good faith by appropriate action
      and for which adequate reserves have been maintained in accordance with GAAP,
      provided that any such Lien referred to in this clause does not materially
      impair the use of the Property covered by such Lien for the purposes for which
      such Property is held by the Borrower or any Restricted Subsidiary or materially
      impair the value of such Property subject thereto; (e) Liens arising solely
      by
      virtue of any statutory or common law provision relating to banker’s liens,
      rights of set-off or similar rights and remedies and burdening only deposit
      accounts or other funds maintained with a depository or financial institution;
      (f) easements, restrictions, servitudes, permits, conditions, covenants,
      exceptions or reservations in any Property of the Borrower or any Restricted
      Subsidiary for the purpose of roads, pipelines, transmission lines,
      transportation lines, distribution lines for the removal of gas, oil, coal
      or
      other minerals or timber, and other like purposes, or for the joint or common
      use of real estate, rights of way, facilities and equipment, that do not secure
      any monetary obligations and 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 or materially impair the value of such Property subject thereto;
      (g) Liens on cash or securities pledged or subject to an escrow agreement to
      secure plugging and abandoning obligations under the P&A Escrow Agreement,
      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 and (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; provided, further that Liens described in clause (e)
      shall remain “Excepted Liens” only for so long as no action to enforce such Lien
      has been commenced, and no intention to subordinate the first priority Lien
      granted in favor of the Administrative Agent and the Lenders is to be hereby
      implied or expressed by the permitted existence of such Excepted
      Liens.

     

    “Exchange
      Notes” means any securities issued in exchange for the Bridge Loans having
      terms and conditions substantially as set forth in Exhibit H to the Bridge
      Credit Agreement.

     

    “Existing
      Convertible Notes” means approximately $215,870,000 of outstanding
      convertible notes of the Parent consisting of (i) its $100,870,000 6% senior
      convertible notes due 2008 and (ii) its $115,000,000 5 1⁄2 % senior convertible
      notes due 2011.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    “Federal
      Funds Effective Rate” means, for any day, the weighted average (rounded
      upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
      Federal funds transactions with members of the Federal Reserve System arranged
      by Federal funds brokers, as published on the next succeeding Business Day
      by
      the Federal Reserve Bank of New York, or, if such rate is not so published
      for
      any day that is a Business Day, the average (rounded upwards, if necessary,
      to
      the next 1/100 of 1%) of the quotations for such day for such transactions
      received by the Administrative Agent from three Federal funds brokers of
      recognized standing selected by it.

     

    “Financial
      Officer” means, for any Person, any vice president, 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 Parent.

     

    “Financial
      Statements” means the financial statement or statements of the Parent and
      its Consolidated Subsidiaries referred to in Section 7.04, including all
      footnotes attached thereto.

     

    “First
      Lien Debt” means the aggregate Revolving Credit Exposures of the Lenders
      under this Agreement.

     

    “Foreign
      Subsidiary” means any Restricted 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 any
      Loan
      Party, any of their Properties, any Agent, the Issuing Bank or any
      Lender.

     

    “Governmental
      Requirement” means any 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.

     

    “Guarantors”
      means:

     

    
      	
               

            	
              (a)

            	
              the
                Parent;

            


    

     

    
      	
               

            	
              (b)

            	
              K-Mc
                Venture I LLC, a Delaware limited liability
                company;

            


    

     

    
      	
               

            	
              (c)

            	
              Freeport
                Canadian Exploration Company, a Delaware
                corporation;

            


    

     

    
      	
               

            	
              (d)

            	
              McMoRan
                International Inc., a Delaware corporation;
                and

            


    

     

    
      	
               

            	
              (e)

            	
              each
                other Domestic Subsidiary which is a Wholly-Owned Subsidiary that
                guarantees the Indebtedness pursuant to Section
                8.14(b).

            


    

    


    “Guaranty
      Agreement” means an agreement executed by the Guarantors in substantially
      the form of Exhibit F-2 unconditionally guarantying on a joint and several
      basis, payment of the Indebtedness, as the same may be amended, modified or
      supplemented from time to time.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    “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.

     

    “Indebtedness”
      means any and all amounts owing or to be owing by any Loan Party (whether direct
      or indirect (including those acquired by assumption), absolute or contingent,
      due or to become due, now existing or hereafter arising): (a) to the
      Administrative Agent, the Issuing Bank or any Lender under any Loan Document;
      (b) to any Lender or any Affiliate of a Lender under any Swap Agreement between
      any Loan Party and such Lender or Affiliate of a Lender while such Person (or
      in
      the case of its Affiliate, the Person affiliated therewith) is a Lender
      hereunder and (c) all renewals, extensions and/or rearrangements of any of
      the
      above.

     

    “Information
      Memorandum” means the Confidential Information Memorandum dated June 2007
      relating to the Parent, the Borrower and the Transactions.

     

    “Initial
      Reserve Report” means the engineering information provided by the Borrower
      and delivered to the Administrative Agent, with respect to the value of the
      Oil
      and Gas Properties of the Borrower and its Restricted Subsidiaries as of
      December 31, 2006 and with respect to the Acquisition Properties the merged
      report of Ryder Scott Petroleum Company, L.P. and the Seller dated as of June
      30, 2007.

     

    “Intercreditor
      Agreement” means that certain Intercreditor Agreement in substantially the
      form of Exhibit I among the Administrative Agent, the Borrower and Guarantors
      and the agent on behalf of the lenders under the Bridge Loans and/or the holders
      of the Exchange Notes, as the same may from time to time be amended, modified,
      supplemented or restated in accordance with the provisions thereof.

     

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

     

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

     

    “Interest
      Period” means with respect to any Eurodollar Borrowing, the period
      commencing on the date of such Borrowing and ending on the numerically
      corresponding day in the calendar month that is one, two, three or six months
      (or, if available to each Lender, periods of less than one month and periods
      of
      nine 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,
      (b) no Interest Period may have a term which would extend beyond the Maturity
      Date, (c) no Interest Period shall extend beyond the date of scheduled Aggregate
      Maximum Credit Amount reductions if repayments of any Loans are required on
      such
      dates, and (d) 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 

     

    
      
        
        

      

      
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    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
      Assignment Properties” means those certain Acquisition Properties listed on
      Schedule 7.16 for which the Seller has beneficial title but not obtained all
      conveyance documents necessary to vest record legal title in itself and as
      a
      result which the Borrower will not have record legal title vested in it as
      of
      the Effective Date.

     

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

     

    “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); (b) the making of any
      advance, loan or capital contribution to, the assumption of Debt of, the
      purchase or other acquisition of any other Debt of 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
      for
      any value other than the then fair market value of such Property, but excluding
      any such advance, loan or extension of credit having a term not exceeding ninety
      (90) days representing the purchase price of inventory, material, equipment
      or
      supplies sold by such Person in the ordinary course of business); (c) the
      purchase or acquisition (in one or a series of transactions) of Property of
      another Person that constitutes a business unit or (d) 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.

     

    “Issuing
      Bank” means JPMorgan, in its capacity as the issuer of Letters of
      Credit hereunder, and its successors in such capacity as provided in Section 2.08(i).  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 Two Hundred Million Dollars
      ($200,000,000.00).

     

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

     

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

     

    “Lenders”
      means the Persons listed on Annex I and 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; provided, that unless the context otherwise requires, each
      reference herein to the Lenders shall be deemed to include any Conduit
      Lender.

     

    
      
        
        

      

      
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    “Letter
      of Credit” means any letter of credit issued pursuant to this Agreement,
      including without limitation the PPR Letter of Credit.

     

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

     

    “LIBO
      Rate” means, with respect to each day during each Interest Period pertaining
      to a Eurodollar Loan, the rate per annum determined on the basis of the rate
      for
      deposits in dollars for a period equal to such Interest Period commencing on
      the
      first day of such Interest Period appearing on the Reuters Screen LIBOR01 Page
      as of 11:00 A.M., London time, two Business Days prior to the beginning of
      such
      Interest Period.  In the event that such rate does not appear on such
      page (or otherwise on such screen), the “LIBO Rate” shall be determined
      by reference to such other comparable publicly available service for displaying
      eurodollar rates as may be selected by the Administrative Agent or, in the
      absence of such availability, by reference to the rate at which the
      Administrative Agent is offered dollar deposits at or about 11:00 A.M., London
      time, two Business Days prior to the beginning of such Interest Period in the
      interbank eurodollar market where its eurodollar and foreign currency and
      exchange operations are then being conducted for delivery on the first day
      of
      such Interest Period for the number of days comprised therein.

     

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

     

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

     

    “Loan
      Party” means the Parent, the Borrower and any other Guarantor.

     

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

     

    “Majority
      Lenders” means, at any time while no Loans or LC Exposure is outstanding,
      Lenders having greater than fifty percent (50%) of the Aggregate Maximum Credit
      Amounts; and at any time while any Loans or LC Exposure is outstanding, Lenders
      holding greater than fifty percent (50%) of the outstanding aggregate principal
      amount of the Loans or participation interests in Letters of Credit (without
      regard to any sale by a Lender of a participation in any Loan under Section 12.04(c)).

     

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

     

    
      
        
        

      

      
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    “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
      any
      Loan Party in an aggregate principal amount exceeding
      $25,000,000.  For purposes of determining Material Indebtedness, the
“principal amount” of the obligations of any Loan Party in respect of any Swap
      Agreement at any time shall be the Swap Termination Value.

     

    “Maturity
      Date” means August 6, 2012.

     

    “Maximum
      Credit Amount” means, as to each Lender, the amount set forth opposite such
      Lender’s name on Annex I under the caption “Maximum Credit Amounts”, as the same
      may be (a) reduced or terminated from time to time in connection with a
      reduction or termination of the Aggregate Maximum Credit Amounts pursuant to
      Section 2.06, or (b) modified from time to time pursuant to any assignment
      permitted by Section 12.04(b). As of the Effective
      Date, the aggregate Maximum Credit Amounts of the Lenders are
      $700,000,000.

     

    “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 Guarantor which is
      subject to the Liens existing and to exist under the terms of the Security
      Instruments.

     

    “Multiemployer
      Plan” means a Plan which is a multiemployer plan as defined in section 3(37)
      or 4001 (a)(3) of ERISA.

     

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

     

    “Non-Recourse
      Debt” means any Debt of any Unrestricted Subsidiary, in each case in respect
      of which: (a) the holder or holders thereof (i) shall have recourse only to,
      and
      shall have the right to require the obligations of such Unrestricted Subsidiary
      to be performed, satisfied, and paid only out of, the Property of such
      Unrestricted Subsidiary and/or one or more of its Subsidiaries (but only to
      the
      extent that such Subsidiaries are Unrestricted Subsidiaries) and/or any other
      Person (other than the Parent, the Borrower and/or any Restricted Subsidiary)
      and (ii) shall have no direct or indirect recourse (including by way of
      guaranty, support or indemnity) to the Parent, the Borrower or any Restricted
      Subsidiary or to any of the Property of the Parent, the Borrower or any
      Restricted Subsidiary, whether for principal, interest, fees, expenses or
      otherwise; and (b) the terms and conditions relating to the non-recourse nature
      of such Debt are in form and substance reasonably acceptable to the
      Administrative Agent.

     

    “Non-US
      Lender” has the meaning set forth in Section
      1.01(d).

     

    “Notes”
      means the promissory notes, if any, 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.

     

    “Oil
      and Gas Properties” means (a) Hydrocarbon Interests; (b) the 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 the Hydrocarbon Interests; (d) all
      operating agreements, contracts and other agreements, including production
      sharing contracts and agreements, which relate to any of the Hydrocarbon
      Interests or the production, sale, purchase, exchange or processing of
      Hydrocarbons from or attributable to such Hydrocarbon Interests; (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, 

     

    
      
        
        

      

      
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    products,
      revenues and other incomes from or attributable to the Hydrocarbon Interests;
      (f) all tenements, hereditaments, appurtenances and Properties in any manner
      appertaining, belonging, affixed or incidental to the 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.

     

    “P&A
      Escrow Agreement” means that certain P&A Escrow Agreement dated as of
      August 6, 2007 among the Borrower and the Seller.

     

    “Parent
      Loan” means the intercompany loan agreement by and between the Borrower, as
      borrower, and the Parent, as lender, dated as of April 17, 2006.

     

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

     

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

     

    “Pension
      Act”: means the Pension Protection Act of 2006, as it presently exists or as
      it may be amended from time to time.

     

    “Permitted
      Refinancing Debt” means Debt (for purposes of this definition, “new
      Debt”) incurred in exchange for, or proceeds of which are used to refinance,
      all of any other Debt (the “Refinanced Debt”); provided that
      (a) such new Debt is in an aggregate principal amount not in excess of the
      sum of (i) the aggregate principal amount then outstanding of the
      Refinanced Debt (or, if the Refinanced Debt is exchanged or acquired for an
      amount less than the principal amount thereof to be due and payable upon a
      declaration of acceleration thereof, such lesser amount) and (ii) an amount
      necessary to pay any fees and expenses, including premiums, related to such
      exchange or refinancing; (b) such new Debt has a stated maturity no earlier
      than the stated maturity of the Refinanced Debt and an average life no shorter
      than the average life of the Refinanced Debt; (c) such new Debt (and any
      guarantees thereof) is secured by no more collateral than the collateral which
      secured, or is permitted by the terms of this Agreement to secure, the
      Refinanced Debt; (d) the obligor(s) in respect of such new Debt shall be the
      same as the obligor(s) in respect of such Refinanced Debt and if such Refinanced
      Debt is not guarantied by any Loan Party, then such new Debt shall also not
      be
      guarantied by any Loan Party; and (e) the Liens, if any, securing such new
      Debt
      are subordinated to the Liens securing the Indebtedness (or, if applicable,
      the
      Guaranty Agreement) to at least the same extent as the Liens securing the
      Refinanced Debt.

     

    “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, as defined in section 3(2) of ERISA,
      which (a) is currently or hereafter sponsored, maintained or contributed to
      by a
      Loan Party or an ERISA Affiliate or (b) was at any time during the six calendar
      years preceding the date hereof, sponsored, maintained or contributed to by
      a
      Loan Party or an ERISA Affiliate.

     

    
      
        
        

      

      
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    “PPR
      Letter of Credit” means the Letter of Credit issued pursuant to Section
      2.08(k).

     

    “Preferential
      Purchase Right Properties” means each of the Oil and Gas Properties listed
      in Schedule 1.02(b).

     

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

     

    “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).

     

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

     

    “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 the Initial Reserve Report and each other report setting
      forth, as of each January 1st or July
      1st (or such
      other
      date in the event of an Interim Redetermination), the oil and gas reserves
      attributable to the 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 

     

    
      
        
        

      

      
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    capital
      expenditures with respect thereto as of such date based upon the economic
      assumptions consistent with the Administrative Agent’s lending requirements at
      the time.

     

    “Responsible
      Officer” means, as to any Person, the Chief Executive 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 Parent.

     

    “Restricted
      Payment” means any dividend or other distribution (whether in cash,
      securities or other Property) with respect to any Equity Interests in any
      Person, 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 or any option, warrant or other right to acquire any such
      Equity Interests.

     

    “Restricted
      Subsidiary” means any direct or indirect Subsidiary of the Parent that is
      not an Unrestricted Subsidiary.

     

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

     

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

     

    “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 Securities and Exchange Commission or any successor Governmental
      Authority.

     

    “Second
      Lien Notes” means the $100,000,000 Second Lien Term Notes issued pursuant to
      the Second Lien Term Loan Agreement.

     

    “Second
      Lien Term Loan Agreement” means that certain Second Lien Term Loan Agreement
      dated as of January 19, 2007 among the Borrower, JPMorgan Chase Bank, N.A.,
      as
      administrative agent and the lenders party thereto.

     

    “Securities
      Act” means the Securities Act of 1933, as amended from time to
      time.

     

    “Security
      Instruments” means the Guaranty Agreement, the Intercreditor Agreement (if
      and when executed), mortgages, deeds of trust and other agreements, instruments
      or certificates described or referred to in Exhibit F-1, and any and all other
      agreements, instruments, consents or certificates now or hereafter executed
      and
      delivered by the Parent, 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 Indebtedness pursuant to this Agreement) in connection with,
      or
      as security for the payment or performance of the Indebtedness, 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.

     

    “Seller”
      means Newfield Exploration Company, a Delaware corporation.

     

    “Senior
      Notes” means (a) any senior, senior subordinated or subordinated Debt issued
      by the Parent or the Borrower (and any guarantees thereof by any Loan Party)
      on
      or after the Effective Date under Section 9.02(j) which is unsecured and any
      Permitted Refinancing Debt in respect thereof, and (b) 

     

    
      
        
        

      

      
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    any
      convertible Debt issued by the Parent (and any guarantees thereof by any Loan
      Party) on or after the Effective Date under Section 9.02(j) which is unsecured
      and any Permitted Refinancing Debt in respect thereof.

     

    “Significant
      Subsidiary” has the meaning set forth in the indentures relating to the
      Existing Convertible Notes.

     

    “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, with respect to the Adjusted
      LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency
      Liabilities” in Regulation D of the Board).  Such reserve percentages
      shall include those imposed pursuant to such Regulation D.  Eurodollar
      Loans shall be deemed to constitute eurocurrency funding and to be subject
      to
      such reserve requirements without benefit of or credit for proration, exemptions
      or offsets that may be available from time to time to any Lender under such
      Regulation D or any comparable regulation.  The Statutory Reserve Rate
      shall be adjusted automatically on and as of the effective date of any change
      in
      any reserve percentage.

     

    “Subsidiary”
      means: (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 Parent and/or one or more of its Subsidiaries and (b) any
      partnership of which the Parent or any Loan Party is a general
      partner.  Unless otherwise indicated herein, each reference to the
      term “Subsidiary” shall mean a direct or indirect Subsidiary of the
      Parent.

     

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

     

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

     

    “Synthetic
      Leases” means, in respect of any Person, all leases which shall have been,
      or should have been, in accordance with GAAP, treated as operating leases on
      the
      financial statements of the Person liable (whether contingently or otherwise)
      for the payment of rent thereunder and which were properly treated as
      indebtedness for borrowed money for purposes of 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 

     

    
      
        
        

      

      
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    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.

     

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

     

    “Title
      Indemnity Agreement” means that certain Title Indemnity Agreement dated as
      of August 6, 2007 among the Borrower and the Seller.

     

    “Total
      Debt” means, at any date, all Debt for borrowed money of the Parent and the
      Consolidated Subsidiaries on a consolidated basis.

     

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

     

    “Transferee”
      means any Assignee or Participant.

     

    “Transition
      Services Agreement” means that certain Transition Services Agreement dated
      as of August 6, 2007 among the Borrower and the Seller.

     

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

     

    “Unrestricted
      Subsidiary” means Freeport-McMoRan Energy, LLC, a Delaware limited liability
      company, any other Subsidiary of the Parent designated as such on Schedule
      7.14
      and each other Subsidiary of any of the foregoing.

     

    “Wholly-Owned
      Subsidiary” means any Restricted 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 Parent and/or one
      or
      more of the Wholly-Owned Subsidiaries.

     

    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 in
      the
      Loan Documents), (b) any reference herein to any law shall 

     

    
      
        
        

      

      
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    be
      construed as referring to such law as amended, modified, codified or reenacted,
      in whole or in part, and in effect from time to time, (c) any reference herein
      to any Person shall be construed to include such Person’s successors and assigns
      (subject to the restrictions contained in the Loan Documents), (d) the words
      “herein”, “hereof” and “hereunder”, and words of similar import, shall be
      construed to refer to this Agreement in its entirety and not to any particular
      provision hereof, (e) with respect to the determination of any time period,
      the
      word “from” means “from and including” and the word “to” means “to and
      including” and (f) any reference herein to Articles, Sections, Annexes, Exhibits
      and Schedules shall be construed to refer to Articles and Sections of, and
      Annexes, Exhibits and Schedules to, this Agreement.  No provision of
      this Agreement or any other Loan Document shall be interpreted or construed
      against any Person solely because such Person or its legal representative
      drafted such provision.

     

    Section
      1.05  Accounting
      Terms and Determinations; GAAP.  Unless
      otherwise specified herein, all terms of an accounting or financial nature
      shall
      be construed in accordance with GAAP, as in effect from time to time;
provided that, if the Borrower or the Parent notifies the Administrative
      Agent that the Borrower or the Parent requests an amendment to any provision
      hereof to eliminate the effect of any change occurring after the date hereof
      in
      GAAP or in the application thereof on the operation of such provision (or if
      the
      Administrative Agent notifies the Borrower or the Parent that the Required
      Lenders request an amendment to any provision hereof for such purpose),
      regardless of whether any such notice is given before or after such change
      in
      GAAP or in the application thereof, then such provision shall be interpreted
      on
      the basis of GAAP as in effect and applied immediately before such change shall
      have become effective until  such notice shall have been withdrawn or
      such provision  amended in accordance herewith.

     

    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 Revolving Credit Exposure exceeding
      such Lender’s Commitment or (b) the total Revolving Credit Exposures exceeding
      the total Commitments.  Within the foregoing limits and subject to the
      terms and conditions set forth herein, the Borrower may borrow, repay and
      reborrow the Loans.  On the Effective Date (or as soon as practicable
      with respect to (iii)):

     

    (i)  the
      Borrower shall pay all accrued and unpaid commitment fees, break funding fees
      under Section 5.02 and all other fees that are outstanding under the Existing
      Credit Agreement for the account of each “Lender” under the Existing Credit
      Agreement;

     

    (ii)  each
“ABR
      Loan” and “Eurodollar Loan” outstanding under the Existing Credit Agreement
      shall be deemed to be repaid with the proceeds of a new ABR Loan or Eurodollar
      Loan, as applicable, under this Agreement;

     

    (iii)  the
      Administrative Agent shall use reasonable efforts to cause such “Lender” under
      the Existing Credit Agreement to deliver to the Borrower as soon as practicable
      after the Effective Date the Note issued by the Borrower to it under the
      Existing Credit Agreement, marked “canceled” or otherwise similarly
      defaced;

     

    (iv)  each
      Letter of Credit issued and outstanding under the Existing Credit Agreement
      (if
      any) shall be deemed issued under this Agreement without the payment of
      additional fees; and

     

    
      
        
        

      

      
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    (v)  the
      Existing Credit Agreement and the commitments thereunder shall be superceded
      by
      this Agreement and such commitments shall terminate.

     

    It
      is the
      intent of the parties hereto that this Agreement not constitute a novation
      of
      the obligations and liabilities existing under the Existing Credit Agreement
      or
      evidence repayment of any such obligations and liabilities and that this
      Agreement amend and restate in its entirety the Existing Credit Agreement and
      re-evidence the obligations of the Borrower outstanding thereunder.

     

    Section
      2.02  Loans
      and Borrowings.

     

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

     

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

     

    (c)  Minimum
      Amounts; Limitation on Number of Borrowings.  At the commencement
      of each Interest Period for any Eurodollar Borrowing, such Borrowing shall
      be in
      an aggregate amount that is an integral multiple of $500,000 and not less than
      $1,000,000.  At the time that each ABR Borrowing is made, such
      Borrowing shall be in an aggregate amount that is an integral multiple of
      $250,000 and not less than $1,000,000.  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.  If
      a Lender shall make a written request to the Administrative Agent and the
      Borrower to have its Loans evidenced by a promissory note, then the Borrower
      shall execute and deliver a single promissory note of the Borrower in
      substantially the form of Exhibit A, payable to the order of such Lender in
      a
      principal amount equal to its Maximum Credit Amount as then in effect, and
      otherwise duly completed.  The date, amount, Type, interest rate and,
      if applicable, Interest Period of each Loan made by each Lender, and all
      payments made on account of the principal thereof, may 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; provided that the 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 (a) in the case of a Eurodollar Borrowing, not later than
      12:00 noon, New York City time, three Business Days before the date of the
      proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00
      noon, New York City time, on the date of the proposed Borrowing; provided that
      no such notice shall be required for any deemed request of an ABR Borrowing
      to
      finance the reimbursement of an LC Disbursement as provided in Section
      2.08(e).  Each such telephonic Borrowing Request shall be irrevocable
      and shall be confirmed promptly by hand 

     

    
      
        
        

      

      
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    delivery
      or telecopy to the Administrative Agent of a written Borrowing Request in
      substantially the form of Exhibit B and signed by the Borrower.  Each
      such telephonic and written Borrowing Request shall specify the following
      information in compliance with Section
      2.02:

     

    (i)  the
      aggregate amount of the requested Borrowing;

     

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

     

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

     

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

     

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

     

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

     

    After
      April 1, 2009 (unless the Conforming Borrowing Base remains in effect),
      information regarding the Conforming Borrowing Base may be omitted from
      subsequent Borrowing Requests.

     

    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 Revolving 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
      2.04  Interest
      Elections.

     

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

     

    (b)  Interest
      Election Requests.  To make an election pursuant to this Section 2.04, the Borrower shall notify the
      Administrative Agent of such election by telephone by the time that a Borrowing
      Request would be required under Section 2.03 if the
      Borrower were requesting a Borrowing of the Type resulting from such election
      to
      be made on the effective date of such election.  Each such telephonic


     

    
      
        
        

      

      
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    Interest
      Election Request shall be irrevocable and shall be confirmed promptly by hand
      delivery or telecopy to the Administrative Agent of a written Interest Election
      Request in substantially the form of Exhibit C and signed by the
      Borrower.

     

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

     

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

     

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

     

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

     

    (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
      and
      Borrowing Base Deficiencies 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 or a Borrowing Base Deficiency has occurred and is
      continuing:  (i) no outstanding Borrowing may be converted to or
      continued as a Eurodollar Borrowing (and any Interest Election Request that
      requests the conversion of any Borrowing to, or continuation of any Borrowing
      as, a Eurodollar Borrowing shall be ineffective) and (ii) unless repaid, each
      Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
      Interest Period applicable thereto.

     

    Section
      2.05  Funding
      of Borrowings.

     

    (a)  Funding
      by Lenders.  Each Lender shall make each Loan to be made by it
      hereunder on the proposed date thereof by wire transfer of immediately available
      funds by 1:00 p.m., New York City 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.  Nothing herein shall be deemed to obligate any
      Lender to obtain the funds for its Loan in any particular place or 

     

    
      
        
        

      

      
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    manner
      or
      to constitute a representation by any Lender that it has obtained or will obtain
      the funds for its Loan in any particular place or manner.

     

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

     

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

     

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

     

    (i)  The
      Borrower may at any time terminate, or from time to time reduce, the Aggregate
      Maximum Credit Amounts; provided that (A) each reduction of the
      Aggregate Maximum Credit Amounts shall be in an amount that is an integral
      multiple of $1,000,000 and not less than $10,000,000 and (B) the Borrower shall
      not
      terminate or reduce the Aggregate Maximum Credit Amounts if, after giving effect
      to any concurrent prepayment of the Loans in accordance with Section 3.04(c), the total Revolving 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 pursuant to this Section 2.06(b)(ii) shall be made ratably among the
      Lenders in accordance with each Lender’s Applicable Percentage.

     

    (c)  Scheduled
      and Mandatory Reductions of Aggregate Maximum Commitment
      Amounts.

     

    (i)  The
      Aggregate Maximum Credit Amounts shall reduce by $300,000,000 in five (5)
      consecutive and equal quarterly installments of $60,000,000, the initial
      reduction of which shall occur on December 31, 2007 and the last such reduction
      shall occur on December 31, 2008.  Each 

     

    
      
        
        

      

      
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    reduction
      of the Aggregate Maximum Credit Amounts pursuant to this Section 2.06(c)(i)
      shall be made ratably among the Lenders in accordance with each Lender’s
      Applicable Percentage.

     

    (ii)  The
      Aggregate Maximum Credit Amounts shall automatically reduce by an amount equal
      to the prepayment amounts accepted by the Lenders from time to time pursuant
      to
      Section 3.04(c)(iv).  Each reduction of the Aggregate Maximum Credit
      Amounts pursuant to this Section 2.06(c)(ii) shall be made ratably among the
      Lenders in accordance with each Lender’s Applicable Percentage.

     

    Section
      2.07  Borrowing
      Base.

     

    (a)  Initial
      Borrowing Base and Initial Conforming 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 $700,000,000
      and
      the amount of the Conforming Borrowing Base shall be
      $500,000,000.   Notwithstanding the foregoing, the Borrowing Base
      may be subject to further adjustments from time to time pursuant to Section
      2.08(k) [preferential purchase rights], Section
      8.13(c) [title defects], Section 8.13(d) [MMS approvals] or Section 9.11(d)
      [asset sales].  As of April 1, 2009, the Conforming Borrowing Base
      shall equal the Borrowing Base and all references to “Conforming Borrowing Base”
in this Agreement shall mean the Borrowing Base.  The Borrowing Base
      shall, under no circumstances, exceed the Aggregate Maximum Credit
      Amounts.

     

    (b)  Scheduled
      and Interim Redeterminations.  The Borrowing Base and the
      Conforming Borrowing Base shall be redetermined semi-annually in accordance
      with
      this Section 2.07 (a “Scheduled
      Redetermination”), and, subject to Section
      2.07(d), such redetermined Borrowing Base and Conforming Borrowing Base
      shall become effective and applicable to the Borrower, the Agents, the Issuing
      Bank and the Lenders on April 1st and October 1st of each year; provided that
      the initial Scheduled Redetermination shall be November 1, 2007.  In
      addition, the Borrower may, by notifying the Administrative Agent thereof,
      and
      the Administrative Agent may, at the direction of the Required Lenders, by
      notifying the Borrower thereof, one time during any 12 month period, each elect
      to cause the Borrowing Base and the Conforming Borrowing Base to be redetermined
      between Scheduled Redeterminations (an “Interim Redetermination”) in
      accordance with this Section 2.07; provided that the
      Required Lenders shall not have the right to make such a request for an Interim
      Redetermination during calendar year 2007 for the thirty (30) days following
      the
      Effective Date.

     

    (c)  Scheduled
      and Interim Redetermination Procedure.

     

    (i)  Each
      Scheduled Redetermination and each Interim Redetermination shall be effectuated
      as follows:  Upon receipt by the Administrative Agent of (A) the Reserve Report
      and the
      certificate required to be delivered by the Borrower to the Administrative
      Agent, in the case of a Scheduled Redetermination, pursuant to Section 8.12(a) and (c), and,
      in the case of an Interim Redetermination, pursuant to Section 8.12(b) and (c), and
(B)
      such other reports,
      data and supplemental information, including, without limitation, the
      information provided pursuant to Section 8.12(c), as
      may, from time to time, be reasonably requested by the Majority Lenders (the
      Reserve Report, such certificate and such other reports, data and supplemental
      information being the “Engineering Reports”), the Administrative Agent
      shall evaluate the information contained in the Engineering Reports and shall,
      in its sole discretion, propose a new Borrowing Base and which shall prior
      to
      October 1, 2008 further specify a new Conforming Borrowing Base (collectively,
      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) 

     

    
      
        
        

      

      
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    as
      the
      Administrative Agent deems appropriate in its sole discretion and consistent
      with its customary oil and gas lending criteria as it exists at the particular
      time.

     

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

     

    (A)  in
      the
      case of a Scheduled Redetermination (1) if the Administrative
      Agent
      shall have received the Engineering Reports 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
      March 15th and September 15th of such year following the date of delivery or
      (2) if the Administrative
      Agent shall not have received the Engineering Reports required to be delivered
      by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete
      manner, then promptly
      after the Administrative Agent has received complete Engineering Reports from
      the Borrower and has had a reasonable opportunity to determine the Proposed
      Borrowing Base in accordance with Section 2.07(c)(i);
      and

     

    (B)  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 (or the
      Conforming 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 (or the Conforming 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).  Such decisions will be made by each Lender based
      upon such criteria as such Lender deems appropriate in its sole discretion
      and
      consistent with its customary oil and gas lending criteria as it exists at
      the
      particular time.  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 (which proposal must also propose a Conforming Borrowing Base,
      if
      appropriate).  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
      (or
      the Conforming 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 (or the Conforming Borrowing Base) then in effect, have approved or deemed
      to have approved, as aforesaid, then the Proposed Borrowing Base shall become
      the new Borrowing Base (and the new Conforming 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 deemed to have approved, as
      aforesaid, then the Administrative Agent shall poll the Lenders to ascertain
      the
      highest Borrowing Base (or the highest Conforming Borrowing Base) then
      acceptable to a number of Lenders sufficient to constitute the Required Lenders
      and, so long as such amount does not increase the Borrowing Base (or the
      Conforming Borrowing Base) then in effect, such amount shall become the new
      Borrowing Base (and the new Conforming Borrowing Base), effective on the date
      specified in Section 2.07(d).  While the
      Conforming Borrowing Base is in effect, the foregoing procedures shall apply
      to
      each proposed Borrowing Base and each proposed Conforming Borrowing Base
      separately.

     

    (d)  Effectiveness
      of a Redetermined Borrowing Base.  After a redetermined Borrowing
      Base (and Conforming Borrowing Base) is approved or is deemed to have been
      approved by all 

     

    
      
        
        

      

      
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    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 (the “New Borrowing Base Notice”) of
      the amount of the redetermined Borrowing Base (and Conforming Borrowing Base),
      and such amount shall become the new Borrowing Base (and new Conforming
      Borrowing Base), effective and applicable to the Borrower, the Agents, the
      Issuing Bank and the Lenders:

     

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

     

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

     

    Such
      amount shall then become the Borrowing Base (and the Conforming Borrowing Base)
      until the next Scheduled Redetermination Date, the next Interim Redetermination
      Date or the next adjustment to the Borrowing Base (and the Conforming Borrowing
      Base) under Section 8.13(c), Section 8.13(d) or
      Section 9.11(d), 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.

     

    Section
      2.08  Letters
      of Credit.

     

    (a)  General.  Subject
      to the terms and conditions set forth herein, the Borrower may request the
      issuance of dollar denominated Letters of Credit for its own account or for
      the
      account of the Parent or 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 period from the Effective Date until
      the
      day which is five (5) Business Days prior to the end of the Availability Period;
      provided that the Borrower may not request the issuance, amendment, renewal
      or
      extension of Letters of Credit hereunder if a Borrowing Base Deficiency exists
      at such time or would exist as a result thereof.  In the event of any
      inconsistency between the terms and conditions of this Agreement and the terms
      and conditions of any form of letter of credit application or other agreement
      submitted by the Borrower to, or entered into by the Borrower with, the Issuing
      Bank relating to any Letter of Credit, the terms and conditions of this
      Agreement shall control.

     

    (b)  Notice
      of Issuance, Amendment, Renewal, Extension; Certain
      Conditions.  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 five
      (5)
      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 Letter of Credit to be
      amended, renewed or extended;

     

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

     

    
      
        
        

      

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

     

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

     

    (v)  specifying
      the name and address of the beneficiary thereof and such other information
      as
      shall be necessary to prepare, amend, renew or extend such Letter of Credit;
      and

     

    (vi)  specifying
      the amount of the then effective Borrowing Base and whether a Borrowing Base
      Deficiency exists at such time, the current total Revolving Credit Exposures
      (without regard to the requested Letter of Credit or the requested amendment,
      renewal or extension of an outstanding Letter of Credit) and the pro
      forma total Revolving Credit Exposures (giving effect to the requested
      Letter of Credit or the requested amendment, renewal or extension of an
      outstanding Letter of Credit).

     

    Each
      notice shall constitute a representation that after giving effect to the
      requested issuance, amendment, renewal or extension, as applicable, (i) the
      LC
      Exposure shall not exceed the LC Commitment, provided clause (i) shall not
      be
      applicable to the PPR Letter of Credit and (ii) the total Revolving Credit
      Exposures shall not exceed the total Commitments (i.e. the lesser of the
      Aggregate Maximum Credit Amounts and the then effective Borrowing
      Base).

     

    If
      requested by the Issuing Bank, the Borrower also shall submit a letter of credit
      application on the Issuing Bank’s standard form in connection with any request
      for a Letter of Credit and shall guarantee the reimbursement of any Letter
      of
      Credit issued for the account of the Parent or a Restricted
      Subsidiary.

     

    (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.

     

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

     

    (e)  Reimbursement.  If
      the Issuing Bank shall make any LC Disbursement in respect of a Letter of
      Credit, the Borrower shall reimburse such LC Disbursement by paying to the
      Administrative Agent an amount equal to such LC Disbursement not later than
      2:00
      p.m., New York City time, on the date that is one (1) Business Day after such
      LC
      Disbursement is made, if the Borrower shall have received notice of such LC
      Disbursement prior to 12:00 noon, New York City time, on the payment date,
      or,
      if such notice has not been received by the Borrower prior to such time on
      the
      payment date, then not later than 

     

    
      
        
        

      

      
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    2:00
      p.m., New York City time, on the second Business Day after the Borrower receives
      such notice; 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 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 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 shall not constitute a Loan and shall not relieve the Borrower
      of its obligation to reimburse such LC Disbursement.

     

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

     

    
      
        
        

      

      
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    accept
      and make payment upon such documents if such documents are not in strict
      compliance with the terms of such Letter of Credit.

     

    (g)  Disbursement
      Procedures.  The Issuing Bank shall, promptly following its
      receipt thereof, examine all documents purporting to represent a demand for
      payment under a Letter of Credit.  The Issuing Bank shall promptly
      notify the Administrative Agent and the Borrower by telephone (confirmed by
      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, the unpaid amount thereof shall bear interest, for each day from
      and including the date such LC Disbursement is made to but excluding the date
      that the Borrower reimburses such LC Disbursement, at the rate per annum then
      applicable to ABR Loans.  Interest accrued pursuant to this Section 2.08(h) shall be for the account of the Issuing
      Bank, except that interest accrued on and after the date of payment by any
      Lender pursuant to Section 2.08(e) to reimburse the
      Issuing Bank shall be for the account of such Lender to the extent of such
      payment.

     

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

     

    (j)  Cash
      Collateralization.  If (i) any Event of Default
      shall
      occur and be continuing and the Borrower receives notice from the Administrative
      Agent or the Majority Lenders demanding the deposit of cash collateral pursuant
      to this Section 2.08(j), or (ii)
      the Borrower is required to
      pay to the Administrative Agent the excess attributable to an LC Exposure in
      connection with any prepayment pursuant to Section
      3.04(c), then the Borrower shall deposit, in an account with the
      Administrative Agent, in the name of the Administrative Agent and for the
      benefit of the Lenders, an amount in cash equal to, 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


     

    
      
        
        

      

      
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    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 Restricted Subsidiaries may now or hereafter have against
      any such beneficiary, the Issuing Bank, the Administrative Agent, the Lenders
      or
      any other Person for any reason whatsoever.  Such deposit shall be
      held as collateral securing the payment and performance of the Borrower’s and
      the Guarantor’s obligations under this Agreement and the other Loan
      Documents.  The Administrative Agent shall have exclusive dominion and
      control, including the exclusive right of withdrawal, over such
      account.  Other than any interest earned on the investment of such
      deposits, which investments shall be made at the option and sole discretion
      of
      the Administrative Agent and at the Borrower’s risk and expense, such deposits
      shall not bear interest.  Interest or profits, if any, on such
      investments shall accumulate in such account.  Moneys in such account
      shall be applied by the Administrative Agent to reimburse the Issuing Bank
      for
      LC Disbursements for which it has not been reimbursed and, to the extent not
      so
      applied, shall be held for the satisfaction of the reimbursement obligations
      of
      the Borrower for the LC Exposure at such time or, if the maturity of the Loans
      has been accelerated, be applied to satisfy other obligations of the Borrower
      and the Guarantors under this Agreement or the other Loan
      Documents.  If the Borrower is required to provide an amount of cash
      collateral hereunder as a result of the occurrence of an Event of Default,
      and
      the Borrower is not otherwise required to pay to the Administrative Agent the
      excess attributable to an LC Exposure in connection with any prepayment pursuant
      to Section 3.04(c), then such amount (to the extent
      not applied as aforesaid) shall be returned to the Borrower within three
      Business Days after all Events of Default have been cured or
      waived.

     

    (k)  Preferential
      Purchase Right Letter of Credit.  Without limitation of the
      foregoing, on the Effective Date, the Issuing Bank will issue a Letter of Credit
      (the “PPR Letter of Credit”) for the benefit of the Seller, in an amount
      not to exceed $110,000,000 (provided that the amount of the PPR Letter of Credit
      shall not be deducted from the LC Commitment) to fund the purchase of the
      Preferential Purchase Right Properties subject of preferential purchase rights
      which rights have not expired, have not been waived or have not been exercised
      by the holders thereof on or before the Effective Date.  The PPR
      Letter of Credit shall expire on the 45th day after
      the
      Effective Date, and to the extent such preferential purchase rights in respect
      of a Preferential Purchase Right Property are waived or expire without being
      exercised after the Effective Date, the PPR Letter of Credit will be drawn
      in an
      amount equal to the allocated purchase price for such Preferential Purchase
      Right Property and such Preferential Purchase Right Properties subject thereof
      will be conveyed to the Borrower.  In connection with such conveyance,
      the Borrower shall grant to the Administrative Agent a first priority perfected
      Lien in such conveyed Preferential Purchase Right
      Properties.  Otherwise, if such preferential purchase rights in
      respect of a Preferential Purchase Right Property are exercised, the PPR Letter
      of Credit will reduce by an amount equal to the purchase price allocated to
      Preferential Purchase Right Property in the Acquisition Documents.  In
      addition, the Borrowing Base and Conforming Borrowing Base will be permanently
      reduced by an amount equal to the value, if any, attributed to such Property
      in
      the Borrowing Base based on Initial Reserve Report.

     

    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.

     

    
      
        
        

      

      
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    Section
      3.02  Interest.

     

    (a)  ABR
      Loans.  The Loans comprising each ABR Borrowing shall bear
      interest at the Alternate Base Rate plus the Applicable Margin.

     

    (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.

     

    (c)  Post-Default
      Rate Rate.  Notwithstanding the foregoing, if an Event of Default
      has occurred and is continuing, or if any principal of or interest on any Loan
      or any fee or other amount payable by the Borrower or any Guarantor hereunder
      or
      under any other Loan Document is not paid when due, whether at stated maturity,
      upon acceleration or otherwise, and including any payments in respect of a
      Borrowing Base Deficiency under Section 3.04(c), then
      all Loans outstanding, in the case of an Event of Default, and such overdue
      amount, in the case of a failure to pay amounts when due, shall on or after
      the
      date the Required Lenders so request 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).

     

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

     

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

     

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

     

    (a)  the
      Administrative Agent determines (which determination shall be conclusive absent
      manifest error) that adequate and reasonable means do not exist for ascertaining
      the Adjusted LIBO Rate or the LIBO Rate for such Interest Period;
      or

     

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

     

    then
      the
      Administrative Agent shall give notice thereof to the Borrower and the Lenders
      by telephone or telecopy as promptly as practicable thereafter and, until the
      Administrative Agent notifies the Borrower and the Lenders that the
      circumstances giving rise to such notice no longer exist, (i) any Interest
      Election Request that requests the conversion of any Borrowing to, or
      continuation of any Borrowing as, a 

     

    
      
        
        

      

      
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    Eurodollar
      Borrowing shall be ineffective, and (ii) if any Borrowing Request requests
      a
      Eurodollar Borrowing, such Borrowing shall be made as an ABR
      Borrowing.

     

    Section
      3.04  Prepayments.

     

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

     

    (b)  Notice
      and Terms of Optional Prepayment.  The Borrower shall notify the
      Administrative Agent by telephone (confirmed by telecopy) of any prepayment
      hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
      than 12:00 noon, New York City 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 City time, one Business Day before the date of
      prepayment.  Each such notice shall be irrevocable and shall specify
      the prepayment date and the principal amount of each Borrowing or portion
      thereof to be prepaid.  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 and any amounts due under Section
      5.02.

     

    (c)  Mandatory
      Prepayments.

     

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

     

    (ii)  Upon
      any
      redetermination of or adjustment to the amount of the Borrowing Base in
      accordance with Section 2.07, Section 8.13(c) or Section 8.13(d),
      if the total
      Revolving Credit Exposures exceeds 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 make such prepayment
      and/or deposit of cash collateral 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(d), if the total
      Revolving Credit Exposures exceeds 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 within two (2) Business Days following the
      date it or any Restricted 

     

    
      
        
        

      

      
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    Subsidiary
      receives cash proceeds as a result of such disposition; 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)  If
      at any
      time, the Borrower or the Parent shall be required to prepay or redeem (or
      make
      any offer to prepay or redeem) all or any portion of the Bridge Loans or any
      Exchange Notes (other than (i) a prepayment or redemption with the proceeds
      of
      an Equity Issuance (other than an Equity Issuance of Disqualified Capital
      Stock), (ii) with the proceeds of Permitted Refinancing Debt or (iii) a change
      of control offer as defined in the Bridge Credit Agreement or the Exchange
      Notes), then not later than the fifth (5th) Business
      Day
      prior to the day on which such prepayment or redemption (or earlier offer to
      prepay or redeem) of any Bridge Loans or Exchange Notes shall be made, the
      Borrower shall make an offer to the Lenders by notice to the Administrative
      Agent to prepay outstanding Loans under this Agreement and cash collateralize
      Letters of Credit in an amount equal to such amount required to be prepaid
      or
      redeemed (or offered to prepay or redeem) under the Bridge Credit Agreement
      or
      any agreement evidencing the Exchange Notes, provided that if such prepayment
      or
      redemption is the result of an asset sale, then (A) if the aggregate Revolving
      Credit Exposures of the Lenders exceeds  or is equal to the Conforming
      Borrowing Base (or if no Conforming Borrowing Base is then in effect, the
      Borrowing Base), the amount offered to the Lenders shall be the amount required
      to be prepaid or redeemed (or offered to prepay or redeem) under the Bridge
      Credit Agreement or any agreement evidencing the Exchange Notes and (B) if
      the
      aggregate Revolving Credit Exposures of the Lenders is less than the Conforming
      Borrowing Base (or if no Conforming Borrowing Base is then in effect, the
      Borrowing Base), the amount offered to the Lenders shall be the lesser of (x)
      the amount allocated the Properties subject of such asset sale in the most
      recent Conforming Borrowing Base and (y) the Net Available Cash (as defined
      in
      the Bridge Credit Agreement) from such asset sale received by a Loan
      Party.  Within three Business Days after the Administrative Agent
      receives notice of an offer from the Borrower under this Section 3.04(c)(iv),
      each Lender shall decide to accept or decline such prepayment of
      Loans.  If a Lender shall fail to respond within three Business Days,
      its failure shall be deemed a rejection of the offer.  If the Majority
      Lenders have agreed to accept such prepayment, then each of the Lenders shall
      accept its pro rata share of the entire prepayment
      amount.  If the prepayment is accepted by the Majority Lenders then
      such prepayment amounts shall be paid by the Borrower to the Lenders within
      one
      Business Day following acceptance.  If the Majority Lenders fail to
      accept such prepayment, then the entire prepayment amount shall be applied
      as
      required pursuant to the mandatory prepayment provisions of the Bridge Loans
      or
      Exchange Notes.  Any amounts not required to be offered to the Lenders
      under clause (B) shall be applied as required pursuant to the mandatory
      prepayment provisions of the Bridge Loans or Exchange Notes.

     

    (v)  Each
      prepayment of Borrowings pursuant to this Section
      3.04(c) shall be applied, first, ratably to any ABR Borrowings then
      outstanding, and, second, to any Eurodollar Borrowings then outstanding as
      the
      Borrower may direct.

     

    (vi)  Prepayments
      pursuant to this Section 3.04(c) shall be accompanied
      by accrued interest to the extent required by Section
      3.02.

     

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

     

    Section
      3.05  Fees.

     

    (a)  Commitment
      Fees.  The Borrower agrees to pay to the Administrative Agent for
      the account of each Lender a commitment fee, which shall accrue at the
      applicable Commitment Fee Rate on the average daily amount of the unused amount
      of the Commitment of such Lender during the period from and including the date
      of this Agreement to but excluding the Termination Date.  Accrued


     

    
      
        
        

      

      
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    commitment
      fees shall be payable in arrears on the third Business Day after the last day
      of
      March, June, September and December of each year and on the Termination Date,
      commencing on the first such date to occur after the date hereof.  All
      commitment fees shall be computed on the basis of a year of 360 days 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 date of this Agreement to but excluding
      the later of the date on which such Lender’s Commitment terminates and the date
      on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank
      a
      fronting fee, which shall accrue at the rate of 0.125% per annum on the average
      daily amount of the LC Exposure (excluding any portion thereof attributable
      to
      unreimbursed LC Disbursements) during the period from and including the date
      of
      this Agreement to but excluding the later of the date of termination of the
      Commitments and the date on which there ceases to be any LC Exposure, provided
      that in no event shall such fee be less than $500 during any quarter, and (iii)
      to the Issuing Bank, for its own account, its standard fees with respect to
      the
      issuance, amendment, renewal or extension of any Letter of Credit or processing
      of drawings thereunder.  Participation fees and fronting fees accrued
      through and including the last day of March, June, September and December of
      each year shall be payable on the third Business Day following such last day,
      commencing on the first such date to occur after the date of this Agreement;
      provided that all such fees shall be payable on the Termination Date and any
      such fees accruing after the Termination Date shall be payable on
      demand.  Any other fees payable to the Issuing Bank pursuant to this
Section 3.05(b) shall be payable within 10 days after
      demand.  All participation fees and fronting fees shall be computed on
      the basis of a year of 360 days and shall be payable for the actual number
      of
      days elapsed (including the first day but excluding the last day).

     

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

     

    ARTICLE
      IV

    Payments;
      Pro Rata Treatment; Sharing of Set-offs

     

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

     

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

     

    
      
        
        

      

      
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    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 prior the Termination
      Date, insufficient funds are received by and available to the Administrative
      Agent to pay fully all amounts of principal, unreimbursed LC Disbursements,
      interest, fees and other amounts then due hereunder, such funds shall be
      applied:  first, ratably 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 outstanding principal of the Loans
      and unreimbursed
      LC Disbursements; and fifth, if applicable, to serve as cash collateral
      to be held by the Administrative Agent to secure the LC Exposure, in each case,
      ratably among the parties entitled thereto in accordance with the amounts then
      due to such parties.

     

    (c)  Sharing
      of Payments by Lenders.  Except as provided under Section
      3.04(c)(iv), 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 Restricted Subsidiary or Affiliate thereof (as to which
      the
      provisions of this Section 4.01(c) shall
      apply).  The Borrower consents to the foregoing and agrees, to the
      extent it may effectively do so under applicable law, that any Lender acquiring
      a participation pursuant to the foregoing arrangements may exercise against
      the
      Borrower rights of set-off and counterclaim with respect to such participation
      as fully as if such Lender were a direct creditor of the Borrower in the amount
      of such participation.

     

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

     

    Section
      4.03  Certain
      Deductions by the Administrative Agent.  If
      any Lender shall fail to make any payment required to be made by it pursuant
      to
Section 2.05(b), Section
      2.08(d), Section 2.08(e) or Section 4.02 then the Administrative
      Agent may, in its
      discretion (notwithstanding any contrary provision hereof), apply any amounts
      thereafter received by the Administrative Agent for the account of 

     

    
      
        
        

      

      
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    such
      Lender to satisfy such Lender’s obligations under such Sections until all such
      unsatisfied obligations are fully paid.

     

    Section
      4.04  Disposition
      of Proceeds.  The
      Security Instruments contain an assignment by the Borrower and/or the Guarantors
      unto and in favor of the Administrative Agent for the benefit of the Lenders
      of
      all of the Borrower’s or each Guarantor’s interest in and to production and all
      proceeds attributable thereto which may be produced from or allocated to the
      Mortgaged Property.  The Security Instruments further provide in
      general for the application of such proceeds to the satisfaction of the
      Indebtedness and other obligations described therein and secured
      thereby.  Notwithstanding the 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 Subsidiaries.

     

    ARTICLE
      V

    Increased
      Costs; Break Funding Payments; Taxes

     

    Section
      5.01  Increased
      Costs.

     

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

     

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

     

    (ii)  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.

     

    (c)  Certificates.  A
      certificate of a Lender or the Issuing Bank setting forth the amount or amounts
      necessary to compensate such Lender or the Issuing Bank or its holding company,
      as the case may be, as specified in Section 5.01(a)
      or (b) shall be delivered to the Borrower and shall
      be 

     

    
      
        
        

      

      
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    conclusive
      absent manifest error.  The Borrower shall pay such Lender or the
      Issuing Bank, as the case may be, the amount shown as due on any such
      certificate within 10 days after receipt thereof.

     

    (d)  Effect
      of Failure or Delay in Requesting Compensation.  Failure or delay
      on the part of any Lender or the Issuing Bank to demand compensation pursuant
      to
      this Section 5.01 shall not constitute a waiver of
      such Lender’s or the Issuing Bank’s right to demand such compensation; provided
      that the Borrower shall not be required to compensate a Lender or the Issuing
      Bank pursuant to this Section 5.01 for any increased
      costs or reductions incurred more than 365 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 365-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,
      or
      (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan
      on
      the date specified in any notice delivered pursuant hereto, 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
      shall be delivered to the Borrower and shall be conclusive absent manifest
      error.  The Borrower shall pay such Lender the amount shown as due on
      any such certificate within 10 days after receipt thereof.

     

    Section
      5.03  Taxes.

     

    (a)  All
      payments made by any Loan Party under this Agreement or any Loan Document shall
      be made free and clear of, and without deduction or withholding for or on
      account of, any present or future income, stamp or other taxes, levies, imposts,
      duties, charges, fees, deductions or withholdings, now or hereafter imposed,
      levied, collected, withheld or assessed by any Governmental Authority, excluding
      net income taxes and franchise taxes (imposed in lieu of net income taxes)
      imposed on the Administrative Agent or any Lender as a result of a present
      or
      former connection between the Administrative Agent or such Lender and the
      jurisdiction of the Governmental Authority imposing such tax or any political
      subdivision or taxing authority thereof or therein (other than any such
      connection arising solely from the Administrative Agent or such Lender having
      executed, delivered or performed its obligations or received a payment under,
      or
      enforced, this Agreement or any other Loan Document).  If any such
      non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
      withholdings (“Non-Excluded Taxes”) or other taxes are required to be
      withheld from any amounts payable to the Administrative Agent or any Lender
      hereunder, the amounts so payable to the Administrative Agent or such Lender
      shall be increased to the extent necessary to yield to the Administrative Agent
      or such 

     

    
      
        
        

      

      
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    Lender
      (after payment of all Non-Excluded Taxes and other taxes) interest or any such
      other amounts payable hereunder at the rates or in the amounts specified in
      this
      Agreement, provided, however, that the Borrower shall not be
      required to increase any such amounts payable to any Lender with respect to
      any
      Non-Excluded Taxes (i)
      that are attributable to such Lender’s failure to comply with the requirements
      of Section 5.03(d) or (e) or (ii) that are United States
      withholding taxes imposed on amounts payable to such Lender at the time such
      Lender becomes a party to this Agreement, except to the extent that such
      Lender’s assignor (if any) was entitled, at the time of assignment, to receive
      additional amounts from the Borrower with respect to such Non-Excluded Taxes
      pursuant to this Section 5.03(a).

     

    (b)  In
      addition, the Borrower shall pay any other taxes to the relevant Governmental
      Authority in accordance with applicable law.

     

    (c)  Whenever
      any Non-Excluded Taxes or other taxes are payable by a Loan Party, as promptly
      as possible thereafter such Loan Party shall send to the Administrative Agent
      for its own account or for the account of the relevant Lender, as the case
      may
      be, a certified copy of an original official receipt received by such Loan
      Party
      showing payment thereof.  If such Loan Party fails to pay any
      Non-Excluded Taxes or other taxes when due to the appropriate taxing authority
      or fails to remit to the Administrative Agent the required receipts or other
      required documentary evidence, the Borrower shall indemnify the Administrative
      Agent and the Lenders for any incremental taxes, interest or penalties that
      may
      become payable by the Administrative Agent or any Lender as a result of any
      such
      failure.

     

    (d)  Each
      Lender (or Transferee) that is not a “U.S. Person” as defined in Section
      7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to the
      Borrower and the Administrative Agent (or, in the case of a Participant, to
      the
      Lender from which the related participation shall have been purchased) two
      copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
      or,
      in the case of a Non-U.S. Lender claiming exemption from U.S. federal
      withholding tax under Section 871(h) or 881(c) of the Code with respect to
      payments of “portfolio interest”, a statement substantially in the form of
      Exhibit H and a Form W-8BEN, or any subsequent versions thereof or successors
      thereto, properly completed and duly executed by such Non-U.S. Lender claiming
      complete exemption from, or a reduced rate of, U.S. federal withholding tax
      on
      all payments by the Loan Parties under this Agreement and the other Loan
      Documents.  Such forms shall be delivered by each Non-U.S. Lender on
      or before the date it becomes a party to this Agreement (or, in the case of
      any
      Participant, on or before the date such Participant purchases the related
      participation).  In addition, each Non-U.S. Lender shall deliver such
      forms promptly upon the obsolescence or invalidity of any form previously
      delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall
      promptly notify the Borrower at any time it determines that it is no longer
      in a
      position to provide any previously delivered certificate to the Borrower (or
      any
      other form of certification adopted by the U.S. taxing authorities for such
      purpose).  Notwithstanding any other provision of this Section
      5.03(d), a Non-U.S. Lender shall not be required to deliver any form pursuant
      to
      this Section 5.03(d) that such Non-U.S. Lender is not legally able to
      deliver.

     

    (e)  A
      Lender
      that is entitled to an exemption from or reduction of non-U.S. 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 Loan Document shall deliver to the Borrower (with a copy
      to the Administrative Agent), at the time or times prescribed by applicable
      law
      or reasonably requested by the Borrower, such properly completed and executed
      documentation prescribed by applicable law as will permit such payments to
      be
      made without withholding or at a reduced rate, provided that such Lender
      is legally entitled to complete, execute and deliver such documentation and
      in
      such Lender’s judgment such completion, execution or submission would not
      materially prejudice the legal position of such Lender.

     

    
      
        
        

      

      
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    (f)  If
      the
      Administrative Agent or any Lender determines, in its sole discretion, that
      it
      has received a refund of any Non-Excluded 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 Non-Excluded
      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.

     

    (g)  The
      agreements in this Section 5.03 shall survive the
      termination of this Agreement and the payment of the Loans and all other amounts
      payable hereunder.

     

    Section
      5.04  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.

     

    Section
      5.05  Replacement
      of Lenders.  If
      (a) any Lender requests compensation under Section
      5.01, (b) 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, (c) any Lender defaults in its
      obligation to fund Loans hereunder, (d) 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)
      which has been approved by Lenders holding 75% or more of the then outstanding
      Commitments or (e) any Lender has not approved a proposed waiver or amendment
      requiring 100% approval or consent but which has been approved by Lenders
      holding 75% or more of the then outstanding Commitments, then the Borrower
      may,
      at its sole expense and effort, upon notice to such Lender and the
      Administrative Agent, require such Lender to assign and delegate, without
      recourse (in accordance with and subject to the restrictions contained in
      Section 12.04(b)), all its interests, rights and obligations under this
      Agreement to an assignee that shall assume such obligations (which assignee
      may
      be another Lender, if a Lender accepts such assignment); provided that (i)
      the
      Borrower shall have received the prior written consent of the Administrative
      Agent, which consent shall not unreasonably be withheld, (ii) 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 (iii) in the case of any such
      assignment resulting from a claim for compensation under Section 5.01 or payments required to be made pursuant to
Section 5.03, such assignment will
      result in a
      reduction in such compensation or payments or will result in the approval of
      the
      proposed Borrowing Base.  A Lender shall not be required to make any
      such 

     

    
      
        
        

      

      
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    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.

     

    ARTICLE
      VI

    Conditions
      Precedent

     

    Section
      6.01  Effective
      Date.  The
      obligations of the Lenders to amend and restate the Existing Credit Agreement,
      to make Loans and of the Issuing Bank to issue Letters of Credit hereunder
      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 Arrangers and the Lenders shall have received all
      fees
      and other amounts due and payable on or prior to the Effective Date, including,
      to the extent invoiced, reimbursement or payment of all out-of-pocket expenses
      required to be reimbursed or paid by the Borrower hereunder.

     

    (b)  The
      Administrative Agent shall have received a certificate of the Secretary or
      an
      Assistant Secretary of the Borrower and each Guarantor setting forth (i) resolutions of its
      board of
      directors or other appropriate governing body with respect to the authorization
      of the Borrower or such Guarantor to execute and deliver the Loan Documents
      to
      which it is a party and to enter into the transactions contemplated in those
      documents, (ii) the
      officers of the Borrower or such Guarantor (y) who are authorized to sign the
      Loan Documents to which the Borrower or such Guarantor is a party and (z) who
      will, until replaced by another officer or officers duly authorized for that
      purpose, act as its representative for the purposes of signing documents and
      giving notices and other communications in connection with this Agreement and
      the transactions contemplated hereby, (iii) specimen signatures
      of
      such authorized officers, and (iv) the articles or certificate
      of incorporation and by-laws or other applicable organizational documents of
      the
      Borrower and such Guarantor, certified as being true and
      complete.  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
      the
      Borrower and each Guarantor.

     

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

     

    (e)  The
      Administrative Agent shall have received from each party thereto duly executed
      counterparts (in such number as may be requested by the Administrative Agent)
      of
      the Security Instruments, including the Guaranty Agreement and the other
      Security Instruments described on Exhibit F-1, but excluding the Intercreditor
      Agreement.  In connection with the execution and delivery of the
      Security Instruments, the Administrative Agent shall:

     

    (i)  be
      reasonably satisfied that the Security Instruments create first priority,
      perfected Liens (except that 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 may exist) on at least 90% of the total value of the Oil and Gas
      Properties evaluated in the Initial Reserve Report (provided that, to the extent
      Preferential Purchase Right Properties or Interim Assignment Properties which
      were evaluated in the Initial Reserve Report are not conveyed to the Borrower
      on
      the Effective Date, compliance with such 90% requirement on the Effective Date
      shall be calculated without regard to such Properties); and

     

    
      
        
        

      

      
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    (ii)  have
      received certificates, if appropriate, together with undated, blank stock powers
      for each such certificate, representing all of the issued and outstanding Equity
      Interests of the Borrower, each of the Guarantors (other than the Parent) and
      not less than 65% of all of the issued and outstanding capital stock of each
      Foreign Subsidiary that is not a Guarantor, which is directly owned by either
      the Borrower or a Domestic Subsidiary.

     

    (f)  The
      Administrative Agent shall have received an opinion of (i) Jones Walker, special
      counsel to the Borrower, substantially in a form and of substance reasonably
      acceptable to the Administrative Agent and (ii) local counsel in the State
      of
      Mississippi, substantially in a form and of substance reasonably acceptable
      to
      the Administrative Agent.

     

    (g)  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.

     

    (h)  The
      Administrative Agent shall have received title information as the Administrative
      Agent may reasonably require satisfactory to the Administrative Agent setting
      forth the status of title to at least 90% of the total value of the Oil and
      Gas
      Properties evaluated in the Initial Reserve Report; provided that, preferential
      purchase rights associated with the Preferential Purchase Right Properties
      and
      conveyance deficiencies associated with the Interim Assignment Properties will
      not render title to such Properties unacceptable for purposes of compliance
      with
      such 90% requirement on the Effective Date, and provided further that such
      title
      information shall be limited to (i) audits of the Borrower’s title diligence
      materials prepared in connection with the Acquisition and other existing well
      or
      lease files and (ii) receipt of assignments conveying the Acquisition Properties
      to the Seller.

     

    (i)  The
      Administrative Agent shall have received a certificate of a Responsible Officer
      of the Borrower certifying that (i) all government and third party approvals
      necessary in connection with the Transactions have been obtained on satisfactory
      terms and (ii) no action or proceeding is pending or threatened in any court
      or
      before any Governmental Authority seeking to restrain or prohibit the
      consummation of the transactions contemplated by the Acquisition Documents
      or to
      obtain substantial damages from the Borrower related to the Acquisition
      Documents.

     

    (j)  The
      Administrative Agent shall have received the financial statements referred
      to in
Section 7.04(a) and 7.04(b) and the Initial Reserve
      Report accompanied by a certificate covering the matters described in Section 8.12(c)(i), (ii) and (iii).  The
      Administrative Agent and the Lenders shall have received projections (broken
      down by quarter for the first year and by year thereafter) for the Parent and
      its Restricted Subsidiaries after giving effect to the Acquisition and the
      other
      transactions contemplated hereby through the fifth anniversary of the Effective
      Date.

     

    (k)  The
      Administrative Agent shall have received appropriate UCC search certificates
      reflecting no prior Liens encumbering the Acquisition Properties and the
      Properties of the Parent, the Borrower and the Restricted Subsidiaries for
      each
      of the following jurisdictions:  Delaware, Louisiana, Texas, Alabama,
      Mississippi and any other jurisdiction requested by the Administrative
      Agent; other than those being released on or prior to the Effective Date or
      Liens permitted by Section 9.03.

     

    (l)  The
      Administrative Agent shall have received evidence that the Borrower has
      purchased one or more commodity price swaps with one or more Approved
      Counterparties which have aggregate notional volumes of not less than 80% of
      the
      reasonably estimated projected crude oil production and not less than 80% of
      the
      reasonably estimated projected natural gas production, in each case, from its
      proved developed, producing Oil and Gas Properties (excluding Main Pass 299)
      as
      determined by reference to the Initial Reserve Reports for each year during
      the
      calendar years 2008, 2009 

     

    
      
        
        

      

      
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    and
      2010;
      provided however, that the Swap Agreements for production related to months
      during July, August, September and October during each such calendar year shall
      be in the form of puts and/or floors.

     

    (m)  The
      Administrative Agent shall have received (i) a certificate of a
      Responsible Officer of the Borrower certifying:  (A) that the Borrower
      is concurrently consummating the Acquisition in accordance with applicable
      law
      and the terms of the Acquisition Documents (with all of the material conditions
      precedent thereto having been satisfied in all material respects or waived
      by
      the parties thereto) and acquiring substantially all of the Acquisition
      Properties contemplated by the Acquisition Documents (other than the
      Preferential Purchase Right Properties); (B) that no provision of the
      Acquisition Agreement has been waived, amended, supplemented or otherwise
      modified in any respect materially adverse to the Borrower or the Lenders
      without the prior consent of the Arrangers; (C) that the terms of the other
      Acquisition Documents are not inconsistent in any material respect with the
      terms of the Acquisition Agreement; (D) that attached thereto is the Preliminary
      Closing Statement as defined in the Acquisition Documents in such detail as
      may
      reasonably be requested by the Administrative Agent and (E) that attached
      thereto are (i) a true and complete list of all Preferential Purchase Right
      Properties which are currently pending final decision by a third party regarding
      purchase of such property in accordance with such preferential right; (ii) a true and complete
      executed copy of each of the Acquisition Documents; and (iii) original counterparts
      or
      copies, certified as true and complete, of the bills of sale and assignment
      to
      the Borrower for all of the Acquisition Properties.

     

    (n)  The
      Borrower shall have unused availability (i.e. the Borrowing Base less the
      aggregate Revolving Credit Exposures) under this Agreement of not less than
      $125,000,000.

     

    (o)  The
      Administrative Agent shall have received a certificate of a Responsible Officer
      of the Parent certifying (i) that the Parent is contemporaneously closing the
      Bridge Loans with gross cash proceeds of not less than $800,000,000 on terms
      approved by the Arrangers; and ('iii) that immediately after giving effect
      to
      the Acquisition, the Parent and its Restricted Subsidiaries will have
      outstanding no Debt for borrowed money or Disqualified Capital Stock other
      than
      (A) the Indebtedness under this Agreement; (B) Debt associated with
      the Bridge Loans (and any intercompany loan of the proceeds thereof by the
      Parent to the Borrower) in an aggregate principal amount of not less than
      $800,000,000; (C) the Existing Convertible Notes and (D) the Parent
      Loan.

     

    (p)  The
      Administrative Agent shall have received a certificate of a Financial Officer
      of
      the Parent certifying that, after giving effect to the Acquisition, the
      borrowings under this Agreement and the Bridge Loans, the Parent and its
      Restricted Subsidiaries, taken as a whole, are solvent as contemplated by
      Section 7.22.

     

    (q)  The
      Administrative Agent shall have received evidence reasonably satisfactory to
      Administrative Agent of the payment in full of all amounts due under the Second
      Lien Term Loan Agreement and the release of all Liens securing such obligations
      and any other obligations secured thereby contemporaneously with the proceeds
      of
      the initial funding under this Agreement.

     

    The
      Administrative Agent shall notify the Borrower and the Lenders of the Effective
      Date, and such notice shall be conclusive and
      binding.  Notwithstanding the foregoing, the obligations of the
      Lenders to amend and restate the Existing Credit Agreement and make Loans and
      of
      the Issuing Bank to issue Letters of Credit hereunder shall not become effective
      unless each of the foregoing conditions is satisfied (or waived pursuant to
Section 12.02) at or prior to 1:00 p.m., New York New
      York time, on August 15, 2007 (and, in the event such conditions are not so
      satisfied or waived, the Commitments shall terminate at such time).

     

    
      
        
        

      

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

     

    (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 circumstance has occurred or shall then exist that has
      resulted in, or could reasonably be expected to have, a Material Adverse Effect;
      provided that with respect to the initial funding on the Effective Date, this
      condition precedent shall not apply.

     

    (c)  The
      representations and warranties of the Borrower and the Guarantors set forth
      in
      this Agreement and in the other Loan Documents shall be true and correct 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; provided that with respect to the initial funding on
      the
      Effective Date, the Parent and the Borrower are not required to make the
      representation contained in Section 7.04(c) and the only representations (and
      related Defaults) the making of which shall be a condition precedent under
      this
      Section 6.02(c) on the Effective Date shall be (i) with respect to the Parent
      and its Restricted Subsidiaries, those representations contained in Sections
      7.01, 7.02, 7.03(b) (but only with respect to the extent of a Loan Party’s
      charter, by-laws or other organizational documents), 7.08 and 7.21 and (ii)
      with
      respect to the Acquisition Properties, such of the representations made by
      or
      with respect to the Assets in the Acquisition Agreement as are material to
      the
      interests of the Lenders (but only to the extent that the Borrower has the
      right
      to terminate its obligations under the Acquisition Agreement as a result of
      a
      breach of such representations in the Acquisition Agreement (determined without
      regard to any waiver, amendment or other modification of the Acquisition
      Agreement)).

     

    (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; provided that with respect to the
      initial funding on the Effective Date, this condition precedent shall not
      apply.

     

    (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.

     

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

     

    
      
        
        

      

      
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    ARTICLE
      VII

    Representations
      and Warranties

     

    The
      Parent and the Borrower represent and warrant to the Lenders that:

     

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

     

    Section
      7.02  Authority;
      Enforceability.  The
      Transactions are within each Loan Party’s corporate powers and have been duly
      authorized by all necessary corporate and, if required, stockholder
      action.  Each Loan Document and Acquisition Document to which a Loan
      Party is a party has been duly executed and delivered by it and constitutes
      its
      legal, valid and binding obligation, as applicable, enforceable in accordance
      with its terms, subject to applicable bankruptcy, insolvency, reorganization,
      moratorium or other laws affecting creditors’ rights generally and subject to
      general principles of equity, regardless of whether considered in a proceeding
      in equity or at law.

     

    Section
      7.03  Approvals;
      No Conflicts.  The
      Transactions (a) do not require any consent or approval of, registration or
      filing with, or any other action by, any Governmental Authority or any other
      third Person, 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 the recording
      and
      filing of the Security Instruments as required by this Agreement, (b) will
      not
      violate any applicable law or regulation or the charter, by-laws or other
      organizational documents of any Loan Party 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 any Loan Party or its Properties,
      or
      give rise to a right thereunder to require any payment to be made by any Loan
      Party and (d) will not result in the creation or imposition of any Lien on
      any
      Property of any Loan Party (other than the Liens created by the Loan
      Documents).

     

    Section
      7.04  Financial
      Condition; No Material Adverse Change.

     

    (a)  The
      Parent has furnished to the Lenders (i) its audited consolidated balance sheets
      and related statements of income, stockholders’ equity and cash flows as of and
      for the fiscal years ended December 31, 2006, December 31, 2005 and December
      31,
      2004 (which audit reports for such financial statements are not subject to
      any
      qualification), (ii) its unaudited consolidated balance sheets and related
      statements of income, stockholders’ equity and cash flows for the fiscal quarter
      ended March 31, 2007, (iii) audited statements of revenues and operating
      expenses for the Assets for the fiscal year ended December 31, 2006 (which
      audit
      reports for such financial statements are not subject to any qualification)
      and
      (iv) unaudited statements of revenues and operating expenses for the Assets
      for
      the fiscal quarter ending March 31, 2007 (and for the comparable period in
      the
      preceding fiscal year), which financial statements shall be prepared in
      accordance with GAAP.  The financial statements in clauses (i) and
      (ii) present fairly, in all material respects, consolidated financial condition
      of the Parent as of the dates and for the periods set forth above in accordance
      with GAAP, subject to year-end audit adjustments and the absence of footnotes
      in
      the case of the unaudited quarterly financial statements.  The
      financial statements in clauses (iii) and (iv) present fairly, in all material
      respects, revenues and operating expenses for the 

     

    
      
        
        

      

      
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    Assets
      as
      of the dates and for the periods set forth above in accordance with GAAP,
      subject to year-end audit adjustments and the absence of footnotes in the case
      of the unaudited quarterly financial statements.

     

    (b)  The
      Parent has heretofore furnished to the Lenders a pro forma consolidated
      balance sheet of the Parent as of June 30, 2007 and a pro forma
      statement of operations as of December 31, 2006, and as of June 30, 2007 and
      12-month period ending on June 30, 2007, in each case adjusted to give effect
      to
      the Acquisition and the other transactions contemplated hereby, the other
      transactions related thereto and any other transactions that would be required
      to be given pro forma effect by Regulation S-X promulgated under the
      Securities Act and such other adjustments as are agreed between the Parent
      and
      the Arrangers.

     

    (c)  Since
      December 31, 2006, there has been no event, development or circumstance that
      has
      had or could reasonably be expected to have a Material Adverse
      Effect.

     

    (d)  Neither
      the Parent nor any of its Restricted Subsidiaries has on the date hereof any
      material Debt (including Disqualified Capital Stock) or any contingent
      liabilities, off-balance sheet liabilities or partnerships, liabilities for
      taxes, unusual forward or long-term commitments or unrealized or anticipated
      losses from any unfavorable commitments, except as referred to or reflected
      or
      provided for in the Financial Statements.

     

    Section
      7.05  Litigation.

     

    (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 Parent or the Borrower, threatened against
      or affecting the Parent and its Restricted Subsidiaries or involving the
      Acquisition (i) not fully
      covered by insurance (except for normal deductibles) 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, any Acquisition Document or the Transactions.

     

    (b)  Since
      the
      date of this Agreement, 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 be reasonably 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):

     

    (a)  neither
      any Property of the Parent and its Restricted Subsidiaries 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 Parent and its Restricted Subsidiaries nor the operations
      currently conducted thereon 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 Parent and its Restricted Subsidiaries, 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


     

    
      
        
        

      

      
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    been
      duly
      obtained or filed, and the Parent and its Restricted Subsidiaries 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 Parent and its Restricted Subsidiaries 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 the environment, and, to the actual knowledge of the Borrower, all
      such transport carriers and treatment and disposal facilities have been and
      are
      operating in compliance with Environmental Laws and so as not to pose an
      imminent and substantial endangerment to public health or 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 Parent and its Restricted Subsidiaries 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 Parent and its Restricted Subsidiaries
      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.

     

    (g)  neither
      the Parent nor any Restricted 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.

     

    (a)  The
      Parent and its Restricted Subsidiaries are 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 Parent nor any of its Restricted Subsidiaries are 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 Parent or any Restricted Subsidiary to Redeem or make any
      offer to Redeem all or any portion of any Debt outstanding under any indenture,
      note, credit agreement or instrument pursuant to which any Material Indebtedness
      is outstanding or by which the Parent or any of its Restricted Subsidiaries
      or
      any of their Properties is bound.

     

    (c)  No
      Default has occurred and is continuing.

     

    Section
      7.08  Investment
      Company Act.  No
      Loan Party 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.

     

    
      
        
        

      

      
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    Section
      7.09  Taxes.  The
      Parent and each of 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 Parent,
      as
      applicable, has set aside on its books adequate reserves in accordance with
      GAAP
      or (b) to the extent that the failure to do so could not reasonably be expected
      to result in a Material Adverse Effect.  The charges, accruals and
      reserves on the books of the Parent in respect of taxes and other governmental
      charges are, in the reasonable opinion of the Parent, adequate.  No
      tax Lien has been filed and, to the knowledge of the Parent, no claim is being
      asserted with respect to any such tax or other such governmental
      charge.

     

    Section
      7.10  ERISA.

     

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

     

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

     

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

     

    (d)  Except
      as
      provided in Schedule 7.10(d), no Plan (other than a defined contribu­tion
      plan) or any trust created under any such Plan has been terminated since
      September 2, 1974.  No liability to the PBGC (other than for the
      payment of current premiums which are not past due) by the Parent or any of
      its
      Subsidiaries or any ERISA Affiliate has been or is expected by any Loan Party
      or
      any ERISA Affiliate to be incurred with respect to any Plan.  No ERISA
      Event with respect to any Plan has occurred.

     

    (e)  Full
      payment when due has been made of all amounts which Parent or any of its
      Subsidiaries or any ERISA Affiliate is required under the terms of each Plan
      or
      applicable law to have paid as contribu­tions to such Plan as of the date
      hereof, no accumulated funding deficiency (as defined in section 302 of ERISA
      and section 412 of the Code), whether or not waived, exists with respect to
      any
      Plan and, on and after the effectiveness of the Pension Act, and no Plan has
      failed to satisfy the minimum funding standards (within the meaning of Section
      412 of the Code or Section 302 of ERISA) applicable to such Plan.

     

    (f)  Except
      as
      provided in Schedule 7.10(f), the actuarial present value of the benefit
      liabili­ties under each Plan which is subject to Title IV of ERISA does
      not, as of the end of the Borrower’s most recently ended fiscal year, exceed the
      current value of the assets (computed on a plan termination basis in accordance
      with Title IV of ERISA) of such Plan allocable to such benefit liabilities
      by an amount in excess of $500,000.  The term “actuarial present value
      of the benefit liabilities” shall have the meaning specified in section 4041 of
      ERISA.

     

    (g)  Neither
      the Parent and any of its Subsidiaries nor any ERISA Affiliate sponsors,
      maintains, or contributes to an employee welfare benefit plan, as defined in
      section 3(1) of ERISA, including, without limitation, any such plan maintained
      to provide benefits to former employees of such entities, that may not be
      terminated by the Parent or any ERISA Affiliate in its sole discretion at any
      time without any material liability.

     

    
      
        
        

      

      
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    (h)  Neither
      the Parent and any of its Subsidiaries nor any ERISA Affiliate sponsors,
      maintains or contributes to, or has at any time in the six-year period preceding
      the date hereof sponsored, maintained or contributed to, any Multiemployer
      Plan.

     

    (i)  Neither
      the Parent and any of its Subsidiaries nor any ERISA Affiliate is required
      to
      provide security under section 401(a)(29) of the Code due to a Plan amendment
      that results in an increase in current liability for the Plan.

     

    Section
      7.11  Disclosure;
      No Material Misstatements.  The
      Parent and the Borrower have disclosed to the Administrative Agent and the
      Lenders all material agreements, instruments and corporate or other restrictions
      to which it or any of its Restricted Subsidiaries is subject, and all other
      matters known to it, that, individually or in the aggregate, could reasonably
      be
      expected to result in a Material Adverse Effect.  Neither the
      Information Memorandum nor any of the other reports, financial statements,
      certificates or other information furnished by or on behalf of the Parent and
      its Restricted Subsidiaries 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, the Parent and the Borrower represent only that such information
      was prepared in good faith based upon assumptions believed to be reasonable
      at
      the time; and further provided that the representations regarding information
      and projections with respect to the Acquisition Properties shall be limited
      to
      the best knowledge of the Parent.  There is no fact peculiar to the
      Parent and its Restricted Subsidiaries 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 Parent and
      its
      Restricted Subsidiaries prior to, or on, the date hereof in connection with
      the
      transactions contemplated hereby.  There are no statements or
      conclusions 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 neither the Parent,
      the Borrower, Restricted the Subsidiaries nor such Responsible Officer warrants
      that such opinions, estimates and projections will ultimately prove to have
      been
      accurate.

     

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

     

    Section
      7.13  Restriction
      on Liens.  Neither
      the Parent nor any of its Restricted Subsidiaries is a party to any material
      agreement or arrangement (other than Capital Leases creating Liens permitted
      by
Section 9.03(c), Liens permitted by clause (g) of the
      definition of Excepted Liens and the Bridge Credit Agreement), 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 

     

    
      
        
        

      

      
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    Administrative
      Agent and the Lenders on or in respect of their Properties to secure the
      Indebtedness and the Loan Documents.

     

    Section
      7.14  Subsidiaries.  Except
      as set forth on Schedule 7.14 or as disclosed in writing to the Administrative
      Agent (which shall promptly furnish a copy to the Lenders), which shall be
      a
      supplement to Schedule 7.14, the Parent has no Subsidiaries.  Schedule
      7.14 sets forth each Subsidiary’s status as a Restricted Subsidiary or an
      Unrestricted Subsidiary.

     

    Section
      7.15  Location
      of Business and Offices.  The
      Parent’s jurisdiction of organization is Delaware; the name of the Parent as
      listed in the public records of its jurisdiction of organization is McMoRan
      Exploration Co.; and the organizational identification number of the Parent
      in
      its jurisdiction of organization is 2927190 (or, in each case, as set forth
      in a
      notice delivered to the Administrative Agent pursuant to Section 8.01(m) in accordance with Section 12.01).  The Borrower’s jurisdiction
      of organization is Delaware; the name of the Borrower as listed in the public
      records of its jurisdiction of organization is McMoRan Oil & Gas LLC; and
      the organizational identification number of the Borrower in its jurisdiction
      of
      organization is 2927213 (or, in each case, as set forth in a notice delivered
      to
      the Administrative Agent pursuant to Section 8.01(m)
      in accordance with Section 12.01).  The
      Parent’s and the Borrower’s principal place of business and chief executive
      offices are located at the address specified in Section
      12.01 (or as set forth in a notice delivered pursuant to Section 8.01(m) and Section
      12.01(c)).  Each Subsidiary’s jurisdiction of organization, name
      as listed in the public records of its jurisdiction of organization,
      organizational identification number in its jurisdiction of organization, and
      the location of its principal place of business and chief executive office
      is
      stated on Schedule 7.14 (or as set forth in a notice delivered pursuant to
Section 8.01(m)).

     

    Section
      7.16  Properties;
      Titles, Etc.

     

    (a)  Except
      as
      set forth in Schedule 7.16, each of the Borrower and the Restricted Subsidiaries
      (as applicable) has good and defensible title to the Oil and Gas Properties
      evaluated in the most recently delivered Reserve Report and good title to all
      its 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.  The Parent owns
      no direct interests in any Oil and Gas Properties.

     

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

     

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

     

     

    
      
        
        

      

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

     

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

     

    Section
      7.17  Maintenance
      of Properties.  Except
      for such acts or failures to act as could not be reasonably expected to have
      a
      Material Adverse Effect, the Oil and Gas Properties (and Properties unitized
      therewith) of the Borrower and its Restricted Subsidiaries have been maintained,
      operated and developed in a good and workmanlike manner and in conformity with
      all Governmental Requirements and in conformity with the provisions of all
      leases, subleases or other contracts comprising a part of the Hydrocarbon
      Interests and other contracts and agreements forming a part of the Oil and
      Gas
      Properties of the Borrower and its Restricted
      Subsidiaries.  Specifically in connection with the foregoing, except
      for those as could not be reasonably expected to have a Material Adverse Effect,
      (i) no Oil and Gas Property of the Parent or its Restricted Subsidiaries 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)
      none of the wells comprising a part of the Oil and Gas Properties (or Properties
      unitized therewith) of the Parent or its Restricted Subsidiaries is deviated
      from the vertical more than the maximum permitted by Governmental 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) of the
      Borrower or such Restricted Subsidiary.  All pipelines, wells, gas
      processing plants, platforms and other material improvements, fixtures and
      equipment owned in whole or in part by the Borrower or any of its Restricted
      Subsidiaries that are necessary to conduct normal operations are being
      maintained in a state adequate to conduct normal operations, and with respect
      to
      such of the foregoing which are operated by the Borrower or any of its
      Restricted Subsidiaries, in a manner consistent with the Borrower’s or its
      Restricted Subsidiaries’ past practices (other than those the failure of which
      to maintain in accordance with this Section 7.17  could not reasonably
      be expected to have a Material Adverse Effect).

     

    Section
      7.18  Gas
      Imbalances, Prepayments.  Except
      as set forth on Schedule 7.18 or on the most recent certificate delivered
      pursuant to Section 8.12(c), on a net basis there are
      no gas imbalances, take or pay or other prepayments which would require the
      Borrower or any of its 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 two and one-half percent (2.5%) of
      the
      aggregate volumes of Hydrocarbons (on an Mcf equivalent basis) listed in the
      most recent Reserve Report.

     

    Section
      7.19  Marketing
      of Production.  Except
      for contracts listed and in effect on the date hereof 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 Restricted Subsidiaries are
      receiving a price for all production sold 

     

    
      
        
        

      

      
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    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 its Restricted Subsidiaries’ Hydrocarbons
      (including, without limitation, calls on or other rights to purchase,
      production, whether or not the same are currently being exercised) that (a)
      pertain to the sale of production at a fixed price and (b) have a maturity
      or
      expiry date of longer than six (6) months from the date hereof.

     

    Section
      7.20  Swap
      Agreements.  Schedule
      7.20, as of the date hereof, and after the date hereof, each report required
      to
      be delivered by the Borrower pursuant to Section
      8.01(d), sets forth, a true and complete list of all Swap Agreements of the
      Parent and its Restricted Subsidiaries, 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 to refinance
      the
      Second Lien Notes, to provide funding in connection with the Acquisition, to
      provide for bonding requirement with the MMS (defined herein), to finance the
      PPR Letter of Credit, to provide working capital for exploration and production
      operations and to provide funding and Letters of Credit for general corporate
      purposes of the Borrower and its Restricted Subsidiaries.  Neither the
      Parent nor any Restricted Subsidiary is 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.  After
      giving effect to the transactions contemplated hereby, (a) the aggregate assets
      (after giving effect to amounts that could reasonably be received by reason
      of
      indemnity, offset, insurance or any similar arrangement), at a fair valuation,
      of the Loan Parties, taken as a whole, will exceed the aggregate Debt of the
      Loan Parties on a consolidated basis, as the Debt becomes absolute and matures,
      (b) each Loan Party will not have incurred or intended to incur, and will not
      believe that it will incur, Debt beyond its ability to pay such Debt (after
      taking into account the timing and amounts of cash to be received by it and
      the
      amounts to be payable on or in respect of its liabilities, and giving effect
      to
      amounts that could reasonably be received by reason of indemnity, offset,
      insurance or any similar arrangement) as such Debt becomes absolute and matures
      and (c) each Loan Party will not have (and will have no 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
      Parent and the Borrower covenant and agree with the Lenders that:

     

    Section
      8.01  Financial
      Statements; Other Information

     

    .  The
      Parent and 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 

     

    
      
        
        

      

      
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    Parent
      and the Borrower, each of their audited consolidated balance sheets and related
      statements of operations, stockholders’ equity, as applicable, 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 Ernst & Young
      LLP or other independent public accountants of recognized national standing
      (without a “going concern” or like qualification or exception and without any
      qualification or exception as to the scope of such audit) to the effect that
      such consolidated financial statements present fairly in all material respects
      the financial condition and results of operations of the Parent and the Borrower
      and their 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 Parent and
      the Borrower, each of their consolidated balance sheet and related statements
      of
      operations and cash flows as of the end of and for such fiscal quarter and
      the
      then elapsed portion of the fiscal year, setting forth in each case in
      comparative form the figures for the corresponding period or periods of (or,
      in
      the case of the balance sheet, as of the end of) the previous fiscal year,
      all
      certified by one of its Financial Officers as presenting fairly in all material
      respects the financial condition and results of operations of the Parent and
      the
      Borrower and their 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), commencing with the
      delivery of financial statements for the fiscal quarter ending September 30,
      2007, a certificate of a Financial Officer of the Parent 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 and
      (ii) setting forth
      reasonably detailed calculations demonstrating compliance with Section 9.01.

     

    (d)  Certificate
      of Financial Officer – Swap Agreements.  Concurrently with any
      delivery of financial statements under Section
      8.01(a) and Section 8.01(b), commencing with the
      delivery of financial statements for the fiscal quarter ending September 30,
      2007, a certificate of a Financial Officer, in form and substance satisfactory
      to the Administrative Agent, setting forth as of the last Business Day of such
      fiscal quarter or fiscal year, a true and complete list of all Swap Agreements
      of each Loan Party, 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.

     

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

     

    (f)  Certificate
      of Insurer -- Insurance Coverage.  Concurrently with any delivery
      of financial statements under Section 8.01(a), a
      certificate of insurance coverage 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.

     

    (g)  Other
      Accounting Reports.  Promptly upon receipt thereof, a copy of each
      other report or letter submitted to any Loan Party by independent accountants
      in
      connection with any annual, 

     

    
      
        
        

      

      
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    interim
      or special audit made by them of the books of any such Person, and a copy of
      any
      response by such Person, or the board of directors or other appropriate
      governing body of such Person, to such letter or report.

     

    (h)  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 Parent with the SEC,
      or  with any national securities exchange, or distributed by the
      Parent or the Borrower to its shareholders generally, as the case may
      be.  Documents required to be delivered pursuant to Section 8.01 may
      be delivered electronically and if so delivered, shall be deemed to have been
      delivered on the date on which the Parent posts such documents to EDGAR (or
      such
      other free, publicly-accessible internet database that may be established and
      maintained by the SEC as a substitute for or successor to EDGAR).

     

    (i)  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.

     

    (j)  Lists
      of Purchasers.  Concurrently with the delivery of any Reserve
      Report to the Administrative Agent pursuant to Section
      8.12, a list of all Persons purchasing Hydrocarbons from the Borrower or any
      Restricted Subsidiary.

     

    (k)  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 with a fair market value in excess of $5,000,000 in accordance with
      Section 9.11, prior written notice of such disposition, the price thereof and
      the anticipated date of closing and any other details thereof reasonably
      requested by the Administrative Agent or any Lender.

     

    (l)  Notice
      of Casualty Events.  Prompt written notice, and in any event
      within three Business Days, of the occurrence of any Casualty Event or the
      commencement of any legal action or proceeding that could reasonably be expected
      to result in a Casualty Event, in each case, of any Property of any Loan Party
      having a fair market value in excess of $10,000,000.

     

    (m)  Information
      Regarding Borrower and Guarantors.  Prompt written notice of (and
      in any event at least ten (10) Business Days following) any change (i) in the Borrower or any
      Guarantor’s corporate name or in any trade name used to identify such Person in
      the conduct of its business or in the ownership of its Properties, (ii) in the location of the
      Borrower or any Guarantor’s chief executive office or principal place of
      business, (iii) in
      the Borrower or any Guarantor’s identity or corporate structure or in the
      jurisdiction in which such Person is incorporated or formed, (iv) in the Borrower or
      any
      Guarantor’s jurisdiction of organization or such Person’s organizational
      identification number in such jurisdiction of organization, and (v) in the Borrower or any
      Guarantor’s federal taxpayer identification number.

     

    (n)  Production
      Report and Lease Operating Statements.  In connection with each
      Reserve Report delivered pursuant to Section 8.12(a), a report setting forth,
      for each 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 during such period 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.

     

    
      
        
        

      

      
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    (o)  Notices
      Relating to Acquisition.  In the event that after the Effective
      Date:  (i) the
      Borrower is required to purchase any Preferential Purchase Right Property,
(ii) the Borrower and the
      Seller
      calculate and agree upon the “final settlement statement” as contemplated by the
      Acquisition Documents, or (iii) the Borrower furnishes
      the
      Seller with any notices or reports under the P&A Escrow Agreement then, in
      each such case, the Borrower shall promptly give the Administrative Agent notice
      in reasonable detail of such circumstances.

     

    (p)  Patriot
      Act.  Promptly upon request, all documentation and other
      information required by regulatory authorities under applicable “know your
      customer” and anti-money laundering rules and regulations, including the USA
      Patriot Act.

     

    (q)  Other
      Requested Information.  Promptly following any request therefor,
      such other information regarding the operations, business affairs and financial
      condition of the Parent 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
      Parent and the Borrower will furnish to the Administrative Agent and each Lender
      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 or affecting the Parent or any Restricted
      Subsidiary thereof not previously disclosed in writing to the Lenders or any
      material adverse development in any action, suit, proceeding, investigation
      or
      arbitration (whether or not previously disclosed to the Lenders) that, in either
      case could reasonably be expected to result in liability in excess of
      $10,000,000, not fully covered by insurance, subject to normal
      deductibles;

     

    (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 liability
      of the Parent or any Restricted Subsidiary in an aggregate amount exceeding
      $5,000,000; 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.

     

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

     

    Section
      8.04  Payment
      of Obligations.  The
      Parent will, and will cause each Restricted Subsidiary to, pay its obligations,
      including tax liabilities of the Borrower and all of its Restricted


     

    
      
        
        

      

      
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    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, (b) the Borrower or such Restricted Subsidiary has set aside on
      its
      books adequate reserves with respect thereto in accordance with GAAP and (c)
      the
      failure to make payment pending such contest could not reasonably be expected
      to
      result in a Material Adverse Effect.

     

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

     

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

     

    (a)  operate
      its Oil and Gas Properties and other material Properties or cause such Oil
      and
      Gas Properties and other material Properties to be operated in a careful and
      efficient manner in accordance with the customary 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, except, in each case, where the failure to comply could not
      reasonably be expected to have a Material Adverse Effect.

     

    (b)  keep
      and
      maintain in good repair, working order and condition (ordinary wear and tear
      excepted) all of its material Oil and Gas Properties and other Properties
      material to the conduct of its business, including, without limitation, all
      equipment, machinery and facilities, except to the extent any such Property
      is
      no longer capable of producing Hydrocarbons in economically reasonable
      amounts.

     

    (c)  promptly
      pay and discharge, or make commercially reasonable efforts to cause to be paid
      and discharged, all delay rentals, royalties, expenses and indebtedness accruing
      under the leases or other agreements affecting or pertaining to its Oil and
      Gas
      Properties.

     

    (d)  promptly
      perform or make commercially reasonable 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 Oil and Gas Properties and other material
      Properties.

     

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

     

    Section
      8.07  Insurance.  The
      Borrower will, and will cause each Restricted Subsidiary to, maintain, with
      financially sound and reputable insurance companies, insurance in such amounts
      and against such risks as are customarily maintained by companies engaged in
      the
      same or similar businesses operating in the same or similar
      locations.  The loss payable clauses or provisions in said insurance
      policy or policies insuring any of the collateral for the Loans shall be
      endorsed in favor of and made payable to the Administrative Agent as its
      interests may appear and such liability 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.

     

    
      
        
        

      

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

     

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

     

    Section
      8.10  Environmental
      Matters.

     

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

     

    (b)  The
      Borrower will promptly, but in no event later than five days of the occurrence
      of a triggering event, notify the Administrative Agent and the Lenders in
      writing of any threatened action, investigation or inquiry by any Governmental
      Authority or any threatened demand or lawsuit by any landowner or other third
      party against the Borrower or its Restricted Subsidiaries or their Properties
      of
      which the Borrower has knowledge in connection with any Environmental Laws
      (excluding routine testing and corrective action) if the Borrower reasonably
      anticipates that such action will result in liability (whether individually
      or
      in the aggregate) in excess of $10,000,000, not fully covered by insurance,
      subject to normal deductibles.

     

    
      
        
        

      

      
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    Section
      8.11  Further
      Assurances.

     

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

     

    (b)  The
      Borrower hereby authorizes the Administrative Agent to file one or more
      financing or continuation statements, and amendments thereto, relative to all
      or
      any part of the Mortgaged Property without the signature of the Borrower or
      any
      other Guarantor where permitted by law.  A carbon, photographic or
      other reproduction of the Security Instruments or any financing statement
      covering the Mortgaged Property or any part thereof shall be sufficient as
      a
      financing statement where permitted by law.

     

    Section
      8.12  Reserve
      Reports.

     

    (a)  On
      or
      before March 1st and September 1st of each year (and on October 1, 2007 for
      the
      purposes of the initial November 1, 2007 Scheduled Redetermination), the
      Borrower shall furnish to the Administrative Agent and the Lenders a Reserve
      Report evaluating the Oil and Gas Properties of the Borrower and its Restricted
      Subsidiaries as of the immediately preceding January 1 and July
      1.  The Reserve Report as of January 1 of each year shall be prepared
      by one or more Approved Petroleum Engineers (and such report delivered in
      conjunction with the initial November 1, 2007 Scheduled Redetermination shall
      be
      prepared primarily by one or more Approved Petroleum Engineers), and the July
      1
      Reserve Report of each year may be prepared by on or more Approved Petroleum
      Engineers or under the supervision of the chief engineer of the Borrower who
      shall certify such Reserve Report to be true and accurate and to have been
      prepared in accordance with the procedures used in the immediately preceding
      January 1 Reserve Report.

     

    (b)  In
      the
      event of an Interim Redetermination, the Borrower shall furnish to the
      Administrative Agent and the Lenders a Reserve Report prepared by or under
      the
      supervision of the chief engineer of the Borrower who shall certify such Reserve
      Report to be true and accurate and to have been prepared in accordance with
      the
      procedures used in the immediately preceding January 1 Reserve
      Report.  For any Interim Redetermination requested by the
      Administrative Agent or the Borrower pursuant to Section
      2.07(b), the Borrower shall provide such Reserve Report with an “as of” date
      as required by the Administrative Agent as soon as possible, but in any event
      no
      later than 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 in all material respects: (i) the information contained
      in
      the Reserve Report and any other information delivered in connection therewith
      is true and correct (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 neither the Parent, the Borrower,
      Restricted the Subsidiaries nor such Responsible Officer warrants that such
      opinions, estimates and projections will ultimately prove to have been
      accurate), (ii) the
      Borrower or its 

     

    
      
        
        

      

      
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    Restricted
      Subsidiaries owns good and defensible title (subject to the title deficiencies
      set forth on Schedule 7.16) to the 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 Parent or any
      Restricted Subsidiary to deliver Hydrocarbons either generally or produced
      from
      such Oil and Gas Properties at some future time without then or thereafter
      receiving full payment therefor, (iv) none of their 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
      exhibit shall list all of its Oil and Gas Properties sold and in such detail
      as
      reasonably required by the Administrative Agent, (v) attached to the certificate
      is a list of all marketing agreements entered into subsequent to the later
      of
      the date hereof or the most recently delivered Reserve Report which the Borrower
      could reasonably be expected to have been obligated to list on Schedule 7.19
      had
      such agreement been in effect on the date hereof and (vi) attached thereto is
      a
      schedule of the Oil and Gas Properties evaluated by such Reserve Report that
      are
      Mortgaged Properties and demonstrating compliance with Section 8.14(a).

     

    Section
      8.13  Title
      Information.

     

    (a)  On
      or
      before the delivery to the Administrative Agent and the Lenders of each Reserve
      Report required by Section 8.12(a), the Borrower will
      deliver title information in form and substance acceptable to the Administrative
      Agent covering enough of the Oil and Gas Properties 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 to the Administrative Agent, satisfactory
      title
      information on at least 85% of the total value of the 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 90 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 the
      Administrative Agent shall have received, together with title information
      previously delivered to the Administrative Agent, satisfactory title information
      on at least 85% 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 by the Administrative
      Agent or the Lenders to be cured within the 90-day period or the Borrower does
      not comply with the requirements to provide acceptable title information
      covering 85% 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 Majority 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 Majority
      Lenders are not satisfied with title to any Mortgaged Property after the 90-day
      period has elapsed, such unacceptable Mortgaged Property shall not count towards
      the 85% requirement, and the Administrative Agent may send a notice to the
      Borrower and the Lenders that the then outstanding Borrowing Base (and if the
      Conforming Borrowing Base is then in effect, the Conforming 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
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    85%
      of
      the value of the Oil and Gas Properties.  This new Borrowing Base (and
      if the Conforming Borrowing Base is then in effect, this new Conforming
      Borrowing Base) shall become effective immediately after receipt of such
      notice.

     

    (d)  The
      Borrower shall (1) use all commercially reasonable efforts to promptly obtain
      approval from the Mineral Management Services of the United States Department
      of
      Interior (the “MMS”) of the assignment of each Acquisition Property to
      the Borrower and shall provide evidence of such approval to the Administrative
      Agent, in such form and substance acceptable to the Administrative Agent, and
      (2) within 60 days of  the Effective Date provide certified copies of
      the recorded leases, conveyances or assignments filed in the conveyance, real
      property records or similar records of the proper Louisiana parish or Texas,
      Mississippi or Alabama counties for each Acquisition Property (including each
      Interim Assignment Property) into the Seller in order to properly evidence
      the
      chain out title into Seller as the Administrative Agent shall reasonably
      request; provided that to the extent the Administrative Agent is reasonably
      satisfied that the Borrower has diligently pursued compliance with the
      requirements of this clause (2) within such 60 day period and to the extent
      at
      the end of such 60 day period such requirements have not been fully satisfied,
      then the Borrower shall have an additional period of 60 days within which to
      comply.  To the extent that the Borrower fails to obtain such
      certified copies of leases, conveyances or assignments within the time periods
      provided herein (including any extensions) for any of the Acquisition Properties
      or Interim Assignment Properties, then such default shall not be a Default,
      but
      instead the Administrative Agent shall have the right to exercise the following
      remedy in its 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.  To the extent that such lease,
      conveyance or assignment document has not been obtained, the Administrative
      Agent may send a notice to the Borrower and the Lenders that the then
      outstanding Borrowing Base and Conforming Borrowing Base shall be reduced by
      an
      amount as determined by the Required Lenders to be the value allocated to such
      Acquisition Properties in the most recent redetermination of the Borrowing
      Base
      and Conforming Borrowing Base.  This new Borrowing Base and Conforming
      Borrowing Base shall become effective immediately after receipt of such
      notice.  To the extent, however, that any assignment is not a
      transaction for which the MMS typically issues approval, Borrower shall be
      deemed to have met its obligations hereunder by providing the Administrative
      Agent with certified copies of any such assignment showing recordation in the
      conveyance, real property or similar records of the proper Louisiana parish
      or
      Texas county.

     

    Section
      8.14  Additional
      Collateral; Additional Guarantors.

     

    (a)  In
      connection with each redetermination of the Borrowing Base, the Borrower shall
      review the Reserve Report and the list of current Mortgaged Properties (as
      described in Section 8.12(c)(vi)) to ascertain
      whether the Mortgaged Properties represent at least 85% of the total value
      of
      the Oil and Gas Properties 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 85% of such total value, then
      the
      Borrower shall, and shall cause its Restricted Subsidiaries to, grant, within
      thirty (30) days of delivery of the certificate required under Section 8.12(c), to the Administrative Agent as security
      for the Indebtedness a first-priority Lien interest (provided that Excepted
      Liens of the type described in clauses (a) to (d) and (f) of the definition
      thereof may exist, 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 85% of such total value.  All such Liens will be
      created and perfected by and in accordance with the provisions of deeds of
      trust, security agreements and financing statements or other Security
      Instruments, all in form and substance reasonably satisfactory to the
      Administrative Agent and in sufficient executed (and acknowledged where
      necessary or appropriate) counterparts for recording
      purposes.  

     

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

     

    (b)  The
      Parent shall promptly cause each newly created or acquired Domestic Subsidiary
      that is a Wholly-Owned Subsidiary (other than the Borrower) to guarantee the
      Indebtedness pursuant to the Guaranty Agreement.  In connection with
      any such guaranty, the Parent shall, or shall cause such Domestic Subsidiary
      to:
(A) execute and deliver
      a
      supplement to the Guaranty Agreement executed by such Subsidiary, (B) pledge all of the Equity
      Interests of such new Subsidiary (including, without limitation, delivery (if
      applicable) of original certificates evidencing the Equity Interests of such
      Subsidiary, together with an appropriate undated stock powers for each
      certificate duly executed in blank by the registered owner thereof) and (C) execute and deliver
      such
      other additional closing documents, certificates and legal opinions as shall
      reasonably be requested by the Administrative Agent.

     

    (c)  In
      the
      event that any Loan Party becomes the owner of a Foreign Subsidiary, then the
      Borrower shall, or shall promptly cause such Domestic Subsidiary to, (1) pledge
      65% of all the Equity Interests of such Foreign Subsidiary (including, without
      limitation, delivery of original stock certificates evidencing such Equity
      Interests of such Foreign Subsidiary, together with appropriate stock powers
      for
      each certificate duly executed in blank by the registered owner thereof) and
      (2)
      execute and deliver such other additional closing documents, certificates and
      legal opinions as shall reasonably be requested by the Administrative
      Agent.

     

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

     

    Section
      8.16  Unrestricted
      Subsidiaries.  The
      Parent:

     

    (a)  will
      cause the management, business and affairs of each of the Parent, the Borrower
      and each Restricted Subsidiary to be conducted in such a manner (including,
      without limitation, by keeping separate books of account, furnishing separate
      financial statements of the Unrestricted Subsidiaries to creditors and potential
      creditors thereof and by not permitting Properties of the Parent, the Borrower
      and each Restricted Subsidiary to be commingled) so that each Unrestricted
      Subsidiary will be treated as a corporate entity separate and distinct from
      Borrower and the Restricted Subsidiaries.

     

    (b)  will
      not,
      and will not permit any of the Restricted Subsidiaries to, incur, assume,
      guarantee or be or become liable for any Debt of any of the Unrestricted
      Subsidiaries except that the Parent may guarantee or otherwise give credit
      support for Debt (other than Debt in respect of borrowed money) of the
      Unrestricted Subsidiaries to the extent it could make an Investment in such
      Unrestricted Subsidiary under Section 9.05(l).

     

    
      
        
        

      

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

     

    Section
      8.17  Marketing
      Activities.  The
      Borrower will not, and will not permit any of its Restricted Subsidiaries to,
      engage in marketing activities for any Hydrocarbons or enter into any contracts
      related thereto other than (i) contracts for the sale of Hydrocarbons scheduled
      or reasonably estimated to be produced from their proved Oil and Gas Properties
      during the period of such contract, (ii) contracts for the sale of Hydrocarbons
      scheduled or reasonably estimated to be produced from proved Oil and Gas
      Properties of third parties during the period of such contract associated with
      the Oil and Gas Properties of the Borrower and its Restricted Subsidiaries
      that
      the Borrower or one of its Restricted Subsidiaries has the right to market
      pursuant to joint operating agreements, unitization agreements or other similar
      contracts that are usual and customary in the oil and gas business and (iii)
      other contracts for the purchase and/or sale of Hydrocarbons of third parties
      (A) which have generally offsetting provisions (i.e. corresponding pricing
      mechanics, delivery dates and points and volumes) such that no “position” is
      taken and (B) for which appropriate credit support has been taken to alleviate
      the material credit risks of the counterparty thereto.

     

    Section
      8.18  Swap
      Agreements.  The
      Parent shall maintain the hedge position established by the Swap Agreements
      required under Section 6.01(l) during the period specified therein and shall
      neither assign, terminate or unwind any such Swap Agreements nor sell any Swap
      Agreements if the effect of such action (when taken together with any other
      Swap
      Agreements executed contemporaneously with the taking of such action) would
      have
      the effect of canceling its positions under such Swap Agreements required
      hereby.

     

    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 Parent
      and
      the Borrower covenant and agree with the Lenders that:

     

    Section
      9.01  Financial
      Covenants.

     

    (a)  Ratio
      of Total Debt to EBITDAX.  The Parent will not, at any time,
      permit its ratio of Total Debt as of such time to EBITDAX for the four fiscal
      quarters ending on the last day of the fiscal quarter immediately preceding
      the
      date of determination for which financial statements are available to be greater
      than the amount set forth below for such period:

     

    
      	
              Period:

            	 	
              Ratio:

            
	
              Effective
                Date to 12/31/07

            	 	
              3.5
                to 1.0

            
	 	 	 
	
              1/1/08
                to 6/30/08

            	 	
              3.0
                to 1.0

            
	 	 	 
	
              7/1/08
                to 12/31/08

            	 	
              2.75
                to 1.0

            
	 	 	 
	
              1/1/09
                and thereafter

            	 	
              2.5
                to 1.0

            
	 	 	 


    

    provided
      that for the fiscal quarter ending September 30, 2007, EBITDAX shall be the
      EBITDAX for such fiscal quarter multiplied by 4, for the fiscal quarter ending
      December 31, 

     

    
      
        
        

      

      
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    2007,
      EBITDAX shall be EBITDAX for the six-month period then ended multiplied by
      2;
      and for the fiscal quarter ending March 31, 2008, EBITDAX shall be EBITDAX
      for
      the nine-month period then ended multiplied by 4/3.

     

    (b)  First
      Lien Debt to EBITDAX.  The Parent will not, at any time, permit
      its ratio of First Lien Debt as of such time to EBITDAX for the four fiscal
      quarters ending on the last day of the fiscal quarter immediately preceding
      the
      date of determination for which financial statements are available to be greater
      than the amount set forth below for such period:

     

    
      	
              Period:

            	 	
              Ratio:

            
	
              Effective
                Date to 12/31/08

            	 	
              2.0
                to 1.0

            
	 	 	 
	
              1/1/09
                and thereafter

            	 	
              1.5
                to 1.0

            
	 	 	 


    

    provided
      that for the fiscal quarter ending September 30, 2007, EBITDAX shall be the
      EBITDAX for such fiscal quarter multiplied by 4, for the fiscal quarter ending
      December 31, 2007, EBITDAX shall be EBITDAX for the six-month period then ended
      multiplied by 2; and for the fiscal quarter ending March 31, 2008, EBITDAX
      shall
      be EBITDAX for the nine-month period then ended multiplied by 4/3.

     

    (c)  Current
      Ratio.  The Parent will not permit, as of the last day of any
      fiscal quarter, its ratio of (i) consolidated current
      assets
      (including the unused amount of the total Commitments, but excluding non-cash
      assets under FAS 133) to (ii) consolidated current
      liabilities (excluding non-cash obligations under FAS 133, reclamation
      obligations to the extent classified as current liabilities under GAAP, current
      maturities under Existing Convertible Notes and current maturities under this
      Agreement) to be less than 1.0 to 1.0.

     

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

     

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

     

    (b)  Debt
      of
      the Loan Parties and their Restricted Subsidiaries existing on the date hereof
      that is reflected in the Financial Statements and set forth on Schedule 9.02,
      including without limitation the Existing Convertible Notes and any Permitted
      Refinancing Debt in respect thereof.

     

    (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
      of
      any Loan Party incurred to finance the acquisition, construction or improvement
      of any fixed or capital assets, including obligations under Capital Leases
      and
      any Debt assumed in connection with the acquisition of any such assets or
      secured by a Lien on any such asset prior to the acquisition thereof, and
      extensions, renewals and replacements of any such Debt that do not increase
      the
      outstanding principal amount thereof; provided that (i) such Debt is incurred
      prior to or within 90 days after such acquisition or the completion of such
      construction or improvement and (ii) the aggregate principal amount of
      Indebtedness permitted by this clause (d) shall not exceed
      $10,000,000.

     

    
      
        
        

      

      
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    (e)  Debt
      in
      respect of (i) letters of credit, bank or completion guarantees, surety,
      performance, warranty, bid, appeal or other bonds or guarantees and similar
      instruments, in each case to the extent (x) required by Governmental
      Requirements or any third Person and (y) provided in the ordinary course of
      business in connection with the operation of the Oil and Gas Properties; and
      (ii) the P&A Escrow Agreement.

     

    (f)  Debt
      (i)
      between the Borrower and the Parent; (ii) between the Borrower and any
      Restricted Subsidiary or between Restricted Subsidiaries to the extent permitted
      by Section 9.05(g); provided that (1) such Debt is not held, assigned,
      transferred, negotiated or pledged to any Person other than a Loan Party, and
      (2) any such Debt owed by either the Borrower or a Guarantor shall be
      subordinated to the Indebtedness on terms set forth in the Guaranty Agreement
      and (iii) of Loan Parties permitted by Section 9.05.

     

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

     

    (h)  Debt
      (other than for borrowed money) incurred in the ordinary course of business
      in
      connection with Hydrocarbon transportation, Hydrocarbon purchasing or other
      similar arrangements, provided that such arrangements are disclosed to the
      Administrative Agent.

     

    (i)  Debt
      incurred in connection with vendor financing provided by Midland Pipe
      Corporation and its affiliates not to exceed $15,000,000 in the aggregate at
      any
      one time outstanding.

     

    (j)  (i)
      Debt
      under the Bridge Loans and any Exchange Notes and any guarantees thereof by
      the
      Borrower or a Guarantor the aggregate principal amount of which Debt does not
      exceed $800,000,000 on such terms approved by the Arrangers; (ii) Debt under
      the
      Senior Notes the aggregate principal amount of which Debt does not exceed
      $500,000,000, provided that (1) the net cash proceeds of such Senior Notes
      are
      used to prepay in part the Bridge Loans or the Exchange Notes, (2) such Debt
      does not have any scheduled amortization prior to one year after the Maturity
      Date and (3) such Debt does not mature sooner than one year after the Maturity
      Date; and (iii) any renewals, extensions, refundings or refinancings of Debt
      described in clauses (i) and (ii) above, provided that (x) the amount of such
      Debt is not increased except by an amount necessary to pay interest and premium
      on the Debt in clauses (i) and (ii) being refinanced and any fees and expenses,
      including premiums relating to such renewals, extensions, refundings or
      refinancings and (y)  the maturity of principal of such Debt is not
      shortened unless to a maturity occurring no earlier than one year after the
      Maturity Date.

     

    (k)  if
      no
      Bridge Loan or Exchange Notes are then outstanding and the Parent has issued
      Equity Interests (other than Disqualified Capital Stock and Equity Interests
      from conversion of the Existing Convertible Notes) generating gross cash
      proceeds of not less than $300,000,000, the Parent may incur additional Debt
      so
      long as at the time of incurrence of such Debt and after giving pro forma effect
      thereto, the Parent would be compliant with Section 9.01(a) and with each
      instrument governing the Senior Notes.

     

    (l)  Debt
      incurred to finance insurance premiums.

     

    (m)  Debt
      in
      connection with trade payables owed to FM Services, Inc. arising in the ordinary
      course of business.

     

    (n)  other
      Debt not to exceed $10,000,000 in the aggregate at any one time
      outstanding.

     

    
      
        
        

      

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

     

    (a)  Liens
      securing the payment of any Indebtedness.

     

    (b)  Liens
      existing on the Effective Date and disclosed on Schedule 9.03 and Excepted
      Liens.

     

    (c)  Liens
      on
      fixed or capital assets acquired, constructed or improved by any Loan Party;
      provided that (i) such Liens secure Indebtedness permitted by Section 9.02(d),
      (ii) such Liens and the Debt secured thereby are incurred prior to or within
      90
      days after such acquisition or the completion of such construction or
      improvement, (iii) the Debt secured thereby does not exceed 100% of the cost
      of
      acquiring, constructing or improving such fixed or capital assets and (iv)
      such
      security interests shall not apply to any other property or assets of such
      Person or any other Loan Party.

     

    (d)  Liens
      on
      Property to secure the Bridge Loans and any Exchange Notes and any guaranties
      thereof as permitted by Section 9.02(j); provided, however, that such Liens
      are
      only on Property constituting collateral to secure the Indebtedness and other
      obligations under this Agreement and the other Loan Documents and such Liens
      are
      subordinate to the Liens securing the Indebtedness, this Agreement and the
      other
      Loan Documents pursuant to the Intercreditor Agreement.

     

    (e)  Liens
      on
      amounts not to exceed the sum of up to three years of regularly scheduled
      interest payments in respect of any convertible Debt issued by the Parent
      permitted hereby, which amounts shall have been placed in interest reserve
      accounts in connection with the issuance of such convertible Debt to secure
      the
      obligations under, such convertible Debt.

     

    (f)  other
      Liens on Property not constituting collateral for the Indebtedness not to exceed
      $10,000,000 in the aggregate at any one time outstanding.

     

    Section
      9.04  Dividends,
      Distributions and Redemptions.

     

    (a)  The
      Parent will not, and will not permit any of its Restricted Subsidiaries to,
      declare or make, or agree to pay or make, directly or indirectly, any Restricted
      Payment, return any capital or make any distribution of its Property to its
      Equity Interest holders, except (i) the Parent may declare and pay dividends
      with respect to its Equity Interests payable solely in additional shares of
      its
      Equity Interests (other than Disqualified Capital Stock), (ii) the Borrower
      may
      make Restricted Payments to the Parent and each other Restricted Subsidiary
      may
      make Restricted Payments to the Borrower, the Parent or any other Restricted
      Subsidiary (which, in the case of Restricted Subsidiaries that are not
      Wholly-Owned Subsidiaries, shall be made to the Parent, to the Borrower or
      to
      any Restricted Subsidiary that is the direct or indirect parent of such
      Restricted Subsidiary and to each other owner of Equity Interests of such
      Restricted Subsidiary ratably, based on the relative ownership interests in
      such
      Restricted Subsidiary), (iii) the Parent may pay cash dividends on preferred
      Equity Interests, provided, however, to the extent the cash proceeds of such
      Equity Issuance were used to make an Investment under Section 9.05(l), such
      dividends may be paid only to the extent of cash actually received by the Parent
      as dividends, interest or a return of capital in respect of such Investment
      and
      (iv) the Parent may make Restricted Payments pursuant to and in accordance
      with
      stock option plans or other benefit plans for its Restricted Subsidiaries
      respective management or employees.

     

    (b)  The
      Parent and the Borrower will not, and will not permit any Restricted Subsidiary
      to: (1) prior to the date that is ninety-one (91) days after the Maturity Date,
      call, make or offer 

     

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    

     

    to
      make
      any optional or voluntary Redemption of or otherwise optionally or voluntarily
      Redeem (whether in whole or in part) the Bridge Loans, any Exchange Notes,
      the
      Existing Convertible Notes or the Senior Notes except (i) the Existing
      Convertible Notes or any other convertible Debt instrument may be converted
      into
      Equity Interests (other than Disqualified Capital Stock) of the Parent, (ii)
      the
      Parent may make cash payments to the holders of the
      Existing  Convertible Notes to induce such holders to convert the
      Existing Convertible Notes into Equity Interests of the Parent or (iii) with
      the
      proceeds of an Equity Issuance (other than Disqualified Capital Stock) or with
      Permitted Refinancing Debt and, in the case of the Bridge Loan or any Exchange
      Notes, with proceeds of the Senior Notes, or (2) amend, modify, waive or
      otherwise change, consent or agree to any amendment, modification, waiver or
      other change to, any of the terms of any instrument or agreement evidencing
      or
      governing any of the Senior Notes if (A) the effect thereof would be to shorten
      the maturity of such Senior Notes or shorten the average life or increase the
      amount of any scheduled repayment or mandatory prepayment of principal or
      increase the interest rate or increase any call, put or prepayment premiums
      or
      shorten any period for payment of interest thereon or (B) such action adds
      any
      covenants or defaults without this Agreement being contemporaneously amended
      to
      add substantially similar covenants or defaults, provided that the foregoing
      shall not prohibit the execution of supplemental agreements to add guarantors
      if
      required by the terms thereof provided that any such guarantor also guarantees
      the Indebtedness pursuant to the Guaranty Agreement and each of the Borrower
      and
      such guarantor otherwise complies with Section 8.14(b).

     

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

     

    (a)  Investments
      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.

     

    (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
      (i) made by the Parent in the Borrower, (ii) made by the Borrower in or to
      the
      Subsidiary Guarantors, (iii) made by any Domestic Subsidiary in or to the
      Borrower or any Guarantor, and (iv) made by the Borrower or any Guarantor in
      or
      to Restricted Subsidiaries which are not Guarantors in an aggregate amount
      at
      any one time outstanding not to exceed $5,000,000.

     

    
      
        
        

      

      
        66

        
          

        

      

      
        
        

      

    

     

    (h)  subject
      to the limits in Section 9.06, Investments (including, without limitation,
      capital contributions) in general or limited partnerships or other types of
      entities (each a “venture”) entered into by the Borrower or a Restricted
      Subsidiary with others in the ordinary course of business; provided that (i) any such venture is
      engaged
      exclusively in oil and gas exploration, development, production, processing
      and
      related activities, including transportation and marketing, (ii) the interest in such
      venture is acquired in the ordinary course of business and on fair and
      reasonable terms and (iii)
      such venture interests acquired and capital contributions made (valued as of
      the
      date such interest was acquired or the contribution made) do not exceed, in
      the
      aggregate at any time outstanding an amount equal to $10,000,000.

     

    (i)  Investments
      in direct ownership interests in additional Oil and Gas Properties and gas
      gathering systems related thereto or related to farm-out, farm-in, joint
      operating, joint venture or area of mutual interest agreements, gathering
      systems, pipelines or other similar arrangements all of which are usual and
      customary in the oil and gas exploration and production business located within
      the geographic boundaries of the United States of America or
      Canada.

     

    (j)  loans
      or
      advances to employees, officers or directors in the ordinary course of business
      of the Borrower or any of its Restricted Subsidiaries, in each case only as
      permitted by applicable law, including Section 402 of the Sarbanes Oxley Act
      of
      2002, but in any event not to exceed $500,000 in the aggregate at any
      time.

     

    (k)  Investments
      in stock, obligations or securities received in settlement of debts arising
      from
      Investments permitted under this Section 9.05 owing
      to the Borrower or any Restricted Subsidiary as a result of a bankruptcy or
      other insolvency proceeding of the obligor in respect of such debts or upon
      the
      enforcement of any Lien in favor of the Borrower or any of its Restricted
      Subsidiaries.

     

    (l)  Investments
      in Unrestricted Subsidiaries, provided that the aggregate amount of all such
      Investments shall not exceed (i) $20,000,000 in any fiscal year plus (ii) an
      amount equal to the net cash proceeds of any Equity Issuance (other than
      Disqualified Capital Stock) in excess of $300,000,000 after the Effective
      Date.

     

    (m)  other
      Investments not to exceed $5,000,000 in the aggregate at any time.

     

    Section
      9.06  Nature
      of Business; International Operations.  The
      Borrower will not, and will not permit any Restricted Subsidiary to, allow
      any
      material change to be made in the character of its business as an independent
      oil and gas exploration and production company.  Except as permitted
      by Section 9.05(g) or otherwise in an amount not to exceed an amount of
      $5,000,000 per year, the Borrower and its Restricted Subsidiaries will not
      acquire or make any other expenditures (whether such expenditure is capital,
      operating or otherwise) in or related to, any Oil and Gas Properties not located
      within the geographical boundaries of the United States or Canada.

     

    Section
      9.07  Proceeds
      of Notes.  The
      Borrower will not permit the proceeds of the Notes to be used for any purpose
      other than those permitted by Section
      7.21.  No Loan Party 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.

     

    
      
        
        

      

      
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    Section
      9.08  ERISA
      Compliance.  The
      Parent will not, and will not permit any Subsidiary to, at any
      time:

     

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

     

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

     

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

     

    (d)  permit
      to
      exist, or allow any ERISA Affiliate to permit to exist, any accumulated funding
      deficiency within the meaning of section 302 of ERISA or section 412 of the
      Code, or, on and after the effectiveness of the Pension Act, fail to satisfy
      the
      minimum funding standards (within the meaning of Section 412 of the Code or
      Section 302 of ERISA), in any case whether or not waived, with respect to any
      Plan.

     

    (e)  except
      as
      set forth in Schedule 7.10(f), permit, or allow any ERISA Affiliate to permit,
      the actuarial present value of the benefit liabilities under any Plan maintained
      by any Loan Party or any ERISA Affiliate which is regulated under Title IV
      of ERISA to exceed the current value of the assets (computed on a plan
      termination basis in accordance with Title IV of ERISA) of such Plan
      allocable to such benefit liabilities.  The term “actuarial present
      value of the benefit liabilities” shall have the meaning specified in section
      4041 of ERISA.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (j)  amend,
      or
      permit any ERISA Affiliate to amend, a Plan resulting in an increase in current
      liability such that any Subsidiary or ERISA Affiliate is required to provide
      security to such Plan under section 401(a)(29) of the Code.

     

    Section
      9.09  Sale
      or Discount of Receivables.  Except
      for receivables obtained by the Borrower or any Restricted Subsidiary out of
      the
      ordinary course of business or the settlement of joint interest billing accounts
      in the ordinary course of business or discounts granted to settle collection
      of
      accounts receivable or the sale of defaulted accounts arising in the ordinary
      course of business in connection with the compromise or collection thereof
      and
      not in connection with any financing transaction, the Parent will not, and
      will
      not permit any Restricted Subsidiary to, discount or sell (with or without
      recourse) any of its notes receivable or accounts receivable.

     

    Section
      9.10  Mergers,
      Etc.  Neither
      the Parent nor any Restricted Subsidiary will merge into or with or consolidate
      with any other Person, or sell, lease or otherwise dispose of (whether in one
      transaction or in a series of transactions) all or substantially all of its
      Property to any other Person, except that (i) any Subsidiary Guarantor may
      merge
      with any other Subsidiary Guarantor, (ii) the Borrower may merge with any
      Wholly-Owned Subsidiary so long as the Borrower is the survivor and (iii) any
      Subsidiary Guarantor may merge with any Wholly-Owned Subsidiary so long as
      the
      Subsidiary Guarantor is a survivor.

     

    Section
      9.11  Sale
      of Properties.  The
      Borrower will not, and will not permit any Restricted Subsidiary to, sell,
      assign, farm-out, convey or otherwise transfer any Property except for (a)
      the
      sale of Hydrocarbons in the ordinary course of business; (b) farmouts in the
      ordinary course of business of undeveloped acreage or undrilled depths and
      assignments in connection with such farmouts; (c) the sale or transfer of
      equipment that is no longer necessary for the business of the Borrower or such
      Restricted Subsidiary or is replaced by equipment of at least comparable value
      and use; (d) the sale or other disposition (including Casualty Events) of any
      Oil and Gas Property or any interest therein or any Restricted Subsidiary;
      provided that (i) 100% of the consideration received in respect of such sale
      or
      other disposition shall be cash, (ii) (other than in respect of Casualty Events)
      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 Restricted Subsidiary subject of such sale or other
      disposition and if requested by the Administrative Agent, the Borrower shall
      deliver a certificate of a Responsible Officer of the Borrower certifying to
      that effect), (iii) if such sale or other disposition of Oil and Gas Property
      or
      Restricted Subsidiary owning Oil and Gas Properties (including farm-outs under
      Section 9.11(a)) 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 five percent (5%) of the Borrowing Base as then in
      effect (as determined by the Administrative Agent), individually or in the
      aggregate, the Borrowing Base (and the Conforming Borrowing Base) shall be
      reduced, effective immediately upon such sale or disposition, by an amount
      equal
      to the value, if any, attributed to such Property in the Borrowing Base based
      on
      the most recently delivered Reserve Report and (iv) 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 Section 9.11(a) to (d) having a fair market value not to exceed
      $1,000,000 during any 12-month period; (f) transfers of Properties to the
      Borrower or any Guarantor (including any Subsidiary that becomes a Guarantor
      after the Effective Date pursuant to Section 9.14); and (g) Casualty Events
      of
      Properties which are not Oil and Gas Properties.

     

    Section
      9.12  Environmental
      Matters.  The
      Parent will not, and will not permit any Restricted Subsidiary to, cause or
      permit any of its Property to be in violation of, or do anything or permit
      anything to be done which will subject any such Property to any Remedial Work
      under any Environmental Laws, assuming disclosure to the applicable Governmental
      Authority of all relevant facts, conditions and 

     

    
      
        
        

      

      
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    circumstances,
      if any, pertaining to such Property where such violations or remedial
      obligations in connection with any such Remedial Work could reasonably be
      expected to have a Material Adverse Effect.

     

    Section
      9.13  Transactions
      with Affiliates.  The
      Parent will not, and will not permit any Restricted Subsidiary to, enter into
      any transaction, including, without limitation, any purchase, sale, lease or
      exchange of Property or the rendering of any service, with any Affiliate (other
      than with Wholly-Owned Subsidiaries of the Parent and FM Services, Inc.) 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.

     

    Section
      9.14  Subsidiaries.  The
      Parent will not, and will not permit any Restricted Subsidiary to, create or
      acquire any additional Subsidiaries unless the Borrower gives written notice
      to
      the Administrative Agent of such creation or acquisition and complies with
Section 8.14(b) and Section 8.14(c).  The
      Parent shall not, and shall not permit any Restricted Subsidiary to, sell,
      assign or otherwise dispose of any Equity Interests in any Restricted Subsidiary
      except in compliance with Section 9.11(d).

     

    Section
      9.15  Negative
      Pledge Agreements; Dividend Restrictions.  The
      Parent 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 (a) the granting, conveying, creation or
      imposition of any Lien on any of its Property to secure the Indebtedness or
      which requires the consent of or notice to other Persons in connection therewith
      or (b) the Borrower or any Restricted Subsidiary from paying dividends or making
      distributions to any Loan Party, or which requires the consent of or notice
      to
      other Persons in connection therewith; provided that (i) the foregoing shall
      not
      apply to restrictions and conditions (A) imposed by applicable laws, rules
      or
      regulations, (B) under the Loan Documents or (C) existing on the date hereof
      under the Bridge Credit Agreement (or the “Loan Documents” thereunder) or under
      any instrument or agreement evidencing or governing the Senior Notes, (ii)
      the
      foregoing shall not apply to customary restrictions and conditions contained
      in
      agreements relating to the sale of any asset or a Restricted Subsidiary pending
      such sale; provided such restrictions and conditions apply only to the asset
      or
      Restricted Subsidiary that is to be sold and such sale is permitted hereunder,
      (iii) the foregoing shall not apply to restrictions and conditions imposed
      by
      any joint venture, partnership or similar arrangement to which any Restricted
      Subsidiary is a party to the extent applicable to such joint venture,
      partnership or similar agreement or direct or indirect interests therein, (iv)
      clause (a) of the foregoing shall not apply to (A) restrictions or conditions
      imposed by any agreement relating to secured Indebtedness permitted by this
      Agreement if such restrictions or conditions apply only to the property or
      assets securing such Indebtedness and (B) customary provisions in leases
      restricting the assignment thereof.

     

    Section
      9.16  Gas
      Imbalances, Take-or-Pay or Other Prepayments.  The
      Borrower will not, and will not permit any Restricted Subsidiary to, 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 two
      and one-half percent (2.5%) of the aggregate total remaining volumes of
      Hydrocarbons (on an Mcf equivalent basis) listed in the most recent Reserve
      Report.

     

    Section
      9.17  Swap
      Agreements.  The
      Parent will not, and will not permit any Restricted Subsidiary to, enter into
      any Swap Agreements with any Person other than (a) Swap Agreements in respect
      of
      commodities (i) with an Approved Counterparty and (ii) the notional volumes
      for
      which (when aggregated with other commodity Swap Agreements then in effect
      other
      than puts, floors and basis differential swaps on volumes already hedged
      pursuant to other Swap Agreements) do not exceed, as of 

     

    
      
        
        

      

      
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    the
      date
      such Swap Agreement is executed, for all months other than July, August,
      September and October, 80% of the reasonably anticipated projected production
      from proved, developed, producing Oil and Gas Properties, excluding Main Pass
      299 (and for the months of July, August, September and October, such Swap
      Agreements shall be in the form of puts and floors) for each month during the
      period during which such Swap Agreement is in effect for each of crude oil
      and
      natural gas, calculated separately, and (b) Swap Agreements in respect of
      interest rates with an Approved Counterparty which effectively convert interest
      rates from (i) floating to fixed, the notional amounts of which (when aggregated
      with all other Swap Agreements of the Parent and its Restricted Subsidiaries
      then in effect effectively converting interest rates from floating to fixed)
      do
      not exceed 75% of the then outstanding principal amount of the Parent’s Debt for
      borrowed money which bears interest at a floating rate and (ii) fixed to
      floating, the notional amounts of which (when aggregated with all other Swap
      Agreements of the Parent and its Restricted Subsidiaries then in effect
      effectively converting interest rates from fixed to floating) do not exceed
      75%
      of the then outstanding principal amount of the Parent’s Debt for borrowed money
      which bears interest at a fixed rate.  Except for any Swap Agreement
      entered into with a Lender or an Affiliate of a Lender in connection herewith,
      in no event shall any Swap Agreement contain any requirement, agreement or
      covenant for the Parent or any Restricted Subsidiary to post collateral or
      margin to secure their obligations under such Swap Agreement or to cover market
      exposures.

     

    Section
      9.18  Acquisition
      Documents.  The
      Borrower will not, and will not permit any of its Restricted Subsidiaries to,
      amend, modify, supplement or fail to enforce (i) any indemnity obligations
      of
      the Seller under the Acquisition Documents and (ii) the provisions of the
      P&A Escrow Agreement, in each case, if the effect thereof could reasonably
      be expected to be material and adverse to the interests of the Lenders (and
      provided that the Borrower promptly furnishes to the Administrative Agent a
      copy
      of such amendment, modification or supplement).

     

    Section
      9.19  Unrestricted
      Subsidiaries.  The
      Parent will not permit its Unrestricted Subsidiaries to incur or suffer to
      exist
      any Debt for borrowed money except Non-Recourse Debt.  No Unrestricted
      Subsidiary will be redesignated as a Restricted Subsidiary and no Restricted
      Subsidiary will be redesignated as an Unrestricted Subsidiary.

     

    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 Parent,
      the Borrower or any Restricted Subsidiary in or in connection with any Loan
      Document or any amendment or modification of any Loan Document or waiver under
      such Loan Document, or in any report, certificate, financial statement or other
      document furnished pursuant to or in connection with any Loan Document or any
      amendment or modification thereof or waiver thereunder, shall prove to have
      been
      incorrect when made or deemed made.

     

    
      
        
        

      

      
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    (d)  the
      Parent, the Borrower or any Restricted Subsidiary shall fail to observe or
      perform any covenant, condition or agreement contained in Section 8.01(j),
Section 8.01(m), Section
      8.02, Section 8.03, Section 8.14 or in ARTICLE IX.

     

    (e)  the
      Parent, the Borrower or any Restricted Subsidiary shall fail to observe or
      perform any covenant, condition or agreement contained in this Agreement (other
      than those specified in Section 10.01(a), Section 10.01(b), Section 10.01(c)
      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 (A) notice
      thereof from the Administrative Agent to the Borrower (which notice will be
      given at the request of any Lender) or (B) a Responsible Officer
      of the
      Borrower or such Restricted Subsidiary otherwise becoming aware of such
      default.

     

    (f)  (i)
      the
      Borrower or any Guarantor 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 or (ii) so long as any
      Existing Convertible Notes remain outstanding, (A) any Significant Subsidiary
      fails to make any payment by the end of the applicable grace period, if any,
      after the final scheduled payment date for such payment with respect to any
      indebtedness for borrowed money in an aggregate amount in excess of $10,000,000
      or (B) indebtedness for borrowed money of any Significant Subsidiary in an
      aggregate amount in excess of $10,000,000 shall have been accelerated or
      otherwise declared due and payable, or required to be prepaid or repurchased
      (other than by regularly scheduled required prepayment) prior to the scheduled
      maturity thereof as a result of a default with respect to such indebtedness,
      in
      either case without such indebtedness referred to in subclause (A) or (B) above
      having been discharged, cured, waived, rescinded or annulled, for a period
      of 30
      days after receipt by the Borrower of a notice of default.

     

    (g)  any
      event
      or condition occurs that results in any Material Indebtedness becoming due
      prior
      to its scheduled maturity or that enables or permits (following any applicable
      grace period and notice) 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 Parent,
      the Borrower or any Restricted Subsidiary to make an offer in respect
      thereof.

     

    (h)  an
      involuntary proceeding shall be commenced or an involuntary petition shall
      be
      filed seeking (i) liquidation, reorganization or other relief in respect of
      the
      Parent, the Borrower or any Restricted Subsidiary or, so long as any Existing
      Convertible Notes remain outstanding, any Significant Subsidiary or any
      Aggregated Subsidiaries, or its or their debts, or of a substantial part of
      its
      or their assets, under any  Federal, state or foreign bankruptcy,
      insolvency, receivership or similar law now or hereafter in effect or (ii)
      the
      appointment of a receiver, trustee, custodian, sequestrator, conservator or
      similar official for the Parent, the Borrower, any Restricted Subsidiary or,
      so
      long as any Existing Convertible Notes remain outstanding, any Significant
      Subsidiary or any Aggregated Subsidiaries or for a substantial part of its
      or
      their assets, and, in any such case, such proceeding or petition shall continue
      undismissed for thirty (30) days or an order or decree approving or ordering
      any
      of the foregoing shall be entered.

     

    (i)  the
      Parent, the Borrower, any Restricted Subsidiary or, so long as any Existing
      Convertible Notes remain outstanding, any Significant Subsidiary or any
      Aggregated Subsidiaries, 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, any Restricted 

     

    
      
        
        

      

      
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    Subsidiary
      or, so long as any
      Existing Convertible Notes remain outstanding, any Significant Subsidiary or
      any
      Aggregated Subsidiaries, or for a substantial part of its or their assets,
      (iv)
      file an answer admitting the material allegations of a petition filed against
      it
      or them 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; or any stockholder of the Parent shall make any request or take
      any
      action for the purpose of calling a meeting of the stockholders of the Parent
      to
      consider a resolution to dissolve and wind up the Parent’s affairs.

     

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

     

    (k)  (i)
      one or more judgments for
      the payment of money in an aggregate amount in excess of $25,000,000 (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) or
      (ii) any one or more
      non-monetary judgments that have, or could reasonably be expected to have,
      individually or in the aggregate, a Material Adverse Effect, shall be rendered
      against any Loan Party or any combination thereof and the same shall remain
      undischarged for a period of 30 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 any Loan Party to enforce any
      such
      judgment.

     

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

     

    (m)  an
      ERISA
      Event shall have occurred that, in the opinion of the Majority Lenders, when
      taken together with all other ERISA Events that have occurred, could reasonably
      be expected to result in liability of the Parent and its Subsidiaries in an
      aggregate amount exceeding $25,000,000 in any year.

     

    (n)  a
      Change
      in Control shall occur.

     

    Section
      10.02  Remedies.

     

    (a)  In
      the
      case of an Event of Default other than one described in Section 10.01(h), Section
      10.01(i) or Section 10.01(j), at any time
      thereafter during the continuance of such Event of Default, the Majority Lenders
      shall, by notice to the Borrower, take either or both of the following actions,
      at the same or different times:  (i) terminate the Commitments, and
      thereupon the Commitments shall terminate immediately, and (ii) declare the
      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 Loan Parties accrued hereunder and under the Loans
      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 each Loan Party; 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 

     

    
      
        
        

      

      
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    accrued
      interest thereon and all fees and the other obligations of the Borrower and
      the
      Guarantors accrued hereunder and under the Notes and the other Loan Documents
      (including, without limitation, the payment of cash collateral to secure the
      LC
      Exposure as provided in Section 2.08(j)), shall
      automatically become due and payable, without presentment, demand, protest
      or
      other notice of any kind, all of which are hereby waived by each Loan
      Party.

     

    (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 Notes, whether by acceleration or
      otherwise, shall be applied:

     

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

     

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

     

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

     

    (iv)  fourth,
      pro rata to payment of principal outstanding on the Loans and Indebtedness
      referred to in Clause (b) of the definition of Indebtedness owing to a Lender
      or
      an Affiliate of a Lender;

     

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

     

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

     

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

     

    ARTICLE
      XI

    The
      Administrative Agent

     

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

     

    Section
      11.02  Duties
      and Obligations of Administrative Agent.  The
      Administrative Agent shall not have any duties or obligations except those
      expressly set forth in the Loan Documents.  Without limiting the
      generality of the foregoing, (a) the Administrative Agent shall not be subject
      to any fiduciary or other implied duties, regardless of whether a Default has
      occurred and is continuing (the use of the term “agent” herein and in the other
      Loan Documents with reference to the Administrative Agent is not intended to
      connote any fiduciary or other implied (or express) obligations arising under
      agency doctrine of any applicable law; rather, such term is used merely as
      a
      matter of market custom, and is intended to create or reflect only an
      administrative relationship between independent contracting parties), (b) the
      Administrative Agent shall have no duty to take any discretionary action or
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    powers,
      except as provided in Section 11.03, and (c) except
      as expressly set forth herein, the Administrative Agent shall not have any
      duty
      to disclose, and shall not be liable for the failure to disclose, any
      information relating to the Parent or any Loan Party that is communicated to
      or
      obtained by the bank serving as Administrative Agent or any of its Affiliates
      in
      any capacity.  The Administrative Agent shall be deemed not to have
      knowledge of any Default unless and until written notice thereof is given to
      the
      Administrative Agent by the Borrower or a Lender, and shall not be responsible
      for or have any duty to ascertain or inquire into (i) any statement, warranty
      or
      representation made in or in connection with this Agreement or any other Loan
      Document, (ii) the contents of any certificate, report or other document
      delivered hereunder or under any other Loan Document or in connection herewith
      or therewith, (iii) the performance or observance of any of the covenants,
      agreements or other terms or conditions set forth herein or in any other Loan
      Document, (iv) the validity, enforceability, effectiveness or genuineness of
      this Agreement, any other Loan Document or any other agreement, instrument
      or
      document, (v) the satisfaction of any condition set forth in ARTICLE VI or elsewhere herein, other than to confirm
      receipt of items expressly required to be delivered to the Administrative Agent
      or as to those conditions precedent expressly required to be to the
      Administrative Agent’s satisfaction, (vi) the existence, value, perfection or
      priority of any collateral security or the financial or other condition of
      the
      Parent and the Loan Parties or any other obligor or guarantor, or (vii) any
      failure by the Borrower or any other Person (other than itself) to perform
      any
      of its obligations hereunder or under any other Loan Document or the performance
      or observance of any covenants, agreements or other terms or conditions set
      forth herein or therein.  For purposes of determining compliance with
      the conditions specified in ARTICLE VI, each Lender
      shall be deemed to have consented to, approved or accepted or to be satisfied
      with, each document or other matter required thereunder to be consented to
      or
      approved by or acceptable or satisfactory to a Lender unless the Administrative
      Agent shall have received written notice from such Lender prior to the proposed
      closing date specifying its objection thereto.  The Administrative
      Agent shall take commercially reasonable steps to make available copies of
      each
      Loan Document to the Lenders promptly upon request.

     

    Section
      11.03  Action
      by Administrative Agent.  The
      Administrative Agent shall have no duty to take any discretionary action or
      exercise any discretionary powers, except discretionary rights and powers
      expressly contemplated hereby or by the other Loan Documents that the
      Administrative Agent is required to exercise in writing as directed by the
      Majority Lenders (or such other number or percentage of the Lenders as shall
      be
      necessary under the circumstances as provided in Section
      12.02) and in all cases the Administrative Agent shall be fully justified in
      failing or refusing to act hereunder or under any other Loan Documents unless
      it
      shall (a) receive written instructions from the Majority Lenders or the Lenders,
      as applicable, (or such other number 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 by the Administrative Agent shall be binding on all
      of
      the Lenders.  If a Default has occurred and is continuing, then the
      Administrative Agent shall take such action with respect to such Default as
      shall be directed by the requisite Lenders in the written instructions (with
      indemnities) described in this Section 11.03,
      provided that, unless and until the Administrative Agent shall have received
      such directions, the Administrative Agent may (but shall not be obligated to)
      take such action, or refrain from taking such action, with respect to such
      Default as it shall deem advisable in the best interests of the
      Lenders.  In no event, however, shall the Administrative Agent be
      required to take any action which exposes the Administrative Agent to personal
      liability or which is contrary to this Agreement, the Loan Documents or
      applicable law.  If a Default has occurred and is continuing, the
      Syndication Agent and the Documentation Agent shall have no obligation to
      perform any act in respect thereof.  No Agent shall not be liable for
      any action taken or not taken by it with the consent or at the request of the
      Majority Lenders or the Lenders (or such other number or percentage of the
      Lenders as shall be necessary under the circumstances as provided in Section 12.02), and otherwise no Agent shall be liable
      for any action taken or not taken by it hereunder or under any other Loan
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    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 Parent, 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 the
      Administrative Agent.  The Administrative Agent and any such sub-agent
      may perform any and all its duties and exercise its rights and powers through
      their respective Related Parties.  The exculpatory provisions of the
      preceding Sections of this ARTICLE XI shall apply to
      any such 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.

     

    Section
      11.06  Resignation
      of Administrative Agent.  Subject
      to the appointment and acceptance of a successor Agent as provided in this
Section 11.06, any Agent may resign at any time by
      notifying the Lenders, the Issuing Bank and the Borrower.  Upon any
      such resignation, the Majority Lenders shall have the right, in consultation
      with the Borrower, to appoint a successor.  If no successor shall have
      been so appointed by the Majority Lenders and shall have accepted such
      appointment within 30 days after the retiring Agent gives notice of its
      resignation of the retiring Agent, then the retiring Agent may, on behalf of
      the
      Lenders and the Issuing Bank, appoint a successor Agent.  Upon the
      acceptance of its appointment as Agent hereunder by a successor, such successor
      shall succeed to and become vested with all the rights, powers, privileges
      and
      duties of the retiring Agent, and the retiring Agent shall be discharged from
      its duties and obligations hereunder.  The fees payable by the
      Borrower to a successor Agent shall be the same as those payable to its
      predecessor unless otherwise agreed between the Borrower and such
      successor.  After the Agent’s resignation hereunder, the provisions of
      this ARTICLE XI and Section
      12.03 shall continue in effect for the benefit of such retiring 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 Agent.

     

    Section
      11.07  Agents
      as Lenders.  Each
      bank serving as an Agent hereunder shall have the same rights and powers in
      its
      capacity as a Lender as any other Lender and may exercise the same as though
      it
      were not an Agent, and such bank and its Affiliates may accept deposits from,
      lend money to and generally engage in any kind of business with the Parent
      or
      any Loan Party or other Affiliate thereof as if it were not an Agent
      hereunder.

     

    Section
      11.08  No
      Reliance.  Each
      Lender acknowledges that it has, independently and without reliance upon the
      Administrative Agent, any other Agent or any other Lender and based on such
      

     

    
      
        
        

      

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

     

    Section
      11.09  Administrative
      Agent May File Proofs of Claim.

     

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

     

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

     

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

     

    and
      any
      custodian, receiver, assignee, trustee, liquidator, sequestrator or other
      similar official in any such judicial proceeding is hereby authorized by each
      Lender to make such payments to the Administrative Agent and, in the event
      that
      the Administrative Agent shall consent to the making of such payments directly
      to the Lenders, to pay to the Administrative Agent any amount due for the
      reasonable compensation, expenses, disbursements and advances of the
      Administrative Agent and its agents and counsel, and any other amounts due
      the
      Administrative Agent under Section
      12.03.

     

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

     

    
      
        
        

      

      
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    Section
      11.10  Authority
      of Administrative Agent 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
      11.11  The
      Arrangers and the Agents.  The
      Arrangers, the Syndication Agent and the Documentation Agent shall have no
      duties, responsibilities or liabilities under this Agreement and the other
      Loan
      Documents other than their duties, responsibilities and liabilities in their
      capacity as Lenders hereunder.

     

    ARTICLE
      XII

    Miscellaneous

     

    Section
      12.01  Notices.

     

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

     

    (i)   if
      to the Borrower, to it at 1615 Poydras Street, New Orleans,
      Louisiana  70112, Attention of Kathleen Quirk (Telecopy No. (504)
      582-4511);

     

    (ii)  if
      to the
      Administrative Agent, to it at:  1 Chase Tower, 10 South Dearborn,
      IL1-0010, Chicago, Illinois 60603 Attention:  Mi Y Kim, Phone No.
      312.732.4853, Fax No. 312.385.7096, and for all other correspondence other
      than
      borrowings, continuation, conversion and Letter of Credit requests 712 Main,
      8th
      Floor, Houston, Texas 77002, Attention of Ronald Dierker (Telecopy No. (713)
      216-7770);

     

    (iii)  if
      to any
      other Lender, to it at its address (or telecopy number) set forth in its
      Administrative Questionnaire.

     

    (b)  Notices
      and other communications to the Lenders hereunder may be delivered or furnished
      by electronic communications pursuant to procedures approved by the
      Administrative Agent; provided that the foregoing shall not apply to notices
      pursuant to ARTICLE II, ARTICLE III, ARTICLE
      IV and
ARTICLE V unless otherwise agreed by the
      Administrative Agent and the applicable Lender.  The Administrative
      Agent or the Borrower may, in its discretion, agree to accept notices and other
      communications to it hereunder by electronic communications pursuant to
      procedures approved by it; provided that approval of such procedures may be
      limited to particular notices or communications.

     

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

     

    Section
      12.02  Waivers;
      Amendments.

     

    
      
        
        

      

      
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    (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 any Loan Party 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 Parent, the Borrower
      and
      the Majority Lenders or by the Parent, the Borrower and the Administrative
      Agent
      with the consent of the Majority Lenders; provided that no such agreement shall
      (i) increase the Maximum
      Credit Amount of any Lender without the written consent of such Lender, (ii) increase the Borrowing
      Base
      or the Conforming Borrowing Base without the written consent of each Lender,
      decrease or maintain the Borrowing Base or the Conforming Borrowing Base without
      the consent of the Required Lenders, (iii) reduce the principal
      amount of any Loan or LC Disbursement or reduce the rate of interest thereon,
      or
      reduce any fees payable hereunder, or reduce any other Indebtedness hereunder
      or
      under any other Loan Document, without the written consent of each Lender
      affected thereby, (iv)
      postpone the scheduled date of payment or prepayment of the principal amount
      of
      any Loan or LC Disbursement, or any interest thereon, or any fees payable
      hereunder, or any other Indebtedness hereunder or under any other Loan Document,
      or reduce the amount of, waive or excuse any such payment, or postpone or extend
      the date of any scheduled reduction of the Maximum Aggregate Credit Amounts
      under Section 2.06(c) or the Termination Date without the written consent of
      each Lender affected thereby, (v) change Section
      4.01(b) or Section
      4.01(c) in a manner that would alter the pro rata sharing of payments
      required thereby, without the written consent of each Lender, (vi) waive or amend Section
      10.02(c) without the written consent of each
      Lender, (vii) release any
      Guarantor (except as set forth in the Guaranty Agreement), release any of the
      collateral (other than as provided in Section 11.10),
      or reduce the percentage set forth in Section
      8.14(a) to less than 85%, without the written consent of each Lender, or
(viii) change any of the
      provisions of this Section 12.02(b) or the
      definitions of “Majority Lenders” or “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, any other Agent or the Issuing Bank hereunder or under
      any
      other Loan Document without the prior written consent of the Administrative
      Agent, other such Agent or the Issuing Bank, as the case may
      be.  Notwithstanding the foregoing, any supplement to Schedule 7.14
      (Subsidiaries) shall be effective simply by delivering to the Administrative
      Agent a supplemental schedule clearly marked as such and, upon receipt, the
      Administrative Agent will promptly deliver a copy thereof to the
      Lenders.  Notwithstanding the foregoing, the Borrower and the
      Administrative Agent may amend this Agreement or any other Loan Document without
      the consent of the Lenders to add covenants or other provisions in order to
      permit the Loan Parties to comply with Section 9.04(b)(ii)(B).

     

    
      
        
        

      

      
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    Section
      12.03  Expenses,
      Indemnity; Damage Waiver.


     

    (a)  The
      Borrower shall pay (i) all
      reasonable out-of-pocket expenses incurred by the Administrative Agent and
      its
      Affiliates, including, without limitation, the reasonable fees, charges and
      disbursements of counsel and other outside consultants for the Administrative
      Agent, the reasonable travel, photocopy, mailing, courier, telephone and other
      similar expenses, and the cost of environmental 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 any 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 or any demand
      for payment thereunder, (iv) all out-of-pocket expenses
      incurred by any Agent, the Issuing Bank or any Lender, including the fees,
      charges and disbursements of any counsel for any 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.

     

    (b)  THE
      BORROWER SHALL INDEMNIFY THE EACH AGENT, THE ARRANGER, THE ISSUING BANK AND
      EACH
      LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON
      BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS
      FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES,
      INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE,
      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, (ii) 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, (iii) THE FAILURE OF THE PARENT OR ANY LOAN PARTY
      TO
      COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH
      ANY GOVERNMENTAL REQUIREMENT, (iv) ANY INACCURACY OF ANY REPRESENTATION OR
      ANY
      BREACH OF ANY WARRANTY OR COVENANT OF THE PARENT OR ANY LOAN PARTY SET FORTH
      IN
      ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS
      DELIVERED IN CONNECTION THEREWITH, (v) ANY LOAN OR LETTER OF CREDIT OR THE
      USE
      OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY THE
      ISSUING
      BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS
      PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT 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,
      (vi) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vii) THE OPERATIONS OF THE
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    PERSONS,
      (viii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS
      RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (ix) ANY ENVIRONMENTAL LAW
      APPLICABLE TO THE BORROWER OR ANY RESTRICTED 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, (x) THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR
      ANY
      RESTRICTED SUBSIDIARY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER
      OR
      ANY RESTRICTED SUBSIDIARY, (xi) THE PAST OWNERSHIP BY THE BORROWER OR ANY
      RESTRICTED SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF
      THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD
      RESULT IN PRESENT LIABILITY, (xii) 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 RESTRICTED 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 RESTRICTED SUBSIDIARIES, (xiii) ANY ENVIRONMENTAL
      LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS RESTRICTED
      SUBSIDIARIES, (xiv) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN
      CONNECTION WITH THE LOAN DOCUMENTS, OR (xv) 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 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.

     

    (c)  To
      the
      extent that the Borrower fails to pay any amount required to be paid by it
      to
      any Agent, the Arrangers or the Issuing Bank under Section 12.03(a) or (b),
      each Lender severally agrees to pay to such Agent, the Arrangers or the Issuing
      Bank, as the case may be, such Lender’s Applicable Percentage (determined as of
      the time that the applicable unreimbursed expense or indemnity payment is
      sought) of such unpaid amount; provided that the unreimbursed expense or
      indemnified loss, claim, damage, liability or related expense, as the case
      may
      be, was incurred by or asserted against such Agent, the Arrangers or the Issuing
      Bank in its capacity as such.

     

    (d)  To
      the
      extent permitted by applicable law, no Loan Party shall assert, and hereby
      waives, any claim against any Indemnitee, on any theory of liability, for
      special, indirect, consequential or punitive damages (as opposed to direct
      or
      actual damages) arising out of, in connection with, or as a result of, this
      Agreement, any other Loan Document or any agreement or instrument contemplated
      hereby or thereby, the Transactions, any Loan or Letter of Credit or the use
      of
      the proceeds thereof.

     

    
      
        
        

      

      
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    (e)  All
      amounts due under this Section 12.03 shall be payable
      not later than 10 days after written demand therefor.

     

    Section
      12.04  Successors
      and Assigns.

     

    (a)  The
      provisions of this Agreement shall be binding upon and inure to the benefit
      of
      the parties hereto and their respective successors and assigns permitted hereby
      (including any Affiliate of the Issuing Bank that issues any Letter of Credit),
      except that (i) the Borrower may not assign or otherwise transfer any of its
      rights or obligations hereunder without the prior written consent of each Lender
      (and any attempted assignment or transfer by the Borrower 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 (each an
“Assignee”) 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 of:

     

    (A)  the
      Borrower, provided that no consent of the Borrower shall be required for an
      assignment to a Lender, an Affiliate of a Lender, an Approved Fund (as defined
      below), or, if an Event of Default under Section 10.01(a), (h), (i) or (j)
      has
      occurred and is continuing, is to any other assignee; and

     

    (B)  the
      Administrative Agent and each Issuing Bank (such consent not to be unreasonably
      withheld).

     

    (ii)  Assignments
      shall be subject to the following additional conditions:

     

    (A)  except
      in
      the case of an assignment to a Lender, an Affiliate of a Lender or an Approved
      Fund or an assignment of the entire remaining amount of the assigning Lender’s
      Commitment or Loans, the amount of the Commitment or Loans of the assigning
      Lender subject to each such assignment (determined as of the date the Assignment
      and Assumption with respect to such assignment is delivered to the
      Administrative Agent) shall not be less than $5,000,000 unless each of the
      Borrower and the Administrative Agent otherwise consent, provided that (1)
      no
      such consent of the Borrower shall be required if an Event of Default has
      occurred and is continuing and (2) such amounts shall be aggregated in respect
      of each Lender and its Affiliates or Approved Funds;

     

    (B)  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; and

     

    (C)  the
      Assignee, if it shall not be a Lender, shall deliver to the Administrative
      Agent
      an Administrative Questionnaire.

     

    For
      the
      purposes of this Section 12.04, “Approved Fund” means any Person (other
      than a natural person) that is engaged in making, purchasing, holding or
      investing in bank loans and similar extensions 

     

    
      
        
        

      

      
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    of
      credit
      in the ordinary course of its business and that is administered or managed
      by
      (a) a Lender, (b) an Affiliate of a Lender or (c) Person or an Affiliate of
      a
      Person that administers or manages a Lender.

     

    (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.

     

    (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
      and, if required hereunder, applicable tax forms (unless the Assignee shall
      already be a Lender hereunder), the processing and recordation fee referred
      to
      in Section 12.04(b) and any written consent to such
      assignment required by Section 12.04(b), the
      Administrative Agent shall accept such Assignment and Assumption and record
      the
      information contained therein in the Register.  No assignment shall be
      effective for purposes of this Agreement unless it has been recorded in the
      Register as provided in this Section
      12.04(b).

     

    (c)  (i)           Any
      Lender may, without the consent of the Borrower, the Administrative Agent or
      the
      Issuing Bank, sell participations to one or more banks or other entities (a
      “Participant”) in all or a portion of such Lender’s rights and
      obligations under this Agreement (including all or a portion of its Commitment
      and the Loans owing to it); provided that (A) such Lender’s obligations
      under this Agreement shall remain unchanged, (B) such Lender shall remain
      solely responsible to the other parties hereto for the performance of such
      obligations, (C) the Borrower, the Administrative Agent, the Issuing Bank
      and the other Lenders shall continue to deal solely and directly with such
      Lender in connection with such Lender’s rights and obligations under this
      Agreement and (D) such Lender shall continue to give prompt attention to and
      process (including, if required, through discussions with Participants) requests
      for waivers or amendments hereunder.  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


     

    
      
        
        

      

      
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    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 is a Non-U.S. 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(d) 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, without limitation, 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.

     

    (e)  Notwithstanding
      the foregoing, any Conduit Lender may assign any or all of the Loans it may
      have
      funded hereunder to its designating Lender without the consent of the Borrower
      or the Administrative Agent and without regard to the limitations set forth
      in
      Section 12.04(b).  Each of the Parent, the Borrower, each Lender and
      the Administrative Agent hereby confirms that it will not institute against
      a
      Conduit Lender or join any other Person in instituting against a Conduit Lender
      any bankruptcy, reorganization, arrangement, insolvency or liquidation
      proceeding under any state bankruptcy or similar law, for one year and one
      day
      after the payment in full of the latest maturing commercial paper note issued
      by
      such Conduit Lender; provided, however, that each Lender
      designating any Conduit Lender hereby agrees to indemnify, save and hold
      harmless each other party hereto for any loss, cost, damage or expense arising
      out of its inability to institute such a proceeding against such Conduit Lender
      during such period of forbearance.

     

    (f)  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 and the Guarantors to file a registration
      statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any
      state.

     

    Section
      12.05  Survival;
      Revival; Reinstatement.

     

    (a)  All
      covenants, agreements, representations and warranties made by the Loan Parties
      herein and in the certificates or other instruments delivered in connection
      with
      or pursuant to this Agreement or any other Loan Document shall be considered
      to
      have been relied upon by the other parties hereto and shall survive the
      execution and delivery of this Agreement and the making of any Loans and
      issuance of any Letters of Credit, regardless of any investigation made by
      any
      such other party or on its behalf and notwithstanding that the Administrative
      Agent, any other Agent, the Issuing Bank or any Lender may have had notice
      or
      knowledge of any Default or incorrect representation or warranty at the time
      any
      credit is extended hereunder, and shall 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 

     

    
      
        
        

      

      
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    ARTICLE
      XI shall survive and remain in full force and
      effect regardless of the consummation of the transactions contemplated hereby,
      the repayment of the Loans, the expiration or termination of the Letters of
      Credit and the Commitments or the termination of this Agreement, any other
      Loan
      Document or any provision hereof or thereof.

     

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

     

    Section
      12.06  Counterparts;
      Integration; Effectiveness.

     

    (a)  This
      Agreement may be executed in counterparts (and by different parties hereto
      on
      different counterparts), each of which shall constitute an original, but all
      of
      which when taken together shall constitute a single contract.

     

    (b)  This
      Agreement, the other Loan Documents and any separate letter agreements with
      respect to fees payable to the Administrative Agent constitute the entire
      contract among the parties relating to the subject matter hereof and thereof
      and
      supersede any and all previous agreements and understandings, oral or written,
      relating to the subject matter hereof and thereof.  This Agreement and
      the other Loan Documents represent the final agreement among the parties hereto
      and thereto and may not be contradicted by evidence of prior, contemporaneous
      or
      subsequent oral agreements of the parties.  There are no unwritten
      oral agreements between the parties.

     

    (c)  Except
      as
      provided in Section 6.01, this Agreement shall become
      effective when it shall have been executed by the Administrative Agent and
      when
      the Administrative Agent shall have received counterparts hereof which, when
      taken together, bear the signatures of each of the other parties hereto, and
      thereafter shall be binding upon and inure to the benefit of the parties hereto
      and their respective successors and assigns.  Delivery of an executed
      counterpart of a signature page of this Agreement by 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 Parent or any Loan Party against
      any
      of and all the obligations of the Parent or any other Loan Party 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 

     

    
      
        
        

      

      
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    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
      12.09  GOVERNING
      LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

     

    (a)  THIS
      AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
      THE LAWS OF THE STATE OF NEW YORK EXCEPT TO THE EXTENT THAT UNITED STATES
      FEDERAL LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE, RESERVE OR
      TAKE
      INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER IS
      LOCATED.

     

    (b)  ANY
      LEGAL
      ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT IN
      THE
      COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
      SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
      EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN
      RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
      THE
      AFORESAID COURTS.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
      INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED
      ON
      THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
      THE
      BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
      JURISDICTIONS.  THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND
      DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN
      ANY
      COURT OTHERWISE HAVING JURISDICTION.

     

    (c)  EACH
      PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
      AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
      THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS
      SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO
      SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME
      EFFECTIVE 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


     

    
      
        
        

      

      
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    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 and each Lender agrees to keep confidential all
      non-public information provided to it by the Parent, the Borrower or any of
      their Subsidiaries, the Administrative Agent or any Lender pursuant to or in
      connection with this Agreement that is designated by the provider thereof as
      confidential; provided that nothing herein shall prevent the Administrative
      Agent or any Lender from disclosing any such information (a) to the
      Administrative Agent, any other Lender or any affiliate thereof, (b) subject
      to
      an agreement to comply with the provisions of this Section, to any actual or
      prospective Transferee or any direct or indirect counterparty to any Swap
      Agreement (or any professional advisor to such counterparty), (c) to its
      employees, directors, agents, attorneys, accountants and other professional
      advisors or those of any of its affiliates, (d) upon the request or demand
      of
      any Governmental Authority, (e) in response to any order of any court or other
      Governmental Authority or as may otherwise be required pursuant to any
      Governmental Requirement, (f) if requested or required to do so in connection
      with any litigation or similar proceeding, (g) that has been publicly disclosed,
      (h) to the National Association of Insurance Commissioners or any similar
      organization or any nationally recognized rating agency that requires access
      to
      information about a Lender’s investment portfolio in connection with ratings
      issued with respect to such Lender, or (i) in connection with the exercise
      of
      any remedy hereunder or under any other Loan Document.

     

    Each
      Lender acknowledges that information furnished to it pursuant to this Agreement
      or the other Loan Documents may include material non-public information
      concerning the Borrower and its Affiliates and their related parties or their
      respective securities, and confirms that it has developed compliance procedures
      regarding the use of material non-public information and that it will handle
      such material non-public information in accordance with those procedures and
      applicable law, including Federal and state securities laws.

     

    All
      information, including requests for waivers and amendments, furnished by the
      Borrower or the Administrative Agent pursuant to, or in the course of
      administering, this Agreement or the other Loan Documents will be
      syndicate-level information, which may contain material non-public information
      about the Borrower and its Affiliates and their related parties or their
      respective securities.  Accordingly, each Lender represents to the
      Borrower and the Administrative Agent that it has identified in its
      Administrative Questionnaire a credit contact who may receive information that
      may contain material non-public information in accordance with its compliance
      procedures and applicable law, including Federal and state securities
      laws.

     

    Section
      12.12  Interest
      Rate Limitation.  It
      is the intention of the parties hereto that each Lender shall conform strictly
      to usury laws applicable to it.  Notwithstanding anything herein to
      the contrary, if at any time the interest rate applicable to any Loan, together
      with all fees, charges and other amounts which are treated as interest on such
      Loan under applicable law (collectively the “Charges”), shall exceed the
      maximum lawful rate (the “Maximum Rate”) which may be contracted for,
      charged, taken, received or reserved by the Lender holding such Loan in
      accordance with applicable law, the rate of interest payable in respect of
      such
      Loan, together with all Charges payable in respect thereof, shall be limited
      to
      the Maximum Rate and, to the extent lawful, the interest and Charges that would
      have been payable in respect of such Loan 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 or periods shall be increased
      (but not above the Maximum Rate therefor) until such cumulated amount, together
      with interest 

     

    
      
        
        

      

      
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    thereon
      at the Federal Funds Effective Rate to the date of repayment, shall have been
      received by such Lender.

     

    Section
      12.13  Collateral
      Matters; Swap Agreements.  The
      benefit of the Security Instruments and of the provisions of this Agreement
      relating to any collateral securing the Indebtedness shall also extend to and
      be
      available to those Lenders or their Affiliates which are counterparties to
      any
      Swap Agreement with the Borrower or any of its Restricted Subsidiaries on a
      pro rata basis in respect of any obligations of the Borrower or any of
      its Restricted Subsidiaries which arise under any such Swap Agreement while
      such
      Person or its Affiliate is a Lender, but only while such Person or its Affiliate
      is a Lender, including any Swap Agreements between such Persons in existence
      prior to the date hereof.  This Agreement and each Security Instrument
      shall be subject to the terms of the Intercreditor 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
      12.14  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 Restricted Subsidiary of the Borrower,
      any
      obligor, contractor, subcontractor, supplier or materialsman) shall have any
      rights, claims, remedies or privileges hereunder or under any other Loan
      Document against the Administrative Agent, any other Agent, the Issuing Bank
      or
      any Lender for any reason whatsoever.  There are no third party
      beneficiaries.

     

    Section
      12.15  Acknowledgements.  Each
      of the Parent and the Borrower hereby acknowledges that:

     

    (a)  it
      has
      been advised by counsel in the negotiation, execution and delivery of this
      Agreement and the other Loan Documents;

     

    (b)  neither
      the Administrative Agent nor any Lender has any fiduciary relationship with
      or
      duty to the Parent or the Borrower arising out of or in connection with this
      Agreement or any of the other Loan Documents, and the relationship between
      Administrative Agent and Lenders, on one hand, and the Parent and the Borrower,
      on the other hand, in connection herewith or therewith is solely that of debtor
      and creditor; and

     

    no
      joint
      venture is created hereby or by the other Loan Documents or otherwise exists
      by
      virtue of the transactions contemplated hereby among the Lenders or among the
      Parent, the Borrower and the Lenders.

     

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

     

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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:                                                                           MCMORAN
      OIL & GAS LLC

     

    By:         __________________________                                                       

    Kathleen
      L. Quirk, Vice
      President

    


    


    PARENT:                                                                           MCMORAN
      EXPLORATION CO.

     

    By:        ____________________________                                                        

    Kathleen
      L. Quirk, Senior Vice

    President
      & Treasurer

    


     

    


    


     

    



    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ADMINISTRATIVE
      AGENT:                                                             JPMORGAN
      CHASE BANK, N.A.,

    as
      Administrative Agent and as a Lender

     

    


    By: ____________________________________

    Name:

    Title:

    


    


    


    
      	
              SYNDICATION
                AGENT:

            	
              MERRILL
                LYNCH CAPITAL, a division
                of 

              Merrill
                Lynch Business Financial
                Services, 

              Inc.,as
                Syndication Agent
                and as a Lender

            


    

    


    By: ____________________________________

    Name:

    Title:

    


    


    


    
      	
              DOCUMENTATION
                AGENT:

            	
              BNP
                PARIBAS, as Documentation Agent and 

              as
                a Lender

            


    

     

    


    By:____________________________________

    Name:

    Title:


    
      
           

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    LENDERS:                                                                                     CAPITAL
      ONE, N.A., as a Lender

    


    


    By: __________________________________

    Name:

    Title:

    


    


    


    ING
      CAPITAL LLC, as a
      Lender

    


    


    By: __________________________________

    Name:

    Title: