exv4w4






Exhibit 4.4




Published CUSIP Number: 86164DAA0




$700,000,000




SECOND AMENDED AND RESTATED CREDIT AGREEMENT




among




STONE ENERGY CORPORATION




as Borrower,




THE FINANCIAL INSTITUTIONS

NAMED IN THIS CREDIT AGREEMENT




as Banks,




BANK OF AMERICA, N.A.

as Administrative Agent and Issuing Bank,




BNP PARIBAS,

NATIXIS,

AND

THE BANK OF NOVA SCOTIA,

as Co-Syndication Agents,




CAPITAL ONE, N.A. and

TORONTO DOMINION (TEXAS) LLC,

as Co-Documentation Agents, and




BANC OF AMERICA SECURITIES LLC

as sole Lead Arranger and Bookrunner




August 28, 2008




 









 





	 	 	 	 	 
	ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	 
	Section 1.1. Certain Defined Terms
	 	 	1	 
	 
	Section 1.2. Computation of Time Periods
	 	 	17	 
	 
	Section 1.3. Accounting Terms; Changes in GAAP
	 	 	17	 
	 
	Section 1.4. Types of Advances
	 	 	17	 
	 
	Section 1.5. Miscellaneous
	 	 	17	 
	 
	ARTICLE II CREDIT FACILITIES
	 	 	17	 
	 
	Section 2.1. Commitment for Advances
	 	 	17	 
	 
	Section 2.2. Borrowing Base
	 	 	18	 
	 
	Section 2.3. Method of Borrowing
	 	 	20	 
	 
	Section 2.4. Prepayment of Advances
	 	 	22	 
	 
	Section 2.5. Repayment of Advances
	 	 	24	 
	 
	Section 2.6. Letters of Credit
	 	 	24	 
	 
	Section 2.7. Fees
	 	 	28	 
	 
	Section 2.8. Interest
	 	 	29	 
	 
	Section 2.9. Payments and Computations
	 	 	31	 
	 
	Section 2.10. Sharing of Payments, Etc
	 	 	31	 
	 
	Section 2.11. Breakage Costs
	 	 	32	 
	 
	Section 2.12. Increased Costs
	 	 	32	 
	 
	Section 2.13. Taxes
	 	 	33	 
	 
	ARTICLE III CONDITIONS OF LENDING
	 	 	35	 
	 
	Section 3.1. Initial Conditions Precedent to Borrowings
	 	 	35	 
	 
	Section 3.2. Conditions Precedent to All Borrowings
	 	 	38	 
	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES
	 	 	39	 
	 
	Section 4.1. Corporate Existence; Subsidiaries
	 	 	39	 
	 
	Section 4.2. Corporate Power; Authorization; No Violation
	 	 	39	 
	 
	Section 4.3. Authorization and Approvals
	 	 	40	 
	 
	Section 4.4. Enforceable Obligations
	 	 	40	 
	 
	Section 4.5. Financial Statements
	 	 	40	 
	 
	Section 4.6. True and Complete Disclosure
	 	 	40	 
	 
	Section 4.7. Litigation
	 	 	41	 
	 
	Section 4.8. Use of Proceeds
	 	 	41	 
	 
	Section 4.9. Investment Company Act
	 	 	42	 






 








 






	 	 	 	 	 
	Section 4.10. Taxes
	 	 	42	 
	 
	Section 4.11. Pension Plans
	 	 	42	 
	 
	Section 4.12. Condition of Property; Casualties
	 	 	43	 
	 
	Section 4.13. No Burdensome Restrictions; No Defaults
	 	 	43	 
	 
	Section 4.14. Environmental Condition
	 	 	43	 
	 
	Section 4.15. Permits, Licenses, Etc.; Compliance with Legal Requirements
	 	 	44	 
	 
	Section 4.16. Gas Contracts
	 	 	44	 
	 
	Section 4.17. Title to Properties, Liens, Leases, Etc
	 	 	44	 
	 
	Section 4.18. Mineral Interests
	 	 	45	 
	 
	ARTICLE V AFFIRMATIVE COVENANTS
	 	 	45	 
	 
	Section 5.1. Compliance with Laws, Etc
	 	 	46	 
	 
	Section 5.2. Maintenance of Insurance
	 	 	46	 
	 
	Section 5.3. Preservation of Corporate Existence, Etc
	 	 	47	 
	 
	Section 5.4. Payment of Taxes, Claims, Etc
	 	 	47	 
	 
	Section 5.5. Visitation Rights
	 	 	48	 
	 
	Section 5.6. Reporting Requirements
	 	 	48	 
	 
	Section 5.7. Maintenance of Property
	 	 	52	 
	 
	Section 5.8. New Subsidiaries
	 	 	52	 
	 
	Section 5.9. Maintenance of Books and Records
	 	 	53	 
	 
	Section 5.10. Use of Proceeds
	 	 	53	 
	 
	Section 5.11. Agreement to Mortgage; Further Assurances
	 	 	53	 
	 
	Section 5.12. Title Information and Cure
	 	 	54	 
	 
	Section 5.13. Post-Closing Requirements
	 	 	55	 
	 
	ARTICLE VI NEGATIVE COVENANTS
	 	 	56	 
	 
	Section 6.1. Liens, Etc
	 	 	56	 
	 
	Section 6.2. Debts, Guaranties, and Other Obligations
	 	 	57	 
	 
	Section 6.3. Agreements Restricting Liens and Distributions
	 	 	58	 
	 
	Section 6.4. Merger or Consolidation; Asset Sales; Farm-Outs
	 	 	58	 
	 
	Section 6.5. Restricted Payments
	 	 	59	 
	 
	Section 6.6. Investments
	 	 	59	 
	 
	Section 6.7. Limitation on Speculative Hedging
	 	 	60	 
	 
	Section 6.8. Affiliate Transactions
	 	 	60	 
	 
	Section 6.9. Compliance with ERISA
	 	 	60	 






- ii -








 






	 	 	 	 	 
	Section 6.10. Maintenance of Ownership of Subsidiaries
	 	 	60	 
	 
	Section 6.11. Sale-and-Leaseback
	 	 	60	 
	 
	Section 6.12. Change of Business
	 	 	61	 
	 
	Section 6.13. Debt to EBITDA Ratio
	 	 	61	 
	 
	Section 6.14. Interest Coverage Ratio
	 	 	61	 
	 
	Section 6.15. Subordinated Debt
	 	 	61	 
	 
	ARTICLE VII REMEDIES
	 	 	61	 
	 
	Section 7.1. Events of Default
	 	 	61	 
	 
	Section 7.2. Optional Acceleration of Maturity
	 	 	64	 
	 
	Section 7.3. Automatic Acceleration of Maturity
	 	 	64	 
	 
	Section 7.4. Right of Set-off
	 	 	65	 
	 
	Section 7.5. Actions Under Credit Documents
	 	 	65	 
	 
	Section 7.6. Non-exclusivity of Remedies
	 	 	65	 
	 
	Section 7.7. Application of Funds
	 	 	65	 
	 
	ARTICLE VIII THE AGENT AND THE ISSUING BANK
	 	 	66	 
	 
	Section 8.1. Appointment and Authorization of Agent
	 	 	66	 
	 
	Section 8.2. Rights as a Bank
	 	 	66	 
	 
	Section 8.3. Exculpatory Provisions
	 	 	67	 
	 
	Section 8.4. Reliance by Agent
	 	 	67	 
	 
	Section 8.5. Delegation of Duties
	 	 	68	 
	 
	Section 8.6. Resignation of Agent
	 	 	68	 
	 
	Section 8.7. Non-Reliance on Agent and Other Banks
	 	 	69	 
	 
	Section 8.8. No Other Duties, Etc
	 	 	69	 
	 
	Section 8.9. Agent May File Proofs of Claim
	 	 	69	 
	 
	Section 8.10. Collateral and Guaranty Matters
	 	 	70	 
	 
	Section 8.11. Indemnification of Agent
	 	 	71	 
	 
	ARTICLE IX MISCELLANEOUS
	 	 	71	 
	 
	Section 9.1. Amendments, Etc
	 	 	71	 
	 
	Section 9.2. Notices, Etc
	 	 	72	 
	 
	Section 9.3. No Waiver; Remedies
	 	 	74	 
	 
	Section 9.4. Costs and Expenses
	 	 	74	 
	 
	Section 9.5. Binding Effect
	 	 	74	 
	 
	Section 9.6. Bank Assignments and Participations
	 	 	74	 






- iii -








 






	 	 	 	 	 
	Section 9.7. Indemnification
	 	 	78	 
	 
	Section 9.8. USA Patriot Act Notice
	 	 	79	 
	 
	Section 9.9. No Advisory or Fiduciary Responsibility
	 	 	79	 
	 
	Section 9.10. Execution in Counterparts
	 	 	80	 
	 
	Section 9.11. Survival of Representations, Etc
	 	 	80	 
	 
	Section 9.12. Severability
	 	 	80	 
	 
	Section 9.13. Business Loans
	 	 	80	 
	 
	Section 9.14. Amendment and Restatement
	 	 	81	 
	 
	Section 9.15. Governing Law
	 	 	81	 
	 
	Section 9.16. Waiver of Punitive Damages, Jury Trial, Etc
	 	 	81	 
	 
	Section 9.17. Treatment of Certain Information; Confidentiality
	 	 	82	 






- iv -








 






	 	 	 	 	 	 	 	 	 
	 

	 	Annex 1
	 	-
	 	Commitments; Borrower,
Agent, and Bank Notice Information; Lending Offices






	 	 	 	 	 	 	 	 	 
	EXHIBITS:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Exhibit A
	 	-
	 	Form of Assignment and Acceptance	 	 
	 

	 	Exhibit B
	 	-
	 	Form of Compliance Certificate	 	 
	 

	 	Exhibit C
	 	-
	 	Form of Guaranty	 	 
	 

	 	Exhibit D
	 	-
	 	Form of Note	 	 
	 

	 	Exhibit E
	 	-
	 	Form of Notice of Borrowing	 	 
	 

	 	Exhibit F
	 	-
	 	Form of Notice of Conversion or Continuation	 	 
	 

	 	Exhibit G
	 	-
	 	Form of Letter of Credit Application	 	 
	 

	 	Exhibit H
	 	-
	 	Form of Security Agreement	 	 
	 

	 	Exhibit I
	 	-
	 	Form of Mortgage Compliance Certificate	 	 






	 	 	 	 	 	 	 	 	 
	SCHEDULES:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Schedule 2.6(h)	 	-
	 	Existing Letters of Credit
	 	 
	 

	 	Schedule 4.1
	 	-
	 	Material Subsidiaries	 	 
	 

	 	Schedule 4.7
	 	-
	 	Existing Litigation	 	 
	 

	 	Schedule 4.14(a)	 	-	 	Existing Environmental Concerns	 	 
	 

	 	Schedule 4.14(b)	 	-	 	Designated Environmental Sites	 	 
	 

	 	Schedule 6.1
	 	-
	 	Permitted Existing Liens	 	 
	 

	 	Schedule 6.2
	 	-
	 	Permitted Existing Debt	 	 
	 

	 	Schedule 6.8
	 	-
	 	Affiliate Transactions	 	 






- v -








 





SECOND AMENDED AND RESTATED CREDIT AGREEMENT




     This Second Amended and Restated Credit Agreement dated as of August 28, 2008 is among Stone
Energy Corporation, a Delaware corporation, the Banks (as defined below), and Bank of America,
N.A., as administrative agent for the Banks and as Issuing Bank.



     The Borrower, the Banks, and the Agent agree as follows:



ARTICLE I




DEFINITIONS AND ACCOUNTING TERMS




     Section 1.1. Certain Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (unless otherwise indicated, such meanings to be equally
applicable to both the singular and plural forms of the terms defined):



     “2001 Indenture” means the Indenture dated as of December 10, 2001 between the
Borrower and JP Morgan Chase Bank, N.A., as Trustee, relating to the issuance of 8.25% unsecured
senior subordinated notes due 2011.



     “2004 Indenture” means the Indenture dated as of December 15, 2004 between the
Borrower and JPMorgan Chase Bank, N.A., as Trustee, relating to the issuance of unsecured senior
subordinated notes due 2014.



     “Acceptable Security Interest” in any Property means a Lien which (a) exists in favor
of the Agent for the benefit of the Agent and the Banks, (b) with respect to Property that is not
Borrowing Base Assets, is the only Lien on such Property other than Permitted Liens, and which is
superior to all Liens or rights of any other Person in such Property encumbered thereby except for
such Permitted Liens, (c) with respect to Borrowing Base Assets, is the only Lien on such Property
other than Permitted Borrowing Base Liens, and which is superior to all Liens or rights of any
other Person in such Property encumbered thereby except for such Permitted Borrowing Base Liens,
(d) secures the Obligations, and (e) is perfected and enforceable.



     “Adjusted Base Rate” means, for any day, the fluctuating rate per annum of interest
equal to the greater of (a) the Base Rate in effect on such day and (b) the Federal Funds Rate in
effect on such day plus 0.50%.



     “Advance” means any advance by a Bank to the Borrower as part of a Borrowing and
refers to a Base Rate Advance or a Eurodollar Rate Advance.



     “Affiliate” means, as to any Person, any other Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under common control with,
such Person or any Subsidiary of such Person. The term “control” (including the terms “controlled
by” or “under common control with”) means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person, whether through ownership
of Voting Securities, by contract, or otherwise.



 









 





     “Agent” means Bank of America, in its capacity as an administrative agent pursuant to
Article VIII, and any successor administrative agent pursuant to Section 8.6.



     “Agent-Related Persons” means the Agent, together with its Affiliates (including, in
the case of Bank of America, in its capacity as the Agent, Banc of America Securities LLC), and the
officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.



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



     “Applicable Lending Office” means, with respect to each Bank, such Bank’s Domestic
Lending Office in the case of a Base Rate Advance and such Bank’s Eurodollar Lending Office in the
case of a Eurodollar Rate Advance.



     “Applicable Margin” means, for any day, the following percentages based upon the ratio
of (a) the aggregate outstanding amount of Advances plus the Letter of Credit Exposure to
(b) the Borrowing Base as of such day:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ratio of (Advances + Letter of	 	 	 	 	 	 
	Credit Exposure) to (Borrowing	 	Applicable Margin for	 	Applicable Margin for	 	Applicable Margin for
	Base)	 	Base Rate Advances	 	Eurodollar Rate Advances	 	Commitment Fees
	Less than .30
	 	 	0.000	%	 	 	1.500	%	 	 	0.375	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to .30
but less than .60
	 	 	0.000	%	 	 	1.750	%	 	 	0.375	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to .60
but less than .90
	 	 	0.250	%	 	 	2.000	%	 	 	0.500	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to .90
	 	 	0.500	%	 	 	2.250	%	 	 	0.500	%






     “Approved Fund” means any Fund that is administered or managed by (a) a Bank, (b) an
Affiliate of a Bank or (c) an entity or an Affiliate of an entity that administers or manages a
Bank.



     “Arranger” means Banc of America Securities LLC, in its capacity as sole lead arranger
and sole bookrunner.



     “Asset Disposition” means any sale, lease, license, transfer, assignment or other
consensual disposition by any Credit Party of any asset, but excluding (i) dispositions of
inventory or used, obsolete, worn-out, or surplus equipment, all in the ordinary course of
business, (ii) sales, transfers and other dispositions of accounts receivable in connection with
the compromise, settlement, or collection thereof in the ordinary course of business, and (iii) any
disposition of property or assets or issuance of equity interests by Borrower or any domestic
Subsidiary to any Credit Party.



-2-









 





     “Assignment and Acceptance” means an assignment and acceptance entered into by a Bank
and an Eligible Assignee, and accepted by the Agent, in substantially the form of the attached
Exhibit A.



     “Bank of America” means Bank of America, N.A. and its successors.



     “Banks” means the lenders listed on the signature pages of this Agreement and each
Eligible Assignee that shall become a party to this Agreement pursuant to Section 9.6.



     “Base Rate” means a fluctuating interest rate per annum as shall be in effect from
time to time equal to the rate of interest publicly announced by Bank of America as its prime rate,
whether or not the Borrower has notice thereof.



     “Base Rate Advance” means an Advance which bears interest as provided in Section
2.8(a).



     “Bois d’Arc Merger” means the merger of the Target into Stone Offshore with each
outstanding share of the Target’s common stock being converted into the right to receive
approximately $13.65 in cash and 0.165 shares of the Borrower’s common stock, all as more fully
described in the Bois d’Arc Merger Agreement.



     “Bois d’Arc Merger Agreement” means the Agreement and Plan of Merger dated as of April
30, 2008 among the Borrower, Stone Offshore, and the Target.



     “Borrower” means Stone Energy Corporation, a Delaware corporation.



     “Borrower Materials” has the meaning set forth in Section 5.6(o).



     “Borrowing” means, subject to Sections 2.3(c)(ii) and 2.4(b)(v), a
borrowing consisting of simultaneous Advances of the same Type made by each Bank pursuant to
Section 2.3(a), continued by each Bank pursuant to Section 2.3(b), or Converted by
each Bank to Advances of a different Type pursuant to Section 2.3(b).



     “Borrowing Base” means, for any date of its determination by the Majority Banks or all
of the Banks, as the case may be, the amount determined in accordance with Section 2.2.



     “Borrowing Base Assets” means, at any time, any assets that are given value in the
most recently determined Borrowing Base.



     “Borrowing Base Deficiency” has the meaning given to such term in Section
2.4(b)(i).



     “Business Day” means a day of the year on which banks are not required or authorized
to close in Dallas, Texas and, if the applicable Business Day relates to any Eurodollar Rate
Advances, on which dealings are carried on by banks in the London interbank market.



     “Capital Leases” means, as applied to any Person, any lease of any Property by such
Person as lessee which would, in accordance with GAAP, be required to be classified and accounted
for as a capital lease on the balance sheet of such Person.



-3-









 





     “Cash Collateral Account” means a special interest bearing cash collateral account
pledged to the Agent for the ratable benefit of the Banks containing cash deposited pursuant to
Sections 2.4(b) or (c), 7.2(b), or 7.3(b) to be maintained at the
Agent’s office in accordance with Section 2.6(g) and bear interest or be invested in the
Agent’s reasonable discretion.



     “CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. §§ 9601 et seq.), as amended, state and local analogs, and all rules and
regulations and requirements thereunder in each case as now or hereafter in effect.



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



     “Collateral” has the meaning specified in the Security Documents.



     “Commitment” means, for any Bank, the amount set opposite such Bank’s name on
Annex 1 as its Commitment, or if such Bank has entered into any Assignment and Acceptance,
as set forth for such Bank as its Commitment in the Register maintained by the Agent pursuant to
Section 9.6(c), as such amount may be reduced or terminated pursuant to Article
VII.



     “Compliance Certificate” means a compliance certificate in the form of the attached
Exhibit B signed by a Responsible Officer of the Borrower.



     “Consents” means the Consent and Agreements made by the counterparties to the
applicable Mortgaged Contracts in favor of the Agent for the benefit of the Secured Parties,
including any such Consent and Agreements delivered from time to time in accordance with
Section 5.11, in each case, as the same may be amended, supplemented, or otherwise modified
from time to time.



     “Controlled Group” means all members of a controlled group of corporations and all
trades (whether or not incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414 of the Code.



     “Convert,” “Conversion,” and “Converted” each refers to a conversion
of Advances of one Type into Advances of another Type pursuant to Section 2.3(b).



     “Credit Documents” means this Agreement, the Notes, the Letter of Credit Documents,
the Guaranties, the Security Documents, and each other agreement, instrument, or document executed
at any time in connection with this Agreement.



     “Credit Parties” means the Borrower and each Guarantor.



     “Debt,” for any Person, means without duplication:



     (a) indebtedness of such Person for borrowed money, including, without limitation, obligations
under letters of credit and agreements relating to the issuance of letters of credit or acceptance
financing;




-4-












 





          (b) obligations of such Person evidenced by bonds, debentures, notes or other similar
instruments;




          (c) obligations of such Person to pay the deferred purchase price of property or services;




          (d) obligations of such Person as lessee under Capital Leases;




          (e) obligations of such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) of such Person to purchase or otherwise acquire, or otherwise
to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (a) through (d) above;




          (f) indebtedness or obligations of others of the kinds referred to in clauses (a) through (e)
secured by any Lien on or in respect of any Property of such Person; and




          (g) all liabilities of such Person in respect of unfunded vested benefits under any Plan.




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




          “Default” means (a) an Event of Default or (b) any event or condition which with
notice or lapse of time or both would, unless cured or waived, become an Event of Default.




          “Defaulting Bank” means any Bank that (a) has failed to fund any portion of the
Advances or participations in Letter of Credit Obligations required to be funded by it hereunder
within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed
to pay over to the Agent or any other Bank any other amount required to be paid by it hereunder
within one Business Day of the date when due, unless the subject of a good faith dispute, or (c)
has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.




          “Dollar Equivalent” means for all purposes of this Agreement, the equivalent in
another currency of an amount in Dollars to be determined by reference to the rate of exchange
quoted by Bank of America at 10:00 a.m. (Dallas, Texas time) on the date of determination, for the
spot purchase in the foreign exchange market of such amount of Dollars with such other currency.




          “Dollars” and “$” means lawful money of the United States of America.




          “Domestic Lending Office” means, with respect to any Bank, the office of such Bank
specified as its “Domestic Lending Office” opposite its name on Annex 1 or such other
office of such Bank as such Bank may from time to time specify to the Borrower and the Agent.




-5-









 








          “EBITDA” means, with respect to any Person and for any period of its determination,
the consolidated Net Income of such Person for such period, plus the consolidated interest expense,
income taxes, depreciation, depletion, and amortization of such Person for such period. If any
acquisition or disposition of assets permitted to be made under this Agreement (other than
non-material acquisitions in the ordinary course of business or non-material dispositions in the
ordinary course of business) occurs during such period of determination, EBITDA for such period
shall be calculated on a pro forma basis to give effect to such acquisition or disposition as if
each such acquisition or disposition had been consummated on the first day of such period.




          “Effective Date” means the date on which each of the conditions precedent in
Section 3.1 have been met or waived.




          “Effective Date Merger Agreements” means (i) the Agreement and Plan of Merger dated as
of August 28, 2008, by and among Bois d’Arc Properties, LP, Bois d’Arc Holdings, LLC and Stone
Energy Offshore, L.L.C., and (ii) the Agreement and Plan of Merger, dated as of August 28, 2008, by
Bois d’Arc Oil & Gas Company, LLC, Bois d’Arc Offshore, Ltd., and Stone Energy Offshore, L.L.C.




          “Effective Date Mergers” means (i) the merger of Bois d’Arc Properties, LP into Stone
Offshore, (ii) the merger of Bois d’Arc Holdings, LLC into Stone Offshore, (iii) the merger of Bois
d’Arc Offshore, Ltd. into Stone Offshore, and (iv) the merger of Bois d’Arc Oil & Gas Company, LLC
into Stone Offshore, in each case with Stone Offshore as the surviving entity.




          “Eligible Assignee” means (i) any Fund, and (ii) any commercial bank, in each case
organized under the laws of any country which is a member of the Organization for Economic
Cooperation and Development and having primary capital (or its equivalent) of not less than
$250,000,000 (or its Dollar Equivalent) and approved by (a) the Agent in its sole discretion, which
approval by the Agent will not be unreasonably withheld or delayed, and (b) if no Default or Event
of Default exists, the Borrower, which approval by the Borrower will not be unreasonably withheld
or delayed.




          “Environment” or “Environmental” shall have the meanings set forth in 42
U.S.C. § 9601(8) (1988).




          “Environmental Claim” means any third party or Governmental Authority action, lawsuit,
claim, demand, regulatory action or proceeding, order, decree, consent agreement or notice of
potential or actual responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Act or similar laws or requirements, to the extent relating to
occupational safety or exposure to Hazardous Substances) which seeks to impose liability under any
Environmental Law.




          “Environmental Law” means all Legal Requirements, including common law, arising from,
relating to, or in connection with the Environment or natural resources, including without
limitation CERCLA, or relating to (a) pollution, contamination, injury, destruction, loss,
protection, cleanup, reclamation or restoration of the air, surface water, groundwater, land
surface or subsurface strata, or other natural resources; (b) solid, gaseous or liquid waste
generation, treatment, processing, recycling, reclamation, cleanup, storage, disposal or



-6-









 






transportation; (c) exposure to pollutants, contaminants, Hazardous Substances, or Hazardous
Wastes; (d) the safety or health of employees, to the extent relating to occupational safety or
exposure to Hazardous Substances; or (e) the manufacture, processing, handling, transportation,
distribution in commerce, use, storage or disposal of Hazardous Substances or Hazardous Wastes.




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




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time.




          “Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of
the Federal Reserve Board (or any successor), as in effect from time to time.




          “Eurodollar Lending Office” means, with respect to any Bank, the office of such Bank
specified as its “Eurodollar Lending Office” opposite its name on Annex 1 (or, if no such
office is specified, its Domestic Lending Office) or such other office of such Bank as such Bank
may from time to time specify to the Borrower and the Agent.




          “Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar Rate
Advance, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
LIBOR”), as published by Reuters (or other commercially available source providing quotations
of BBA LIBOR as designated by the Agent from time to time) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for
delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.
If such rate is not available at such time for any reason, then the “Eurodollar Rate” for such
Interest Period shall be the rate per annum determined by the Agent to be the rate at which
deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the
approximate amount of the Eurodollar Rate Advance being made, continued or converted by Bank of
America and with a term equivalent to such Interest Period would be offered by Bank of America’s
London Branch to major banks in the London interbank eurodollar market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest
Period.




          “Eurodollar Rate Advance” means an Advance which bears interest as provided in
Section 2.8(b).




          “Eurodollar Rate Reserve Percentage” of any Bank for the Interest Period for any
Eurodollar Rate Advance means the reserve percentage applicable during such Interest Period (or if
more than one such percentage shall be so applicable, the daily average of such percentages for
those days in such Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Federal Reserve Board for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for such Bank with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.




          “Event of Default” has the meaning specified in Section 7.1.




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          “Existing Credit Agreement” means the Amended and Restated Credit Agreement dated as
of November 1, 2007 among the Borrower, the lenders party thereto, and Bank of America, as
administrative agent.




          “Existing Letters of Credit” means the letters of credit outstanding on the date of
this Agreement, issued by the Issuing Bank for the account of the Borrower or its Subsidiaries,
which are described on Schedule 2.6(h).




          “Expiration Date” means, with respect to any Letter of Credit, the date on which such
Letter of Credit will expire or terminate in accordance with its terms.




          “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum
equal for each day during such period to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next 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 any such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it.




          “Federal Reserve Board” means the Board of Governors of the Federal Reserve System or
any of its successors.




          “Financial Statements” means the consolidated financial statements of the Borrower and
its Subsidiaries for the fiscal year ended 2007, including balance sheets, income and cash flow
statements, audited by independent public accountants and prepared in conformity with GAAP.




          “Fund” means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its activities.




          “Foreign Bank” has the meaning set forth in Section 2.13(d).




          “GAAP” means United States generally accepted accounting principles as in effect from
time to time, applied on a basis consistent with the requirements of Section 1.3.




          “Governmental Authority” means any foreign governmental authority, the United States
of America, any state of the United States of America and any subdivision of any of the foregoing,
and any agency, department, commission, board, authority or instrumentality, bureau or court having
jurisdiction over any Bank, the Borrower, or the Borrower’s Subsidiaries or any of their respective
Properties.




          “Guaranties” means each Guaranty in favor of the Agent for the ratable benefit of the
Banks in the form of the attached Exhibit C executed on the date hereof or as required by
Section 5.8, as the same may be amended, supplemented, or otherwise modified from time to
time.




          “Guarantors” means each Subsidiary of the Borrower which has executed a Guaranty on
the date hereof or as required by Section 5.8.




-8-









 








          “Hazardous Substance” means the substances identified as such pursuant to CERCLA and
those regulated as pollutants or contaminants under any other Environmental Law, including without
limitation petroleum or petroleum products, materials exhibiting radioactivity in excess of
background concentrations, and medical and infectious waste.




          “Hazardous Waste” means the substances regulated as such pursuant to any Environmental
Law.




          “Hydrocarbons” means oil, gas, coal seam gas, casinghead gas, drip gasolines, natural
gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons produced or to be
produced in conjunction therewith, and all products, by-products and all other substances derived
therefrom or the processing thereof, and all other minerals and substances, including 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.




          “Indemnified Liabilities” has the meaning set forth in Section 9.7.




          “Information” has the meaning set forth in Section 9.17.




          “Insurance Certificate” shall mean a “Certificate of Insurance” issued by an insurance
broker on the form ACORD-25 (in the case of property or physical damage policies) or ACORD-27 (in
the case of liability policies) or its substantial equivalent, and, in the case of each liability
policy, shall include an ISO Form CG 2018 confirming that the Agent has been added as an additional
insured for such liability policy, in each case in form reasonably satisfactory to Agent.




          “Interest Period” means, for each Eurodollar Rate Advance comprising part of the same
Borrowing, the period commencing on the date of such Advance or the date of the Conversion of any
Base Rate Advance into such an Advance and ending on the last day of the period selected by the
Borrower pursuant to the provisions below or by Section 2.3 and, thereafter, each
subsequent period commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant to the provisions below or
by Section 2.3. The duration of each such Interest Period shall be one, two, three, or six
months, or such longer period approved by the Agent and the Banks, in each case as the Borrower
may, upon notice received by the Agent not later than 10:00 a.m. (Dallas, Texas time) on, the third
Business Day prior to the first day of such Interest Period select; provided,
however, that:




          (a) the Borrower may not select any Interest Period for any Advance which ends after the
Maturity Date;




          (b) Interest Periods commencing on the same date for Advances comprising part of the same
Borrowing shall be of the same duration;




          (c) whenever the last day of any Interest Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be extended to occur on the next
succeeding Business Day, provided that if such extension would cause the last day of such

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Interest Period to occur in the next following calendar month, the last day of such Interest
Period shall occur on the next preceding Business Day; and




          (d) any Interest Period which begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month in which it would have
ended if there were a numerically corresponding day in such calendar month.




          “Issuing Bank” means Bank of America and any successor issuing bank pursuant to
Section 8.6.




          “Legal Requirement” means any law, statute, ordinance, decree, requirement, order,
judgment, rule, regulation (or official interpretation of any of the foregoing) of, and the terms
of any license or permit issued by, any Governmental Authority, including, but not limited to,
Regulations U and X.




          “Letter of Credit” means, individually, any standby letter of credit issued by the
Issuing Bank which is subject to this Agreement, including the Existing Letters of Credit, and
“Letters of Credit” means all such letters of credit collectively.




          “Letter of Credit Application” means the Issuing Bank’s standard form letter of credit
application for either a commercial or standby letter of credit, as the case may be, which has been
executed by the Borrower and accepted by the Issuing Bank in connection with the issuance of a
Letter of Credit, which form or forms as of the date of this Agreement are in the form of the
attached Exhibit G, as the same may be amended, supplemented, and otherwise modified from
time to time.




          “Letter of Credit Documents” means all Letters of Credit, Letter of Credit
Applications, and agreements, documents, and instruments entered into in connection with or
relating thereto.




          “Letter of Credit Exposure” means, at any time, the sum of (a) the aggregate undrawn
maximum face amount of each Letter of Credit at such time, plus (b) the aggregate unpaid
amount of all Reimbursement Obligations at such time.




          “Letter of Credit Fees” has the meaning given such term in Section 2.7(d)(i).




          “Letter of Credit Obligations” means any obligations of the Borrower under this
Agreement in connection with the Letters of Credit, including the Reimbursement Obligations.




          “Lien” means any mortgage, lien, pledge, charge, deed of trust, security interest, or
encumbrance to secure or provide for the payment of any obligation of any Person, whether arising
by contract, operation of law, or otherwise (including, without limitation, the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease, or other title retention
agreement).




          “Liquid Investments” means:




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          (a) debt securities issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, with maturities of no more than two years from
the date of acquisition;




          (b) commercial paper of a domestic issuer rated at the date of acquisition not less than P1 by
Moody’s Investor Service, Inc., or A1 by Standard & Poor’s Corporation;




          (c) certificates of deposit, demand deposits, Eurodollar time deposits, overnight bank
deposits, and bankers’ acceptances, with maturities of no more than two years from the date of
acquisition, issued by any Bank or any bank or trust company organized under the laws of the United
States or any state thereof whose deposits are insured by the Federal Deposit Insurance
Corporation, and having capital and surplus aggregating at least $100,000,000;




          (d) corporate bonds, mortgaged-backed securities, and municipal bonds of a domestic issuer
rated at the date of acquisition Aaa by Moody’s Investor Service, Inc., or AAA by Standard & Poor’s
Corporation, with maturities of no more than two years from the date of acquisition;




          (e) repurchase agreements secured by debt securities of the type described in part (a) above,
the market value of which, including accrued interest, is not less than 100% of the amount of the
repurchase agreement, with maturities of no more than two years from the date of acquisition,
issued by or acquired from or through any Bank or any bank or trust company organized under the
laws of the United States or any state thereof and having capital and surplus aggregating at least
$100,000,000; and




          (f) money market funds;




provided that (i) investments in any one issuer, excluding the United States government or any
agency or instrumentality thereof, shall not exceed 20% of total fixed-income Liquid Investments
based on market value at the time of acquisition, (ii) fixed-income holdings shall not exceed 5% of
all Liquid Investments at any time, and (iii) certificates of deposit, commercial paper, corporate
bonds, mortgaged-backed securities, or municipal bonds issued by any one issuer shall not exceed 5%
of all Liquid Investments at any time.




          “Majority Banks” means, at any time and except as provided in the last sentence of
this definition, Banks holding at least 66-2/3% of the then aggregate unpaid principal amount of
the Notes held by the Banks and the Letter of Credit Exposure of the Banks at such time, but in no
event less than two Banks at any time when there are three or more Banks; provided that if
no such principal amount or Letter of Credit Exposure is then outstanding, “Majority Banks” shall
mean Banks having at least 66-2/3% of the aggregate amount of the Commitments at such time, but in
no event less than two Banks at any time when there are three or more Banks; and provided
further that the Commitment of, and the portion of the aggregate unpaid principal amount of
the Notes and Letter of Credit Exposure held or deemed held by, any Defaulting Bank shall be
excluded for purposes of making a determination of Majority Banks. For any redetermination of the
Borrowing Base under Section 2.2 which would increase the Borrowing Base, “66-2/3%” in the
foregoing sentence shall be “100%”.




-11-









 








          “Material Adverse Change” means (a) a material adverse change in the business,
financial condition, or results of operations of the Borrower and its Subsidiaries taken as a
whole, or (b) the occurrence and continuance of any event or circumstance which could reasonably be
expected (i) to have a material adverse effect on the Borrower’s or any Guarantor’s ability to
perform its obligations under this Agreement, any Note, any Guaranty, or any other Credit Document,
(ii) to materially impair the rights and remedies of the Agent or any Bank under any Credit
Document, or (iii) to have a materially adverse effect upon the legality, validity, or binding
effect, or enforceability against the Borrower or any Guarantor of, any Credit Document to which it
is party.




          “Material Subsidiary” means, as of any date of its determination, a Subsidiary of the
Borrower (a) with assets constituting 5% or more of the Borrower’s consolidated assets on such
date, (b) that contributed 5% or more of the Borrower’s consolidated EBITDA for the four-quarter
period most recently ended, (c) that owns any Borrowing Base Assets, (d) that has guaranteed any
Debt of any Credit Party, or (e) the Borrower has designated to be Material Subsidiary.




          “Maturity Date” means the earlier of (a) July 1, 2011 and (b) the earlier termination
in whole of the Commitments pursuant to Section 2.1(b) or Article VII.




          “Maximum Rate” means the maximum nonusurious interest rate under applicable law.




          “Mergers” means, collectively, the Bois d’Arc Merger and the Effective Date Mergers.




          “Mortgaged Contracts” means the contracts of the Borrower and the Guarantors related
to the Mortgaged Properties.




          “Mortgaged Properties” means the Oil and Gas Properties of the Borrower and the
Guarantors that are subject to the Mortgages.




          “Mortgaged Property Value” means, as of any date of its determination, the aggregate
present value of the future net income with respect to the Mortgaged Properties as set forth in the
applicable engineering report, discounted at the stated per annum rate utilized in such report.
For the avoidance of doubt, the methodology utilized to calculate the Mortgaged Property Value
shall be the same methodology utilized to calculate the Oil and Gas Property Value for all purposes
of this Agreement.




          “Mortgages” means (i) the Amended and Restated Act of Mortgage, Assignment of
Production, Security Agreement, Fixture Filing, and Financing Statement dated as of August 28,
2008, made by the Borrower in favor of the Agent for the benefit of the Secured Parties, and
governed by Louisiana law, (ii) the Act of Mortgage, Assignment of Production, Security Agreement,
Fixture Filing, and Financing Statement dated as of August 28, 2008, made by Stone Offshore in
favor of the Agent for the benefit of the Secured Parties, and governed by Louisiana law, and (iii)
any other mortgage or deed of trust executed by the Borrower or any Guarantor in favor of the Agent
for the benefit of the Secured Parties, in each case, as the same may be amended, supplemented, or
otherwise modified from time to time.




-12-









 








          “Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA.




          “Net Cash Proceeds” means, with respect to any transaction or event, an amount equal
to the cash proceeds received by any Credit Party from or in respect of such transaction or event
(including proceeds of any non-cash proceeds of such transaction), less (i) any out-of-pocket
expenses paid to a Person that are reasonably incurred by such Credit Party in connection therewith
and (ii) in the case of an Asset Disposition, the amount of any Debt secured by a Lien on the
related asset and discharged from the proceeds of such Asset Disposition and any taxes paid or
reasonably estimated by the applicable Credit Party to be payable by such Person in respect of such
Asset Disposition (provided, that if the actual amount of taxes paid is less than the estimated
amount, the difference shall immediately constitute Net Cash Proceeds).




          “Net Income” means, for any Person and for any period of its determination, the net
income of such Person determined in accordance with GAAP, excluding, without duplication, the
non-cash impact of (a) impairments (including, without limitation, goodwill), (b) full cost ceiling
test write downs, (c) gains or losses on sale of property, (d) extraordinary items, and (e)
accretion expense (in accordance with SFAS No. 143).




          “Net Interest Expense” means, for any Person for any period (a) interest expense of
such Person for such period minus (b) interest income of such Person for such period, in each case
determined in accordance with GAAP consistently applied.




          “Note” means a promissory note of the Borrower payable to the order of any Bank, in
substantially the form of the attached Exhibit D, evidencing indebtedness of the Borrower
to such Bank resulting from Advances owing to such Bank.




          “Notice of Borrowing” means a notice of borrowing in the form of the attached
Exhibit E signed by a Responsible Officer of the Borrower.




          “Notice of Conversion or Continuation” means a notice of conversion or continuation in
the form of the attached Exhibit F signed by a Responsible Officer of the Borrower.




          “Obligations” means all (a) principal, interest, fees, reimbursements,
indemnifications, and other amounts payable by the Borrower or any Guarantor to the Agent, the
Issuing Bank, or the Banks under the Credit Documents and (b) all debts, liabilities, obligations
of the Borrower or any Guarantor under any Specified Swap Contract, in each case, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due or to become due,
now existing or hereafter arising and including interest and fees that accrue after the
commencement by or against the Borrower or any Guarantor of any proceeding under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors naming such Person as the debtor
in such proceeding, regardless of whether such interest and fees are allowed claims in such
proceeding; provided that any release of Collateral or Guarantors pursuant to this
Agreement shall not require the consent of the holders of Obligations under Specified Swap
Contracts.




          “Oil and Gas Properties” means fee, leasehold or other interests in or under mineral
estates or oil, gas, and other liquid or gaseous hydrocarbon leases with respect to Properties
situated in the United States or offshore from any state of the United States, including overriding



-13-









 






royalty and royalty interests, leasehold estate interests, net profits interests, production
payment interests and mineral fee interests, together with contracts executed in connection
therewith and incidental rights belonging thereto.




          “Oil and Gas Property Value” means, as of any date of its determination, the aggregate
present value of the future net income with respect to the Oil and Gas Properties of the Borrower
and the Guarantors as set forth in the applicable engineering report, discounted at the stated per
annum rate utilized in such report.




          “Oil and Gas Reserve Report” means each engineering report covering the Borrower’s
consolidated Oil and Gas Properties provided to the Agent pursuant to Section 5.6(c).




          “PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any
or all of its functions under ERISA.




          “Participant” has the meaning given to such term in Section 9.6(d).




          “Permitted Borrowing Base Liens” means Permitted Liens of the type described in
clauses (a) and (d) through (i) (inclusive) of Section 6.1.




          “Permitted Liens” means the Liens permitted to exist pursuant to Section 6.1.




          “Person” means an individual, partnership, corporation (including a business trust),
joint stock company, limited liability corporation or company, limited liability partnership,
trust, unincorporated association, joint venture or other entity, or a government or any political
subdivision or agency thereof or any trustee, receiver, custodian or similar official.




          “Plan” means an employee benefit plan (other than a Multiemployer Plan) maintained for
employees of the Borrower or any member of the Controlled Group and covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code.




          “Platform” has the meaning specified in Section 5.6(o).




          “Property” of any Person means any property or assets (whether real, personal, or
mixed, tangible or intangible) of such Person.




          “Property Proceeds” means (i) the aggregate insurance proceeds received under any
property or physical damage insurance policy in connection with one or more related events or
(ii) any award or other compensation with respect to any eminent domain, condemnation of property
or similar proceedings (or any transfer or disposition of property in lieu of condemnation).




          “Pro Rata Share” means, with respect to any Bank, either (a) the ratio (expressed as a
percentage) of such Bank’s Commitments at such time to the aggregate Commitments at such time or
(b) if the Commitments have been terminated, the ratio (expressed as a percentage) of such Bank’s
aggregate outstanding Advances and Letter of Credit Exposure at such time to the aggregate
outstanding Advances and Letter of Credit Exposure of all the Banks at such time.





-14-












 





     “Proved Mineral Interests” means, collectively, proved developed producing
reserves, proved developed non-producing reserves, and proved undeveloped reserves.



     “Public Bank” has the meaning set forth in Section 5.6(o).



     “Register” has the meaning set forth in paragraph (c) of Section 9.6.



     “Regulations U and X” mean Regulations U and X of the Federal Reserve Board, as the
same is from time to time in effect, and all official rulings and interpretations thereunder or
thereof.



     “Reimbursement Obligations” means all of the obligations of the Borrower to reimburse
the Issuing Bank for amounts paid by the Issuing Bank under Letters of Credit as established by the
Letter of Credit Applications and Section 2.6(d).



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



     “Release” shall have the meaning set forth in CERCLA or under any similar applicable
Environmental Law.



     “Response” shall have the meaning set forth in CERCLA or under any similar applicable
Environmental Law.



     “Responsible Officer” means, with respect to any Person, such Person’s Chief Executive
Officer, President, Chief Financial Officer, Chief Accounting Officer, and Vice Presidents.



     “Restricted Payment” means, with respect to any Person, any dividends or other
distributions (in cash, property, or otherwise) on, or any payment for the purchase, redemption, or
other acquisition of, any shares of any capital stock of such Person, other than dividends payable
in such Person’s stock.



     “Secured Parties” means the Agent, the Issuing Bank, the Banks, and the holders of
Obligations under Specified Swap Contracts.



     “Security Agreement” means the Amended and Restated Security Agreement dated as of the
date of this Agreement and each other Security Agreement in favor of the Agent for the ratable
benefit of the Secured Parties in the form of the attached Exhibit H, and any supplement or
joinder thereto, executed on the date hereof or as required by Section 5.8, as the same may
be amended, supplemented, or otherwise modified from time to time.



     “Security Documents” means the Mortgages, the Security Agreements, the Consents, and
each of the other agreements, instruments, or documents that creates or purports to create, or to
consent to the creation of, a Lien in favor of the Agent for the benefit of the Secured Parties.



     “Specified Swap Contract” means any Swap Contract entered into between any Credit
Party and any Person which was a Bank or an Affiliate of any Bank at the time such Swap



- 15 -









 







Contract was executed. The status of any Swap Contract as a Specified Swap Contract shall not
create in favor of such Bank or Affiliate any rights in connection with the management or release
of any Collateral or of the obligations of any Credit Party under any Security Document.



     “Stone Offshore” means Stone Energy Offshore, L.L.C., a Delaware limited liability
company.



     “Subsidiary” of a Person means any corporation or other entity of which more than 50%
of the outstanding capital stock or other ownership interests having ordinary voting power to elect
a majority of the board of directors or similar governing body of such corporation or other entity
(irrespective of whether at such time capital stock or other ownership interests of any other class
or classes of such corporation or other entity shall or might have voting power upon the occurrence
of any contingency) is at the time directly or indirectly owned by such Person, by such Person and
one or more Subsidiaries of such Person or by one or more Subsidiaries of such Person.



     “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, equity or equity index swaps or options, bond or bond price or bond index
swaps or options or forward bond or forward bond price or forward bond index transactions, interest
rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options,
spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or governed by, any
form of master agreement published by the International Swaps and Derivatives Association, Inc.,
any International Foreign Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement, in each case, expressly including any such
transactions in which a Person hedges the price to be received by it for future production from the
Oil and Gas Properties.



     “Target” means Bois d’Arc Energy , Inc., a Nevada corporation.



     “Termination Event” means (a) a Reportable Event described in Section 4043 of ERISA
and the regulations issued thereunder (other than a Reportable Event not subject to the provision
for 30-day notice to the PBGC under such regulations), (b) the withdrawal of the Borrower or any of
its Affiliates from a Plan during a plan year in which it was a “substantial employer” as defined
in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC, or (e) any other event or condition which constitutes
grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.



     “Type” has the meaning set forth in Section 1.4.



- 16 -









 





     “Voting Securities” means with respect to any corporation, capital stock of the
corporation having general voting power under ordinary circumstances to elect directors of such
corporation (irrespective of whether at the time stock of any other class or classes shall have or
might have special voting power or rights by reason of the happening of any contingency).



     Section 1.2. Computation of Time Periods. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each means “to but excluding”.



     Section 1.3. Accounting Terms; Changes in GAAP.



     (a) All accounting terms not specifically defined in this Agreement shall be construed in
accordance with GAAP applied on a consistent basis with those applied in the preparation of the
Financial Statements.



     (b) Unless otherwise indicated, all financial statements of the Borrower, all calculations for
compliance with covenants in this Agreement and all calculations of any amounts to be calculated
under the definitions in Section 1.1 shall be based upon the consolidated accounts of the
Borrower and its Subsidiaries in accordance with GAAP (or in compliance with the regulations
promulgated by the United States Securities and Exchange Commission regarding financial reporting)
and consistent with the principles applied in preparing the Financial Statements. If at any time
any change in GAAP would affect the computation of any financial ratio or requirement set forth in
any Credit Document, and either the Borrower or the Majority Banks shall so request, the Agent, the
Banks and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve
the original intent thereof in light of such change in GAAP (subject to the approval of the
Majority Banks); provided that, until so amended, (i) such ratio or requirement
shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the
Borrower shall provide to the Agent and the Banks financial statements and other documents required
under this Agreement or as reasonably requested hereunder setting forth a reconciliation between
calculations of such ratio or requirement made before and after giving effect to such change in
GAAP.



     Section 1.4. Types of Advances. Advances are distinguished by “Type.” The “Type” of
an Advance refers to the determination whether such Advance is a Eurodollar Rate Advance or Base
Rate Advance.



     Section 1.5. Miscellaneous. Article, Section, Schedule, and Exhibit references are to
Articles and Sections of and Schedules and Exhibits to this Agreement, unless otherwise specified.



ARTICLE II




CREDIT FACILITIES




     Section 2.1. Commitment for Advances.



     (a) Advances. Each Bank severally agrees, on the terms and conditions set forth in
this Agreement, to make Advances to the Borrower from time to time on any Business Day



- 17 -









 







during the period from the date of this Agreement until the Maturity Date in an aggregate
outstanding amount up to but not to exceed an amount equal to (i) the lesser of such Bank’s
Commitment or such Bank’s Pro Rata Share of the Borrowing Base less (ii) such Bank’s Pro
Rata Share of the Letter of Credit Exposure; provided that the sum of the outstanding amount of all
Advances made by such Bank and such Bank’s Pro Rata Share of the Letter of Credit Exposure shall
not exceed such Bank’s Commitment. Each Borrowing shall, in the case of Borrowings consisting of
Base Rate Advances, be in an aggregate amount not less than $500,000 and in integral multiples of
$100,000 in excess thereof, and in the case of Borrowings consisting of Eurodollar Rate Advances,
be in an aggregate amount not less than $2,000,000 or in integral multiples of $1,000,000 in excess
thereof, and in each case shall consist of Advances of the same Type made on the same day by the
Banks ratably according to their respective Commitments. Within the limits of each Bank’s
Commitment, and subject to the terms of this Agreement, the Borrower may from time to time borrow,
prepay, and reborrow Advances.



     (b) Optional Reduction of Commitment. The Borrower shall have the right, upon at
least three Business Days’ irrevocable notice to the Agent, to terminate in whole or reduce ratably
in part the unused portion of the Commitments; provided that each partial reduction of the
Commitments shall be in the aggregate amount of $5,000,000 or in integral multiples of $1,000,000
in excess thereof. Any reduction or termination of the Commitments pursuant to this
Section 2.1(b) shall be permanent, with no obligation of the Banks to reinstate such
Commitments, and the commitment fees provided for in Section 2.7(a) shall thereafter be
computed on the basis of the Commitments, as so reduced.



     (c) Notes. The indebtedness of any Borrower to each Bank resulting from the Advances
owing to such Bank shall, if such Bank requests, be evidenced by a Note of the Borrower in the
maximum principal amount of such Bank’s Commitment.



     Section 2.2. Borrowing Base.



     (a) The Borrowing Base has been set by the Banks and acknowledged by the Borrower as
$700,000,000, as of the date hereof.



     (b) From the date hereof through the Maturity Date and subject to the further provisions of
this Section 2.2, the Borrowing Base shall be redetermined by the Majority Banks each May 1
and November 1 in accordance with Section 2.2(d) on the basis of information, including the
Oil and Gas Reserve Reports required to be delivered before each such date supplied by Borrower in
compliance with the provisions of this Agreement, such additional data concerning pricing,
quantities of production, purchasers of production, and other information and engineering and
geological data with respect thereto as the Agent or any Bank may reasonably request, together with
all other information then available to the Agent and the Banks; provided that the first such
scheduled redetermination shall occur on November 1, 2008. Notwithstanding the foregoing, the
Majority Banks may, in the exercise of their good faith discretion, require additional
redeterminations of the Borrowing Base in accordance with Section 2.2(d) (i) by providing
written notice to the Borrower, but only two such requests may be made during any calendar year and
(ii) from time to time upon the occurrence of any Material Adverse Change.



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     (c) The Borrower may request that the Majority Banks redetermine the Borrowing Base (i) by
providing a written request to the Agent, but only two such requests may be made during any
calendar year or (ii) in connection with the Borrower’s or any Guarantor’s acquisition of Oil and
Gas Properties with a purchase price of $20,000,000 or more. In connection with any such request,
the Borrower shall provide the Agent and the Banks with an interim reserve report prepared by the
Borrower together with such other information, including additional data concerning pricing,
quantities of production, purchasers of production, and other information and engineering and
geological data, as the Agent or any Bank may reasonably request. Within 30 days following the
receipt of such interim reserve report and other information, the Majority Banks shall make a
redetermination of the Borrowing Base in accordance with Section 2.2(d).



     (d) In connection with a redetermination of the Borrowing Base, the Agent shall propose a
Borrowing Base to the Banks, and the Banks shall vote to approve or disapprove such proposed
Borrowing Base. If the Majority Banks do not approve the proposed Borrowing Base, the Agent shall
propose, and the Banks shall vote to approve or disapprove, another Borrowing Base, until the
Majority Banks approve a Borrowing Base proposed by the Agent. Once the Majority Banks approve the
proposed Borrowing Base, the Agent shall notify the Borrower of such redetermination. Until the
Borrower receives such notification from the Agent, the Borrowing Base most recently established
shall remain in effect, and thereafter the new Borrowing Base as set forth in such notification
shall be in effect.



     (e) Upon any sale, lease, transfer, or other disposition, whether or not in the ordinary
course of business, by the Borrower or any of its Subsidiaries of Borrowing Base Assets that
(individually or on a cumulative basis with all such dispositions consummated since the
determination of the most recently determined Borrowing Base) were given value in the most recently
determined Borrowing Base in excess of 5% of the amount of such Borrowing Base, the Borrowing Base
shall automatically be reduced by the present value given to such assets in the most recent
engineering report delivered pursuant to Section 5.6(c), including the applicable stated
discount utilized therein.



     (f) The Borrowing Base shall represent the determination by the Majority Banks of the loan
value of the Borrower’s and the Guarantors’ Oil and Gas Properties which are either (i) subject to
an Acceptable Security Interest or (ii) unencumbered (except for Permitted Borrowing Base Liens),
but the Agent and the Majority Banks shall make their determination and vote their approval,
respectively, in accordance with the applicable definitions and provisions herein contained, each
such Bank’s standard policies regarding energy lending, industry lending practices, consultation
with the Agent and the other Banks (but without requiring the approval of any such Bank), and
consideration for the nature of the facilities established hereunder. The Borrower acknowledges
that the determination of the Borrowing Base contains an equity cushion (market value in excess of
loan value), which is acknowledged by Borrower to be essential for the adequate protection of the
Agent and the Banks.



     (g) The Borrower shall also have the right to reduce the Borrowing Base once during the period
from October 1 to March 31 and once during the period from April 1 to September 30 during each year
by providing the Agent 30 days advance written notice of such reduction. The Agent shall promptly
send to each Bank a copy of such notice and such reduction shall be effective on the date of the
Agent’s receipt of such notice.



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     (h) As of the date of this Agreement, the Agent has provided the Borrower with the Agent’s
standard policies regarding energy lending. The Agent, but not any other Bank, agrees to provide
the Borrower with written notice of any changes to such policies.



     Section 2.3. Method of Borrowing.



     (a) Notice. Each Borrowing shall be made pursuant to a Notice of Borrowing (or by
telephone notice promptly confirmed in writing by a Notice of Borrowing), given not later than
10:00 a.m. (Dallas, Texas time) (i) on the third Business Day before the date of the proposed
Borrowing, in the case of a Eurodollar Rate Borrowing or (ii) on the Business Day of the proposed
Borrowing, in the case of a Base Rate Borrowing, by the Borrower to the Agent, which shall in turn
give to each Bank prompt notice of such proposed Borrowing by telecopier or telex. Each Notice of
a Borrowing shall be given by telecopier or telex, confirmed immediately in writing specifying the
information required therein. In the case of a proposed Borrowing comprised of Eurodollar Rate
Advances, the Agent shall promptly notify each Bank of the applicable interest rate under
Section 2.8(b). Each Bank shall (A) in the case of a Eurodollar Rate Borrowing, before
10:00 a.m. (Dallas, Texas time) on the date of such Borrowing and (B) in the case of a Base Rate
Borrowing, before 12:00 noon (Dallas, Texas time) on the date of such Borrowing, make available for
the account of its Applicable Lending Office to the Agent at its address referred to in
Section 9.2, or such other location as the Agent may specify by notice to the Banks, in
same day funds, such Bank’s Pro Rata Share of such Borrowing. After the Agent’s receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent shall
make such funds available to the Borrower at its account with the Agent.



     (b) Conversions and Continuations. The Borrower may elect to Convert or continue any
Borrowing under this Section 2.3 by delivering an irrevocable Notice of Conversion or
Continuation to the Agent at the Agent’s office no later than 10:00 a.m. (Dallas, Texas time)
(i) on the date which is at least three Business Days in advance of the proposed Conversion or
continuation date in the case of a Conversion to or a continuation of a Borrowing comprised of
Eurodollar Rate Advances and (ii) on the Business Day of the proposed conversion date in the case
of a Conversion to a Borrowing comprised of Base Rate Advances. Each such Notice of Conversion or
Continuation shall be in writing or by telex or telecopier confirmed immediately in writing
specifying the information required therein. Promptly after receipt of a Notice of Conversion or
Continuation under this Section, the Agent shall provide each Bank with a copy thereof and, in the
case of a Conversion to or a Continuation of a Borrowing comprised of Eurodollar Rate Advances,
notify each Bank of the applicable interest rate under Section 2.8(b).



     (c) Certain Limitations. Notwithstanding anything in paragraphs (a) and (b) above:




     (i) at no time shall there be more than twelve Interest Periods applicable to
outstanding Eurodollar Rate Advances;




     (ii) if any Bank shall, at least one Business Day before the date of any requested
Borrowing, Conversion, or continuation, notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful, or that any
central bank or other Governmental Authority asserts that it is unlawful, for such Bank or
its Eurodollar Lending Office to perform its obligations under this Agreement to



- 20 -









 







make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances, the
right of the Borrower to select Eurodollar Rate Advances from such Bank shall be suspended
until such Bank shall notify the Agent that the circumstances causing such suspension no
longer exist, and the Advance made by such Bank in respect of such Borrowing, Conversion, or
continuation shall be a Base Rate Advance;




     (iii) if the Agent is unable to determine the Eurodollar Rate for Eurodollar Rate
Advances comprising any requested Borrowing, the right of the Borrower to select Eurodollar
Rate Advances for such Borrowing or for any subsequent Borrowing shall be suspended until
the Agent shall notify the Borrower and the Banks that the circumstances causing such
suspension no longer exist, and each Advance comprising such Borrowing shall be a Base Rate
Advance;




     (iv) if the Majority Banks shall, at least one Business Day before the date of any
requested Borrowing, notify the Agent that the Eurodollar Rate for Eurodollar Rate Advances
comprising such Borrowing will not adequately reflect the cost to such Banks of making or
funding their respective Eurodollar Rate Advances, as the case may be, for such Borrowing,
the right of the Borrower to select Eurodollar Rate Advances for such Borrowing or for any
subsequent Borrowing shall be suspended until the Agent shall notify the Borrower and the
Banks that the circumstances causing such suspension no longer exist, and each Advance
comprising such Borrowing shall be a Base Rate Advance; and




     (v) if the Borrower shall fail to select the duration or continuation of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions contained in the
definition of “Interest Period” in Section 1.1 and paragraph (b) above, the Agent
shall forthwith so notify the Borrower and the Banks and such Advances shall be made
available to the Borrower on the date of such Borrowing as Base Rate Advances or, if an
existing Advance, Convert into Base Rate Advances.



     (d) Notices Irrevocable. Each Notice of Borrowing and Notice of Conversion or
Continuation shall be irrevocable and binding on the Borrower. In the case of any Borrowing which
the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the
Borrower shall indemnify each Bank against any loss, out-of-pocket cost, or expense incurred by
such Bank as a result of any failure by the Borrower to fulfill on or before the date specified in
such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III
including, without limitation, any loss, cost, or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to fund the Advance to be made by
such Bank as part of such Borrowing when such Advance, as a result of such failure, is not made on
such date.



     (e) Agent Reliance. Unless the Agent shall have received notice from a Bank before
the date of any Borrowing that such Bank shall not make available to the Agent such Bank’s Pro Rata
Share of such Borrowing, the Agent may assume that such Bank has made its Pro Rata Share of such
Borrowing available to the Agent on the date of such Borrowing in accordance with paragraph (a) of
this Section 2.3 and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that



- 21 -









 







such Bank shall not have so made its Pro Rata Share of such Borrowing available to the Agent,
such Bank and the Borrower severally agree to immediately repay to the Agent on demand such
corresponding amount, together with interest on such amount, for each day from the date such amount
is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the
case of the Borrower, the interest rate applicable on such day to Advances comprising such
Borrowing and (ii) in the case of such Bank, the Federal Funds Rate for such day. If such Bank
shall repay to the Agent such corresponding amount and interest as provided above, such
corresponding amount so repaid shall constitute such Bank’s Advance as part of such Borrowing for
purposes of this Agreement even though not made on the same day as the other Advances comprising
such Borrowing.



     (f) Bank Obligations Several. The failure of any Bank to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Bank of its obligation, if any, to make
its Advance on the date of such Borrowing. No Bank shall be responsible for the failure of any
other Bank to make the Advance to be made by such other Bank on the date of any Borrowing.



     Section 2.4. Prepayment of Advances.



     (a) Optional. The Borrower may prepay Advances, after giving by 10:00 a.m. (Dallas,
Texas time) (i) in the case of Eurodollar Rate Advances, at least two Business Days’ or (ii) in
case of Base Rate Advances, same Business Day’s, irrevocable prior written notice to the Agent
stating the proposed date and aggregate principal amount of such prepayment. If any such notice is
given, the Borrower shall prepay Advances comprising part of the same Borrowing in whole or ratably
in part in an aggregate principal amount equal to the amount specified in such notice;
provided, however, that each partial prepayment with respect to: (A) any Borrowing
comprised of Base Rate Advances shall be made in $100,000 multiples and in an aggregate principal
amount such that after giving effect thereto such Borrowing shall have a principal amount
outstanding of at least $500,000 and (B) any Borrowing comprised of Eurodollar Rate Advances shall
be made in $1,000,000 multiples and in an aggregate principal amount such that after giving effect
thereto such Borrowing shall have a principal amount outstanding of at least $2,000,000. Full
prepayments of any Borrowing are permitted without restriction of amounts.



     (b) Mandatory.




     (i) Borrowing Base Deficiency. Subject to Section 2.4(b)(ii), (iv), and
(v) below, if the aggregate outstanding amount of Advances plus the Letter of Credit
Exposure ever exceeds the Borrowing Base (such excess being referred to herein as the
“Borrowing Base Deficiency”), the Borrower shall, within ten days after receipt of
written notice of such condition from the Agent elect by written notice to the Agent to take
one or more of the following actions to remedy such Borrowing Base Deficiency:




     (A) prepay Advances and, if the Advances have been repaid in full, make
deposits into the Cash Collateral Account to provide cash collateral for the Letter
of Credit Exposure, such that the Borrowing Base Deficiency is cured within ten days
after the Borrower’s written election;



- 22 -









 






     (B) add additional Oil and Gas Properties acceptable to the Majority Banks to
the Borrowing Base (and take such actions as are requested by the Agent to cause
such additional Oil and Gas Properties to become subject to Mortgages, to the extent
necessary to cause the Mortgaged Property Value to equal or exceed 80% of the Oil
and Gas Property Value) such that the Borrowing Base Deficiency is cured within 30
days after the Borrower’s written election; or




     (C) pay the deficiency in monthly installments in amounts not greater than one
half of the deficiency in any one monthly payment or such lesser amounts
satisfactory to the Majority Banks for the prepayment of Advances and, if the
Advances have been repaid in full, make deposits into the Cash Collateral Account to
provide cash collateral for the Letter of Credit Exposure such that the Borrowing
Base Deficiency is eliminated in a period of 90 days or such longer period
satisfactory to the Majority Banks, but in no event to exceed six months.




     (ii) Reduction of Commitments. On the date of each reduction of the aggregate
Commitments pursuant to Section 2.1(b), the Borrower agrees to make a prepayment in
respect of the outstanding amount of the Advances and the Letter of Credit Exposure to the
extent, if any, that the aggregate unpaid principal amount of all Advances plus the
Letter of Credit Exposure exceeds the Commitments, as so reduced. Any amount paid under the
preceding sentence in respect of Letter of Credit Exposure shall be held as cash collateral
under Section 2.6(g).




     (iii) Asset Sales. If, after giving effect to the sale, transfer or other
disposition of any of the Borrower’s or any of its Subsidiaries’ Borrowing Base Assets, the
aggregate outstanding amount of Advances plus the Letter of Credit Exposure exceeds the
Borrowing Base, the Borrower shall repay the Advances, and then cash collateralize the
Letter of Credit Exposure, by an amount equal to the lesser of (A) such Borrowing Base
Deficiency and (B) 100% of the Net Cash Proceeds of such sale, transfer, or other
disposition, within three days after receipt of such proceeds.




     (iv) Property, Physical Damage and Other Insurance Proceeds. If any Credit
Party (or Agent as loss payee or assignee) receives any Property Proceeds arising from a
single event or related series of events, whether as one payment or a series of payments,
(A) during the existence of a Default or Event of Default, then the Borrower shall repay the
Advances, and then cash collateralize the Letter of Credit Exposure, by an amount equal to
100% of such Property Proceeds, upon receipt of such proceeds, and (B) during the existence
of a Borrowing Base Deficiency, then the Borrower shall repay the Advances, and then cash
collateralize the Letter of Credit Exposure, by an amount equal to the lesser of (1) such
Borrowing Base Deficiency and (2) 100% of such Property Proceeds, within three days after
receipt of such proceeds.




     (v) Illegality. If any Bank shall notify the Agent and the Borrower that the
introduction of or any change in or in the interpretation of any law or regulation makes it
unlawful, or that any central bank or other governmental authority asserts that it is
unlawful for such Bank or its Eurodollar Lending Office to perform its obligations under
this Agreement to maintain any Eurodollar Rate Advances of such Bank then outstanding



- 23 -









 







hereunder, (i) the Borrower shall, no later than 10:00 a.m. (Dallas, Texas time) (A) if
not prohibited by law, on the last day of the Interest Period for each outstanding
Eurodollar Rate Advance made by such Bank or (B) if required by such notice, on the second
Business Day following its receipt of such notice prepay all of the Eurodollar Rate Advances
made by such Bank then outstanding, (ii) such Bank shall simultaneously make a Base Rate
Advance to the Borrower on such date in an amount equal to the aggregate principal amount of
the Eurodollar Rate Advances prepaid to such Bank, and (iii) the right of the Borrower to
select Eurodollar Rate Advances from such Bank for any subsequent Borrowing shall be
suspended until such Bank gives notice referred to above shall notify the Agent that the
circumstances causing such suspension no longer exist.



     (c) No Additional Right; Ratable Prepayment; Interest and Breakage. The Borrower
shall have no right to prepay any principal amount of any Advance except as provided in this
Section 2.4, and all notices given pursuant to this Section 2.4 shall be
irrevocable and binding upon the Borrower. Each payment of any Advance pursuant to this
Section 2.4 shall be made in a manner such that all Advances comprising part of the same
Borrowing are paid in whole or ratably in part. Each prepayment pursuant to this
Section 2.4 shall be accompanied by accrued interest on the amount prepaid to the date of
such prepayment and amounts, if any, required to be paid pursuant to Section 2.11 as a
result of such prepayment being made on such date.



     Section 2.5. Repayment of Advances. The Borrower shall repay to the Agent for the
ratable benefit of the Banks the outstanding principal amount of each Advance on the Maturity Date.



     Section 2.6. Letters of Credit.



     (a) Commitment. From time to time from the date of this Agreement until the Maturity
Date, at the request of the Borrower, the Issuing Bank shall, on the terms and conditions
hereinafter set forth, issue, increase, or extend the expiration date of Letters of Credit for the
account of the Borrower on any Business Day;




     (i) provided that no Letter of Credit shall be issued, increased, or extended:




(A) unless such issuance, increase, extension or conversion would not cause
the Letter of Credit Exposure to exceed the lesser of (1) $300,000,000 or
(2) the lesser of (x) the aggregate Commitments less the aggregate
outstanding principal amount of all Advances or (y) the Borrowing Base
less the aggregate outstanding principal amount of all Advances;




(B) unless such Letter of Credit has an Expiration Date not later than the
earlier of (1) 12 months after the date of issuance thereof (or, if
extendable beyond such period, unless such Letter of Credit is cancelable
upon at least 30 days’ notice given by the Issuing Bank to the beneficiary
of such Letter of Credit) or (2) five days prior to the Maturity Date;




(C) unless such Letter of Credit Documents are in form and substance
acceptable to the Issuing Bank in its sole discretion;




- 24 -











 






(D) unless such Letter of Credit is a standby letter of credit not
supporting the repayment of indebtedness for borrowed money of any Person;
and




(E) unless the Borrower has delivered to the Issuing Bank a completed and
executed Letter of Credit Application; and




     (ii) provided further that the Issuing Bank shall not be under any
obligation to issue any Letter of Credit if:




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




(B) the issuance of such Letter of Credit would violate one or more policies
of the Issuing Bank; or




(C) a default of any Bank’s obligations to fund under Section 2.6(d)
exists or any Bank is at such time a Defaulting Bank hereunder, unless the
Issuing Bank has entered into satisfactory arrangements with the Borrower or
such Bank to eliminate the Issuing Bank’s risk with respect to such Bank.


As of the Effective Date, the Existing Letters of Credit shall be deemed “Letters of Credit”
hereunder and shall be subject to the terms and provisions set forth herein.




     (b) Participations. Upon the date of the issuance or increase of a Letter of Credit
or the conversion of an Existing Letter of Credit to a Letter of Credit, the Issuing Bank shall be
deemed to have sold to each other Bank and each other Bank shall have been deemed to have purchased
from the Issuing Bank a participation in the related Letter of Credit Obligations equal to such
Bank’s Pro Rata Share at such date and such sale and purchase shall otherwise be in accordance with
the terms of this Agreement. The Issuing Bank shall promptly notify each such participant Bank by
telex, telephone, or telecopy of each Letter of Credit issued, increased, or extended or converted
and the actual dollar amount of such Bank’s participation in such Letter of Credit.



-25-









 





     (c) Issuing. Each Letter of Credit shall be issued, increased, or extended pursuant
to a Letter of Credit Application (or by telephone notice promptly confirmed in writing by a Letter
of Credit Application), given not later than 10:00 a.m. (Dallas, Texas time) on the fifth Business
Day before the date of the proposed issuance, increase, or extension of the Letter of Credit, and
the Agent shall give to each Bank prompt notice thereof by telex, telephone, or telecopy. Each
Letter of Credit Application shall be given by telecopier or telex, confirmed immediately in
writing, specifying the information required therein. After the Agent’s receipt of such Letter of
Credit Application and upon fulfillment of the applicable conditions set forth in Article III, the
Agent shall issue, increase, or extend such Letter of Credit for the account of the Borrower. Each
Letter of Credit Application shall be irrevocable and binding on the Borrower.



     (d) Reimbursement. The Borrower hereby agrees to pay on demand to the Issuing Bank an
amount equal to any amount paid by the Issuing Bank under any Letter of Credit. In the event the
Issuing Bank makes a payment pursuant to a request for draw presented under a Letter of Credit and
such payment is not promptly reimbursed by the Borrower upon demand, the Issuing Bank shall give
the Agent notice of the Borrower’s failure to make such reimbursement and the Agent shall promptly
notify each Bank of the amount necessary to reimburse the Issuing Bank. Upon such notice from the
Agent, each Bank shall promptly reimburse the Issuing Bank for such Bank’s Pro Rata Share of such
amount, and such reimbursement shall be deemed for all purposes of this Agreement to be an Advance
to the Borrower transferred at the Borrower’s request to the Issuing Bank. If such reimbursement
is not made by any Bank to the Issuing Bank on the same day on which the Agent notifies such Bank
to make reimbursement to the Issuing Bank hereunder, such Bank shall pay interest on its Pro Rata
Share thereof to the Issuing Bank at a rate per annum equal to the Federal Funds Rate. The
Borrower hereby unconditionally and irrevocably authorizes, empowers, and directs the Agent and the
Banks to record and otherwise treat such reimbursements to the Issuing Bank as Base Rate Advances
under a Borrowing requested by the Borrower to reimburse the Issuing Bank which have been
transferred to the Issuing Bank at the Borrower’s request.



     (e) Obligations Unconditional. The obligations of the Borrower under this Agreement
in respect of each Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances, including, without
limitation, the following circumstances:




     (i) any lack of validity or enforceability of any Letter of Credit Documents;




     (ii) any amendment or waiver of, or any consent to, departure from any Letter of Credit
Documents;




     (iii) the existence of any claim, set-off, defense, or other right which the Borrower
may have at any time against any beneficiary or transferee of such Letter of Credit (or any
Persons for whom any such beneficiary or any such transferee may be acting), the Issuing
Bank, or any other person or entity, whether in connection with this Agreement, the
transactions contemplated in this Agreement or in any Letter of Credit Documents, or any
unrelated transaction;



-26-









 









     (iv) any statement or any other document presented under such Letter of Credit proving
to be forged, fraudulent, invalid, or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect to the extent the Issuing Bank would not be liable
therefor pursuant to the following paragraph (f); or




     (v) payment by the Issuing Bank under such Letter of Credit against presentation of a
draft or certificate which does not comply with the terms of such Letter of Credit;


provided, however, that nothing contained in this paragraph (e) shall be deemed to
constitute a waiver of any remedies of the Borrower in connection with the Letters of Credit or the
Borrower’s rights under Section 2.6(f) below.




     (f) Liability of Issuing Bank. The Borrower assumes all risks of the acts or
omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such
Letter of Credit. Neither the Issuing Bank nor any of its officers or directors shall be liable or
responsible for:




     (i) the use which may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith;




     (ii) the validity, sufficiency, or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects invalid,
insufficient, fraudulent, or forged;




     (iii) payment by the Issuing Bank against presentation of documents which do not comply
with the terms of a Letter of Credit, including failure of any documents to bear any
reference or adequate reference to the relevant Letter of Credit; or




     (iv) any other circumstances whatsoever in making or failing to make payment under any
Letter of Credit (INCLUDING THE ISSUING BANK’S OWN NEGLIGENCE),


except that the Borrower shall have a claim against the Issuing Bank, and the Issuing Bank
shall be liable to the Borrower, to the extent of any direct, as opposed to consequential, damages
suffered by the Borrower which the Borrower proves were caused by (A) the Issuing Bank’s willful
misconduct or gross negligence in determining whether documents presented under a Letter of Credit
comply with the terms of such Letter of Credit or (B) the Issuing Bank’s willful failure to make
lawful payment under any Letter of Credit after the presentation to it of a draft and certificate
strictly complying with the terms and conditions of such Letter of Credit. In furtherance and not
in limitation of the foregoing, the Issuing Bank may accept documents that appear on their face to
be in order, without responsibility for further investigation, regardless of any notice or
information to the contrary.




     (g) Cash Collateral Account.




     (i) If the Borrower is required to deposit funds in the Cash Collateral Account
pursuant to Sections 2.4(b) or (c), 7.2(b), or 7.3(b), then
the Borrower and the Agent shall



-27-









 






establish the Cash Collateral Account and the Borrower shall execute any documents and
agreements, including the Agent’s standard form assignment of deposit accounts, that the
Agent requests in connection therewith to establish the Cash Collateral Account and grant
the Agent a first priority security interest in such account and the funds therein. The
Borrower hereby pledges to the Agent and grants the Agent a security interest in the Cash
Collateral Account, whenever established, all funds held in the Cash Collateral Account from
time to time, and all proceeds thereof as security for the payment of the Obligations.




     (ii) So long as no Event of Default exists, (A) the Agent may apply the funds held in
the Cash Collateral Account only to the reimbursement of any Letter of Credit Obligations,
and (B) the Agent shall release to the Borrower at the Borrower’s written request any funds
held in the Cash Collateral Account in an amount up to but not exceeding the excess, if any
(immediately prior to the release of any such funds), of the total amount of funds held in
the Cash Collateral Account over the Letter of Credit Exposure. During the existence of any
Event of Default, the Agent may apply any funds held in the Cash Collateral Account to the
Obligations in any order determined by the Agent, regardless of any Letter of Credit
Exposure which may remain outstanding. The Agent may in its sole discretion at any time
release to the Borrower any funds held in the Cash Collateral Account.




     (iii) The Agent shall exercise reasonable care in the custody and preservation of any
funds held in the Cash Collateral Account and shall be deemed to have exercised such care if
such funds are accorded treatment substantially equivalent to that which the Agent accords
its own property, it being understood that the Agent shall not have any responsibility for
taking any necessary steps to preserve rights against any parties with respect to any such
funds.



     Section 2.7. Fees.



     (a) Commitment Fees.




     (i) The Borrower agrees to pay to the Agent for the account of each Bank a commitment
fee per annum equal to the Applicable Margin for commitment fees in effect from time to time
on the average daily amount by which such Bank’s Pro Rata Share of the Borrowing Base
exceeds the sum of such Bank’s outstanding Advances and such Bank’s Pro Rata Share of the
Letter of Credit Exposure, from the Effective Date until the Maturity Date.




     (ii) The commitment fees shall be due and payable quarterly in arrears on the last day
of each March, June, September, and December during the term of this Agreement and on the
Maturity Date.



     (b) Agent and Arranger Fees. The Borrower agrees to pay to the Agent and the Arranger
for their own accounts the fees described in the letter dated April 29, 2008 from the Agent and the
Arranger to the Borrower.



     (c) Bank Fees. The Borrower agrees to pay to the Agent for the ratable benefit of the
Banks on the Effective Date, the fees agreed to between the Borrower and the Banks.



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     (d) Letter of Credit Fees.




     (i) The Borrower agrees to pay (A) to the Agent for the pro rata benefit of the Banks a
per annum fee for each Letter of Credit issued hereunder equal to the Applicable Margin for
Eurodollar Advances on the face amount of such Letter of Credit, but with a minimum annual
fee of $1,000 on each Letter of Credit (collectively, the “Letter of Credit Fees”),
and (B) to the Agent for the benefit of the Issuing Bank a fronting fee for each Letter of
Credit equal to 0.125% per annum of the face amount of such Letter of Credit, but with a
minimum annual fee of $1,000 on each Letter of Credit. Each such fee with respect to a
Letter of Credit shall be payable quarterly in arrears for the period such Letter of Credit
is outstanding, and on the Maturity Date.




     (ii) The Borrower agrees to pay to the Issuing Bank for its own account the customary
issuance, presentation, amendment, and other processing fees, and other standard costs and
charges, of the Issuing Bank relating to letters of credit as from time to time in effect.
Such customary fees and standard costs and charges are due and payable on demand and are
nonrefundable.



     Section 2.8. Interest. The Borrower shall pay interest on the unpaid principal amount
of each Advance made by each Bank from the date of such Advance until such principal amount shall
be paid in full, at the following rates per annum:



     (a) Base Rate Advances. If such Advance is a Base Rate Advance, a rate per annum
equal at all times to the Adjusted Base Rate in effect from time to time plus the
Applicable Margin in effect from time to time, payable in arrears on the last day of March, June,
September, and December and on the date such Base Rate Advance shall be paid in full,
provided that any amount of principal which is not paid when due (whether at stated
maturity, by acceleration, or otherwise) shall bear interest from the date on which such amount is
due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to
the Adjusted Base Rate in effect from time to time plus the Applicable Margin plus
2.00% per annum.



     (b) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate Advance, a rate
per annum equal at all times during the Interest Period for such Advance to the Eurodollar Rate for
such Interest Period plus the Applicable Margin in effect from time to time, payable on the
last day of such Interest Period, and, in the case of Interest Periods that are longer than three
months, every three months and on the last day of such Interest Period, provided that any
amount of principal which is not paid when due (whether at stated maturity, by acceleration, or
otherwise) shall bear interest from the date on which such amount is due until such amount is paid
in full, payable on demand, at a rate per annum equal to (i) until the end of the relevant Interest
Period, the Eurodollar Rate in effect from time to time plus the Applicable Margin plus
2.00% per annum and (ii) thereafter, the Adjusted Base Rate in effect from time to time
plus the Applicable Margin plus 2.00% per annum.



     (c) Additional Interest on Eurodollar Rate Advances. The Borrower shall pay to each
Bank, so long as any such Bank shall be required under regulations of the Federal Reserve Board to
maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, additional interest on the unpaid principal amount of each Eurodollar Rate Advance



-29-









 




of such Bank, from the effective date of such Advance until such principal amount is paid in
full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i)
the Eurodollar Rate for the Interest Period for such Advance from (ii) the rate obtained by
dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of such Bank for such Interest Period, payable on each date on which interest is payable
on such Advance. Such additional interest payable to any Bank shall be determined by such Bank and
notified to the Borrower through the Agent (such notice to include the calculation of such
additional interest, which calculation shall be conclusive in the absence of manifest error).




     (d) Usury.




     (i) If, with respect to any Bank, the effective rate of interest contracted for under
the Credit Documents, including the stated rates of interest and fees contracted for
hereunder and any other amounts contracted for under the Credit Documents which are deemed
to be interest, at any time exceeds the Maximum Rate, then the outstanding principal amount
of the loans made by such Bank hereunder shall bear interest at a rate which would make the
effective rate of interest for such Bank under the Credit Documents equal the Maximum Rate
until the difference between the amounts which would have been due at the stated rates and
the amounts which were due at the Maximum Rate (the “Lost Interest”) has been
recaptured by such Bank.




     (ii) If, when the loans made hereunder are repaid in full, the Lost Interest has not
been fully recaptured by such Bank pursuant to the preceding paragraph, then, to the extent
permitted by law, for the loans made hereunder by such Bank the interest rates charged under
Section 2.8 hereunder shall be retroactively increased such that the effective rate
of interest under the Credit Documents was at the Maximum Rate since the effectiveness of
this Agreement to the extent necessary to recapture the Lost Interest not recaptured
pursuant to the preceding sentence and, to the extent allowed by law, the Borrower shall pay
to such Bank the amount of the Lost Interest remaining to be recaptured by such Bank.




     (iii) In calculating all sums paid or agreed to be paid to any Bank by the Borrower for
the use, forbearance, or detention of money under the Credit Documents, such amounts shall,
to the extent permitted by applicable law, be amortized, prorated, allocated, and spread in
equal parts throughout the term of the Credit Documents.




     (iv) NOTWITHSTANDING the foregoing or any other term in this Agreement and the Credit
Documents to the contrary, it is the intention of each Bank and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Bank contracts for, charges, or
receives any consideration which constitutes interest in excess of the Maximum Rate, then
(A) the provisions of this Section 2.8, together with the second sentence of
Section 9.13 shall control, and (B) any such excess shall be canceled automatically
and, if previously paid, shall at such Bank’s option be applied to the outstanding amount of
the loans made hereunder by such Bank or be refunded to the Borrower. For purposes of
Chapter 303 of the Texas Finance Code, as amended, to the extent applicable, the Borrower
agrees that the Maximum Rate shall be the “indicated



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(weekly) rate ceiling” as defined in said Chapter, provided that such Bank may
also rely, to the extent permitted by applicable laws, on alternative maximum rates of
interest under other laws applicable to such Bank, if greater.



     Section 2.9. Payments and Computations.



     (a) Payment Procedures. The Borrower shall make each payment under this Agreement and
under the Notes not later than 10:00 a.m. (Dallas, Texas time) on the day when due in Dollars to
the Agent at 901 Main Street, 14th Floor, Dallas, Texas 75202 (or such other location as the Agent
shall designate in writing to the Borrower), in same day funds. The Agent shall promptly
thereafter cause to be distributed like funds relating to the payment of principal, interest or
fees ratably (other than amounts payable solely to the Agent, the Issuing Bank, or a specific Bank
pursuant to Section 2.7(b), 2.8(c), 2.11, 2.12, 2.13,
8.7, or 9.7, but after taking into account payments effected pursuant to
Section 9.4) to the Banks for the account of their respective Applicable Lending Offices,
and like funds relating to the payment of any other amount payable to any Bank or the Issuing Bank
to such Bank for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement.



     (b) Computations. All computations of interest based on the Base Rate shall be made
by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of
interest based on the Eurodollar Rate and the Federal Funds Rate and of fees shall be made by the
Agent, on the basis of a year of 360 days, in each case for the actual number of days (including
the first day, but excluding the last day) occurring in the period for which such interest or fees
are payable. Each determination by the Agent of an interest rate or fee shall be conclusive and
binding for all purposes, absent manifest error.



     (c) Non-Business Day Payments. Whenever any payment shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of payment of interest or
fees, as the case may be; provided, however, that if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.



     (d) Agent Reliance. Unless the Agent shall have received written notice from the
Borrower prior to the date on which any payment is due to the Banks that the Borrower shall not
make such payment in full, the Agent may assume that the Borrower has made such payment in full to
the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed
to each Bank on such date an amount equal to the amount then due such Bank. If and to the extent
the Borrower shall not have so made such payment in full to the Agent, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank, together with interest, for each
day from the date such amount is distributed to such Bank until the date such Bank repays such
amount to the Agent, at the Federal Funds Rate for such day.



     Section 2.10. Sharing of Payments, Etc. If any Bank shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of
the Advances or Letter of Credit Obligations made by it in excess of its Pro Rata Share of payments
on account of the Advances or Letter of Credit Obligations obtained by all the Banks,



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such Bank shall notify the Agent and forthwith purchase from the other Banks such
participations in the Advances made by them or Letter of Credit Obligations held by them as shall
be necessary to cause such purchasing Bank to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Bank, such purchase from each Bank shall be rescinded and such Bank
shall repay to the purchasing Bank the purchase price to the extent of such Bank’s ratable share
(according to the proportion of (a) the amount of the participation sold by such Bank to the
purchasing Bank as a result of such excess payment to (b) the total amount of such excess payment)
of such recovery, together with an amount equal to such Bank’s ratable share (according to the
proportion of (a) the amount of such Bank’s required repayment to the purchasing Bank to (b) the
total amount of all such required repayments to the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so recovered. The
Borrower agrees that any Bank so purchasing a participation from another Bank pursuant to this
Section 2.10 may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such participation as fully as if such
Bank were the direct creditor of the Borrower in the amount of such participation.



     Section 2.11. Breakage Costs. If (a) any payment of principal of any Eurodollar Rate
Advance is made other than on the last day of the Interest Period for such Advance, whether as a
result of any payment pursuant to Section 2.4, the acceleration of the maturity of the
Notes pursuant to Article VII, or otherwise, or (b) the Borrower fails to make a principal
or interest payment with respect to any Eurodollar Rate Advance on the date such payment is due and
payable, the Borrower shall, within 10 days of any written demand sent by any Bank to the Borrower
through the Agent, pay to the Agent for the account of such Bank any amounts required to compensate
such Bank for any additional losses, out-of-pocket costs or expenses which it may reasonably incur
as a result of such payment or nonpayment, including, without limitation, any loss (including loss
of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Bank to fund or maintain such Advance. If, following the
Effective Date for a period of the earlier of 90 days or the date on which Banc of America
Securities LLC declares the syndication to be completed, any such breakage costs, charges or fees
are incurred with respect to Eurodollar Rate Advances on account of the syndication of the credit
facility evidenced by this Agreement, the Borrower shall immediately reimburse the Agent for any
such costs, charges or fees. Such right of reimbursement shall be in addition to and not in
limitation of the protections set forth above and elsewhere in this Agreement.



     Section 2.12. Increased Costs.



     (a) Eurodollar Rate Advances. If, due to either (i) the introduction of or any change
(other than any change by way of imposition or increase of reserve requirements included in the
Eurodollar Rate Reserve Percentage) in, or in the interpretation of, any law or regulation after
the date hereof or (ii) the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) made after the date hereof, there
shall be any increase in the cost to any Bank of agreeing to make or making, funding, or
maintaining Eurodollar Rate Advances, then the Borrower shall from time to time, upon demand by
such Bank (with a copy of such demand to the Agent), immediately pay to the Agent for the account
of such Bank additional amounts sufficient to compensate such Bank for such increased



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cost. A certificate as to the amount of such increased cost and detailing the calculation of
such cost submitted to the Borrower and the Agent by such Bank shall be conclusive and binding for
all purposes, absent manifest error.



     (b) Capital Adequacy. If any Bank or the Issuing Bank determines in good faith that
compliance with any law or regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), in each case, issued or made after
the date hereof, affects or would affect the amount of capital required or expected to be
maintained by such Bank or the Issuing Bank or any corporation controlling such Bank or the Issuing
Bank and that the amount of such capital is increased by or based upon the existence of such Bank’s
commitment to lend or the Issuing Bank’s commitment to issue the Letters of Credit and other
commitments of this type, then, upon 30 days’ prior written notice by such Bank or the Issuing Bank
(with a copy of any such demand to the Agent), the Borrower shall immediately pay to the Agent for
the account of such Bank or to the Issuing Bank, as the case may be, from time to time as specified
by such Bank or the Issuing Bank, additional amounts sufficient to compensate such Bank or the
Issuing Bank, in light of such circumstances, (i) with respect to such Bank, to the extent that
such Bank reasonably determines such increase in capital to be allocable to the existence of such
Bank’s commitment to lend under this Agreement and (ii) with respect to the Issuing Bank, to the
extent that the Issuing Bank reasonably determines such increase in capital to be allocable to the
issuance or maintenance of the Letters of Credit for such increased cost. A certificate as to such
amounts and detailing the calculation of such amounts submitted to the Borrower by such Bank or the
Issuing Bank shall be conclusive and binding for all purposes, absent manifest error.



     (c) Letters of Credit. If any change in any law or regulation or in the
interpretation thereof after the date hereof by any court or administrative or Governmental
Authority charged with the administration thereof shall either (i) impose, modify, or deem
applicable any reserve, special deposit, or similar requirement against letters of credit issued
by, or assets held by, or deposits in or for the account of, the Issuing Bank or (ii) impose on the
Issuing Bank any other condition regarding the provisions of this Agreement relating to the Letters
of Credit or any Letter of Credit Obligations, and the result of any event referred to in the
preceding clause (i) or (ii) shall be to increase the cost to the Issuing Bank of issuing or
maintaining any Letter of Credit (which increase in cost shall be determined by the Issuing Bank’s
reasonable allocation of the aggregate of such cost increases resulting from such event), then,
upon demand by the Issuing Bank, the Borrower shall pay to the Issuing Bank, from time to time as
specified by the Issuing Bank, additional amounts which shall be sufficient to compensate the
Issuing Bank for such increased cost. A certificate as to such increased cost incurred by the
Issuing Bank, as a result of any event mentioned in clause (i) or (ii) above, and detailing the
calculation of such increased costs submitted by the Issuing Bank to the Borrower, shall be
conclusive and binding for all purposes, absent manifest error.



     Section 2.13. Taxes.



     (a) No Deduction for Certain Taxes. Any and all payments by the Borrower shall be
made, in accordance with Section 2.9, free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank, the Issuing Bank, and the
Agent, (i)



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taxes imposed on or measured by its income, and franchise taxes imposed on it, by the United
States of America or the jurisdiction (or any political subdivision thereof) under the laws of
which such Bank, the Issuing Bank, or the Agent (as the case may be) is organized or in which its
principal office is located or, in the case of any Bank or the Issuing Bank, in which its
applicable lending office is located, (ii) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the Borrower is located and
(iii) in the case of a Foreign Bank (as defined in subparagraph (d), hereof), any withholding tax
that is imposed on amounts payable to such Foreign Bank at the time such Foreign Bank becomes a
party to this Agreement or other Credit Document (or designates a new lending office) (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as “Taxes”). If the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable to any Bank, the Issuing Bank, or the Agent, (i)
the sum payable shall be increased as may be necessary so that, after making all required
deductions (including deductions applicable to additional sums payable under this Section
2.13), such Bank, the Issuing Bank, or the Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made; provided, however, that
if the Borrower’s obligation to deduct or withhold Taxes is caused solely by such Bank’s, the
Issuing Bank’s, or the Agent’s failure to provide the forms described in paragraph (d) of this
Section 2.13 and such Bank, the Issuing Bank, or the Agent could have provided such forms,
no such increase shall be required; (ii) the Borrower shall make such deductions; and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.



     (b) Other Taxes. In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar levies which arise
from any payment made or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement, the Notes, or the other Credit Documents (hereinafter referred to as “Other
Taxes”).



     (c) Indemnification. THE BORROWER INDEMNIFIES EACH BANK, THE ISSUING BANK, AND THE
AGENT FOR THE FULL AMOUNT OF TAXES OR OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY TAXES OR
OTHER TAXES IMPOSED BY ANY JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION 2.13) PAID BY
SUCH BANK, THE ISSUING BANK, OR THE AGENT (AS THE CASE MAY BE) AND ANY LIABILITY (INCLUDING
INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR
OTHER TAXES WERE CORRECTLY OR LEGALLY ASSERTED. EACH PAYMENT REQUIRED TO BE MADE BY THE BORROWER
IN RESPECT OF THIS INDEMNIFICATION SHALL BE MADE TO THE AGENT FOR THE BENEFIT OF ANY PARTY CLAIMING
SUCH INDEMNIFICATION WITHIN 30 DAYS FROM THE DATE THE BORROWER RECEIVES WRITTEN DEMAND THEREFOR
FROM THE AGENT ON BEHALF OF ITSELF AS AGENT, THE ISSUING BANK, OR ANY SUCH BANK. NOTWITHSTANDING
ANYTHING HEREIN TO THE CONTRARY, NO BANK, THE ISSUING BANK OR THE AGENT SHALL BE INDEMNIFIED FOR
ANY TAXES HEREUNDER UNLESS SUCH BANK, ISSUING BANK OR AGENT SHALL MAKE WRITTEN DEMAND ON THE
BORROWER FOR REIMBURSEMENT HEREUNDER NO LATER THAN 120 DAYS AFTER THE EARLIER OF (I) THE DATE ON
WHICH SUCH




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BANK, ISSUING BANK OR AGENT MAKES PAYMENT OF SUCH TAXES AND (II) THE DATE ON WHICH THE RELEVANT
GOVERNMENT AUTHORITY MAKES WRITTEN DEMAND UPON SUCH BANK, ISSUING BANK OR AGENT FOR PAYMENT OF SUCH
TAXES. IF ANY BANK, THE AGENT, OR THE ISSUING BANK RECEIVES A REFUND IN RESPECT OF ANY TAXES PAID
BY THE BORROWER UNDER THIS PARAGRAPH (C), SUCH BANK, THE AGENT, OR THE ISSUING BANK, AS THE CASE
MAY BE, SHALL PROMPTLY PAY TO THE BORROWER THE BORROWER’S SHARE OF SUCH REFUND.




     (d) Withholding Exemption. Each Bank and the Issuing Bank, if requested by the
Borrower or the Agent, shall deliver such documentation (including Form W-9) prescribed by
applicable law or reasonably requested by the Borrower or the Agent as will enable the Borrower or
the Agent to determine whether or not such Bank or Issuing Bank is subject to backup withholding or
information reporting requirements. In addition, each Bank and Issuing Bank that is not
incorporated under the laws of the United States of America or a state thereof (a “Foreign
Bank”) agrees that it will deliver to the Borrower and the Agent on the date of this Agreement
or upon the effectiveness of any Assignment and Acceptance and from time to time thereafter if
requested in writing by the Borrower, to the extent applicable, (i) Internal Revenue Service Form
W-8ECI, W-8BEN, W-8EXP, or W-8IMY as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which exempts such Bank from withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement or other Credit
Document is effectively connected with the conduct of a trade or business in the United States,
(ii) in the case of a Foreign Bank claiming the benefits of the exemption for portfolio interest
under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Bank is not (A)
a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of
the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign
corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed copies of
Internal Revenue Service Form W-8BEN, and (iii) any other form prescribed by applicable law as a
basis for claiming an exemption from tax on payments pursuant to this Agreement or any of the other
Credit Documents. If an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any delivery required by the preceding sentence
would otherwise be required which renders all such forms inapplicable or which would prevent any
Bank from duly completing and delivering any such letter or form with respect to it and such Bank
advises the Borrower and the Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax, and, in the case of a Form W-9,
establishing an exemption from United States backup withholding tax, such Bank shall not be
required to deliver such letter or forms.



ARTICLE III




CONDITIONS OF LENDING




     Section 3.1. Initial Conditions Precedent to Borrowings. This Agreement shall become
effective on the date the following conditions precedent are met:



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     (a) Documentation. On or before the day on which the initial Borrowing is made or the
initial Letters of Credit are issued, the Agent shall have received the following duly executed by
all the parties thereto, in form and substance satisfactory to the Agent and the Banks, and, where
applicable, in sufficient copies for each Bank:




     (i) this Agreement, the Notes, the Security Agreement, the Consents, and the Mortgages;




     (ii) proper financing statements in form appropriate for filing under the Uniform
Commercial Code of all jurisdictions that the Agent may deem necessary or desirable in order
to perfect the Liens created under the Security Documents;




     (iii) a favorable opinion of Vinson & Elkins LLP, counsel to the Credit Parties, dated
as of the Effective Date, covering such matters as any Bank through the Agent may reasonably
request;




     (iv) a favorable opinion of Geiger, Laborde & Laperouse L.L.C., Louisiana counsel to
the Borrower covering the Louisiana-law Mortgages and such other matters as any Bank through
the Agent may reasonably request;




     (v) a certificate of the Secretary or an Assistant Secretary of the Borrower and each
Guarantor certifying (A) certificates of good standing and existence or qualification to do
business for each of the Borrower and each Guarantor from its jurisdiction of organization
and each jurisdiction where it is required to be qualified to do business, (B) the
certificate of incorporation, formation, or partnership of each of the Borrower and each
Guarantor, (C) the bylaws, limited liability company agreement, or partnership agreement of
each of the Borrower and each Guarantor, (D) the resolutions of the Board of Directors of
the Borrower and each Guarantor authorizing this Agreement and related transactions, (E) the
incumbency and signatures of the officers of the Borrower and each Guarantor authorized to
execute this Agreement and related documents, (F) the Bois d’Arc Merger Agreement, and (G)
the Effective Date Merger Agreements;




     (vi) a certificate of a Responsible Officer of Borrower stating that (A) the
representations and warranties contained in this Agreement and the other Credit Documents
are true and correct in all material respects, (B) no Default or Event of Default exists,
and (C) all conditions set forth in this Section 3.1 and in Section 3.2 have
been satisfied (assuming satisfaction by the Agent and the Banks where such satisfaction is
specified in such conditions);




     (vii) Insurance Certificates from the Borrower’s and Guarantors’ insurance providers
setting forth the insurance maintained by Borrower and Guarantors, showing that insurance
meeting the requirements of Section 5.2 is in full force and effect and that all
premiums due with respect thereto have been paid, showing Agent as loss payee with respect
to all such property or physical damage policies and as additional insured with respect to
all such liability policies, and stating that such insurer will provide Agent with at least
30 days’ advance notice of cancellation of any such policy;



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     (viii) such UCC lien search reports as Agent shall require, conducted in such
jurisdictions and reflecting such names as Agent shall request; and




     (ix) such other documents, governmental certificates, agreements, and lien searches as
the Agent or any Bank may reasonably request.



     (b) Payment of Fees. On the date of this Agreement, the Borrower shall have paid (i)
the fees required by Section 2.7(b) and (c), (ii) all costs and expenses which have
been invoiced and are payable pursuant to Section 9.4, and (iii) all fees payable to the
Arranger and Agent pursuant to any written agreement between Borrower and the Arranger or the
Agent.



     (c) Financial Statements. The Agent shall have reviewed and be satisfied with (i) the
consolidated financial statements of the Borrower and its Subsidiaries, and of the Target, in each
case for the fiscal years ended 2005, 2006, and 2007, including balance sheets, income and cash
flow statements audited by independent public accountants and prepared in conformity with GAAP and
such other financial information as the Agent may request and (ii) the consolidated unaudited
quarterly financial statements of the Borrower and its Subsidiaries, and of the Target, in each
case for the fiscal quarters ended March 31, 2008 and June 30, 2008.



     (d) No Material Adverse Change. There shall not have occurred a Material Adverse
Effect (as defined in the Bois d’Arc Merger Agreement) with respect to the Target.



     (e) No Material Litigation. The absence of any action, suit, investigation or
proceeding pending or threatened in any court or before any arbitrator or governmental authority
that (i) could reasonably be expected to cause a Material Adverse Change, except as set forth on
Schedule 4.7, (ii) prevents or purports to prevent any of the Mergers, or (iii) purports to
adversely affect any transaction contemplated hereby or the ability of the Borrower and the
Guarantors to perform their respective obligations under the Credit Documents.



     (f) Engineering Reports. The Agent shall have received Oil and Gas Reserve Reports
for the Oil and Gas Properties included in the Borrowing Base.



     (g) Environmental Condition. The Agent shall be reasonably satisfied with the
environmental condition of the Borrower’s and its Subsidiaries’ Oil and Gas Properties.



     (h) Mergers.




     (i) The Bois d’Arc Merger Agreement shall not have been materially altered, amended, or
otherwise changed, or supplemented or any material condition or requirement therein waived,
in each case without the prior written consent of the Banks.




     (ii) Each Merger shall be consummated substantially simultaneously with the funding of
the initial Advances hereunder, in compliance with applicable law and regulatory approvals,
and substantially in accordance with (A) in the case of the Bois d’Arc Merger, the terms of
the Bois d’Arc Merger Agreement and (B) in the case of the Effective Date Mergers, the terms
of the Effective Date Merger Agreements.



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     (iii) All governmental, shareholder, and third party consents and approvals necessary
to consummate the Mergers shall have been received.




     (iv) All Debt of the Target and its Subsidiaries shall have been terminated and repaid
in full, except for Debt that would be permitted by this Agreement.




     (v) All Liens on the assets of and equity in the Target and its Subsidiaries shall have
been released, except for Liens that would be permitted by this Agreement.



     (i) Title. The Borrower shall have delivered to the Agent title reports (or title
opinions) regarding that portion of the Borrowing Base Assets representing not less than 50% of the
value of the aggregate oil and gas reserves of the Target and its Subsidiaries immediately prior to
the Bois d’Arc Merger, and such title reports or opinions shall reflect that, upon the consummation
of the Bois d’Arc Merger, the Borrower and its Subsidiaries (including the Target) shall have good
and marketable title to all such Borrowing Base Assets, free and clear of all Liens, except for
Permitted Borrowing Base Liens.



     (j) Other Matters. All matters related to this Agreement, the other Credit Documents,
and Borrower or any Guarantor shall be acceptable to Agent and each Bank in their sole discretion,
and Borrower shall have delivered to Agent and each Bank such evidence as they shall request to
substantiate any matters related to this Agreement, the other Credit Documents, and Borrower or any
Guarantor as Agent or any Bank shall request.



     Section 3.2. Conditions Precedent to All Borrowings. The obligation of each Bank to
make an Advance on the occasion of each Borrowing and of the Issuing Bank to issue, increase, or
extend any Letter of Credit shall be subject to the further conditions precedent that on the date
of such Borrowing or the issuance, increase, or extension of such Letter of Credit:



     (a) the Agent shall have timely received a Notice of Borrowing or Letter of Credit
Application, as applicable;



     (b) the following statements shall be true (and each of the giving of the applicable Notice of
Borrowing or Letter of Credit Application and the acceptance by the Borrower of the proceeds of
such Borrowing or the issuance, increase, or extension of such Letter of Credit shall constitute a
representation and warranty by the Borrower that, on the date of such Borrowing, or the issuance,
increase, or extension of such Letter of Credit, such statements are true):




     (i) the representations and warranties contained in Article IV and the
Guaranties are correct in all material respects on and as of the date of such Borrowing or
the date of the issuance, increase, or extension of such Letter of Credit, before and after
giving effect to such Borrowing or to the issuance, increase, or extension of such Letter of
Credit and to the application of the proceeds from such Borrowing, as though made on and as
of such date;




     (ii) no Default has occurred and is continuing or would result from such Borrowing or
from the application of the proceeds therefrom or from the issuance, increase, or extension
of such Letter of Credit; and



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     (iii) the funding of such Borrowing or issuance of such Letter of Credit and all other
Borrowings to be made or Letters of Credit to be issued on the same day under this
Agreement, shall not (A) cause the aggregate outstanding amount of Advances plus the Letter
of Credit Exposure to exceed the lesser of (1) the Borrowing Base and (2) the aggregate
Commitments, or (B) cause the Letter of Credit Exposure to exceed $300,000,000; and



     (c) the Agent shall have received such other approvals, opinions, or documents reasonably
deemed necessary or desirable by any Bank as a result of circumstances occurring after the date of
this Agreement, as any Bank through the Agent may reasonably request.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES




     The Borrower represents and warrants as follows:



     Section 4.1. Corporate Existence; Subsidiaries. The Borrower is a corporation duly
organized, validly existing, and in good standing under the laws of Delaware and in good standing
and qualified to do business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification and where a failure to be qualified could
reasonably be expected to cause a Material Adverse Change. Each Guarantor is a corporation,
limited liability company, or limited partnership duly organized, validly existing, and in good
standing under the laws of its jurisdiction of formation and in good standing and qualified to do
business in each jurisdiction where its ownership or lease of property or conduct of its business
requires such qualification and where a failure to be qualified could reasonably be expected to
cause a Material Adverse Change. Each Material Subsidiary of the Borrower (after giving effect to
the Mergers) has executed a Guaranty and otherwise complied with the requirements of Section
5.8. Schedule 4.1 lists each Material Subsidiary of the Borrower (after giving effect
to the Mergers), its jurisdiction and type of organization, and the owners of the equity interests
in such Material Subsidiary.



     Section 4.2. Corporate Power; Authorization; No Violation.



     (a) The execution, delivery, and performance by the Borrower of this Agreement, the Notes, and
the other Credit Documents to which it is a party and by the Guarantors of the Guaranties and the
consummation of the transactions contemplated hereby and thereby (including the Mergers) (i) are
within the Borrower’s and the Guarantors’ corporate, limited liability, or limited partnership
powers, (ii) have been duly authorized by all necessary corporate, limited liability, or limited
partnership action, (iii) do not contravene (A) the Borrower’s or any Guarantor’s certificate or
articles, as the case may be, of incorporation or by-laws or other formation documents or (B) any
law or any material contractual restriction binding on or affecting the Borrower or any Guarantor,
and (iv) will not result in or require (A) the creation or imposition of any Lien prohibited by
this Agreement or (B) any preferential right, right of first refusal, consent right, or similar
right of a counterparty under any material contract.



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     (b) At the time of each Borrowing, such Borrowing and the use of the proceeds of such
Borrowing (i) will be within the Borrower’s corporate powers, (ii) will have been duly authorized
by all necessary corporate action on the part of the Borrower, (iii) will not contravene (A) the
Borrower’s certificate of incorporation or by-laws or (B) any law or any material contractual
restriction binding on or affecting the Borrower, and (iv) will not result in or require the
creation or imposition of any Lien prohibited by this Agreement.



     Section 4.3. Authorization and Approvals. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority or third party is required
for the due execution, delivery, and performance by the Borrower of this Agreement, the Notes, or
the other Credit Documents to which the Borrower is a party or by each Guarantor of its Guaranty or
the consummation of the transactions contemplated thereby, except for (i) those that have already
been obtained or made, (ii) routine consents, authorizations, filings and notices required to be
made in the ordinary course of business, (iii) the filing of UCC-1 or UCC-3 financing statements in
the appropriate filing offices, and (iv) filings required pursuant to Section 5.8 in
connection with new Material Subsidiaries or Section 5.11 and Section 5.12 in
connection with the mortgaging of additional Oil and Gas Properties). At the time of each
Borrowing, no authorization or approval or other action by, and no notice to or filing with, any
Governmental Authority or third party will be required for such Borrowing or the use of the
proceeds of such Borrowing.



     Section 4.4. Enforceable Obligations. This Agreement, the Notes, and the other Credit
Documents to which the Borrower is a party have been duly executed and delivered by the Borrower
and the Guaranties and the other Credit Documents to which any Guarantor is a party have been duly
executed and delivered by such Guarantor. Each Credit Document is the legal, valid, and binding
obligation of the Borrower and each Guarantor which is a party to it enforceable against the
Borrower and each such Guarantor in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium, or similar law
affecting creditors’ rights generally and by general principles of equity.



     Section 4.5. Financial Statements. The Financial Statements, copies of which have
been furnished to each Bank, fairly present in all material respects the consolidated financial
condition of the Borrower and its Subsidiaries, as at such date and the consolidated results of the
operations of the Borrower and its Subsidiaries, for the fiscal year ended on such date, and such
consolidated balance sheets and consolidated statements of operations, cash flow, and stockholders’
equity were prepared in accordance with GAAP (or in compliance with the regulations promulgated by
the United States Securities and Exchange Commission). Since the date of the Financial Statements,
no Material Adverse Change has occurred.



     Section 4.6. True and Complete Disclosure.



     (a) All factual information (excluding estimates, projections, and pro forma financial
information) heretofore or contemporaneously furnished by or on behalf of the Borrower or any of
its Subsidiaries (prior to giving effect to the Bois d’Arc Merger) in writing to any Bank or the
Agent for purposes of or in connection with this Agreement, any other Credit Document or any
transaction contemplated hereby or thereby (but limited to those delivered by the Borrower or its



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Subsidiaries (prior to giving effect to the Bois d’Arc Merger) to a Bank or the Agent in
connection with such agreements and transactions in anticipation of or in connection with this
amendment and restatement and the Mergers) is (taken as a whole) true and correct in all material
respects on the date as of which such information is dated or certified and does not contain any
untrue statement of a material fact or omit to state any material fact necessary to make the
statements contained therein not misleading as of the date of this Agreement, in light of the
circumstances under which they were made. All such projections, estimates, and pro forma financial
information heretofore or contemporaneously furnished by the Borrower or any of its Subsidiaries
(prior to giving effect to the Bois d’Arc Merger) were prepared in good faith on the basis of
assumptions, data, information, tests, or conditions believed to be reasonable at the time such
projections, estimates, and pro forma financial information were furnished.




     (b) All factual information (excluding estimates, projections, and pro forma financial
information) furnished by or on behalf of the Borrower or any of its Subsidiaries in writing to any
Bank or the Agent after the Effective Date for purposes of or in connection with this Agreement,
any other Credit Document or any transaction contemplated hereby or thereby is (taken as a whole)
true and correct in all material respects on the date as of which such information is dated or
certified and does not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained therein not misleading, in light of the
circumstances under which they were made. All such projections, estimates, and pro forma financial
information furnished by the Borrower or any of its Subsidiaries after the Effective Date were
prepared in good faith on the basis of assumptions, data, information, tests, or conditions
believed to be reasonable at the time such projections, estimates, and pro forma financial
information were furnished.



     Section 4.7. Litigation. Set forth on Schedule 4.7 is an accurate description
of all of the Borrower’s and its Subsidiaries’ pending litigation existing on the date of this
Agreement which could reasonably be expected to cause a Material Adverse Change. There is no
pending or, to the best knowledge of the Borrower, threatened action, proceeding, or investigation
affecting the Borrower or any of its Subsidiaries before any court, Governmental Authority or
arbitrator, which (a) could reasonably be expected to cause a Material Adverse Change, except as
set forth on Schedule 4.7, or (b) purports to affect the legality, validity, binding
effect, or enforceability of this Agreement, any Note, or any other Credit Document.



     Section 4.8. Use of Proceeds. All Advances and Letters of Credit shall be used (a) to
partially finance the cash portion of the purchase price for the Bois d’Arc Merger, (b) to pay off
Debt outstanding under the Target’s senior credit facility and replace letters of credit
outstanding under such facility with, or deem them to be, Letters of Credit, (c) to pay costs and
expenses related to the Mergers and the credit facility evidenced by this Agreement, and (d) for
working capital, capital expenditures, and general corporate purposes of the Borrower and its
Subsidiaries (including without limitation to finance the acquisition of Oil and Gas Properties).
The Borrower is not engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U). No proceeds of any Advance will be
used to purchase or carry any margin stock in violation of Regulation U or X.



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     Section 4.9. Investment Company Act. Neither the Borrower nor any of its Subsidiaries
is an “investment company” or a company “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.



     Section 4.10. Taxes. Proper and accurate (in all material respects) federal, state,
local, and foreign tax returns, reports and statements required to be filed (after giving effect to
any extension granted in the time of filing) by or on behalf of the Borrower, its Subsidiaries, or
any member of the Controlled Group (hereafter collectively called the “Tax Group”) have
been duly filed on a timely basis or appropriate extensions have been obtained with appropriate
governmental agencies in all jurisdictions in which such returns, reports, and statements are
required to be filed, except where the failure to so file would not be reasonably expected to cause
a Material Adverse Change; and all taxes (which are material in amount) and other impositions due
and payable have been timely paid prior to the date on which any fine, penalty, interest, late
charge, or loss may be added thereto for non-payment thereof, except where contested in good faith
by appropriate proceedings. The reserves for accrued taxes reflected in the financial statements
delivered to the Banks under this Agreement are adequate in the aggregate for the payment of all
unpaid taxes, whether or not disputed, for the period ended as of the date thereof and for any
period prior thereto, and for which the Tax Group may be liable in its own right, as withholding
agent or as a transferee of the assets of, or successor to, any Person, except for such taxes or
reserves therefor, the failure to pay or provide for which does not and could not cause a Material
Adverse Change, and except that no reserves are maintained for the Louisiana franchise taxes that
are the subject of the litigation described in paragraph 1 of Schedule 4.7. Timely payment
of all material sales and use taxes required by applicable law has been made by the Borrower and
all other members of the Tax Group.



     Section 4.11. Pension Plans. All Plans are in compliance in all material respects
with all applicable provisions of ERISA. No Termination Event has occurred with respect to any
Plan, and each Plan has complied with and been administered in all material respects with
applicable provisions of ERISA and the Code. No “accumulated funding deficiency” (as defined in
Section 302 of ERISA) has occurred and there has been no excise tax imposed under Section 4971 of
the Code. To the knowledge of the Borrower, no Reportable Event has occurred with respect to any
Multiemployer Plan, and each Multiemployer Plan has complied with and been administered in all
material respects with applicable provisions of ERISA and the Code. The present value of all
benefits vested under each Plan (based on the assumptions used to fund such Plan) did not, as of
the last annual valuation date applicable thereto, exceed the value of the assets of such Plan
allocable to such vested benefits. Neither the Borrower nor any member of the Controlled Group has
had a complete or partial withdrawal from any Multiemployer Plan for which there is any withdrawal
liability. As of the most recent valuation date applicable thereto, neither the Borrower nor any
member of the Controlled Group would become subject to any liability under ERISA if the Borrower or
any member of the Controlled Group has received notice that any Multiemployer Plan is insolvent or
in reorganization. Based upon GAAP existing as of the date of this Agreement and current factual
circumstances, the Borrower has no reason to believe that the annual cost during the term of this
Agreement to the Borrower or any member of the Controlled Group for post-retirement benefits to be
provided to the current and former employees of the Borrower or any member of the Controlled Group
under Plans that are welfare benefit plans (as defined in Section 3(a) of ERISA) could, in the
aggregate, reasonably be expected to cause a Material Adverse Change.



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     Section 4.12. Condition of Property; Casualties. The material Properties used or to
be used in the continuing operations of the Borrower and each of its Subsidiaries are in all
material respects in good repair, working order and condition. Since the date of the Financial
Statements, neither the business nor the material Properties of the Borrower and each of its
Subsidiaries, taken as a whole, has experienced a Material Adverse Change been materially and
adversely affected as a result of any fire, explosion, earthquake, flood, drought, windstorm,
accident, strike or other labor disturbance, embargo, requisition or taking of property or
cancellation of contracts, permits, or concessions by a Governmental Authority, riot, activities of
armed forces, or acts of God or of any public enemy.



     Section 4.13. No Burdensome Restrictions; No Defaults. Neither the Borrower nor any
of its Subsidiaries is a party to any indenture, loan, or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate restriction or provision of
applicable law or governmental regulation which could reasonably be expected to cause a Material
Adverse Change. The Borrower and the Guarantors are not in default under or with respect to any
contract, agreement, lease, or other instrument to which the Borrower or any Guarantor is a party
and which could reasonably be expected to cause a Material Adverse Change. Neither the Borrower
nor any Guarantor has received any notice of default under any material contract, agreement, lease,
or other instrument to which the Borrower or such Guarantor is a party. No Default has occurred
and is continuing.



     Section 4.14. Environmental Condition.



     (a) Permits, Etc. Except as set forth on Schedule 4.14(a), the Borrower and
its Subsidiaries (i) have obtained all Environmental Permits material to the ownership and
operation of their respective Properties and the conduct of their respective businesses; (ii) have
been and are in compliance in all material respects with all terms and conditions of such
Environmental Permits and with all other applicable Environmental Laws; (iii) have not received
written notice of any unresolved violation or alleged violation of any Environmental Law or
Environmental Permit; and (iv) are not subject to any actual or contingent Environmental Claim,
which could reasonably be expected to cause a Material Adverse Change.



     (b) Certain Liabilities. Except as set forth on Schedule 4.14(b), none of the
present or, to the Borrower’s actual knowledge, previously owned or operated Property of the
Borrower or of any of its present or former Subsidiaries, wherever located, (i) has been placed on
or proposed to be placed on the National Priorities List, the Comprehensive Environmental Response
Compensation Liability Information System list, or their state or local analogs, or have been
otherwise investigated, designated, listed, or identified as a potential site for any material
removal, remediation, cleanup, closure, restoration, reclamation, or other response activity under
any Environmental Laws; (ii) is subject to a Lien, arising under or in connection with any
Environmental Laws, that attaches to any revenues or to any Property owned or operated by the
Borrower or any of its Subsidiaries, wherever located, which could reasonably be expected to cause
a Material Adverse Change; or (iii) has been the site of any Release of Hazardous Substances or
Hazardous Wastes from present or past operations which has caused at the site or at any third-party
site any condition that has resulted in or could reasonably be expected to result in the imposition
of any Response, notice, or investigation obligations on the Borrower or any of



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its Subsidiaries under applicable Environmental Law that would cause a Material Adverse
Change.




     (c) Certain Actions. Without limiting the foregoing, except for matters that will not
result in a Material Adverse Change: (i) all necessary notices have been properly filed, and no
further action is required under current Environmental Law as to each Response or other restoration
or remedial project undertaken by the Borrower, or its present or former Subsidiaries on any of
their presently or formerly owned or operated Property and (ii) the present and, to the Borrower’s
best knowledge, future liability, if any, of the Borrower and its Subsidiaries which could
reasonably be expected to arise in connection with requirements under Environmental Laws.



     Section 4.15. Permits, Licenses, Etc.; Compliance with Legal Requirements. Except for
Environmental Permits, which are addressed in Section 4.14(a), the Borrower and its
Subsidiaries possess (a) all permits and licenses which are material to the conduct of its business
and (b) except where the failure to possess the same could not reasonably be expected to result in
a Material Adverse Change, all patents, patent rights or patent licenses, trademarks, trademark
rights, trade names rights and copyrights necessary for the conduct of its business. The Borrower
and its Subsidiaries manage and operate their business in accordance with all applicable Legal
Requirements and good industry practices, except where the failure to do so could not reasonably be
expected to result in a Material Adverse Change.



     Section 4.16. Gas Contracts. Neither the Borrower nor any of its Subsidiaries, as of
the date hereof, (a) is obligated in any material respect by virtue of any prepayment made under
any contract containing a “take-or-pay” or “prepayment” provision or under any similar agreement to
deliver hydrocarbons produced from or allocated to any of the Borrower’s consolidated Oil and Gas
Properties at some future date without receiving full payment therefor at the time of delivery, or
(b) has produced gas, in any material amount, subject to, and none of the Borrower’s consolidated
Oil and Gas Properties is subject to, balancing rights of third parties or subject to balancing
duties under governmental requirements, except as to such matters for which the Borrower or its
relevant Subsidiary has established monetary reserves adequate in amount in accordance with GAAP to
satisfy such obligations.



     Section 4.17. Title to Properties, Liens, Leases, Etc.



     (a) Except as is being cured pursuant to Section 5.12, Borrower and/or its applicable
Subsidiaries (i) have good and marketable title to all Borrowing Base Assets, free and clear of all
Liens, except for Permitted Borrowing Base Liens, and (ii) have good and marketable title to all
material assets reflected in the financial statements most recently delivered pursuant to
Section 5.6(a) or Section 5.6(b), free and clear of all Liens, except for Permitted
Liens.



     (b) On the date of this Agreement, (i) with respect to the Mortgages, all governmental actions
and all other filings, recordings, registrations, third party consents and other actions which are
necessary as of such date to create and perfect the Liens provided for in the Mortgages will have
been made, obtained and taken in all relevant jurisdictions and (ii) with respect to the Security
Agreement, (A) all UCC-1 financing statements which are necessary as of such date to create and
perfect the Liens provided for in the Security Agreement will have been made,




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obtained and taken in all relevant jurisdictions and (B) all actions necessary to grant control
over the Pledged Securities (as defined in the Security Agreement) have been taken.




     (c) All leases and agreements for the conduct of business of the Credit Parties are valid and
subsisting, in full force and effect, and there exists no default or event of default or
circumstance which with the giving of notice or lapse of time or both would give rise to a default
under any such leases or agreements, in each case which could reasonably be expected to cause a
Material Adverse Change.



     (d) No Credit Party is a party to any agreement or arrangement (other than this Agreement, the
Security Documents, and the documents evidencing Debt referred to in Section 6.2(c)), or
subject to any order, judgment, writ or decree, which either restricts or purports to restrict its
ability to grant Liens to secure the Obligations against their respective assets or Properties.



     Section 4.18. Mineral Interests.



     (a) Except for Permitted Borrowing Base Liens, all Borrowing Base Assets are valid,
subsisting, and in full force and effect, and all rentals, royalties, and other amounts due and
payable in respect thereof have been duly paid.



     (b) Without regard to any consent or non-consent provisions of any joint operating agreement
covering Borrower’s or any Guarantor’s Proved Mineral Interests, and except for Permitted Borrowing
Base Liens, Borrower’s and each Guarantor’s share of (i) the costs for each Borrowing Base Asset is
not greater than the decimal fraction set forth in the most recently delivered Oil and Gas 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, and
(ii) production from, allocated to, or attributed to each such Borrowing Base Asset is not less
than the decimal fraction set forth in such Oil and Gas Reserve Report, before and after payout, as
the case may be, and described therein by the designations “net revenue interest,” “NRI,” or
similar terms.



     (c) Each well drilled in respect of proved producing reserves described in the most recently
delivered Oil and Gas Reserve Report (i) is capable of, and was, as of the date of such Oil & Gas
Reserve Report, producing Hydrocarbons in commercial quantities, and Borrower and each Guarantor
(as applicable) is currently receiving payments for its share of production, with no funds in
respect of any thereof being presently held in suspense, other than any such funds being held in
suspense pending delivery of appropriate division orders, and (ii) to Borrower’s knowledge, has
been drilled, bottomed, completed, and operated in compliance in all material respects with
applicable Legal Requirements 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.



ARTICLE V




AFFIRMATIVE COVENANTS




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     So long as any Note or any amount under any Credit Document shall remain unpaid, any Letter of
Credit shall remain outstanding, or any Bank shall have any Commitment hereunder, the Borrower
agrees, unless the Majority Banks shall otherwise consent in writing, to comply with the following
covenants.



     Section 5.1. Compliance with Laws, Etc. The Borrower shall comply, and cause each of
its Subsidiaries to comply, with all Legal Requirements except where the failure to do so could not
reasonably be expected to result in a Material Adverse Change. Without limiting the generality and
coverage of the foregoing, the Borrower shall comply, and shall cause each of its Subsidiaries to
comply with all Environmental Laws and all laws, regulations, or directives with respect to equal
employment opportunity and employee safety in all jurisdictions in which the Borrower, or any of
its Subsidiaries do business, except where the failure to do so could not reasonably be expected to
result in a Material Adverse Change; provided, however, that this Section 5.1 shall
not prevent the Borrower, or any of its Subsidiaries from, in good faith and with reasonable
diligence, contesting the validity or application of any such laws or regulations by appropriate
legal proceedings.



     Section 5.2. Maintenance of Insurance.



     (a) Required Insurance Coverage. Borrower will maintain, and will cause each
Subsidiary to maintain, property and physical damage insurance on selected real and personal
property on an all risks basis (including the perils of flood and quake on a sub-limited basis),
covering the repair and replacement cost of all such selected property. Borrower will also
maintain commercial general liability and excess liability insurance and products/completed
operations liability coverage. Each of the policies described in this clause (a) shall be of the
kinds and in the amounts customarily carried or maintained by Persons of established reputation
engaged in similar businesses and owning similar properties in the same general areas in which the
Borrower or such Subsidiary operates. All such insurance shall be provided by insurers having a
minimum A.M. Best policyholders rating of A-, VII. Borrower will not, and will not permit any of
its Subsidiaries to, bring or keep any article on any business location of Borrower or any of its
Subsidiaries, or cause or allow any condition to exist, if the presence of such article or the
occurrence of such condition would reasonably cause the invalidation of any insurance required by
this Section 5.2, or would otherwise be prohibited by the terms thereof.



     (b) Loss Payee; Additional Insured.




     (i) On or prior to the Effective Date, and at all times thereafter, Borrower will cause
Agent to be named as (A) an additional insured on each liability policy required to be
maintained pursuant to this Section 5.2, and (B) loss payee (which shall include, as
applicable, identification as mortgagee) on each property and physical damage policy
required to be maintained pursuant to this Section 5.2 for any Property Proceeds in
excess of $10,000,000 arising from a single event or related series of events.




     (ii) If (A) Agent receives Property Proceeds in its capacity as loss payee, (B) no
Default or Event of Default exists at such time, and (C) such Property Proceeds are not
required to be applied as a prepayment under the terms of this Agreement, Agent will remit
such Property Proceeds to Borrower within fifteen days after receipt.



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     (iii) Agent shall, promptly after the Effective Date, deliver, to Borrower’s insurance
broker for delivery to each insurer that provides a property or physical damage policy on
which Agent is listed as loss payee, a revocable notice that such insurer may pay any
Property Proceeds arising from a single event or related series of events that occurred
prior to the date of this Agreement directly to Borrower; provided that (A) such notice may
be revoked by Agent at any time when a Default or Event of Default exists or any such
Property Proceeds would be required to be applied as a prepayment under the terms of this
Agreement, and (B) any Property Proceeds payable under such policy after receipt by the
insurer of written notice of such revocation shall be paid directly to Agent. If such
Default or Event of Default is cured or waived, the foregoing arrangement may be restored
with respect to future Property Proceeds.




     (iv) All loss payee and additional insured endorsements must be in form and substance
reasonably acceptable to Agent.



     (c) Evidence of Insurance Coverage. Borrower will deliver to Agent on the Effective
Date, an Insurance Certificate from Borrower’s insurance broker dated such date showing the amount
of coverage under all such policies as of such date, showing the endorsements required above, and
showing waivers of all rights of subrogation against all loss payees and additional insureds. Each
such Insurance Certificate will also indicate that each additional insured and loss payee will be
given at least 30 days’ written notice of the cancellation, termination, reduction in amount or
material change in coverage to any part of any applicable policy. Annually, on or prior to June
30, Borrower shall provide Insurance Certificates for all of its insurance policies as of May 1 of
such year and such additional information as to the applicable policies as is reasonably requested
by any Bank. Borrower will deliver to Agent, (i) within 15 days after receipt of notice from any
insurer, a copy of any notice of cancellation or material change in coverage from that existing
under the applicable policy immediately prior to such notice, (ii) as soon as possible but no later
than May 31 of any year, notice of any cancellation or nonrenewal of any insurance policy by the
applicable insurer, if such policy has not been renewed or replaced with a substantially similar
policy, effective as of May 1 of such year, and (iii) notice of any cancellation or nonrenewal of
any insurance policy by Borrower as soon as possible but no later than May 31 of any year.



     Section 5.3. Preservation of Corporate Existence, Etc. The Borrower shall preserve
and maintain, and cause each of its Subsidiaries to preserve and maintain, its corporate existence,
rights, franchises, and privileges in the jurisdiction of its incorporation, and qualify and remain
qualified, and cause each such Subsidiary to qualify and remain qualified, as a foreign corporation
in each jurisdiction in which qualification is necessary or desirable in view of its business and
operations or the ownership of its properties, and, in each case, where failure to qualify or
preserve and maintain its rights and franchises could reasonably be expected to cause a Material
Adverse Change; provided, however, that nothing herein contained shall prevent any
transaction permitted by Section 6.4.



     Section 5.4. Payment of Taxes, Claims, Etc. The Borrower shall pay and discharge, and
cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent,
(a) all taxes, assessments, and governmental charges or levies imposed upon it or upon its income
or profits or Property that are material in amount, prior to the date on which penalties



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attach thereto and (b) all lawful claims in excess of $2,500,000 which, if unpaid, might by
law become a Lien upon its Property; provided, however, that neither the Borrower nor any
such Subsidiary shall be required to pay or discharge any such tax, assessment, charge, or levy
which is being contested in good faith and by appropriate proceedings, and with respect to which
reserves required by GAAP have been provided.



     Section 5.5. Visitation Rights. At any reasonable time and from time to time, upon
reasonable notice, the Borrower shall, and shall cause its Subsidiaries to, permit the Agent and
any Bank or any of its agents or representatives thereof, to (a) examine and make copies of and
abstracts from the records and books of account of, and visit and inspect at its reasonable
discretion the properties of, the Borrower and any such Subsidiary, and (b) discuss the affairs,
finances and accounts of the Borrower and any such Subsidiary with any of their respective officers
or directors; provided however, the Agent or the Bank for whose benefit such inspection and
visitation is made assumes sole responsibility for the condition of any property of the Borrower or
its Subsidiaries so visited and inspected, the access and egress thereto (including, but not
limited to wharves, docks, and helicopter landing areas), and any vice or defect therein or
thereon, and assumes all responsibility for and hereby releases and indemnifies the Borrower, its
Affiliates, and their officers, directors, employees, and agents against any claim for damage or
injury to or by the Agent or such Bank (or the representatives thereof) or to the Borrower’s or its
Subsidiaries’ property which may be occasioned by such inspection and visitation of the Borrower’s
or its Subsidiaries’ property.



     Section 5.6. Reporting Requirements. The Borrower shall furnish to the Agent and each
Bank:



     (a) Annual Financials. As soon as available and in any event not later than 120 days
after the end of each fiscal year of the Borrower, (i) a copy of the annual audit report for such
year for the Borrower and its Subsidiaries, including therein the consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such fiscal year and consolidated statements of
operations, cash flows, and stockholders’ equity of the Borrower and its Subsidiaries for such
fiscal year, in each case certified by Ernst & Young LLP or other independent certified public
accountants of national standing and including any management letters delivered by such accountants
to the Borrower in connection with such audit, (ii) the capital budget for the Borrower and its
Subsidiaries established by the Board of Directors of the Borrower for the next fiscal year, in
reasonable detail by geographical area and type of expenditure, and (iii) a Compliance Certificate
executed by the Chief Financial Officer or Chief Accounting Officer of the Borrower;



     (b) Quarterly Financials. As soon as available and in any event not later than 90
days after the end of each of the first three quarters of each fiscal year of the Borrower, (i) the
unaudited consolidated balance sheet of Borrower and its Subsidiaries as of the end of such quarter
and the consolidated statements of operations and cash flows of the Borrower and its Subsidiaries
for the period commencing at the end of the previous year and ending with the end of such quarter,
all in reasonable detail and duly certified with respect to such consolidated statements (subject
to year-end audit adjustments) by the Chief Financial Officer or Chief Accounting Officer of the
Borrower as having been prepared in accordance with GAAP (or in compliance with the regulations
promulgated by the United States Securities and Exchange



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Commission), and (ii) a Compliance Certificate executed by the Chief Financial Officer or
Chief Accounting Officer of the Borrower;



     (c) Oil and Gas Reserve Reports.




     (i) As soon as available but in any event on or before March 31 of each year, an
engineering report in form and substance meeting the requirements of the Securities and
Exchange Commission for financial reporting purposes, certified by a firm or firms of
independent consulting petroleum engineers approved by the Agent as fairly setting forth (A)
the proved and producing, shut in, behind pipe, and undeveloped oil and gas reserves
(separately classified as such) attributable to the Borrower’s consolidated Oil and Gas
Properties as of December 31 of the previous year, (B) the aggregate present value,
determined on the basis of stated pricing assumptions, of the future net income with respect
to such Oil and Gas Properties, discounted at a stated per annum discount rate, and (C)
projections of the annual rate of production, gross income, and net income with respect to
such Oil and Gas Properties.




     (ii) As soon as available but in any event on or before September 30 of each year, an
internal engineering report in form and substance satisfactory to the Agent, certified by a
Responsible Officer of the Borrower, to such Responsible Officer’s actual knowledge without
investigation and not in such Responsible Officer’s individual capacity, as fairly setting
forth (A) the proved and producing, shut in, behind pipe, and undeveloped oil and gas
reserves (separately classified as such) attributable to the Borrower’s consolidated Oil and
Gas Properties as of June 30 of such year, (B) the aggregate present value, determined on
the basis of stated pricing assumptions, of the future net income with respect to such Oil
and Gas Properties, discounted at a stated per annum discount rate, and (C) projections of
the annual rate of production, gross income, and net income with respect to such Oil and Gas
Properties.




     (iii) Each engineering report delivered pursuant to clause (i) or (ii) above or clause
(iv) below shall be accompanied by a certificate, executed by a Responsible Officer of the
Borrower in the form of Exhibit I attached hereto, which (A) sets forth the
Mortgaged Property Value, as set forth in such engineering report and (B) either (y)
demonstrates and certifies that such Mortgaged Property Value equals or exceeds 80% of the
Oil and Gas Property Value as set forth in such engineering report or (z) demonstrates and
certifies the amount by which such Mortgaged Property Value is less than 80% of such Oil and
Gas Property Value and agrees that the Borrower shall take all actions required under
Section 5.11 hereof within the period required by such Section.




     (iv) (A) At least 10 days prior to the consummation of any sale, lease, transfer, or
other disposition, whether or not in the ordinary course of business, by the Borrower or any
Guarantor of any Mortgaged Property for which the value of the future net income attributed
thereto in the most recently delivered engineering report (individually or on a cumulative
basis with all sales of Mortgaged Properties consummated since the date of such report)
comprised in excess of 5% of the Mortgaged Property Value as set forth in such report, (B)
at least 10 days prior to the consummation of any acquisition by the Borrower or any
Guarantor of any Oil and Gas Property for which the value of the future



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net income attributed thereto in the engineering reports obtained in connection with
such acquisition (individually or on a cumulative basis with all acquisitions of Oil and Gas
Properties consummated since the date of such report) comprises in excess of 5% of the Oil
and Gas Property Value as set forth in the engineering report most recently delivered under
this Agreement, and (C) no later than 10 days following the written request of the Agent
(provided that, so long as no Event of Default exists, the Agent shall not make more
than 2 such requests in any calendar year), the Borrower shall provide (y) an updated
internal engineering report, current as of the end of the month then most recently ended for
which production data is available and in form and substance satisfactory to the Agent,
setting forth the information required by clause (ii) above for internal engineering reports
and (z) a certificate as required by clause (iii) above which, in the case of any
disposition of any Mortgaged Property or acquisition of any Oil and Gas Property, shall make
the required calculation giving pro forma effect to such transaction (including, in the case
of any disposition of any Mortgaged Property, the inclusion of any additional Oil and Gas
Properties mortgaged by the Borrower or the Guarantors pursuant to Section
6.2(b)(ii) prior to or concurrently with such disposition).




     (v) The Agent and the Banks acknowledge that the Oil and Gas Reserve Reports contain
certain proprietary information including geological and geophysical data, maps, models, and
interpretations necessary for determining the Borrowing Base and the creditworthiness of the
Borrower and the Guarantors. The Agent and the Banks agree to maintain the confidentiality
of such information except (A) as required by law and (B) that the Agent and the Banks may
share such information with potential transferees of their interests under this Agreement if
such transferees agree to maintain the confidentiality of such information.



     (d) Defaults. As soon as possible and in any event within five days after the
occurrence of each Default known to a Responsible Officer of the Borrower or any of its
Subsidiaries which is continuing on the date of such statement, a statement of the Chief Financial
Officer of the Borrower setting forth the details of such Default and the actions which the
Borrower has taken and proposes to take with respect thereto;



     (e) Securities Law Filings. Except as provided in paragraphs (a) and (b) above,
promptly and in any event within 15 days after the sending or filing thereof, copies of all proxy
material, reports and other information which the Borrower or any of its Subsidiary sends to or
files with the United States Securities and Exchange Commission or sends to any shareholder of the
Borrower;



     (f) Termination Events. As soon as possible and in any event (i) within 30 days after
the Borrower or any member of the Controlled Group knows or has reason to know that any Termination
Event described in clause (a) of the definition of Termination Event with respect to any Plan has
occurred, and (ii) within 10 days after the Borrower or any member of the Controlled Group knows or
has reason to know that any other Termination Event with respect to any Plan has occurred, a
statement of the Chief Financial Officer of the Borrower describing such Termination Event and the
action, if any, which the Borrower or such member proposes to take with respect thereto;



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     (g) Termination of Plans. Promptly and in any event within five Business Days after
receipt thereof by the Borrower or any member of the Controlled Group from the PBGC, copies of each
notice received by the Borrower or any such member of the Controlled Group of the PBGC’s intention
to terminate any Plan or to have a trustee appointed to administer any Plan;



     (h) Other ERISA Notices. Promptly and in any event within five Business Days after
receipt thereof by the Borrower or any member of the Controlled Group from a Multiemployer Plan
sponsor, a copy of each notice received by the Borrower or any member of the Controlled Group
concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA;



     (i) Environmental Notices. Promptly upon the receipt thereof by the Borrower or any
of its Subsidiaries, a copy of any form of notice, investigation, summons or citation received from
the EPA, or any other Governmental Authority, concerning (i) violations or alleged violations of
Environmental Laws, which seeks to impose liability on the Borrower or any of its Subsidiaries or
in relation to their respective Oil and Gas Properties in excess of $2,500,000, (ii) any action or
omission on the part of the Borrower or any of its present or former Subsidiaries in connection
with Hazardous Waste or a Release of Hazardous Substances which could reasonably result in the
imposition of liability on the Borrower or any of its Subsidiaries or in relation to their
respective Oil and Gas Properties in excess of $2,500,000, including without limitation any notice
of potential responsibility under CERCLA, or (iii) concerning the filing of a Lien upon, against or
in connection with the Borrower, its present or former Subsidiaries, or any of their leased or
owned Property, wherever located, pursuant to Environmental Laws;



     (j) Other Governmental Notices. Promptly and in any event within five Business Days
after receipt thereof by the Borrower or any Subsidiary, a copy of (i) any notice, summons,
citation, or proceeding seeking to modify in any material respect, revoke, or suspend any material
contract, license, permit, or agreement with any Governmental Authority (including material
Environmental Permits) and (ii) any other material notice from any Governmental Authority;



     (k) Material Changes. Prompt written notice of any condition or event of which the
Borrower has knowledge, which condition or event has resulted or may reasonably be expected to
result in a Material Adverse Change or;



     (l) Disputes, Etc. Prompt written notice of any claims, proceedings, or disputes, or
to the knowledge of the Borrower threatened, or affecting the Borrower, or any of its Subsidiaries
which could reasonably be expected to cause a Material Adverse Change, or any material labor
controversy of which the Borrower or any of its Subsidiaries has knowledge resulting in or
reasonably considered to be likely to result in a strike against the Borrower or any of its
Subsidiaries; and



     (m) Other Information. Such other information respecting the business or Properties,
or the condition or operations, financial or otherwise, of the Borrower, or any of its
Subsidiaries, as any Bank through the Agent may from time to time reasonably request. The Agent
agrees to provide the Banks with copies of any material notices and information delivered solely to
the Agent pursuant to the terms of this Agreement.



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     (n) Notices regarding Oil and Gas Properties. Prompt, but in any event at least 10
days prior to the consummation thereof, written notice of (i) any sale, lease, transfer, or other
disposition, whether or not in the ordinary course of business, by the Borrower or any Guarantor of
any Mortgaged Property and (ii) any acquisition by the Borrower or any Guarantor of any Oil and Gas
Property for which the value of the future net income attributed thereto in the engineering reports
obtained in connection with such acquisition (individually or on a cumulative basis with all
acquisitions of Oil and Gas Properties consummated since the date of such report) comprises in
excess of 5% of the Oil and Gas Property Value as set forth in the engineering report most recently
delivered under this Agreement.



     (o) Designation of Public Information. The Borrower hereby acknowledges that (a) Agent
and/or the Arranger will make available to the Banks materials and/or information provided by or on
behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the
Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and
(b) certain of the Banks (each, a “Public Bank”) may have personnel who do not wish to
receive material non-public information with respect to the Borrower or its Affiliates, or the
respective securities of any of the foregoing, and who may be engaged in investment and other
market-related activities with respect to such Persons’ securities. The Borrower hereby agrees
that (w) all Borrower Materials that are to be made available to Public Banks shall be clearly and
conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear
prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower
shall be deemed to have authorized the Agent, the Arranger, the Issuing Bank and the Banks to treat
such Borrower Materials as not containing any material non-public information with respect to the
Borrower or its securities for purposes of United States Federal and state securities laws; (y) all
Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the
Platform designated “Public Investor”; and (z) the Agent and the Arrangers shall be entitled to
treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a
portion of the Platform not designated “Public Investor”. Notwithstanding the foregoing, the
Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC” unless and until the
Agent (1) has been notified in writing by any Bank that it is a Public Bank or has received notice
through the Platform that any Bank is a Public Bank and (2) has given notice to the Borrower that
any Bank is a Public Bank.



     Section 5.7. Maintenance of Property. Borrower shall, and shall cause each of its
Subsidiaries to, maintain their material Properties used or to be used in the continuing operations
of the Borrower and its Subsidiaries in all material respects in good repair, working order, and
condition; and shall abstain, and cause each of its Subsidiaries to abstain from, and not knowingly
or willfully permit the commission of waste or other injury, destruction, or loss of natural
resources, or the occurrence of pollution, contamination, or any other condition in, on or about
the owned or operated property involving the Environment that could reasonably be expected to
result in Response activities the costs of which would result in a Material Adverse Change.



     Section 5.8. New Subsidiaries. Prior to the creation or acquisition of any Material
Subsidiary after the date of this Agreement or if an existing Subsidiary becomes a Material
Subsidiary after the date of this Agreement, the Borrower shall give written notice of such new
Material Subsidiary to the Agent. Within 15 days after such creation or acquisition or such



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Subsidiary’s becoming a Material Subsidiary, the Borrower shall cause (a) such Subsidiary to
execute and deliver to the Agent a Guaranty (or joinder to an existing Guaranty) with such changes
as the Agent may reasonably request, (b) such Subsidiary to execute and deliver to the Agent a
Security Agreement (or joinder to an existing Security Agreement) with such changes as the Agent
may reasonably request, (c) if such Subsidiary holds Oil and Gas Properties, and if the Mortgaged
Property Value as set forth in the certificate of such value delivered in connection with the most
recently delivered engineering report is less than 80% of the Oil and Gas Property Value (after
giving effect to such New Subsidiary’s Oil and Gas Properties), such Subsidiary to execute and
deliver to the Agent a Mortgage or Mortgages granting an Acceptable Security Interest in such Oil
and Gas Properties, (d) each equity holder of such Subsidiary to execute and deliver a supplement
or joinder to its Security Agreement evidencing its pledge of the equity of such Subsidiary, (e)
such Subsidiary and such equity holders to deliver to the Agent evidence of corporate authority to
enter into such documentation as the Agent may reasonably request, including, without limitation,
if requested by Agent, a legal opinion regarding the enforceability of such documentation, and (f)
such Subsidiary and such equity holders deliver to the Agent such other documentation, or authorize
Agent to take such other action, as is reasonably requested by Agent.



     Section 5.9. Maintenance of Books and Records. The Borrower shall, and shall cause
its Material Subsidiaries to, (a) maintain proper books of record and account, in which full, true,
and correct entries in conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Borrower or such Subsidiary, as
the case may be, and (b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory jurisdiction over the
Borrower or such Subsidiary, as the case may be.



     Section 5.10. Use of Proceeds. The Borrower shall, and shall cause its Subsidiaries
to, use all Advances and Letters of Credit (a) to partially finance the cash portion of the
purchase price for the Bois d’Arc Merger, (b) to pay off Debt outstanding under the Target’s senior
credit facility and replace letters of credit outstanding under such facility with, or deem them to
be, Letters of Credit, (c) to pay costs and expenses related to the Mergers and the credit facility
evidenced by this Agreement, and (d) for working capital, capital expenditures, and general
corporate purposes of the Borrower and its Subsidiaries (including without limitation to finance
the acquisition of Oil and Gas Properties).



     Section 5.11. Agreement to Mortgage; Further Assurances.



     (a) If any certificate delivered pursuant to Section 5.6(c)(iii) or (iv)
demonstrates that the Mortgaged Property Value as set forth in the related engineering report is
less than 80% of the Oil and Gas Property Value as set forth in such report, the Borrower shall, or
shall cause the Guarantors to (i) promptly, but in any event within 60 days of the delivery of such
certificate, grant to the Agent an Acceptable Security Interest in (A) additional Oil and Gas
Properties of the Borrower or the Guarantors as necessary to cause the Mortgaged Property Value to
equal or exceed 80% of the Oil and Gas Property Value, together with all related equipment and
(B) the Borrower’s and the Guarantors’ contracts related to such additional Mortgaged Properties
(unless the granting of a security interest in any such contract requires the consent of the
applicable counterparty, in which case the Borrower or applicable Guarantor shall grant such
security



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interest upon receipt of such consent), and (ii) promptly, but in any event within 90 days of
the delivery of such certificate (A) perform such title review, title reports (provided that no
title opinions shall be required), and title clean-up as are reasonably requested by the Agent with
respect to such additional Mortgaged Properties, (B) use commercially reasonable efforts to obtain
consents from contract counterparties with respect to each such additional Mortgaged Contract that
is material to (y) the Credit Parties’ business or financial condition or (z) the operation and
ownership of the additional Mortgaged Property to which it relates (including without limitation
production, transportation, and marketing of oil and gas produced therefrom), in each case, to the
extent such material Mortgaged Contract prohibits or restricts assignment of the applicable Credit
Party’s rights thereunder to the Agent, unless otherwise agreed by Agent and the Majority Banks,
and (C) take such other actions, approve such other filings, provide such opinions of counsel, and
execute and deliver such other documents as are reasonably requested by the Agent in connection
with the foregoing.



     (b) The Credit Parties shall from time to time execute and deliver, or cause to be executed
and delivered, such additional instruments, certificates or documents, and take such actions, as
the Agent may reasonably request for the purposes of implementing or effectuating the provisions of
this Agreement and the other Credit Documents, or of more fully perfecting or renewing the rights
of the Agent and the Banks with respect to the Collateral (or with respect to any additions thereto
or replacements or proceeds thereof or with respect to any other property or assets hereafter
acquired by any Credit Party which may be part of the Collateral) pursuant hereto or thereto,
including without limitation using commercially reasonable efforts to obtain consents from contract
counterparties with respect to any future Mortgaged Contract that is material to (i) the Credit
Parties’ business or financial condition or (ii) the operation and ownership of the Mortgaged
Property to which it relates (including without limitation production, transportation, and
marketing of oil and gas produced therefrom), in each case, to the extent such material Mortgaged
Contract prohibits or restricts assignment of the applicable Credit Party’s rights thereunder to
the Agent, unless otherwise agreed by Agent and the Majority Banks. Upon the exercise by the Agent
or any Bank of any power, right, privilege or remedy pursuant to this Agreement or the other Credit
Documents which requires any consent, approval, recording, qualification or authorization of any
Governmental Authority, each Credit Party will execute and deliver, or will cause the execution and
delivery of, all applications, certifications, instruments and other documents and papers that the
Agent or such Bank may be required to obtain from the Borrower or any of its Subsidiaries for such
governmental consent, approval, recording, qualification or authorization.



     Section 5.12. Title Information and Cure.



     (a) Within 60 days after the delivery to Agent and the Banks of each Oil and Gas Reserve
Report required by Section 5.6, the Borrower shall deliver title information (provided that
no title opinions shall be required) in form and substance reasonably acceptable to Agent covering
enough of the Oil and Gas Properties evaluated by such Oil and Gas Reserve Report that were not
included in the immediately preceding Oil and Gas Reserve Report, so that Agent shall have
received, together with title information previously delivered to Agent, reasonably satisfactory
title information on at least 80% of the Oil and Gas Property Value.




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     (b) Within 60 days after notice from Agent that title defects or exceptions (including defects
or exceptions as to priority, but excluding Permitted Borrowing Base Liens) exist with respect to
any Oil and Gas Properties, the Borrower shall either (i) cure any such title defects or
exceptions, (ii) substitute acceptable Mortgaged Properties having an equivalent or greater value
with no title defects or exceptions other than Permitted Borrowing Base Liens or (iii) deliver
title information (provided that no title opinions shall be required) in form and substance
acceptable to Agent so that Agent shall have received, together with title information previously
delivered to Agent, satisfactory title information on at least 80% of the Oil and Gas Property
Value.



     (c) If Borrower is unable to cure any title defect requested by Agent to be cured within the
60-day period referred to in subsection (b) above or Borrower does not comply with the requirements
to provide acceptable title information covering 80% of the Oil and Gas Property Value in
accordance with subsection (b) above, such failure shall not be an Event of Default, but instead
Agent shall have the right to exercise the following remedy in its sole discretion from time to
time while such condition persists, and any failure to so exercise this remedy at any such time
shall not be a waiver as to future exercise of the remedy by Agent or the Banks. To the extent that
Agent is not satisfied with title to any Mortgaged Property after the 60-day period has elapsed,
such unacceptable Mortgaged Property shall not count towards the 80% requirement, and Agent may
send a notice to Borrower and the Banks that the then outstanding Borrowing Base shall be reduced
by 50% of the value given to such unacceptable Mortgaged Property in the most recently delivered
Oil and Gas Reserve Report.



     Section 5.13. Post-Closing Requirements.



     (a) No later than 45 days after the Effective Date, or such later date as shall be agreed to
by the Agent in its sole discretion, the Borrower shall deliver to the Agent title reports
regarding that portion of the Borrowing Base Assets which results in evidence of title satisfactory
to Agent and its counsel covering Borrowing Base Assets representing not less than 80% of the Oil
and Gas Property Value, and such title reports shall not have revealed any condition or
circumstance which would reflect that the representations and warranties contained in Section
4.17 are inaccurate in any material respect.



     (b) No later than 90 days after the Effective Date, or such later date as shall be agreed to
by the Agent in its sole discretion, the Borrower shall execute and deliver to the Agent
supplements to the Mortgages, in form and substance satisfactory to the Agent, for filing in each
jurisdiction where the Mortgages were filed, that expand Exhibit A to each such Mortgage to include
the Contracts (as defined in the Mortgages) related to the Collateral described in such Mortgage.



     (c) As soon as possible after the Effective Date (but no later than 45 days after the
Effective Date, or such later date as shall be agreed to by the Agent in its sole discretion), the
Borrower or its counsel shall file or cause to be filed such forms or documents as may be required
by the Minerals Management Service, the Louisiana State Mineral Board, or any other Governmental
Authority with respect to the Mergers and the Security Documents, in form and substance
satisfactory to the Agent, in each case with the appropriate Governmental Authorities.



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     (d) As soon as possible after the Effective Date (but no later than five Business Days after
the approval of any documents described in clause (c) above by the Louisiana State Mineral Board,
or such later date as shall be agreed to by the Agent in its sole discretion), the Borrower or its
counsel shall file copies of any documents described in clause (c) above that were filed with the
Louisiana State Mineral Board, that have been approved by the Louisiana State Mineral Board, in the
real property records of the applicable parishes in which the Mortgages are filed.



ARTICLE VI




NEGATIVE COVENANTS



So long as any Note or any amount under any Credit Document shall remain unpaid, any Letter of
Credit shall remain outstanding, or any Bank shall have any Commitment, the Borrower agrees, unless
the Majority Banks otherwise consent in writing, to comply with the following covenants.




     Section 6.1. Liens, Etc. The Borrower shall not create, assume, incur, or suffer to
exist, or permit any of its Subsidiaries to create, assume, incur, or suffer to exist, any Lien on
or in respect of any of its Property whether now owned or hereafter acquired, or assign any right
to receive income, except that the Borrower and its Subsidiaries may create, incur, assume, or
suffer to exist:



     (a) Liens securing the Obligations;



     (b) Liens specified in the attached Schedule 6.1 on the Property owned by the Borrower
and its Subsidiaries which is specified therein securing only the obligations disclosed to be
secured by such Liens therein;



     (c) Liens securing indebtedness permitted under Section 6.2(c), provided that each
such Lien encumbers only the property acquired in connection with the creation of any such purchase
money indebtedness;



     (d) Liens for taxes, assessments, or other governmental charges or levies that (i) are not yet
due or (ii) provided foreclosure, distraint, sale, or other similar proceedings shall not have been
initiated, are being contested in good faith by appropriate proceedings, and for which such reserve
as may be required by GAAP shall have been made;



     (e) Liens in favor of vendors, carriers, warehousemen, repairmen, mechanics, workmen,
materialmen, construction, or similar Liens arising by operation of law in the ordinary course of
business in respect of obligations that are not yet due or that are being contested in good faith
by appropriate proceedings, provided such reserve as may be required by GAAP shall have been made
therefor;



     (f) Liens to operators and non-operators under joint operating agreements arising in the
ordinary course of the business of the Borrower or the relevant Subsidiary to secure amounts owing,
which amounts are not yet due or are being contested in good faith by appropriate proceedings, if
such reserve as may be required by GAAP shall have been made therefor;



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     (g) easements, rights-of-way, restrictions, and other similar encumbrances, and minor defects
in the chain of title that are customarily accepted in the oil and gas financing industry, none of
which interfere with the ordinary conduct of the business of Borrower or the relevant Subsidiary or
materially detract from the value or use of the Property to which they apply;



     (h) Liens of record under terms and provisions of the leases, unit agreements, assignments,
and other transfer of title documents in the chain of title under which the Borrower or the
relevant Subsidiary acquired the Property, which have been disclosed to the Agent;



     (i) Liens to secure plugging and abandonment obligations;



     (j) Liens to secure the performance of bids, trade contracts and leases (other than Debt),
statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business, in an aggregate amount not to exceed
$10,000,000;



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



     (l) Liens securing judgments for the payment of money not constituting an Event of Default
under Section 7.1(f).



     Section 6.2. Debts, Guaranties, and Other Obligations. The Borrower shall not, and
shall not permit any of its Subsidiaries to, create, assume, suffer to exist, or in any manner
become or be liable in respect of, any Debt except:



     (a) Debt of the Borrower and its Subsidiaries under the Credit Documents;



     (b) Debt of the Borrower and its Subsidiaries existing on the date hereof and disclosed in the
attached Schedule 6.2 and any extensions, rearrangements, modifications, renewal, and
refinancings thereof which do not increase the principal amount thereof or the interest rate
charged thereon above a market rate of interest;



     (c) Debt (including Capital Leases and purchase money obligations) relating to Property or
assets acquired by the Borrower after the date of this Agreement not to exceed $25,000,000
(excluding gas balancing liabilities assumed in the acquisition of Oil and Gas Properties) at any
time outstanding;



     (d) Debt for borrowed money owed by any Subsidiary of the Borrower to the Borrower or to any
other Credit Party;



     (e) Debt in the form of obligations for the deferred purchase price of property or services
incurred in the ordinary course of business which are not yet due and payable or are being
contested in good faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP have been established; and



     (f) Any guarantee of any other Debt permitted to be incurred hereunder.



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     Section 6.3. Agreements Restricting Liens and Distributions. The Borrower shall not,
nor shall it permit any of its Subsidiaries to, enter into any agreement (other than a Credit
Document, the 2001 Indenture and the 2004 Indenture) which (a) except with respect to specific
Property encumbered to secure payment of Debt related to such Property, imposes restrictions upon
the creation or assumption of any Lien upon its Properties, revenues or assets, whether now owned
or hereafter acquired or (b) limits Restricted Payments to or any advance by any of the Borrower’s
Subsidiaries to the Borrower; provided that the 2001 Indenture and the 2004 Indenture shall
not limit the creation or existence of any Lien securing the Obligations or contain limitations on
Restricted Payments made by any Subsidiary to the Borrower or any other Subsidiary that are more
restrictive than the limitations in Section 6.5 of this Agreement.



     Section 6.4. Merger or Consolidation; Asset Sales; Farm-Outs. The Borrower shall not,
and shall not permit any of its Subsidiaries to:



     (a) merge or consolidate with or into any other Person, except that (i) the Borrower may merge
with any of its wholly owned Subsidiaries and any of the Borrower’s wholly owned Subsidiaries may
merge with another of the Borrower’s wholly owned Subsidiaries, (ii) in connection with a sale
permitted pursuant to Section 6.4(b)(i) of a Subsidiary of Borrower that (A) is not a
Material Subsidiary and (B) does not own Borrowing Base Assets, such Subsidiary may merge with a
Person that is not a wholly owned Subsidiary of Borrower, (iii) the Borrower and its Subsidiaries
may consummate the Effective Date Mergers, and (iv) the Borrower may consummate the Bois d’Arc
Merger; provided that, in the case of the mergers pursuant to clauses (i), (ii), or (iii)
above, (x) immediately after giving effect to any such proposed transaction no Default would exist,
(y) in the case of any such merger to which the Borrower is a party, the Borrower is the surviving
entity, and (z) in the case of any such merger between a Guarantor and a Subsidiary that is not a
Guarantor, the Guarantor is the surviving entity;



     (b) sell, lease, transfer, or otherwise dispose of any of its Property (including pursuant to
a farm-out, participation, or other agreement that would reduce the Borrower’s or such Subsidiary’s
interest in any Property), except for (i) dispositions of assets that are not Borrowing Base Assets
or Mortgaged Properties either (y) in the ordinary course of business or (z) outside of the
ordinary course of business in an aggregate amount for any fiscal year not to exceed $50,000,000,
and (ii) dispositions, whether or not in the ordinary course of business, of Borrowing Base Assets,
including Mortgaged Properties, of which the Borrower has provided the Agent 10 days’ advance
notice, provided that (y) such proposed dispositions will not cause the aggregate outstanding
amount of the Advances plus the Letter of Credit Exposure to exceed the Borrowing Base, after
giving effect to any reduction of the Borrowing Base that would be required under Section
2.2(e) in connection with such sale and (z) in the case of any disposition of a Mortgaged
Property, at the time of such disposition the Mortgaged Property Value is not less than 80% of the
Oil and Gas Property Value, as set forth in the engineering report most recently delivered pursuant
to Section 5.6(c), after giving effect to (1) any reduction of such present value (which
shall be the present value given to such assets in such most recent engineering report, including
the applicable stated discount utilized therein, in connection with such disposition) on a
cumulative basis with all sales of Mortgaged Properties since the date of such report and (2) the
aggregate present value, as set forth in such report or otherwise reasonably determined by the
Agent and discounted at the applicable rate stated in such report, of any additional Oil and Gas
Properties mortgaged by the Borrower or the Guarantors in



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accordance with the requirements of Section 5.11 prior to or concurrently with such
disposition (on a cumulative basis with all mortgages of additional Oil and Gas Properties since
the date of such report); or



     (c) enter into any contract that would obligate the Borrower or such Subsidiary to sell,
lease, transfer, or otherwise dispose of any interest in any of its Property pursuant to a
farm-out, participation, or other similar agreement, unless such sale, lease, transfer, or other
disposal would be permitted by Section 6.4(b) above.



     Section 6.5. Restricted Payments. The Borrower shall not, and shall not permit any of
its Subsidiaries to, make or pay any Restricted Payment or make any prepayment, redemption, or
defeasance of Debt (other than Debt under the Credit Documents) other than the following:



     (a) Restricted Payments from a Subsidiary of the Borrower to the Borrower;



     (b) the repurchase or redemption, in one or more transactions, of shares of Borrower’s common
stock, or a one-time payment of a special dividend, in an aggregate amount during the period from
June 30, 2007 until the Maturity Date not to exceed $100,000,000, so long as (i) at the time of any
such repurchase, redemption or special dividend, and immediately after giving effect thereto, the
Borrowing Base is at least $50,000,000 greater than the sum of the outstanding principal amount of
the Advances plus the Letter of Credit Exposure and (ii) no Default exists at the time of any such
repurchase, redemption or special dividend, or would be caused thereby;



     (c) any prepayment, redemption, or defeasance of Debt, so long as (i) at the time of such
prepayment, redemption, or defeasance, and immediately after giving effect thereto, the sum of the
outstanding principal amount of the Advances plus the Letter of Credit Exposure does not exceed 90%
of the Borrowing Base in effect at such time and (ii) no Default exists at the time of such
prepayment, redemption, or defeasance or would be caused thereby; and



     (d) Restricted Payments required to be made to consummate the Bois d’Arc Merger in accordance
with the Bois d’Arc Merger Agreement.



     Section 6.6. Investments. The Borrower shall not, and shall not permit any of its
Subsidiaries to, make or permit to exist any loans, advances, or capital contributions to, or make
any investment in, or purchase or commit to purchase any stock or other securities or evidences of
indebtedness of or interests in any Person, except:



     (a) Liquid Investments;



     (b) trade and customer accounts receivable which are for goods furnished or services rendered
in the ordinary course of business and are payable in accordance with customary trade terms;



     (c) ordinary course of business contributions, loans, or advances to, or investments in, (i) a
directly or indirectly wholly owned Subsidiary of the Borrower, or (ii) the Borrower;



     (d) oil and gas farm-ins, oil and gas development joint ventures and limited partnerships, and
similar transactions, in each case in the ordinary course of business;



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     (e) investments not covered by clauses (a) through (d) above in an aggregate outstanding
amount not to exceed $2,000,000;



     (f) investments necessary to consummate the Bois d’Arc Merger in accordance with the Bois
d’Arc Merger Agreement; and



     (g) investments in the equity of wholly owned Subsidiaries of the Borrower made in connection
with the Effective Date Mergers.



     Section 6.7. Limitation on Speculative Hedging. The Borrower shall not, and shall not
permit any of its Subsidiaries to, purchase, assume, or hold a speculative position in any
commodities market or futures market. Borrower may continue its current production hedging program
policy, including swaps, puts, and collars, to reduce price risk on quantities less than its total
production.



     Section 6.8. Affiliate Transactions. Except as expressly permitted elsewhere in this
Agreement or otherwise approved in writing by the Agent, and except as described in
Schedule 6.8, the Borrower shall not, and shall not permit any of its Subsidiaries to,
make, directly or indirectly: (a) any investment in any Affiliate (other than a Credit Party);
(b) any transfer, sale, lease, assignment, or other disposal of any assets to any such Affiliate or
any purchase or acquisition of assets from any such Affiliate (other than a Credit Party); or
(c) any arrangement or other transaction directly or indirectly with or for the benefit of any such
Affiliate (other than a Credit Party) (including without limitation guaranties and assumptions of
obligations of an Affiliate) ; provided that the Borrower and its Subsidiaries may enter
into any arrangement or other transaction with any such Affiliate providing for the leasing of
property, the rendering or receipt of services or the purchase or sale of inventory and other
assets in the ordinary course of business if the monetary or business consideration arising
therefrom would be substantially as advantageous to the Borrower and its Subsidiaries as the
monetary or business consideration which it would obtain in a comparable arm’s length transaction
with a Person not such an Affiliate.



     Section 6.9. Compliance with ERISA. The Borrower shall not, and shall not permit any
of its Subsidiaries to, (a) terminate, or permit any member of its Controlled Group to terminate,
any Plan so as to result in any material (in the opinion of the Majority Banks) liability of the
Borrower or any of member of its Controlled Group to the PBGC or (b) permit to exist any occurrence
of any Reportable Event (as defined in Title IV of ERISA), or any other event or condition, which
presents a material (in the opinion of the Majority Banks) risk of such a termination by the PBGC
of any Plan.



     Section 6.10. Maintenance of Ownership of Subsidiaries. Except as permitted by
Section 6.4, the Borrower shall not, and shall not permit any of its Subsidiaries to, sell
or otherwise dispose of any shares of capital stock of any of the Borrower’s Subsidiaries or permit
any Subsidiary to issue, sell, or otherwise dispose of any shares of its capital stock or the
capital stock of any of the Borrower’s Subsidiaries.



     Section 6.11. Sale-and-Leaseback. The Borrower shall not, nor shall it permit any of
its Subsidiaries to, sell or transfer to a Person (other than the Borrower or a Subsidiary of the



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Borrower) any property, whether now owned or hereafter acquired, if at the time or thereafter
the Borrower or a Subsidiary of the Borrower shall lease as lessee such property or any part
thereof or other property which the Borrower or a Subsidiary of the Borrower intends to use for
substantially the same purpose as the property sold or transferred except such transactions (a)
incident to transactions permitted by Section 6.4(b), and (b) from which arise lease
obligations and other rental obligations not exceeding $3,000,000 during any fiscal year of the
Borrower.



     Section 6.12. Change of Business. The Borrower shall not, nor shall it permit any of
its Subsidiaries to, materially change the character of their business as presently and normally
conducted or engage in any type of business not related to their business as presently and normally
conducted (in each case, after giving effect to the Bois d’Arc Merger).



     Section 6.13. Debt to EBITDA Ratio. The Borrower shall not permit the ratio, as of
the last day of any fiscal quarter of Borrower, of (a) Borrower’s consolidated Debt on such date to
(b) Borrower’s consolidated EBITDA for the four fiscal quarters most recently ended, to be greater
than 3.25 to 1.00.



     Section 6.14. Interest Coverage Ratio. The Borrower shall not permit the ratio, as of
the last day of any fiscal quarter of Borrower, of (a) its consolidated EBITDA for the four fiscal
quarters most recently ended to (b) its consolidated Net Interest Expense for the four fiscal
quarters most recently ended, to be less than 3.00 to 1.00.



     Section 6.15. Subordinated Debt. The Borrower (a) shall not violate the subordination
terms governing any Debt which is by its terms subordinated to the Obligations and (b) shall not
amend the subordination terms governing any such Debt without prior written consent of the Majority
Banks.



ARTICLE VII




REMEDIES




     Section 7.1. Events of Default. The occurrence of any of the following events shall
constitute an “Event of Default” under any Credit Document:



     (a) Payment. The  Borrower shall fail to pay (i) any principal of any Advance or any
reimbursement obligation in respect of any Letter of Credit Obligation when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof
or otherwise, or (ii) any interest on any Advance or any fee or any other amount (other than an
amount referred to in clause (i) above) payable under any Credit Document, when and as the same
shall become due and payable, and such failure shall continue unremedied for a period of five
Business Days.



     (b) Representation and Warranties. Any representation or warranty made or deemed to
be made (i) by the Borrower in this Agreement or in any other Credit Document, (ii) by the Borrower
(or any of its officers) in connection with this Agreement or any other Credit Document, or
(iii) by any Subsidiary of the Borrower in any Credit Document shall prove to have been incorrect
in any material respect when made or deemed to be made;



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     (c) Covenant Breaches.



          (i) The Borrower shall fail to perform or observe any covenant contained in
Section 5.2, 5.3, 5.5, 5.6 (except for clauses (i) and (j)
thereof), 5.8 or 5.13 or Article VI of this Agreement,




          (ii) any Guarantor shall fail to perform or observe any covenant contained in its
Guaranty, or




          (iii) any Credit Party shall fail to perform or observe any other term or covenant set
forth in this Agreement or in any other Credit Document which is not covered by clause (i)
or (ii) above, or any other provision of this Section 7.1, if such failure shall
remain unremedied for 30 days after the earlier of written notice of such default shall have
been given to such Person by the Agent or any Bank or such Person’s actual knowledge of such
default;




     (d) Cross-Defaults. (i) The Borrower or any its Subsidiaries shall fail to pay any
principal of or premium or interest on its Debt or pay any net hedging obligation which is
outstanding in a principal amount of at least $2,500,000 individually or when aggregated with all
such Debt or net hedging obligations of the Borrower or its Subsidiaries so in default (but
excluding Debt evidenced by the Notes) when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or instrument relating to
such Debt or such hedging obligations; (ii) any other event shall occur or condition shall exist
under any agreement or instrument relating to Debt which is outstanding in a principal amount of at
least $2,500,000 individually or when aggregated with all such Debt of the Borrower and its
Subsidiaries so in default, and shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or (iii) any such Debt shall be declared to
be due and payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or (iv) there occurs under any Swap Contract an
Early Termination Date (as defined in such Swap Contract, if applicable), or such Swap Contract is
otherwise terminated prior to the scheduled term of the applicable transaction, in each case,
resulting from (A) any event of default under such Swap Contract as to which the Borrower or any
Subsidiary is the defaulting party or (B) any Termination Event (as defined in such Swap Contract,
if applicable, or the equivalent defined term) under such Swap Contract as to which the Borrower or
any Subsidiary is an Affected Party (as defined in such Swap Contract, if applicable, or the
equivalent defined term) and, in either event, the net hedging obligation owed by the Borrower or
such Subsidiary as a result thereof is greater than $2,500,000;



     (e) Insolvency. The Borrower or any of its Subsidiaries shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay its debts generally,
or shall make a general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower or any of its Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or
the



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appointment of a receiver, trustee or other similar official for it or for any substantial
part of its property and, in the case of any such proceeding instituted against the Borrower or any
such Subsidiary, either such proceeding shall remain undismissed for a period of 30 days or any of
the actions sought in such proceeding shall occur; or the Borrower or any of its Subsidiaries shall
take any corporate action to authorize any of the actions set forth above in this paragraph (e);



     (f) Judgments. Any judgment or order for the payment of money in excess of $2,500,000
(not fully covered by insurance) shall be rendered against the Borrower or any of its Subsidiaries
and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment
or order or (ii) there shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect;



     (g) Termination Events. Any Termination Event with respect to a Plan shall have
occurred, and, 30 days after notice thereof shall have been given to the Borrower by the Agent,
(i) such Termination Event shall not have been corrected and (ii) the then present value of such
Plan’s vested benefits exceeds the then current value of assets accumulated in such Plan by more
than the amount of $2,500,000 (or in the case of a Termination Event involving the withdrawal of a
“substantial employer” (as defined in Section 4001(a)(2) of ERISA), the withdrawing employer’s
proportionate share of such excess shall exceed such amount);



     (h) Plan Withdrawals. The Borrower or any member of the Controlled Group as employer
under a Multiemployer Plan shall have made a complete or partial withdrawal from such Multiemployer
Plan and the plan sponsor of such Multiemployer Plan shall have notified such withdrawing employer
that such employer has incurred a withdrawal liability in an annual amount exceeding $2,500,000;



     (i) Borrowing Base. Any failure to cure any Borrowing Base deficiency in accordance
with Section 2.4, including any failure to make payments to cure the Borrowing Base
deficiency within the time period specified by and in accordance with Section 2.4(b);



     (j) Credit Documents; Security Interests. Any provision of any Credit Document shall
for any reason cease to be valid and binding on the applicable Credit Parties or any such Credit
Party. Any Security Document shall for any reason (other than as permitted pursuant to the terms
thereof or hereof) cease to create a valid and perfected lien on and security interest in any
material portion of the Collateral or any Credit Party shall so state in writing; or



     (k) Change of Control. (i) As a result of one or more transactions after the date of
this Agreement, any “person” or “group” of persons shall have “beneficial ownership” of more than
35% of the outstanding common stock of the Borrower (within the meaning of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations
thereunder), provided that the relationships among the officers and directors of the
Borrower and among the respective shareholders of the Borrower on the date of this Agreement shall
not be deemed to constitute all or any combination of them as a “group” or (ii) during any period
of 12 consecutive months, beginning with and after the date of this Agreement, individuals who at
the beginning of such 12-month period were directors of the Borrower or who were nominated for
election by a majority of the persons who were directors of



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the Borrower at the beginning of such period cease for any reason to constitute a majority of
the board of directors of the Borrower at any time during such period.



     Section 7.2. Optional Acceleration of Maturity. If any Event of Default (other than
an Event of Default pursuant to paragraph (e) of Section 7.1) shall have occurred and be
continuing, then, and in any such event,



     (a) the Agent (i) shall at the request, or may with the consent, of the Majority Banks, by
notice to the Borrower, declare the obligation of each Bank and the Issuing Bank to make extensions
of credit hereunder, including making Advances and issuing Letters of Credit, to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Majority Banks, by notice to the Borrower, declare all principal, interest, fees,
reimbursements, indemnifications, and all other amounts payable under this Agreement, the Notes,
and the other Credit Documents to be forthwith due and payable, whereupon all such amounts shall
become and be forthwith due and payable in full, without notice of intent to demand, demand,
presentment for payment, notice of nonpayment, protest, notice of protest, grace, notice of
dishonor, notice of intent to accelerate, notice of acceleration, and all other notices, all of
which are hereby expressly waived by the Borrower;



     (b) the Borrower shall, on demand of the Agent at the request or with the consent of the
Majority Banks, deposit with the Agent into the Cash Collateral Account an amount of cash equal to
the Letter of Credit Exposure as security for the Obligations; and



     (c) the Agent shall at the request of, or may with the consent of, the Majority Banks proceed
to enforce its rights and remedies under the Guaranties and any other Credit Document for the
ratable benefit of the Banks by appropriate proceedings.



     Section 7.3. Automatic Acceleration of Maturity. If any Event of Default pursuant to
paragraph (e) of Section 7.1 shall occur,



     (a) (i) the obligation of each Bank and the Issuing Bank to make extensions of credit
hereunder, including making Advances and issuing Letters of Credit, shall terminate, and (ii) all
principal, interest, fees, reimbursements, indemnifications, and all other amounts payable under
this Agreement, the Notes, and the other Credit Documents shall become and be forthwith due and
payable in full, without notice of intent to demand, demand, presentment for payment, notice of
nonpayment, protest, notice of protest, grace, notice of dishonor, notice of intent to accelerate,
notice of acceleration, and all other notices, all of which are hereby expressly waived by the
Borrower;



     (b) the Borrower shall deposit with the Agent into the Cash Collateral Account an amount of
cash equal to the outstanding Letter of Credit Exposure as security for the Obligations; and



     (c) the Agent shall at the request of, or may with the consent of, the Majority Banks proceed
to enforce its rights and remedies under the Guaranties and any other Credit Document for the
ratable benefit of the Banks by appropriate proceedings.




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     Section 7.4. Right of Set-off. Upon the occurrence and during the continuance of any
Event of Default, the Agent, the Issuing Bank and each Bank 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
indebtedness at any time owing by the Agent, the Issuing Bank or such Bank to or for the credit or
the account of the Borrower against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement, the Notes held by the Agent or such Bank, and the other Credit
Documents, irrespective of whether or not the Agent, the Issuing Bank or such Bank shall have made
any demand under this Agreement, such Notes, or such other Credit Documents, and although such
obligations may be unmatured. The Agent, the Issuing Bank and each Bank agrees to promptly notify
the Borrower after any such set-off and application made by the Agent, the Issuing Bank or such
Bank, provided that the failure to give such notice shall not affect the validity of such set-off
and application. The rights of the Agent, the Issuing Bank and each Bank under this Section
7.4 are in addition to any other rights and remedies (including, without limitation, other
rights of set-off) which the Agent, the Issuing Bank or such Bank may have.



     Section 7.5. Actions Under Credit Documents. Following an Event of Default, the Agent
shall at the request, or may with the consent, of the Majority Banks, take any and all actions
permitted under the other Credit Documents, including enforcing it rights under the Guaranties for
the ratable benefit of the Banks.



     Section 7.6. Non-exclusivity of Remedies. No remedy conferred upon the Agent is
intended to be exclusive of any other remedy, and each remedy shall be cumulative of all other
remedies existing by contract, at law, in equity, by statute or otherwise.



     Section 7.7. Application of Funds. After the exercise of remedies provided for above
(or after the Advances have automatically become immediately due and payable and the Letter of
Credit Obligations have automatically been required to be cash collateralized as set forth in
Section 7.3), any amounts received on account of the Obligations shall be applied by the
Agent in the following order:




     First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and disbursements of
counsel to the Agent payable to the Agent in its capacity as such;




     Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal, interest and Letter of Credit Fees)
payable to the Banks and the Issuing Bank (including fees, charges and disbursements of
counsel to the respective Banks and the Issuing Bank and amounts payable under Sections
2.11, 2.12, and 2.13), ratably among them in proportion to the
respective amounts described in this clause Second payable to them;




     Third, to payment of that portion of the Obligations constituting accrued and
unpaid Letter of Credit Fees and interest on the Advances and other Obligations, ratably
among the Banks and the Issuing Bank in proportion to the respective amounts described
in this clause Third payable to them;



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     Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Advances and Obligations with respect to Specified Swap Contracts, ratably
among the Banks, the Issuing Bank, and the holders of Obligations under Specified Swap
Contracts, in proportion to the respective amounts described in this clause Fourth
held by them;




     Fifth, to the Agent for the account of the Issuing Bank, to cash collateralize
that portion of Letter of Credit Obligations comprised of the aggregate undrawn amount of
Letters of Credit; and




     Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Borrower or as otherwise required by applicable law.


Subject to Section 2.3, amounts used to cash collateralize the aggregate undrawn amount of
Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under
such Letters of Credit as they occur. If any amount remains on deposit as cash collateral after
all Letters of Credit have either been fully drawn or expired, such remaining amount shall be
applied to the other Obligations, if any, in the order set forth above.




ARTICLE VIII




THE AGENT AND THE ISSUING BANK




     Section 8.1. Appointment and Authorization of Agent.



     (a) Each of the Banks and the Issuing Bank hereby irrevocably appoints Bank of America to act
on its behalf as the Agent hereunder and under the other Credit Documents and authorizes the Agent
to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the
terms hereof or thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the Agent, the Banks and the
Issuing Bank, and the Borrower shall not have rights as a third party beneficiary of any of such
provisions except for the Borrower’s consultation rights explicitly set forth in Section
8.6.



     (b) The Issuing Bank shall act on behalf of the Banks with respect to any Letters of Credit
issued by it and the documents associated therewith, and the Issuing Bank shall have all of the
benefits and immunities (i) provided to the Agent in this Article VIII with respect to any
acts taken or omissions suffered by the Issuing Bank in connection with Letters of Credit issued by
it or proposed to be issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term “Agent” as used in this Article
VIII and in the definition of “Agent-Related Person” included the Issuing Bank with respect to
such acts or omissions, and (ii) as additionally provided herein with respect to the Issuing Bank.



     Section 8.2. Rights as a Bank. The Person serving as the Agent hereunder shall have
the same rights and powers in its capacity as a Bank as any other Bank and may exercise the
same as though it were not the Agent and the term “Bank” or “Banks” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person serving as the
Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits



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from, lend money to, act as the financial advisor or in any other advisory capacity for and
generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Agent hereunder and without any duty to account therefor to
the Banks.



     Section 8.3. Exculpatory Provisions. The Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Credit Documents. Without
limiting the generality of the foregoing, the Agent:




     (a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;




     (b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby
or by the other Credit Documents that the Agent is required to exercise as directed in
writing by the Majority Banks (or such other number or percentage of the Banks as shall be
expressly provided for herein or in the other Credit Documents), provided that the
Agent shall not be required to take any action that, in its opinion or the opinion of its
counsel, may expose the Agent to liability or that is contrary to any Credit Document or
applicable law; and




     (c) shall not, except as expressly set forth herein and in the other Credit Documents,
have any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Affiliates that is communicated to or
obtained by the Person serving as the Agent or any of its Affiliates in any capacity.



     The Agent shall not be liable for any action taken or not taken by it (i) with the consent or
at the request of the Majority Banks (or such other number or percentage of the Banks as shall be
necessary, or as the Agent shall believe in good faith shall be necessary, under the circumstances
as provided in Article VII and Section 9.1) or (ii) in the absence of its own gross
negligence or willful misconduct. The Agent shall be deemed not to have knowledge of any Default
unless and until notice describing such Default is given to the Agent by the Borrower, a Bank or
the Issuing Bank.



     The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this Agreement or any other
Credit Document, (ii) the contents of any certificate, report or other document delivered hereunder
or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Credit Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article III or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the Agent.



     Section 8.4. Reliance by Agent. The 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



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website posting or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. The Agent also may rely upon any statement
made to it orally or by telephone and believed by it to have been made by the proper Person, and
shall not incur any liability for relying thereon. In determining compliance with any condition
hereunder to the making of an Advance, or the issuance of a Letter of Credit, that by its terms
must be fulfilled to the satisfaction of a Bank or the Issuing Bank, the Agent may presume that
such condition is satisfactory to such Bank or the Issuing Bank unless the Agent shall have
received notice to the contrary from such Bank or the Issuing Bank prior to the making of such
Advance or the issuance of such Letter of Credit. The Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in accordance with the advice of any
such counsel, accountants or experts.



     Section 8.5. Delegation of Duties. The Agent may perform any and all of its duties
and exercise its rights and powers hereunder or under any other Credit Document by or through any
one or more sub-agents appointed by the Agent. The Agent and any such sub-agent may perform any
and all of its duties and exercise its rights and powers by or through their respective Related
Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the
Related Parties of the Agent and any such sub-agent, and shall apply to their respective activities
in connection with the syndication of the credit facilities provided for herein as well as
activities as Agent.



     Section 8.6. Resignation of Agent. The Agent may at any time give notice of its
resignation to the Banks, the Issuing Bank and the Borrower. Upon receipt of any such notice of
resignation, the Majority Banks shall have the right, in consultation with the Borrower, to appoint
a successor, which shall be a bank with an office in the United States, or an Affiliate of any such
bank with an office in the United States. If no such successor shall have been so appointed by the
Majority Banks and shall have accepted such appointment within 30 days after the retiring Agent
gives notice of its resignation, then the retiring Agent may on behalf of the Banks and the Issuing
Bank, appoint a successor Agent meeting the qualifications set forth above; provided that
if the Agent shall notify the Borrower and the Banks that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in accordance with such
notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and
under the other Credit Documents (except that in the case of any collateral security held by the
Agent on behalf of the Banks or the Issuing Bank under any of the Credit Documents, the retiring
Agent shall continue to hold such collateral security until such time as a successor Agent is
appointed) and (2) all payments, communications and determinations provided to be made by, to or
through the Agent shall instead be made by or to each Bank and the Issuing Bank directly, until
such time as the Majority Banks appoint a successor Agent as provided for above in this Section.
Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of the retiring (or
retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations
hereunder or under the other Credit Documents (if not already discharged therefrom as provided
above in this Section). The fees
payable by the Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor. After the retiring
Agent’s resignation hereunder and under the other Credit Documents, the provisions of



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this Article and Section 10.04 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while the retiring Agent was acting as Agent.


Any resignation by Bank of America as Agent pursuant to this Section shall also constitute its
resignation as Issuing Bank. Upon the acceptance of a successor’s appointment as Agent hereunder,
(a) such successor shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring Issuing Bank, (b) the retiring Issuing Bank shall be discharged from all
of their respective duties and obligations hereunder or under the other Credit Documents, and (c)
the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit,
if any, outstanding at the time of such succession or make other arrangements satisfactory to the
retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with
respect to such Letters of Credit.




     Section 8.7. Non-Reliance on Agent and Other Banks. Each Bank and the Issuing Bank
acknowledges that it has, independently and without reliance upon the Agent or any other Bank or
any of their Related Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank and
the Issuing Bank also acknowledges that it will, independently and without reliance upon the Agent
or any other Bank or any of their Related Parties and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Credit Document or any related
agreement or any document furnished hereunder or thereunder.



     Section 8.8. No Other Duties, Etc. Anything herein to the contrary notwithstanding,
none of the Syndication Agents, Co-Documentation Agents, Managing Agents, Bookrunners, or Lead
Arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under
this Agreement or any of the other Credit Documents, except in its capacity, as applicable, as the
Agent, a Bank, or the Issuing Bank hereunder.



     Section 8.9. Agent May File Proofs of Claim. In case of the pendency of any
proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Credit
Party, the Agent (irrespective of whether the principal of any Advance or Letter of Credit
Obligation shall then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Agent shall have made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise:



     (a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Advances, Letter of Credit Obligations and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or advisable in order to have
the claims of the Banks, the Issuing Bank and the Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Banks, the Issuing Bank and the Agent and
their respective agents and counsel and all other amounts due the Banks, the Issuing Bank and the
Agent under Sections 2.7 and 9.4) allowed in such judicial proceeding; and



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



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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Bank and the Issuing Bank to make such
payments to the Agent and, in the event that the Agent shall consent to the making of such payments
directly to the Banks and the Issuing Bank, to pay to the Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of the Agent and its agents and counsel, and any
other amounts due the Agent under Sections 2.7 and 9.4.



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




     Section 8.10. Collateral and Guaranty Matters. The Banks and the Issuing Bank
irrevocably authorize the Agent, at its option and in its discretion,




(a) to release any Lien on any property granted to or held by the Agent under any Credit
Document (i) upon termination of the Commitments and payment in full of all Obligations
(other than contingent indemnification obligations) and the expiration or termination of all
Letters of Credit, (ii) that is sold or to be sold as part of or in connection with any sale
permitted hereunder or under any other Credit Document, or (iii) subject to Section
9.1, if approved, authorized or ratified in writing by the Majority Banks;




(b) to release any Lien on any Mortgaged Property granted to or held by the Agent under the
Mortgages, so long as (i) after giving effect to such release, the Mortgaged Property Value
shall not be less than 80% of the Oil and Gas Property Value as set forth in the most recent
Oil and Gas Reserve Report, (ii) the Borrower shall deliver to the Agent a certificate in
the form of Exhibit I hereto, which sets forth the calculation of Mortgaged Property
Value and demonstrates and certifies that such Mortgaged Property Value equals or exceeds
80% of the Oil and Gas Property Value, after giving effect to such release of Mortgaged
Property, and (iii) the Borrower identifies in writing on such certificate the Mortgaged
Properties to be released and sets forth the value attributed thereto in the most recent Oil
and Gas Reserve Report;




(c) to subordinate any Lien on any property granted to or held by the Agent under any Credit
Document to the holder of any Lien on such property that is permitted by Section
6.2(c); and




(d) to release any Guarantor from its obligations under any Guaranty if such Person ceases
to be a Subsidiary as a result of a transaction permitted hereunder.


Upon request by the Agent at any time, the Majority Banks will confirm in writing the Agent’s
authority to release or subordinate its interest in particular types or items of property, or to
release any Guarantor from its obligations under any Guaranty pursuant to this Section
8.10.




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     Section 8.11. Indemnification of Agent. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED
HEREBY ARE CONSUMMATED, THE BANKS SHALL INDEMNIFY UPON DEMAND EACH AGENT-RELATED PERSON (TO THE
EXTENT NOT REIMBURSED BY OR ON BEHALF OF BORROWER AND WITHOUT LIMITING THE OBLIGATION OF BORROWER
TO DO SO), PRO RATA (AS DETERMINED AT THE TIME INDEMNIFICATION IS SOUGHT HEREUNDER), AND HOLD
HARMLESS EACH AGENT-RELATED PERSON FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES INCURRED BY
IT; PROVIDED, HOWEVER, THAT NO BANK SHALL BE LIABLE FOR THE PAYMENT TO ANY
AGENT-RELATED PERSON OF ANY PORTION OF SUCH INDEMNIFIED LIABILITIES TO THE EXTENT DETERMINED IN A
FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH
AGENT-RELATED PERSON’S OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; PROVIDED,
HOWEVER, THAT NO ACTION TAKEN IN ACCORDANCE WITH THE DIRECTIONS OF THE MAJORITY BANKS SHALL
BE DEEMED TO CONSTITUTE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT FOR PURPOSES OF THIS SECTION.
WITHOUT LIMITATION OF THE FOREGOING, EACH BANK SHALL REIMBURSE THE AGENT UPON DEMAND FOR ITS
RATABLE SHARE (AS DETERMINED AT THE TIME INDEMNIFICATION IS SOUGHT HEREUNDER) OF ANY COSTS OR
OUT-OF-POCKET EXPENSES (INCLUDING ALL FEES, EXPENSES, AND DISBURSEMENTS OF ANY LAW FIRM OR OTHER
EXTERNAL COUNSEL AND, WITHOUT DUPLICATION, THE ALLOCATED COST OF INTERNAL LEGAL SERVICES AND ALL
EXPENSES AND DISBURSEMENTS OF INTERNAL COUNSEL) INCURRED BY THE AGENT IN CONNECTION WITH THE
PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER
THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT, OR ANY DOCUMENT CONTEMPLATED BY
OR REFERRED TO HEREIN, TO THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY OR ON
BEHALF OF THE BORROWER. THE UNDERTAKING IN THIS SECTION SHALL SURVIVE TERMINATION OF THE
COMMITMENTS, THE PAYMENT OF ALL OTHER OBLIGATIONS, AND THE RESIGNATION OF THE AGENT.



ARTICLE IX




MISCELLANEOUS




     Section 9.1. Amendments, Etc. No amendment or waiver of any provision of this
Agreement, the Notes, or any other Credit Document, nor consent to any departure by the Borrower or
any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and
signed by the Majority Banks and the Borrower, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver, or consent shall, unless in writing and signed by
all the Banks, do any of the following: (a) waive any of the conditions specified in
Section 3.1 or 3.2, (b) increase the Commitment of the Banks, (c) reduce the
principal of, or interest on, the Notes or any fees or other amounts payable hereunder or under any
other Credit Document, (d) postpone any date fixed for any payment of principal of, or interest on,
the Notes or any fees



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or other amounts payable hereunder or extend the Maturity Date, (e) change the percentage of
Banks which shall be required for the Banks or any of them to take any action hereunder or under
any other Credit Document, (f) amend Section 2.10 or this Section 9.1, (g) amend
the definition of “Majority Banks,” (h) release any Guarantor from its obligations under any
Guaranty (other than as provided in Section 8.10(d) or as otherwise permitted by the Credit
Documents), (i) release any Collateral (other than as provided in Section 8.10(a) or
(b) or as otherwise permitted by the Credit Documents) in any transaction or series of
related transactions, or (j) except with respect to a Defaulting Bank, change any provision which
provides for payment to be distributed to the Banks in accordance with their Pro Rata Shares; and
provided, further, that no amendment, waiver or consent shall, unless in writing and signed
by the Agent or the Issuing Bank in addition to the Banks required above to take such action,
affect the rights or duties of the Agent or the Issuing Bank, as the case may be, under this
Agreement or any other Credit Document. Notwithstanding anything to the contrary herein, no
Defaulting Bank shall have any right to approve or disapprove any amendment, waiver, or consent
hereunder, except that the Commitment of such Bank may not be increased or extended without the
consent of such Bank.



     Section 9.2. Notices, Etc.



     (a) Except as provided in clause (b) below, all notices and other communications shall be in
writing (including, without limitation, telecopy or telex) and mailed by certified mail, return
receipt requested, telecopied, telexed, hand delivered, or delivered by a nationally recognized
overnight courier, at the address for the appropriate party specified in Annex 1 or at such
other address as shall be designated by such party in a written notice to the other parties. All
such notices and communications shall, when so mailed, telecopied, telexed, or hand delivered or
delivered by a nationally recognized overnight courier, be effective when received if mailed, when
telecopy transmission is completed, when confirmed by telex answer-back, or when delivered by such
messenger or courier, respectively, except that (i) notices and communications to the Agent
pursuant to Article II or VIII shall not be effective until received by the Agent, and (ii) notices
delivered through electronic communications pursuant to clause (b) below shall be effective as
provided in such clause (b).



     (b) Electronic Communications. Notices and other communications to the Banks
hereunder may be delivered or furnished by electronic communication (including e-mail and internet
or intranet websites) pursuant to procedures approved by the Agent, provided that the
foregoing shall not apply to notices to any Bank pursuant to Article II if such Bank, as
applicable, has notified the Agent that it is incapable of receiving notices under such Article by
electronic communication. The Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be limited to
particular notices or communications.


Unless the Agent otherwise prescribes, (i) notices and other communications sent to an e-mail
address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is not sent
during the normal business hours of the recipient, such notice or communication shall be


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deemed to have been sent at the opening of business on the next business day for the recipient, and
(ii) notices or communications posted to an internet or intranet website shall be deemed received
upon the deemed receipt by the intended recipient at its e-mail address as described in the
foregoing clause (i) of notification that such notice or communication is available and identifying
the website address therefor.




     (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE
AGENT-RELATED PERSONS DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE
ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE
BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY AGENT-RELATED PERSONS IN CONNECTION WITH THE
BORROWER MATERIALS OR THE PLATFORM. In no event shall the Agent-Related Persons have any liability
to the Borrower, any Bank or any other Person for losses, claims, damages, liabilities or expenses
of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Agent’s
transmission of Borrower Materials through the internet, except to the extent that such losses,
claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a
final and nonappealable judgment to have resulted from the gross negligence or willful misconduct
of Agent; provided, however, that in no event shall any Agent-Related Person have
any liability to the Borrower, any Bank, the Issuing Bank, or any other Person for indirect,
special, incidental, consequential or punitive damages (as opposed to direct or actual damages).



     (d) Change of Address, Etc. Each of the Borrower, the Agent, and the Issuing Bank may
change its address, telecopier or telephone number for notices and other communications hereunder
by notice to the other parties hereto. Each other Bank may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the Borrower and the
Agent. In addition, each Bank agrees to notify the Agent from time to time to ensure that the
Agent has on record (i) an effective address, contact name, telephone number, telecopier number and
electronic mail address to which notices and other communications may be sent and (ii) accurate
wire instructions for such Bank. Furthermore, each Public Bank agrees to cause at least one
individual at or on behalf of such Public Bank to at all times have selected the “Private Side
Information” or similar designation on the content declaration screen of the Platform in order to
enable such Public Bank or its delegate, in accordance with such Public Bank’s compliance
procedures and applicable Legal Requirements, including United States federal and state securities
laws, to make reference to Borrower Materials that are not made available through the “Public Side
Information” portion of the Platform and that may contain material non-public information with
respect to the Borrower or its securities for purposes of United States Federal or state securities
laws.



     (e) Reliance by Agent, Issuing Bank, and Banks. The Agent, Issuing Bank and the Banks
shall be entitled to rely and act upon any notices (including telephonic Notices of Borrowing)
purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a
manner specified herein, were incomplete or were not preceded or followed by any



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other form of notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The Borrower shall indemnify the Agent, the
Issuing Bank, each Bank and the Related Parties of each of them from all losses, costs, expenses
and liabilities resulting from the reliance by such Person on each notice purportedly given by or
on behalf of the Borrower. All telephonic notices to and other telephonic communications with the
Agent may be recorded by the Agent, and each of the parties hereto hereby consents to such
recording.



     Section 9.3. No Waiver; Remedies. No failure on the part of any Bank, the Agent, or
the Issuing Bank to exercise, and no delay in exercising, any right hereunder or under any Note
shall operate as a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by law.



     Section 9.4. Costs and Expenses. The Borrower agrees to pay on demand (a) all
reasonable out-of-pocket costs and expenses of the Agent in connection with the syndication of the
credit facilities provided for herein, the preparation, execution, delivery, administration,
modification, and amendment of this Agreement, the Notes, the Guaranties, the Security Documents,
and the other Credit Documents including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Agent with respect to advising the Agent as to its rights and
responsibilities under this Agreement, and (b) all out-of-pocket costs and expenses, if any, of the
Agent, the Issuing Bank, and each Bank (including, without limitation, reasonable counsel fees and
expenses of the Agent, the Issuing Bank, and each Bank) in connection with the enforcement (whether
through negotiations, legal proceedings, or otherwise) of this Agreement, the Notes, the
Guaranties, the Security Documents and the other Credit Documents. The agreements in this Section
shall survive the resignation of the Agent, the replacement of any Bank, the termination of the
Commitments, and the repayment, satisfaction or discharge of all the other Obligations.



     Section 9.5. Binding Effect. This Agreement shall become effective when it shall have
been executed by the Borrower and the Agent, and when the Agent shall have, as to each Bank, either
received a counterpart hereof executed by such Bank or been notified by such Bank that such Bank
has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agent, the Issuing Bank, and each Bank and their respective successors and assigns, except that the
Borrower shall not have the right to assign its rights or delegate its duties under this Agreement
or any interest in this Agreement without the prior written consent of each Bank.



     Section 9.6. Bank Assignments and Participations.



     (a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of the Agent and each
Bank and no Bank may assign or otherwise transfer any of its rights or obligations hereunder except
(i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way
of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by
way




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of pledge or assignment of a security interest subject to the restrictions of subsection (f) of
this Section (and any other attempted assignment or transfer by any party hereto shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of the Agent, the Issuing Bank and the Banks) any
legal or equitable right, remedy or claim under or by reason of this Agreement.




     (b) Assignments by Banks. Any Bank may at any time assign to one or more assignees
all or a portion of its rights and obligations under this Agreement (including all or a portion of
its Commitment and the Advances (including for purposes of this subsection (b), participations in
Letter of Credit Obligations) at the time owing to it); provided that any such assignment
shall be subject to the following conditions:




     (i) Minimum Amounts.




(A) in the case of an assignment of the entire remaining amount of the assigning
Bank’s Commitment and the Advances at the time owing to it or in the case of an
assignment to a Bank, an Affiliate of a Bank or an Approved Fund, no minimum amount
need be assigned; and




(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate
amount of the Commitment (which for this purpose includes Advances outstanding
thereunder) or, if the Commitment is not then in effect, the principal outstanding
balance of the Advances of the assigning Bank subject to each such assignment,
determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Agent or, if “Trade Date” is specified in the
Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000,
unless each of the Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that
concurrent assignments to members of an Assignee Group and concurrent assignments
from members of an Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group) will be treated as a single assignment
for purposes of determining whether such minimum amount has been met.




     (ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Bank’s rights and obligations under
this Agreement with respect to the Advances or the Commitment assigned;




     (iii) Required Consents. No consent shall be required for any assignment
except to the extent required by subsection (b)(i)(B) of this Section and, in addition:




(A) the consent of the Borrower (such consent not to be unreasonably withheld or
delayed) shall be required unless (1) an Event of Default has occurred and is



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continuing at the time of such assignment or (2) such assignment is to a Bank, an
Affiliate of a Bank or an Approved Fund;




(B) the consent of the Agent (such consent not to be unreasonably withheld or
delayed) shall be required if such assignment is to a Person that is not a Bank, an
Affiliate of such Bank or an Approved Fund with respect to such Bank; and




(C) the consent of the Issuing Bank (such consent not to be unreasonably withheld or
delayed) shall be required for any assignment that increases the obligation of the
assignee to participate in exposure under one or more Letters of Credit (whether or
not then outstanding).




     (iv) Assignment and Assumption. The parties to each assignment shall execute
and deliver to the Agent an Assignment and Assumption, together with a processing and
recordation fee in the amount of $3,500; provided, however, that the Agent
may, in its sole discretion, elect to waive such processing and recordation fee in the case
of any assignment. The assignee, if it is not a Bank, shall deliver to the Agent an
administrative questionnaire.




     (v) No Assignment to Borrower. No such assignment shall be made to the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.




     (vi) No Assignment to Natural Persons. No such assignment shall be made to a
natural person.


Subject to acceptance and recording thereof by the Agent pursuant to subsection (c) of this
Section, from and after the effective date specified in each Assignment and Assumption, the
assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Bank under this Agreement,
and the assigning Bank thereunder shall, to the extent of the interest assigned by such Assignment
and Assumption, be released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Bank’s rights and obligations under this
Agreement, such Bank shall cease to be a party hereto) but shall continue to be entitled to the
benefits of Sections 2.11, 2.12, 2.13, 9.4, and 9.7 with respect to facts and circumstances
occurring prior to the effective date of such assignment. Upon request, the Borrower (at its
expense) shall execute and deliver a Note to the assignee Bank. Any assignment or transfer by a
Bank of rights or obligations under this Agreement that does not comply with this subsection shall
be treated for purposes of this Agreement as a sale by such Bank of a participation in such rights
and obligations in accordance with subsection (d) of this Section.




     (c) Register. The Agent, acting solely for this purpose as an agent of the Borrower,
shall maintain at the Agent’s Office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Banks, and the Commitments of, and
principal amounts of the Advances and Letter of Credit Obligations owing to, each Bank pursuant to
the terms hereof from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Agent and the Banks may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Bank hereunder for all purposes of this



-76-









 







Agreement, notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Bank, at any reasonable time and from time to time upon
reasonable prior notice.



     (d) Participations. Any Bank may at any time, without the consent of, or notice to,
the Borrower or the Agent, sell participations to any Person (other than a natural person or the
Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in
all or a portion of such Bank’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Advances (including such Bank’s participations in Letter of
Credit Obligations) owing to it); provided that (i) such Bank’s obligations under this
Agreement shall remain unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower, the Agent, the Banks
and the Issuing Bank shall continue to deal solely and directly with such Bank in connection with
such Bank’s rights and obligations under this Agreement.


Any agreement or instrument pursuant to which a Bank sells such a participation shall provide that
such Bank shall retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such agreement or
instrument may provide that such Bank will not, without the consent of the Participant, agree to
any amendment, waiver or other modification described in the first proviso to Section 9.1
that affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.11, 2.12, and
2.13 to the same extent as if it were a Bank and had acquired its interest by assignment
pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 7.4 as though it were a Bank, provided
such Participant agrees to be subject to Section 2.10 as though it were a Bank.




     (e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 2.12 or 2.13 than the applicable Bank
would have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Borrower’s prior written
consent. A Participant that would be a Foreign Bank if it were a Bank shall not be entitled to the
benefits of Section 2.13 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 2.13(d) as though it were a Bank.



     (f) Certain Pledges. Any Bank may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement (including under its Note, if any) to secure
obligations of such Bank, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or assignment shall release such Bank from any
of its obligations hereunder or substitute any such pledgee or assignee for such Bank as a party
hereto.



     (g) Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the
same legal effect, validity or enforceability as a manually executed signature or the use of



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a paper-based recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act, or any other similar state laws
based on the Uniform Electronic Transactions Act.



     (h) Resignation as Issuing Bank after Assignment. Notwithstanding anything to the
contrary contained herein, if at any time Bank of America assigns all of its Commitment and
Advances pursuant to subsection (b) above, Bank of America may, upon 30 days’ notice to the
Borrower and the Banks, resign as Issuing Bank. In the event of any such resignation as Issuing
Bank, the Borrower shall be entitled to appoint from among the Banks a successor Issuing Bank
hereunder; provided, however, that no failure by the Borrower to appoint any such
successor shall affect the resignation of Bank of America as Issuing Bank. If Bank of America
resigns as Issuing Bank, it shall retain all the rights, powers, privileges and duties of the
Issuing Bank hereunder with respect to all Letters of Credit outstanding as of the effective date
of its resignation as Issuing Bank and all Letter of Credit Obligations with respect thereto
(including the right to require the Banks to make Advances or fund risk participations in
unreimbursed amounts pursuant to Section 2.6(d)). Upon the appointment of a successor
Issuing Bank, (a) such successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring Issuing Bank, and (b) the successor Issuing Bank shall issue
letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of
such succession or make other arrangements satisfactory to Bank of America to effectively assume
the obligations of Bank of America with respect to such Letters of Credit.



     Section 9.7. Indemnification. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE
CONSUMMATED, THE BORROWER SHALL INDEMNIFY AND HOLD HARMLESS EACH AGENT-RELATED PERSON, EACH BANK
AND THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, AGENTS AND
ATTORNEYS-IN-FACT (COLLECTIVELY THE “INDEMNITEES”) FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, DEMANDS, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES, AND DISBURSEMENTS (INCLUDING ALL FEES, EXPENSES, AND DISBURSEMENTS OF ANY LAW FIRM
OR OTHER EXTERNAL COUNSEL AND, WITHOUT DUPLICATION, THE ALLOCATED COST OF INTERNAL LEGAL SERVICES
AND ALL EXPENSES AND DISBURSEMENTS OF INTERNAL COUNSEL AND INCLUDING SETTLEMENT COSTS) OF ANY KIND
OR NATURE WHATSOEVER, (EXCLUDING, HOWEVER, THE COSTS AND EXPENSES INCURRED BY THE BANKS, OTHER THAN
THE AGENT, IN CONNECTION WITH THE PREPARATION, EXECUTION OR DELIVERY OF THIS AGREEMENT) WHICH MAY
AT ANY TIME BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST ANY SUCH INDEMNITEE IN ANY WAY RELATING
TO OR ARISING OUT OF OR IN CONNECTION WITH (A) THE EXECUTION, DELIVERY, ENFORCEMENT, PERFORMANCE OR
ADMINISTRATION OF ANY CREDIT DOCUMENT OR ANY OTHER AGREEMENT, LETTER, OR INSTRUMENT DELIVERED IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED THEREBY OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREBY, (B) ANY COMMITMENT, ADVANCE, OR LETTER OF CREDIT OR THE USE OR PROPOSED USE
OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A



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DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH
DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), OR (C) ANY ACTUAL OR
ALLEGED PRESENCE OR RELEASE OF HAZARDOUS WASTE OR HAZARDOUS SUBSTANCES ON OR FROM ANY PROPERTY
CURRENTLY OR FORMERLY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR ANY
LIABILITY UNDER ENVIRONMENTAL LAW RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR
(D) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE
FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY (INCLUDING ANY INVESTIGATION OF,
PREPARATION FOR, OR DEFENSE OF ANY PENDING OR THREATENED CLAIM, INVESTIGATION, LITIGATION OR
PROCEEDING) AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO (ALL THE FOREGOING,
COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”), IN ALL CASES, WHETHER OR NOT CAUSED BY OR
ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF THE
INDEMNITEE; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO
THE EXTENT THAT SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, DEMANDS,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS 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. NO INDEMNITEE SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM
THE USE BY OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH INTRALINKS OR OTHER
SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY
INDEMNITEE HAVE ANY LIABILITY FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT
OR ANY OTHER CREDIT DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH
(WHETHER BEFORE OR AFTER THE EFFECTIVE DATE). ALL AMOUNTS DUE UNDER THIS SECTION 9.7 SHALL
BE PAYABLE WITHIN TEN BUSINESS DAYS AFTER DEMAND THEREFOR. THE AGREEMENTS IN THIS SECTION SHALL
SURVIVE THE RESIGNATION OF THE AGENT, THE REPLACEMENT OF ANY BANK, THE TERMINATION OF THE
COMMITMENTS, AND THE REPAYMENT, SATISFACTION OR DISCHARGE OF ALL THE OTHER OBLIGATIONS.



     Section 9.8. USA Patriot Act Notice. Each Bank that is subject to the Act (as
hereinafter defined) and the Agent (for itself and not on behalf of any Bank) hereby notifies the
Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and
record information that identifies the Borrower, which information includes the name and address of
the Borrower and other information that will allow such Bank or the Agent, as applicable, to
identify the Borrower in accordance with the Act.



     Section 9.9. No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby (including in connection with any amendment, waiver



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or other modification hereof or of any other Credit Document), the Borrower acknowledges and
agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other
services regarding this Agreement provided by the Agent and the Arranger are arm’s-length
commercial transactions between the Borrower and its Affiliates, on the one hand, and the Agent and
the Arranger, on the other hand, (B) the Borrower has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is
capable of evaluating, and understands and accepts, the terms, risks and conditions of the
transactions contemplated hereby and by the other Credit Documents; (ii) (A) the Agent and the
Arranger each is and has been acting solely as a principal and, except as expressly agreed in
writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent
or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) neither the
Agent nor the Arranger has any obligation to the Borrower or any of its Affiliates with respect to
the transactions contemplated hereby except those obligations expressly set forth herein and in the
other Credit Documents; and (iii) the Agent and the Arranger and their respective Affiliates may be
engaged in a broad range of transactions that involve interests that differ from those of the
Borrower and its Affiliates, and neither the Agent nor the Arranger has any obligation to disclose
any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law,
the Borrower hereby waives and releases any claims that it may have against the Agent and the
Arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection
with any aspect of any transaction contemplated hereby.



     Section 9.10. Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement.



     Section 9.11. Survival of Representations, Etc. All representations and warranties
contained in this Agreement or made in writing by or on behalf of the Borrower in connection
herewith shall survive the execution and delivery of this Agreement and the Credit Documents, the
making of the Advances and any investigation made by or on behalf of the Banks, none of which
investigations shall diminish any Bank’s right to rely on such representations and warranties. All
obligations of the Borrower provided for in Sections 2.11, 2.12, 2.13(c), 9.4, and
9.7 and all of the obligations of the Banks in Section 8.7 shall survive any
termination of this Agreement and repayment in full of the Obligations.



     Section 9.12. Severability. In case one or more provisions of this Agreement or the
other Credit Documents shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality, and enforceability of the remaining provisions contained
herein or therein shall not be affected or impaired thereby.



     Section 9.13. Business Loans. The Borrower warrants and represents that the Advances
evidenced by the Notes are and shall be for business, commercial, investment, or other similar
purposes and not primarily for personal, family, household, or agricultural use, as such terms are
used in Chapter One (“Chapter One”) of the Texas Credit Code. At all such times, if any,
as Chapter One shall establish a Maximum Rate, the Maximum Rate shall be the “indicated rate
ceiling” (as such term is defined in Chapter One) from time to time in effect.



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     Section 9.14. Amendment and Restatement. This Agreement represents an amendment and
restatement of the Existing Credit Agreement. Any indebtedness under the Existing Credit Agreement
continues under this Agreement, and the execution of this Agreement does not indicate a payment,
satisfaction, novation, or discharge thereof.



     Section 9.15. Governing Law. This Agreement, the Notes and the other Credit Documents
shall be governed by, and construed and enforced in accordance with, the laws of the State of
Texas. Without limiting the intent of the parties set forth above, Chapter 346 the Texas Finance
Code, as amended, shall not apply to this Agreement, the Notes, or the transactions contemplated
hereby. Each Letter of Credit shall be governed by the Uniform Customs and Practice for
Documentary Credits, International Chamber of Commerce Publication No. 500 (1993 version).



     Section 9.16. Waiver of Punitive Damages, Jury Trial, Etc.



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



     (b) WAIVER OF VENUE. THE BORROWER AND EACH OTHER CREDIT PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY ANY LEGAL REQUIREMENT, ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH
(a) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT.



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     (c) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.2. NOTHING IN THIS AGREEMENT WILL AFFECT
THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY ANY LEGAL
REQUIREMENT.



     (d) WAIVER OF PUNITIVE DAMAGES, ETC. EACH CREDIT PARTY HEREBY (i) IRREVOCABLY WAIVES,
TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, (A) ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE CREDIT DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR ASSOCIATED
THEREWITH, ANY “SPECIAL DAMAGES,” AS DEFINED BELOW; AND (B) ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY); (ii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iii)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS AND
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION. AS USED IN THIS SECTION, “SPECIAL DAMAGES” INCLUDES ALL
SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT
INCLUDE ANY PAYMENT OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY
OTHER PARTY HERETO.



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



     Section 9.17. Treatment of Certain Information; Confidentiality.



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Each of the Agent, the Banks and the Issuing Bank agrees to maintain the confidentiality of the
Information, except that Information may be disclosed (a) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents, advisors and
representatives (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority purporting to have
jurisdiction over it (including any self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Credit Document or any action or proceeding
relating to this Agreement or any other Credit Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the same as 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 advisors) to any swap or derivative transaction relating to the
Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach of this Section or
(y) becomes available to the Agent, any Bank, the Issuing Bank, or any of their respective
Affiliates on a nonconfidential basis from a source other than the Borrower.



For purposes of this Section, “Information” means all information received from the
Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective
businesses, other than any such information that is available to the Agent, any Bank, or the
Issuing Bank on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary,
provided that, in the case of information received from the Borrower or any Subsidiary
after the date hereof, such information is clearly identified at the time of delivery as
confidential. 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.



Each of the Agent, the Banks, and the Issuing Bank acknowledges that (a) the Information may
include material non-public information concerning the Borrower or a Subsidiary, as the case may
be, (b) it has developed compliance procedures regarding the use of material non-public information
and (c) it will handle such material non-public information in accordance with applicable Legal
Requirements, including United States federal and state securities laws.




     THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS AGREEMENT, REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES 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.



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     EXECUTED as of the date first above written.



	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	STONE ENERGY CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ David H. Welch
 

David H. Welch
	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Kenneth H. Beer
 

Kenneth H. Beer
	 	 
	 

	 	Title:
	 	Senior Vice President and Chief Financial Officer	 	 






[SIGNATURE PAGE TO CREDIT AGREEMENT]














 





	 	 	 	 	 
	 	AGENT AND ISSUING BANK:



BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/ Ronald E. McKaig
 	 
	 	Name:  	Ronald E. McKaig 	 
	 	Title:  	Senior Vice President 	 
	 
	 	BANKS:



BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/ Ronald E. McKaig
 	 
	 	Name:  	Ronald E. McKaig 	 
	 	Title:  	Senior Vice President 	 
	 



[SIGNATURE PAGE TO CREDIT AGREEMENT]





 









 





	 	 	 	 	 
	 	BNP PARIBAS

 	 
	 	By:  	/s/ Douglas R. Liftman
 	 
	 	Name:  	Douglas R. Liftman 	 
	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	     /s/ Polly Schott
 	 
	 	Name:  	Polly Schott 	 
	 	Title:  	Director 	 
	 



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	 	NATIXIS

 	 
	 	By:  	/s/ Donovan C. Broussard
 	 
	 	Name:  	Donovan C. Broussard 	 
	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	   /s/  Liana Tchernysheva 	 
	 	Name:  	Liana Tchernysheva 	 
	 	Title:  	Director 	 
	 



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	 	THE BANK OF NOVA SCOTIA

 	 
	 	By:  	/s/ David Mills
 	 
	 	Name:  	David Mills 	 
	 	Title:  	Director 	 
	 



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	 	CAPITAL ONE, N.A.

 	 
	 	By:  	/s/ Paul D. Hein
 	 
	 	Name:  	Paul D. Hein 	 
	 	Title:  	Vice President 	 
	 



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	 	TORONTO DOMINION (TEXAS) LLC

 	 
	 	By:  	/s/ Debbi L. Brito
 	 
	 	Name:  	Debbi L. Brito 	 
	 	Title:  	Authorized Signatory 	 
	 



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	 	ALLIED IRISH BANKS p.l.c.

 	 
	 	By:  	/s/ James Giordano
 	 
	 	Name:  	James Giordano 	 
	 	Title:  	Assistant Vice President 	 
	 
	 	 	 
	 	By:  	     /s/ Mark Connelly
 	 
	 	Name:  	Mark Connelly 	 
	 	Title:  	Senior Vice President 	 
	 



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	 	BARCLAYS BANK PLC

 	 
	 	By:  	/s/ Joseph Gyurindak
 	 
	 	Name:  	Joseph Gyurindak 	 
	 	Title:  	Director 	 
	 



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	 	REGIONS BANK

 	 
	 	By:  	/s/ William A. Philipp
 	 
	 	Name:  	William A. Philipp 	 
	 	Title:  	Vice President 	 
	 



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	 	U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Daria Mahoney
 	 
	 	Name:  	Daria Mahoney 	 
	 	Title:  	Vice President 	 
	 



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	 	 	WHITNEY NATIONAL BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Will Jochetz	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Will Jochetz	 	 
	 

	 	Title:
	 	Loan Officer	 	 






[SIGNATURE PAGE TO CREDIT AGREEMENT]




 









 





	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael A. Kamauf	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Michael A. Kamauf	 	 
	 

	 	Title:
	 	Vice President	 	 






[SIGNATURE PAGE TO CREDIT AGREEMENT]




 









 





	 	 	 	 	 	 	 
	 	 	SUMITOMO MITSUI BANKING CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ William M. Ginn	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	William M. Ginn	 	 
	 

	 	Title:
	 	General Manager	 	 






[SIGNATURE PAGE TO CREDIT AGREEMENT]





 









 








Annex 1




COMMITMENTS;

BORROWER, AGENT, AND BANK NOTICE INFORMATION;

LENDING OFFICES





	I.	 	Commitments






	 	 	 	 	 
	Bank of America, N.A.
	 	$	65,000,000	 
	BNP Paribas
	 	$	65,000,000	 
	Natixis
	 	$	65,000,000	 
	The Bank of Nova Scotia
	 	$	65,000,000	 
	Capital One, N.A.
	 	$	65,000,000	 
	Toronto Dominion (Texas) LLC
	 	$	65,000,000	 
	Allied Irish Banks p.l.c.
	 	$	50,000,000	 
	Barclays Bank PLC
	 	$	50,000,000	 
	Regions Bank
	 	$	50,000,000	 
	U.S. Bank National Association
	 	$	50,000,000	 
	Whitney National Bank
	 	$	50,000,000	 
	JPMorgan Chase Bank, N.A.
	 	$	35,000,000	 
	Sumitomo Mitsui Banking Corporation
	 	$	25,000,000	 
	 
	 	 	 
	 
	 	 	 	 
	Total Commitments
	 	$	700,000,000	 







	II.	 	Borrower Notice Information
	 
	 	 	Stone Energy Corporation

625 E. Kaliste Saloom Road

Lafayette, Louisiana 70508

Attn:Mr. Kenneth H. Beer

Telephone: 337-237-0410

Telecopy: 337-237-0426






Annex 1 to Credit Agreement









 








 












	III.	 	Agent Notice Information
	 
	 	 	Bank of America, N.A.

901 Main Street, 14th Floor

Dallas, Texas 75202-3714

Attn: Ms. Renita Cummings

Telephone:     214-209-4130

Telecopy:       214-290-8371

	 
	 	 	With a copy to:

Bank of America, N.A.

Energy Finance Department

700 Louisiana St., 8th Floor

Houston, Texas 77002

Attn: Mr. Ronald McKaig

Telephone:    713-247-7237

Telecopy:      713-247-7286





 - 2 - 









 






	IV.	 	Bank Notice Information





	 	 	 
	Credit Contact	 	Operations Contact
	Bank of America, N.A.

	 	Bank of America, N.A.
	Energy Finance Department

	 	Mail Code: TX1-492-14-04
	700 Louisiana St., 8th Floor

	 	901 Main Street
	Houston, Texas 77002

	 	Dallas, Texas 75202-3714
	Attn: Mr. Ronald McKaig

	 	Attn: Ms. Melissa Lopez
	Telephone:      713-247-7237

	 	Telephone:    214-209-2031
	Telecopy:       713-247-7286

	 	Telecopy:       214-290-9485
	 
	 	 
	BNP Paribas

	 	BNP Paribas
	1200 Smith St., Suite 3100

	 	525 Washington Blvd.
	Houston, Texas 77002

	 	Jersey City, NJ 07310
	Attn: Doug Liftman

	 	Attn: Tammy Papadeas
	Telephone:   713-982-1154

	 	Telephone:    212-471-6361
	Telecopy:       713-659-6915

	 	Telecopy:       732-726-8009
	 
	 	 
	Natixis

	 	Natixis
	Houston Energy Group

	 	Natural Resources & Related Industries
	333 Clay Street, Suite 4340

	 	333 Clay Street, Suite 4340
	Houston, TX 77002

	 	Houston, TX 77002
	Attn: Donovan Broussard

	 	Attn: Honi Gregory
	Telephone:     713-759-0973

	 	Telephone:    713-759-9409
	Telecopy:       713-571-6167

	 	Telecopy:      713-583-7745
	 
	 	 
	The Bank of Nova Scotia

	 	The Bank of Nova Scotia
	711 Louisiana, Suite # 1400

	 	720 King St., 2nd Floor
	Houston, TX 77002

	 	Toronto, Ontario
	Attn: Sandra Aultman

	 	M5V2T3
	Telephone:   713-759-3428

	 	Attn: Jeannie Fan
	Telecopy:      713-752-2425

	 	Telephone:   212-225-5705
	 

	 	Telecopy:      212-225-5709
	 
	 	 
	Capital One, N.A.

	 	Capital One, N.A.
	5718 Westheimer, # 600

	 	5718 Westheimer, # 600
	Houston, Texas 77057

	 	Houston, Texas 77057
	Attn: Paul Hein

	 	Attn: Kimberley Lopez
	Telephone:    713-435-7461

	 	Telephone:    713-435-5281
	Telecopy:       713-435-5106

	 	Telecopy:      713-435-5106






 - 3 - 









 






	 	 	 
	Credit Contact	 	Operations Contact
	Toronto Dominion (Texas) LLC

	 	Toronto Dominion (Texas) LLC
	909 Fannin Street., Suite 1950

	 	77 King St. W.
	Houston, TX 77010

	 	Royal Trust Tower 18th Floor
	Attn: Martin Snyder

	 	Toronto, ON M5K 1A2
	Telephone: 713-653-8211

	 	Attn: Maria Castillo
	 

	 	Telephone:    (416) 590-4350
	 

	 	Telecopy:       (416) 590-4335
	 
	 	 
	Allied Irish Banks p.l.c.

	 	Allied Irish Banks p.l.c.
	AIB Corporate Banking

	 	Corporate Operations
	405 Park Avenue, 4th Floor

	 	2nd Floor, Iona House, Shelbourne Road
	New York, NY 10022

	 	Ballsbridge, Dublin 4, Ireland
	Attn: David O’Driscoll

	 	Attn: Bernie Glynn
	Telephone:    212-515-6743

	 	Telephone:   #043;353-1-641-6623
	Telecopy:      212-339-8099

	 	Telecopy:      +353-1-641-6668
	 
	 	 
	Barclays Capital

	 	Barclays Capital Services LLC
	Joseph Gyurindak

	 	200 Cedar Knolls Road
	200 Park Avenue, 3rd Floor

	 	Whippany, NJ 07981
	New York, NY 10166

	 	Attn: Yessenia Barrantas
	Telephone:    212-412-3474

	 	Telephone:    973-576-3597
	Telecopy:       212-412-7600

	 	Telecopy:       973-576-3014
	 
	 	 
	Regions Bank

	 	Regions Bank
	P.O. Box 23146

	 	201 Milam Parkway
	Jackson, MS 39225-3146

	 	Birmingham, AL 35211
	Attn: Bill Philipp

	 	Attn: LaShunda Johnson
	Telephone:   601.354.8229

	 	Telephone:     205-420-7505
	Telecopy:       601.354.8563

	 	Telecopy:      205-264-5003
	 
	 	 
	U.S. Bank National Association

	 	U.S. Bank National Association
	950 17th Street, DNCOT8E

	 	555 SW Oak, PDORP7LS
	Denver, CO 80202

	 	Portland, OR 97208
	Attn: Daria Mahoney

	 	Attn: Tony Wong
	Telephone:    303-585-4216

	 	Telephone:     503-275-3252
	Telecopy:      303-585-4362

	 	Telecopy:      503-973-6900
	 
	 	 
	Whitney National Bank

	 	Whitney National Bank
	4265 San Felipe Ave, Suite 200

	 	4265 San Felipe Ave, Suite 200
	Houston, TX 77027

	 	Houston, TX 77027
	Attn: Will Jochetz

	 	Attn: Anna Fitzgerald
	Telephone:     713-951-7288

	 	Telephone:    713-951-7108
	Telecopy:       713-951-7172

	 	Telecopy:       713-951-7172






 - 4 - 









 






	 	 	 
	Credit Contact	 	Operations Contact
	JPMorgan Chase Bank, N.A.

	 	JPMorgan Chase Bank, N.A.
	712 Main St., 8th Floor

	 	712 Main St., 8th Floor, South
	Houston, Texas 77002

	 	Houston, Texas 77002
	Attn: Mr. Michael A. Kamauf

	 	Attn: Ms. Lisa Miller
	Telephone:    713-216-7739

	 	Telephone:    713-216-7756
	Telecopy:      713-216-7770

	 	Telecopy:       713-216-7793
	 
	 	 
	Sumitomo Mitsui Banking Corporation

	 	Sumitomo Mitsui Banking Corp., New York
	1200 Smith Street, Suite 1140

	 	277 Park Avenue
	Houston, Texas 77002

	 	New York, NY 10172
	Attn: Nathanael Pieper

	 	Attn: Linda Soohoo
	Telephone:   713-277-3506

	 	Telephone:    212-224-4328
	Telecopy:      713-277-3555

	 	Telecopy:       212-224-4176






 - 5 - 









 







	V.	 	Lending Offices





	 	 	 
	Domestic Lending Office	 	Eurodollar Lending Office
	Bank of America, N.A.

	 	Bank of America, N.A.
	901 Main Street

	 	901 Main Street
	Dallas, Texas 75202-3714

	 	Dallas, Texas 75202-3714
	 
	 	 
	BNP Paribas

	 	BNP Paribas
	525 Washington Blvd.

	 	525 Washington Blvd.
	Jersey City, NJ 07310

	 	Jersey City, NJ 07310
	Attn: Loan Servicing - 8th Floor

	 	Attn: Loan Servicing - 8th Floor
	 
	 	 
	Natixis

	 	Natixis
	Natural Resources & Related Industries

	 	Natural Resources & Related Industries
	333 Clay Street, Suite 4340

	 	333 Clay Street, Suite 4340
	Houston, TX 77002

	 	Houston, TX 77002
	 
	 	 
	The Bank of Nova Scotia

	 	The Bank of Nova Scotia
	711 Louisiana, Suite # 1400

	 	711 Louisiana, Suite # 1400
	Houston, Texas 77002

	 	Houston, Texas 77002
	 
	 	 
	Capital One, N.A.

	 	Capital One, N.A.
	5718 Westheimer, # 600

	 	5718 Westheimer, # 600
	Houston, Texas 77057

	 	Houston, Texas 77057
	 
	 	 
	Toronto Dominion (Texas) LLC

	 	Toronto Dominion (Texas) LLC
	31 W. 52nd, 22nd Floor

	 	31 W. 52nd, 22nd Floor
	New York, NY 10019

	 	New York, NY 10019
	 
	 	 
	Allied Irish Bank - Corporate Operations

	 	Allied Irish Bank - Corporate Operations
	2nd Floor, Iona House, Shelbourne Road

	 	2nd Floor, Iona House, Shelbourne Road
	Ballsbridge, Dublin 4, Ireland

	 	Ballsbridge, Dublin 4, Ireland
	 
	 	 
	Barclays Bank PLC

	 	Barclays Bank PLC
	200 Park Avenue

	 	200 Park Avenue
	New York, NY 10166

	 	New York, NY 10166
	 
	 	 
	Regions Bank

	 	Regions Bank
	1900 5th Ave North

	 	1900 5th Ave North
	Birmingham, AL 35203

	 	Birmingham, AL 35203
	 
	 	 
	U.S. Bank

	 	U.S. Bank
	950 17th Street, 8th Floor

	 	950 17th Street, 8th Floor
	DN-CO-T8E

	 	DN-CO-T8E
	Denver, CO 80202

	 	Denver, CO 80202






 - 6 - 








 






	 	 	 
	Domestic Lending Office	 	Eurodollar Lending Office
	Whitney National Bank

	 	Whitney National Bank
	4265 San Felipe Ave, Suite 200

	 	4265 San Felipe Ave, Suite 200
	Houston, TX 77027

	 	Houston, TX 77027
	 
	 	 
	JPMorgan Chase Bank, N.A.

	 	JPMorgan Chase Bank, N.A.
	10 South Dearborn, Fl 7th

	 	10 South Dearborn, Fl 7th
	IL1-0010

	 	IL1-0010
	Chicago, IL 60603-2003 US

	 	Chicago, IL 60603-2003 US
	 
	 	 
	Sumitomo Mitsui Banking Corp., New York

	 	Sumitomo Mitsui Banking Corp., New York
	277 Park Avenue

	 	277 Park Avenue
	New York, NY 10172

	 	New York, NY 10172







 - 7 - 











 





EXHIBIT A


FORM OF


ASSIGNMENT AND ACCEPTANCE


[date]


     Reference is made to the Second Amended and Restated Credit Agreement dated as of August
[___], 2008 (as the same may be modified from time to time, the “Credit
Agreement”), among
Stone Energy Corporation, a Delaware corporation (“Borrower”), the banks named therein
(“Banks”), and Bank of America, N.A., as administrative agent for the Banks
(“Agent”). Capitalized terms used herein but not defined herein shall have the meanings
specified by the Credit Agreement.



     Pursuant to the terms of the Credit Agreement,
[     ] (“Assignor”), wishes to assign and
delegate to [     ] (“Assignee”), [     ]%1 of its rights and obligations under the
Credit Agreement. Therefore, Assignor, Assignee, and the Agent agree as follows:



     1. The Assignor hereby sells and assigns and delegates to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, without recourse to the Assignor and without
representation or warranty except for the representations and warranties specifically set forth in
clauses (i), (ii), and (iii) of Section 2 of this Assignment and Acceptance, a [     ]%
interest in and to all of the Assignor’s rights and obligations under the Credit Agreement and the
other Credit Documents as of the Effective Date (as defined below), including such percentage
interest in the Assignor’s Commitment, the Advances owing to the Assignor, and the Note held by the
Assignor.



     2. The Assignor (i) represents and warrants that, prior to executing this Assignment and
Acceptance, its Commitment is $[     ], the aggregate outstanding principal amount of Advances owed by
the Borrower to the Assignor is $[     ], and its Pro Rata Share of the Letter of Credit Exposure is
$[     ]; (ii) represents and warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse claim; (iii) makes
no representation or warranty and assumes no responsibility with respect to any statements,
warranties, or representations made in or in connection with the Credit Agreement or any other
Credit Document or the execution, legality, validity, enforceability, genuineness, sufficiency, or
value of the Credit Agreement or any other Credit Document or any other instrument or document
furnished pursuant thereto; (iv) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or any Guarantor or the performance or
observance by the Borrower or any Guarantor of any of its obligations under the Credit Agreement or
any other Credit Document or any other instrument or document furnished pursuant thereto; and (v)
attaches the Note referred to in Section 1 above and requests that the Agent exchange such
Note for a new Note dated [     ], in the principal





 




			
	1	 	Specify percentage to 4 decimal points.




 








 









amount of $[      ] payable to the order of the Assignee and a new Note dated
[      ], in the principal amount of $[ ] payable to the order of Assignor.




     3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together
with copies of the financial statements referred to in Section 4.05 thereof and such other
documents and information as it has deemed appropriate to make its own credit analysis and decision
to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor, or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement or any other Credit Document; (iii) appoints
and authorizes the Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement and any other Credit Document as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms all of the obligations which by the terms of the Credit
Agreement or any other Credit Document are required to be performed by it as a Bank; (v) specifies
as its Domestic Lending Office (and address for notices) and Eurodollar Lending Office the offices
set forth beneath its name on the signature pages hereof; (vi) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee’s status for purposes
of determining exemption from United States withholding taxes with respect to all payments to be
made to the Assignee under the Credit Agreement and the Note or such other documents as are
necessary to indicate that all such payments are subject to such rates at a rate reduced by an
applicable tax treaty2, and (vii) represents that it is an Eligible Assignee.



     4. The effective date for this Assignment and Acceptance shall be [___] (“Effective
Date”)3, and following the execution of this Assignment and Acceptance, the Agent
will record it in the Register.



     5. Upon such recording, and as of the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement for all purposes, and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights (other than rights against the
Borrower pursuant to Sections 9.4 and 9.7 of the Credit Agreement, which shall
survive this agreement) and be released from its obligations (other than obligations to the Agent
pursuant to Section 8.7 of the Credit Agreement, which shall survive this agreement) under
the Credit Agreement.



     6. Upon such recording, from and after the Effective Date, the Agent shall make all payments
under the Credit Agreement and the Note in respect of the interest assigned hereby (including all
payments of principal, interest, and fees) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments under the Credit Agreement and the Notes for periods prior
to the Effective Date directly between themselves.





 




			
	2	 	If the Assignee is organized under the laws of a jurisdiction outside the United States.
	 
	3	 	See Section 9.06. Such date shall be at least three Business Days after the execution of this Assignment and Acceptance.




-2-








 










     7. This Assignment and Acceptance shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.



     The parties hereto have caused this Assignment and Acceptance to be duly executed as of the
date first above written.



	 	 	 	 	 	 	 
	 	 	[ASSIGNOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	Telecopy No:
	 	 


	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	[ASSIGNEE]	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 
	 	 
	 
	 	 	 	 
	 	 
	 
	 	 	Domestic Lending Office:	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	Telecopy No:
	 	 


	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	Eurodollar Lending Office:	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	Telecopy No:
	 	 


	 	 
	 

	 	 	 	 

	 	 






-3-








 






	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,
as Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 





[CONSENTED TO

this                      day of                     ,                     .]4




	 	 	 	 	 
	STONE ENERGY CORPORATION	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 








 




			
	4	 	Consent of Borrower not required if Default or Event of Default exists.




-4-









 










EXHIBIT B




FORM OF




COMPLIANCE CERTIFICATE




[date]




Bank of America, N.A., as Agent

700 Louisiana Street, 8th Floor

Houston, Texas 77002




Attention:           Mr. Ron E. McKaig




Ladies and Gentlemen:



I refer to the Second Amended and Restated Credit Agreement dated as of August [___], 2008 (as the
same may be modified from time to time, the “Credit
Agreement”), among Stone Energy
Corporation (“Borrower”), the banks named therein (“Banks”), and Bank of America,
N.A., as administrative agent for the Banks (“Agent”), the defined terms of which are used
herein unless otherwise defined herein.



I hereby certify that I have no knowledge of any Defaults under the Credit Agreement which existed
as of [                    ] or which exist as of the date of this letter.



I also certify that the accompanying consolidated financial statements present fairly, in all
material respects, the consolidated financial condition of the Borrower as of [                    ], and the
related results of operations for the period then ended, in conformity with generally accepted
accounting principles.



The following sets forth the information and computations to demonstrate compliance with the
requirements of Sections 6.13 and 6.14 of the Credit Agreement as of [                    ]:




	 	 	 	 	 	 	 	 	 	 	 
	 	 	A.	 	Section 6.13 - Debt to EBITDA Ratio	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	1.	 	 	consolidated Debt as of [                                        ]
	 	$______
	 

	 	 	 	 	2.	 	 	consolidated Net
Income1 for four quarters ending
[                                                            ]	 	$______
	 

	 	 	 	 	3.	 	 	consolidated interest expense for such period
	 	$______
	 

	 	 	 	 	4.	 	 	depreciation, depletion, and amortization for such period
	 	$______
	 

	 	 	 	 	5.	 	 	income taxes for such period
	 	$______








 




			
	1	 	Excluding the non-cash impact of (a) impairments, (b)
full cost ceiling test write downs, (c) gains or losses on sale of property,
(d) extraordinary items, and (e) accretion expense (in accordance with SFAS No.
143).




 








 










	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	6.	 	 	A.2 + A.3 +A.4 + A.5
	 	$	______	 
	 

	 	 	 	 	7.	 	 	ratio A.1 ÷ A.6
	 	___to 1.00

	 

	 	 	 	 	8.	 	 	maximum
	 	3.25 to 1.00
	 	 	 	 	 	 	 	 	 
	 	 	B.	 	Section 6.14 — Interest Coverage Ratio	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	1.	 	 	consolidated EBITDA for four fiscal quarters ending [                    ](copy from line A.6 above)
	 	 	$	 
	 

	 	 	 	 	2.	 	 	consolidated interest expense for such period
	 	 	$	 
	 

	 	 	 	 	3.	 	 	consolidated interest income for such period
	 	 	$	 
	 

	 	 	 	 	4.	 	 	Letter of Credit Fees accrued during such period
	 	 	$	 
	 

	 	 	 	 	5.	 	 	B.2 — B.3 + B.4
	 	 	$	 
	 

	 	 	 	 	6.	 	 	ratio B.1 ÷ B. 5
	 	___to 1.00

	 

	 	 	 	 	7.	 	 	minimum
	 	3.00 to 1.00






This certificate is given in my capacity as an officer of the Borrower and not in my individual
capacity.




Very truly yours,




                                                            

[Chief Financial Officer]

[Chief Accounting Officer]





-2-









 








EXHIBIT C




FORM OF GUARANTY




GUARANTY




     This Guaranty dated as of August [___], 2008 (“Agreement”), is made by the undersigned
Subsidiaries of Stone Energy Corporation (collectively the “Guarantors”), in favor of the
Agent for the benefit of the Agent and the Banks referred to below.



INTRODUCTION




     This Guaranty is given in connection with the Second Amended and Restated Credit Agreement
dated as of August [___], 2008 (as the same may be modified from time to time, the “Credit
Agreement”), among Stone Energy Corporation, a Delaware corporation (“Borrower”), the
banks named therein (“Banks”), and Bank of America, N.A., as administrative agent for the
Banks (“Agent”). Capitalized terms used herein but not defined herein shall have the
meanings specified by the Credit Agreement. As a condition precedent to the extension of credit
under the Credit Agreement, the Agent and the Banks require the Guarantors to enter into this
Agreement. Each Guarantor believes that it will obtain substantial direct and indirect benefit
from the credit extended to the Borrower by the Banks under the Credit Agreement.



     In consideration of the foregoing and for other valuable consideration received, each
Guarantor agrees as follows:



     ARTICLE I Guaranty.



     Section 1.1. Each Guarantor irrevocably guarantees to the Agent the full payment of (a) all
principal, interest, fees, reimbursements, indemnifications, and other amounts now or hereafter
owed by the Borrower to the Agent and the Banks under the Credit Agreement and the other Credit
Documents, and (b) any increases, extensions, and rearrangements of the foregoing obligations under
any amendments, supplements, and other modifications of the documents and agreements creating the
foregoing obligations (collectively, the “Guaranteed Obligations”). This is a guaranty of
payment and not merely a guaranty of collection, and each Guarantor is liable as a primary obligor.
If any of the Guaranteed Obligations are not punctually paid when due, whether by maturity,
acceleration, or otherwise, the Guarantors shall immediately pay to the Agent, for the ratable
benefit of the Banks, the full amount due. Each Guarantor shall make each payment to the Agent in
Dollars in immediately available funds as directed by the Agent. The Agent and each Bank is hereby
authorized at any time following any demand for payment hereunder to set off and apply any
indebtedness owed by the Agent or the Bank to the Guarantors against any and all of the Guaranteed
Obligations. The Agent and each Bank severally agrees to promptly notify the Guarantors after any
such setoff and application, but the failure to give such notice shall not affect the validity of
such setoff and application.



 









 





     Section 1.2. This Agreement shall continue to be effective or be reinstated, as the case may
be, if any payment on the Guaranteed Obligations must be refunded for any reason including any
bankruptcy proceeding. In the event that the Agent or any Bank must refund any payment received
against the Guaranteed Obligations, any prior release from the terms of this Agreement given to the
Guarantors by the Agent shall be without effect, and this Agreement shall be reinstated in full
force and effect. It is the intention of each Guarantor that the Guarantor’s obligations hereunder
shall not be discharged except by final payment of the Guaranteed Obligations.



     ARTICLE II Guaranty Absolute.



     Section 2.1. In the event that one or more other parties guarantees all or part of the
Guaranteed Obligations, such other guarantees shall not reduce any Guarantor’s obligations
hereunder and the Guarantor shall remain fully liable for all of the Guaranteed Obligations.



     Section 2.2. There are no conditions precedent to the enforcement of this Agreement, except as
expressly contained herein. It shall not be necessary for the Agent, in order to enforce payment
by any Guarantor under this Agreement, to show proof of any default by the Borrower, to exhaust the
Agent’s remedies against the Borrower or any other person liable for the payment of the Guaranteed
Obligations, to enforce any support for the payment of the Guaranteed Obligations, or to enforce
any other means of obtaining payment of the Guaranteed Obligations. Each Guarantor waives any
rights under Chapter 34 of the Texas Business and Commerce Code related to the foregoing. Neither
the Agent nor the Banks shall be required to mitigate damages or take any other action to reduce,
collect, or enforce the Guaranteed Obligations.



     Section 2.3. Each Guarantor agrees that such Guarantor’s obligations under this Agreement
shall not be released, diminished, or impaired by, and waives any rights which such Guarantor might
otherwise have which relate to:



          (a) Any lack of validity or enforceability of the Guaranteed Obligations, any Credit Document,
or any other agreement or instrument relating thereto;




          (b) Any increase, reduction, extension, or rearrangement of the Guaranteed Obligations, any
amendment, supplement, or other modification of the Credit Documents, or any waiver or consent
granted under the Credit Documents, including waivers of the payment and performance of the
Guaranteed Obligations;




          (c) Any release, exchange, subordination, waste, or other impairment of any collateral
securing payment of the Guaranteed Obligations;




          (d) Any full or partial release of the Borrower, any guarantor, or any other person liable for
the payment of the Guaranteed Obligations;




          (e) Any change in the organization or structure of the Borrower, any guarantor, or any other
person liable for the payment of the Guaranteed Obligations; or the insolvency, bankruptcy,
liquidation, or dissolution of the Borrower or any other person liable for the payment of the
Guaranteed Obligations;




-2-









 








          (f) The failure to apply or any manner of applying payments or the proceeds of any collateral
against the Guaranteed Obligations;




          (g) The failure to give notice of the occurrence of any of the events or actions referred to
in this Section 2.3, notice of any default or event of default, however denominated, under
the Credit Documents, notice of intent to demand, notice of demand, notice of presentment for
payment, notice of nonpayment, notice of intent to protest, notice of protest, notice of grace,
notice of dishonor, notice of intent to accelerate, notice of acceleration, notice of bringing of
suit, notice of sale or foreclosure of any collateral for the Guaranteed Obligations, notice of the
Agent’s or any Banks’ transfer of the Guaranteed Obligations, notice of the financial condition of
or other circumstances regarding the Borrower or any other person liable for the Guaranteed
Obligations, or any other notice of any kind relating to the Guaranteed Obligations (and the
parties intend that no Guarantor shall be considered a “Debtor” as defined in Section 9.102(28) of
the Texas Business and Commerce Code for the purpose of notices required to be given to a Debtor
thereunder, should such section apply); and




          (h) Any other action taken or omitted which affects the Guaranteed Obligations, whether or not
such action or omission prejudices any Guarantor or increases the likelihood that any Guarantor
will be required to pay the Guaranteed Obligations pursuant to the terms hereof—it is the
unambiguous and unequivocal intention of each Guarantor that such Guarantor shall be obligated to
pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event,
action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not
particularly described herein.




     ARTICLE III Subrogation. Until the payment in full in cash of the Guaranteed
Obligations, the termination of all Commitments, and the payment in full in cash or termination of
all Letter of Credit Obligations, no Guarantor shall take action pursuant to any rights which it
may acquire against the Borrower or any other person liable for the payment of the Guaranteed
Obligations under this Agreement, including any right of subrogation (including any statutory
rights of subrogation under Section 509 of the Bankruptcy Code, 11 U.S.C. § 509, or under Chapter
34 of the Texas Business and Commerce Code), contribution, indemnification, reimbursement,
exoneration, or any right to participate in any claim or remedy of the Agent or the Banks against
the Borrower or any collateral, if any, which the Agent or the Banks now have or acquire. If any
amount shall be paid to any Guarantor in violation of the preceding sentence, such amount shall be
held in trust for the benefit of the Banks and immediately turned over to the Agent, for the
ratable benefit of the Banks, with any necessary endorsement to be applied to the Guaranteed
Obligations.



     ARTICLE IV Representations, Warranties, and Covenants of Guarantor. Each Guarantor
represents and warrants to (and with each extension of credit under the Credit Agreement again
represents and warrants to) and agrees with the Agent as follows:



     Section 4.1. Each Guarantor is familiar with, and has independently reviewed books and records
regarding, the financial condition of the Borrower, the other Guarantors, and any other persons
liable for the payment of the Guaranteed Obligations. As of the date hereof, assuming each of the
transactions contemplated by the Credit Documents is consummated and the Borrower makes full use of
the credit facilities thereunder, and taking into account the effect



-3-









 




thereof, the present realizable fair market value of the assets of each Guarantor exceeds the
total obligations of such Guarantor, specifically including the contingent obligations represented
by the fairly discounted value of such Guarantor’s obligations under this Agreement and the other
Credit Documents, taking into account the rights which such Guarantor would gain if payments under
this Agreement were made by such Guarantor. Each Guarantor is able to realize upon its assets and
pay its obligations as such obligations mature in the normal course of business. In consummating
the transactions contemplated by the Credit Documents, no Guarantor intends to disturb, delay,
hinder, or defraud either present or future creditors of the Guarantors.




     Section 4.2. The representations and warranties set forth in Article IV of the Credit
Agreement are incorporated herein by reference, and each Guarantor represents and warrants to the
Agent each such representation and warranty which applies to such Guarantor as if set forth herein.



     Section 4.3. The covenants set forth in Article V and VI of the Credit Agreement are
incorporated herein by reference, and each Guarantor agrees with the Agent to comply with each such
covenant which applies to such Guarantor as if set forth herein.



     ARTICLE V Miscellaneous.



     Section 5.1. Each Guarantor agrees to pay on demand (a) all reasonable out-of-pocket costs and
expenses of the Agent in connection with the preparation, execution, delivery, administration,
modification, and amendment of this Agreement including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for the Agent with respect to advising the Agent as to its
rights and responsibilities under this Agreement, and (b) all out-of-pocket costs and expenses, if
any, of the Agent, the Issuing Bank, and each Bank (including, without limitation, reasonable
counsel fees and expenses of the Agent, the Issuing Bank, and each Bank) in connection with the
enforcement (whether through negotiations, legal proceedings, or otherwise) of this Agreement.



     Section 5.2. EACH GUARANTOR SHALL INDEMNIFY AND HOLD HARMLESS EACH AGENT-RELATED PERSON, EACH
BANK AND THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, AGENTS AND
ATTORNEYS-IN-FACT (COLLECTIVELY THE “INDEMNITEES”) FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, GUARANTEED OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, DEMANDS,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, AND DISBURSEMENTS (INCLUDING ALL FEES, EXPENSES, AND
DISBURSEMENTS OF ANY LAW FIRM OR OTHER EXTERNAL COUNSEL AND, WITHOUT DUPLICATION, THE ALLOCATED
COST OF INTERNAL LEGAL SERVICES AND ALL EXPENSES AND DISBURSEMENTS OF INTERNAL COUNSEL AND
INCLUDING SETTLEMENT COSTS) OF ANY KIND OR NATURE WHATSOEVER, (EXCLUDING, HOWEVER, THE COSTS AND
EXPENSES INCURRED BY THE BANKS, OTHER THAN THE AGENT, IN CONNECTION WITH THE PREPARATION, EXECUTION
OR DELIVERY OF THIS AGREEMENT) WHICH MAY AT ANY TIME BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST
ANY SUCH INDEMNITEE IN ANY WAY RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH (A) THE
EXECUTION, DELIVERY, ENFORCEMENT, PERFORMANCE OR ADMINISTRATION OF ANY




-4-











 




CREDIT DOCUMENT OR ANY OTHER AGREEMENT, LETTER, OR INSTRUMENT DELIVERED IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED THEREBY OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, (B)
ANY COMMITMENT, ADVANCE, OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM
(INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT
IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF
SUCH LETTER OF CREDIT), OR (C) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS WASTE OR
HAZARDOUS SUBSTANCES ON OR FROM ANY PROPERTY CURRENTLY OR FORMERLY OWNED OR OPERATED BY THE
BORROWER OR ANY OF ITS SUBSIDIARIES, OR ANY LIABILITY UNDER ENVIRONMENTAL LAW RELATED IN ANY WAY TO
THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (D) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY (INCLUDING ANY INVESTIGATION OF, PREPARATION FOR, OR DEFENSE OF ANY PENDING OR
THREATENED CLAIM, INVESTIGATION, LITIGATION OR PROCEEDING) AND REGARDLESS OF WHETHER ANY INDEMNITEE
IS A PARTY THERETO (ALL THE FOREGOING, COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”), IN ALL
CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE,
CONTRIBUTORY, OR SOLE NEGLIGENCE OF THE INDEMNITEE; PROVIDED THAT SUCH INDEMNITY SHALL NOT,
AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LIABILITIES, OBLIGATIONS, GUARANTEED
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, DEMANDS, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES OR DISBURSEMENTS 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. NO INDEMNITEE SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY
INFORMATION OR OTHER MATERIALS OBTAINED THROUGH INTRALINKS OR OTHER SIMILAR INFORMATION
TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY INDEMNITEE HAVE ANY LIABILITY
FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE
EFFECTIVE DATE). ALL AMOUNTS DUE UNDER THIS SECTION 9.7 SHALL BE PAYABLE WITHIN TEN
BUSINESS DAYS AFTER DEMAND THEREFOR. THE AGREEMENTS IN THIS SECTION SHALL SURVIVE THE RESIGNATION
OF THE AGENT, THE REPLACEMENT OF ANY BANK, THE TERMINATION OF THE COMMITMENTS, AND THE REPAYMENT,
SATISFACTION OR DISCHARGE OF ALL THE OTHER OBLIGATIONS AND GUARANTEED OBLIGATIONS.




     Section 5.3. This Agreement shall be governed by the laws of the State of Texas. If any
provision in this Agreement is held to be unenforceable, such provision shall be severed and the
remaining provisions shall remain in full force and effect. All representations, warranties, and
covenants of each Guarantor in this Agreement shall survive the execution of this Agreement



-5-









 







and any other contract or agreement. If a due date for an amount payable is not specified in
this Agreement, the due date shall be the date on which the Agent demands payment therefor. The
Agent’s remedies under this Agreement shall be cumulative, and no delay in enforcing this Agreement
shall act as a waiver of the Agent’s or the Banks’ rights hereunder. The provisions of this
Agreement may be waived or amended only in a writing signed by the party against whom enforcement
is sought. This Agreement shall bind each Guarantor and its successors and assigns and shall inure
to the benefit of the Agent and its successors and assigns. No Guarantor may assign its rights or
delegate its duties under this Agreement. The Agent may assign its rights and delegate its duties
under this Agreement. This Agreement may be executed in multiple counterparts which together shall
constitute one and the same agreement. Unless otherwise specified, all notices provided for in
this Agreement shall be in writing, delivered to the following addresses or to such other address
as shall be designated by one party in writing to the other parties: if to the Agent: Bank of
America, N.A., Attn: Ron McKaig, Principal, 700 Louisiana St., 8th Floor, Houston, Texas
77002, telephone: 713-247-7237, telecopy: 713-247-7286; if to the Guarantor: Stone Energy
Offshore, L.L.C., Attn: Kenneth H. Beer, 625 E. Kaliste Saloom Road, Lafayette, Louisiana 70508,
telephone: 337-237-0410, telecopy: 337-237-0426. Notice sent by telecopy shall be deemed to be
given and received when receipt of such transmission is acknowledged, and delivered notice shall be
deemed to be given and received when receipted for by, or actually received by, an authorized
officer of the receiving party.



     Section 5.4. Waiver of Punitive Damages, Jury Trial, Etc.



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



     (b) WAIVER OF VENUE. EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY ANY LEGAL REQUIREMENT, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT



-6-









 







OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (a) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.



     (c) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 5.3. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT
OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY ANY LEGAL REQUIREMENT.



     (d) WAIVER OF PUNITIVE DAMAGES, ETC. EACH GUARANTOR HEREBY (i) IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, (A) ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE CREDIT DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR ASSOCIATED
THEREWITH, ANY “SPECIAL DAMAGES,” AS DEFINED BELOW; AND (B) ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY); (ii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iii)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS
SECTION. AS USED IN THIS SECTION, “SPECIAL DAMAGES” INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY,
OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENT OR FUNDS WHICH ANY
PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY HERETO.



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



-7-









 







DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES.




THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.




     EXECUTED as of the date first above written.



	 	 	 	 	 	 	 
	 	 	[GUARANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 







-8-









 








EXHIBIT D




FORM OF NOTE




			
	$[                    ]
	 	[date]






     For value received, the undersigned Stone Energy Corporation, a Delaware corporation
(“Borrower”), hereby promises to pay to [                               ] (“Bank”) or
registered assigns the principal amount of [ ] and [ ]/100 Dollars ($[                          ]) or, if
less, the aggregate outstanding principal amount of each Advance (as defined in the Credit
Agreement referred to below) made by the Bank to the Borrower, together with accrued but unpaid
interest on the principal amount of each such Advance from the date of such Advance until such
principal amount is paid in full, at such interest rates, and at such times, as are specified in
the Credit Agreement.



     This Note (“Note”) is one of the Notes referred to in, and is entitled to the benefits
of, and is subject to the terms of, the Second Amended and Restated Credit Agreement dated as of
August [___], 2008 (as the same may be modified from time to time, the “Credit Agreement”),
among the Borrower, the banks named therein (“Banks”), and Bank of America, N.A., as
administrative agent for the Banks (“Agent”). Capitalized terms used herein but not
defined herein shall have the meanings specified by the Credit Agreement. The Credit Agreement,
among other things, (a) provides for the making of Advances by the Bank to the Borrower from time
to time in an aggregate outstanding amount not to exceed the amount of this Note, the indebtedness
of the Borrower resulting from each such Advance being evidenced by this Note, and (b) contains
provisions for acceleration of the maturity of this Note upon the happening of certain events
stated in the Credit Agreement and for prepayments of principal prior to the maturity of this Note
upon the terms and conditions specified in the Credit Agreement.



     Both principal and interest are payable in lawful money of the United States of America to the
Agent as specified in the Credit Agreement. The Bank shall record all Advances and payments of
principal made under this Note, but no failure of the Bank to make such recordings shall affect the
Borrower’s repayment obligations under this Note.



     It is contemplated that because of prepayments there may be times when no indebtedness is owed
under this Note. Notwithstanding such prepayments, this Note shall remain valid and shall be in
force as to Advances made pursuant to the Credit Agreement after such prepayments.



     It is the intention of the Bank and the Borrower to conform strictly to any applicable usury
laws. Accordingly, the terms of the Credit Agreement relating to the prevention of usury will be
strictly followed.



     This Note shall be governed by, and construed and enforced in accordance with, the laws of the
State of Texas.



 









 





     EXECUTED as of the date first above written.



	 	 	 	 	 	 	 
	 	 	STONE ENERGY CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 







-2-









 








EXHIBIT E




FORM OF




NOTICE OF BORROWING




[date]




Bank of America, N.A., as Agent

901 Main Street

Dallas, Texas 75202-3714




Attention: Ms. Melissa Lopez

Telephone: 214-209-2031

Telecopy: 214-290-9485




Ladies and Gentlemen:



The undersigned, Stone Energy Corporation, a Delaware corporation (“Borrower”), refers to
the Second Amended and Restated Credit Agreement dated as of August [___], 2008 (as the same may be
modified from time to time, the “Credit Agreement,” the defined terms of which are used in
this Notice of Borrowing unless otherwise defined in this Notice of Borrowing) among the Borrower,
the banks named therein (“Banks”), and Bank of America, N.A., as administrative agent for
the Banks (“Agent”), and hereby gives you irrevocable notice pursuant to
Section 2.03(a) of the Credit Agreement that the undersigned hereby requests a Borrowing
(the “Proposed Borrowing”) on the terms set forth below:




	 	 	 
	Date of Borrowing1

	 	:
	Type of Advances2

	 	:
	Aggregate Amount3

	 	:
	Interest Period4

	 	:





The undersigned hereby certifies that the following statements are true on the date hereof, and
will be true on the date of the Proposed Borrowing:






 




			
	1	 	The Date of Borrowing must be a Business Day. The
Borrower must give three Business Days’ advance notice for Proposed Borrowings
comprised of Eurodollar Rate Advances.
	 
	2	 	The Type of Advances comprising the Proposed Borrowing may be Base
Rate Advances or Eurodollar Rate Advances.
	 
	3	 	The aggregate amount of Borrowings must be (a) in a minimum amount
of $500,000 and in multiples of $100,000 with respect to Base Rate Advances and
(b) in a minimum amount of $2,000,000 and in multiples of $1,000,000 with
respect to Borrowings comprised of Eurodollar Rate Advances.
	 
	4	 	The Interest Period applies only to Eurodollar Rate Advances and
may be one, two, three, or six months, or such longer period approved by Agent
and Banks. Insert “N/A” for Base Rate Advances.





 









 





     (a) the representations and warranties contained in the Credit Agreement are correct in all
material respects, before and after giving effect to the Proposed Borrowing and the application of
the proceeds therefrom, as though made on the date of the Proposed Borrowing; and



     (b) no Default has occurred and remains uncured, nor would result from the Proposed Borrowing
or from the application of the proceeds therefrom.



	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	STONE ENERGY CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 







			
	cc:     	 	Bank of America, N.A.

Energy Finance Department

700 Louisiana St., 8th Floor

Houston, Texas 77002

Attn: Mr. Ron McKaig

Telephone: 713-247-7237

Telecopy: 713-247-7286





-2-









 








EXHIBIT F




FORM OF




NOTICE OF CONVERSION OR CONTINUATION




[date]




Bank of America, N.A., as Agent

901 Main Street

Dallas, Texas 75202-3714




Attention: Ms. Melissa Lopez

Telephone: 214-209-2031

Telecopy: 214-290-9485




Ladies and Gentlemen:



The undersigned, Stone Energy Corporation, a Delaware corporation (“Borrower”), refers to
the Second Amended and Restated Credit Agreement dated as of August [___], 2008 (as the same may be
modified from time to time, the “Credit Agreement,” the defined terms of which are used in
this Notice of Conversion or Continuation unless otherwise defined in this Notice of Conversion or
Continuation), among the Borrower, the banks named therein (“Banks”), and Bank of America,
N.A., as administrative agent for the Banks (“Agent”), and hereby gives you irrevocable
notice pursuant to Section 2.03(b) of the Credit Agreement that the undersigned hereby
requests a [conversion][continuation] of an outstanding Borrowing into a new Borrowing (the
“Proposed Borrowing”) on the terms set forth below:



	 	 	 
	Outstanding Borrowing	 	 
	Date of Borrowing

	 	:
	Type of Advance

	 	:
	Aggregate Amount

	 	:
	Interest Period

	 	:
	 
	Proposed Borrowing	 	 
	Date of Conversion
or Continuation1

	 	:
	Type of Advance2

	 	:
	Aggregate Amount3

	 	:
	Interest Period4

	 	:








 




			
	1	 	The Date of Conversion or Continuation must be a
Business Day. The Borrower must give three Business Days’ advance notice for
conversions into or continuations of Borrowings comprised of Eurodollar Rate
Advances.
	 
	2	 	The Type of Advances comprising a Proposed Borrowing
may be Base Rate Advances or Eurodollar Rate Advances.




 









 









The undersigned hereby certifies that the following statements are true on the date hereof, and
will be true on the date of the Proposed Borrowing:




     (a) the representations and warranties contained in the Credit Agreement are correct in all
material respects, before and after giving effect to the Proposed Borrowing and the application of
the proceeds therefrom, as though made on the date of the Proposed Borrowing; and



     (b) no Default has occurred and remains uncured, nor would result from the Proposed Borrowing.



	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	STONE ENERGY CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 







			
	cc:     	 	Bank of America, N.A.

Energy Finance Department

700 Louisiana St., 8th Floor

Houston, Texas 77002

Attn: Mr. Ronald McKaig

Telephone: 713-247-7237

Telecopy: 713-247-7286







 




			
	3	 	The Interest Period applies only to Eurodollar Rate
Advances and may be one, two, three, or six months, or such longer period
approved by Agent and Banks. Insert “N/A” for Base Rate Advances.
	 
	4	 	The Interest Period applies only to Eurodollar Rate Advances and may be one,
two, three, or six months, or such longer period approved by Agent and Banks.
Insert “N/A” for Base Rate Advances.





-2-





 










 





EXHIBIT G




FORM OF

LETTER OF CREDIT APPLICATION




See attached.




 









 





EXHIBIT H




FORM OF

SECURITY AGREEMENT




See attached.




 









 





EXHIBIT I




FORM OF




MORTGAGE COMPLIANCE CERTIFICATE




[date]




Bank of America, N.A., as Agent

700 Louisiana Street, 8th Floor

Houston, Texas 77002




Attention:      Mr. Ronald E. McKaig




Ladies and Gentlemen:



I refer to the Second Amended and Restated Credit Agreement dated as of August [___], 2008 (as the
same may be modified from time to time, the “Credit Agreement”), among Stone Energy
Corporation (“Borrower”), the banks named therein (“Banks”), and Bank of America,
N.A., as administrative agent for the Banks (“Agent”), the defined terms of which are used
herein unless otherwise defined herein.



In connection with the delivery of, and based upon the information set forth in, the Oil and Gas
Reserve Report with respect to the Borrower’s consolidated Oil and Gas Properties as of [                    ],
dated as of [                    ] (the “Applicable Report”), the following sets forth the information
and computations required by Section 5.6(c)(iii) of the Credit Agreement as of [                    ]:




	 	 	 	 	 
	8.
	 	Mortgaged Property Value (as set forth in the Applicable Report)	 	$                    
	 
	 	 	 	 
	9.
	 	Oil and Gas Property Value (as set forth in the Applicable Report)	 	$                    
	 
	 	 	 	 
	10.
	 	80% of line 2 above	 	$                    
	 
	 	 	 	 
	11.
	 	[Amount by which the
Mortgaged Property Value is	 	 
	 
	 	  less than 80% of the Oil and Gas Property	 	[$                    ]
	 
	 	Value (line 3 minus line 1)]	 	 
	 
	 	[Include the above only if line 1 is less than line 3]	 	 






 








 





To the Agent and the Banks listed on

the attached Schedule 1

c/o Bank of America, N.A.

as Administrative Agent for the Banks

[date]

Page 2



I hereby certify that [the Mortgaged Property Value (as set forth in the Applicable Report) equals
or exceeds 80% of the Oil and Gas Property Value (as set forth in the Applicable Report).] [the
amount by which the Mortgaged Property Value (as set forth in the Applicable Report) is less than
80% of the Oil and Gas Property Value (as set forth in the Applicable Report) is $                    , and
the Borrower agrees to take all actions required by Section 5.11 of the Credit Agreement
with respect to such difference within the time period required by such Section.] [Select
appropriate alternative.]



This certificate is given in my capacity as an officer of the Borrower and not in my individual
capacity.




	 	 	 	 	 
	 

	 	Very truly yours,
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 






 









 





SCHEDULE 2.6(h)




EXISTING LETTERS OF CREDIT



The issuer of each Existing Letter of Credit listed below is Bank of America, N.A.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Letter of	 	 	 	 	 	 	 	 
	Credit	 	 	 	 	 	 	 	 
	Number	 	Beneficiary	 	Amount	 	Issue Date	 	Expiration Date
	139717
	 	Texaco Exploration and Production	 	$	1,400,000.00	 	 	 	6/01/1999	 	 	 	5/31/2008	 
	139745
	 	Chevron U.S.A., Inc.	 	 	730,000.00	 	 	 	7/31/1999	 	 	 	4/30/2008	 
	142785
	 	Conoco, Inc.	 	 	952,000.00	 	 	 	1/01/1999	 	 	 	12/20/2008	 
	908720
	 	Chevron USA Inc.	 	 	1,400,000.00	 	 	 	5/16/1999	 	 	 	4/30/2009	 
	150588
	 	Chevron U.S.A., Inc.	 	 	65,000.00	 	 	 	9/15/1999	 	 	 	4/30/2009	 
	3079627
	 	Travelers Casualty and Surety	 	 	5,737,000.00	 	 	 	1/11/2006	 	 	 	1/10/2009	 
	3083069
	 	BP Exploration & Productions Inc.	 	 	34,000,000.00	 	 	 	7/07/2006	 	 	 	4/30/2009	 
	3091162
	 	Chevron U.S.A., Inc.	 	 	1,800,000.00	 	 	 	1/14/2008	 	 	 	11/30/2008	 






 









 





SCHEDULE 4.1




MATERIAL SUBSIDIARIES




	 	 	 	 	 
	 	 	Jurisdiction and Type of	 	 
	Subsidiary	 	Organization	 	Ownership
	Stone Energy Offshore, L.L.C.
	 	Delaware Limited Liability Company
	 	Stone Energy Corporation (Sole Member






 








 





SCHEDULE 4.7




EXISTING LITIGATION





	1.	 	Louisiana Franchise Tax Litigation
	 
	 	 	Cynthia Bridges, Secretary, Louisiana Department of Revenue versus Stone Energy Corporation,
Nos. 20046227, 20046228, 20056524, 15th Judicial District Court, Lafayette Parish,
Louisiana.
	 
	 	 	On December 30, 2004, Stone was served with two petitions filed by the Louisiana Department
of Revenue (“LDR”) in the 15th Judicial District Court (Parish of Lafayette, Louisiana)
claiming additional franchise taxes due. In one case, the LDR is seeking additional franchise
taxes from Stone in the amount of $640,000, plus accrued interest of $352,000 (calculated
through December 15, 2004), for the franchise year 2001. In the other case, the LDR is
seeking additional franchise taxes from Stone (as successor to Basin Exploration, Inc.) in
the amount of $274,000, plus accrued interest of $159,000 (calculated through December 15,
2004), for the franchise years 1999, 2000 and 2001. Further, on December 29, 2005, the LDR
filed another petition in the 15th Judicial District Court claiming additional franchise
taxes due for the taxable years ended December 31, 2002 and 2003 in the amount of $2.6
million plus accrued interest calculated through December 15, 2005 in the amount of $1.2
million. Also, on January 2, 2008, Stone was served with a petition (civil action number
2007-6754) claiming $1.5 million of additional franchise taxes due for the 2004 franchise
year, plus accrued interest of $800,000 calculated through November 30, 2007. These
assessments all relate to the LDR’s assertion that sales of crude oil and natural gas from
properties located on the Outer Continental Shelf, which are transported through the state of
Louisiana, should be sourced to the state of Louisiana for purposes of computing the
Louisiana franchise tax apportionment ratio.
	 
	2.	 	Securities Litigation
	 
	 	 	Total coverage in the amount of $50,000,000 is available for the aggregate liability related
to the securities litigation matters listed below.






	 	(a)	 	In re: Stone Energy Corporation Securities Litigation, Docket No. 05-cv-02088,
United States District Court for the Western District of Louisiana, Lafayette Division.
	 
	 	 	 	The complaint alleges that the defendants, among other things, misstated or failed to
disclose (i) that Stone had materially overstated the Company’s financial results by
overvaluing its oil reserves through improper and aggressive reserve methodologies, (ii)
that Stone lacked adequate internal controls and was therefore unable to ascertain its
true financial condition, and (iii) that as a result of the foregoing, the values of
Stone’s proven reserves, assets and future net cash flows were materially overstated at
all relevant times.
	 
	 	(b)	 	In re Stone Energy Corporation Shareholder Derivative Litigation, Docket No.
05-CV-2166, United States District Court for the Western District of Louisiana,
Lafayette Division.




 









 






	 	 	 	This action was brought derivatively on behalf of Stone Energy Corporation against
certain current and former officers and directors and Stone Energy Corporation named as a
nominal defendant. This case involves the same issues as those in the litigation above.
	 
	 	(c)	 	Gregory Sakhno, derivatively on behalf of Stone Energy Corporation, versus James
H. Stone, et al. (including Stone’s directors, Kenneth H. Beer, D. Peter Canty and James
H. Prince), No. 20060505, 15th Judicial District Court, Lafayette Parish,
Louisiana.
	 
	 	 	 	This is a purported shareholder derivative action on behalf of Stone Energy Corporation,
with Stone Energy Corporation also named as a nominal defendant. The allegations in this
state court action are substantially the same as those in the federal shareholder
derivative action set forth above.





 









 





SCHEDULE 4.14(a)




EXISTING ENVIRONMENTAL CONCERNS




None.




 









 





SCHEDULE 4.14(b)




DESIGNATED ENVIRONMENTAL SITES




None.




 









 





SCHEDULE 6.1




PERMITTED EXISTING LIENS





	1.	 	Lien in favor of Network Appliance, Inc. on various computer networking equipment more fully
described in Delaware Secretary of State UCC-1 filing Number 51310961.
	 
	2.	 	Lien in favor of GreatAmerica Leasing Corporation on various leased copy and fax machines
more fully described in Delaware Secretary of State UCC-1 filing Number 50489444.
	 
	3.	 	Lien in favor of GreatAmerica Leasing Corporation on various leased copy and fax machines
more fully described in Delaware Secretary of State UCC-1 filing Number 51908830.
	 
	4.	 	Lien in favor of U.S. Bancorp Equipment Finance, Inc. on various compressor related items of
equipment more fully described in Delaware Secretary of State UCC-1 filing Number 53661254.





 









 





SCHEDULE 6.2


PERMITTED EXISTING DEBT


1.      $200 million of unsecured indebtedness related to the 2001 issuance of 8.25% senior subordinated
notes due 2011 pursuant to the Indenture dated as of December 5, 2001 between the Borrower and JP
Morgan Chase Bank, as Trustee.



2.      $200 million of unsecured indebtedness related to the 2004 issuance of 6.75% senior subordinated
notes due 2014 pursuant to the Indenture dated as of December 15, 2004 between the Borrower and
JPMorgan Chase Bank, N.A., as Trustee.




 








 





SCHEDULE 6.8




AFFILIATE TRANSACTIONS




None.