exv10w1







Exhibit 10.1





 





CREDIT AGREEMENT




dated as of




August 8, 2008,




among




QUICKSILVER RESOURCES INC.,




THE LENDERS PARTY HERETO




and




CREDIT SUISSE,

as Administrative Agent




 






CREDIT SUISSE SECURITIES (USA) LLC




and




J.P. MORGAN SECURITIES INC.,

as Co-Lead Arrangers and Joint Bookrunners




J.P. MORGAN SECURITIES INC.,

as Syndication Agent




 





[CS&M Ref. No. 05865-651]





 









 









Table of Contents




	 	 	 	 	 
	 	 	Page
	ARTICLE I

	 
	 	 	 	 
	Definitions

	 
	 	 	 	 
	SECTION 1.01. Defined Terms

	 	 	1	 
	SECTION 1.02. Terms Generally

	 	 	35	 
	SECTION 1.03. Accounting Terms; GAAP

	 	 	35	 
	SECTION 1.04. Effectuation of Transactions

	 	 	36	 
	 
	 	 	 	 
	ARTICLE II

	 
	 	 	 	 
	The Credits

	 
	 	 	 	 
	SECTION 2.01. Commitments

	 	 	36	 
	SECTION 2.02. Loans and Borrowings

	 	 	36	 
	SECTION 2.03. Borrowings Procedure

	 	 	37	 
	SECTION 2.04. Funding of Borrowings

	 	 	37	 
	SECTION 2.05. Interest Elections

	 	 	38	 
	SECTION 2.06. Termination of Commitments

	 	 	39	 
	SECTION 2.07. Repayment of Loans; Evidence of Indebtedness

	 	 	39	 
	SECTION 2.08. Amortization of Loans

	 	 	40	 
	SECTION 2.09. Prepayment of Loans

	 	 	40	 
	SECTION 2.10. Fees

	 	 	42	 
	SECTION 2.11. Interest

	 	 	42	 
	SECTION 2.12. Alternate Rate of Interest

	 	 	43	 
	SECTION 2.13. Illegality

	 	 	43	 
	SECTION 2.14. Increased Costs

	 	 	44	 
	SECTION 2.15. Break Funding Payments

	 	 	45	 
	SECTION 2.16. Taxes

	 	 	46	 
	SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs

	 	 	47	 
	SECTION 2.18. Mitigation Obligations; Replacement of Lenders

	 	 	49	 
	 
	 	 	 	 
	ARTICLE III

	 
	 	 	 	 
	Representations and Warranties

	 
	 	 	 	 
	SECTION 3.01. Existence and Power

	 	 	50	 
	SECTION 3.02. Loan Party and Governmental Authorization; Contravention

	 	 	50	 
	SECTION 3.03. Binding Effect

	 	 	51	 
	SECTION 3.04. Financial Information; Absence of Material Adverse Effect;
Solvency

	 	 	51	 
	SECTION 3.05. Litigation

	 	 	51	 
	SECTION 3.06. ERISA

	 	 	52	 
	SECTION 3.07. Taxes and Filing of Tax Returns

	 	 	52	 






i 









 






Table of Contents





	 	 	 	 	 
	 	 	Page
	SECTION 3.08. Ownership of Properties

	 	 	53	 
	SECTION 3.09. Mineral Interests

	 	 	53	 
	SECTION 3.10. Licenses, Permits, Etc

	 	 	54	 
	SECTION 3.11. Compliance with Law

	 	 	54	 
	SECTION 3.12. Full Disclosure

	 	 	54	 
	SECTION 3.13. Nature of Business; Organizational Structure

	 	 	54	 
	SECTION 3.14. Environmental Matters

	 	 	54	 
	SECTION 3.15. No Default

	 	 	55	 
	SECTION 3.16. Government Regulation

	 	 	55	 
	SECTION 3.17. Gas Balancing Agreements and Advance Payment Contracts

	 	 	55	 
	SECTION 3.18. Collateral Matters

	 	 	55	 
	SECTION 3.19. Hedging Agreements

	 	 	56	 
	SECTION 3.20. Insurance

	 	 	56	 
	 
	 	 	 	 
	ARTICLE IV

	 
	 	 	 	 
	Conditions

	 
	 	 	 	 
	ARTICLE V

	 
	 	 	 	 
	Affirmative Covenants

	 
	 	 	 	 
	SECTION 5.01. Information

	 	 	61	 
	SECTION 5.02. Delivery of Reserve Reports

	 	 	64	 
	SECTION 5.03. Nature of Business

	 	 	65	 
	SECTION 5.04. Maintenance of Existence; Oil and Gas Properties

	 	 	65	 
	SECTION 5.05. Title Data

	 	 	66	 
	SECTION 5.06. Books and Records; Right of Inspection

	 	 	66	 
	SECTION 5.07. Maintenance of Insurance

	 	 	67	 
	SECTION 5.08. Payment of Taxes and Claims

	 	 	67	 
	SECTION 5.09. Compliance with Laws and Documents

	 	 	67	 
	SECTION 5.10. Operation of Properties and Equipment

	 	 	68	 
	SECTION 5.11. Environmental Law Compliance

	 	 	68	 
	SECTION 5.12. ERISA Reporting Requirements

	 	 	68	 
	SECTION 5.13. Environmental Review

	 	 	69	 
	SECTION 5.14. Casualty and Condemnation

	 	 	69	 
	SECTION 5.15. Concerning Subsidiaries

	 	 	69	 
	SECTION 5.16. Information Regarding Collateral

	 	 	70	 
	SECTION 5.17. Further Assurances

	 	 	70	 






ii 









 





Table of Contents





	 	 	 	 	 
	 	 	Page
	ARTICLE VI

	 
	 	 	 	 
	Financial Covenants

	 
	 	 	 	 
	SECTION 6.01. Current Ratio

	 	 	71	 
	SECTION 6.02. Interest Coverage Ratio

	 	 	71	 
	SECTION 6.03. Total Debt Asset Coverage Ratio

	 	 	71	 
	SECTION 6.04. Total Secured Debt Asset Coverage Ratio

	 	 	71	 
	 
	 	 	 	 
	ARTICLE VII

	 
	 	 	 	 
	Negative Covenants

	 
	 	 	 	 
	SECTION 7.01. Indebtedness

	 	 	72	 
	SECTION 7.02. Restricted Payments

	 	 	74	 
	SECTION 7.03. Liens

	 	 	75	 
	SECTION 7.04. Consolidations and Mergers; Fundamental Changes

	 	 	75	 
	SECTION 7.05. Asset Dispositions; Sale/Leaseback Transactions

	 	 	75	 
	SECTION 7.06. Amendments to Material Documents

	 	 	76	 
	SECTION 7.07. Use of Proceeds

	 	 	77	 
	SECTION 7.08. Investments

	 	 	77	 
	SECTION 7.09. Transactions with Affiliates

	 	 	77	 
	SECTION 7.10. ERISA

	 	 	77	 
	SECTION 7.11. Hedging Transactions

	 	 	77	 
	SECTION 7.12. Fiscal Year

	 	 	78	 
	SECTION 7.13. Certain Payments of Indebtedness

	 	 	78	 
	SECTION 7.14. Restrictive Agreements

	 	 	79	 
	SECTION 7.15. Gas Balancing Agreements and Advance Payments Contracts

	 	 	80	 
	 
	 	 	 	 
	ARTICLE VIII

	 
	 	 	 	 
	Events of Default

	 
	 	 	 	 
	SECTION 8.01. Listing of Events of Default

	 	 	80	 
	SECTION 8.02. Action if Bankruptcy

	 	 	82	 
	SECTION 8.03. Action if Other Event of Default

	 	 	82	 






iii 









 





Table of Contents





	 	 	 	 	 
	 	 	Page
	ARTICLE IX

	 
	 	 	 	 
	Administrative Agent

	 
	 	 	 	 
	ARTICLE X

	 
	 	 	 	 
	Miscellaneous

	 
	 	 	 	 
	SECTION 10.01. Notices

	 	 	86	 
	SECTION 10.02. Waivers; Amendments

	 	 	87	 
	SECTION 10.03. Expenses; Indemnity; Damage Waiver

	 	 	88	 
	SECTION 10.04. Successors and Assigns

	 	 	90	 
	SECTION 10.05. Survival

	 	 	93	 
	SECTION 10.06. Counterparts; Integration; Effectiveness

	 	 	93	 
	SECTION 10.07. Severability

	 	 	93	 
	SECTION 10.08. Right of Setoff

	 	 	93	 
	SECTION 10.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE
OF PROCESS

	 	 	94	 
	SECTION 10.10. WAIVER OF JURY TRIAL

	 	 	95	 
	SECTION 10.11. Headings

	 	 	95	 
	SECTION 10.12. Confidentiality

	 	 	95	 
	SECTION 10.13. Interest Rate Limitation

	 	 	96	 
	SECTION 10.14. PATRIOT Act Notice

	 	 	96	 
	SECTION 10.15. No Fiduciary Relationship

	 	 	96	 
	SECTION 10.16. Intercreditor Agreement

	 	 	97	 
	SECTION 10.17. Release of Liens and Guarantees

	 	 	97	 
	SECTION 10.18. Waiver of Consumer Credit Laws

	 	 	98	 
	SECTION 10.19. Status of Term Obligations

	 	 	98	 
	SECTION 10.20. NO ORAL AGREEMENTS

	 	 	98	 







iv 









 









Exhibits and Schedules




	 	 	 	 	 
	Exhibits:
	 	 	 	 
	 
	 	 	 	 
	Exhibit A

	 	3⁄4
	 	Form of Assignment and Acceptance
	Exhibit B

	 	3⁄4
	 	Form of Indemnity, Contribution and Subrogation Agreement
	Exhibit C

	 	3⁄4
	 	Form of Intercreditor Agreement
	Exhibit D

	 	3⁄4
	 	Form of Interest Election Request
	Exhibit E

	 	3⁄4
	 	Form of Perfection Certificate
	Exhibit F

	 	3⁄4
	 	Form of Pledge Agreement
	Exhibit G

	 	3⁄4
	 	Form of Security Agreement
	Exhibit H

	 	3⁄4
	 	Form of Subsidiary Guarantee Agreement
	Exhibit I

	 	3⁄4
	 	Form of Compliance Certificate
	 
	 	 	 	 
	Schedules:
	 	 	 	 
	 
	 	 	 	 
	Schedule 2.01

	 	3⁄4
	 	Commitments
	Schedule 3.09

	 	3⁄4
	 	Initial Designated Real Properties
	Schedule 3.13

	 	3⁄4
	 	Organizational Structure
	Schedule 3.14

	 	3⁄4
	 	Environmental Matters
	Schedule 3.19

	 	3⁄4
	 	Existing Hedging Agreements
	Schedule 3.20

	 	3⁄4
	 	Existing Insurance
	Schedule 4.01

	 	3⁄4
	 	Certain Existing MLP Subsidiary Indebtedness
	Schedule 7.01

	 	3⁄4
	 	Existing Indebtedness
	Schedule 7.03

	 	3⁄4
	 	Existing Permitted Encumbrances
	Schedule 7.08

	 	3⁄4
	 	Existing Investments
	Schedule 7.14

	 	3⁄4
	 	Existing Restrictive Agreements






v 









 







     CREDIT AGREEMENT dated as of August 8, 2008, among QUICKSILVER
RESOURCES INC., a Delaware corporation (the “Borrower”), the Lenders (as
defined in Article I below) and CREDIT SUISSE, Cayman Islands Branch
(“Credit Suisse”), as the Administrative Agent.



     WHEREAS, the Borrower intends to acquire (the “Acquisition”) certain producing, leasehold,
royalty, midstream and other assets associated with the Barnett Shale formation in Texas pursuant
to (a) a purchase and sale agreement dated as of July 3, 2008, among the Borrower, as purchaser,
and Nortex Minerals, L.P., Petrus Investment, L.P., Petrus Development, L.P., and Perot Investment
Partners, Ltd., as sellers, and (b) a purchase and sale agreement dated as of July 3, 2008, among
the Borrower, as purchaser, and Hillwood Oil & Gas, L.P., Burtex Minerals, L.P., Chief Resources,
LP, Hillwood Alliance Operating Company, L.P., Chief Resources Alliance Pipeline LLC, Chief Oil &
Gas LLC, Berry Barnett, L.P., Collins and Young, L.L.C. and Mark Rollins, as sellers (such purchase
and sale agreements, as amended, supplemented or otherwise modified from time to time, being
referred to as the “Purchase Agreements”), for an aggregate consideration of $1,000,000,000 in cash
and shares of common stock of the Borrower having market value of $307,000,000, in each case as
such cash and stock consideration amounts may be adjusted in accordance with the Purchase
Agreements (the “Acquisition Consideration”).



     WHEREAS, in connection with the Acquisition, the Borrower has requested the Lenders (such term
and each other capitalized term used but not defined in this introductory statement having the
meaning given it in Article I) to extend credit in the form of Loans to be made on the date hereof,
in an aggregate principal amount not in excess of $700,000,000. The proceeds of the Loans are to
be used by the Borrower on the date hereof, together with the proceeds of loans under the First
Lien U.S. Credit Agreement, solely (a) to pay the cash portion of the Acquisition Consideration and
(b) to pay fees and expenses incurred in connection with the Transactions.



     The Lenders are willing to extend such credit to the Borrower on the terms and subject to the
conditions set forth herein. Accordingly, the parties hereto agree as follows:



ARTICLE I




Definitions




     SECTION 1.01. 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” has the meaning given to such term in the introductory statement hereto.



     “Acquisition Consideration” has the meaning given to such term in the introductory statement
hereto.



 









 



2


     “Adjusted Consolidated Net Tangible Assets” has the meaning given to the term “Adjusted
Consolidated Net Tangible Assets” under the Existing Senior Notes Indenture as in effect on the
date hereof, with all references therein to the “Restricted Subsidiaries” being deemed to be
references to the Subsidiaries that are Credit Parties. For purposes hereof, the amount of
Adjusted Consolidated Net Tangible Assets at any time shall be the amount thereof as of such time
determined in accordance with this definition.



     “Adjusted Eurodollar Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum equal to (a) the Eurodollar Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.



     “Administrative Agent” means Credit Suisse, in its capacity as administrative agent and
collateral agent hereunder and under the other Loan Documents, and its successors and assigns in
such capacity as provided in Article IX. It is understood that the term “Administrative Agent”
refers to such agent acting, among other things, in its capacity as the collateral agent under the
Loan Documents, and that references in any Security Document to the term “Collateral Agent” shall
be construed to have the same meaning and effect as if such references were to the term
“Administrative Agent”.



     “Administrative Agent Fee Letter” means that certain letter agreement dated July 17, 2008,
among the Borrower, Credit Suisse and Credit Suisse Securities (USA) LLC.



     “Administrative Questionnaire” means an Administrative Questionnaire to be delivered by the
Lenders to the Administrative Agent, in a form supplied by the Administrative Agent.



     “Advance Payment” has the meaning given to such term in the definition of the term “Advance
Payment Contract”.



     “Advance Payment Contract” means any contract whereby any Credit Party either (a) receives or
becomes entitled to receive (either directly or indirectly) any payment (each, an “Advance
Payment”) to be applied toward payment of the purchase price of Hydrocarbons produced or to be
produced from any Oil and Gas Property of any Credit Party, and which Advance Payment is, or is to
be, paid in advance of actual delivery of such production to or for the account of the purchaser,
regardless of such production, and is, or is to be, applied as payment in full or in part for such
production when sold and delivered, or (b) grants an option or right of refusal to the purchaser to
take delivery of such production in lieu of payment; provided, that the term “Advance Payment
Contract” shall not include any Gas Balancing Agreement.



     “Affiliate” of any Person means any Person directly or indirectly Controlled by, Controlling
or under common Control with such first Person. For purposes of this definition, any Person which
owns directly or indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other governing body of a corporation or 10% or more of the partnership or
other ownership interests of any other Person (other than as a limited partner of such other
Person) will be deemed to “Control” (including, with its correlative meanings, “Controlled by” and
“under common Control with”) such corporation or other Person.



     “Agreement” means this Credit Agreement.



 









 



3


     “Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1% and (c) 4.25%. Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, as the case may be. If the Administrative Agent
shall have determined (which determination shall be conclusive and binding, absent manifest error)
that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with
the terms of the definition of such term, the Alternate Base Rate shall be determined without
regard to clause (b) of the preceding sentence until the circumstances giving rise to such
inability no longer exist.



     “Applicable Lending Office” means, for each Lender and for each Type of Loan, such office of
such Lender (or of an Affiliate of such Lender) as such Lender may from time to time specify in
writing to the Administrative Agent and the Borrower as the office by which its Loans of such Type
are to be made and/or maintained.



     “Applicable Margin” means, for any day, (a) with respect to any Eurodollar Loan, 4.50% per
annum, and (b) with respect to any ABR Loan, 3.50% per annum, in each case plus an Incremental
Applicable Margin, if any, applicable on such day.



     “Approved Engineer” means (a) Schlumberger Data and Consulting Services, (b) LaRoche Petroleum
Consultants Limited and (c) any other reputable firm of independent petroleum engineers or
independent petroleum consultants expert in the matters required to be performed in connection with
the preparation and delivery or auditing of a Reserve Report, in each case under this clause (c),
selected by the Borrower and reasonably satisfactory to the Administrative Agent.



     “Arrangers” means Credit Suisse Securities (USA) LLC and J.P. Morgan Securities Inc., in their
capacities as co-lead arrangers and joint bookrunners for the credit facility provided for herein.



     “Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an
assignee (with the consent of any Person whose consent is required by Section 10.04), and accepted
by the Administrative Agent, in substantially the form of Exhibit A or any other form approved by
the Administrative Agent.



     “Authorized Officer” means, as to any Person, its Chief Executive Officer, its President, its
Chief Financial Officer, its Vice President-Treasurer, its Assistant Treasurer, its Vice
President-General Counsel, its Vice President-Controller or any other officer specified as such to
the Administrative Agent in writing by any of the aforementioned officers of such Person or by
resolution from the board of directors or similar governing body of such Person.



     “BBEP” means BreitBurn Energy Partners L.P., a Delaware limited partnership.



     “BBEP Common Units” means Common Units of BBEP, and shall include any securities into or for
which such Common Units are reclassified, converted or exchanged in connection with (a) a
consolidation, merger, reorganization or other business combination



 









 



4




transaction to which BBEP is a party and in which BBEP is the continuing or surviving Person
or (b) a transfer of all or substantially all of the assets of BBEP.



     “BBEP Fair Market Value”, as of the last day of any Fiscal Quarter, means the product of (a)
the average per share closing price of BBEP Common Units, as reported on the NASDAQ Global Select
Market (or, if not the NASDAQ Global Select Market, the principal securities exchange or
inter-dealer quotation system on which the Common Units are listed or quoted for trading at such
time), for each of the trading days during such Fiscal Quarter (provided, that if, on such day,
BBEP Common Units are not listed or quoted for trading on any nationally recognized securities
exchange or inter-dealer quotation system in the United States, such average per share closing
price shall be deemed to be zero); and (b) the number of BBEP Common Units owned by the Borrower or
any other Loan Party on such day.



     “Board” means the Board of Governors of the Federal Reserve System of the United States of
America.



     “Borrower” has the meaning given to such term in the preamble hereto.



     “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 Request” means a request by the Borrower for a Borrowing in accordance with
Section 2.03, which shall be in a form reasonably acceptable to the Administrative Agent.



     “Business Day” means any day that is not a Saturday, Sunday or a United States federal holiday
or any other day on which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits in the
London interbank market.



     “Capital Lease Obligations” means, for any Person, all obligations of such Person to pay rent
or other amounts under a lease of (or other agreement conveying the right to use) any property to
the extent such obligations are required to be classified and accounted for as a capital lease on a
balance sheet of such Person under GAAP. For purposes of this Agreement, the amount of any Capital
Lease Obligation shall be the capitalized amount thereof, determined in accordance with GAAP.



     “Casualty Event” means any loss, casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of, any property of the Borrower
or any other Credit Party.



     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. § 9601, et. seq., as amended from time to time.



     “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, for purposes of Section 2.14(b), by any Applicable Lending



 









 



5




Office of such Lender or by such Lender’s holding company, if any) with any request, guideline
or directive (whether or not having the force of law) of any Governmental Authority made or issued
after the date of this Agreement.



     “Change of Control” means the occurrence, after the date hereof, of any of the following
events: (a) any Person or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange
Act), other than the Darden Group, shall have acquired ownership, directly or indirectly,
beneficially or of record, of Equity Interests representing more than 35% of the aggregate ordinary
voting power represented by the issued and outstanding Equity Interests in the Borrower; (b) the
occupation of a majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were neither (i) nominated by the board of directors or the stockholders of
the Borrower nor (ii) appointed by directors a majority of whom was so nominated; or (c) the
occurrence of a “Change of Control” as defined in any Existing Notes Indenture, for so long as any
Existing Notes shall be outstanding under such Existing Notes Indenture, or any “change of control”
(or similar event, however denominated) with respect to the Borrower under and as defined in any
other indenture or other agreement or instrument evidencing or governing the rights of the holders
of any Material Indebtedness of the Borrower or any other Credit Party (other than any First Lien
Permitted Indebtedness), where the occurrence of such a “change of control” or similar event
constitutes, or upon the giving of notice, the lapse of time or both would constitute, a “default”
or an “event of default” thereunder, or shall require, or upon the giving of notice, the lapse of
time or both would require, that any payment, purchase, repurchase, redemption or defeasance of
such Material Indebtedness be made, or be offered to be made, as a result thereof.



     “Closing Date” means the date on which the conditions specified in Article IV are satisfied
(or waived in accordance with Section 10.02).



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



     “Collateral” means any and all assets on which Liens are purported to be granted pursuant to
the Security Documents as security for the Term Obligations.



     “Collateral and Guarantee Requirement” means, at any time, the requirement that:




     (a) the Administrative Agent shall have received from the Borrower and each other
Designated Credit Party either (i) a counterpart of the Security Agreement, the Pledge
Agreement, the Indemnity, Contribution and Subrogation Agreement, the Intercreditor
Agreement and, other than in the case of the Borrower, the Subsidiary Guarantee Agreement,
in each case duly executed and delivered on behalf of such Person, or (ii) in the case of
any Person that becomes a Designated Credit Party after the date hereof, instruments in the
form or forms specified in the Security Agreement, the Pledge Agreement, the Indemnity,
Contribution and Subrogation Agreement, the Subsidiary Guarantee Agreement and the
Intercreditor Agreement under which such Designated Credit Party becomes a party thereto, in
each case duly executed and delivered on behalf of such Person;



 









 



6



     (b) all Equity Interests owned by any Loan Party shall have been pledged pursuant to
the Pledge Agreement (provided that the Loan Parties shall not be required to pledge more
than 65% of the outstanding voting Equity Interests of any Foreign Subsidiary), and the
Administrative Agent (or its agent or bailee) shall, to the extent required by the Pledge
Agreement, have received certificates or other instruments representing all such Equity
Interests that are Equity Interests in a Subsidiary (other than an Inactive Subsidiary) and
all such other Equity Interests as are certificated, in each case, together with undated
stock powers or other instruments of transfer with respect thereto endorsed in blank;




     (c) all Indebtedness of the Borrower or any Subsidiary that is owing to any Loan Party
(other than any such Indebtedness of any MLP Subsidiary in the form of advances that do not
constitute obligations for borrowed money) shall have been evidenced by a promissory note
(which shall be in form and substance satisfactory to the Borrower) and shall have been
pledged pursuant to the Security Agreement, and the Administrative Agent (or its agent or
bailee) shall have received all such promissory notes, together with undated instruments of
transfer with respect thereto endorsed in blank;




     (d) the Administrative Agent shall have received, with respect to each Designated Real
Property, (i) counterparts of a Mortgage duly executed and delivered by the record owner or
lessee of such Designated Real Property, (ii) an opinion of counsel, addressed to the
Administrative Agent and each Lender and in form and substance reasonably satisfactory to
the Administrative Agent, with respect to the enforceability and validity of the Mortgage
thereon and any related fixture filings and (iii) all such other items as the Administrative
Agent shall reasonably deem necessary to create and evidence a valid and perfected second
priority mortgage Lien and provide appropriate notice and filing of such Lien on such
Designated Real Property, subject only to Permitted Encumbrances;




     (e) all documents and instruments, including UCC financing statements, required by
applicable law or reasonably requested by the Administrative Agent to be filed, registered
or recorded to create the Liens intended to be created by the Security Documents and perfect
such Liens to the extent required by, and with the priority required by, the Security
Documents, shall have been filed, registered or recorded or delivered to the Administrative
Agent for filing, registration or recording, and all filing, recording and similar fees and
Taxes payable in connection with the foregoing shall have been paid or provided for in a
manner reasonably satisfactory to the Administrative Agent; and




     (f) each Designated Credit Party shall have obtained all material consents and
approvals required to be obtained by it in connection with the execution and delivery of all
Security Documents to which it is or is intended to be a party, the performance of its
obligations thereunder and the granting by it of the Liens thereunder (it being understood
that the foregoing shall not require any Designated Credit Party to seek consent to
assignment under any of its agreements, licenses or permits that contains a restriction on
the assignment of, or the creation of a security interest in, its rights thereunder).



 









 



7

The foregoing definition shall not require the creation or perfection of pledges of or security
interests in, or the obtaining of legal opinions or other deliverables with respect to, particular
assets of the Designated Credit Parties if, and for so long as the Administrative Agent, in
consultation with the Borrower, determines that the cost of creating or perfecting such pledges or
security interests in such assets, or obtaining such legal opinions or other deliverables in
respect of such assets, shall be excessive in view of the benefits to be obtained by the Lenders
therefrom. The Administrative Agent may grant extensions of time for the creation and perfection of
security interests in or the obtaining of legal opinions or other deliverables with respect to
particular assets (including delivery of certificates representing pledged Equity Interests) or the
provision of any Guarantee by any Subsidiary (including extensions beyond the Closing Date or in
connection with assets acquired, or Subsidiaries formed or acquired, after the Closing Date) where
it determines that such action cannot be accomplished without undue effort, expense or other burden
by the time or times at which it would otherwise be required to be accomplished by this Agreement
or the Security Documents.




     “Commitment” means, with respect to each Lender, the commitment of such Lender to make Loans
hereunder, expressed as an amount representing the maximum principal amount of the Loans to be made
by such Lender, as such commitment may be reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 10.04. The initial amount of each Lender’s
Commitment is set forth on Schedule 2.01. The initial aggregate principal amount of the
Commitments of the Lenders is $700,000,000.



     “Confidential Information Memorandum” means the Confidential Information Memorandum dated July
2008, relating to the credit facility provided for herein.



     “Consolidated Current Assets” means, at any time, the sum of (a) the current assets of the
Borrower and the Subsidiaries at such time, determined on a consolidated basis in accordance with
GAAP, but excluding (i) current assets of any Person that is not a Credit Party, (ii) current
assets resulting from the application of SFAS 133 to any Hedging Agreement and (iii) current assets
resulting from the application of SFAS 143, plus (b) the First Lien Global Availability at such
time.



     “Consolidated Current Liabilities” means, at any time, the sum of the current liabilities of
the Borrower and the Subsidiaries at such time, determined on a consolidated basis in accordance
with GAAP, but excluding (a) current liabilities of any Person that is not a Credit Party, except
to the extent such liabilities constitute liabilities of a Credit Party (including pursuant to a
Guarantee), (b) current liabilities resulting from the application of SFAS 133 to any Hedging
Agreement, (c) current liabilities resulting from the application of SFAS 143 and (d) the current
portion of any Long Term Debt at such time.



     “Consolidated EBITDAX” means, for any period, the Consolidated Net Income for such period,
plus, without duplication and to the extent deducted in determining such Consolidated Net Income,
the sum of (a) any income, sales or franchise Taxes for such period, (b) the Consolidated Net
Interest Expense for such period, (c) depreciation, depletion and amortization expense for such
period, (d) any unusual or non-recurring non-cash expenses or losses for such period (including,
whether or not set forth as a separate item in the statement of income, non-cash losses on sales of
assets outside of the ordinary course of business), (e) other non-cash



 









 



8




charges for such period and (f) costs and expenses for such period associated with seismic,
geological and geophysical services performed in connection with, and attributable to, oil and gas
exploration; provided that any cash payment made with respect to any non-cash items added back in
computing Consolidated EBITDAX for any prior period pursuant to this definition shall be subtracted
in computing Consolidated EBITDAX for the period in which such cash payment is made.



     “Consolidated Net Income” means, for any period, the net income (or loss) of the Borrower and
the Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, but
excluding, without duplication, (a) the income of any Person that is not a Credit Party, except to
the extent of the amount of cash dividends or similar cash distributions actually paid by such
Person to the Borrower or, subject to clause (b) below, any other Credit Party, (b) the income of,
and any amounts referred to in clause (a) above paid to, any Credit Party (other than a Loan Party)
if and to the extent the declaration or payment of cash dividends or similar cash distributions by
such Credit Party of such income or such other amounts is not, on the date of determination,
permitted without any prior approval of any Governmental Authority that has not been obtained or by
the operation of the terms of the Organic Documents of such Credit Party, any agreement or other
instrument binding upon such Credit Party or any law applicable to such Credit Party (other than
any corporate, limited liability company, partnership or similar law limiting dividends and similar
distributions that is generally applicable to Persons incorporated or organized under such law),
unless such restrictions with respect to the payment of cash dividends and other similar cash
distributions has been legally and effectively waived, (c) any after-tax gains attributable to
asset dispositions, (d) any non-cash gains, losses or charges resulting from the application of
SFAS 133 to any Hedging Agreement, (e) any non-cash gains, losses or charges resulting from the
application of SFAS 143 or SFAS 144, (f) any after-tax extraordinary gains (net of extraordinary
losses for such period) and (g) non-cash nonrecurring gains.



     “Consolidated Net Interest Expense” means, for any period, (a) the interest expense (including
imputed interest expense in respect of Capital Lease Obligations) of the Borrower and the
Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, but
excluding any interest expense attributable to obligations of any Person that is not a Credit Party
except where such obligations constitute obligations of a Credit Party (including pursuant to a
Guarantee), minus (b) the interest income of the Borrower and the Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, but excluding the interest income of
any Person that is not a Credit Party (except to the extent of the amount of cash dividends or
similar cash distributions actually paid by such Person to the Borrower or any other Credit Party).



     “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, but not solely by being an officer or director of that Person.
“Controlling” and “Controlled” have meanings correlative thereto.



     “Credit Parties” means, collectively, (a) the Borrower, (b) the Subsidiary Guarantors, (c)
Quicksilver Canada and each other Subsidiary that is an obligor (including pursuant to a Guarantee)
under any First Lien Permitted Facility, (d) each other Subsidiary that is a “Loan



 









 



9




Party” under, and as defined in, any First Lien Credit Agreement or any successor definitive
documentation governing any First Lien Permitted Facility (or a term connoting a meaning
substantially similar to that connoted by the term “Loan Party” under any First Lien Credit
Agreement as of the date hereof) and (e) each other Subsidiary that is not (i) an MLP Subsidiary or
(ii) a Subsidiary that has been designated as, or otherwise constitutes, an “Unrestricted
Subsidiary” under each indenture governing any issued and outstanding notes of the Borrower or any
Subsidiary that permits designation of Subsidiaries as “Unrestricted Subsidiaries” (including, for
so long as the Existing Senior Notes or the Existing Subordinated Notes shall be outstanding, the
Existing Senior Notes Indenture and the Existing Subordinated Notes Indenture).



     “Credit Suisse” has the meaning given to such term in the preamble hereto.



     “Darden Group” means, collectively, the estate of Frank Darden, Lucy Darden, Anne Darden Self,
Glenn Darden and Thomas Darden, and their respective heirs, beneficiaries, trusts, estates and
controlled Affiliates (including, for so long as such Persons constitute such controlled
Affiliates, Mercury Exploration, Mercury Production, QELP, The Discovery Fund, Pennsylvania Avenue
Limited Partnership and Pennsylvania Management Company).



     “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.



     “Designated Credit Parties” means, collectively, (a) the Borrower, (b) the Subsidiary
Guarantors and (c) each other Domestic Subsidiary that is an obligor (including pursuant to a
Guarantee), or is required to become an obligor pursuant to a Guarantee, under any First Lien
Permitted Facility or any of the Existing Notes (or any Refinancing Indebtedness in respect
thereof).



     “Designated Real Properties” means (a) each Real Property of any Designated Credit Party that
is located in the United States and subject to a mortgage Lien securing any obligation under any
First Lien Permitted Facility and (b) such other Oil and Gas Properties of the Designated Credit
Parties that are Real Properties located in the United States as are at any time required to
constitute “Designated Real Properties” in order for the Mortgaged Property Requirement to be
satisfied as of such time.



     “Domestic Subsidiary” means any Subsidiary other than a Foreign Subsidiary.



     “Engagement Letter” means that certain Engagement Letter dated July 17, 2008, by and among the
Borrower, Credit Suisse, Credit Suisse Securities (USA) LLC, JPMorgan Chase Bank, N.A., and J.P.
Morgan Securities Inc.



     “Environmental Complaint” means any complaint, summons, citation, notice, directive, order,
claim, litigation, investigation, proceeding, judgment, letter or other communication from any
federal, state or municipal Governmental Authority or any other Person against any Credit Party
involving (a) a Hazardous Discharge from, onto or about any real property owned, leased or operated
at any time by any Credit Party, (b) a Hazardous Discharge caused, in whole or in part, by any
Credit Party, or by any Person acting on behalf of or at the instruction of any Credit Party, or
(c) any violation of any Environmental Law by any Credit Party.



 









 



10


     “Environmental Laws” means any and all applicable Governmental Rules pertaining to health
(with respect to exposure to Hazardous Materials) or the environment in effect in any and all
jurisdictions in which the Borrower or any Subsidiary is conducting or at any time has conducted
business, or where any property of the Borrower or any Subsidiary is located, including OPA, the
Clean Air Act, as amended, CERCLA, 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, the Environmental Protection and Enhancement
Act, R.S.A. 2000, c. E-12, as amended, the Canadian Environmental Protection Act, 1999. S.C. 1999.
c. 33, as amended, and other environmental conservation or protection laws. The term “oil” shall
have the meaning specified in OPA; the term “release” (or “threatened release”) shall have the
meaning specified in CERCLA; and the term “disposal” (or “disposed”) shall have the meaning
specified in RCRA; provided, however, that (i) in the event any of OPA, CERCLA or RCRA is amended
so as to broaden the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment, and (ii) to the extent the laws of the state,
province or territory in which any property of the Borrower or any Subsidiary is located establish
a meaning for “oil”, “release”, or “disposal” which is broader than that specified in either OPA,
CERCLA or RCRA, such broader meaning shall apply.



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



     “Equity Interests” means, with respect to any Person, shares of the capital stock, partnership
interests, membership interests in a limited liability company, beneficial interests in a trust or
other equity interests in such Person, or any warrants, options or other rights to acquire any of
the foregoing.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute of similar import, together with the rules, regulations and interpretations
thereunder, in each case as in effect from time to time.



     “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together
with the Borrower or any other Credit Party, is treated as a single employer under Section 414 (b)
or 414 (c) of the Code or Section 4001(b)(1) of ERISA, or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.



 









 



11


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



     “Eurodollar Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the
applicable British Bankers’ Association LIBOR rate for deposits in U.S. Dollars as reported by any
generally recognized financial information service at approximately 11:00 a.m., London time, on the
date that is two Business Days prior to the first day of such Interest Period, and having a
maturity equal to such Interest Period; provided that, if no such British Bankers’ Association
LIBOR rate is available to the Administrative Agent, the applicable Eurodollar Rate for the
relevant Interest Period shall instead be the rate determined by the Administrative Agent to be the
average of the rates per annum at which deposits in U.S. Dollars, in the approximate amount of such
Borrowing and for a period equal to such Interest Period, are offered to major banks in the London
interbank market in London, England by the Administrative Agent at approximately 11:00 a.m., London
time, on the date that is two Business Days prior to the first day of such Interest Period;
provided further that, if the Eurodollar Rate determined as provided above with respect to any
Eurodollar Borrowing for any Interest Period would be less than 3.25% per annum, then the
Eurodollar Rate with respect to such Eurodollar Borrowing for such Interest Period shall be deemed
to be 3.25% per annum.



     “Event of Default” has the meaning given to such term in Section 8.01.



     “Excess Available Cash” means, at any time, the excess, if any, of (a) the proceeds of
borrowings under the First Lien Permitted Facilities made within 45 days prior to such time over
(b) the portion of such proceeds that has been used, or is reasonably expected by the Borrower to
be used within 46 days after such time, by the Borrower and the other Credit Parties for working
capital and other general corporate purposes.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.



     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, or any other
recipient of any payment to be made by or on account of any obligation of the Borrower hereunder,
(a) income or franchise taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is or was organized or in
which its principal office is or was located or, in the case of any Lender, in which its Applicable
Lending Office is or was located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the recipient is or was
located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 2.18(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a
new Applicable Lending Office) or is attributable to such Foreign Lender’s failure to comply with
Section 2.16(e), except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new Applicable Lending Office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16.



 









 



12


     “Existing Convertible Debentures” means the 1.875% Convertible Subordinated Debentures due
2024 of the Borrower and the Indebtedness represented thereby.



     “Existing Convertible Debentures Documents” means the Existing Convertible Debentures, the
Existing Convertible Debentures Indenture and all promissory notes, guarantees and other documents,
instruments and agreements executed and delivered pursuant to the Existing Convertible Debentures
Indenture or otherwise pertaining to the Existing Convertible Debentures.



     “Existing Convertible Debentures Indenture” means that certain Indenture dated as of November
1, 2004, between the Borrower and The Bank of New York Mellon Trust Company, N.A. (as successor in
interest), as trustee (or any other successor trustee).



     “Existing Notes” means the Existing Convertible Debentures, the Existing Senior Notes and the
Existing Subordinated Notes.



     “Existing Notes Documents” means the Existing Convertible Debentures Documents, the Existing
Senior Notes Documents and the Existing Subordinated Notes Documents.



     “Existing Notes Indentures” means the Existing Convertible Debentures Indenture, the Existing
Senior Notes Indenture and the Existing Subordinated Notes Indenture.



     “Existing Senior Notes” means the 81/4% Senior Notes due 2015 of the Borrower and the
Indebtedness represented thereby.



     “Existing Senior Notes Documents” means the Existing Senior Notes, the Existing Senior Notes
Indenture and all promissory notes, guarantees and other documents, instruments and agreements
executed and delivered pursuant to the Existing Subordinated Notes Indenture evidencing,
guaranteeing or otherwise pertaining to the Existing Senior Notes, other than any Security
Documents.



     “Existing Senior Notes Indenture” means that certain Indenture dated as of December 22, 2005,
between the Borrower and The Bank of New York Mellon Trust Company, N.A. (as successor in
interest), as trustee (or any other successor trustee), as supplemented by (a) the Fifth
Supplemental Indenture dated as of June 27, 2008, and (b) the Sixth Supplemental Indenture dated as
of July 10, 2008.



     “Existing Subordinated Notes” means the 7-1/8% Senior Subordinated Notes due 2016 of the
Borrower and the Indebtedness represented thereby.



     “Existing Subordinated Notes Documents” means the Existing Subordinated Notes, the Existing
Subordinated Notes Indenture and all promissory notes, guarantees and other documents, instruments
and agreements executed and delivered pursuant to the Existing Subordinated Notes Indenture
evidencing, guaranteeing or otherwise pertaining to the Existing Subordinated Notes.



     “Existing Subordinated Notes Indenture” means that certain Indenture dated as of December 22,
2005, between the Borrower and The Bank of New York Mellon Trust Company,



 









 



13




N.A. (as successor in interest), as trustee (or any successor trustee), as supplemented by (a)
the First Supplemental Indenture dated as of March 16, 2006, (b) the Second Supplemental Indenture
dated as of July 31, 2006, (c) the Third Supplemental Indenture dated as of September 26, 2006, and
(d) the Fourth Supplemental Indenture dated as of October 31, 2007.



     “Federal Funds Effective Rate” means, for any day, an interest rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published for such day (or if such
day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a Business Day, the average
of the quotations for such day on such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by the Administrative Agent in its sole
reasonable discretion.



     “Financial Officer” of any Person means its Chief Financial Officer; provided, that if no
Person serves in such capacity, the term “Financial Officer” shall mean the highest ranking
executive officer of such Person with responsibility for accounting, financial reporting, cash
management and similar functions.



     “First Lien Canadian Credit Agreement” means the Amended and Restated Credit Agreement dated
as of February 9, 2007, among Quicksilver Canada, as borrower, the lenders party thereto, BNP
Paribas and Bank of America, N.A., as co-global syndication agents, Fortis Capital Corp., The Bank
of Nova Scotia and Deutsche Bank Trust Company Americas, as co-global documentation agents,
JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian administrative agent, and JPMorgan Chase
Bank, N.A., as global administrative agent, as heretofore amended, including pursuant to the First
Lien Fifth Amendment.



     “First Lien Credit Agreements” means the First Lien U.S. Credit Agreement and the First Lien
Canadian Credit Agreement.



     “First Lien Event of Default” has the meaning given to such term in Section 8.01(f).



     “First Lien Fifth Amendment” means the amendment, waiver or other modification of the First
Lien Credit Agreements or other First Lien Loan Documents entered into in connection with the
Acquisition to, among other things, permit under each First Lien Credit Agreement the borrowing of
the Loans hereunder.



     “First Lien Global Availability” means, at any time, the amount by which (a) the lower of
(i) the aggregate amount of the First Lien Combined Commitments (whether used or unused) in effect
at such time and (ii) the amount of the First Lien Global Borrowing Base as in effect at such time
exceeds (b) the aggregate First Lien Combined Credit Exposure under the First Lien Permitted
Facilities at such time. For purposes of this definition, (A) the term “First Lien Combined Credit
Exposure” has the meaning given to the term “Combined Credit Exposure” under the First Lien Credit
Agreements (or, in respect of any successor definitive documentation governing any First Lien
Permitted Facility, a term connoting a meaning substantially similar to that connoted by the term
“Combined Credit Exposure” under the First Lien Credit Agreements as of the date hereof) and (B)
the term “First Lien Combined Commitments” has the meaning



 









 



14




given to the term “Combined Commitments” under the First Lien Credit Agreements (or, in
respect of any successor definitive documentation governing any First Lien Permitted Facility, a
term connoting a meaning substantially similar to that connoted by the term “Combined Commitments”
under the First Lien Credit Agreements as of the date hereof).



     “First Lien Global Borrowing Base” has the meaning given to the term “Global Borrowing Base”
in the First Lien Credit Agreements (or, in respect of any successor definitive documentation
governing any First Lien Permitted Facility, a term connoting a meaning substantially similar to
that connoted by the term “Global Borrowing Base” under the First Lien Credit Agreements as of the
date hereof).



     “First Lien Hedging Obligations” means Hedging Obligations that are guaranteed and/or secured
pursuant to the First Lien Loan Documents or any successor definitive documentation for the First
Lien Permitted Facilities.



     “First Lien Loan Documents” has the meaning given to the term “Combined Loan Documents” under
the First Lien Credit Agreements.



     “First Lien Permitted Facility” means any credit facility referred to in Section 7.01(c)
pursuant to which any First Lien Permitted Indebtedness is outstanding.



     “First Lien Permitted Indebtedness” has the meaning given to such term in Section 7.01(c).



     “First Lien U.S. Borrowing Base” has the meaning given to the term “U.S. Global Borrowing
Base” in the First Lien U.S. Credit Agreement (or, in respect of any successor definitive
documentation governing any First Lien Permitted Facility, a term connoting a meaning substantially
similar to that connoted by the term “U.S. Global Borrowing Base” under the First Lien U.S. Credit
Agreement as of the date hereof).



     “First Lien U.S. Credit Agreement” means the Amended and Restated Credit Agreement dated as of
February 9, 2007, among the Borrower, the lenders party thereto, BNP Paribas and Bank of America,
N.A., as co-global syndication agents, Fortis Capital Corp., The Bank of Nova Scotia and Deutsche
Bank Trust Company Americas, as co-global documentation agents, and JPMorgan Chase Bank, N.A., as
global administrative agent, as heretofore amended, including pursuant to the First Lien Fifth
Amendment.



     “Fiscal Quarter” means a three month period ending on March 31, June 30, September 30 or
December 31 of any Fiscal Year. Unless otherwise indicated herein, each reference to the term
“Fiscal Quarter” shall mean a Fiscal Quarter of the Borrower.



     “Fiscal Year” means a twelve month period ending on December 31. Unless otherwise indicated
herein, each reference to the term “Fiscal Year” shall mean a Fiscal Year of the Borrower.



     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other
than the United States.



 









 



15


     “Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction
other than the United States.



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



     “Gas Balancing Agreement” means any agreement or arrangement whereby any Credit Party, or any
other Person having an interest in any Hydrocarbons to be produced from Mineral Interests in which
any Credit Party owns an interest, has a right to take more than its proportionate share of
production therefrom.



     “Governmental Approval” means (a) any authorization, consent, approval, license, ruling,
permit, tariff, rate, certification, waiver, exemption, filing, variance, claim, order, judgment or
decree of or with any Governmental Authority, (b) any required notice to any Governmental
Authority, (c) any declaration of or with any Governmental Authority or (d) any registration by or
with any Governmental Authority.



     “Governmental Authority” means the government of the United States of America, Canada, any
other nation or any political subdivision thereof, whether state, provincial, territorial 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.



     “Governmental Rule” means any statute, law, regulation, ordinance, rule, judgment, order,
decree, permit, concession, grant, franchise, license, agreement, directive or other governmental
restriction or binding form of decision of or determination by, or binding interpretation or
administration of any of the foregoing by, any Governmental Authority, whether now or hereafter in
effect.



     “Guarantee” by any Person means any obligation, contingent or otherwise, of such Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person, and
includes, without limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay or to maintain financial statement conditions, by “comfort letter” or
other similar undertaking of support or otherwise) or (b) entered into for the purpose of assuring
in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part); provided that the
term “Guarantee” shall not include (i) endorsements of instruments for collection or deposit in the
ordinary course of business or (ii) indemnities given in connection with asset sales or otherwise
provided in the ordinary course of business. The terms “Guarantee” and “Guaranteed” used as a verb
shall have correlative meanings.



     “Hazardous Discharge” means any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or dumping of any



 









 



16




Hazardous Material from or onto any real property owned, leased or operated at any time by any
Loan Party or any real property owned, leased or operated by any other Person.



     “Hazardous Material” means all explosive or radioactive substances or wastes and all hazardous
or toxic substances, wastes or other pollutants, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law, and any petroleum, petroleum
products or petroleum distillates and associated oil or natural gas exploration, production and
development wastes that are not exempted or excluded from being defined as “hazardous substances”,
“hazardous materials”, “hazardous wastes” and “toxic substances” under such Environmental Laws.



     “Hedging Agreement” means any agreement, instrument, arrangement or schedule or supplement
thereto evidencing any Hedging Transaction.



     “Hedging Obligations” means, with respect to any Person, all obligations and liabilities
(including obligations and liabilities of such Person arising in connection with or as a result of
early or premature termination of a Hedging Agreement or Hedging Transaction, whether or not
occurring as a result of a default thereunder) of such Person under a Hedging Agreement or Hedging
Transaction.



     “Hedging Transaction” means any financial derivative transaction, including any commodity,
interest rate, currency or other derivative, swap, option, collar, futures contract or other
contract pursuant to which a Person hedges risks related to commodity prices, interest rates,
currency exchange rates, securities prices or financial market conditions.



     “Highest Lawful Rate” has the meaning given to such term in Section 10.13.



     “Hydrocarbons” means, collectively, oil, gas, casinghead gas, drip gasolines, natural
gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons produced or to be
produced in conjunction therewith, and all products, by-products and all other substances refined,
separated, settled or derived therefrom or the processing thereof, and all other minerals and
substances, including liquefied petroleum gas, natural gas, kerosene, sulphur, lignite, coal,
uranium, thorium, iron, geothermal steam, water, carbon dioxide, helium, and any and all other
minerals, ores, or substances of value, and the products and proceeds therefrom, including all gas
resulting from the in-situ combustion of coal or lignite.



     “Immaterial Title Deficiencies” means minor defects in title that do not secure the payment of
money, have no material adverse effect on the operation of the subject property and do not diminish
by more than 2.0% the Proved PV-10 Value of the Proved Mineral Interests attributable to the Oil
and Gas Properties of the Credit Parties, as set forth in the most recent Reserve Report delivered
pursuant hereto.



     “Inactive Subsidiary” means, at any time, any Subsidiary that at such time (a) does not
conduct any business operations, (b) has assets with a book value not in excess of $10,000 and
(c) does not have any Indebtedness outstanding.



 









 



17


     “Incremental Applicable Margin” means (a) prior to the Initial Incremental Applicable Margin
Date, zero, and (b) on and after the Initial Incremental Applicable Margin Date, (i) 0.25% per
annum plus (ii) on each Subsequent Incremental Applicable Margin Date, an additional 0.25% per
annum. For purposes of this definition, the term “Initial Incremental Applicable Margin Date”
means the day immediately following the second anniversary of the date hereof, and the term
“Subsequent Incremental Applicable Margin Date” means (A) the day that is the numerically
corresponding day to the Initial Incremental Applicable Margin Date in the calendar month that is
three months after the Initial Incremental Applicable Margin Date (or if there is no such
numerically corresponding day, the calendar day immediately succeeding the day that would have been
a numerically corresponding day) and (B) each other day that is the numerically corresponding day
to the day determined pursuant to clause (A) above (or, after the first determination thereof, the
most recent day determined pursuant to this clause (B)) in the calendar month that is three months
after the day so determined (or if there is no such numerically corresponding day, the calendar day
immediately succeeding the day that would have been a numerically corresponding day).



     “Indebtedness” of any Person means (without duplication): (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (c) all other indebtedness of such Person on which interest charges are
customarily paid or accrued, (d) all Capital Lease Obligations of such Person (other than oil and
gas leases entered into in the ordinary course of business), (e) all Guarantees by such Person of
Indebtedness of others, (f) all obligations, contingent or otherwise, of such Person as an account
party in respect of letters of credit and letters of guaranty (other than any guarantees of
performance of non-payment obligations), (g) all obligations, contingent or otherwise, of such
Person under bankers’ acceptances or surety or other bonds issued for the account of such Person,
(h) any amount owed by such Person representing the deferred purchase price of property or services
(other than (i) accounts payable incurred in the ordinary course of business and which have not
been outstanding for more than 90 days past the applicable due date or, if outstanding beyond such
date, are being contested in good faith and such Person has established appropriate reserves, if
any, as required in conformity with GAAP, (ii) deferred compensation and (iii) any purchase price
adjustment, earnout or deferred payment of a similar nature incurred in connection with an
acquisition (but only to the extent no payment has at the time accrued pursuant to such purchase
price adjustment, earnout or deferred payment obligation)), (i) all Indebtedness of others secured
by a Lien on any property owned by such Person, regardless of whether the Indebtedness secured
thereby shall have been assumed by such Person, (j) all obligations under operating leases that
(i) require such Person or its Affiliate to make payments over the term of such lease, including
payments at termination, based on the purchase price or appraisal value of the property subject to
such lease plus a marginal interest rate and (ii) are used primarily as a financing vehicle for
such property, (k) the undischarged balance of any Production Payment created by such Person or for
the creation of which such Person directly or indirectly received payment, to the extent such
Production Payment would be reflected as indebtedness on a consolidated balance sheet of such
Person prepared in accordance with GAAP, (l) net liabilities of such Person under all Hedging
Obligations determined in accordance with GAAP and (m) all liability of such Person as a general
partner of a partnership for obligations of such partnership of the nature described in clauses (a)
through (l) above.



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



 









 



18


     “Indemnitee” has the meaning given to such term in Section 10.03(b).



     “Indemnity, Contribution and Subrogation Agreement” means the Indemnity, Contribution and
Subrogation Agreement among the Borrower, the other Loan Parties and the Administrative Agent,
substantially in the form of Exhibit B, together with all supplements thereto.



     “Initial Reserve Report” means, collectively, (a) the reserve report prepared by Schlumberger
Data and Consulting Services dated January 24, 2008, evaluating as of December 31, 2007, the Proved
Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties located in the
United States, (b) the reserve report prepared by LaRoche Petroleum Consultants Limited dated
January 24, 2008, evaluating as of December 31, 2007, the Proved Mineral Interests attributable to
Oil and Gas Properties of the Credit Parties located in Canada, (c) the reserve report prepared by
the Borrower’s internal engineers dated July 29, 2008, evaluating as of June 30, 2008, the Proved
Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties located in the
United States, and (d) the reserve report prepared by Schlumberger Data and Consulting Services
dated August 7, 2008, evaluating as of July 31, 2008, the Proved Mineral Interests attributable to
the Oil and Gas Properties to be acquired by the Credit Parties in the Acquisition.



     “Intercreditor Agreement” means an Intercreditor Agreement among the Borrower, the Subsidiary
Guarantors, the First Lien Collateral Agent (as defined therein) and the Administrative Agent,
substantially in the form of Exhibit C, with such modifications thereto as are expressly authorized
under Section 10.16.



     “Interest Election Request” means a written or telephonic request by an Authorized Officer of
the Borrower to convert or continue a Borrowing in accordance with Section 2.05, which if written
shall be in substantially the form of Exhibit D or any other form approved by the Administrative
Agent.



     “Interest Payment Date” means (a) with respect to any ABR Loan, the last Business 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 agreed to by each Lender, 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, and (b) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last



 









 



19




Business Day of the last calendar month of such Interest Period. For purposes hereof, the
date of a Eurodollar 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.



     “Investment” means, with respect to any Person, any loan, advance or other extension of credit
to, any Guarantee of any Indebtedness or other payment obligation of, any capital contribution to,
any investment in or purchase of the Equity Interests or other securities of, or interests in, any
other Person.



     “Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have
become a party to this Agreement pursuant to an Assignment and Acceptance, other than any such
Person that ceases to be a party hereto pursuant to an Assignment and Acceptance.



     “Lien” means (a) any lien, charge or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or a lease, consignment, bailment or
margin account for security purposes, (b) Production Payments and the like which constitute
Indebtedness and are payable out of Oil and Gas Properties or (c) reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting title to property. For the purposes of this Agreement,
the Borrower and the other Credit Parties shall be deemed to own subject to a Lien any asset which
is acquired or held subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such asset.



     “Liquidity Amount” means, at any time, the sum of (a) the First Lien Global Availability at
such time and (b) the Excess Available Cash at such time.



     “Loan Documents” means this Agreement, the Security Documents, the Subsidiary Guarantee
Agreement, the Indemnity, Contribution and Subrogation Agreement, the Intercreditor Agreement and
any promissory notes delivered pursuant to Section 2.07(e).



     “Loan Parties” means the Borrower and the Subsidiary Guarantors.



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



     “Long Term Debt” means Indebtedness which matures more than one year from the date it is
incurred, or which can be extended at the option of the obligor(s) to a date more than one year
from the date it is incurred.



     “Material Adverse Effect” means a material and adverse effect on (a) the financial condition,
business, operations, properties or assets of (i) the Borrower and the Subsidiaries, taken as a
whole, or (ii) the Borrower and the other Credit Parties, taken as a whole, (b) the validity and
enforceability of this Agreement or any other Loan Document, (c) the perfection or priority of any
material Lien purported to be created by any Security Document or (d) the right or ability of the
Loan Parties to fully, completely and timely pay and perform their obligations under the Loan
Documents.



 









 



20


     “Material Agreement” means, as to any Person, any material written or oral agreement or
contract to which such Person is a party, by which such Person is bound or to which any material
assets of such Person are subject, and which is not cancelable by such Person upon notice of 30
days or less without liability for further payment other than nominal penalty.



     “Material Gas Imbalance” means, with respect to all Gas Balancing Agreements to which any
Credit Party is a party or by which any Credit Party is bound, or to which any Oil and Gas Property
of any Credit Party is subject, a net negative gas imbalance in the aggregate for the Credit
Parties in excess of one half bcf of gas (on an mcf equivalent basis).



     “Material Indebtedness” means Indebtedness (other than the Loans), or Hedging Obligations, of
any one or more of the Borrower and the other Credit Parties in a principal amount of $16,500,000
or more individually or $36,000,000 or more in the aggregate. For purposes of determining Material
Indebtedness, the “principal amount” of the Hedging Obligations in respect of any Hedging Agreement
or Hedging Transaction at any time shall be the maximum aggregate amount (giving effect to any
netting agreements) that the Credit Parties would be required to pay if such Hedging Agreement or
such Hedging Transaction were terminated at such time.



     “Maturity Date” means the fifth anniversary of the date hereof.



     “Mercury Exploration” means Mercury Exploration Company, a Texas corporation.



     “Mercury Production” means Mercury Production Company, a Texas corporation.



     “Midstream Assets” means oil and gas pipelines, gathering systems, processing and storage
facilities and other assets in the midstream portion of the energy commodity supply chain.



     “Mineral Interests” means all rights, estates, titles and interests in and to oil and gas
leases and any oil and gas interests, royalty and overriding royalty interests, production
payments, net profits interests, oil and gas fee interests and other rights therein, including any
reserved, residual, reversionary or carried interests relating to the foregoing, together with
rights, titles and interests created by or arising under the terms of any unitization,
communization, and pooling agreements or arrangements, and all properties, rights and interests
covered thereby, whether arising by contract, order or operation of Governmental Rules, which now
or hereafter include all or any part of the foregoing.



     “Minimum Liquidity Amount” means, at any time, the greater of (a) 10.0% of the First Lien
Global Borrowing Base at such time and (b) $100,000,000.



     “MLP” means Quicksilver Gas Services LP, a Delaware limited partnership.



     “MLP Gathering and Processing Agreement” means that certain Fifth Amended and Restated Cowtown
Gas Facilities Gas Gathering and Processing Agreement, dated as of August 10, 2007, among the
Borrower, Cowtown Pipeline Partners L.P., a Texas limited partnership, and Cowtown Gas Processing
Partners L.P., a Texas limited partnership.



 









 



21


     “MLP GP” means Quicksilver Gas Services GP LLC, a Delaware limited liability company.



     “MLP Holdings” means Quicksilver Gas Services Holdings LLC, a Delaware limited liability
company.



     “MLP Omnibus Agreement” means that certain Omnibus Agreement, dated as of August 10, 2007,
among MLP GP, MLP, Quicksilver Gas Services Operating LLC, a Delaware limited liability company,
and the Borrower.



     “MLP Subsidiaries” means, collectively, (a) MLP Holdings, (b) MLP GP, (c) MLP and (d) any
Subsidiary of MLP.



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



     “Mortgage” means a mortgage, deed of trust, assignment of production, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any Real Property to secure
the Term Obligations. Each Mortgage shall be in form and substance reasonably satisfactory to the
Administrative Agent.



     “Mortgaged Property” means any Designated Real Property with respect to which a Lien has been
granted pursuant to a Mortgage.



     “Mortgaged Property Requirement” means, at any time, the requirement that the Designated Real
Properties represent not less than 75% of the Proved PV-10 Domestic Value at such time.



     “Net Cash Proceeds” means, with respect to any Prepayment Event, the cash proceeds (including
cash equivalents and any cash payments received by way of deferred payment of principal pursuant to
a note or installment receivable or purchase price adjustment receivable or otherwise, but only as
and when received) received in respect of such Prepayment Event, net of, without duplication, (a)
all attorneys’ fees, accountants’ fees, investment banking fees and other customary expenses, fees
and commissions actually incurred by the Borrower or any of the Subsidiaries in connection with
such Prepayment Event, (b) Taxes paid or payable by the Borrower or any of the Subsidiaries that
are directly attributable to such Prepayment Event and (c) in the case of any Prepayment Event
referred to in clause (a) or (b) of the definition of such term, (i) amounts required to be applied
to the repayment of any Indebtedness (other than Loans or any First Lien Permitted Indebtedness)
secured by a Lien expressly permitted hereunder on any property that is the subject thereof, (ii)
cash payments made by the Borrower or any of the Subsidiaries to satisfy obligations resulting from
early termination of Hedging Agreements directly attributable to such Prepayment Event and (iii)
any portion of such cash proceeds held as a reserve or placed in escrow, whether as a reserve for
adjustment of the purchase price, for satisfaction of indemnities in respect of such Prepayment
Event, or otherwise, to the extent directly attributable to such Prepayment Event; provided,
however, that upon termination of such reserve or escrow, Net Cash Proceeds will be increased by
the portion of funds in such reserve or escrow that are released to the Borrower or any of the
Subsidiaries.



 









 



22


     “Non-Recourse Debt” means Indebtedness of any Subsidiary (a) secured solely by the assets
acquired with the proceeds of such Indebtedness and (b) with respect to which (i) no Loan Party
shall have any liability to any Person for repayment of all or any portion of such Indebtedness
beyond the assets so secured and (ii) the holders thereof (A) shall have recourse only to, and
shall have the right to require the obligations of such Subsidiary to be performed, satisfied or
paid only out of, the assets so secured and (B) shall have no direct or indirect recourse
(including by way of indemnity or guaranty) to any Loan Party, whether for principal, interest,
fees, expenses or otherwise; provided, however, that any such Indebtedness shall not cease to be
“Non-Recourse Debt” solely as a result of the instrument governing such Indebtedness containing
terms pursuant to which such Indebtedness becomes recourse upon (i) fraud or misrepresentation by
the Person in connection with such Indebtedness, (ii) such Person failing to pay taxes or other
charges that result in the creation of Liens on any portion of the specific property securing such
Indebtedness or failing to maintain any insurance on such property required under the instruments
securing such Indebtedness, (iii) the conversion of any of the collateral for such Indebtedness,
(iv) such Person failing to maintain any of the collateral for such Indebtedness in the condition
required under the instruments securing the Indebtedness, (v) any income generated by the specific
property securing such Indebtedness being applied in a manner not otherwise allowed in the
instruments securing such Indebtedness, (vi) the violation of any Environmental Law or otherwise
affecting the environmental condition of the specific property securing the Indebtedness or
(vii) the rights of the holder of such Indebtedness to the specific property becoming impaired,
suspended or reduced by any act, omission or misrepresentation of such Person; provided further,
however, that, upon the occurrence of any of the foregoing clauses (i) through (vii) above, any
such Indebtedness shall cease to be “Non-Recourse Debt” and shall be deemed to be Indebtedness
incurred by such Person at such time.



     “NYMEX” means the New York Mercantile Exchange.



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



     “Oil and Gas Properties” means the Mineral Interests; the properties now or hereafter pooled
or unitized with the Mineral Interests; all presently existing or future unitization, pooling
agreements and declarations of pooled units and the units created thereby (including all units
created under orders, regulations and rules of any Governmental Authority having jurisdiction)
which may affect all or any portion of the Mineral Interests; all operating agreements, joint
venture agreements, contracts and other agreements which relate to any of the Mineral Interests or
the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such
Mineral Interests; all Hydrocarbons in and under and which may be produced and saved or
attributable to the Mineral Interests, the lands covered thereby and all oil in tanks and all
rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the
Mineral Interests; all tenements, profits á prendre, hereditaments, appurtenances and properties in
any way appertaining, belonging, affixed or incidental to the Mineral Interests and properties,
rights, titles, interests and estates described or referred to above, including any and all
property now owned or hereafter acquired and situated upon, used, held for use or useful in
connection with the operating, working or development of any of such Mineral Interests or property
(excluding drilling rigs, automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses) and including any



 









 



23




and all oil wells, gas wells, water 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.



     “OPA” means the Oil Pollution Act of 1990, as amended from time to time.



     “Organic Documents” means, relative to any Person, its articles of organization, association,
formation or incorporation (or comparable document), its by-laws, memorandum of association or
operating agreement and all partnership agreements, limited liability company or operating
agreements and similar arrangements applicable to ownership of its Equity Interests.



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



     “Participant” has the meaning given to such term in Section 10.04(e).



     “PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, as amended from time to time.



     “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any
successor entity performing similar functions.



     “Perfection Certificate” means a certificate in the form of Exhibit E or any other form
reasonably satisfactory to the Administrative Agent.



     “Permitted Encumbrances” means, with respect to any asset:




     (a) Liens created under the Loan Documents;




     (b) Liens created under the First Lien Loan Documents or any successor definitive
documentation for the First Lien Permitted Facilities; provided that (A) such Liens secure
only (1) First Lien Permitted Indebtedness and (2) obligations not constituting Indebtedness
that are secured thereunder; and (B) no such Lien shall apply to any property of the
Borrower or any Domestic Subsidiary that is not subject to a Lien created under the Loan
Documents;




     (c) minor defects in title which do not secure the payment of money and otherwise have
no material adverse effect on the value or the operation of the subject property, including
(i) easements, rights-of-way, servitudes, permits, zoning restrictions, surface leases and
other similar rights in respect of surface operations, (ii) easements for pipelines,
streets, alleys, highways, telephone lines, power lines, railways and other



 









 



24




easements and rights-of-way, on, over or in respect of any of the properties of any
Credit Party and (iii) Immaterial Title Deficiencies;




     (d) inchoate statutory or operators’ Liens securing obligations for labor, services,
materials and supplies arising in the ordinary course of business which are not delinquent
(except to the extent permitted by Section 5.08);




     (e) mechanic’s, materialmen’s, warehouseman’s, journeyman’s, vendor’s, landlord’s and
carrier’s Liens and other similar Liens arising by operation of law in the ordinary course
of business which are not delinquent (except to the extent permitted by Section 5.08);




     (f) Liens for Taxes, assessments, fees and other charges of any Governmental Authority
not yet due or not yet delinquent, or, if delinquent, that are being contested in good faith
in the normal course of business by appropriate action, as permitted by Section 5.08;




     (g) lease burdens payable to third parties which are deducted in the calculation of
Proved PV-10 Value as set forth in the most recent Reserve Report delivered pursuant hereto,
including any royalty, overriding royalty, net profits interest, production payment, carried
interest or reversionary working interest in existence as of the date hereof or as a result
of or in accordance with the Credit Party’s acquisition of the property burdened thereby;




     (h) Liens securing Non-Recourse Debt permitted by Section 7.01(h);




     (i) pledges or deposits in connection with workers’ compensation, unemployment
compensation and/or other social security legislation, and deposits in the ordinary course
of business securing liabilities to insurance carriers under insurance or self-insurance
arrangements;




     (j) deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other similar obligations
incurred in the ordinary course of business;




     (k) judgment Liens in respect of judgments that do not constitute an Event of Default
under Section 8.01(i);




     (l) any Lien existing on any asset prior to the acquisition thereof by the Borrower or
any Subsidiary or existing on any asset of any Person that becomes a Subsidiary after the
date hereof prior to the time such Person becomes a Subsidiary; provided that (i) such Lien
is not created in contemplation of or in connection with such acquisition or such Person
becoming a Subsidiary, as applicable, (ii) such Lien shall not apply to any other asset of
the Borrower or any Subsidiary, (iii) such Lien shall secure only those obligations which it
secures on the date of such acquisition or the date such Person becomes a Subsidiary, as
applicable, and extensions, renewals and replacements of such obligations that are not in
excess of the outstanding principal amount of such obligations as of such acquisition date
or the date such Person becomes a Subsidiary and (iv) the



 









 



25




aggregate principal amount of Indebtedness secured by such Liens, together with the
aggregate principal amount of Indebtedness secured by Liens pursuant to clause (o) below,
shall at no time exceed $24,000,000 in the aggregate;




     (m) any interest or title of a lessor under any lease entered into by the Borrower or
any other Credit Party in the ordinary course of business and in accordance with the Loan
Documents and covering only the assets so leased;




     (n) Liens in existence on the date hereof and set forth on Schedule 7.03 that secure
only Indebtedness permitted by Section 7.01(e); provided that such Liens shall not apply to
any additional property after the date hereof and that the amount of the Indebtedness
secured thereby is not increased;




     (o) Liens on fixed or capital assets acquired, constructed or improved by the Borrower
or any other Credit Party; provided that (i) such Liens secure only Indebtedness permitted
by Section 7.01(j), (ii) such Liens and the Indebtedness secured thereby are incurred prior
to or within 90 days after such acquisition, construction or improvement, (iii) the
Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or
improving such fixed or capital assets, (iv) such Liens shall not apply to any other
property of the Borrower or any of other Credit Party and (v) the aggregate principal amount
of Indebtedness secured by such Liens, together with the aggregate principal amount of
Indebtedness secured by Liens pursuant to clause (l) above, shall at no time exceed
$24,000,000 in the aggregate;




     (p) Liens arising solely by virtue of any statutory or common law provision relating to
banker’s liens, rights of set-off or similar rights and remedies and burdening only deposit
accounts or other funds maintained with a creditor depository institution;




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




     (r) other Liens, so long as neither (i) the aggregate outstanding principal amount of
the obligations secured thereby nor (ii) the aggregate fair market value (determined, with
respect to each such Lien, as of the date such Lien is incurred) of the assets subject
thereto exceeds, in either case, $48,000,000 in the aggregate at any time.




 











 


26



     “Permitted Investments” means:




     (a) readily marketable direct obligations of, or readily marketable obligations the
principal of and interest on which are unconditionally guaranteed by, the United States of
America (or any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States of America);




     (b) fully insured time deposits and certificates of deposit with maturities of one year
or less of any commercial bank operating in the United States having capital and surplus in
excess of $100,000,000;




     (c) all Investments held by any Credit Party in the form of cash or cash equivalents;




     (d) investments in commercial paper of an issuer organized in the United States if, at
the time of purchase, such paper is rated in one of the two highest ratings categories of
S&P or Moody’s;




     (e) money market mutual or similar funds having assets in excess of $100,000,000
and at least 95% of the assets of which are comprised of assets specified in
clauses (a) through (d) above;




     (f) all Investments existing on the date hereof and set forth on Schedule 7.08;




     (g) all Investments by the Borrower and the other Credit Parties in Equity Interests of
their respective Subsidiaries; provided that (i) the aggregate amount of such Investments by
Loan Parties in Subsidiaries that are not Credit Parties, plus (ii) the aggregate principal
amount of loans and advances by Loan Parties to Subsidiaries that are not Credit Parties
made in reliance on clause (h) below, plus (iii) the aggregate amount of Guarantees by Loan
Parties of Indebtedness and other payment obligations of Subsidiaries that are not Loan
Parties made in reliance on clause (i) below (excluding all such Guarantees of First Lien
Permitted Indebtedness and all such Investments, loans, advances and Guarantees existing on
the date hereof and set forth on Schedule 7.08) shall not exceed $7,500,000 at any time
outstanding;




     (h) loans or advances made by the Borrower or any other Credit Party to any Subsidiary;
provided that (i) any such loan or advance made by a Loan Party to any Subsidiary that is
not a Loan Party shall, to the extent and as required by the Collateral and Guarantee
Requirement, be evidenced by a promissory note that shall have been pledged to the
Administrative Agent (or its agent or bailee) and (ii) the aggregate principal amount of
such loans and advances by Loan Parties (excluding all such loans and advances existing on
the date hereof and set forth on Schedule 7.08) to Subsidiaries that are not Credit Parties
shall be subject to the limitation set forth in clause (g) above;




     (i) Guarantees by the Borrower or any other Credit Party of Indebtedness or other
payment obligations of the Borrower or any Subsidiary; provided that (i) a Domestic
Subsidiary shall not Guarantee any First Lien Permitted Indebtedness or any Existing Notes,
or any Refinancing Indebtedness in respect thereof, unless (A) such Subsidiary has



 









 



27



Guaranteed the Term Obligations pursuant to a Subsidiary Guarantee Agreement and (B) in
the case of any Guarantee of any Existing Subordinated Notes, or any Refinancing
Indebtedness in respect thereof, such Guarantee is subordinated to such Guarantee of the
Term Obligations on terms no less favorable to the Lenders, taken as a whole, than the
subordination provisions of the Existing Subordinated Notes, or such Refinancing
Indebtedness, as the case may be, and (ii) the aggregate amount of Indebtedness and other
payment obligations of Subsidiaries that are not Loan Parties that is Guaranteed by the Loan
Parties (excluding all such Guarantees of First Lien Permitted Indebtedness and all such
Guarantees existing on the date hereof and set forth on Schedule 7.08) shall be subject to
the limitation set forth in clause (g) above;




     (j) extensions of customer or trade credit in the ordinary course of business;




     (k) all Investments arising from transactions by the Borrower or any other Credit Party
with customers or suppliers in the ordinary course of business, including endorsements of
negotiable instruments, debt obligations and other Investments received by the Borrower or
any other Credit Party in connection with the bankruptcy or reorganization of customers and
in settlement of delinquent obligations of, and other disputes with, customers;




     (l) entry into operating agreements, working interests, royalty interests, mineral
leases, processing agreements, farm-out agreements, contracts for the sale, transportation
or exchange of oil, natural gas or CO2, unitization agreements, pooling
arrangements, area of mutual interest agreements, production sharing agreements or other
similar or customary agreements, transactions, properties, interests or arrangements, and
Investments and expenditures in connection therewith or pursuant thereto, in each case made
in the ordinary course of the oil and gas business;




     (m) Investments made as a result of the receipt of non-cash consideration from a sale,
transfer, lease or other disposition of any asset in compliance with Section 7.05; and




     (n) any other Investments by any Credit Party in any Persons; provided that the
aggregate amount of all such Investments made in reliance on this clause (n) outstanding at
any time shall not exceed $50,000,000 (measured on a cost basis).


For the avoidance of doubt, to the extent any Investment is permitted by more than one clause of
this definition, the Borrower may categorize all or any portion of such Investment to any one or
more of such clauses as it elects and, except as otherwise expressly provided above, in no event
shall the same portion of any Investment be deemed to utilize availability under more than one
clause of this definition.




     “Permitted Subordinated Indebtedness” has the meaning given to such term in Section 7.01(q).



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



 









 



28


     “Plan” means an employee benefit plan within the meaning of Section 3(3) of ERISA, other than
a multiemployer plan (as defined in Section 4001(a)(3) of ERISA), sponsored, maintained or
contributed to by any Credit Party or an ERISA Affiliate for the benefit of any present or former
employee of any Credit Party or any ERISA Affiliate, or such present or former employee’s
dependents or beneficiaries..



     “Pledge Agreement” means the Pledge Agreement among the Borrower, the other Loan Parties and
the Administrative Agent, substantially in the form of Exhibit F, together with all supplements
thereto.



     “Prepayment Date” means (a) in respect of any Prepayment Event described in clause (a) of the
definition of such term, the earlier of (i) such date as shall have been determined by the Borrower
to be a “Prepayment Date” with respect thereto and (ii) the 30th day following the occurrence of
such Prepayment Event, (b) in respect of any Prepayment Event described in clause (b) of the
definition of such term, the earlier of (i) such date as shall have been determined by the Borrower
to be a “Prepayment Date” with respect thereto and (ii) (A) the first Business Day following the
last day of the calendar year in which such Prepayment Event shall have occurred, if the Net Cash
Proceeds received by the Credit Parties in respect of such Prepayment Event and all other such
Prepayment Events that have occurred during such calendar year do not exceed 5.0% of the First Lien
Global Borrowing Base as in effect on such last day, or (B) otherwise, the date of the
effectiveness of the first redetermination of the First Lien Global Borrowing Base or the First
Lien U.S. Borrowing Base made in the calendar year next following the calendar year in which such
Prepayment Event has occurred (or, if no such redetermination has been effected prior to such date,
the 120th day of such following calendar year), (c) in respect of any Prepayment Event described in
clause (d) of the definition of such term, the day on which any Net Cash Proceeds in respect
thereof are received by the Borrower or any other Credit Party and (d) in respect of any other
Prepayment Event, the fifth Business Day following the day on which any Net Cash Proceeds in
respect thereof are received by the Borrower or any other Credit Party.



     “Prepayment Event” means:




     (a) any sale, transfer or other disposition (including by way of merger or
consolidation, but excluding any disposition resulting from the occurrence of a Casualty
Event) of (i) any Equity Interests in MLP Holdings, MLP GP or MLP (other than any sale or
issuance by MLP of its Equity Interests or any transfer by MLP GP of Equity Interests in MLP
to employees of the MLP Subsidiaries pursuant to any employee stock option or stock purchase
plan or other employee benefit plan) or (ii) any asset directly owned by the Borrower or any
other Credit Party, including any sale or issuance to a Person other than the Borrower or
any other Credit Party of Equity Interests in any Subsidiary that is a Credit Party, other
than, in each case, (A) dispositions described in clauses (a), (b) and (d) of Section 7.05
and (B) other dispositions resulting in aggregate Net Cash Proceeds not exceeding $2,500,000
during any Fiscal Year;




     (b) any Casualty Event resulting in aggregate Net Cash Proceeds of $2,500,000 or more;



 









 



29



     (c) any issuance by the Borrower of any Equity Interests, or the receipt by the
Borrower of any capital contribution, other than (i) the issuance of common stock of the
Borrower as part of the Acquisition Consideration and (ii) any issuance of Equity Interests
of the Borrower under any employee stock option or stock purchase plan or other employee
benefit plan;




     (d) the incurrence by the Borrower or any other Credit Party of any Permitted
Subordinated Indebtedness; or




     (e) receipt by the Borrower or any other Credit Party of any indemnity or like payment
under any Purchase Agreement resulting in aggregate Net Cash Proceeds of $2,500,000 or more.



     “Prime Rate” means the rate of interest per annum determined from time to time by the
Administrative Agent as its prime rate in effect at its principal office in New York City and
notified to the Borrower. For purposes of this Agreement, any change in the Alternate Base Rate
due to a change in the Prime Rate shall be effective on the date such change in the Prime Rate is
announced as being effective.



     “Production Payments” means a production payment obligation (whether volumetric or dollar
denominated) of the Borrower or any of the Subsidiaries which are payable from a specified share of
proceeds received from production from specified Oil and Gas Properties, together with all
undertakings and obligations in connection therewith.



     “Proved Mineral Interests” means all Mineral Interests which constitute “proved reserves”,
“proved developed producing reserves”, “proved developed nonproducing reserves” and “proved
undeveloped reserves”, as such terms are defined from time to time by the Society of Petroleum
Engineers of the American Institute of Mining Engineers.



     “Proved Producing Mineral Interests” means all Mineral Interests which constitute “proved
developed producing reserves”, as such term is defined from time to time by the Society of
Petroleum Engineers of the American Institute of Mining Engineers.



     “Proved PV-10 Domestic Value” means, as of any date, the present value of estimated future net
cash flows to be realized from Proved Mineral Interests attributable to Oil and Gas Properties of
the Credit Parties located in the United States, as set forth in the Reserve Report most recently
delivered pursuant hereto prior to such date, calculated in accordance with the rules and
regulations of the SEC in effect from time to time and using the Three-Year Strip Price for crude
oil (WTI) and natural gas (Henry Hub), as quoted on the NYMEX as of the date as of which the
information set forth in such Reserve Report is provided (as adjusted for basis differentials), and
discounted using an annual discount rate of 10%. The amount of Proved PV-10 Domestic Value at any
time (a) shall be calculated on a pro forma basis for dispositions and acquisitions of Oil and Gas
Properties located in the United States consummated by the Credit Parties since the date of the
Reserve Report most recently delivered pursuant hereto prior to such time (provided that, in the
case of any such acquisition,
the Administrative Agent shall have received a Reserve Report evaluating the Proved Mineral
Interests attributable to the Oil and Gas Properties located in the United States subject thereto
in form and substance reasonably



 









 



30

acceptable to the Administrative Agent and accompanied by such
certifications as to the matters set forth therein as the Administrative Agent may reasonably
request) and (b) shall be adjusted to give effect to the Hedging Agreements in respect of Oil and
Gas Hedging Transactions of the Designated Credit Parties then in effect.




     “Proved PV-10 Value” means, as of any date, the present value of estimated future net cash
flows to be realized from Proved Mineral Interests attributable to Oil and Gas Properties of the
Credit Parties, as set forth in the Reserve Report most recently delivered pursuant hereto prior to
such date, calculated in accordance with the rules and regulations of the SEC in effect from time
to time and using the Three-Year Strip Price for crude oil (WTI) and natural gas (Henry Hub), as
quoted on the NYMEX as of the date as of which the information set forth in such Reserve Report is
provided (as adjusted for basis differentials), and discounted using an annual discount rate of
10%. The amount of Proved PV-10 Value at any time (a) shall be calculated on a pro forma basis for
dispositions and acquisitions of Oil and Gas Properties consummated by the Credit Parties since the
date of the Reserve Report most recently delivered pursuant hereto prior to such time (provided
that, in the case of any such acquisition, the Administrative Agent shall have received a Reserve
Report evaluating the Proved Mineral Interests attributable to the Oil and Gas Properties subject
thereto in form and substance reasonably acceptable to the Administrative Agent and accompanied by
such certifications as to the matters set forth therein as the Administrative Agent may reasonably
request) and (b) shall be adjusted to give effect to the Hedging Agreements in respect of Oil and
Gas Hedging Transactions of the Credit Parties then in effect.



     “Purchase Agreements” has the meaning given to such term in the introductory statement hereto.



     “QELP” means Quicksilver Energy, L.P., a Michigan limited partnership.



     “Quicksilver Canada” means Quicksilver Resources Canada Inc., an Alberta, Canada corporation.



     “Real Property” means, collectively, all right, title and interest of the Borrower or any
other Credit Party in, to or under any and all parcels of real property owned, leased or operated
by the Borrower or any other Credit Party, together with all improvements and appurtenant fixtures,
equipment, personal property, easements and other property and rights incidental to the ownership,
lease or operation thereof, including all Oil and Gas Properties that constitute real property.



     “Refinancing Indebtedness” means, in respect of any Indebtedness (the “Original
Indebtedness”), any Indebtedness that extends, renews or refinances such Original Indebtedness (or
any Refinancing Indebtedness in respect thereof); provided that (a) the principal amount of such
Refinancing Indebtedness (other than any Refinancing Indebtedness in respect of Original
Indebtedness that is First Lien Permitted Indebtedness) shall not exceed the principal amount of
such Original Indebtedness, plus all fees and expenses incurred by the Borrower or any other Credit
Party in connection with such extension, renewal or
refinancing; (b) the maturity of such Refinancing Indebtedness shall not be earlier, and the
weighted average life to maturity of such Refinancing Indebtedness shall not be shorter, than that
of such Original Indebtedness; (c) such



 









 



31

Refinancing Indebtedness shall not be required to be
repaid, prepaid, redeemed, repurchased or defeased, whether on one or more fixed dates, upon the
occurrence of one or more events or at the option of any holder thereof (except, in each case, (i)
upon the occurrence of an event of default or a change in control, (ii) in the case of any
Refinancing Indebtedness in respect of Original Indebtedness that is First Lien Permitted
Indebtedness, as a result of the credit extensions thereunder exceeding the First Lien Global
Borrowing Base or the First Lien U.S. Borrowing Base, as applicable, thereunder or (iii) as and to
the extent such repayment, prepayment, redemption, repurchase or defeasance would have been
required pursuant to the terms of such Original Indebtedness) prior to the earlier of (i) the
maturity of such Original Indebtedness and (ii) the date 180 days after the Maturity Date; (d) such
Refinancing Indebtedness shall not constitute an obligation of any Subsidiary that shall not have
been (or, in the case of after-acquired Subsidiaries, shall not have been required to become) an
obligor in respect of such Original Indebtedness; (e) if such Original Indebtedness shall have been
subordinated to the Term Obligations, such Refinancing Indebtedness shall also be subordinated to
the Term Obligations on terms not less favorable in any material respect, when taken as a whole, to
the Lenders; and (f) such Refinancing Indebtedness shall not be secured by any Lien on any asset
other than the assets that secured such Original Indebtedness (or would have been required to
secure such Original Indebtedness pursuant to the terms thereof).




     “Register” has the meaning given to such term in Section 10.04(c).



     “Related Fund” means, with respect to any Lender that is a fund or commingled investment
vehicle that invests in bank loans, any other fund that invests in bank loans and is managed or
advised by the same investment advisor as such Lender or by an Affiliate of such investment
advisor.



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



     “Required Lenders” means, at any time, Lenders having aggregate Loans (or, prior to the
borrowing hereunder on the date hereof, Commitments) representing more than 50% of the aggregate
outstanding principal amount of the Loans (or, prior to such borrowing, the aggregate Commitments)
at such time.



     “Reserve Report” means (a) the Initial Reserve Report and (b) any reserve report delivered
pursuant to Section 5.02 or pursuant to the definitions of the terms “Proved PV-10 Value” and
“Proved PV-10 Domestic Value”. For purposes hereof, references to the “most recent Reserve Report
delivered pursuant hereto” and words of similar import shall be deemed to refer to both (i) the
most recent Reserve Report delivered pursuant hereto with respect to the Oil and Gas Properties
located in the United States and (ii) the most recent Reserve Report delivered pursuant hereto with
respect to the Oil and Gas Properties located in Canada.



     “Restricted Payment” means (a) any payment (whether in cash, securities or other property) on
account of the retirement, redemption, purchase or other
acquisition for value, or cancellation or termination, of any Equity Interests in the Borrower
or any other Credit Party, including any sinking fund or similar deposit, (b) any dividend or other
distribution (whether in



 









 



32

cash, securities or other property) on or with respect to any Equity
Interests in the Borrower or any other Credit Party and (c) any other payment on or with respect to
any Equity Interests in the Borrower or any other Credit Party; provided, however, that the term
“Restricted Payment” shall not include any payment or distribution by the Borrower to any holder of
Indebtedness of the Borrower that is convertible into capital stock of the Borrower that is made
(or agreed to be made) in satisfaction, in whole or in part, of (i) such Indebtedness or (ii) the
obligation of the Borrower to issue capital stock upon any such holder’s conversion of such
Indebtedness into capital stock of the Borrower, in either case, whether paid or distributed by the
Borrower upon any such holder’s request to convert any such Indebtedness into capital stock of the
Borrower or otherwise.




     “Sale/Leaseback Transaction” means an arrangement relating to property owned by the Borrower
or any other Credit Party whereby the Borrower or such other Credit Party sells or transfers such
property to any Person and, within 180 days thereafter, the Borrower or any other Credit Party
leases such property, or other property that it intends to use for substantially the same purpose
or purposes as the property sold or transferred, from such Person or its Affiliates.



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



     “SEC” means the Securities and Exchange Commission in the United States and any successor
Governmental Authority.



     “Secured Obligations” has the meaning given to such term in the Security Agreement.



     “Secured Parties” has the meaning given to such term in the Security Agreement.



     “Security Agreement” means the Security Agreement among the Borrower, the other Loan Parties
and the Administrative Agent, substantially in the form of Exhibit G, together with all supplements
thereto.



     “Security Documents” means the Security Agreement, the Pledge Agreement, the Mortgages and
each other security agreement or other instrument or document executed and delivered pursuant to
this Agreement or pursuant to the Loan Documents to secure any of the Term Obligations.



     “SFAS 133” means the Statement of Financial Accounting Standard Number 133 entitled
“Accounting for Derivative Instruments and Hedging Activities” issued by the Financial Accounting
Standards Board in June of 1998, as amended and in effect from time to time.



     “SFAS 143” means the Statement of Financial Accounting Standard Number 143 entitled
“Accounting for Asset Retirement Obligations” issued by the Financial Accounting Standards Board in
June of 2001, as amended and in effect from time to time.



     “SFAS 144” means the Statement of Financial Accounting Standard Number 144 entitled
“Accounting for the Impairment or Disposal of Long-Lived Assets” issued by the Financial Accounting
Standards Board in August of 2001, as amended and in effect from time to time.



 









 



33


     “Solvent” means, with respect to any Person at any time, a condition under which (a) the fair
saleable value of such Person’s assets is, on the date of determination, greater than the total
amount of such Person’s liabilities (including contingent and unliquidated liabilities) at such
time, (b) such Person is able to pay all of its liabilities as such liabilities mature, (c) such
Person does not intend to, and such Person does not believe it will, incur debts or liabilities
beyond its ability to pay as such debts and liabilities mature, and (d) such Person is not engaged
in a business or transaction, and such Person is not about to engage in a business or transaction
for which such Person’s property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such Person is engaged. For
purposes of this definition, (i) the amount of a Person’s contingent or unliquidated liabilities at
any time shall be that amount which, in light of all the facts and circumstances then existing,
represents the amount which can reasonably be expected to become an actual or matured liability,
(ii) the “fair saleable value” of an asset shall be the amount which may be realized within a
reasonable time either through collection or sale of such asset at its regular market value, and
(iii) the “regular market value” of an asset shall be the amount which a capable and diligent
business person could obtain for such asset from an interested buyer who is willing to purchase
such asset under ordinary selling conditions.



     “Specified MLP Assets” means all the assets that any of the MLP Subsidiaries have an
obligation or option to purchase from the Borrower or any other Credit Party pursuant to Section
4.4 of the MLP Gathering and Processing Agreement and Sections 2.2(b) and 2.3 of the MLP Omnibus
Agreement.



     “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 applicable
maximum reserve percentages (including all basic, marginal, special, emergency and supplemental
reserves) expressed as a decimal established by the Board to which the Administrative Agent is
subject with respect to the Adjusted Eurodollar 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 Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency fundings and to be subject to such reserve requirements without the benefit of or
credit for proration, exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve percentage.



     “Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation,
limited liability company, partnership (limited or
general), association or other entity the accounts of which would be consolidated with those
of the parent in the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date. Unless otherwise indicated herein, each
reference to the term “Subsidiary” means a Subsidiary of the Borrower.



     “Subsidiary Guarantor” means each Subsidiary that is a party to the Subsidiary Guarantee
Agreement.



 









 



34


     “Subsidiary Guarantee Agreement” means the Subsidiary Guarantee Agreement between the
Subsidiary Guarantors and the Administrative Agent, substantially in the form of Exhibit H,
together with all supplements thereto.



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



     “Term Obligations” means the obligations of the Borrower under this Agreement and of the
Borrower and the other Loan Parties under the other Loan Documents, including (a) the due and
punctual payment by the Borrower of (i) the principal of and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or similar proceeding, regardless
of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all
other monetary obligations of the Borrower under this Agreement or any other Loan Document,
including in respect of fees, costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including any monetary obligations incurred during the pendency of
any bankruptcy, insolvency, receivership or similar proceeding, regardless of whether allowed or
allowable in such proceeding), (b) the due and punctual performance of all other obligations of the
Borrower under or pursuant to this Agreement and each other Loan Document and (c) the due and
punctual payment and performance of all of the obligations of each other Loan Party under or
pursuant to each of the other Loan Documents.



     “Three-Year Strip Price” means, as of any date, (a) for the 36-month period commencing with
the month immediately following the month in which such date occurs, the monthly futures contract
prices for crude oil and natural gas for the 36 succeeding months as quoted on the NYMEX and
(b) for periods after such 36-month period, the average of such quoted prices for the period from
and including the 25th month in such 36-month period through the 36th month in such period.



     “Total Debt” means, as of any date, the sum, without duplication, of (a) the aggregate
principal amount of Indebtedness of the Borrower and the Subsidiaries outstanding as of such date,
in the amount that would be reflected on a balance sheet prepared as of such date on a consolidated
basis in accordance with GAAP, but excluding Indebtedness of any Person that is not a Credit Party
except to the extent such Indebtedness constitutes Indebtedness of a Credit Party (including
pursuant to a Guarantee), and (b) the aggregate principal amount of Indebtedness of any Person that
is not a Credit Party that is Guaranteed as of such date by the Borrower or any other Credit Party.



     “Total Secured Debt” means, at any time, Total Debt that is secured by or arises in connection
with a Lien on any asset of the Borrower or any other Credit Party.



     “Transactions” means (a) the execution, delivery and performance by the Borrower of each
Purchase Agreement and the consummation of the Acquisition and the other transactions contemplated
thereby, (b) the execution, delivery and performance by each Loan Party of the Loan Documents to
which it is to be a party, the borrowing of the Loans and the use of the proceeds thereof, (c) the
execution, delivery and performance by the Borrower and the other



 









 



35

Credit Parties party thereto of
the First Lien Fifth Amendment and (d) the payment of fees and expenses incurred in connection with
the foregoing.




     “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
Adjusted Eurodollar Rate or the Alternate Base Rate.



     “UCC” means the Uniform Commercial Code as in effect in any applicable state or jurisdiction,
as the same may be amended from time to time.



     “United States” or “U.S.” means the United States of America, its fifty states and the
District of Columbia.



     “U.S. Dollars”, “$” or “Dollar” refers to lawful money of the United States of America.



     “Wholly-Owned Subsidiary” means, as to any Person, any Subsidiary of such Person all of the
outstanding Equity Interests (other than directors’ qualifying shares) of which, on a fully-diluted
basis, are owned, beneficially and of record, by such Person or one or more of its Wholly-Owned
Subsidiaries or by such Person and one or more of its Wholly-Owned Subsidiaries. Unless otherwise
indicated, each reference to a “Wholly-Owned Subsidiary” means a Wholly-Owned Subsidiary of the
Borrower.



     SECTION 1.02. Terms Generally. The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The
word “will” shall be construed to have the same meaning and effect as the word “shall”. The words
“asset” and “property” shall be construed to have the same meaning and effect and to refer to any
and all real and personal, tangible and intangible assets and properties, including cash,
securities, accounts and contract rights. 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, restated,
increased, renewed, extended, supplemented or otherwise modified (subject to any restrictions on
such amendments, restatements, increases, renewals, extensions, supplements or modifications set
forth herein), (b) any reference herein to any Person shall be construed to include such Person’s
successors and assigns, provided such successors and assigns are permitted by the Loan Documents,
(c) the words “herein”, “hereof” and “hereunder”, and
words of similar import, shall be construed to refer to this Agreement in its entirety and not
to any particular provision hereof, and (d) all references herein to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules
to, this Agreement.



     SECTION 1.03. Accounting Terms; GAAP. Except as otherwise expressly provided 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 notifies the Administrative Agent that the
Borrower requests an amendment to any provision hereof to eliminate the effect of any change
occurring after the date of this Agreement in GAAP or in the application thereof



 









 



36

on the operation
of such provision (or if the Administrative Agent notifies the Borrower 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.




     SECTION 1.04. Effectuation of Transactions. All representations and warranties of the
Borrower and the other Loan Parties contained in this Agreement and the other Loan Documents shall
be deemed made immediately after giving effect to the Acquisition and the other Transactions to
occur on the date hereof, unless the context otherwise requires.



ARTICLE II




The Credits




     SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender
agrees to make a Loan to the Borrower on the date hereof in a principal amount not exceeding such
Lender’s Commitment. Amounts repaid or prepaid in respect of Loans may not be reborrowed.



     SECTION 2.02. Loans and Borrowings. (a) 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 of the Lenders are several and
no Lender shall be responsible for any other Lender’s failure to make Loans as required hereunder.
Notwithstanding anything to the contrary contained herein (and without affecting any other
provision hereof), the funded portion of each Loan to be made on the date hereof (i.e., the amount
advanced in cash to the Borrower on the date hereof) shall be equal to 98.0% of the principal
amount of such Loan.



     (b) Subject to Section 2.13, 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) 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 $1,000,000 and not less than
$2,500,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $500,000 and not less than $500,000. 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 seven Eurodollar Borrowings outstanding.



     (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled
to request, or to elect to convert or continue, any Eurodollar Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.



 









 



37


     SECTION 2.03. Borrowings Procedure. To request a Borrowing, an Authorized Officer of the
Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., 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 2:00 p.m.,
New York City time, on the day (which shall be a Business Day) of the proposed Borrowing. Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile to the Administrative Agent of a written Borrowing Request executed by an
Authorized Officer of the Borrower. Each such telephonic and written Borrowing Request shall
specify the following information in compliance with Section 2.02:




     (a) the aggregate amount of the requested Borrowing;




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




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




     (d) the wire transfer instructions for one or more accounts (together with the account
number of each such account) to which funds are to be disbursed (and, in the event funds are
to be disbursed to more than one account, the portion of the proceeds of the requested
Borrowing to be disbursed to each such account).


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. Promptly following receipt of a Borrowing Request in accordance with this Section, 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. Funding of Borrowings. (a) 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 wiring the amounts so received, in like funds, in accordance
with the wiring instructions set forth in the Borrowing Request.



     (b) 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 paragraph (a) of this Section 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



 









 



38

Administrative Agent, at (i) in the case of such Lender, the greater of
(A) the Federal Funds Effective Rate or (B) 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 Loans included in such Borrowing. If such Lender pays
such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.




     SECTION 2.05. Interest Elections. (a) Each Borrowing initially shall be of the Type
specified in the applicable Borrowing Request (or an ABR Borrowing if no Type is specified) and, in
the case of a Eurodollar Borrowing, shall have an initial Interest Period of one month.
Thereafter, the Borrower may elect from time to time 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. The Borrower may, subject to the requirements
of Section 2.02(c), 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) To make an election pursuant to this Section, an Authorized Officer of the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a Borrowing Request
would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile to the Administrative Agent of a written Interest Election Request executed
by an Authorized Officer of the Borrower.



     (c) Each telephonic and written Interest Election Request pursuant to this Section 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 clauses (iii) and (iv) below 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 to be 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.



 









 



39




     (d) Promptly following receipt of an Interest Election Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.



     (e) If the Borrower fails to deliver a timely Interest Election Request (or delivers an
Interest Election Request that is inconsistent with a telephonic election) with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the request of the Required
Lenders, so notifies the Borrower, then, so long as such Event of Default is continuing, (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless
repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.



     SECTION 2.06. Termination of Commitments. Unless previously terminated, the Commitments
shall terminate at 5:00 p.m., New York City time, on the date hereof.



     SECTION 2.07. Repayment of Loans; Evidence of Indebtedness. (a) 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 of such Lender on the Maturity Date, plus a fee equal to 1.00%
of such unpaid principal amount.



     (b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the Term Obligations of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid to such Lender from
time to time hereunder.



     (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount
of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable from the Borrower
to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the accounts of the Lenders and each Lender’s share thereof.



     (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this
Section shall be prima facie evidence of the existence and amounts of the obligations recorded
therein; provided that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligation of the Borrower to pay
any amounts due hereunder in accordance with the terms of this Agreement.



     (e) Any Lender may request that Loans made by it be evidenced by one or more promissory
notes. In such event, the Borrower shall prepare, execute and deliver to such Lender promissory
notes payable to the order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent and reasonably acceptable to
the Borrower. Thereafter, the Loans evidenced by such promissory notes and interest thereon shall
at all times (including after assignment pursuant to



 









 



40

Section 10.04) be represented by one or more
promissory notes in such form payable to the payee named therein (or, if any such promissory note
is a registered note, to such payee and its registered assigns).




     SECTION 2.08. Amortization of Loans. (a) Subject to adjustment for prepayments as set forth
in paragraph (b) of this Section, the Borrower shall repay to the Administrative Agent, for the
ratable account of the Lenders, the Loans on the last Business Day of each December, March, June
and September in an aggregate principal amount for each such date equal to 0.25% of the aggregate
principal amount of the Loans outstanding on the date hereof.



     (b) Any prepayment of a Borrowing pursuant to Section 2.09 shall be applied pro rata against
the remaining scheduled installments of principal due in respect of the Loans under paragraph (a)
of this Section.



     (c) Prior to any repayment of Borrowings under this Section, the Borrower shall specify the
Borrowing or Borrowings to be repaid and shall notify the Administrative Agent by telephone
(confirmed by hand delivery or facsimile) of such election not later than 2:00 p.m., New York City
time, three Business Days (or, in the case of a repayment of an ABR Borrowing, one Business Day)
before the scheduled date of such repayment. Each repayment of a Borrowing shall be applied
ratably to the Loans included in the repaid Borrowing. Repayments of Borrowings shall be
accompanied by accrued and unpaid interest on the amount repaid and shall be subject to
Section 2.15.



     SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the right at any time and
from time to time to prepay any Borrowing in whole or in part, without premium or penalty, subject
to the requirements of this Section; provided, however, that any prepayment pursuant to this
paragraph (i) made after the second anniversary of the date hereof but on or prior to the third
anniversary of the date hereof shall be accompanied by a prepayment fee equal to 3.00% of the
aggregate principal amount of such prepayment, (ii) made after the third anniversary of the date
hereof but on or prior to the fourth anniversary of the date hereof shall be accompanied by a
prepayment fee equal to 2.00% of the aggregate principal amount of such prepayment and (iii) made
after the fourth anniversary of the date hereof but prior to the Maturity Date shall be accompanied
by a prepayment fee equal to 1.00% of the aggregate principal amount of such prepayment.



     (b) In the event and on each occasion that any Net Cash Proceeds are received by or on behalf
of the Borrower or any other Credit Party in respect of any Prepayment Event (or, in the
case of any Prepayment Event described in clause (a)(i) of the definition of such term, by or
on behalf of the Borrower or any Subsidiary), the Borrower shall, on the Prepayment Date in respect
of such Prepayment Event, prepay the Loans in an aggregate amount equal to such Net Cash Proceeds;
provided, however, that no prepayment shall be required pursuant to this paragraph (i) in the case
of any Prepayment Event described in clause (b) of the definition of such term, to the extent such
Net Cash Proceeds in respect thereof shall be required to be applied (in the absence of any
reinvestment thereof) to reduce Indebtedness outstanding under any First Lien Permitted Facility as
a result of a reduction of the First Lien Global Borrowing Base or the First Lien U.S. Borrowing
Base arising from the occurrence of such Prepayment Event and (ii) in the case of any Prepayment
Event, to the extent that, as of the Prepayment Date in respect of such



 









 



41

Prepayment Event, the
Liquidity Amount (giving effect, in the case of any Prepayment Event referred to in clause (b) of
the definition of such term, to any required reduction of Indebtedness outstanding under any First
Lien Permitted Facility as described in clause (i) above) is less than the Minimum Liquidity
Amount.




     (c) Any Lender may elect, by notice to the Administrative Agent by telephone (confirmed by
hand delivery or facsimile) within one Business Day of having received notice from the
Administrative Agent of such prepayment, to decline all or any portion of any prepayment of its
Loans pursuant to this Section (other than an optional prepayment pursuant to paragraph (a) of this
Section, which may not be declined), in which case the aggregate amount of the payment that would
have been applied to prepay Loans but was so declined shall be retained by the Borrower (and may be
used by the Borrower, in its discretion, to make an optional prepayment of Borrowings under this
Section).



     (d) Prior to any optional or mandatory prepayment of Borrowings under this Section, the
Borrower shall specify the Borrowing or Borrowings to be prepaid in the notice of such prepayment
delivered pursuant to paragraph (e) of this Section; provided, that (i) any optional prepayment
pursuant to paragraph (a) of this Section shall be applied first to ABR Borrowings to the full
extent thereof and then to Eurodollar Borrowings, in each case in a manner that minimizes the
amount of any payments required to be made by the Borrower pursuant to Section 2.15, and (ii) any
mandatory prepayment pursuant to paragraph (b) of this Section shall be applied on a pro rata basis
to the then outstanding Loans, irrespective of whether such outstanding Loans are ABR Loans or
Eurodollar Loans; provided that if no Lender shall have exercised its right under paragraph (c) of
this Section, then, with respect to each such mandatory prepayment, the amount of such mandatory
prepayment shall be applied first to ABR Borrowings to the full extent thereof and then to
Eurodollar Borrowings, in each case in a manner that minimizes the amount of any payments required
to be made by the Borrower pursuant to Section 2.15.



     (e) The Borrower shall notify the Administrative Agent by telephone (confirmed by hand
delivery or facsimile) of (i) any prepayment under paragraph (a) of this Section, (A) 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, and (B) 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 and
(ii) any prepayment under paragraph (b) of this Section, not later than 12:00 noon, New York City
time, four Business Days before the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date, the principal amount of each
Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment; provided that a notice of any
prepayment under paragraph (b) of this Section in respect of any Prepayment Event described in
clause (d) of the definition of such term may state that it is conditioned upon the occurrence of
such Prepayment Event, and may be revoked (by notice to the Administrative Agent on or prior to the
applicable Prepayment Date) if such condition shall not have been satisfied, it being understood
that any such revocation shall not affect the obligations of the Borrower under Section 2.15.
Promptly following receipt of any such notice, 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



 









 



42

provided in Section 2.02,
except as necessary to apply fully the required amount of a mandatory prepayment. Subject to
paragraphs (c) and (d) of this Section, each prepayment of a Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing. Prepayments of Borrowings shall be accompanied by
accrued and unpaid interest on the amount prepaid and shall be subject to Section 2.15.




     SECTION 2.10. 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 in writing between the
Borrower and the Administrative Agent, including the fees payable under the Administrative Agent
Fee Letter. Such fees shall be paid on the dates due, in immediately available funds, and shall
not be refundable under any circumstances absent manifest error (e.g., as a result of a clerical
mistake).



     SECTION 2.11. Interest. (a) Subject to Section 10.13, the Loans comprising each
ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin for ABR
Loans.



     (b) Subject to Section 10.13, the Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted Eurodollar Rate for the Interest Period in effect for such Borrowing plus
the Applicable Margin for Eurodollar Loans.



     (c) Notwithstanding the foregoing, but subject to Section 10.13, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall until
paid or waived in writing bear interest, after as well as before judgment, at a rate per annum
equal to (i) in the case of overdue principal of any Loan, the lesser of (A) the rate otherwise
applicable to such Loan as provided in the preceding paragraphs of this Section plus 2% or (B) the
Highest Lawful Rate or (ii) in the case of any other amount, the lesser of (A) the rate applicable
to ABR Loans as provided in paragraph (a) of this Section plus 2% or (B) the Highest Lawful Rate.



     (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date
for such Loan; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall
be payable on demand of the Administrative Agent or the Required Lenders, (ii) in the event of any
repayment or prepayment of any Loan (whether due to acceleration or otherwise), 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) All interest hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to (i) the Alternate Base Rate at times when the Alternate Base Rate
is based on the Prime Rate or (ii) clause (c) of the definition of the term “Alternate Base 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). Each determination by the Administrative Agent of an interest rate or



 









 



43

fee hereunder
shall, except in cases of manifest error, be final, conclusive and binding on the parties.




     SECTION 2.12. 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 Eurodollar Rate or the Eurodollar Rate, as applicable, for such Interest Period;




     (b) the Administrative Agent is advised by the Required Lenders that the Adjusted
Eurodollar Rate 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; or




     (c) the Administrative Agent determines in good faith (which determination shall be
conclusive) that by reason of circumstances affecting the interbank dollar market generally,
deposits in U.S. Dollars in the London interbank dollar market are not being offered for the
applicable Interest Period and in an amount equal to the amount of the Eurodollar Loan
requested by the Borrower;


then the Administrative Agent shall give notice thereof (which may be telephonic) to the Borrower
and the Lenders 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,
which notice the Administrative Agent shall give promptly after becoming aware thereof, any
Interest Election Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurodollar Borrowing for the affected Interest Period shall be ineffective.




     SECTION 2.13. Illegality. (a) Notwithstanding any other provision of this Agreement to the
contrary, if (i) by reason of the adoption of any applicable Governmental Rule or any change in any
applicable Governmental Rule or in the interpretation or administration thereof by any Governmental
Authority or compliance by any Lender with any request or directive (whether or not having the
force of law) of any central bank or other Governmental Authority or (ii) circumstances affecting
the London interbank dollar market or the position of a Lender therein shall at any time make it
unlawful in the sole discretion of a Lender exercised in good faith for such Lender or its
Applicable Lending Office to (A) honor its obligation to make
Eurodollar Loans either generally or for a particular Interest Period provided for hereunder
or (B) maintain Eurodollar Loans either generally or for a particular Interest Period provided for
hereunder, then such Lender shall promptly notify the Borrower thereof in writing through the
Administrative Agent (who will endeavor to, but not be liable for failing to, provide the Borrower
with the basis therefor in reasonable detail) and such Lender’s obligation to make or maintain
Eurodollar Loans having an affected Interest Period hereunder shall be suspended until such time as
such Lender may again make and maintain Eurodollar Loans having an affected Interest Period (in
which case the provisions of paragraph (b) below shall be applicable). Before giving such notice
pursuant to this Section, such Lender will designate a different available



 









 



44

Applicable Lending
Office for the affected Eurodollar Loans of such Lender or take such other action as the Borrower
may request if such designation or action will avoid the need to suspend such Lender’s obligation
to make Eurodollar Loans hereunder and will not, in the sole opinion of such Lender exercised in
good faith, be disadvantageous to such Lender (provided that such Lender shall have no obligation
so to designate an Applicable Lending Office for Eurodollar Loans located in the United States).




     (b) If the obligation of any Lender to make or maintain any Eurodollar Loans shall be
suspended pursuant to paragraph (a) of this Section, all Loans having an affected Interest Period
which would otherwise be made by such Lender as Eurodollar Loans shall be made instead as ABR Loans
(and, if such Lender so requests by written notice to the Borrower with a copy to the
Administrative Agent, each Eurodollar Loan having an affected Interest Period of such Lender then
outstanding shall be automatically converted into an ABR Loan on the last day of the Interest
Period for such Eurodollar Loans unless earlier conversion is required by applicable law) and, to
the extent that Eurodollar Loans are so made as (or converted into) ABR Loans, all payments of
principal which would otherwise be applied to such Eurodollar Loans shall be applied instead to
such ABR Loans.



     SECTION 2.14. Increased Costs. (a) If any Change in Law shall:




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


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 to reduce the amount of any sum received or receivable by such
Lender hereunder (whether of principal, interest or otherwise) with respect to any Eurodollar Loan,
then the Borrower will pay, in accordance with paragraph (c) of this Section, to such Lender such
additional amount or amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.




     (b) If any Lender determines in good faith that any Change in Law regarding capital
requirements has had or would have the effect of reducing the rate of return on such Lender’s
capital or on the capital of such Lender’s holding company, if any, as a consequence of this
Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s
holding company could have achieved but for such Change in Law (taking into consideration such
Lender’s policies and the policies of such Lender’s holding company with respect to capital
adequacy), then the Borrower will pay, in accordance with paragraph (c) of this Section, to such
Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding
company for any such reduction suffered.



 









 



45


     (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate
such Lender or such Lender’s holding company, as the case may be, as specified in paragraph (a) or
(b) of this Section delivered to the Borrower shall be conclusive absent manifest error. Except as
provided in paragraph (d) of this Section, the Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 Business Days after receipt thereof.



     (d) Failure or delay on the part of any Lender to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender pursuant to this Section for any
increased costs or reductions incurred more than 180 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of
such Lender’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 180-day period referred
to above shall be extended to include the period of retroactive effect thereof.



     SECTION 2.15. Break Funding Payments. In the event of:




     (a) the payment (including prepayment) 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 other than on the last day of the Interest
Period applicable thereto;




     (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date
specified in any notice delivered pursuant hereto (whether or not such notice may be revoked
in accordance with the provisions hereof); or




     (d) the assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.18;


then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. 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 Eurodollar 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 London interbank market. A certificate of any Lender setting forth any amount
or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to
the Borrower and the Administrative Agent and shall be conclusive absent manifest error. Except as
provided in the last sentence of this Section, the Borrower shall pay such





 









 



46




Lender the amount shown
as due on any such certificate within 10 Business Days after receipt thereof. Failure or delay on
the part of any Lender to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be
required to compensate a Lender pursuant to this Section for any such loss, cost or expense
described in this Section incurred more than 180 days prior to the date that such Lender notifies
the Borrower of the circumstance giving rise to such loss, cost or expense described in this
Section and of such Lender’s intention to claim compensation therefor.




     SECTION 2.16. Taxes. (a) Any and all payments by or on account of any obligation of the
Borrower hereunder or under any other Loan Document shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required
to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall
be increased as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section), the Administrative Agent or each Lender
(as the case may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance with applicable law;
provided that if a Lender has breached or is in breach of its obligations under paragraph (e)
below, then the Borrower shall have no obligations under clause (i) above with respect to payments
made or to be made to such Lender where Indemnified Taxes and/or Other Taxes arise in respect of
such payments as a consequence of such Lender’s status as a Foreign Lender.



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



     (c) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT AND EACH LENDER, WITHIN 10 BUSINESS
DAYS AFTER WRITTEN DEMAND THEREFOR, FOR THE FULL AMOUNT OF ANY INDEMNIFIED TAXES OR OTHER TAXES
PAID BY THE ADMINISTRATIVE AGENT OR SUCH LENDER ON OR WITH RESPECT TO ANY PAYMENT BY OR ON ACCOUNT
OF ANY OBLIGATION OF THE BORROWER HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT (INCLUDING INDEMNIFIED
TAXES OR OTHER TAXES IMPOSED OR ASSERTED ON OR ATTRIBUTABLE TO AMOUNTS PAYABLE UNDER THIS SECTION)
AND ANY PENALTIES, INTEREST AND REASONABLE EXPENSES ARISING THEREFROM OR WITH RESPECT THERETO,
WHETHER OR NOT SUCH INDEMNIFIED TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY IMPOSED OR ASSERTED
BY THE RELEVANT GOVERNMENTAL AUTHORITY; PROVIDED THAT IF SUCH PAYMENTS OR LIABILITIES ARISE FROM
THE
LENDER HAVING BREACHED OR BEING IN BREACH OF ITS OBLIGATIONS UNDER PARAGRAPH (E) BELOW, THEN
THE BORROWER SHALL HAVE NO OBLIGATIONS UNDER THIS PARAGRAPH WITH RESPECT TO SUCH PAYMENTS OR
LIABILITIES. A CERTIFICATE AS TO THE AMOUNT OF SUCH PAYMENT OR LIABILITY DELIVERED TO THE BORROWER
BY A LENDER OR BY THE ADMINISTRATIVE AGENT ON ITS OWN BEHALF OR ON BEHALF OF A LENDER SHALL BE
CONCLUSIVE ABSENT MANIFEST ERROR.



 









 



47


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



     (e) Each Foreign Lender agrees that such Lender will deliver to the Borrower and the
Administrative Agent two duly completed copies of United States Internal Revenue Service Form W-8
BEN or W-8 ECI or successor forms (or if such forms are no longer required, a representation by
such Foreign Lender) certifying in either case that such Foreign Lender is entitled to receive
payments from the Loan Parties under the Loan Documents without deduction or withholding of any
United States federal income taxes. Each Foreign Lender that so delivers a Form W-8 BEN or W-8 ECI
further undertakes to deliver to the Borrower and the Administrative Agent two additional copies of
such form (or a successor form) on or before such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered by it and such
amendments thereto or extensions or renewals thereof as may be reasonably requested by the Borrower
or the Administrative Agent, in each case, certifying that such Foreign Lender is entitled to
receive payments from the Borrower under the Loan Documents without deduction or withholding of any
United States federal income taxes, unless (i) an event (including any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would otherwise be required
which renders all such forms inapplicable or which would prevent such Foreign Lender from duly
completing and delivering any such form with respect to it and (ii) such Foreign Lender advises the
Borrower and the Administrative Agent that it is not capable of receiving such payments without any
deduction or withholding of United States federal income tax.



     (f) If the Borrower at any time pays an amount under paragraphs (b) or (c) above to any
Lender or the Administrative Agent and such payee receives a refund of or credit for any part of
any Indemnified Taxes or Other Taxes which such payee determines in its reasonable judgment is made
with respect to such amount paid by the Borrower, such Lender or the Administrative Agent shall pay
to the Borrower the amount of such refund or credit, net of all out-of-pocket expenses of such
Lender or the Administrative Agent and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund or credit), promptly, and in any event
within 60 days, following the receipt of such refund or credit by such payee; provided that the
Borrower, upon the request of such Lender or the Administrative Agent, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to such Lender or the Administrative Agent, as the case may be, if such
Lender or the Administrative Agent is required to repay such refund or credit to such Governmental
Authority. This paragraph 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 that it deems confidential) to the Borrower or any other Person.



     SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it hereunder or
under any other Loan Document (whether of principal, interest, fees or of amounts payable under
Section 2.14, 2.15 or 2.16, or otherwise) prior to the time expressly required hereunder or under
such other Loan Document for such payment (or, if no such time is expressly required, prior to



 









 



48

2:00 p.m., New York City time), on the date when due, in immediately available funds, without
set-off or counterclaim. 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 such account as
may be specified in writing by the Administrative Agent to the Borrower for such purpose, except
that payments pursuant to Sections 2.14, 2.15, 2.16 and 10.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons
specified therein. 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.
Except as otherwise expressly provided herein, if any payment under any Loan Document shall be due
on a day that is not a Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable
for the period of such extension. All payments under each Loan Document shall be made in U.S.
Dollars.




     (b) 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 resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its Loans 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 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; 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 paragraph 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 to any
assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to
which the provisions of this paragraph 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.



     (c) 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
hereunder that the Borrower will not make such payment, the Administrative Agent may
assume that the Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such Lender 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.



 









 



49


     (d) If any Lender shall fail to make any payment required to be made by it to the
Administrative Agent pursuant to this Agreement, then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received
by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations to
the Administrative Agent until all such unsatisfied obligations are fully paid.



     SECTION 2.18. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests
compensation under Section 2.14, 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 2.16, then
such Lender shall use commercially reasonable efforts to designate a different Applicable Lending
Office for funding or booking its Loans hereunder or to assign and delegate its rights and
obligations hereunder to another of its offices, branches or Affiliates, if, in the reasonable
judgment of such Lender, such designation or assignment and delegation (i) would eliminate or
reduce amounts payable pursuant to Section 2.14 or 2.16, 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 and
delegation.



     (b) If (i) any Lender asserts that events have occurred suspending its obligation to make or
maintain Eurodollar Loans under Section 2.13 when substantially all other Lenders have not also
done so, (ii) any Lender requests compensation under Section 2.14, (iii) 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 2.16, (iv) any Lender defaults in its obligation to fund Loans hereunder
or (iv) any Lender has failed to consent to a proposed amendment, waiver, discharge or termination
that under Section 10.02 requires the consent of all the Lenders (or all the affected Lenders) and
with respect to which the Required Lenders shall have granted their consent, then the Borrower may,
at its sole expense, 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 10.04), all its interests, rights and obligations under this Agreement and the
other Loan Documents to an assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided that (A) if the assignee is not a
Lender or an Affiliate of a Lender, the Borrower shall have received the prior written consent of
the Administrative Agent, which consent shall not unreasonably be withheld, conditioned or delayed,
(B) such Lender shall have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon and all other amounts payable to it hereunder (including, if
applicable, the prepayment fee payable pursuant to Section 2.09(a) (with such assignment being
deemed to be an optional
prepayment under such Section)), from the assignee (to the extent of such outstanding
principal and accrued interest) or the Borrower (in the case of all other amounts), (C) in the case
of any such assignment resulting from a claim for compensation under Section 2.14 or payments
required to be made pursuant to Section 2.16, such assignment will result in a reduction in such
compensation or payments and (D) in the case of any such assignment resulting from the failure to
provide a consent, the assignee shall have given (or, if not a Lender, shall substantially
contemporaneously with becoming a Lender give) such consent and, as a result of such assignment and
any substantially contemporaneous assignments and consents, the applicable amendment, waiver,
discharge or termination can be effected. A Lender shall not be required to




 












 


50


make any such
assignment and delegation if, prior thereto, as a result of a waiver or consent by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment and delegation have
ceased to apply. Each party hereto agrees that an assignment required pursuant to this paragraph
may be effected pursuant to an Assignment and Acceptance executed by the Borrower, the
Administrative Agent and the assignee and that the Lender required to make such assignment need not
be a party thereto.




ARTICLE III




Representations and Warranties




     In order to induce the Administrative Agent and the Lenders to enter into this Agreement and
to make Loans hereunder, the Borrower represents and warrants to the Administrative Agent and the
Lenders that each of the following statements is true and correct:



     SECTION 3.01. Existence and Power. Each Credit Party (a) is a corporation, partnership or
limited liability company duly incorporated or organized (as applicable), validly existing and, if
applicable for such Credit Party in the jurisdiction in issue, in good standing under the laws of
its jurisdiction of incorporation or organization, (b) has all requisite corporate, partnership or
limited liability company power (as applicable) required to carry on its businesses as now
conducted and (c) is duly qualified to transact business as a foreign corporation, partnership or
limited liability company in each jurisdiction where a failure to be so qualified would reasonably
be expected to have a Material Adverse Effect.



     SECTION 3.02. Loan Party and Governmental Authorization; Contravention. The Transactions to
be entered into by each Credit Party (a) are within such Credit Party’s corporate, partnership or
limited liability company powers, (b) have been duly authorized by all necessary corporate,
partnership or limited liability company action, (c) require no action by or in respect of, or
filing with, any Governmental Authority (other than (i) actions or filings pursuant to the Exchange
Act, (ii) actions or filings necessary to create or perfect the Liens required by any Loan Document
or any First Lien Loan Document, (iii) actions or filings that have been taken or made and are in
full force and effect, or that are of the type that would be obtained after the date hereof in the
ordinary course of business, and (iv) actions or filings which, if not taken or made, would not
reasonably be expected to have a Material Adverse Effect), (d) will not violate or contravene any
provision of (i) any applicable Governmental Rule (including Regulation T, U or X of the Board),
except any violation or contravention that would not reasonably be expected to have a Material
Adverse Effect, or (ii) the Organic Documents of the Borrower or any Subsidiary, (e) will not
violate or result (alone or with notice or lapse of time or both) in a default
under any indenture or other agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower or any Subsidiary or any of their properties, or give rise to
a right thereunder to require any prepayment, repurchase or redemption to be made by the Borrower
or any Subsidiary, or give rise to a right of, or result in, any termination, cancellation or
acceleration of any obligation thereunder, except any of the foregoing that would not reasonably be
expected to have a Material Adverse Effect, or (f) will not result in the creation or imposition of
any Lien on any property of any Credit Party, other than Liens created under the Loan Documents and
the First Lien Loan Documents.



 









 



51


     SECTION 3.03. Binding Effect. This Agreement constitutes, and each other Loan Document when
executed and delivered will constitute, a legal, valid and binding obligation of each Loan Party
which is a party hereto or thereto, enforceable against each such Loan Party which executes the
same in accordance with its terms, except as the enforceability thereof may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, or similar Governmental Rules affecting
creditors’ rights generally, and (b) equitable principles of general applicability (whether
enforcement is sought by proceedings at law or in equity).



     SECTION 3.04. Financial Information; Absence of Material Adverse Effect; Solvency. (a) The
most recent annual audited consolidated balance sheet of the Borrower and the Subsidiaries made
available to the Lenders, and the related consolidated statements of income and comprehensive
income and cash flows for the Fiscal Year then ended, fairly present in all material respects, in
conformity with GAAP, the consolidated financial position of the Borrower and the Subsidiaries as
of the end of such Fiscal Year and their consolidated results of operations and cash flows for such
Fiscal Year.



     (b) The most recent quarterly unaudited consolidated balance sheet of the Borrower and the
Subsidiaries made available to the Lenders, and the related unaudited consolidated statements of
income and comprehensive income and cash flows for the Fiscal Quarter and the portion of the Fiscal
Year then ended, fairly present in all material respects, in conformity with GAAP, the consolidated
financial position of the Borrower and the Subsidiaries as of the end of such Fiscal Quarter and
their consolidated results of operations and cash flows for such Fiscal Quarter and such portion of
such Fiscal Year (except that such balance sheet and other financial statements do not contain all
footnote disclosures required in accordance with GAAP and are subject to normal year-end audit
adjustments).



     (c) The Borrower has heretofore furnished to the Lenders the pro forma consolidated balance
sheet of the Borrower and the Subsidiaries as of June 30, 2008, prepared giving effect to the
Transactions as if the Transactions had occurred on such date. Such pro forma consolidated balance
sheet (i) has been prepared by the Borrower in good faith, (ii) is based on the information
available to the Borrower as of the date of delivery thereof after due inquiry, (iii) accurately
reflects in all material respects all adjustments necessary to give effect to the Transactions and
(iv) presents fairly, in all material respects, the pro forma consolidated financial position of
the Borrower and the Subsidiaries as of such date as if the Transactions had occurred on such date.



     (d) Since December 31, 2007, no event or circumstance which would reasonably be expected to
have a Material Adverse Effect has occurred.



     (e) After giving effect to the Transactions, the Borrower and the Subsidiaries, on a
consolidated basis, are Solvent.



     SECTION 3.05. Litigation. There is no action, suit or proceeding not fully covered by
insurance (except for normal deductibles and provided that the applicable insurance company has
acknowledged such coverage and a copy thereof is provided to the Administrative Agent) pending, or
to the knowledge of any Credit Party, threatened against or affecting the Borrower or any
Subsidiary before any Governmental Authority (a) in which there is a reasonable possibility



 









 



52




of an
adverse decision that, individually or together with any other such action, suit or proceeding,
would reasonably be expected to have a Material Adverse Effect or (b) that involves any of the Loan
Documents or the Transactions.



     SECTION 3.06. ERISA. No Credit Party or any ERISA Affiliate sponsors, maintains or
contributes to, or has ever sponsored, maintained or contributed to, or been obligated to sponsor,
maintain or contribute to, any Plan covered by Title IV of ERISA or subject to the funding
requirements of Section 412 of the Code or Section 302 of ERISA. Except in such instances where an
action, omission or failure would not reasonably be expected to have a Material Adverse Effect, (a)
each Plan sponsored, maintained or contributed to by any Credit Party or any ERISA Affiliate is in
compliance with all applicable Governmental Rules, (b) all returns, reports and notices required to
be filed with any Governmental Authority with respect to any Plan have been filed timely, and (c)
no Credit Party or any ERISA Affiliate has failed to make any contribution or pay any amount due or
owing as required by the terms of any Plan. There are no pending or, to the knowledge of any
Credit Party, threatened claims, lawsuits, investigations or actions (other than routine claims for
benefits in the ordinary course) asserted or instituted against the assets of any Plan or its
related trust or against any fiduciary of a Plan with respect to the operation of such Plan that
are likely to result in liability to any Credit Party or any Affiliate thereof resulting in an
event or circumstance which would reasonably be expected to have a Material Adverse Effect. Except
in such instances where an action, omission or failure would not reasonably be expected to have a
Material Adverse Effect, each Plan that is intended to be “qualified” within the meaning of Section
401(a) of the Code is, and has been during the period from its adoption to date, so qualified, both
as to form and operation, and all necessary governmental approvals, including a favorable
determination as to the qualification under the Code of such Plan and each amendment thereto, have
been or will be timely obtained. No Credit Party or any ERISA Affiliate has engaged in any
non-exempt prohibited transactions, within the meaning of Section 406 of ERISA or Section 4975 of
the Code, in connection with any Plan which would result in liability to any Credit Party that
would reasonably be expected to have a Material Adverse Effect. No Credit Party or any ERISA
Affiliate maintains or contributes to any Plan that provides a post-employment health benefit,
other than a benefit required under Section 601 of ERISA, or maintains or contributes to a Plan
that provides health benefits that is not fully funded except where the failure to fully fund such
Plan would not reasonably be expected to have a Material Adverse Effect. As of the date hereof, no
Credit Party or any ERISA Affiliate sponsors, maintains or contributes to, or has ever sponsored,
maintained or contributed to a multiple employer welfare benefit arrangement within the meaning of
Section 3(40)(A) of ERISA or any multiemployer plan within the meaning of Section 4001(a)(3) of
ERISA.



     SECTION 3.07. Taxes and Filing of Tax Returns. Except as otherwise permitted by Section 5.08,
(a) each Credit Party has filed all tax returns required to have been filed by it and
has paid all Taxes shown to be due and payable on such returns, including interest and
penalties, and all other Taxes which are payable by such Credit Party, to the extent the same have
become due and payable, (b) no Credit Party knows of any proposed material Tax assessment against
it, and all Tax liabilities of each Credit Party are adequately provided for, and (c) no income tax
liability of any Credit Party has been asserted by the Internal Revenue Service or other
Governmental Authority for Taxes in excess of those already paid.



 









 



53


     SECTION 3.08. Ownership of Properties. Each Credit Party has good and defensible fee simple
or leasehold title (subject to Immaterial Title Deficiencies and Permitted Encumbrances) to all
properties (including all Mortgaged Properties) purported to be owned by it, including all
properties reflected in the balance sheets referred to in Section 3.04 (other than any such
properties that have been sold, transferred or otherwise disposed of in accordance with the terms
hereof), and none of such properties is subject to any Lien other than Permitted Encumbrances.



     SECTION 3.09. Mineral Interests. Schedule 3.09 sets forth, as of the date hereof, an accurate
and complete list and description of all Real Properties that constitute “Designated Real
Properties” pursuant to clause (a) of the definition of such term, and such other Real Properties,
if any, as are required to be designated as “Designated Real Properties” in order for the Mortgaged
Property Requirement to be satisfied as of the date hereof. Subject only to Immaterial Title
Deficiencies and Permitted Encumbrances, each Credit Party has good and defensible title to all Oil
and Gas Properties described in the most recent Reserve Report delivered pursuant hereto (other
than any Oil and Gas Properties that have been sold, transferred or otherwise disposed of in
accordance with the terms hereof ). Subject only to Immaterial Title Deficiencies and Permitted
Encumbrances, (a) all Oil and Gas Properties described in the most recent Reserve Report delivered
pursuant hereto are valid, subsisting and in full force and effect, and (b) all material rentals,
royalties and other amounts due and payable in respect thereof have been duly paid when due, except
as provided in Section 5.04(b)(i) with respect to delay rentals. Without regard to any consent or
non-consent provisions of any joint operating agreement covering any Proved Mineral Interests of
any Credit Party, subject to Immaterial Title Deficiencies and Permitted Encumbrances, such Credit
Party’s proportionate share of (i) the costs for each Proved Mineral Interest described in the most
recent Reserve Report delivered pursuant hereto is not greater than 105% of the decimal fraction
set forth in such Reserve Report, before and after payout, as the case may be, and described
therein by the respective designations “working interests”, “WI”, “gross working interest”, “GWI”
or similar terms (provided that such Credit Party shall have the right to bear costs
disproportionate to its working interest with respect to any Mineral Interest for a period of time
in order to earn a working interest in such Mineral Interest from a third party as evidenced by a
written agreement) and (ii) production from, allocated to or attributed to each such Proved Mineral
Interest is not less than the decimal fraction set forth in such Reserve Report, before and after
payout, as the case may be, and described therein by the designations “net revenue interest”, “NRI”
or similar terms. Each well drilled in respect of each Proved Producing Mineral Interest described
in the most recent Reserve Report delivered pursuant hereto (A) is capable of, and is presently,
producing Hydrocarbons in commercially profitable quantities (except to the extent shut-in in
accordance with the applicable lease for such Proved Producing Mineral Interest), and after giving
effect to the transactions contemplated by this Agreement, each Credit Party will be entitled to
receive payments on a current basis for its share of production, with no funds in respect of any
thereof held in suspense,
other than any such funds held in suspense pending delivery of appropriate division orders,
and (B) has been drilled, bottomed, completed and operated in compliance in all material respects
with all applicable Governmental Rules, and no such well which is currently producing Hydrocarbons
is subject to any penalty in production by reason of such well having produced in excess of its
allowable production.



 









 



54


     SECTION 3.10. Licenses, Permits, Etc. Each Credit Party possesses such valid franchises,
certificates of convenience and necessity, operating rights, licenses, permits, consents,
authorizations, approvals, exemptions and orders of Governmental Authorities as are necessary to
carry on its business as now conducted and as proposed to be conducted, except to the extent a
failure to obtain any such item would not reasonably be expected to have a Material Adverse Effect.



     SECTION 3.11. Compliance with Law. The Borrower and each Subsidiary is in compliance with all
applicable Governmental Rules, other than violations of Governmental Rules which would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.



     SECTION 3.12. Full Disclosure. Neither the Confidential Information Memorandum nor any of the
other reports, financial statements, certificates or other information furnished by any Credit
Party to the Administrative Agent or any Lender for purposes of or in connection with this
Agreement or any other Loan Document or any transaction contemplated hereby or thereby (as modified
or supplemented by other information so furnished, and when taken as a whole) 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 as of the time when
made (it being understood that the foregoing representation and warranty, insofar as it relates to
the properties acquired in the Acquisition, is made to the knowledge of the Credit Parties);
provided that any projections and pro forma financial information contained in the materials
referenced above are based upon good faith estimates and assumptions believed by management of the
applicable Credit Party to be reasonable at the time made, it being recognized by the
Administrative Agent and Lenders that such financial information as it relates to future events is
not to be viewed as fact and that actual results during the period covered by such financial
information may differ from the projected results as set forth therein by a material amount. The
Credit Parties have disclosed or have caused to be disclosed to Lenders in writing any and all
facts (other than facts of general public knowledge, including facts contained in the Borrower’s
publicly available filings with the SEC) which would reasonably be expected to have a Material
Adverse Effect.



     SECTION 3.13. Nature of Business; Organizational Structure. The Credit Parties are engaged
only in the business of acquiring, exploring, developing and operating Mineral Interests in the
United States and Canada and the production, marketing, processing and transporting of Hydrocarbons
therefrom and businesses reasonably related or complementary thereto. Schedule 3.13 sets forth, as
of the date hereof, the name and jurisdiction of organization of, and the percentage of each class
of Equity Interests owned by the Borrower or any Subsidiary in, (a) each Subsidiary and (b) each
joint venture in which the Borrower or any Subsidiary owns any Equity Interests, and identifies
each Credit Party and Designated Credit Party as such.



     SECTION 3.14. Environmental Matters. Except for matters disclosed on Schedule 3.14, no
operation conducted by any Credit Party and no property now or previously owned or leased by any
Credit Party (including Mineral Interests) and no operations conducted thereon, and to any Credit
Party’s knowledge, no operations of any applicable prior owner, lessee or operator of any such
properties, is or has been in violation of any Environmental Law other than violations which
neither individually nor in the aggregate would reasonably be



 









 



55




expected to have a Material Adverse
Effect. Except for matters disclosed on Schedule 3.14, no Credit Party, nor any such property or
operation, is the subject of any existing, pending or, to any Credit Party’s knowledge, threatened
Environmental Complaint which would reasonably be expected to have a Material Adverse Effect. All
notices, permits, licenses and similar authorizations required to be obtained or filed in
connection with the ownership of each tract of real property or operations of any Credit Party
thereon and each item of personal property owned, leased or operated by any Credit Party, including
notices, licenses, permits and authorizations required in connection with any past or present
treatment, storage, disposal or release of Hazardous Materials into the environment, have been duly
obtained or filed, except to the extent the failure to obtain or file such notices, licenses,
permits and authorizations would not reasonably be expected to have a Material Adverse Effect. All
Hazardous Materials generated at each tract of real property or by each item of personal property
owned, leased or operated by any Credit Party have been transported, treated, and disposed of only
by carriers or facilities maintaining valid permits under RCRA and all other applicable
Environmental Laws for the conduct of such activities, except in such cases where the failure to
obtain such permits would not reasonably be expected to have a Material Adverse Effect. Except for
matters disclosed on Schedule 3.14, there have been no Hazardous Discharges which were not in
compliance with Environmental Laws, other than Hazardous Discharges which would not reasonably be
expected to have a Material Adverse Effect. Except for matters disclosed on Schedule 3.14, neither
the Borrower nor any Subsidiary has any contingent liability in connection with any Hazardous
Discharge which would reasonably be expected to have a Material Adverse Effect.



     SECTION 3.15. No Default. No Default or Event of Default has occurred and is continuing, or
will exist after giving effect to the transactions contemplated by this Agreement or the other Loan
Documents. Neither the Borrower nor any Subsidiary is in default under, nor has any event or
circumstance occurred which, but for the expiration of any applicable grace period or the giving of
notice, or both, would constitute a default under, any Material Agreement to which the Borrower or
any Subsidiary is a party or by which the Borrower or any Subsidiary is bound which default would
reasonably be expected to have a Material Adverse Effect.



     SECTION 3.16. Government Regulation. No Credit Party is subject to regulation under the
Federal Power Act, the Interstate Commerce Act, the Investment Company Act of 1940 (as any of the
preceding acts have been amended), or any other Governmental Rule which regulates the incurrence by
such Credit Party of Indebtedness, including Governmental Rules relating to common contract
carriers or the sale of electricity, gas, steam, water or other public utility services.



     SECTION 3.17. Gas Balancing Agreements and Advance Payment Contracts. On the date hereof, (a)
there is no Material Gas Imbalance, and (b) the aggregate amount of all Advance Payments received
by the Credit Parties under Advance Payment Contracts which have not been satisfied by delivery of
production does not exceed $300,000.



     SECTION 3.18. Collateral Matters. (a) The Security Agreement, upon execution and delivery
thereof by the parties thereto, will create in favor of the Administrative Agent, for the benefit
of the Secured Parties, a valid and enforceable security interest in the Collateral (as defined
therein) and, when financing statements in appropriate form are filed in the applicable filing
offices, the security interest created under the Security Agreement will constitute a fully



 









 



56




perfected security interest in all right, title and interest of the Loan Parties in the Collateral
(as defined therein) to the extent perfection can be obtained by filing Uniform Commercial Code
financing statements, prior and superior to the rights of any other Person, subject to the
Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law.



     (b) The Pledge Agreement, upon execution and delivery thereof by the parties thereto, will
create in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid and
enforceable security interest in the Pledged Collateral (as defined therein) and, when the Pledged
Collateral (as defined therein) constituting certificated securities (as defined in the Uniform
Commercial Code) is delivered to the Administrative Agent (or its agent or bailee), together with
instruments of transfer duly endorsed in blank, the Pledge Agreement will constitute a fully
perfected security interest in all right, title and interest of the pledgors thereunder in such
Pledged Collateral, prior and superior in right to any other Person, subject to the Intercreditor
Agreement and to Permitted Encumbrances that have priority as a matter of law.



     (c) Each Mortgage, upon execution and delivery thereof by the parties thereto, will create in
favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in all the applicable mortgagor’s right, title and interest in and to
the Mortgaged Properties subject thereto and the proceeds thereof, and when the Mortgages have been
filed in the jurisdictions specified therein, the Mortgages will constitute a fully perfected
security interest in all right, title and interest of the mortgagors in the Mortgaged Properties
and the proceeds thereof, prior and superior in right to any other Person, subject to the
Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law.



     (d) Each asset that, at any time, constitutes Collateral, or is otherwise subject to a Lien
securing the Term Obligations, is subject, at such time, to a Lien securing the First Lien
Obligations (as defined in the Intercreditor Agreement).



     SECTION 3.19. Hedging Agreements. Schedule 3.19 sets forth, as of the date set forth therein,
a true and complete list of all Hedging Agreements (including commodity price swap agreements and
all forward agreements or contracts of sale which provide for prepayment for deferred shipment or
delivery of oil, gas or other commodities) of the Borrower and each other Credit Party, 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, but excluding the First Lien Loan Documents)
and the counterparty to each such agreement.



     SECTION 3.20. Insurance. Schedule 3.20 sets forth, as of the date hereof, an accurate and
complete description in all material respects of all material policies of fire, liability,
workmen’s compensation and other forms of insurance owned or held by the Borrower or any other
Credit Party. As of the date hereof, all such policies are in full force and effect, all premiums
with respect thereto covering all periods up to and including the date hereof and
through the respective dates set forth in Schedule 3.20 have been paid, and no notice of
cancellation or termination has been received by the Borrower or any other Credit Party with
respect to any such policy. The policies of insurance owned or held by the Credit Parties (a) are
sufficient for compliance in all material respects with all requirements of law and of all
agreements to which any Credit Party is a party and (b) provide adequate aggregate coverage in



 









 



57




at
least such amounts and against at least such risks (but including in any event public liability) as
are usually insured against in the same general area by companies engaged in the same or a similar
business as the assets and operations of the Credit Parties.



ARTICLE IV




Conditions




     The obligations of the Lenders to make Loans hereunder shall not become effective until each
of the following conditions has been satisfied (or waived in accordance with Section 10.02):



     (a) Credit Agreement. The Administrative Agent (or its counsel) shall have received from each
party hereto either a counterpart of this Agreement signed on behalf of such party or written
evidence satisfactory to the Administrative Agent (which may include facsimile or other customary
electronic transmission acceptable to the Administrative Agent of a signed signature page of this
Agreement) that each such party has signed a counterpart of this Agreement.



     (b) Opinions of Counsel. The Administrative Agent shall have received opinions, each dated
the date hereof and addressed to the Administrative Agent and the Lenders, of (i) General Counsel
of the Borrower and (ii) Jones Day, counsel to the Borrower, in each case in form and substance
reasonably satisfactory to the Administrative Agent.



     (c) Organizational Documents. The Administrative Agent shall have received a certificate of
an Authorized Officer of each Loan Party dated the date hereof, certifying:




     (i) that attached to such certificate is (A) a true and complete copy of the Organic
Documents of such Loan Party, as in effect on the date hereof, (B) a true and complete copy
of a certificate from the applicable Governmental Authority of the jurisdiction of such Loan
Party’s organization to the effect that such Loan Party is validly existing in such
jurisdiction and (C) a true and complete copy of a certificate from the appropriate
Governmental Authority of each jurisdiction (without duplication) to the effect that such
Loan Party is duly qualified to transact business in such jurisdiction as a foreign entity,
if the failure to be so qualified would reasonably be expected to have a Material Adverse
Effect;




     (ii) that attached to such certificate is a true and complete copy of resolutions duly
adopted by the board of directors, management committee, members or general partner of such
Loan Party, as applicable, authorizing the execution, delivery and performance of the Loan
Documents to which such Loan Party is or is intended to be a party and, in the case of the
Borrower, the borrowing hereunder;




     (iii) that attached thereto is (A) a true and complete copy of a certificate from the
applicable Governmental Authority of the jurisdiction of such Loan Party’s organization
as to the existence and good standing of, and payment of franchise taxes by, such Loan
Party, each dated as of a recent date; and (B) a true and complete copy of a certificate
from the appropriate Governmental Authority of each jurisdiction (without duplication) to
the effect that such Loan Party is in good standing in such jurisdiction as a foreign



 









 



58




entity, if the failure to be so qualified would reasonably be expected to have a Material
Adverse Effect; and




     (iv) as to the incumbency and specimen signature of each Authorized Officer of such
Loan Party executing any of the Loan Documents to which such Loan Party is or is intended to
be a party.



     (d) Perfection Certificate; Lien Searches. The Administrative Agent shall have received a
completed Perfection Certificate, dated the date hereof and signed by an Authorized Officer of the
Borrower, together with all attachments contemplated thereby, including (i) the results of a search
of the UCC (or equivalent) filings made with respect to the Designated Credit Parties in the
jurisdictions contemplated by the Perfection Certificate and copies of the financing statements (or
similar documents) disclosed by such search and (ii) pay-off letters or other evidence reasonably
satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or
similar documents) are Permitted Encumbrances or shall have been released (or that arrangements for
the release thereof reasonably satisfactory to the Administrative Agent shall have been made).



     (e) Title. The Administrative Agent shall have received (or shall have been provided
reasonable access to), in respect of each Designated Real Property as of the date hereof, an
opinion of counsel as to title for such Designated Real Property, or such other evidence of title
as shall be reasonably satisfactory to the Administrative Agent.



     (f) Collateral and Guarantee Requirement. The Collateral and Guarantee Requirement shall have
been satisfied, subject to the penultimate sentence of this Article.



     (g) Approvals and Consents. All material Governmental Approvals and all material consents and
approvals of any other Person, in each case, necessary or advisable in connection with the
Transactions shall have been obtained, other than any such Governmental Approvals or other consents
and approvals as are of the type that would be obtained after the date hereof in the ordinary
course of business, all applicable appeal periods shall have expired and there shall be no
litigation, governmental, administrative or judicial action, actual or threatened, that could
reasonably be expected to restrain, prevent or impose burdensome conditions on the Transactions.



     (h) Insurance. The Administrative Agent shall have received endorsements naming the
Administrative Agent, for the benefit of the Secured Parties, as loss payee, and naming the
Administrative Agent and the Lenders as additional insured, under policies of insurance maintained
by the Loan Parties, in each case to the extent required under Section 5.07.



     (i) Initial Reserve Report. The Administrative Agent shall have received a copy of the
Initial Reserve Report, the reports comprising which, in each case, shall not be materially
inconsistent with the relevant reserve information previously provided by the Borrower to the
Administrative Agent and shall otherwise be in form and substance reasonably satisfactory to
the Administrative Agent.



     (j) Financial Statements. (i) The Administrative Agent shall have received (A) the
consolidated balance sheets of the Borrower and the Subsidiaries as of December 31, 2007 and



 









 



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2006, and the related consolidated statements of income and comprehensive income and cash flows for the
Fiscal Years ended December 31, 2007 and 2006, audited by and accompanied by the opinion of
Deloitte & Touche LLP, together with related unaudited consolidating financial statements to the
extent available, and (B) the unaudited consolidated balance sheet of the Borrower and the
Subsidiaries as of June 30, 2008 and March 31, 2008, and the related consolidated statements of
income and comprehensive income and cash flows for each such Fiscal Quarter and the portions of the
Fiscal Year then ended, certified by the Financial Officer of the Borrower as presenting fairly, in
all material respects, in conformity with GAAP, the consolidated financial position of the Borrower
and the Subsidiaries as of each such date and their consolidated results of operations and cash
flows for each such Fiscal Quarter and the corresponding portion of the Fiscal Year (subject to
normal year-end audit adjustments and the absence of certain footnotes), together with related
unaudited consolidating financial statements to the extent available.




     (ii) The Administrative Agent shall have received the pro forma consolidated balance
sheet referred to in Section 3.04(c).



     (k) Environmental Matters. The Administrative Agent shall have received a certificate, dated
the date hereof and signed by an Authorized Officer of the Borrower, stating that (i) the Borrower
has adopted and implemented such policies and guidelines as the Borrower has determined to be
reasonably appropriate to assure compliance in all material respects with applicable Environmental
Laws and to identify and evaluate events or conditions which would result in any material
Environmental Liability and (ii) on the basis of such policies and guidelines, the Borrower has
reasonably concluded that no Environmental Liabilities exist and no violations of Environmental
Laws have occurred which would reasonably be expected to have a Material Adverse Effect. The
Administrative Agent shall have received such environmental assessment reports as to the properties
of the Credit Parties (including properties to be acquired in the Acquisition) as shall be
available to the Borrower.



     (l) No Material Adverse Effect; Litigation. The Administrative Agent shall have received a
certificate, dated the date hereof and signed by an Authorized Officer of the Borrower, stating
that (i) no event or condition has occurred since December 31, 2007, which would reasonably be
expected to have a Material Adverse Effect and (ii) no litigation, arbitration, governmental
proceeding, claim for Taxes, dispute or administrative or other proceeding is pending or, to the
knowledge of the Borrower, threatened against the Borrower or any of the Subsidiaries which would
reasonably be expected to have a Material Adverse Effect.



     (m) Representations and Warranties; Absence of Defaults. At the time of and immediately after
giving effect to the Transactions to occur on the date hereof, (i) the representations and
warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all
material respects on and as of the date hereof, except in the case of any such representation and
warranty that is made expressly as of an earlier date, in which case such
representation and warranty shall be true and correct in all material respects on and as of
such earlier date, and (ii) no Default or Event of Default shall have occurred and be continuing.



 









 



60


     (n) Solvency. The Administrative Agent shall have received a certificate, dated the date
hereof and signed by the Financial Officer of the Borrower, stating that, after giving effect to
the Transactions, the Borrower and the Subsidiaries, on a consolidated basis, are Solvent.



     (o) First Lien Fifth Amendment. The First Lien Fifth Amendment, and all the amendments to the
First Lien Loan Documents set forth therein, shall have become effective. The Administrative Agent
shall have received copies thereof and all material documents related thereto, certified by an
Authorized Officer of the Borrower as being complete and correct. The terms and conditions of the
First Lien Fifth Amendment shall be reasonably satisfactory to the Administrative Agent.



     (p) Consummation of the Acquisition. The Acquisition shall have been, or substantially
contemporaneously with the funding of Loans on the date hereof shall be, consummated, in accordance
with applicable law and on the terms described in the Purchase Agreements (without giving effect to
any amendments of, or waivers under, the Purchase Agreements that are adverse to the Lenders in any
material respect and that have not been consented to by the Administrative Agent). The
Administrative Agent shall have received copies of the Purchase Agreements and all material
documents related thereto, certified by an Authorized Officer of the Borrower as being complete and
correct.



     (q) Existing Indebtedness and Preferred Equity Interests. Immediately after giving effect to
the Transactions, the Borrower and the Subsidiaries shall have outstanding no Indebtedness or
shares of preferred stock or other preferred Equity Interests, other than (i) Indebtedness incurred
under the Loan Documents, (ii) Indebtedness incurred under the First Lien Loan Documents, (iii) the
Existing Convertible Debentures, (iv) the Existing Senior Notes and any Guarantees in respect
thereof, (v) the Existing Subordinated Notes and any Guarantees in respect thereof, (vi)
Indebtedness of MLP under that certain Credit Agreement dated as of August 10, 2007, among MLP, as
borrower, the lenders party thereto, BNP Paribas, as syndication agent, JPMorgan Chase Bank, N.A.,
The Royal Bank of Scotland plc and Fortis Capital Corp., as co-documentation agents, and Bank of
America, N.A., as administrative agent, (vii) Indebtedness set forth on Schedule 4.01 or 7.01,
(viii) shares of Series 1 and Series 2 preferred stock of Quicksilver Resources Horn River Inc., an
Alberta, Canada corporation, and (ix) the non-voting limited partner interest in MLP issued to MLP
GP pursuant to, and referred to as the “Incentive Distribution Rights” in, that certain First
Amended and Restated Agreement of Limited Partnership of MLP dated as of August 10, 2007.



     (r) Intercreditor Agreement. The Administrative Agent (or its counsel) shall have received
from the First Lien Collateral Agent (as defined in the Intercreditor Agreement) a counterpart of
the Intercreditor Agreement signed on behalf of the First Lien Collateral Agent.



     (s) Hedging Agreements. The Hedging Agreements set forth on Schedule 3.19 shall be in full
force and effect and shall have the effect of establishing minimum fixed prices or floors on a
notional volume of equivalent production equal to no less than (i) 60% of the aggregate anticipated
production from Proved Mineral Interests of the Borrower and the Subsidiaries for
the period from August 1, 2008 through December 31, 2008, and (ii) 49% of the aggregate
anticipated production from Proved Mineral Interests of the Borrower and the Subsidiaries for the
period from January 1, 2009 through December 31, 2009.



 









 



61


     (t) Closing Date Officer’s Certificate. The Administrative Agent shall have received a
certificate, dated the date hereof and signed by the Chief Executive Officer or the Financial
Officer of the Borrower, confirming satisfaction of the conditions set forth in each of paragraphs
(g), (m), (q) and (s) of this Article and in each of the first sentences of paragraphs (o) and (p)
of this Article.



     (u) Fees and Expenses. The Administrative Agent, the Arrangers and the Lenders shall have
received all fees and expenses required to be paid in accordance with the Engagement Letter, the
Administrative Agent Fee Letter, this Agreement or any other Loan Document on or prior to the date
hereof, including reimbursement or payment of all reasonable out-of-pocket expenses (including
reasonable fees, charges and disbursements of counsel) required to be reimbursed or paid by any
Loan Party hereunder or under any other Loan Document.



     (v) PATRIOT Act. The Lenders shall have received, at least five Business Days prior to the
date hereof, all documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations, including the
PATRIOT Act.


Notwithstanding the foregoing, if the Borrower shall have been unable to cause the requirements set
forth in clauses (b) and (c) of the definition of the term “Collateral and Guarantee Requirement”
to be satisfied on or prior to the Closing Date, then satisfaction of such requirements shall not
be a condition precedent to the obligations of the Lenders to make Loans hereunder; provided that
the Borrower shall, as promptly as practicable after the Closing Date and in any event within 60
days thereafter, cause such requirements to be satisfied, except to the extent otherwise agreed by
the Administrative Agent pursuant to its authority as set forth in the definition of the term
“Collateral and Guarantee Requirement”.



The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such
notice shall be conclusive and binding.




ARTICLE V




Affirmative Covenants




     Until the Commitments shall have terminated and the principal of and interest on each Loan and
all fees payable hereunder shall have been paid in full, the Borrower covenants and agrees with the
Administrative Agent and each Lender that:



     SECTION 5.01. Information. The Borrower shall deliver, or shall cause to be delivered, to the
Administrative Agent (which shall make available to each Lender):



     (a) As soon as available and in any event in accordance with then applicable law but not later
than 120 days after the end of each Fiscal Year, a consolidated balance sheet of the Borrower and
the Subsidiaries as of the end of such Fiscal Year and the related consolidated
statements of income and comprehensive income and cash flow for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous Fiscal Year, all reported by
the Borrower in accordance with GAAP and audited by a firm of independent public accountants of
nationally recognized standing and reasonably acceptable to the Administrative Agent



 









 



62




(without a
“going concern” or like qualification or exception and without any qualification or exception as to
the scope of such audit).



     (b) As soon as available and in any event in accordance with then applicable law but not later
than 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year,
consolidated balance sheets of the Borrower and the Subsidiaries as of the end of such Fiscal
Quarter, the related consolidated statement of income and comprehensive income for such Fiscal
Quarter and for the portion of such Fiscal Year ended at the end of such Fiscal Quarter and the
related consolidated statement of cash flows for the portion of such Fiscal Year ended at the end
of such Fiscal Quarter, all reported by the Borrower, in accordance with GAAP subject to the
absence of certain footnote disclosures required in accordance with GAAP and normal year-end audit
adjustments) setting forth in each case in comparative form the figures for the corresponding
period or periods of the previous Fiscal Year.



     (c) Simultaneously with the delivery of each set of financial statements referred to in
paragraphs (a) and (b) of this Section, a certificate of a Financial Officer of the Borrower in the
form of Exhibit I (i) setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Article VI as of the end of the
Fiscal Year or Fiscal Quarter with respect to which such financial statements are delivered, (ii)
stating whether there exists on the date of such certificate any Default and, if any Default then
exists, setting forth the details thereof and the action which the Borrower is taking or proposes
to take with respect thereto, (iii) certifying that such financial statements fairly reflect in all
material respects the consolidated financial position, results of operations and cash flows of the
Borrower and the Subsidiaries as of the date of and for the period or periods covered thereby, (iv)
certifying that all notices required to be provided under Sections 5.15 and 5.16 have been provided
or are simultaneously therewith being provided and (v) setting forth a summary of the Hedging
Transactions to which each Credit Party is a party on such date (which summary shall include with
respect to such Hedging Transactions the type of information referred to in Section 3.19).



     (d) Promptly after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC
or with any national securities exchange, or distributed by the Borrower to its shareholders
generally, as the case may be.



     (e) Promptly following an Authorized Officer of any Credit Party becoming aware of the receipt
of same, notice of any notice or other information received by any Credit Party indicating (i) any
potential, actual or alleged non-compliance with or violation of the requirements of any
Environmental Law which could result in liability to the Credit Parties for fines, clean up or any
other remediation obligations or any other liability in excess of $5,000,000 (to the extent not
paid or fully covered by insurance as to which the relevant insurance company has acknowledged
coverage in writing thereof and a copy of such acknowledgment has been provided to the
Administrative Agent) in the aggregate, (ii) any Hazardous Discharge that imposes on any Credit
Party a duty to report to a Governmental Authority or to pay cleanup costs or to take remedial
action under any Environmental Law which could result in liability to the Credit Parties for fines,
clean up and other remediation obligations or any other liability in excess of $5,000,000 (to the
extent not paid or fully covered by insurance as to which the relevant insurance company has



 









 



63




acknowledged coverage in writing thereof and a copy of such acknowledgment has been provided to the
Administrative Agent) in the aggregate, or (iii) the existence of any Lien on any property of the
Credit Parties arising under any Environmental Law and securing any obligation to pay fines, clean
up or other remediation costs or any other liability in excess of $5,000,000 in the aggregate.



     (f) Promptly upon receipt of same by any Credit Party, copies of all environmental
consultants’ or engineers’ reports received by any Credit Party which would render the
representations and warranties (or any of them) contained in Section 3.14 untrue or inaccurate in
any respect.



     (g) In the event any notification is provided pursuant to paragraph (e) above or the
Administrative Agent or any Lender otherwise learns of any event or condition under which any such
notice would be required, then, upon written request of the Required Lenders, within 60 days
following such request, a report by an environmental consulting firm reasonably acceptable to the
Administrative Agent, stating that a review of such event, condition or circumstance has been
undertaken (the scope of which shall be reasonably acceptable to the Administrative Agent) and
detailing the findings, conclusions and recommendations of such consulting firm; the Borrower shall
bear all expenses and costs associated with such review and updates thereof.



     (h) Promptly, but in no event later than five Business Days (if such Default continues to
exist as of such fifth Business Day), following any Authorized Officer of any Credit Party becoming
aware of the occurrence of any Default, a certificate of an Authorized Officer of the Borrower
setting forth the details thereof and the action which the Borrower is taking or proposes to take
with respect thereto.



     (i) Promptly, but in no event later than five Business Days (if such event or circumstance
continues to exist as of such fifth Business Day) following an Authorized Officer of any Credit
Party becoming aware of same, notice to the Administrative Agent of any event or circumstance that
since the date hereof has had, or would reasonably be expected to have, a Material Adverse Effect.



     (j) Promptly following an Authorized Officer of any Credit Party becoming aware of same,
notice of (i) all actions, suits or proceedings by or before any arbitrator or Governmental
Authority against or affecting the Borrower or any Subsidiary, except actions, suits or proceedings
which, if adversely determined, would not reasonably be expected to have a Material Adverse Effect,
and (ii) the occurrence of any development with respect to any action, suit or proceeding
previously disclosed to the Administrative Agent pursuant to this Agreement, where such
developments would reasonably be expected to have a Material Adverse Effect.



     (k) Promptly after any request therefor, such additional information regarding the business,
operations, assets, liabilities and financial position of the Borrower and the Credit
Parties, or compliance with the terms of any Loan Document, as the Administrative Agent or any
Lender (through the Administrative Agent) may reasonably request.


Reports and other information required to be delivered pursuant to paragraphs (a), (b) and (d) of
this Section shall be deemed to have been delivered on the date on which such reports, or reports


 









 



64



containing such information, shall have been posted by or on behalf of the Borrower on an
Intralinks or similar site to which Lenders have been granted access or shall be publicly available
on the SEC’s website.




     SECTION 5.02. Delivery of Reserve Reports. (a) On or prior to April 1 of each year, the
Borrower shall furnish to the Administrative Agent (i) a Reserve Report evaluating, as of December
31 of the immediately preceding year, the Proved Mineral Interests attributable to the Oil and Gas
Properties of the Credit Parties that are located in the United States and (ii) a Reserve Report
evaluating, as of December 31 of the immediately preceding year, the Proved Mineral Interests
attributable to the Oil and Gas Properties of the Credit Parties that are located in Canada, in
each case prepared by an Approved Engineer and setting forth volumes, projections of the future
rate of production, Hydrocarbon prices, escalation rates, discount rate assumptions, net proceeds
of production, present value of the net proceeds of production, operating expenses and capital
expenditures with respect thereto as of such date, in each case based upon reasonable economic
assumptions, and certified by such Approved Engineer as having been prepared in accordance with the
normal and customary methods and procedures used by such Approved Engineer for evaluating oil and
gas reserves and in accordance in all material respects with the procedures used to prepare the
corresponding prior Reserve Report most recently delivered pursuant hereto (or, prior to the first
such delivery, the corresponding reserve report that is part of the Initial Reserve Report).



     (b) On or prior to September 1 of each year, commencing with September 1, 2009, the Borrower
shall furnish to the Administrative Agent (i) a Reserve Report evaluating, as of June 30 of such
year, the Proved Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties
that are located in the United States and (ii) a Reserve Report evaluating, as of June 30 of such
year, the Proved Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties
that are located in Canada, in each case prepared by or under supervision of a reserve engineer
employed by the Borrower of seniority reasonably acceptable to the Administrative Agent and setting
forth volumes, projections of the future rate of production, Hydrocarbon prices, escalation rates,
discount rate assumptions, net proceeds of production, present value of the net proceeds of
production, operating expenses and capital expenditures with respect thereto as of such date, in
each case based upon reasonable economic assumptions, and certified by such reserve engineer as
having been prepared in accordance with the normal and customary methods and procedures used by
such reserve engineer for evaluating oil and gas reserves and in accordance in all material
respects with the procedures used to prepare the corresponding prior Reserve Report most recently
delivered pursuant hereto (or, prior to the first such delivery, the corresponding reserve report
that is part of the Initial Reserve Report).



     (c) If requested by the Required Lenders (which request may not be made more than once during
any 12-month period), the Borrower shall furnish to the Administrative Agent and the Lenders, as
soon as reasonably practicable after such request, (i) a Reserve Report evaluating, as of the date
specified in such request, the Proved Mineral Interests attributable to
the Oil and Gas Properties of the Credit Parties that are located in the United States and
(ii) a Reserve Report evaluating, as of the date specified in such request, the Proved Mineral
Interests attributable to the Oil and Gas Properties of the Credit Parties that are located in
Canada, in each case prepared by or under supervision of a reserve engineer employed by the
Borrower of seniority reasonably acceptable to the Administrative Agent and setting forth volumes,



 









 



65




projections of the future rate of production, Hydrocarbon prices, escalation rates, discount rate
assumptions, net proceeds of production, present value of the net proceeds of production, operating
expenses and capital expenditures with respect thereto as of such date, in each case based upon
reasonable economic assumptions, and certified by such reserve engineer as having been prepared in
accordance with the normal and customary methods and procedures used by such reserve engineer for
evaluating oil and gas reserves and in accordance in all material respects with the procedures used
to prepare the Reserve Report most recently delivered prior thereto pursuant to paragraph (a) or
(b) of this Section.



     (d) Concurrently with the delivery of any Reserve Reports pursuant to paragraph (a), (b) or
(c) of this Section, the Borrower shall deliver to the Administrative Agent a certificate of an
Authorized Officer of the Borrower, in form and substance reasonably acceptable to the
Administrative Agent, certifying that (i) there are no statements or conclusions in any such
Reserve Report that are based upon or include materially misleading information or fail to take
into account material information regarding the matters reported thereon, (ii) subject to
Immaterial Title Deficiencies and Permitted Encumbrances, the Credit Parties own good and
defensible title to the Oil and Gas Properties evaluated in each such Reserve Report and such Oil
and Gas Properties are free and clear of all Liens and (iii) the Oil and Gas Properties evaluated
by such Reserve Reports that are Mortgaged Properties represent not less 75% of the Proved PV-10
Domestic Value as set forth in such Reserve Reports (together with reasonable detail in support
thereof).



     SECTION 5.03. Nature of Business. The sole business of the Borrower and the Credit Parties
shall be the acquisition, exploration, development and operation of Mineral Interests in the United
States and Canada and the production, marketing, processing and transportation of Hydrocarbons
therefrom and businesses reasonably related or complementary thereto (or to act as a holding
company for any such Credit Party).



     SECTION 5.04. Maintenance of Existence; Oil and Gas Properties. (a) The Borrower shall, and
shall cause each other Credit Party to, at all times (i) maintain its corporate, partnership or
limited liability company existence in its state of incorporation or organization and (ii) maintain
its good standing (if and when applicable in the jurisdiction in issue) and qualification to
transact business in all jurisdictions where the failure to maintain good standing or qualification
to transact business would reasonably be expected to have a Material Adverse Effect; provided that
the foregoing shall not prohibit any action permitted under Section 7.04 or 7.05.



     (b) The Borrower will, and will cause each other Credit Party to, in all material respects,
promptly, (i) pay and discharge, or make commercially reasonable efforts to cause to be paid and
discharged, when due all delay rentals, royalties and expenses accruing under the leases or other
agreements affecting or pertaining to its Oil and Gas Properties, provided that, in the case of
delay rentals, a Credit Party shall only be required to pay and discharge, or make commercially
reasonable efforts to pay and discharge, delay rentals as and to the extent such Credit Party
determines in good faith that payment and discharge thereof is in its best interest, (ii) perform,
or make reasonable and customary efforts to cause to be performed, the obligations of the Borrower
or any other Credit Party required by each and all of the assignments, deeds, leases, subleases,
contracts and agreements affecting its interests in its material Oil and Gas Properties and other



 









 



66




material properties, and (iii) do all other things necessary to keep unimpaired, except for
Permitted Encumbrances, its rights with respect to its material Oil and Gas Properties and other
material properties and prevent any forfeiture thereof or a default thereunder, except to the
extent a portion of such properties is no longer capable of producing Hydrocarbons in economically
reasonable amounts, except for dispositions permitted by this Agreement or any other Loan Document
and except when the failure to do so would not reasonably be expected to have a Material Adverse
Effect.



     SECTION 5.05. Title Data. (a) On or prior to each delivery to the Administrative Agent of
the Reserve Reports required to be delivered under any paragraph of Section 5.02, the Borrower
shall deliver to the Administrative Agent (or shall provide to the Administrative Agent reasonable
access to) opinions of counsel as to title to Oil and Gas Properties, or such other evidence of
title for Oil and Gas Properties as shall be reasonably satisfactory to the Administrative Agent,
that, together with such opinions and other evidence of title theretofore delivered or made
available to the Administrative Agent, constitutes title information with respect to Oil and Gas
Properties representing at least 75% of the Proved PV-10 Domestic Value, as set forth in such
Reserve Reports.



     (b) Upon notice from the Administrative Agent to the Borrower that any material title defect
or exception (other than Permitted Encumbrances and Immaterial Title Deficiencies) exists with
respect to any Oil and Gas Properties for which title information was provided pursuant paragraph
(a) of this Section, the Borrower shall use its commercially reasonable efforts to cure, as
promptly as practicable, such title defect or exception. If such title defect or exception shall
not have been cured within 90 days after the date of such notice (or such longer period thereafter
as shall have been agreed to in writing by the Administrative Agent), and the Administrative Agent
shall not have been provided with evidence reasonably satisfactory to it of such cure, then, (i)
solely for purposes of Section 5.17(c), such Oil and Gas Property shall not be deemed to be an Oil
and Gas Property of the Credit Parties and (ii) solely for purposes of Sections 6.03 and 6.04, the
Proved PV-10 Value shall be deemed to exclude all amounts on account of Proved Mineral Interests
attributable to such Oil and Gas Property, in each case until and unless such title defect or
exception shall have been cured, and the Administrative Agent shall have been provided with
evidence thereof reasonably satisfactory to it.



     SECTION 5.06. Books and Records; Right of Inspection. The Borrower will, and will cause each
other Credit Party to, keep proper books of record and account in which full, true and correct
entries in conformity with GAAP and Governmental Rules are made of all dealings and transactions in
relation to its business and activities. The Borrower will permit, and will cause each other
Credit Party to permit, any officer, employee or agent of the Administrative Agent or of any Lender
to visit and inspect any of the assets of any Credit Party, examine each Credit Party’s books of
record and accounts, take copies and extracts thereof and therefrom, and discuss the affairs,
finances and accounts of each Credit Party with such Credit Party’s officers, accountants and
auditors, all upon prior written notice to the Borrower at such reasonable times
during the Borrower’s or such Credit Party’s normal business hours (and in a manner so as, to
the extent practicable, not to interfere with the normal business operations of the Borrower or
such Credit Party) as the Administrative Agent or any Lender may reasonably request, and, subject
to the immediately following sentence, at the expense of the Borrower; provided that, so long as no
Event of Default shall have occurred and be continuing, the rights of the



 









 



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Administrative Agent and
the Lenders under this Section may only be exercised by the Administrative Agent. Except in the
case of any visit, inspection or examination commenced after the occurrence and during the
continuance of an Event of Default (or at a time when the Administrative Agent or any Lender
requesting such visit, inspection or examination has a reasonable basis for believing that an Event
of Default has occurred and is continuing), only one inspection in any calendar year shall be at
the expense of the Borrower.



     SECTION 5.07. Maintenance of Insurance. The Borrower will, and will cause each other Credit
Party to, at all times maintain or cause to be maintained insurance in such amounts (with no
greater risk retention, other than self-insurance in respect of health and dental insurance) and
against such risks as are customarily maintained by companies of established repute engaged in the
same or similar businesses operating in the same or similar locations, including (a) workmen’s
compensation insurance, (b) employer’s liability insurance, (c) comprehensive general public
liability, (d) property damage, including insurance against losses customarily insured against as a
result of damage by fire, lightning, hail, tornado, explosion and other similar risk, and (e)
comprehensive automobile liability insurance. All loss payable clauses or provisions in all such
policies of property damage maintained by the Loan Parties shall be endorsed in favor of the
Administrative Agent, for the benefit of the Secured Parties, and the Administrative Agent, on
behalf of the Secured Parties, shall have been named as a loss payee thereunder. All such
liability policies maintained by the Loan Parties shall name the Administrative Agent and the
Lenders as additional insureds thereunder. The Borrower hereby irrevocably makes, constitutes and
appoints the Administrative Agent (and all officers, employees or agents designated by the
Administrative Agent) as the Borrower’s true and lawful agent (and attorney-in-fact) for the
purpose, after the occurrence and during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of insurance, endorsing the
name of the Borrower on any check, draft, instrument or other item of payment for the proceeds of
such policies and for making all determinations and decisions with respect thereto. It is
understood that nothing in this Section shall affect the agreements of the Administrative Agent set
forth in the Intercreditor Agreement.



     SECTION 5.08. Payment of Taxes and Claims. The Borrower will, and will cause each other
Credit Party to, pay (a) all Taxes imposed upon it or any of its assets or with respect to any of
its franchises, business, income or profits before any material penalty or interest accrues thereon
and (b) all material claims (including claims for labor, services, materials and supplies) for sums
which have become due and payable and which by law have or might become a Lien (other than a
Permitted Encumbrance) on any of its assets; provided, however, that no payment of such Taxes or
claims shall be required to the extent that (i) (A) the amount, applicability or validity thereof
is currently being contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and no material property of any Credit Party is subject to any pending levy or
execution and (B) the Credit Parties, as and to the extent required in accordance with GAAP, shall
have set aside on their books reserves (segregated to the extent required by GAAP) deemed by them
to be adequate with respect thereto, or (ii) the failure to make payment
pending such contest would not reasonably be expected to have a Material Adverse Effect or
result in the seizure or levy of any material property of any Credit Party.



     SECTION 5.09. Compliance with Laws and Documents. The Borrower will, and will cause each
other Credit Party to, comply with all Governmental Rules, their respective Organic



 









 



68




Documents and
all Material Agreements to which any Credit Party is a party if a violation, alone or when combined
with all other such violations, would reasonably be expected to have a Material Adverse Effect.



     SECTION 5.10. Operation of Properties and Equipment. (a) The Borrower will, and will cause
each other Credit Party to, maintain, develop and operate (or use its commercially reasonable
efforts to cause the operator to maintain and operate to the extent the operator is not a Credit
Party) its Oil and Gas Properties in a good and workmanlike manner as and to the extent the
Borrower or such Credit Party elects in its commercially reasonable discretion to maintain, develop
and operate any such Oil and Gas Property, except to the extent the failure to do so would not
reasonably be expected to have a Material Adverse Effect.



     (b) Subject Section 7.05 and to exceptions as in the aggregate would not reasonably be
expected to have a Material Adverse Effect, the Borrower will, and will cause each other Credit
Party to, at all times maintain, preserve and keep all operating equipment used with respect to its
Mineral Interests in proper repair, working order and condition (subject to ordinary wear and
tear), and make all necessary or appropriate repairs, renewals, replacements, additions and
improvements thereto so that, in the Borrower’s commercially reasonable judgment, the efficiency of
such operating equipment shall at all times be properly preserved and maintained; provided that no
item of operating equipment need be so repaired, renewed, replaced, added to or improved if the
Borrower shall have in good faith determined that such action is not necessary or desirable for the
continued efficient and profitable operation of the business of the Credit Parties.



     SECTION 5.11. Environmental Law Compliance. The Borrower will, and will cause each other
Credit Party to, comply in all respects with all Environmental Laws, including, (a) all licensing,
permitting, notification and similar requirements of Environmental Laws, and (b) all provisions of
all Environmental Laws regarding storage, discharge, release, transportation, treatment and
disposal of Hazardous Materials, if a violation, alone or when combined with all other such
violations, would reasonably be expected to have a Material Adverse Effect. The Borrower will, and
will cause each other Credit Party to, promptly pay and discharge when due all legal debts, claims,
liabilities and obligations with respect to any clean-up or remediation measures necessary to
comply with Environmental Laws; provided that such payment or discharge shall not be required to
the extent that (i) (A) the amount, applicability or validity thereof is currently being contested
in good faith by appropriate proceedings promptly initiated and diligently conducted and no
material property of any Credit Party is subject to any pending levy or execution and (B) the
Credit Parties, as and to the extent required in accordance with GAAP, shall have set aside on
their books reserves (segregated to the extent required by GAAP) deemed by them to be adequate with
respect thereto, or (ii) the failure to make such payment or discharge would not reasonably be
expected to have a Material Adverse Effect.



     SECTION 5.12. ERISA Reporting Requirements. The Borrower shall furnish, or cause to be
furnished, to the Administrative Agent:




     (a) promptly, and in any event (i) within 30 days after an Authorized Officer of the
Borrower or any ERISA Affiliate receives notice from any Governmental Authority of the
commencement of an audit, investigation or similar proceeding with respect to a Plan and
(ii) within 10 days after the Borrower or any ERISA Affiliate contacts the



 









 



69




Internal Revenue
Service for the purpose of participation in a closing agreement or any voluntary resolution
program with respect to a Plan, in each case, if the result of any such audit, investigation
or similar proceeding or any such closing agreement or voluntary resolution would reasonably
be expected to have a Material Adverse Effect, a written notice describing such event and
describing what action is being taken or is proposed to be taken with respect thereto;




     (b) promptly and in any event within 30 days after the receipt by the Borrower of a
written request therefor by a Lender, copies of any annual and other report with respect to
a Plan filed by the Borrower or any ERISA Affiliate with the United States Department of
Labor, the Internal Revenue Service or the PBGC;




     (c) notification within 30 days of the effective date thereof of any material increases
in the benefits, or material change in the funding method, of any existing Plan, or the
establishment of any material new Plans, or the commencement of material contributions to
any Plan or a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which the
Borrower or any ERISA Affiliate was not previously contributing; and




     (d) promptly after receipt of written notice of commencement thereof, notice of all (i)
claims (other than routine claims for benefits) made by participants or beneficiaries with
respect to any Plan and (ii) actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Borrower or any ERISA Affiliate with respect to any Plan, except those which,
in the aggregate, if adversely determined could not reasonably be expected to have a
Material Adverse Effect.



     SECTION 5.13. Environmental Review. In connection with any acquisition by any Credit Party of
Mineral Interests, other than an acquisition of additional interests in Mineral Interests in which
a Credit Party previously held an interest, to the extent a Credit Party obtains or is provided the
same, the Borrower shall, promptly following such Credit Party’s obtaining or being provided with
the same, deliver to the Administrative Agent all environmental reports and results of
environmental reviews (including Phase I environmental reports) of such Mineral Interests.



     SECTION 5.14. Casualty and Condemnation. The Borrower (a) will furnish to the Administrative
Agent promptly, and in any event within 15 Business Days after an Authorized Officer of the
Borrower becomes aware of the occurrence thereof, written notice of any Casualty Event and (b) will
ensure that the Net Cash Proceeds of any such event (whether in the form of insurance proceeds,
condemnation awards or otherwise) are collected and applied as and to the extent required by
Section 2.09(b).



     SECTION 5.15. Concerning Subsidiaries. If any Subsidiary is formed or acquired after the date
hereof, or any Subsidiary becomes a Designated Credit Party or ceases to be an Inactive Subsidiary,
the Borrower will, as promptly as practicable, and in any event within 30 days, notify the
Administrative Agent thereof and, within such period (or such longer period thereafter as shall
have been agreed to in writing by the Administrative Agent), cause the Collateral and



 









 



70




Guarantee
Requirement to be satisfied with respect to such Subsidiary (if it is a Designated Credit Party)
and with respect to any Equity Interests in or Indebtedness of such Subsidiary owned by any Loan
Party. The Borrower will, as promptly as practicable, and in any event within 30 days, notify the
Administrative Agent of any Subsidiary ceasing to be a Credit Party as a result of clause (e) of
the definition of such term.



     SECTION 5.16. Information Regarding Collateral. The Borrower will furnish to the
Administrative Agent promptly, and in any event within 30 days upon an Authorized Officer of the
Borrower becoming aware of same, written notice of any change (a) in any Loan Party’s legal name or
jurisdiction of organization, (b) in the location of any Loan Party’s chief executive office or its
principal place of business, (c) in any Loan Party’s identity or corporate structure and (d) in any
Loan Party’s organizational number issued to it in its jurisdiction of organization or, with
respect to any Loan Party organized under the laws of a jurisdiction that requires such information
to be set forth on the face of a UCC financing statement, the Federal Taxpayer Identification
Number of such Loan Party.



     SECTION 5.17. Further Assurances. (a) The Borrower will, and will cause each other Loan
Party to, at the Borrower’s expense, cure promptly any defects in the execution and delivery of
this Agreement and any other Loan Document to which any of them is a party. The Borrower, at its
expense, will and will cause each other Loan Party to, promptly execute and deliver to the
Administrative Agent all such other documents, agreements and instruments reasonably requested by
the Administrative Agent to cause the Collateral and Guarantee Requirement to be and remain
satisfied at all times and otherwise to comply with or accomplish the covenants and agreements of
the Borrower or any other Loan Party, in this Agreement and any other Loan Document, or to file any
notices or obtain any consents, all as may be reasonably necessary or appropriate in connection
therewith.



     (b) The Borrower agrees that it will, and will cause each Loan Party to, at the Borrower’s
expense, execute any and all further documents, financing statements, agreements and instruments
and take all such further actions (including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents) that may be required under any
applicable law or which the Administrative Agent may reasonably request, to effect the transactions
contemplated by the Security Documents, or to grant, preserve, protect or perfect the Liens created
or intended to be created thereby or the validity or priority (subject only, with respect to
priority, to Permitted Encumbrances) of any such Liens, all at the expense of the Loan Parties.



     (c) The Borrower shall at all times cause the requirement set forth in clause (d) of the
definition of the term “Collateral and Guarantee Requirement” to be satisfied with respect to Oil
and Gas Properties of the Credit Parties representing not less than 75% of the Proved PV-10
Domestic Value, as set forth in the most recent Reserve Report delivered pursuant hereto.



     (d) The Borrower agrees to provide to the Administrative Agent, from time to time upon
reasonable request of the Administrative Agent, information that is in the possession of the
Borrower or the Subsidiaries or otherwise reasonably obtainable by any of them, reasonably
satisfactory to the Administrative Agent as to the perfection and priority (subject only, with
respect to priority, to Permitted Encumbrances) of the Liens created or intended to be created by



 









 



71




the Security Documents. The Security Documents shall remain in effect at all times unless otherwise
released pursuant to the terms of this Agreement or any other Loan Document.



     (e) In connection with the foregoing, the Borrower hereby authorizes the Administrative Agent
to file one or more financing statements or continuation statements, and amendments thereto, in
such jurisdictions as are necessary or as the Administrative Agent, in its reasonable discretion,
deems advisable to perfect, prepare, protect and maintain the Liens, and the priority thereof,
created pursuant to the Security Documents relative to all or any part of the Collateral without
the signature of the Borrower or any other Loan Party where permitted by law and describing the
collateral using words such as “all personal property”, “all assets” or other words of similar
import.



ARTICLE VI




Financial Covenants




     Until the Commitments shall have terminated and the principal of and interest on each Loan and
all fees payable hereunder shall have been paid in full, the Borrower covenants and agrees with the
Administrative Agent and each Lender that:



     SECTION 6.01. Current Ratio. The Borrower will not permit, as of the end of any Fiscal
Quarter, commencing with the Fiscal Quarter ending on September 30, 2008, the ratio of Consolidated
Current Assets to Consolidated Current Liabilities to be less than 1.00 to 1.00.



     SECTION 6.02. Interest Coverage Ratio. The Borrower will not permit, as of the end of any
Fiscal Quarter, commencing with the Fiscal Quarter ending on September 30, 2008, the ratio of
Consolidated EBITDAX (for the period of four Fiscal Quarters ending on such date) to Consolidated
Net Interest Expense (for the period of four Fiscal Quarters ending on such date) to be less than
2.25 to 1.00.



     SECTION 6.03. Total Debt Asset Coverage Ratio. The Borrower will not permit, as of the last
day of any Fiscal Quarter, the ratio of (a) the sum of (i) the Proved PV-10 Value as of such day
plus (ii) 50% of the BBEP Fair Market Value as of such day to (b) the Total Debt as of such day to
be less than 1.50 to 1.00.



     SECTION 6.04. Total Secured Debt Asset Coverage Ratio. The Borrower will not permit, as of
the last day of any Fiscal Quarter, the ratio of (a) the sum of (i) the Proved PV-10 Value as of
such day plus (ii) 50% of the BBEP Fair Market Value as of such day to (b) the Total Secured Debt
as of such day to be less than the ratio set forth below opposite the period that includes such
day:



	 	 	 	 	 
	Period	 	Ratio
	September 30, 2008 to September 30, 2010
	 	 	2.00 to 1.00	 
	December 31, 2010 and thereafter
	 	 	2.25 to 1.00	 







 











 


72



ARTICLE VII




Negative Covenants




     Until the Commitments shall have terminated and the principal of and interest on each Loan and
all fees payable hereunder shall have been paid in full, the Borrower covenants and agrees with the
Administrative Agent and each Lender that:



     SECTION 7.01. Indebtedness. The Borrower will not, nor will the Borrower permit any other
Credit Party to, incur, assume or become or remain liable for any Indebtedness, other than:




     (a) the Term Obligations;




     (b) Guarantees incurred in compliance with Section 7.08;




     (c) Indebtedness created under any First Lien Credit Agreement, and Refinancing
Indebtedness in respect thereof, in an aggregate principal amount at any time outstanding
not to exceed the greater of (i) $1,200,000,000 or (ii) 30% of Adjusted Consolidated Net
Tangible Assets at such time; provided that (i) such Indebtedness shall be created under a
single credit facility or a U.S. credit facility and a Canadian credit facility (whether
documented under a single credit agreement or separate credit agreements), (ii) each such
credit facility shall be revolving in nature and the availability of credit extensions
thereunder shall be determined by reference to a “borrowing base”, which shall be determined
in a manner substantially similar to the manner of the determination of the First Lien
Global Borrowing Base and First Lien U.S. Borrowing Base as set forth in the First Lien
Credit Agreements as of the date hereof or shall otherwise be a “borrowing base” that is
based on Proved Mineral Interests and generally conforms to the market standard for
borrowing base credit facilities of this type in the oil and gas industry provided by
commercial banks or commercial finance companies and (iii) the aggregate principal amount of
Indebtedness of the Credit Parties that are Foreign Subsidiaries permitted under this clause
(c) shall not exceed $450,000,000 at any time outstanding (Indebtedness permitted under this
clause (c), together with any First Lien Hedging Obligations, is referred to herein as
“First Lien Permitted Indebtedness”);




     (d) Indebtedness of the Borrower or any other Credit Party to the Borrower or any other
Credit Party; provided that (i) such Indebtedness shall not have been transferred (other
than to a Credit Party), (ii) any such Indebtedness owing to any Loan Party shall, to the
extent and as required by the Collateral and Guarantee Requirement, be evidenced by a
promissory note that shall have been pledged to the Administrative Agent (or its agent or
bailee) and (iii) any such Indebtedness of any Subsidiary that is not a Credit Party to any
Loan Party shall be incurred in compliance with Section 7.08;




     (e) Indebtedness outstanding on the date hereof and set forth on Schedule 7.01, and any
Refinancing Indebtedness in respect thereof;




     (f) Indebtedness of a Person which becomes a Credit Party after the date hereof;
provided that (i) such Indebtedness existed at the time such Person became a Credit Party
and was not created in anticipation thereof and (ii) immediately after giving effect to the



 









 



73




acquisition of such Person by the Borrower or any other Credit Party, no Default or
Event of Default shall have occurred and be continuing; and provided further that the
aggregate principal amount of Indebtedness permitted by this clause (f), together with the
aggregate principal amount of Indebtedness permitted by clause (j) below, shall not exceed
$24,000,000 in the aggregate at any time outstanding;




     (g) Indebtedness consisting of performance bonds or surety or appeal bonds provided by
the Borrower or any Credit Party in the ordinary course of business;




     (h) Non-Recourse Debt in an aggregate amount outstanding at any time not to exceed
$5,000,000;




     (i) Hedging Obligations that are incurred in respect of Hedging Transactions permitted
under Section 7.11;




     (j) Indebtedness incurred to finance the acquisition, construction or improvement of
fixed or capital assets (including Capital Lease Obligations) secured by Liens permitted by
clause (o) of the definition of the term “Permitted Encumbrances”; provided that the
aggregate principal amount of Indebtedness permitted by this clause (j), together with the
aggregate principal amount of Indebtedness permitted by clause (f) above, shall not exceed
$24,000,000 in the aggregate at any time outstanding;




     (k) Indebtedness in an aggregate principal amount outstanding at any time not to exceed
$48,000,000;




     (l) the Existing Convertible Debentures, and Refinancing Indebtedness in respect
thereof, in an aggregate principal amount not to exceed $150,000,000 at any time
outstanding;




     (m) the Existing Senior Notes, and Refinancing Indebtedness in respect thereof, in an
aggregate principal amount not to exceed $475,000,000 at any time outstanding;




     (n) the Existing Subordinate Notes, and Refinancing Indebtedness in respect thereof, in
an aggregate principal amount not to exceed $350,000,000 at any time outstanding;




     (o) Indebtedness associated with worker’s compensation claims, unemployment insurance
laws or similar legislation incurred in the ordinary course of business;




     (p) Taxes, assessments or other governmental charges which are not yet due or are being
contested in good faith in accordance with Section 5.08; and




     (q) other Indebtedness of the Borrower (provided that such Indebtedness (i) does not
mature, and is not subject to mandatory repayment, prepayment, redemption, repurchase,
defeasance or amortization (other than pursuant to customary asset sale or change in control
provisions requiring redemption or repurchase only if and to the extent then permitted by
this Agreement), in each case, prior to the date that is 180 days after the Maturity Date,
(ii) is not secured, directly or indirectly, by any assets of the Borrower



 









 



74




or any other Credit Party, (iii) is not exchangeable or convertible into Indebtedness
of the Borrower or any other Credit Party (other than Indebtedness that would constitute
Permitted Subordinated Indebtedness) and (iv) all the Net Cash Proceeds thereof are applied
on the date of the incurrence thereof to prepay Loans as and to the extent required by
Section 2.09(b); and provided further that such Indebtedness, and any Guarantees thereof,
are subordinated to the Term Obligations pursuant to subordination provisions that are no
less favorable in any material respect, when taken as a whole, to the Lenders than the
subordination provisions of the Existing Senior Subordinated Notes (such Indebtedness
permitted under this clause (q) is referred to as the “Permitted Subordinated
Indebtedness”)) and any Refinancing Indebtedness in respect thereof.


For the avoidance of doubt, to the extent any Indebtedness is permitted by more than one clause of
this Section, the Borrower may categorize all or any portion of such Indebtedness to any one or
more of such clauses as it elects and, except as otherwise expressly provided above, in no event
shall the same portion of any Indebtedness be deemed to utilize availability under more than one
clause of this Section.




     SECTION 7.02. Restricted Payments. The Borrower will not, nor will the Borrower permit any
other Credit Party to, directly or indirectly, declare or pay, or incur any obligation (contingent
or otherwise) to declare or pay, any Restricted Payment; provided that:




     (a) any Person in which the Borrower directly or indirectly owns Equity Interests may
make Restricted Payments to the Borrower and/or other Persons owning Equity Interests in
such Person, so long as any such Restricted Payment is, in each case, made to the Borrower
and/or such other Persons ratably in accordance with their Equity Interests of the same
class or series therein;




     (b) so long as no Default or Event of Default has occurred and is continuing, the
Borrower may repurchase shares of its common stock, par value $0.01 per share, for an
aggregate consideration of not more than $24,000,000;




     (c) the Borrower may declare and pay dividends and make other distributions and
payments with respect to its Equity Interests, in each case, payable solely in its Equity
Interests;




     (d) the Borrower may purchase or otherwise acquire Equity Interests in any Subsidiary
using additional shares of its Equity Interests;




     (e) the Borrower may (i) make repurchases or redemptions of its Equity Interests (A) in
connection with the exercise of stock options or restricted stock awards if such Equity
Interests represent all or a portion of the exercise price thereof or (B) deemed to occur
upon the withholding of a portion of such Equity Interests issued to directors, officers or
employees of the Borrower or any Subsidiary under any stock option plan or other benefit
plan or agreement for directors, officers and employees of the Borrower and the Subsidiaries
to cover withholding tax obligations of such Persons in respect of such issuance and (ii)
make other Restricted Payments, not exceeding $2,500,000 in the aggregate for any Fiscal
Year, pursuant to and in accordance with stock option plans or



 









 



75




other benefit plans or agreements for directors, officers and employees of the Borrower
and the Subsidiaries; and




     (f) the Borrower may redeem any share purchase rights issued pursuant to that certain
Rights Agreement, dated as of March 11, 2003, between the Borrower and Mellon Investor
Services LLC, as Rights Agent, or any share purchase rights issued pursuant to any successor
rights agreement, in each case, in accordance with the terms of such Rights Agreement or
such successor rights agreement and for consideration not to exceed $0.01 per any such
right.



     SECTION 7.03. Liens. The Borrower will not, nor will the Borrower permit any other Credit
Party to, create, assume or permit to exist any Lien on any of their respective properties, other
than Permitted Encumbrances.



     SECTION 7.04. Consolidations and Mergers; Fundamental Changes. (a)   The Borrower will not,
nor will the Borrower permit any other Credit Party to, consolidate or merge with or into any other
Person; provided that, so long as at the time thereof no Default or Event of Default has occurred
and is continuing or will result therefrom, (i) the Borrower may merge with any other Person so
long as the Borrower is the surviving corporation in such merger, and (ii) any Credit Party (other
than the Borrower) may merge or consolidate with any other Person so long as the surviving entity
in such transaction is a Credit Party (and, if any party to such merger or consolidation is a Loan
Party, such surviving entity is a Loan Party) or the Borrower.



     (b) The Borrower will cause each Subsidiary that is a Credit Party to be a Wholly-Owned
Subsidiary and a direct Subsidiary of the Borrower or any other Credit Party (provided that, in the
case of any such Subsidiary that is a Domestic Subsidiary, such other Credit Party shall also be a
Domestic Subsidiary).



     (c) The Borrower will cause all Oil and Gas Properties located in the United States and
owned, directly or indirectly, by the Borrower (other than any such Oil and Gas Properties owned
directly by any MLP Subsidiary) to be owned directly by the Borrower or any other Loan Party.



     SECTION 7.05. Asset Dispositions; Sale/Leaseback Transactions. The Borrower will not, nor
will the Borrower permit any other Credit Party to, sell, lease, transfer, abandon or otherwise
dispose of any property, including any Equity Interest owned by it, other than:




     (a) transfers and other dispositions of cash and cash equivalents in the ordinary
course of business;




     (b) sales, leases, transfers and other dispositions to the Borrower or any other Credit
Party; provided that any such sales, lease, transfer or other disposition involving a Credit
Party that is not a Loan Party shall be made in compliance with Sections 7.08 and 7.09; and




     (c) farmouts of undeveloped acreage and assignments in connection with such farmouts or
the abandonment, farm-out, exchange, lease or sublease of Oil and Gas Properties not
containing Proved Mineral Interests capable of being produced in material



 









 



76




economic quantities and which are not included in the most recently delivered Reserve
Report;




     (d) sales in the ordinary course of business of Hydrocarbons produced from the Mineral
Interests of the Credit Parties;




     (e) sales, transfers and other dispositions of assets obtained as a result of mergers,
consolidations or acquisitions permitted under this Agreement that are unrelated to the
business of the Credit Parties;




     (f) sales, transfers and other dispositions of machinery or equipment that are
obsolete, worn out or otherwise not necessary in the operation of the business of the Credit
Parties or that, substantially concurrently, are replaced by machinery or equipment of
comparable value and use;




     (g) sales, transfers and other dispositions to any MLP Subsidiary of (i) the Specified
MLP Assets, on the terms set forth in the MLP Gathering and Processing Agreement and the MLP
Omnibus Agreement, in each case as in effect on the date hereof, (ii) Midstream Assets
acquired in the Acquisition and (iii) other Midstream Assets; provided that all sales,
transfers and other dispositions made in reliance on this clause (g) shall be made for 100%
cash consideration and, in the case of sales, transfers and other dispositions referred to
in clause (ii) or (iii) above, shall be made in compliance with Section 7.09;




     (h) so long as no Event of Default shall have occurred and is continuing, sales,
transfers, leases and other dispositions of assets that are not permitted by any other
clause of this Section; provided that all sales, transfers, leases and other dispositions
made in reliance on this clause (h) shall be made for fair value and at least 85% cash
consideration; and




     (i) any Subsidiary (other than any Loan Party) may liquidate, dissolve or cease
operations if the Borrower determines in good faith that such liquidation or cessation is in
the best interests of the Borrower and is not materially disadvantageous to the Lenders;


provided, however, without limiting the foregoing, the Borrower will not, nor will the Borrower
permit any other Credit Party to, (A) sell any Hydrocarbons under Advance Payment Contracts, except
to the extent permitted under Section 7.15, (B) sell or securitize any of their accounts receivable
(other than (1) sales of accounts receivable deemed in good faith by the Borrower to be doubtful or
uncollectible, (2) discounts of accounts receivable granted to settle collection thereof and
(3) sales of defaulted accounts receivable arising in the ordinary course of business in connection
with the compromise or collection thereof and not in connection with any financing transaction),
(C) sell any Production Payment or other term royalty or (D) enter into any Sale/Leaseback
Transaction (other than with respect to equipment).




     SECTION 7.06. Amendments to Material Documents. The Borrower will not, nor will the Borrower
permit any other Credit Party to, enter into or permit any amendment or other modification of, or
waive any of its rights under, (a) its Organic Documents, (b) the definitive documentation for any
First Lien Permitted Facility (including the First Lien Loan Documents),



 









 



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(c) the Existing Notes Documents or (d) any other agreement or instrument governing or
evidencing any Material Indebtedness, in each case, to the extent such amendment, modification or
waiver could reasonably be expected (i) to materially impair the rights of or benefits available to
the Lenders under any Loan Document in respect of any payment obligation of any Loan Party
thereunder, or the ability of any Loan Party to perform any of its obligations under any Loan
Document, or (ii) to otherwise be adverse in any material respect to the Lenders, giving effect to
the rights of the Credit Parties hereunder (including the right to incur any Indebtedness permitted
under Section 7.01 and any Liens permitted under Section 7.02).




     SECTION 7.07. Use of Proceeds. The proceeds of the Loans will not be used for any purposes
other than for the purpose described in the introductory statement to this Agreement. No part of
the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails
a violation of any of the regulations of the Board, including Regulation T, U or X.



     SECTION 7.08. Investments. The Borrower will not, nor will the Borrower permit any other
Credit Party to, directly or indirectly, make or have outstanding any Investment in any other
Person, other than Permitted Investments.



     SECTION 7.09. Transactions with Affiliates. The Borrower will not, nor will the Borrower
permit any other Credit Party to, engage in any transaction with any Affiliate, except for (a) any
Permitted Investments, (b) any Restricted Payment permitted by Section 7.02, (c) transactions
between or among the Loan Parties, in each case not involving any other Person, (d) transactions
between or among Credit Parties that are not Loan Parties, in each case not involving any other
Person, and (e) transactions that are at prices and other material terms and conditions not
materially less favorable to the Borrower or such Credit Party than those that could be obtained in
a comparable arm’s length transaction with a Person that is not an Affiliate.



     SECTION 7.10. ERISA. Except in such instances where an action, omission or failure would not
reasonably be expected to have a Material Adverse Effect, the Borrower will not, nor will the
Borrower permit any other Credit Party to, (a) take any action or fail to take any action which
would result in a violation of ERISA, the Code or other Governmental Rules applicable to the Plans
sponsored, maintained or contributed to by the Borrower or any ERISA Affiliate, or (b) modify the
term of, or the funding obligations or contribution requirements under any existing Plan, establish
a new Plan, or become obligated or incur any liability under a Plan that is not sponsored,
maintained or contributed to by the Borrower or any ERISA Affiliate as of the date hereof.



     SECTION 7.11. Hedging Transactions. (a) The Borrower will not, nor will the Borrower permit
any other Credit Party to, enter into any Hedging Transactions, except (i) Hedging Transactions
entered into to hedge or mitigate risks to which the Borrower or any other Credit Party has actual
exposure (other than in respect of Equity Interests or Indebtedness of the Borrower or any other
Credit Party), (ii) Hedging Transactions entered into in order to effectively cap, collar or
exchange interest rates (from fixed to floating rates, from one floating rate to another floating
rate or otherwise) with respect to any Indebtedness or any other interest-bearing liability of the
Borrower or any other Credit Party, (iii) Hedging Transactions entered into, other than for
speculative reasons, in respect of one or more currencies and (iv) Oil and Gas Hedging
Transactions.



 









 



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     (b) The Borrower will not, nor will the Borrower permit any other Credit Party to, enter into
any new Oil and Gas Hedging Transactions which would cause the volume of Hydrocarbons with respect
to which a settlement payment is calculated under all Oil and Gas Hedging Transactions (including
such new transactions) to which the Borrower and/or any other Credit Party is a party as of the
date such Oil and Gas Hedging Transaction is entered into to exceed (i)(A) for the calendar year in
which such new Oil and Gas Hedging Transaction is entered into (the “Initial Measurement Period”),
85% of the aggregate of the Borrower’s and the Subsidiaries’ anticipated production from Proved
Mineral Interests for each of oil and gas (including natural gas liquids), calculated separately,
(B) for the calendar year immediately following the end of the Initial Measurement Period (the
“Second Measurement Period”), 80% of the aggregate of the Borrower’s and the Subsidiaries’
anticipated production from Proved Mineral Interests for each of oil and gas (including natural gas
liquids), calculated separately, and (C) for the calendar year immediately following the end of the
Second Measurement Period (the “Third Measurement Period”), 75% of the aggregate of the Borrower’s
and the Subsidiaries’ anticipated production from Proved Mineral Interests for each of oil and gas
(including natural gas liquids), calculated separately, plus, in each case, (ii) an amount not to
exceed 100% of associated royalty owners’ oil, gas and/or natural gas liquids produced from the
same wells, and which oil, gas and/or natural gas liquids the Borrower has the authority to market
and sell, during the applicable measurement period; provided that the Borrower will not, nor will
the Borrower permit any other Credit Party to, permit its production from Proved Producing Mineral
Interests (whether or not included or reflected in the most recent Reserve Report delivered
pursuant hereto) during the then current month to be less than the aggregate amount of production
from Proved Producing Mineral Interests which are subject to Oil and Gas Hedging Transactions
during such month; provided further that the Borrower will not, nor will the Borrower permit any
other Credit Party to, enter into any Oil and Gas Hedging Transaction (A) except in the ordinary
course of business (and not for speculative purposes) and (B) with a counterparty with a rating of
its senior, unsecured, long-term indebtedness for borrowed money that is not guaranteed by any
other Person or subject to any other credit enhancement of lower than “BBB-” or “Baa3” by S&P and
Moody’s, respectively.



     SECTION 7.12. Fiscal Year. The Borrower will not, and the Borrower will not permit any other
Credit Party to, change its fiscal year to end on a date other than December 31.



     SECTION 7.13. Certain Payments of Indebtedness. The Borrower will not, nor will the Borrower
permit any other Credit Party to, directly or indirectly, (a) make any payment or other
distribution (whether in cash, securities or other property) of or in respect of principal of any
Existing Notes, any Permitted Subordinated Indebtedness or any Refinancing Indebtedness in respect
of any thereof, or any payment or other distribution (whether in cash, securities or other
property) in respect of the purchase, repurchase, redemption or defeasance of principal of any
Existing Notes, any Permitted Subordinated Indebtedness or any Refinancing Indebtedness in respect
of any thereof, in each case, at any time prior to the scheduled maturity thereof, or (b) make any
prepayment of interest on any Indebtedness prior to the time that such interest is due; provided,
however, that (i) so long as no Default or Event of Default has occurred and is continuing or would
result therefrom, the Borrower or any other Credit Party may, in connection with any refinancing of
any Existing Notes or any Permitted Subordinated Indebtedness, or of any Refinancing Indebtedness
in respect of any thereof, permitted by Section 7.01, prepay all or any portion of the principal
of, and accrued interest and premiums, if any, on, any Existing



 









 



79




Notes, any Permitted Subordinated Indebtedness or any such Refinancing Indebtedness prior to
the scheduled maturity thereof; (ii) the Borrower may repurchase any Existing Convertible
Debentures with respect to which the holder thereof shall have exercised its right to require the
Borrower to make such repurchase pursuant to Section 3.06 of the Existing Convertible Debentures
Indenture, as in effect on the date hereof; and (iii) any Existing Notes, any Permitted
Subordinated Indebtedness and any Refinancing Indebtedness in respect of any thereof may, prior to
the scheduled maturity thereof, be paid, purchased, redeemed or otherwise acquired, in each case,
in exchange for shares of common stock of the Borrower (and cash in lieu of fractional shares), and
accrued interest and premiums, if any, thereon may be prepaid in connection therewith.
Notwithstanding the foregoing, the provisions of this Section shall in no event or circumstance
apply to or restrict any payment (whether in respect of a purchase, repurchase, redemption,
defeasance, prepayment or otherwise) that the Borrower is obligated to make in respect of any
Existing Senior Notes; provided, however, that, except for any actions permitted under clause (i)
or (iii) above, the Borrower will not, nor will the Borrower permit any other Credit Party to, take
any action, or omit to take any action, if, as the direct result of such action or omission, any
Existing Senior Notes shall become due and payable prior to the scheduled maturity thereof.



     SECTION 7.14. Restrictive Agreements. The Borrower will not, nor will the Borrower permit
any other Credit Party to, directly or indirectly, enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of the Borrower or any other Loan Party to create, incur or permit to exist any Lien upon
any of its assets to secure any Term Obligations or (b) the ability of any Credit Party to pay
dividends or other distributions with respect to its Equity Interests or to make or repay loans or
advances to the Borrower or any other Credit Party or to Guarantee Indebtedness of the Borrower or
any other Credit Party; provided that (i) the foregoing shall not apply to (A) restrictions and
conditions imposed by law or by any Loan Document, (B) restrictions and conditions imposed by any
First Lien Loan Documents as in effect on the date hereof (or any successor definitive
documentation for any First Lien Permitted Indebtedness, provided that the restrictions and
conditions contained in any such successor definitive documentation are not materially less
favorable to the Lenders, taken as a whole, than the restrictions and conditions imposed by the
First Lien Loan Documents as in effect on the date hereof), (C) restrictions and conditions imposed
by any definitive agreements governing or evidencing any of the Existing Notes as in effect on the
date hereof (or any definitive agreement governing or evidencing any Refinancing Indebtedness in
respect of any of the Existing Notes, provided that the restrictions and conditions contained in
any such definitive agreements are not materially less favorable to the Lenders, taken as a whole,
than the restrictions and conditions imposed by the definitive agreements governing or evidencing
such Existing Notes as in effect on the date hereof) and (D) restrictions and conditions existing
on the date hereof and identified on Schedule 7.14 (but shall apply to any extension or renewal of,
or any amendment or modification expanding the scope of, any such restriction or condition),
(ii) clause (a) of the foregoing shall not apply to customary provisions in leases and other
agreements restricting the assignment thereof and (iii) clause (b) of the foregoing shall not apply
to (A) customary restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided that such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, or (B) restrictions and
conditions imposed by agreements governing Indebtedness of any Subsidiary in existence at the time
such Subsidiary became a Subsidiary and otherwise



 









 



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permitted under Section 7.01(f) (but shall apply to any extension or renewal of, or any
amendment or modification expanding the scope of, any such restriction or condition), provided that
such restrictions and conditions apply only to such Subsidiary.



     SECTION 7.15. Gas Balancing Agreements and Advance Payments Contracts. The Borrower will not
(a) permit to exist any Material Gas Imbalance or (b) permit the aggregate amount of the Advance
Payments received by the Credit Parties under the Advance Payment Contracts which have not been
satisfied by delivery of production at any time to exceed $300,000.



ARTICLE VIII




Events of Default




     SECTION 8.01. Listing of Events of Default. Each of the following events or occurrences
described in this Section shall constitute an “Event of Default”:




     (a) the Borrower shall fail to pay when due any principal of any Loan;




     (b) the Borrower shall fail to pay when due accrued interest on any Loan or any fees or
any other amount payable hereunder, and such failure shall continue for a period of five
days following the due date thereof;




     (c) the Borrower shall fail to observe or perform any covenant or agreement contained
in Section 5.01(h), 5.01(i), 5.01(j) or 5.04(a) (with respect to the existence of the
Borrower) or in Article VI or VII;




     (d) any Loan Party shall fail to observe or perform any covenant or agreement contained
in this Agreement or any other Loan Document (other than those referenced in clause (a), (b)
or (c) above) and such failure continues for a period of 30 days after the earlier of (i)
 the date any Authorized Officer of any Loan Party acquires knowledge of such failure or
(ii)  written notice of such failure has been given to any Loan Party by Administrative
Agent or any Lender;




     (e) any representation, warranty, certification or statement made or deemed to have
been made by any Loan Party in this Agreement or any other Loan Document, or any
certificate, financial statement or other document delivered pursuant to this Agreement or
any other Loan Document, shall prove to have been incorrect in any material respect when
made or deemed made;




     (f) (i) any Credit Party shall fail to make one or more payments when due on any
Material Indebtedness of such Person, which failure continues uncured or unwaived; (ii) any
event or condition shall occur and be continuing that results in any Material Indebtedness
(other than any First Lien Permitted Indebtedness) becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice, the lapse of time
or both) the holder or holders of any such Material Indebtedness or any trustee or agent on
its or their behalf, or, in the case of any Hedging Agreement, the
applicable counterparty, to cause such Material Indebtedness to become due, or to
require



 









 



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the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity or, in the case of any Hedging Agreement, to cause the termination thereof; or
(iii) any event or condition shall occur and be continuing that (A) results in any First
Lien Permitted Indebtedness becoming due prior to its scheduled maturity or (B) enables or
permits the holder or holders of any such First Lien Permitted Indebtedness or any agent on
its or their behalf, to cause First Lien Permitted Indebtedness to become due, or to require
the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided, however, that, in the case of this clause (iii)(B), the occurrence of
any “Event of Default” (however denominated) under and as defined in any First Lien Credit
Agreement or any other definitive agreement governing or evidencing any First Lien Permitted
Indebtedness (a “First Lien Event of Default”) shall constitute an Event of Default under
this clause (f) only after a period 45 days has elapsed since the earlier of (1) notice of
such First Lien Event of Default from the administrative agent or any lender under such
First Lien Credit Agreement or other definitive agreement to the Borrower or any other
Credit Party and (2) the date an Authorized Officer of the Borrower or any other Credit
Party acquires knowledge of such First Lien Event of Default; provided further that clauses
(ii) and (iii) above shall not apply to (x) secured Indebtedness becoming due as a result of
the voluntary sale or transfer of the assets securing such Indebtedness, or the occurrence
of any other event or condition (other than an “event of default”, however denominated) that
requires a prepayment or a redemption of, or the making of an offer to prepay or redeem, any
Indebtedness pursuant to the terms of the definitive documentation governing or evidencing
such Indebtedness as in effect prior to the occurrence of such event or condition, or (y)
any Indebtedness becoming due as a result of a refinancing thereof permitted under
Section 7.01;




     (g) any Credit Party shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar Governmental Rule now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due or shall admit in
writing its inability to pay its debts as they become due or shall admit to any of the
circumstances, facts or events in this clause (g) or clause (h) below, or shall take any
corporate, partnership or limited liability company action to authorize any of the
foregoing;




     (h) an involuntary case or other proceeding shall be commenced against any Credit Party
seeking liquidation, reorganization, dissolution, winding up, or other similar relief
(including re-composition or readjustment) with respect to it or its debts under any
bankruptcy, insolvency or other similar Governmental Rule now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed for a period of 60 consecutive days; or an order for
relief shall be entered against any Credit Party under the Federal Bankruptcy Code as
now or hereafter in effect;



 









 



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     (i) one or more final judgments or orders (not paid or fully covered by insurance as to
which the relevant insurance company has acknowledged coverage and a copy of such
acknowledgement has been delivered to the Administrative Agent) for the payment of money
aggregating in excess of $16,500,000 shall be rendered against any Credit Party and such
judgment or order shall continue unsatisfied or unstayed for a period of 60 consecutive
days, or any action shall be legally taken by a judgment creditor to attach or levy upon any
assets of any Credit Party to enforce any such judgment;




     (j) any event occurs with respect to any Plan or Plans pursuant to which (i) any
Credit Party and/or any ERISA Affiliate incur a liability due and owing at the time of such
event, without existing funding therefor, for benefit payments under such Plan or Plans in
excess of $16,500,000; or (ii) any Credit Party, any ERISA Affiliate, or any other
“party-in-interest” or “disqualified person,” as such terms are defined in section 3(14) of
ERISA and section 4975(e)(2) of the Code, shall engage in transactions which in the
aggregate would reasonably be likely to result in a direct or indirect liability to any
Credit Party or any ERISA Affiliate in excess of $16,500,000 under section 409 or 502 of
ERISA or section 4975 of the Code;




     (k) this Agreement or any other Loan Document shall cease to be in full force and
effect or shall be declared null and void or the validity or enforceability thereof shall be
contested or challenged by any Loan Party, or any Loan Party shall deny that it has any
further liability or obligation under any of the Loan Documents to which it is a party, or
any Lien created by the Loan Documents shall for any reason (other than the release thereof
in accordance with the Loan Documents) cease to be, or shall be asserted by any Loan Party
not to be, a valid and perfected Lien upon any of the Collateral purported to be covered
thereby;




     (l) a Change of Control shall occur; or




     (m) any Guarantee under the Subsidiary Guarantee Agreement is for any reason (other
than a release in accordance with the Loan Documents) partially or wholly revoked or
invalidated, or otherwise ceases to be in full force and effect in any material respect, or
any Subsidiary Guarantor or any other Loan Party contests in any manner the validity or
enforceability thereof or denies that such Subsidiary Guarantor has any further liability or
obligation thereunder.



     SECTION 8.02. Action if Bankruptcy. If any of the Events of Default specified in
Section 8.01(g) or 8.01(h) shall occur, then without any notice to any Loan Party or any other act
by the Administrative Agent or Lenders, the principal amount of all outstanding Loans and all other
Term Obligations hereunder shall automatically be and become immediately due and payable, without
demand, protest or presentment or notice of any kind, all of which are hereby expressly waived by
the Borrower and the Subsidiaries. Without limiting the foregoing, the Administrative Agent and
the Lenders shall be entitled to exercise any and all other remedies available to them under the
Loan Documents and applicable law.



     SECTION 8.03. Action if Other Event of Default. If any of the Events of Default (other than
any Event of Default specified in Section 8.01(g) or 8.01(h)) shall occur for any reason,



 









 



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whether
voluntary or involuntary, and be continuing, the Required Lenders may, by notice to the Borrower,
declare all of the outstanding principal amount of the Loans and all other Term Obligations
hereunder to be due and payable, whereupon the full unpaid amount of such Loans and other
obligations shall be and become immediately due and payable, without demand, protest or presentment
or notice of any kind, all of which are hereby waived by the Borrower and the Subsidiaries.
Without limiting the foregoing, the Administrative Agent and the Lenders shall be entitled to
exercise any and all other remedies available to them under the Loan Documents and applicable law.



ARTICLE IX




Administrative Agent




     Each of the Lenders hereby irrevocably appoints Credit Suisse to serve as administrative agent
and collateral agent under the Loan Documents, and authorizes the Administrative Agent to take such
actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by
the terms of the Loan Documents, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and
the Lenders, and, except as expressly set forth in this Article, none of the Borrower or any other
Loan Party shall have any rights as a third party beneficiary of any such provisions.



     The Person serving as the Administrative Agent 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
Administrative Agent, and such Person and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not an Administrative Agent hereunder and without any duty to
account therefor to the Lenders.



     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; (b) the Administrative Agent shall not have any
duty to take any discretionary action or to exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that such Administrative Agent is
required to exercise following its receipt of written instructions from the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02); provided that the Administrative Agent shall not be required to take
any action that, in its opinion, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable law; and (c) except as expressly set forth in the Loan
Documents, 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 Borrower or any of the Subsidiaries
that is communicated to or obtained by the Person serving as Administrative Agent or any of its
Related Parties in any capacity. The Administrative Agent shall not be liable for any action taken
or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or
as the Administrative Agent shall believe in good faith to be necessary, under the circumstances as



 









 



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provided in Section 10.02) or in the absence of its own gross negligence or willful misconduct (IT
BEING UNDERSTOOD THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT THE ADMINISTRATIVE AGENT BE
INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER
SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL). 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 the
Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with any Loan Document,
(ii) the contents of any certificate, report or other document delivered thereunder or in
connection therewith, (iii) the performance or observance of any of the covenants, agreements or
other terms or conditions set forth in any Loan Document or the occurrence of any Default, (iv) the
validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in Article IV or
elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent or satisfaction of any condition that expressly refers to the
matters described therein being acceptable or satisfactory to the Administrative Agent.



     The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed or sent by the proper Person or
otherwise authenticated by the proper Person (including, if applicable, an Authorized Officer or a
Financial Officer of such 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 (including, if
applicable, an Authorized Officer or a Financial Officer of such Person), and shall not incur any
liability for relying thereon. 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 perform any and all its duties and exercise its rights and powers
hereunder or under any other Loan Document by or through any one or more sub-agents appointed by
the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all
its duties and exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of this Article 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 facility provided for herein as well as activities
as an Administrative Agent.



     Subject to the appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right, with the consent
of the Borrower (unless an Event of Default has occurred and is
continuing), not to be unreasonably withheld, delayed or conditioned, to appoint a successor.
If no successor shall have been so appointed by the Required Lenders, with such consent of the



 









 



85




Borrower if so required, and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may,
with the consent of the Borrower (unless an Event of Default has occurred and is continuing), not
to be unreasonably withheld, delayed or conditioned, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a commercial bank organized under the laws of the United States
having combined capital and surplus of at least $100,000,000, or an Affiliate of any such bank.
Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from
its duties and obligations hereunder (other than under Section 10.12) and under the other Loan
Documents. The fees payable by the Borrower to a successor Administrative Agent shall be the same
as those payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article
and Section 10.03 shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while it was acting as Administrative Agent.



     Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent, any Arranger, any Persons designated on the cover page of this Agreement as a
Syndication Agent or any other Lender, or any Related Parties of any of the foregoing, and based on
such documents and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Administrative Agent, any Arranger, any Persons designated on the
cover page of this Agreement as a Syndication 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 or any related agreement or any document furnished hereunder or thereunder.



     Each Lender, by delivering its signature page to this Agreement and funding its Loans on the
date hereof, or delivering its signature page to an Assignment and Acceptance pursuant to which it
shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to
and approved, each Loan Document and each other document required to be delivered to, or be
approved by or satisfactory to, the Administrative Agent or the Lenders on the date hereof.



     No Secured Party shall have any right individually to realize upon any of the Collateral or to
enforce any Guarantee of the Term Obligations, it being understood and agreed that all powers,
rights and remedies under the Loan Documents may be exercised solely by the Administrative Agent on
behalf of the Secured Parties in accordance with the terms thereof. In the event of a foreclosure
by the Administrative Agent on any of the Collateral pursuant to a public or private sale or other
disposition, the Administrative Agent or any Lender may be the purchaser or licensor of any or all
of such Collateral at any such sale or other disposition, and the Administrative Agent, as agent
for and representative of the Secured Parties (but not any Lender
or Lenders in its or their respective individual capacities unless Required Lenders shall
otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or
payment



 









 



86




of the purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply any of the Term Obligations as a credit on account of the purchase price for
any collateral payable by the Administrative Agent on behalf of the Secured Parties at such sale or
other disposition. Each Secured Party, whether or not a party hereto, will be deemed, by its
acceptance of the benefits of the Collateral and of the Guarantees of the Term Obligations provided
under the Loan Documents, to have agreed to the foregoing provisions.



     Notwithstanding anything herein to the contrary, neither the Arranger nor any Person named on
the cover page of this Agreement as a Syndication Agent shall have any duties or obligations under
this Agreement or any other Loan Document (except in its capacity, as applicable, as a Lender), but
all such Persons shall have the benefit of the indemnities provided for hereunder.



ARTICLE X




Miscellaneous




     SECTION 10.01. Notices. (a) Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by facsimile, as follows:




	 	(i)	 	if to the Borrower, to:


Quicksilver Resources Inc.

777 West Rosedale Street, Suite 300

Fort Worth, Texas 76104

Attention: MarLu Hiller

Telephone: (817) 665-4860

Facsimile: (817) 665-5016

Email: mhiller@qrinc.com








	 	(ii)	 	if to the Administrative Agent, to:


Credit Suisse

Eleven Madison Avenue

New York, NY 10010

Attention: Agency Group

Facsimile: (212) 322-2291

Email: agency.loanops@credit-suisse.com






	 	(iii)	 	if to any Lender, to it at its address (or facsimile number)
provided to the Administrative Agent and the Borrower or as set forth in its
Administrative Questionnaire.





     (b) Notices and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications (including email and Internet and intranet websites)




 












 


87


pursuant to
procedures approved by the Administrative Agent; provided that the foregoing shall not apply to
notices under Article II to any Lender if such Lender has notified the Administrative Agent that it
is incapable of receiving notices under such Article by electronic communication. The
Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to procedures approved by it;
provided further that approval of such procedures may be limited to particular notices or
communications.




     (c) Any party hereto may change its address or facsimile number for notices and other
communications hereunder by written notice to the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of this Agreement shall
be deemed to have been given on the date of receipt if delivered by hand or overnight courier
service or sent by facsimile or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section or in accordance with the latest unrevoked direction from such
party given in accordance with this Section.



     SECTION 10.02. Waivers; Amendments. (a) No failure or delay by the Administrative Agent or
any Lender in exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereof or the exercise of any other right or power. The rights and remedies
of the Administrative Agent 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 any 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 paragraph (b) of
this Section, 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 shall not be construed as a waiver of any Default, regardless
of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default
at the time.



     (b) None of this Agreement, any other Loan Document or any provision hereof or thereof may be
waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or
agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and
the Administrative Agent with the consent of the Required Lenders, or, in the case of any other
Loan Document, pursuant to an agreement or agreements in writing entered into by the relevant Loan
Parties thereto and the Required Lenders or by the relevant Loan Parties thereto and the
Administrative Agent with the consent of the Required Lenders; provided that (i) any provision of
this Agreement or any other Loan Document may be amended by an agreement in writing entered into by
the Borrower and the Administrative Agent to cure any ambiguity, omission, defect or inconsistency
so long as, in each case, the Lenders shall have received at least five Business Days’ prior
written notice thereof and the Administrative Agent shall not have received, within five Business
Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating
that the Required Lenders object to such amendment; and (ii) no such agreement may (A) increase the
Commitment of any Lender without the written consent of such Lender, (B) reduce, or otherwise
release the Borrower from



 









 



88




its obligation to pay, the principal amount of any Loan or reduce the
rate of interest thereon, or reduce any prepayment fees payable hereunder, without the written
consent of each Lender affected thereby, (C) postpone the scheduled maturity date of any Loan, or
the date of any scheduled payment of the principal amount of any Loan under Section 2.08, or the
scheduled date of payment of any interest thereon or of any fees payable under Section 2.07(a) or
any prepayment fees payable under Section 2.09(a), or reduce the amount of, waive or excuse any
such payment, without the written consent of each Lender affected thereby, (D) change
Section 2.17(a) or 2.17(b) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender, (E) change any of the provisions of this
Section or the percentage set forth in the definition of the term “Required Lenders” or any other
provision of any Loan Document specifying the number or percentage of Lenders required to waive,
amend or modify any rights of the Lenders thereunder or make any determination or grant any consent
thereunder, without the written consent of each Lender, (F) except as expressly provided in Section
10.17 or the Intercreditor Agreement, release all or substantially all the value of the Guarantees
under the Subsidiary Guarantee Agreement, or limit liability in respect of such Guarantees in a
manner that foregoes all or substantially all the value of such Guarantees, without the written
consent of each Lender, or (G) except as expressly provided in Section 10.17 or the Intercreditor
Agreement, release all or substantially all of the Collateral from the Liens of the Security
Documents, without the written consent of each Lender; provided further that no such agreement
shall amend, waive, modify or otherwise affect the rights or duties of the Administrative Agent
without the prior written consent of the Administrative Agent.



     SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all
legal, printing, recording, syndication, travel, advertising and other reasonable and substantiated
out-of-pocket expenses incurred by the Administrative Agent and the Arrangers, including the
reasonable and substantiated fees, charges and disbursements of one outside counsel and of local
and special counsel for the Administrative Agent and the Arrangers, in connection with the
syndication of the credit facility provided for herein, the preparation,
execution, delivery and administration of this Agreement, the other Loan Documents and each
other document or instrument relevant to this Agreement or any other Loan Document and any
amendments, modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) the filing, recording,
refiling or rerecording of the Mortgages and any other Security Documents and/or any Uniform
Commercial Code financing statements relating thereto and all amendments, supplements and
modifications to, and all releases and terminations of, any thereof and any and all other documents
or instruments of further assurance required to be filed or recorded or refiled or rerecorded by
the terms hereof or of any Mortgage or any other Security Document, and (iii) all reasonable and
substantiated out-of-pocket expenses incurred by the Administrative Agent or any Lender, including
the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender,
reasonably incurred in connection with the enforcement or protection of its rights in connection
with the Loan Documents, including its rights under this Section, or in connection with the Loans
made hereunder, including all such reasonable and substantiated out-of-pocket expenses reasonably
incurred during any workout, restructuring or negotiations in respect of such Loans.



     (b) EXCEPT TO THE EXTENT REIMBURSEMENT OF EXPENSES IS LIMITED BY SECTION 10.03(A) TO
REIMBURSEMENT OF EXPENSES OF ONLY



 









 



89




CERTAIN PARTIES, THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE
AGENT (AND ANY SUB-AGENT THEREOF), EACH ARRANGER AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF
THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH
INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES,
INCLUDING THE REASONABLE OUT-OF-POCKET 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 ANY LOAN DOCUMENT OR ANY OTHER AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY, THE PERFORMANCE BY THE PARTIES TO THE LOAN DOCUMENTS OF THEIR RESPECTIVE
OBLIGATIONS THEREUNDER OR THE CONSUMMATION OF THE FINANCING TRANSACTIONS OR ANY OTHER TRANSACTIONS
CONTEMPLATED HEREBY, (II) ANY LOAN OR THE USE OF THE PROCEEDS THEREFROM, (III) ANY ACTUAL OR
ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY CURRENTLY OR FORMERLY
OWNED OR OPERATED BY THE BORROWER OR ANY OF THE SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY
RELATED IN ANY WAY TO THE BORROWER OR ANY OF THE SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE
CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY AND WHETHER INITIATED AGAINST OR BY ANY PARTY TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT, ANY AFFILIATE OF ANY OF THE FOREGOING OR ANY THIRD PARTY (AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO); PROVIDED THAT SUCH INDEMNITY AND RELEASE
SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES,
CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (A) ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SUCH INDEMNITEE (IT BEING UNDERSTOOD THAT IT IS THE INTENTION OF THE PARTIES
HERETO THAT EACH OF THE INDEMNITEES BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN
GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR
PASSIVE, IMPUTED, JOINT OR TECHNICAL), (B) EXCEPT WHERE SUCH INDEMNITEE IS THE ADMINISTRATIVE AGENT
(OR ANY SUB-AGENT THEREOF) OR A RELATED PARTY THEREOF, RELATE TO CLAIMS BETWEEN OR AMONG THE
LENDERS OR ANY OF THEIR AFFILIATES, SHAREHOLDERS, PARTNERS OR MEMBERS (OTHER THAN ANY SUCH CLAIMS
ARISING FROM A BREACH BY ANY LOAN PARTY OF ITS OBLIGATIONS UNDER THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT) OR (C) EXCEPT WHERE SUCH INDEMNITEE IS THE ADMINISTRATIVE AGENT (OR ANY SUB-AGENT
THEREOF) OR A RELATED PARTY THEREOF, ARE IN RESPECT OF ANY PROPERTY FOR ANY OCCURRENCE ARISING FROM
THE ACTS OR OMISSIONS OF ANY LENDER



 









 



90




DURING THE PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR
ASSIGNS SHALL HAVE OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE OR DEED IN LIEU OF
FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE).



     (c) To the extent that the Borrower fails to pay any amount required to be paid by the
Borrower to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the
foregoing under paragraph (a) or (b) of this Section (and without limiting its obligation to do
so), each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) such
Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent (or such sub-agent) in its capacity as such, or
against any Related party of any of the foregoing in connection with such capacity. For purposes
hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum (without
duplication) of the total Loans at the time.



     (d) To the extent permitted by applicable law, no party hereto shall assert, or permit any of
its Related Parties to assert, and each party hereby waives, any claim against any other party (i)
for any damages arising from the use by others of information or other materials obtained through
electronic telecommunications or other information transmission systems (including the internet) or
(ii) 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 the use of the proceeds thereof.



     (e) All amounts due under this Section shall be payable not later than 30 days after written
demand is received by Borrower therefor.



     SECTION 10.04. 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, except that (i) the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of the Administrative Agent
and each Lender (and 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. Nothing in this Agreement, expressed
or implied, shall be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants (to the extent provided in this
Section), the Arrangers and, to the extent expressly contemplated hereby, the Related Parties of
any of the Administrative Agent, the Arrangers and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.



     (b) Each Lender may assign to one or more assignees all or a portion of its interests, rights
and obligations under this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it), with notice to the Borrower (failure to provide or delay in providing such
notice shall not invalidate such assignment) and the prior written consent of the Administrative
Agent (not to be unreasonably withheld, delayed or conditioned); provided,



 









 



91




however, that no consent
of the Administrative Agent shall be required in the case of an assignment of a Lender to any other
Lender, an Affiliate of a Lender or a Related Fund of a Lender; and provided further that (i) the
amount of the Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall be in an integral multiple of, and not less than,
$1,000,000 (or, if less, the entire remaining amount of such Lender’s Commitment or Loans);
provided that simultaneous assignments by two or more Related Funds shall be combined for purposes
of determining whether the minimum assignment requirement is met; (ii) the parties to each
assignment shall (A) execute and deliver to the Administrative Agent an Assignment and Acceptance
via an electronic settlement system acceptable to the Administrative Agent or (B) if previously
agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an
Assignment and Acceptance, and, in each case, shall pay to the Administrative Agent a processing
and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the
Administrative Agent), and (iii) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire (in which the assignee shall designate one or
more credit contacts to whom all syndicate-level information (which may contain material non-public
information about the Loan Parties and their Related Parties or their respective securities) will
be made available and who may receive such information in accordance with the assignee’s compliance
procedures and applicable laws, including Federal and state securities laws) and all applicable tax
forms. Upon acceptance and recording pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance, (1) the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and (2) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations
under this Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.14, 2.15, 2.16 and 10.03, as
well as to any fees accrued for its account and not yet paid, and be subject to the terms of
Section 10.12). Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.



     (c) The Administrative Agent shall maintain at one of its offices in New York a copy of each
Assignment and Acceptance delivered to it and records of the names and addresses of the Lenders,
and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive
absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder
for all purposes of this Agreement and the other Loan Documents, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower and, as to entries
pertaining to it, any Lender, at any reasonable time and from time to time upon reasonable prior
notice.



 









 



92


     (d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee
shall already be a Lender hereunder), the processing and recordation fee referred to in
paragraph (b) of this Section and any written consent to such assignment required by paragraph (b)
of this Section, the Administrative Agent shall accept such Assignment and Acceptance and promptly
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
paragraph.



     (e) Any Lender may, without the consent of the Borrower or the Administrative Agent, 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 (i) such Lender’s obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, and (iii) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender shall retain the sole
right to enforce the Loan Documents and to approve any amendment, modification or waiver of any
provision of the Loan Documents; 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 10.02(b) that affects such Participant or requires the
approval of all the Lenders. Subject to paragraph (f) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same
extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b)
of this Section. To the extent permitted by law, each Participant also shall be entitled to the
benefits of Sections 10.08 and 10.12 as though it were a Lender; provided such Participant agrees
to be subject to Section 2.16(b) as though it were a Lender.



     (f) A Participant shall not be entitled to receive any greater payment under Sections 2.14,
2.15 or 2.16 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.16 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 2.16(e) as though it were a Lender.



     (g) Any Lender may, without consent of the Borrower or the Administrative Agent, at any time
pledge or assign a security interest on all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank or, in the case of a Lender organized in a jurisdiction outside of the United
States, a comparable Governmental Authority, and this Section 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.



 









 



93


     SECTION 10.05. Survival. All covenants, agreements, representations and warranties made by
the Loan Parties in the Loan Documents 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
the Loan Documents and the making of any Loans, regardless of any investigation made by any such
other party or on its behalf and notwithstanding that the Administrative Agent, any Arranger 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 other amount payable under this
Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated.
The provisions of Section 2.14, 2.15, 2.16, 10.03 and 10.12 and Article IX 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 Commitments or the termination of
this Agreement or any provision hereof.



     SECTION 10.06. Counterparts; Integration; Effectiveness. 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.
This Agreement and the other Loan Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof (but do not supersede any
provisions of the Engagement Letter or any separate letter agreements with respect to fees payable
to the Administrative Agent that do not by the terms of such documents terminate upon the
effectiveness of this Agreement, all of which provisions shall remain in full force and effect).
Except as provided in Article IV, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by facsimile (or other customary electronic transmission acceptable to the
Administrative Agent) shall be effective as delivery of a manually executed counterpart of
this Agreement.



     SECTION 10.07. Severability. Any provision of this Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other jurisdiction.



     SECTION 10.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each of the Administrative Agent, the Lenders and their 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 at any time owing by such Lender or Affiliate to or for the credit or the account
of, the Borrower or any other Loan Party against any and all the obligations of the Borrower now or
hereafter existing under this Agreement held by such Lender, irrespective of



 









 



94




whether or not such
Lender shall have made any demand under this Agreement and although such obligations may be
unmatured; provided, however, that any such set-off and application shall be subject to the
provisions of Section 2.17 and the Intercreditor Agreement. As security for such obligations, the
Borrower hereby grants to the Administrative Agent and each Lender a continuing security interest
in any and all balances, credits, deposits, accounts or moneys of the Borrower and the other Loan
Parties then or thereafter maintained with the Administrative Agent and such Lenders. The rights
of each Lender under this Section are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.



     SECTION 10.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF
LAW PROVISION) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.



     (b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK
SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES
THAT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER
MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.



     (c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.



 









 



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     (d) EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 10.01. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY OF
THE PARTIES HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW; PROVIDED THAT NOTICE OF
THE USE OF ANY SUCH ALTERNATIVE MEANS OF SERVICE SHALL BE PROVIDED TO EACH AFFECTED PARTY IN THE
MANNER PROVIDED IN SECTION 10.01.



     SECTION 10.10. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.



     SECTION 10.11. 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 10.12. Confidentiality. Each of the Administrative Agent and the Lenders agrees to
maintain the confidentiality of the Information (as defined below), except that Information may be
disclosed (a) to its Related Parties, including accountants, legal counsel, petroleum engineers or
consultants and other agents and advisors, it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential, (b) to the extent requested by
any regulatory authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to the extent required
by applicable law or by any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies under this Agreement or any other
Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing confidentiality undertakings substantially similar to those of this Section, to (i) any
assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights
or obligations under this Agreement or (ii) any actual or prospective counterparty (or its Related
Parties) to any swap or derivative transaction relating to the Borrower or any other Subsidiary and
its obligations, (g) with the consent of the Borrower or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, any Lender or any Affiliate of any of the foregoing on a
nonconfidential basis from a source other than the Borrower or any Subsidiary. For purposes of



 









 



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this Section, “Information” means all information received from the Borrower or any Subsidiary
relating to the Borrower or any Subsidiary or its businesses, other than any such information that
is available to the Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower or any Subsidiary. Any Person required to maintain the confidentiality
of Information as provided in this Section shall be considered to have complied with its obligation
to do so if such Person has exercised the same degree of care to maintain the confidentiality of
such Information as such Person would accord to its own confidential information.



     SECTION 10.13. Interest Rate Limitation. (a) 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 that are treated as interest on such Loan under applicable law (collectively the
“Charges”), shall exceed the maximum lawful rate (the “Highest Lawful Rate”) that 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 hereunder, together with all
Charges payable in respect thereof, shall be limited to the Highest Lawful Rate and, to the extent
lawful, the interest and Charges that would have been payable in respect of such Loan 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 Highest Lawful Rate therefor) until such cumulated amount, together with interest thereon
at the Federal Funds Effective Rate to the date of repayment, shall have been received by such
Lender.



     (b) For purposes of Chapter 303 of the Texas Finance Code, as amended, to the extent
applicable, the Borrower agrees that the Highest Lawful Rate shall be the “indicated (weekly) rate
ceiling” as defined in such Chapter; provided that each Lender and the Administrative Agent may
also rely, to the extent permitted by applicable law, on alternative maximum rates of interest
under other laws applicable to such Lender or the Administrative Agent, if greater.



     SECTION 10.14. PATRIOT Act Notice. Each Lender that is subject to the PATRIOT Act and the
Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the
Borrower and each other Loan Party that pursuant to the requirements of the Patriot Act, it is
required to obtain, verify and record information that identifies the Borrower and each other Loan
Party, which information includes the name and address of the Borrower and each other Loan Party
and other information that will allow such Lender or the Administrative Agent, as applicable, to
identify the Borrower and each other Loan Party in accordance with the PATRIOT Act.



     SECTION 10.15. No Fiduciary Relationship. The Borrower, on behalf of itself and the
Subsidiaries, agrees that in connection with all aspects of the transactions contemplated hereby
and any communications in connection therewith, the Borrower, the Subsidiaries and their
Affiliates, on the one hand, and the Administrative Agent, the Lenders and their Affiliates, on the
other hand, will have a business relationship that does not create, by implication or otherwise,
any fiduciary duty on the part of the Administrative Agent, the Lenders or their Affiliates, and no
such duty will be deemed to have arisen in connection with any such transactions or communications.



 









 



97


     SECTION 10.16. Intercreditor Agreement. The Lenders acknowledge that obligations of the
Borrower and the Subsidiaries under the First Lien Permitted Indebtedness and the Existing Senior
Notes Documents, and certain obligations related thereto, will be secured by Liens on assets of the
Borrower and the Subsidiaries that constitute Collateral. At the request of the Borrower, the
Administrative Agent shall enter into the Intercreditor Agreement establishing the relative rights
of the Secured Parties and of the secured parties under the First Lien Permitted Facilities with
respect to the Collateral. Each Lender hereby irrevocably (a) consents to the subordination of
Liens provided for under the Intercreditor Agreement, (b) authorizes and directs the Administrative
Agent to execute and deliver the Intercreditor Agreement and any documents relating thereto, in
each case, on behalf of such Lender and without any further consent, authorization or other action
by such Lender, (c) agrees that, upon the execution and delivery thereof, such Lender will be bound
by the provisions of the Intercreditor Agreement as if it were a signatory thereto and will take no
actions contrary to the provisions of the Intercreditor Agreement and (d) agrees that no Lender
shall have any right of action whatsoever against the Administrative Agent as a result of any
action taken by the Administrative Agent pursuant to this Section or in accordance with the terms
of the Intercreditor Agreement. Each Lender hereby further irrevocably authorizes and directs the
Administrative Agent to enter into such amendments, supplements or other modifications to the
Intercreditor Agreement as are contemplated by Section 7.02 thereof in connection with any
extension, renewal, refinancing or replacement of any First Lien Credit Agreement or any
refinancing, in part but not in whole, of the Term Obligations, in each case, on behalf of such
Lender and without any further consent, authorization or other action by such Lender. The
Administrative Agent shall have the benefit of the provisions of Article IX with respect to all
actions taken by it pursuant to this Section or in accordance with the terms of the Intercreditor
Agreement to the full extent thereof.



     SECTION 10.17. Release of Liens and Guarantees. Upon any sale or other transfer by any Loan
Party (other than to the Borrower or any other Loan Party) of any Collateral in a transaction
permitted under this Agreement, or upon the effectiveness of any written consent to the release of
the security interests created under any Security Document in any Collateral pursuant to
Section 10.02, the security interests in such Collateral created by the Security Documents shall be
automatically released; provided, in each case, that the security interests in
such Collateral created by the First Lien Loan Documents or any successor definitive
documentation for the First Lien Permitted Facilities shall have been, or shall concurrently
therewith, be released. A Subsidiary that is a Loan Party shall automatically be released from its
obligations under the Loan Documents, and all security interests created by the Security Documents
in Collateral owned by such Subsidiary shall be automatically released, upon the consummation of
any transaction permitted by this Agreement as a result of which such Subsidiary ceases to be a
Subsidiary; provided that, (a) if so required by this Agreement, the Required Lenders shall have
consented to such transaction and the terms of such consent shall not have provided otherwise; and
(b) such Subsidiary shall have been, or shall concurrently therewith, be released from its
obligations under the First Lien Loan Documents and any successor definitive documentation for the
First Lien Permitted Facilities, and all security interests created by the First Lien Loan
Documents and such other definitive documentation in Collateral owned by such Subsidiary shall have
been, or shall concurrently therewith, be released. In connection with any termination or release
pursuant to this Section, the Administrative Agent shall execute and deliver to any Loan Party, at
such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence
such termination or



 









 



98




release. Any execution and delivery of documents pursuant to this Section
shall be without recourse to or warranty by the Administrative Agent.



     SECTION 10.18. Waiver of Consumer Credit Laws. Pursuant to Chapter 346 of the Texas Finance
Code, as amended, the Borrower agrees that such Chapter 346 shall not govern or in any manner apply
to the Loans.



     SECTION 10.19. Status of Term Obligations. (a) The Borrower represents, warrants and agrees
that, so long as the Lenders are at all times banks or other institutional lenders, the Term
Obligations will at all times constitute “Bank Indebtedness” under, and as defined in, each of the
Existing Senior Notes Indenture and the Existing Subordinated Notes Indenture.



     (b) The Loans and other Term Obligations are hereby designated as “Senior Indebtedness” for
purposes of each Existing Notes Indenture and as “Designated Senior Indebtedness” for purposes of
the Existing Convertible Debentures Indenture and the Existing Subordinated Notes Indenture. In
the event that the Borrower or any other Loan Party shall at any time issue or have outstanding any
other Indebtedness that, by its terms, is subordinated in right of payment to any other
Indebtedness, the Borrower shall take or cause such other Loan Party to take all such actions as
shall be necessary to cause the Term Obligations to constitute senior indebtedness (however
denominated) in respect of such subordinated Indebtedness and to enable the Lenders to have and
exercise any payment blockage or other remedies available or potentially available to holders of
senior indebtedness under the terms of such Subordinated Indebtedness. Without limiting the
foregoing, the Term Obligations are hereby designated as “senior indebtedness” and as “designated
senior indebtedness” for purposes of each indenture or other agreement or instrument under which
such other subordinated Indebtedness is outstanding and are further given all such other
designations as shall be required under the terms of any such subordinated Indebtedness in order
that the Lenders may have and exercise any payment blockage or other remedies available or
potentially available to holders of senior indebtedness under the terms of such subordinated
Indebtedness.



     SECTION 10.20. NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.



[Signatures begin on the following page]




 









 






     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.



	 	 	 	 	 	 
	 	QUICKSILVER RESOURCES INC.,

 	 
	 	      	by  	
 	 
	 	      	  	 	 
	 	      	  	/s/ Philip Cook
 	 
	 	 	 	Name:  	Philip W. Cook 	 
	 	 	 	Title:  	Senior Vice President–Chief Financial Officer 	 



 









 







	 	 	 	 	 



	 	 	 	 	 	 
	 	CREDIT SUISSE, Cayman Islands Branch,

individually and as Administrative Agent,

 	 
	 	       	by  	 	 
	 	       	  	 	 
	 	       	  	/s/ Vanessa Gomez
 	 
	 	 	 	Name:  	Vanessa Gomez 	 
	 	 	 	Title:  	Director 	 
	 	 
	 	 	 	 
	 	 	by  	 	 
	 	 	  	 	 
	 	 	  	     /s/ Nupur Kumar
 	 
	 	 	 	Name:  	Nupur Kumar 	 
	 	 	 	Title:  	Associate 	 




 









 







	 	 	 	 	 
	 	SIGNATURE PAGE TO THE CREDIT
AGREEMENT	 
	 	DATED AS OF AUGUST 8, 2008 OF

QUICKSILVER RESOURCES INC.	 



	 	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.,

 	 
	 	       	by  	 	 
	 	       	  	 	 
	 	       	  	/s/ Wm. Mark Cranmer
 	 
	 	 	 	Name:  	Wm. Mark Cranmer 	 
	 	 	 	Title:  	Senior Vice President