exv10w1






Exhibit 10.1




EXECUTION VERSION




 





SECOND LIEN TERM LOAN



CREDIT AGREEMENT



dated as of



September 28, 2011



among



MAGNUM HUNTER RESOURCES CORPORATION,

as Borrower,



CAPITAL ONE, NATIONAL ASSOCIATION,

as Administrative Agent,



BMO HARRIS FINANCING, INC.,

as Syndication Agent



CITIBANK, N.A.,

as Documentation Agent



and



THE LENDERS PARTY HERETO



*****



BMO CAPITAL MARKETS CORP. and CAPITAL ONE, NATIONAL ASSOCIATION,

as Joint Lead Arrangers and Bookrunners



 




 









 






TABLE OF CONTENTS




	 	 	 	 	 

	ARTICLE I Definitions and Accounting Matters
	 	 	1	 
	Section 1.01 Terms Defined Above
	 	 	1	 
	Section 1.02 Certain Defined Terms
	 	 	1	 
	Section 1.03 Types of Loans and Borrowings
	 	 	21	 
	Section 1.04 Terms Generally; Rules of Construction
	 	 	21	 
	Section 1.05 Accounting Terms and Determinations; GAAP
	 	 	21	 
	 
	ARTICLE II The Credits
	 	 	22	 
	Section 2.01 Commitments
	 	 	22	 
	Section 2.02 Loans and Borrowings
	 	 	22	 
	Section 2.03 Requests for Borrowings
	 	 	23	 
	Section 2.04 Interest Elections
	 	 	24	 
	Section 2.05 Funding of Loans
	 	 	25	 
	Section 2.06 [RESERVED]
	 	 	25	 
	Section 2.07 Total Reserve Value
	 	 	25	 
	Section 2.08 Intercreditor Agreement
	 	 	26	 
	 
	ARTICLE III Payments of Principal and Interest; Prepayments; Fees
	 	 	26	 
	Section 3.01 Repayment of Loans
	 	 	26	 
	Section 3.02 Interest
	 	 	26	 
	Section 3.03 Alternate Rate of Interest
	 	 	27	 
	Section 3.04 Prepayments
	 	 	28	 
	Section 3.05 Fees
	 	 	31	 
	 
	ARTICLE IV Payments; Pro Rata Treatment; Sharing of Set-offs
	 	 	31	 
	Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
	 	 	31	 
	Section 4.02 Presumption of Payment by the Borrower
	 	 	32	 
	Section 4.03 Certain Deductions by the Administrative Agent
	 	 	32	 
	Section 4.04 Disposition of Proceeds
	 	 	32	 
	 
	ARTICLE V Increased Costs; Break Funding Payments; Taxes; Illegality
	 	 	33	 
	Section 5.01 Increased Costs
	 	 	33	 
	Section 5.02 Break Funding Payments
	 	 	34	 
	Section 5.03 Taxes
	 	 	34	 
	Section 5.04 Mitigation Obligations
	 	 	35	 
	Section 5.05 Illegality
	 	 	36	 
	 
	ARTICLE VI Conditions Precedent
	 	 	36	 
	Section 6.01 Conditions to Effectiveness
	 	 	36	 
	Section 6.02 Additional Conditions
	 	 	38	 
	 
	ARTICLE VII Representations and Warranties
	 	 	39	 
	Section 7.01 Organization; Powers
	 	 	39	 
	Section 7.02 Authority; Enforceability
	 	 	39	 






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	 Section 7.03 Approvals; No Conflicts
	 	 	40	 
	 Section 7.04 Financial Condition; No Material Adverse Change
	 	 	40	 
	 Section 7.05 Litigation
	 	 	40	 
	 Section 7.06 Environmental Matters
	 	 	41	 
	 Section 7.07 Compliance with the Laws and Agreements; No Defaults
	 	 	42	 
	 Section 7.08 Investment Company Act
	 	 	42	 
	 Section 7.09 Taxes
	 	 	42	 
	 Section 7.10 ERISA
	 	 	42	 
	 Section 7.11 Disclosure; No Material Misstatements
	 	 	43	 
	 Section 7.12 Insurance
	 	 	43	 
	 Section 7.13 [RESERVED]
	 	 	43	 
	 Section 7.14 Subsidiaries
	 	 	44	 
	 Section 7.15 Location of Business and Offices
	 	 	44	 
	 Section 7.16 Properties; Titles, Etc
	 	 	44	 
	 Section 7.17 Maintenance of Properties
	 	 	45	 
	 Section 7.18 Gas Imbalances, Prepayments
	 	 	45	 
	 Section 7.19 Marketing of Production
	 	 	45	 
	 Section 7.20 Swap Agreements
	 	 	46	 
	 Section 7.21 Use of Loans
	 	 	46	 
	 Section 7.22 Solvency
	 	 	46	 
	 
	ARTICLE VIII Affirmative Covenants
	 	 	46	 
	Section 8.01 Financial Statements; Other Information
	 	 	46	 
	Section 8.02 Notices of Material Events
	 	 	49	 
	Section 8.03 Existence; Conduct of Business
	 	 	49	 
	Section 8.04 Payment of Obligations
	 	 	50	 
	Section 8.05 Performance of Obligations under Loan Documents
	 	 	50	 
	Section 8.06 Operation and Maintenance of Properties
	 	 	50	 
	Section 8.07 Insurance
	 	 	51	 
	Section 8.08 Books and Records; Inspection Rights
	 	 	51	 
	Section 8.09 Compliance with Laws
	 	 	51	 
	Section 8.10 Environmental Matters
	 	 	52	 
	Section 8.11 Further Assurances
	 	 	52	 
	Section 8.12 Reserve Reports
	 	 	53	 
	Section 8.13 Title Information
	 	 	54	 
	Section 8.14 Additional Collateral
	 	 	55	 
	Section 8.15 ERISA Compliance
	 	 	55	 
	Section 8.16 New Subsidiary Requirements
	 	 	55	 
	 
	ARTICLE IX Negative Covenants
	 	 	56	 
	Section 9.01 Financial Covenants
	 	 	56	 
	Section 9.02 Debt
	 	 	57	 
	Section 9.03 Liens
	 	 	59	 
	Section 9.04 Restricted Payments
	 	 	60	 
	Section 9.05 Investments, Loans and Advances
	 	 	61	 
	Section 9.06 Nature of Business; International Operations
	 	 	63	 
	Section 9.07 Limitation on Leases
	 	 	63	 






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	 Section 9.08 Proceeds of Notes/Loans
	 	 	63	 
	 Section 9.09 Sale or Discount of Receivables
	 	 	63	 
	 Section 9.10 Mergers, Etc
	 	 	63	 
	 Section 9.11 Sale of Assets
	 	 	64	 
	 Section 9.12 Environmental Matters
	 	 	66	 
	 Section 9.13 Transactions with Affiliates
	 	 	66	 
	 Section 9.14 Subsidiaries
	 	 	66	 
	 Section 9.15 Subsidiary Obligations and Preferred Stock
	 	 	66	 
	 Section 9.16 Negative Pledge Agreements; Dividend Restrictions
	 	 	66	 
	 Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments
	 	 	67	 
	 Section 9.18 Swap Agreements
	 	 	67	 
	 Section 9.19 Sale and Leaseback Transactions
	 	 	68	 
	 Section 9.20 Anti-Layering
	 	 	68	 
	 
	ARTICLE X Events of Default; Remedies
	 	 	68	 
	Section 10.01 Events of Default
	 	 	68	 
	Section 10.02 Remedies
	 	 	70	 
	 
	ARTICLE XI The Administrative Agent
	 	 	71	 
	Section 11.01 Appointment; Powers
	 	 	71	 
	Section 11.02 Duties and Obligations of Administrative Agent
	 	 	71	 
	Section 11.03 Action by Administrative Agent
	 	 	72	 
	Section 11.04 Reliance by Administrative Agent
	 	 	72	 
	Section 11.05 Subagents
	 	 	72	 
	Section 11.06 Resignation or Removal of Administrative Agent
	 	 	73	 
	Section 11.07 Administrative Agent as Lender
	 	 	73	 
	Section 11.08 No Reliance
	 	 	73	 
	Section 11.09 Authority to Release Collateral and Liens
	 	 	74	 
	Section 11.10 The Arrangers, the Syndication Agent and the Documentation Agent
	 	 	74	 
	Section 11.11 Filing of Proofs of Claim
	 	 	74	 
	Section 11.12 Acknowledgement Regarding Securities Laws
	 	 	75	 
	 
	ARTICLE XII Miscellaneous
	 	 	75	 
	Section 12.01 Notices
	 	 	75	 
	Section 12.02 Waivers; Amendments
	 	 	76	 
	Section 12.03 Expenses, Indemnity; Damage Waiver
	 	 	77	 
	Section 12.04 Successors and Assigns
	 	 	79	 
	Section 12.05 Survival; Revival; Reinstatement
	 	 	82	 
	Section 12.06 Counterparts; Integration; Effectiveness
	 	 	82	 
	Section 12.07 Severability
	 	 	83	 
	Section 12.08 Right of Setoff
	 	 	83	 
	Section 12.09 Governing Law; Jurisdiction; Consent to Service of Process
	 	 	83	 
	Section 12.10 Headings
	 	 	84	 
	Section 12.11 Confidentiality
	 	 	84	 
	Section 12.12 Exculpation Provisions
	 	 	85	 
	Section 12.13 No Third Party Beneficiaries
	 	 	85	 
	Section 12.14 USA Patriot Act Notice
	 	 	85	 
	Section 12.15 Interest Rate Limitation
	 	 	85	 






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	Annex 1

	 	List of Commitments
	 
	Exhibit A

	 	Form of Note
	Exhibit B

	 	Form of Borrowing Request
	Exhibit C

	 	Form of Interest Election Request
	Exhibit D

	 	Form of Compliance Certificate
	Exhibit E-1

	 	Form of Security Agreement
	Exhibit E-2

	 	Form of Guaranty
	Exhibit F

	 	Form of Assignment and Assumption
	Exhibit G

	 	Form of Intercreditor Agreement
	 
	 	 
	Schedule 1.01A

	 	Additional Unrestricted Subsidiaries as of the Effective Date
	Schedule 7.01

	 	Corporate Organizational Chart
	Schedule 7.05

	 	Litigation
	Schedule 7.14

	 	Subsidiaries
	Schedule 7.16

	 	Properties
	Schedule 7.18

	 	Gas Imbalances
	Schedule 7.19

	 	Marketing Contracts
	Schedule 9.02

	 	Debt
	Schedule 9.03

	 	Liens
	Schedule 9.05

	 	Investments
	Schedule 9.16

	 	PRC Williston LLC Agreement






-iv-









 






     THIS SECOND LIEN TERM LOAN CREDIT AGREEMENT, dated as of September 28, 2011 (the
“Effective Date”), is among MAGNUM HUNTER RESOURCES CORPORATION, a Delaware corporation
(the “Borrower”), each of the Lenders from time to time party hereto, CAPITAL ONE, NATIONAL
ASSOCIATION (in its individual capacity, “Capital One”), as administrative agent for the Lenders
(in such capacity, together with its successors in such capacity, the “Administrative
Agent”), BMO HARRIS FINANCING, INC., as syndication agent (in such capacity, together with its
successors in such capacity, the “Syndication Agent”) and CITIBANK, N.A., as documentation
agent (in such capacity, the “Documentation Agent”).



R E C I T A L S




     WHEREAS, each Lender is severally willing to make available to the Borrower a term loan upon
the terms and subject to the conditions set forth herein;



     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and
of the loans and commitments hereinafter referred to, the parties hereto agree as follows:



ARTICLE I



Definitions and Accounting Matters



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



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



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



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



     “Administrative Agent” has the meaning given in the introductory paragraph.



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



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



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



 









 





     “Agreement” means this Second Lien Term Loan Credit Agreement, as the same may from
time to time be amended, modified, supplemented or restated.



     “Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1% and (c) the LIBO Rate for a one month interest period in effect on such day plus
1%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds
Effective Rate or the LIBO Rate shall be effective from and including the effective day of such
change in the Prime Rate, the Federal Funds Effective Rate and the LIBO Rate, respectively.



     “Applicable Margin” means, for any day, with respect to any ABR Loan or Eurodollar
Loan, as the case may be, the rate per annum set forth in the grid below:



	 	 	 	 	 	 	 	 	 
	 	 	Effective Date through	 	July 1, 2012 through
	 	 	and including June 30,2012	 	Maturity Date
	ABR Loans

	 	 	6.00	%	 	 	7.00	%
	Eurodollar Loans

	 	 	7.00	%	 	 	8.00	%






     “Approved Counterparty” means (a) any First Lien Lender or any Affiliate of a First
Lien Lender or (b) any other Person whose long term senior unsecured debt rating at the time of
entry into the applicable Swap Agreement is A-/A3 by S&P or Moody’s (or their equivalent) or
higher.



     “Approved Fund” means (a) a CLO or (b) with respect to any Lender that is a fund which
invests in bank loans and similar extensions of credit, any other fund that invests in bank loans
and similar extensions of credit and is managed by the same investment advisor as such Lender or by
an Affiliate of such investment advisor.



     “Approved Petroleum Engineers” means an independent petroleum engineer or engineers
proposed by the Borrower and approved by the Administrative Agent.



     “Arrangers” means BMO Capital Markets Corp. and Capital One, National Association, in
their capacity as joint lead arrangers and bookrunners.



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



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



     “Borrower” has the meaning given in the introductory paragraph.



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



     “Borrowing Base” means the amount established by the First Lien Lenders from time to
time under the First Lien Credit Agreement as the maximum amount of loans and letters of credit the
First Lien Lenders will make available to the Borrower thereunder.



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



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



     “Canadian Collateral Documents” means any security agreement, pledge agreement,
guaranty, and the mortgages, deeds of trust and other agreements, instruments or certificates, and
any and all other agreements, instruments, certificates or certificates now or hereafter executed
and delivered by the Borrower or any other Person (other than participation or similar agreements
between any Lender and any other lender or creditor with respect to any Obligations pursuant to
this Agreement) regarding Collateral located in Canada, in connection with, or as security for the
payment or performance of the Obligations, the Notes or this Agreement, as such agreements may be
amended, modified, supplemented or restated from time to time.



     “Capital Leases” means, in respect of any Person, all leases that shall have been, or
should have been, in accordance with GAAP, recorded as capital leases on the balance sheet of the
Person liable (whether contingent or otherwise) for the payment of rent thereunder.



     “Casualty Event” means any loss, casualty or other insured damage to, or any
nationalization, taking under power of eminent domain or by condemnation or similar proceeding of,
any Property of the Borrower or any of its Restricted Subsidiaries having a fair market value in
excess of $2,000,000.



     “Change in Control” means the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the Securities Exchange
Act of 1934 and the rules of the SEC thereunder as in effect on the Effective Date) of Equity
Interests representing more than thirty percent (30%) of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Borrower.



     “Change in Law” means (a) the adoption of any law, rule or regulation after the
Effective Date, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the Effective Date or (c) compliance by any
Lender (or, for purposes of Section 5.01(b), by any lending office of such Lender or by
such Lender’s holding company, if any) with any request, guideline or directive (whether or not
having the force of law) of any Governmental Authority made or issued after the Effective Date;
provided, that



-3-









 




notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or
issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date
enacted, adopted or issued.




     “CLO” means any Person (other than a natural Person) that is engaged in making,
purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or an Affiliate of such
Lender.



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



     “Collateral” means all property and interests in property and proceeds thereof now
owned or hereafter acquired by any Loan Party in or upon which a Lien is granted or purported to be
granted pursuant to any Loan Document.



     “Commitment” means, with respect to each Lender, the commitment of such Lender to make
its Loan to the Borrower under this Agreement on the Effective Date, which commitment is in the
amount set forth opposite such Lender’s name on Annex 1 under the caption “Commitments”.
As of the Effective Date, the aggregate amount of the Commitments is $100,000,000.



     “Consolidated Net Income” means with respect to the Borrower and the Restricted
Subsidiaries, for any period, the aggregate of the net income (or loss) of the Borrower and the
Restricted Subsidiaries after allowances for Taxes payable by the Borrower and the Restricted
Subsidiaries for such period determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded from such net income (to the extent otherwise
included therein) the following: (a) the net income of any Person in which the Borrower or any
Restricted Subsidiary has an interest (which interest does not cause the net income of such other
Person to be consolidated with the net income of the Borrower and the Restricted Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or distributions actually
paid in cash during such period by such other Person to the Borrower or to a Restricted Subsidiary,
as the case may be; (b) any extraordinary gains or losses (excluding any unrealized gains and
losses under FAS 133) during such period; and (c) any gains or losses (excluding any unrealized
gains and losses under FAS 133) attributable to writeups or writedowns of assets; and
provided further that if the Borrower or any Restricted Subsidiary shall acquire or
dispose of any Property during such period in an aggregate amount that equals or exceeds ten
percent (10%) of the Borrowing Base then in effect, then Consolidated Net Income shall be
calculated after giving pro forma effect to such acquisition or disposition, as if such acquisition
or disposition had occurred on the first day of such period.



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



-4-









 





     “Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. For the purposes of this definition, and without
limiting the generality of the foregoing, any Person that owns directly or indirectly 40% or more
of the Equity Interests having ordinary voting power for the election of the directors or other
governing body of a Person (other than as a limited partner of such other Person) will be deemed to
“control” such other Person. “Controlling” and “Controlled” have meanings
correlative thereto.



     “Debt” means, for any Person, the sum of the following (without duplication): (a) all
obligations of such Person for borrowed money or evidenced by bonds, bankers’ acceptances,
debentures, notes or other similar instruments; (b) all obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, surety or other bonds and similar
instruments; (c) all accounts payable and all accrued expenses, liabilities or other obligations of
such Person to pay the deferred purchase price of Property or services; (d) all obligations under
Capital Leases; (e) all obligations under Synthetic Leases; (f) all Debt (as defined in the other
clauses of this definition) of others secured by a Lien (other than the Lien permitted by
Section 9.03(h)) on any Property of such Person, whether or not such Debt is assumed by
such Person; (g) all Debt (as defined in the other clauses of this definition) of others guaranteed
by such Person or in which such Person otherwise assures a creditor against loss of the Debt
(howsoever such assurance shall be made) to the extent of the lesser of the amount of such Debt and
the maximum stated amount of such guarantee or assurance against loss; (h) all obligations or
undertakings of such Person to maintain or cause to be maintained the financial position or
covenants of others or to purchase the Debt or Property of others; (i) obligations to deliver
commodities, goods or services, including, without limitation, Hydrocarbons, in consideration of
one or more advance payments, other than gas balancing arrangements in the ordinary course of
business; (j) any Debt of a partnership for which such Person is liable either by agreement, by
operation of law or by a Governmental Requirement but only to the extent of such liability; (k)
Disqualified Capital Stock; and (l) the undischarged balance of any production payment created by
such Person or for the creation of which such Person directly or indirectly received payment. The
Debt of any Person shall include all obligations of such Person of the character described above to
the extent such Person remains legally liable in respect thereof notwithstanding that any such
obligation is not included as a liability of such Person under GAAP.



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



     “Disqualified Capital Stock” means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible or for which it is exchangeable) or upon the
happening of any event, matures or is mandatorily redeemable for any consideration other than other
Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking
fund obligation or otherwise, or is convertible or exchangeable for Debt or redeemable for any
consideration other than other Equity Interests (which would not constitute Disqualified
Capital Stock) at the option of the holder thereof, in whole or in part, on or prior to the
date that is one year after the Maturity Date; provided, however, Disqualified Capital
Stock shall not include Series C or Series D preferred stock permitted under Section 9.02,
so long as any dividends paid with respect thereto comply with the provisions of Section
9.04.



-5-









 





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



     “Domestic Subsidiary” means any Subsidiary that is organized under the laws of the
United States of America or any state thereof or the District of Columbia.



     “EBITDAX” means, for any period, the sum of Consolidated Net Income for such period
calculated on a trailing four quarter basis plus the following expenses or charges to the extent
deducted from Consolidated Net Income in such period: interest, income Taxes, depreciation,
depletion, amortization, expenses associated with the exploration of Oil and Gas Properties, all
non-cash charges and adjustments (including stock-based compensation, impairment of asset values,
non-cash adjustments to derivative carrying values, non-cash adjustments to asset retirement
obligations and other similar items as from time to time required under GAAP) and all non-recurring
expenses, minus all non-cash income added to Consolidated Net Income. Notwithstanding the
foregoing, EBITDAX shall be Consolidated Net Income plus the aforementioned expenses or charges (i)
for the most recently ended two (2) quarters multiplied by two (2) with respect to the quarter
ended September 30, 2011, and (ii) for the most recently ended three (3) quarters multiplied by
four-thirds (4/3) with respect to the quarter ended December 31, 2011. With respect to any
acquisitions completed in any fiscal quarter, EBITDAX shall be calculated on a pro forma basis as
if such acquisitions had taken place as of the beginning of the quarter during which such
acquisitions take place.



     “Effective Date” means the date first written above.



     “Environmental Laws” means any and all Governmental Requirements pertaining in any way
to health, safety, the environment or the preservation or reclamation of natural resources, in
effect in any and all jurisdictions in which the Borrower or any Subsidiary is conducting or at any
time has conducted business, or where any Property of the Borrower or any Restricted Subsidiary is
located, including without limitation, the Oil Pollution Act of 1990 (“OPA”), as amended,
the Clean Air Act, as amended, the Comprehensive Environmental, Response, Compensation, and
Liability Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 (“RCRA”), as amended, the Safe Drinking Water Act, as amended, the
Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986,
as amended, the Hazardous Materials Transportation Act, as amended, and other environmental
conservation or protection Governmental Requirements. The term “oil” shall have the meaning
specified in OPA, the terms “hazardous substance” and “release” (or “threatened release”) have the
meanings specified in CERCLA, the terms “solid waste” and “disposal” (or “disposed”) have the
meanings specified in RCRA and the term “oil and gas waste” shall have the meaning specified in
Section 91.1011 of the Texas Natural Resources Code (“Section 91.1011”); provided,
however, that (a) in the event either OPA, CERCLA, RCRA or Section 91.1011 is amended so as
to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to
the effective date of
such amendment and (b) to the extent the laws of the state or other jurisdiction in which any
Property of the Borrower or any Subsidiary is located establish a meaning for “oil,” “hazardous
substance,” “release,” “solid waste,” “disposal” or “oil and gas waste” which is broader than that
specified in either OPA, CERCLA, RCRA or Section 91.1011, such broader meaning shall apply.



-6-









 





     “ESOP Shares” means (a) any issuances of Equity Interests pursuant to any employee
stock option or other stock incentive plan or other employee benefit or stock ownership plan of the
Borrower, including pursuant to any exercise of Equity Interests issued under such plans, (b) any
issuances of Equity Interests pursuant to the exercise of the Borrower’s outstanding warrants and
the warrants to be issued pursuant to the dividends declared prior to the Effective Date, and (c)
any issuances of Equity Interests pursuant to any rights offerings by the Borrower to shareholders
of the Borrower, including pursuant to the exercise of such rights.



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



     “Equity Prepayment Proceeds” has the meaning assigned such term in Section
3.04(c)(v).



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



     “ERISA Affiliate” means each trade or business (whether or not incorporated) that,
together with the Borrower or a Subsidiary is treated as a “single employer” under Section
414(b) or (c) of the Code, or solely for the proposes of Section 302 of ERISA and Section 412 of
the Code, is treated as a single employer under Section 414 of the Code.



     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than an event for which the 30 day
notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or
not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any Plan; (d) the
incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA
with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any
of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from
any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any
notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer
Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of
ERISA.



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



     “Eureka Hunter” means Eureka Hunter Pipeline, LLC, a Delaware limited liability
company.



-7-









 





     “Eureka Hunter Pipeline” means that certain pipeline system (as it may exist from time
to time, including any expansions thereof) for the gathering of natural gas in Ohio and West
Virginia commonly known as the Eureka Hunter Pipeline.



     “Eureka Hunter Pipeline J.V.” means a joint venture that may be formed between Eureka
Hunter Pipeline Partners and a third party to own and operate the Eureka Hunter Pipeline, subject
to approval by the Administrative Agent acting reasonably.



     “Eureka Hunter Pipeline Partners” means Eureka Hunter Pipeline Partners, LLC, a
Delaware limited liability company.



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



     “Excepted Liens” means (a) Liens for Taxes, assessments or other governmental charges
or levies which are not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP; (b) Liens in
connection with workers’ compensation, unemployment insurance or other social security, old age
pension or public liability obligations which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been maintained in accordance
with GAAP; (c) statutory landlord’s liens, operators’, vendors’, carriers’, warehousemen’s,
repairmen’s, mechanics’, suppliers’, workers’, materialmen’s, construction or other like Liens
arising by operation of law in the ordinary course of business or incident to the exploration,
development, operation and maintenance of Oil and Gas Properties each of which is in respect of
obligations that are not delinquent or which are being contested in good faith by appropriate
action and for which adequate reserves have been maintained in accordance with GAAP; (d)
contractual Liens that arise in the ordinary course of business under operating agreements, joint
venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out agreements,
division orders, contracts for the sale, transportation or exchange of oil and natural gas,
unitization and pooling declarations and agreements, area of mutual interest agreements, overriding
royalty agreements, marketing agreements, processing agreements, net profits agreements,
development agreements, gas balancing or deferred production agreements, injection, repressuring
and recycling agreements, salt water or other disposal agreements, seismic or other geophysical
permits or agreements, and other agreements which are usual and customary in the oil and gas
business and are for claims which are not delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in accordance with GAAP
(or, with respect to royalty interests, such liens will not reasonably be expected to result in a
Material Adverse Effect), provided that any such Lien referred to in this clause does not
materially impair the use of the Property covered by such Lien for the purposes for which such
Property is held by the Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (e) Liens arising solely by virtue of any
statutory or common law provision relating to banker’s liens, rights of set-off or similar
rights and remedies and burdening only deposit accounts or other funds maintained with a creditor
depository institution, provided that no such deposit account is a dedicated cash collateral
account or is subject to restrictions against access by the depositor in excess of those set forth
by regulations promulgated by the Board and no such deposit account is intended by Borrower or any
of its Subsidiaries to provide collateral to the depository institution; (f) easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any



-8-









 




Property of the Borrower or any Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal or other minerals or
timber, and other like purposes, or for the joint or common use of real estate, rights of way,
facilities and equipment, which in the aggregate do not materially impair the use of such Property
for the purposes of which such Property is held by the Borrower or any Subsidiary or materially
impair the value of such Property subject thereto; (g) Liens on cash or securities pledged to
secure performance of tenders, surety and appeal bonds, government contracts, performance and
return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations
and other obligations of a like nature incurred in the ordinary course of business; (h) judgment
and attachment Liens not giving rise to an Event of Default, provided that any appropriate
legal proceedings which may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceeding may be initiated shall not have
expired and no action to enforce such Lien has been commenced; and (i) Liens arising from UCC
financing statement filings regarding operating leases entered into by the Borrower and the
Subsidiaries in the ordinary course of business covering only the Property under lease; provided,
further that Liens described in clauses (a) through (e) shall remain Excepted Liens only for so
long as no action to enforce such Lien has been commenced and no intention to subordinate the
second priority Lien granted in favor of the Administrative Agent and the Lenders is to be hereby
implied or expressed by the permitted existence of such Excepted Liens.




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



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



-9-









 





     “Fee Letters” means the letter agreement dated August 30, 2011, among the Borrower,
the Syndication Agent and BMO Capital Markets Corp. pertaining to certain fees payable to the
Syndication Agent and BMO Capital Markets Corp., and the letter agreement dated September 20, 2011,
among the Borrower and the Administrative Agent pertaining to certain fees payable to the
Administrative Agent.



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



     “Financial Statements” means the financial statement or statements of the Borrower and
its Consolidated Subsidiaries referred to in Section 7.04(a).



     “First Lien Administrative Agent” means Bank of Montreal, acting in its capacity as
administrative agent for the First Lien Lenders.



     “First Lien Credit Agreement” means the Second Amended and Restated Credit Agreement,
dated as of April 13, 2011 among the Borrower, Bank of Montreal as administrative agent, the other
agents party thereto and the lenders from time to time party thereto, as amended prior to the date
hereof and as amended from time to time in accordance with the terms of this Agreement and the
Intercreditor Agreement.



     “First Lien Credit Facility” means senior secured first lien revolving facility under
the First Lien Credit Agreement.



     “First Lien Lender” means any bank or other financial institution which is a “Lender”
under the First Lien Credit Agreement.



     “First Lien Loan Documents” means the First Lien Credit Agreement, the Notes (as
defined in the First Lien Credit Agreement) issued thereunder, the Letter of Credit Agreements (as
defined in the First Lien Credit Agreement) entered into in accordance therewith, the Letters of
Credit (as defined in the First Lien Credit Agreement) issued thereunder, the Security Instruments
(as defined in the First Lien Credit Agreement) entered into in accordance therewith and the
Guaranties (as defined in the First Lien Credit Agreement) entered into in accordance therewith.



     “First Lien Obligations” has the meaning specified in the Intercreditor Agreement.



     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is located. For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.



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



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



-10-









 





     “Governmental Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government over the Borrower, any Subsidiary, any of their Properties, the
Administrative Agent or any Lender.



     “Governmental Requirement” means any applicable law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other directive or requirement, whether now or hereinafter in effect,
including, without limitation, Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.



     “Guaranty” means the Guaranty executed by the Guarantors of even date herewith in the
form of Exhibit E-2 attached hereto.



     “Guarantor” means all Restricted Subsidiaries of Borrower.



     “Hall Houston Debt” means the obligations of the Borrower with respect to contingent
liabilities retained by the Borrower in connection with the sale of limited partner interests in
Hall Houston Exploration II LP.



     “Highest Lawful Rate” means, as to any Lender, the maximum non-usurious interest rate,
if any (or, if the context so requires, an amount calculated at such rate), that at any time or
from time to time may be contracted for, taken, reserved, charged, or received by such Lender under
applicable laws with respect to an obligation, as such laws are presently in effect or, to the
extent allowed by applicable law, as such laws may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than such laws now allow. The determination of the Highest
Lawful Rate shall, to the extent required by applicable law, take into account as interest paid,
taken, received, charged, reserved or contracted for any and all relevant payments or charges under
the Loan Documents.



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



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



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Initial Reserve Report” means the Reserve Report effective as of June 30, 2011
prepared by or under the supervision of the chief engineer of the Borrower.



-11-









 





     “Intercreditor Agreement” means that certain Subordination and Intercreditor
agreement, dated as of the date hereof, among the Borrower, the Administrative Agent and the First
Lien Administrative Agent substantially in the form of Exhibit G, as the same may be
amended, modified or replaced from time to time.



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



     “Interest Expense” means, for any applicable period, the aggregate cash interest
expense (both accrued and paid and net of interest income paid during such period to the Borrower
and its Restricted Subsidiaries) of the Borrower and its Restricted Subsidiaries for such
applicable period, including the portion of any payments made in respect of Capital Leases
allocable to interest expense.



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



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



     “Interim Redetermination” means any redetermination of the Total Reserve Value under
Section 2.07(a).



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



     “Investment” means, for any Person: (a) the acquisition (whether for cash, Property,
services or securities or otherwise) of Equity Interests of any other Person or any agreement to
make any such acquisition (including, without limitation, any “short sale” or any sale of
any
securities at a time when such securities are not owned by the Person entering into such short
sale) or any capital contribution to any other Person; (b) the making of any deposit with, or



-12-









 




advance, loan or capital contribution to, assumption of Debt of, purchase or other acquisition of
any other Debt or equity participation or interest in, or other extension of credit to, any other
Person (including the purchase of Property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such Property to such Person); or (c) the entering
into of any guarantee of, or other contingent obligation (including the deposit of any Equity
Interests to be sold) with respect to, Debt or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such Person.




     “Lenders” means the Persons listed on Annex 1 and any Person that shall have
become a party hereto pursuant to an Assignment and Assumption, other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Assumption.



     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period,
the rate appearing on Reuters BBA Libor Rates LIBOR01 (or on any successor or substitute page of
such service, or any successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of such service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the LIBO Rate with respect to such Eurodollar Borrowing
for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and, in each
case, for a maturity comparable to such Interest Period are offered by the principal London office
of the Administrative Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest
Period; provided that for the period from the Effective Date until June 30, 2012, the LIBO Rate
shall not be less than 1.0% per annum and any period after June 30, 2012, the LIBO Rate shall not
be less than 2.0%.



     “Lien” means any interest in Property securing an obligation owed to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on the common law,
statute or contract, and whether such obligation or claim is fixed or contingent, and including but
not limited to (a) the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or bailment for
security purposes or (b) royalties, production payments and the like payable out of Oil and Gas
Properties. The term “Lien” shall include easements, restrictions, servitudes, permits,
conditions, covenants, encroachments, exceptions or reservations. For the purposes of this
Agreement, the Borrower and its Subsidiaries shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement, or leases under a financing lease
or other arrangement pursuant to which title to the Property has been retained by or vested in some
other Person in a transaction intended to create a financing.



     “Liquidate” means, with respect to any Swap Agreement, (a) the sale, assignment,
novation, unwind or termination of all or any part of such Swap Agreement or (b) the creation of an
offsetting position against all or any part of such Swap Agreement; provided that, a Swap
Agreement shall not be considered “Liquidated” for the purposes of this Agreement if, upon the
occurrence of any of the events described in clauses (a) and
(b), such Swap Agreement is



-13-









 




 replaced
simultaneously with a new Swap Agreement containing substantially the same terms and provisions as
the prior Swap Agreement. The term “Liquidated” has a correlative meaning thereto.




     “Liquidity” means the sum of (a) the Borrower’s unrestricted cash and cash equivalents
and (b) the total unusued availability under the First Lien Credit Agreement.



     “Loan Documents” means the Intercreditor Agreement, this Agreement, the Notes, the
Security Instruments and the Guaranty.



     “Loan Parties” means the Borrower and each Subsidiary that is a party to any Loan
Document.



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



     “Material Adverse Effect” means a material adverse effect on (a) the business,
operations, Property or condition (financial or otherwise) of the Borrower and the Restricted
Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform any of its obligations
under any Loan Document, (c) the validity or enforceability of any Loan Document or (d) the rights
and remedies of or benefits available to the Administrative Agent or any Lender under any Loan
Document.



     “Material Indebtedness” means any Debt (other than the Loans) or obligations in
respect of one or more Swap Agreements, of any one or more of the Borrower and its Restricted
Subsidiaries in an aggregate principal amount exceeding $3,500,000. For purposes of determining
Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Restricted
Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Borrower or such Restricted Subsidiary would be
required to pay if such Swap Agreement were terminated at such time.



     “Maturity Date” means October 13, 2016.



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



     “Mortgaged Property” means any Property owned by the Borrower or any Restricted
Subsidiary that is subject to the Liens existing and to exist under the terms of the Security
Instruments.



     “Mortgages” means all mortgages and deeds of trust executed in connection herewith.



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



     “Net Cash Proceeds” means (a) in the case of any offering, issuance or incurrence of
Debt, proceeds received in cash from the offering, issuance or incurrence of Debt (excluding any
Debt incurred in accordance with Section 9.02) by the Borrower net of brokers’, advisors’
and



-14-









 




investment banking fees and other customary out-of-pocket underwriting discounts, commissions
and other customary out-of-pocket cash costs, fees and expenses, including fees and expenses of
attorneys, accountants, other agents and advisors, in each case incurred in connection with such
transaction; (b) in the case of any sale, lease or other disposition of Properties, the cash
proceeds received from such sale, lease or disposition net of attorneys’ fees and other customary
fees and expenses actually incurred in connection therewith and income taxes and sale, use or other
transactional taxes paid or payable as a direct result of such disposition, any amounts paid to
terminate Swap Agreements in connection with such sale and the amount of any Debt (other than Debt
under the First Lien Credit Agreement) that is secured by a Lien on the asset subject to such
disposition and that is repaid in connection with such disposition; and (c) in the case of any
issuance or sale of Equity Interests, proceeds received in cash from such issuance or sale by the
Borrower, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting
discounts and commissions and other customary fees and expenses in each case incurred in connection
with such transaction.




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



     “Obligations” means, without duplication, (i) all Debt evidenced hereunder, (ii) the
obligation of the Loan Parties for the payment of the fees payable hereunder or under the other
Loan Documents and (iii) all other obligations and liabilities (monetary or otherwise, whether
absolute or contingent, matured or unmatured) of the Loan Parties to the Administrative Agent and
the Lenders, in each case now existing or hereafter incurred under, arising out of or in connection
with any Loan Document, and to the extent that any of the foregoing includes or refers to the
payment of amounts deemed or constituting interest, only so much thereof as shall have accrued,
been earned and which remains unpaid at each relevant time of determination.



     “Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) Properties now or
hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently existing or future
unitization, pooling agreements and declarations of pooled units and the units created thereby
(including without limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of Hydrocarbon Interests; (d) all
operating agreements, contracts and other agreements, including production sharing contracts and
agreements, which relate to any of Hydrocarbon Interests or the production, sale, purchase,
exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests; (e) all
Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon
Interests, including all oil in tanks, and all rents, issues, profits, proceeds, products, revenues
and other incomes from or attributable to Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or incidental to
Hydrocarbon Interests and (g) all Properties, rights, titles, interests and estates described or
referred to above, including any and all Property, real or personal, now owned or hereinafter
acquired and situated upon, used, held for use or useful in connection with the operating, working
or development of any of such Hydrocarbon Interests or Property (excluding
drilling rigs, automotive equipment, rental equipment or other personal Property which may be
on such premises for the purpose of drilling a well or for other similar temporary uses) and
including any and all oil wells, gas wells, injection wells or other wells, buildings, structures,



-15-









 




fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering
systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers,
casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all
additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.




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



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



     “Patriot Act” has the meaning set forth in Section 12.15.



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



     “PDP” means, with respect to the Oil and Gas Properties, properties that are
categorized as “Proved Reserves” that are both “Developed” and “Producing” as such terms are
defined in the Definitions for Oil and Gas Reserves as promulgated by the Society of Petroleum
Engineers (or any generally recognized successor) as in effect as the time in question.



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



     “Plan” means any employee pension benefit plan (other than a Multiemployer Plan),
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5)
of ERISA.



     “Preferred Prepayment Proceeds” has the meaning assigned such term in Section
3.04(c)(iv).



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



-16-









 





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



     “Proved Reserves” means “Proved Reserves” as defined in the Definitions for Oil and
Gas Reserves (in this paragraph, the “Definitions”) promulgated by the Society of Petroleum
Engineers (or any generally recognized successor) as in effect at the time in question.
“Proved Developed Producing Reserves” means Proved Reserves which are categorized as both
“Developed” and “Producing” in the Definitions, “Proved Developed Nonproducing Reserves”
means Proved Reserves which are categorized as both “Developed” and “Nonproducing” in the
Definitions, and “Proved Undeveloped Reserves” means Proved Reserves which are categorized
as “Undeveloped” in the Definitions.



     “PV” means the net present value, discounted at 10% per annum, of the future net
revenues expected to accrue to the Borrower’s and its Subsidiaries’ collective interests in Proved
Reserves expected to be produced from Oil and Gas Properties during the remaining expected economic
lives of such reserves. Each calculation of such expected future net revenues shall be based upon
the most recently delivered Reserve Report as of each Redetermination Date and shall be made in
accordance with the then existing standards of the Society of Petroleum Engineers, provided that in
any event (a) appropriate deductions shall be made for severance and ad valorem taxes, and for
operating, gathering, transportation and marketing costs required for the production and sale of
such reserves (provided that lease operating costs, development costs and other related operating
or development costs shall be held constant as determined as of the Effective Date), (b)
appropriate adjustments shall be made for hedging operations, (c) the pricing assumptions used in
determining PV for any particular reserves shall be based upon the following price decks: (i) for
natural gas, the average of the quotations for deliveries of natural gas for each of the five
immediately consecutive 12-month periods following a Redetermination Date from the New York
Mercantile Exchange (each such quotation for a 12-month period from the New York Mercantile
Exchange being, the “Strip Price”), provided that with respect to quotations for 12-month
periods after the fifth 12-month period following the relevant Redetermination Date, the price deck
for such fifth 12-month period shall be applied and (ii) for crude oil, the quoted Strip Price for
West Texas Intermediate crude oil for each such 12-month period following a Redetermination Date,
provided that with respect to quotations for 12-month periods after the fifth 12-month period
following the relevant Redetermination Date, the price deck for such fifth 12-month period
following the relevant Redetermination Date shall be applied and (d) the cash-flows derived from
the pricing assumptions set forth in clause (b) and (c) above shall be further adjusted to account
for the historical basis differentials and marketing expenses for each month during the preceding
12-month period calculated by comparing realized crude oil and natural gas prices for West Texas
Intermediate crude oil and Henry Hub NYMEX prices for each month during such period.



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



     “Redetermination Date” has the meaning assigned such term in Section 2.07(a).



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



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



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



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



     “Required Lenders” means two or more Lenders holding more than fifty percent (50%) of
the outstanding aggregate principal amount of the Loans.



     “Reserve Report” means a report, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth, as of each December 31st or June 30th, the oil and gas
reserves attributable to the proved Oil and Gas Properties of the Borrower and the Restricted
Subsidiaries, together with a projection of the rate of production and future net income, taxes,
operating expenses and capital expenditures with respect thereto as of such date, based upon the
pricing assumptions consistent with SEC reporting requirements at the time and shall include the
Initial Reserve Report.



     “Reserve Report Certificate” has the meaning ascribed such term in Section
8.12(c).



     “Responsible Officer” means, as to any Person, the Chief Executive Officer, the Chief
Operating Officer, the President, any Financial Officer or any Vice President of such Person.
Unless otherwise specified, all references to a Responsible Officer herein shall mean a Responsible
Officer of the Borrower.



     “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any Equity Interests in the Borrower or any
Restricted Subsidiary, or any payment (whether in cash, securities or other Property), including
any sinking fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests in the Borrower or any
Restricted Subsidiary or any option, warrant or other right to acquire any such Equity Interests in
the Borrower or any Restricted Subsidiary.



     “Restricted Subsidiary” means any Subsidiary that is not an Unrestricted Subsidiary.



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



     “Security” means second-priority mortgage and security interest in the Collateral.



     “Security Agreement” means the Second Lien Security and Pledge Agreement executed by
the Borrower and the Guarantors of even date herewith, substantially in the form of Exhibit
E-1 attached hereto.



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     “Security Instruments” means the mortgages, deeds of trust and other agreements,
instruments or certificates, and any and all other agreements, instruments, certificates or
certificates now or hereafter executed and delivered by the Borrower or any other Person (other
than participation or similar agreements between any Lender and any other lender or creditor with
respect to any Obligations pursuant to this Agreement) in connection with, or as security for the
payment or performance of the Obligations, the Notes, this Agreement, as such agreements may be
amended, modified, supplemented or restated from time to time, including, without limitation, the
Security Agreement, the Canadian Collateral Documents and Mortgages.



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



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



     “Subsidiary” means (a) any Person of which at least a majority of the outstanding
Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board
of directors, manager or other governing body of such Person (irrespective of whether or not at the
time Equity Interests of any other class or classes of such Person shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or indirectly owned or
Controlled by the Borrower or one or more of its Subsidiaries or by the Borrower and one or more of
its Subsidiaries and (b) any partnership of which the Borrower or any of its Subsidiaries is a
general partner. Unless otherwise indicated herein, each reference to the term
“Subsidiary” shall mean a Subsidiary of the Borrower. Notwithstanding the foregoing, for
the purposes of ARTICLE IX, Unrestricted Subsidiaries shall not be considered “Subsidiaries” and
the covenants contained in ARTICLE IX shall not apply to Unrestricted Subsidiaries.



     “Swap Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement, whether exchange traded, “over-the-counter”
or otherwise, involving, or settled by reference to, one or more rates, currencies, commodities,
equity or debt instruments or securities, or economic, financial or pricing indices or measures of
economic, financial or pricing risk or value or any similar transaction or any combination of these
transactions; provided that no stock incentive, stock option, phantom stock or similar plan
or program providing for stock-based awards or payments to current or former directors, officers,
employees or consultants of the Borrower or the Subsidiaries, shall be considered to be a Swap
Agreement.



     “Syndication Agent” has the meaning given in the introductory paragraph.



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



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



     “Total Proved Reserves” means, with respect to the Oil and Gas Properties, the sum of
(a) PDP Oil and Gas Properties, (b) Oil and Gas Properties that are categorized as “Proved
Developed Nonproducing Reserves”, and (c) Oil and Gas Properties that are categorized as “Proved
Undeveloped Reserves”, in each case, as said two latter terms are defined in the Definitions for
Oil and Gas Reserves as promulgated by the Society of Petroleum Engineers (or any generally
recognized successor) as in effect at the time in question.



     “Total Reserve Value” means at any time the PV attributable to Proved Reserves as most
recently determined and certified to the Lenders in accordance with Section 2.07, as the
same may be adjusted from time to time pursuant to Section 2.07(c), Section 8.13 or
Section 9.11 and further adjusted, if necessary, to exclude a portion of reserves other
than Proved Developed Producing Reserves such that not less than 70% of Total Reserve Value is
attributable to the PV of Proved Developed Producing Reserves.



     “Transactions” means the execution, delivery and performance by the Borrower of this
Agreement, each other Loan Document to which it is a party, the borrowing of Loans, the use of the
proceeds thereof and the grant of Liens by the Borrower and the Guarantors on Mortgaged Properties
and other Properties pursuant to the Security Instruments.



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



     “UCC” means the Uniform Commercial Code in effect from time to time in the State of
New York, or, where applicable as to specific Property, any other relevant state.



     “Unrestricted Subsidiary” means (i) any Subsidiary that at the time of determination
shall have been designated as an Unrestricted Subsidiary by the Borrower in the manner provided
below (and shall not have been subsequently designated as a Restricted Subsidiary), (ii) any
Subsidiary of an Unrestricted Subsidiary and (iii) the Persons listed on Schedule 1.01A
(except to the extent any such Person has been subsequently designated as a Restricted Subsidiary).
The Borrower may from time to time designate any Subsidiary (including a newly-created or newly
acquired Subsidiary) (other than a Subsidiary that, immediately after such designation, shall hold
any Debt or Equity Interest in the Borrower or any Restricted Subsidiary) as an Unrestricted
Subsidiary, and may designate any Unrestricted Subsidiary as a Restricted Subsidiary so long as,



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immediately after giving effect to such designation, no Default shall have occurred and be
continuing. Any designation by the Borrower pursuant to this definition shall be made in an
officer’s certificate delivered to the Administrative Agent and containing a certification that
such designation is in compliance with the terms of this definition.




     “Wholly-Owned Subsidiary” means any Subsidiary of which all of the outstanding Equity
Interests (other than any directors’ qualifying shares mandated by applicable law), on a
fully-diluted basis, are owned by the Borrower or one or more of the Wholly-Owned Subsidiaries or
by the Borrower and one or more of the Wholly-Owned Subsidiaries; provided that, for
purposes of this Agreement, and for the avoidance of doubt, PRC Williston, LLC, during such times
as the Borrower owns all of the Equity Interests therein, shall be deemed a Wholly-Owned
Subsidiary, notwithstanding the non-controlling interests in such Subsidiary recorded for
accounting purposes as reflected in the Borrower’s Financial Statements.



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



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



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



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date on which financial statements are required to be delivered to
the Lenders pursuant to Section 8.01(a); provided that, unless the Borrower and
the Required Lenders shall otherwise agree in writing, no such change shall modify or affect the
manner in which compliance with the covenants contained herein is computed such that all such
computations shall be conducted utilizing financial information presented consistently with prior
periods.




ARTICLE II




The Credits



     Section 2.01 Commitments. Subject to the terms and conditions set forth herein, each Lender agrees
to make a Loan to the Borrower on the Effective Date in an aggregate principal amount that will not
exceed such Lender’s Commitment. The Commitments are not revolving and the Borrower may not
borrow, repay and reborrow the Loans. Any portion of the Commitments not requested pursuant to
Section 2.03 by the Borrower on or before 3:00 p.m. New York time on the Effective Date
shall be permanently cancelled.



     Section 2.02
Loans and Borrowings. Borrowings; Several Obligations. Each Term Loan
shall be made as part of a Borrowing consisting of Loans made by each Lender ratably in accordance
with its respective Commitment. The failure of any Lender to make its Loan shall not relieve any
other Lender of its obligations hereunder; provided that the Commitments are several and no
Lender shall be responsible for any other Lender’s failure to make its Loan as required.



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



     (c) Minimum Amounts; Limitation on Number of Borrowings. At the commencement of each
Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that
is an integral multiple of $100,000 and not less than $500,000. At the time that each ABR
Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $500,000; provided that an ABR Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Commitments. Borrowings of more
than one Type may be outstanding at the same time; provided that there shall not at any
time be more than a total of four (4) Eurodollar Borrowings outstanding. Notwithstanding any other
provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert
or continue, any Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.



     (d) Notes. Any Lender may request that Loans made by it be evidenced by a single
promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to such Lender in substantially the form of Exhibit A, dated, in
the case of (i) any Lender party hereto as of the Effective Date, as of the Effective Date or (ii)
any Lender



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that becomes a party hereto pursuant to an Assignment and Assumption, as of the
effective date of the Assignment and Assumption, in each case, payable to such Lender in a
principal amount equal to its Loans as in effect on such date, and otherwise duly completed. If
the amount of any Lender’s Loans increases or decreases for any reason (whether pursuant to
Section 12.04(b) or otherwise), the Borrower shall deliver or cause to be delivered on the
effective date of such increase or decrease, a new Note payable to any Lender who requested a Note
hereunder in a principal amount equal to its Loans after giving effect to such increase or
decrease, and otherwise duly completed, and such Lender agrees to promptly thereafter return the
previously issued Note held by such Lender marked canceled or otherwise similarly defaced. The
date, amount, Type, interest rate and, if applicable, Interest Period of each Loan made by each
Lender that receives a Note, and all payments made on account of the principal thereof, shall be
recorded by such Lender on its books for its Note, and, prior to any transfer, may be endorsed by
such Lender on a schedule attached to such Note or any continuation thereof or on any separate
record maintained by such Lender. Failure to make any such notation or to attach a schedule shall
not affect any Lender’s or the Borrower’s rights or obligations in respect of such Loans or affect
the validity of such transfer by any Lender of its Note.




     Section 2.03 Requests for Borrowings. To request the Borrowing, the Borrower shall notify the
Administrative Agent of such request by written Borrowing Request in substantially the form of
Exhibit B and signed by the Borrower (the “Borrowing Request”): (a) in the case of
a Eurodollar Borrowing, not later than 12:00 noon, New York, New York time, three Business Days
before the Effective Date or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New
York, New York time, on the Effective Date. The Borrowing Request shall be irrevocable. The
Borrowing Request shall specify the following information in compliance with Section 2.02:




     (i) the aggregate amount of the requested Borrowing;




     (ii) the date of such Borrowing, which shall be the Effective Date;




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




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




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



     If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be
an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest Period of
one month’s duration. Promptly following receipt of a Borrowing Request in accordance with
this Section 2.03, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.



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



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



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




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




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




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




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


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




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



     (e) Effect of Failure to Deliver Timely Interest Election Request and Events of Default on
Interest Election. If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto,



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then,
unless such Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing: (i) no outstanding Borrowing may be
converted to or continued as a Eurodollar Borrowing (and any Interest Election Request that
requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar
Borrowing shall be ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable thereto.




     Section 2.05
Funding of Loans. Funding by Lenders. Each Lender shall make its Loan on
the Effective Date by wire transfer of immediately available funds by 1:00 p.m., New York, New York
time, to the account of the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by
promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained
with the Administrative Agent in New York, New York and designated by the Borrower in the Borrowing
Request.



     (b) Presumption of Funding by the Lenders. Unless the Administrative Agent shall have
received notice from a Lender prior to the time such Lender is required to fund its share of a
Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share
of such Borrowing, the Administrative Agent may assume that such Lender has made such share
available on such date in accordance with paragraph (a) above and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the Administrative Agent, then
the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith
on demand such corresponding amount with interest thereon, for each day from and including the date
such amount is made available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective
Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR
Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Loan included in such Borrowing.



     Section 2.06 [RESERVED].



     Section 2.07 Total Reserve Value.



     (a) Subject to interim adjustment under Section 2.07(c), Section 8.13 and
Section 9.11, the initial Total Reserve Value shall be $437,175,428. The Borrower shall
deliver to the Administrative Agent a Reserve Report Certificate in accordance with Section
8.12, so that the
Total Reserve Value may be redetermined semi-annually on or around November 1st and May 1st of
each year (each, a “Scheduled Redetermination Date” and, together with each Interim
Redetermination Date, as defined below, a “Redetermination Date”) which Reserve Report
Certificate shall reflect the Total Reserve Value as of the immediately preceding June 30 and
December 31, respectively, commencing May 1, 2012. The Borrower shall calculate the Total Reserve
Value based upon the applicable definitions of this Agreement.



-25-









 





     (b) Upon receipt of a Reserve Report Certificate, the Administrative Agent shall promptly
review such certificate and, within five (5) Business Days, confirm to the Borrower and the Lenders
that (i) the calculations used to determine the Total Reserve Value were based upon the pricing and
other requirements set forth in the definition of Total Reserve Value and (ii) no mathematical or
other errors or omissions have been made in such calculation. If facts under (i) or (ii) are
ascertained not to exist, the Administrative Agent and the Borrower shall cooperate to promptly
calculate the proper amount of the Total Reserve Value. Otherwise, upon confirmation of such
amount as the Total Reserve Value, such amount will be the Total Reserve Value until next adjusted
or redetermined in accordance with the terms of this Agreement.



     (c) If the Borrower or any Subsidiary changes the material terms of any commodity-price Swap
Agreement, terminates any such Swap Agreement or creates any off-setting positions in respect of
any hedge positions under any such Swap Agreement (whether evidenced by a floor, put or Swap
Agreement), then the Total Reserve Value shall be simultaneously reduced by an amount determined by
the Majority Lenders not exceeding the economic consequences of such change, termination or
creation of off-setting positions.



     (d) The Borrower may elect to redetermine the Total Reserve Value, by notifying the
Administrative Agent thereof, one time during any six-month period, that it elects to cause the
Total Reserve Value to be redetermined between Scheduled Redeterminations (each an “Interim
Redetermination”) in accordance with this Section 2.07 (each an “Interim Redetermination
Date”).



     Section 2.08 Intercreditor Agreement. The Loans, the Notes, this Agreement and the other Loan
Documents, the rights and remedies of the Lenders and the Administrative Agent hereunder and
thereunder and the Liens created thereby are subject to the Intercreditor Agreement. Each Lender
hereunder (a) acknowledges that it has received a copy of the Intercreditor Agreement, (b) consents
to the subordination of Liens provided for in the Intercreditor Agreement, (c) agrees that it will
be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement and
(d) authorizes and instructs the Administrative Agent to enter into the Intercreditor Agreement as
Second Lien Collateral Agent (as defined therein) and on behalf of such Lender. The foregoing
provisions are intended as an inducement to the lenders under the First Lien Credit Agreement to
permit the incurrence of Indebtedness under this Agreement and to extend credit to the Borrower and
such lenders are intended third party beneficiaries of such provisions.



ARTICLE III




Payments of Principal and Interest; Prepayments; Fees



     Section 3.01 Repayment of Loans. The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan
on the Maturity Date.



     Section 3.02 Interest. ABR Loans. The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.




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



     (c) Post-Default Rate. Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by the Borrower hereunder or under any other Loan
Document is not paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to
two percent (2%) plus the rate applicable to ABR Loans as provided in Section 3.02(a), but
in no event to exceed the Highest Lawful Rate.



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



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



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



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



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


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





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Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.




     Section 3.04 Prepayments.Optional Prepayments. Subject to prior notice in accordance
with Section 3.04(b), the Borrower shall have the right, from time to time, to prepay the
Loans, in whole or in part, subject to the following:




     (i) if such prepayment is made on a date before, or on, the first anniversary of the
Effective Date, without premium or penalty;




     (ii) if such prepayment is made on a date after the first anniversary of the Effective
Date but prior to and including the second anniversary of the Effective Date, with a premium
equal to 2% of such principal amount prepaid;




     (iii) if such prepayment is made on a date after the second anniversary of the
Effective Date, but prior to and including the third anniversary of the Effective Date, with
a premium equal to 1% of such principal amount prepaid; and




     (iv) if such prepayment is made on a date after the third anniversary of the Effective
Date, without premium or penalty;


provided that, each prepayment is for a principal amount that is an integral multiple of $1,000,000
and not less than $1,000,000, or if such principal amount is less than $1,000,000, the outstanding
principal amount of the Loans.




     (b) Notice and Terms of Optional Prepayment. The Borrower shall notify the
Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the
case of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York, New York time,
three Business Days before the date of prepayment, or (ii) in the case of prepayment of an ABR
Borrowing, not later than 12:00 noon, New York, New York time, on the Business Day of prepayment.
Each such notice shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid. Promptly following receipt of any such
notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by
Section 3.02.



     (c) Mandatory Prepayments.




     (i) If any Debt securities evidenced by bonds, debentures, notes or similar instruments
(excluding any Debt incurred in accordance with Section 9.02, but including any such
Debt securities convertible into Equity Interests) shall be issued or incurred by the
Borrower, an amount equal to 100% of the Net Cash Proceeds thereof shall be applied, no
later than five Business Days after the Borrower’s receipt of such Net Cash Proceeds, toward
the prepayment of the Loans so long as no Default or Event of Default
shall exist under the First Lien Credit Agreement and no Borrowing Base Deficiency (as
defined in the Intercreditor Agreement) exists.



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     (ii) If the Net Cash Proceeds of any sale or other disposition of any Property of any
Loan Party (including, without limitation, any Casualty Event) are $25,000,000 or more, an
amount equal to 100% of such Net Cash Proceeds shall be applied, first, to prepay the
principal amount of the First Lien Obligations (until such time as the Liquidity test below
is satisfied) and, then, to prepay the Loans; provided, that the Borrower shall not
be required to prepay the Loans (A) with respect to any Net Cash Proceeds from the sale or
other disposition of assets permitted pursuant to Section 9.11 (other than Section
9.11(b) or (d)) or (B) so long as (1) any Default or Event of Default shall
exist under the First Lien Credit Agreement, (2) Liquidity is less than $50,000,000 after
giving pro forma effect to such prepayment or (3) any Borrowing Base Deficiency (as defined
in the Intercreditor Agreement) exists. Any such prepayment of the Loans shall be made no
later than the fifth Business Day after the receipt of such Net Cash Proceeds.




     (iii) If the Net Cash Proceeds of any sale or other disposition of any Property of any
Loan Party (including, without limitation, any Casualty Event) permitted under Section
9.11(b) or (d) are less than $25,000,000, the Borrower shall prepay the Loans in
accordance with Section 9.11(b)(i) or Section 9.11(d)(v), respectively;
provided, that the Borrower shall not be required to prepay the Loans so long as (A)
any Default or Event of Default shall exist under the First Lien Credit Agreement, (B)
Liquidity is less than $50,000,000 after giving pro forma effect to such prepayment or (C)
any Borrowing Base Deficiency (as defined in the Intercreditor Agreement) exists. Any such
prepayment of the Loans shall be made upon the expiry of the 180 day term set forth in
Section 9.11(d)(v).




     (iv) If the aggregate Net Cash Proceeds of sales or issuances, private or public, of
preferred stock (other than Net Cash Proceeds (A) arising out of issuances or exercises of,
or otherwise realized from (i) ESOP Shares or (ii) issuances, exchanges or redemptions
permitted under Section 9.04(d) and (B) from issuances or sales made in connection with an
Investment permitted under Section 9.05(h) to the extent the Borrower has previously
notified the Administrative Agent of its intent to use such Net Cash Proceeds for a specific
acquisition in accordance with Section 9.05(h) for which the Borrower or a
Restricted Subsidiary has entered into a definitive agreement related thereto and
consummated such acquisition within ninety (90) days of the execution of such definitive
agreement) by the Borrower, from and after the Effective Date, are more than $50,000,000, an
amount equal to 50% of such Net Cash Proceeds in excess of $50,000,000 (such prepayment
amount, the “Preferred Prepayment Proceeds”) shall be applied (without duplication
of any prepayment made in accordance with the following proviso), no later than the last
Business Day of the fiscal quarter during which such Preferred Prepayment Proceeds are
received by the Borrower, toward the prepayment of the Loans so long as no Default or Event
of Default shall exist under the First Lien Credit Agreement and no Borrowing Base
Deficiency (as defined in the Intercreditor Agreement) exists when such prepayment is to be
made; provided, that if the Preferred Prepayment Proceeds exceed $3,500,000 in any fiscal
quarter, such Preferred Prepayment Proceeds shall be applied, no later than five Business
Days after the Borrower’s receipt of
such Preferred Prepayment Proceeds or, if applicable, the expiry of the ninety-day term
in clause (B) above, toward the prepayment of the Loans so long as no Default or
Event of



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Default shall exist under the First Lien Credit Agreement and no Borrowing Base
Deficiency (as defined in the Intercreditor Agreement) exists.




     (v) If any Equity Interests that are not preferred stock (including, without
limitation, any common stock or convertible securities other than Debt securities
convertible into Equity Interests) shall be issued or sold by the Borrower, an amount equal
to 50% of the Net Cash Proceeds thereof (other than Net Cash Proceeds (A) arising out of
issuances or exercises of, or otherwise realized from (i) ESOP Shares and (ii) issuances,
exchanges or redemptions permitted under Section 9.04(d) and (B) from issuances or
sales made in connection with an Investment permitted under Section 9.05(h) to the
extent the Borrower has previously notified the Administrative Agent of its intent to use
such Net Cash Proceeds for a specific acquisition in accordance with Section 9.05(h)
for which the Borrower or a Restricted Subsidiary has entered into a definitive agreement
related thereto and consummated such acquisition within ninety (90) days of the execution of
such definitive agreement) (such prepayment amount, the “Equity Prepayment
Proceeds”) shall be applied (without duplication of any prepayment made in accordance
with the following proviso), no later than the last Business Day of the fiscal quarter
during which such Equity Prepayment Proceeds are received by the Borrower, toward the
prepayment of the Loans so long as no Default or Event of Default shall exist under the
First Lien Credit Agreement and no Borrowing Base Deficiency (as defined in the
Intercreditor Agreement) exists when such prepayment is to be made; provided, that if the
Equity Prepayment Proceeds exceed $3,500,000 in any fiscal quarter, such Equity Prepayment
Proceeds shall be applied, no later than five Business Days after either the Borrower’s
receipt of such Equity Prepayment Proceeds, or, if applicable, the expiry of the ninety-day
term in clause (B) above, toward the prepayment of the Loans so long as no Default
or Event of Default shall exist under the First Lien Credit Agreement and no Borrowing Base
Deficiency (as defined in the Intercreditor Agreement) exists.




     (vi) Any prepayment pursuant to this clause (c) above shall be accompanied by payment
of any break funding costs payable pursuant to Section 5.02




     (vii) Notwithstanding anything herein to the contrary, if the amount of any Net Cash
Proceeds referred to in this clause (c) would otherwise be a required prepayment
under the terms of the First Lien Credit Agreement, then prepayment shall only be required
to the extent any excess Net Cash Proceeds remain after making such prepayment.




     (viii) Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be
applied to outstanding Borrowings as directed by the Borrower or, if no such direction is
given, first, ratably to any ABR Borrowings then outstanding, and, second, to any Eurodollar
Borrowings then outstanding, and if more than one Eurodollar Borrowing is then outstanding,
to each such Eurodollar Borrowing in order of priority beginning with the Eurodollar
Borrowing with the least number of days remaining in the Interest Period applicable thereto
and ending with the Eurodollar Borrowing with the most number of days remaining in the
Interest Period applicable thereto.



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



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



     Section 3.05 Fees. The Borrower agrees to pay to the Administrative Agent, for its own account,
fees payable in the amounts and at the times specified in the Fee Letter, or otherwise separately
agreed upon between the Borrower and the Administrative Agent.



ARTICLE IV




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



     Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs. Payments by the
Borrower. The Borrower shall make each payment required to be made by it hereunder (whether of
principal, interest, fees, or of amounts payable under Section 5.01, Section 5.02,
Section 5.03 or otherwise) prior to 12:00 noon, New York, New York time, on the date when
due, in dollars that constitute immediately available funds, without defense, deduction,
recoupment, set-off or counterclaim. Fees, once paid, shall not be refundable under any
circumstances absent manifest error (e.g., as a result of a clerical mistake). Any amounts
received after such time on any date may, in the discretion of the Administrative Agent, be deemed
to have been received on the next succeeding Business Day for purposes of calculating interest
thereon. All such payments shall be made to the Administrative Agent at its offices located at
Capital One Bank, Commercial Loan Servicing, 14601 Sweitzer Lane, Laurel, MD 20707, except that
payments pursuant to Section 5.01, Section 5.02, Section 5.03 and
Section 12.03 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on
a day that is not a Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable
for the period of such extension. All payments hereunder shall be made in dollars.



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



     (c) Sharing of Payments by Lenders. If any Lender shall, by exercising any right of
set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on
any of its Loans resulting in such Lender receiving payment of a greater proportion of the



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




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



     Section 4.03 Certain Deductions by the Administrative Agent. If any Lender shall fail to make any
payment required to be made by it pursuant to Section 2.05(a), 4.02 or
12.03(c), then the Administrative Agent may, in its discretion and notwithstanding any
contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent
for the account of such Lender and for the benefit of the Administrative Agent to satisfy such
Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid,
and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application
to, any future funding obligations of such Lender under such Sections; in the case of each of (i)
and (ii) above, in any order as determined by the Administrative Agent in its discretion.



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



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Notwithstanding the assignment contained in such Security Instruments, until the occurrence of an
Event of Default, (a) the Administrative Agent and the Lenders agree that they will neither notify
the purchaser or purchasers of such production nor take any other action to cause such proceeds to
be remitted to the Administrative Agent or the Lenders, but the Lenders will instead permit such
proceeds to be paid to the Borrower and its Restricted Subsidiaries and (b) the Lenders hereby
authorize the Administrative Agent to take such actions as may be necessary to cause such proceeds
to be paid to the Borrower and/or such Restricted Subsidiaries.




ARTICLE V




Increased Costs; Break Funding Payments; Taxes; Illegality



     Section 5.01 Increased Costs. Eurodollar Changes in Law. If any Change in Law shall:




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




     (ii) impose on any Lender or the London interbank market any other condition affecting
this Agreement or Eurodollar Loans made by such Lender;


and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to
reduce the amount of any sum received or receivable by such Lender (whether of principal, interest
or otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.




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



     (c) Certificates. A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be, as specified in
Section 5.01(a) or (b) and reasonably detailed calculations therefor shall be
delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.



     (d) Effect of Failure or Delay in Requesting Compensation. Failure or delay on the
part of any Lender to demand compensation pursuant to this Section 5.01 shall not
constitute a waiver of such Lender’s right to demand such compensation; provided that the
Borrower shall



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not be required to compensate a Lender pursuant to this Section 5.01 for
any increased costs or reductions incurred more than 90 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of
such Lender’s intention to claim compensation therefor; provided further that, if
the Change in Law giving rise to such increased costs or reductions is retroactive, then the 90-day
period referred to above shall be extended to include the period of retroactive effect thereof.




     Section 5.02 Break Funding Payments. In the event of (a) the payment of any principal of any
Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any Eurodollar Loan into an ABR Loan other
than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant
hereto, or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to Section
5.04(b), then, in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the principal amount of
such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such Lender would bid
were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the Eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this Section 5.02
and reasonably detailed calculations therefor shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.



     Section 5.03 Taxes.Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower under any Loan Document shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the
sum payable shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section 5.03(a)),
the Administrative Agent or Lender (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.



     (b) Payment of Other Taxes by the Borrower. The Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.



     (c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent and each Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such



-34-









 




Lender, as the case may
be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder
(including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts
payable under this Section 5.03) and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental Authority. A
certificate of the Administrative Agent or a Lender as to the amount of such payment or liability
under this Section 5.03 shall be delivered to the Borrower and shall be conclusive absent
manifest error.




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



     (e) Foreign Lenders. Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or
any treaty to which such jurisdiction is a party, with respect to payments under this Agreement or
any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at
the time or times prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower as will permit such payments
to be made without withholding or at a reduced rate.



     (f) Tax Refunds. If the Administrative Agent or a Lender determines, in its
reasonable discretion, that it has received a refund of any Taxes or Other Taxes as to which it has
been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 5.03, it shall pay over such refund to the Borrower (but only to
the extent of indemnity payments made, or additional amounts paid, by the Borrower under this
Section 5.03 with respect to the Taxes or Other Taxes giving rise to such refund), net of
all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to such refund);
provided, that the Borrower, upon the request of the Administrative Agent or such Lender,
agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the
event
the Administrative Agent or such Lender is required to repay such refund to such Governmental
Authority. This Section 5.03 shall not be construed to require the Administrative Agent
or any Lender to make available its tax returns (or any other information relating to its taxes
which it deems confidential) to the Borrower or any other Person.



     Section 5.04 Mitigation Obligations. Designation of Different Lending Office. If any
Lender requests compensation under Section 5.01, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 5.03, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of
such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 5.01 or Section 5.03, as the case may be, in the future and (ii) would
not subject such Lender to



-35-









 




any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by any Lender in connection with any such designation or assignment.




     (b) Replacement of Lenders. If (i) any Lender requests compensation under
Section 5.01 or (ii) the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section 5.03, then
the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in Section 12.04(b)), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that, (1) in the case
of a required assignment of interest, the Borrower shall have received the prior written consent of
the Administrative Agent, which consent shall not unreasonably be withheld, (2) such Lender shall
have received payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder, including any
applicable premium then due under Section 3.04(a), from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (3) in the case of any such assignment resulting from a claim for compensation under
Section 5.01 or payments required to be made pursuant to Section 5.03, such
assignment will result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and
delegation cease to apply.



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



ARTICLE VI




Conditions Precedent



     Section 6.01 Conditions to Effectiveness. The obligations of each Lender to fund its Loan
hereunder shall not become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 12.02):



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     (a) The Administrative Agent, the Arranger and the Lenders shall have received all fees and
other amounts due and payable hereunder and under the Fee Letter, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid
by the Borrower hereunder.



     (b) The Administrative Agent shall have received a certificate of the Secretary, an Assistant
Secretary or other authorized officer of each Loan Party setting forth (i) resolutions of its board
of directors or similar governing authority with respect to the authorization of such Loan Party to
execute and deliver the Loan Documents to which it is a party, to enter into the Transactions to
which it is a party, (ii) the officers of such Loan Party (y) who are authorized to sign the Loan
Documents to which such Loan Party is a party and (z) who will, until replaced by another officer
or officers duly authorized for that purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection with this Agreement and the
Transactions, (iii) specimen signatures of such authorized officers, and (iv) the articles or
certificate of incorporation and bylaws or similar organizational documents of such Loan Party,
certified as being true and complete. The Administrative Agent and the Lenders may conclusively
rely on such certificate until the Administrative Agent receives notice in writing from the
Borrower to the contrary.



     (c) The Administrative Agent shall have received certificates of the appropriate State
agencies with respect to the existence, qualification and good standing of each Loan Party.



     (d) The Administrative Agent shall have received a compliance certificate which shall be
substantially in the form of Exhibit D, duly and properly executed by a Responsible Officer
dated as of the Effective Date.



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



     (f) The Administrative Agent shall have received duly executed Notes payable to each Lender
that has requested a Note in a principal amount equal to its Commitment dated as of the Effective
Date.



     (g) The Administrative Agent shall have received from each party thereto duly executed
counterparts (in such number as may be requested by the Administrative Agent) of the Intercreditor
Agreement, Security Instruments and the Guaranty. In connection with the execution and delivery of
the Security Instruments, the Administrative Agent shall:




     (1) be reasonably satisfied that the Security Instruments create perfected Liens
(subject in priority only to Liens created by the First Lien Credit Documents and Excepted
Liens, but subject to the provisos at the end of such definition) on at least 80% of the
total value of the Oil and Gas Properties evaluated in the Initial Reserve Report all of
which presently secure the Senior Revolving Credit Agreement (including, for the avoidance
of doubt, Liens on any such Oil and Gas Properties located in Canada); and



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     (2) be reasonably satisfied that it has a Lien on all Property constituting collateral
for the First Lien Credit Agreement (including, for the avoidance of doubt, Liens on any
such Property located in Canada).



     (h) The Administrative Agent shall have received the opinions of Fulbright & Jaworski LLP,
special counsel to the Borrower, together with opinions or other assurances as the Administrative
Agent may request relating to the Security Instruments covering the Mortgaged Properties located
in, without limitation, Kentucky, North Dakota, Ohio, West Virginia and Canada, in each case, in
form and substance reasonably satisfactory to Administrative Agent.



     (i) The Administrative Agent shall have received a certificate of insurance coverage of the
Borrower evidencing that the Borrower is carrying insurance in accordance with Section
7.12.



     (j) The Administrative Agent shall have received a certificate of a Responsible Officer of the
Borrower certifying that the Borrower has (i) received all consents and approvals required by
Section 7.03 and (ii) has no other Debt in respect of borrowed money other than Debt
permitted by Section 9.02.



     (k) The Administrative Agent shall have received the financial statements referred to in
Section 7.04(a).



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



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



     (n) The Administrative Agent shall have received the Initial Reserve Report for the Oil and
Gas Properties, accompanied by a Reserve Report Certificate covering the matters described in
Section 8.12(c).



     (o) The Administrative Agent shall have received appropriate UCC search certificates
reflecting no prior Liens encumbering the Properties of the Loan Parties for the jurisdiction of
organization (or equivalent) for each of the Loan Parties and any other jurisdiction requested by
the Administrative Agent, other than Liens permitted by Section 9.03.



     (p) The Borrower and the Restricted Subsidiaries shall have Liquidity of not less than
$50,000,000.



     (q) The Administrative Agent shall have received such other documents as the Administrative
Agent or its special counsel may reasonably request.



     Section 6.02 Additional Conditions. The obligation of each Lender to make its Loan on the
Effective Date is subject to the satisfaction of the following additional conditions:



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     (a) At the time of and immediately after giving effect to such Borrowing no Default or Event
of Default shall have occurred and be continuing.



     (b) At the time of and immediately after giving effect to such Borrowing no event, development
or condition that has or could reasonably be expected to have a Material Adverse Effect shall have
occurred.



     (c) The representations and warranties of the Borrower set forth in this Agreement and in the
other Loan Documents shall be true and correct on and as of the Effective Date, except to the
extent any such representations and warranties are expressly limited to an earlier date, in which
case, on and as of the date of such Borrowing, such representations and warranties shall continue
to be true and correct as of such specified earlier date.



     (d) The making of such Loan would not conflict with, or cause any Lender to violate or exceed,
any applicable Governmental Requirement, and no Change in Law shall have occurred, and no
litigation shall be pending or threatened, which does or, with respect to any threatened
litigation, seeks to, enjoin, prohibit or restrain, the making or repayment of any Loan or the
consummation of the transactions contemplated by this Agreement or any other Loan Document.



ARTICLE VII




Representations and Warranties



     The Borrower represents and warrants to the Lenders that:



     Section 7.01 Organization; Powers. Each of the Borrower and the Subsidiaries is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization, has
all requisite power and authority, and has all material governmental licenses, authorizations,
consents and approvals necessary, to own its assets and to carry on its business as now conducted,
and is qualified to do
business in, and is in good standing in, every jurisdiction where such qualification is
required, except where failure to have such power, authority, licenses, authorizations, consents,
approvals and qualifications could not reasonably be expected to have a Material Adverse Effect.
As of the Effective Date, Schedule 7.01 is an accurate corporate organizational chart of
Borrower and its Subsidiaries showing the ownership of all Equity Interests in such Persons.



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



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



     Section 7.04 Financial Condition; No Material Adverse Change. The Borrower has heretofore
furnished to the Lenders (i) its audited consolidated balance sheet and statement of income,
stockholders equity and cash flows as of and for the fiscal year ended December 31, 2010, all
reported on by a firm of independent public accountants acceptable to the Administrative Agent and
(ii) its unaudited consolidated balance sheet and statement of income, stockholders equity and cash
flows as of and for the six-month period ended June 30, 2011. Such financial statements present
fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and its
Consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP.



     (b) Since December 31, 2010, (i) there has been no event, development or circumstance that has
had or could reasonably be expected to have a Material Adverse Effect and (ii) the business of the
Borrower and its Restricted Subsidiaries has been conducted only in the ordinary course consistent
with past business practices.



     (c) Except as set forth on Schedule 9.02 or in a certificate delivered pursuant to
Section 8.01(d), neither the Borrower nor any Restricted Subsidiary has on the Effective
Date any material Debt (including Disqualified Capital Stock) or any material contingent
liabilities, off-balance sheet liabilities or partnerships, material liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any unfavorable
commitments.



     Section 7.05 Litigation.  As of the Effective Date, except as set forth on Schedule
7.05, there are no actions, suits, investigations or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower, threatened in writing
against or affecting the Borrower or any Subsidiary (i) as to which there is a reasonable
possibility of an adverse determination that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that
involve any Loan Document or the Transactions.



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     (b) Since the Effective Date, there has been no change in the status of the matters disclosed
in Schedule 7.05 that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.



     Section 7.06 Environmental Matters. Except as could not reasonably be expected to have a Material
Adverse Effect (or with respect to (c), (d) and (e) below, where the failure to take such actions
could not be reasonably expected to have a Material Adverse Effect), to the knowledge of Borrower:



     (a) neither any Property of the Borrower or any Subsidiary nor the operations conducted
thereon violate any order or requirement of any court or Governmental Authority or any
Environmental Laws;



     (b) no Property of the Borrower or any Subsidiary nor the operations currently conducted
thereon or by any prior owner or operator of such Property or operation, are in violation of or
subject to any existing, pending or threatened action, suit, investigation, inquiry or proceeding
by or before any court or Governmental Authority or to any remedial obligations under Environmental
Laws;



     (c) all notices, permits, licenses, exemptions, approvals or similar authorizations, if any,
required to be obtained or filed in connection with the operation or use of any and all Property of
the Borrower and each Subsidiary, including, without limitation, past or present treatment,
storage, disposal or release of a hazardous substance, oil and gas waste or solid waste
into the environment, have been duly obtained or filed, and the Borrower and each Subsidiary
are in compliance with the terms and conditions of all such notices, permits, licenses and similar
authorizations;



     (d) all hazardous substances, solid waste and oil and gas waste, if any, generated at any and
all Property of the Borrower or any Subsidiary have in the past been transported, treated and
disposed of in accordance with Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment, and all such transport carriers and
treatment and disposal facilities have been and are operating in compliance with Environmental Laws
and so as not to pose an imminent and substantial endangerment to public health or welfare or the
environment, and are not the subject of any existing, pending or threatened action, investigation
or inquiry by any Governmental Authority in connection with any Environmental Laws;



     (e) the Borrower has taken all steps reasonably necessary to determine and has determined that
no oil, hazardous substances, solid waste or oil and gas waste, have been disposed of or otherwise
released and there has been no threatened release of any oil, hazardous substances, solid waste or
oil and gas waste on or to any Property of the Borrower or any Subsidiary except in compliance with
Environmental Laws and so as not to pose an imminent and substantial endangerment to public health
or welfare or the environment;



     (f) to the extent applicable, all Property of the Borrower and each Subsidiary currently
satisfies all design, operation, and equipment requirements imposed by the OPA, and the Borrower
does not have any reason to believe that such Property, to the extent subject to the



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OPA, will not
be able to maintain compliance with the OPA requirements during the term of this Agreement; and




     (g) neither the Borrower nor any Subsidiary has any known contingent liability or Remedial
Work in connection with any release or threatened release of any oil, hazardous substance, solid
waste or oil and gas waste into the environment.



     Section 7.07 Compliance with the Laws and Agreements; No Defaults. Except as could not be
reasonably be expected to have a Material Adverse Effect:



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



     (b) neither the Borrower nor any Subsidiary is in default nor has any event or circumstance
occurred which, but for the expiration of any applicable grace period or the giving of notice, or
both, would constitute a default or would require the Borrower or a Subsidiary to Redeem or make
any offer to Redeem under any indenture, note, credit agreement or instrument pursuant to which any
Material Indebtedness is outstanding or by which the Borrower or any Subsidiary or any of their
Properties is bound; and



     (c) no Default has occurred and is continuing.



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



     Section 7.09 Taxes. Each of the Borrower and its Subsidiaries has timely filed or caused to be
filed all Tax returns and reports required to have been filed and has paid or caused to be paid all
Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside
on its books adequate reserves in accordance with GAAP or (b) to the extent that the failure to do
so could not reasonably be expected to result in a Material Adverse Effect. The charges, accruals
and reserves on the books of the Borrower and its Subsidiaries in respect of Taxes and other
governmental charges are, in the reasonable opinion of the Borrower, adequate. No Tax Lien
relating to Taxes described in the first sentence of this Section 7.09 has been filed and,
to the knowledge of the Borrower, no claim is being asserted with respect to any such Tax or other
such governmental charge.



     Section 7.10 ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when
taken together with all other such ERISA Events for which liability is reasonably expected to
occur, could reasonably be expected to result in a Material Adverse Effect. The present value of
all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $250,000



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the fair market value of
the assets of such Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $250,000 the fair market value of the assets of all such underfunded
Plans.




     Section 7.11 Disclosure; No Material Misstatements. The Borrower has disclosed to the
Administrative Agent and the Lenders all agreements, instruments and corporate or other
restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. To the knowledge of Borrower, taken as a whole, none of the other reports,
financial statements, certificates or other information furnished by or on behalf of the Borrower
or any Subsidiary to the Administrative Agent or any Lender or any of their Affiliates in
connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder
or under any other Loan Document (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact necessary to make
the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with respect to
projected financial information, prospect information, geological and geophysical data and
engineering projections, the Borrower represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time. To the knowledge of Borrower
there is no fact peculiar to the Borrower or any Subsidiary which could reasonably be expected to
have a Material Adverse Effect or in the future is reasonably likely to have a Material Adverse
Effect and which has not been set forth in this Agreement or the Loan Documents or the other
documents, certificates and statements furnished to the Administrative Agent or the Lenders by or
on behalf of the Borrower or any Subsidiary prior to, or on, the Effective Date in connection with
the transactions contemplated hereby. There are no statements or conclusions known to the Borrower
in any Reserve Report which are based upon or include misleading information or fail to take into
account material information regarding the matters reported therein, it being understood that
projections concerning volumes attributable to the Oil and Gas Properties and production and cost
estimates contained in each Reserve Report are necessarily based upon professional opinions,
estimates and projections and that the Borrower and the Subsidiaries do not warrant that such
opinions, estimates and projections will ultimately prove to have been accurate.



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



     Section 7.13 [RESERVED]



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     Section 7.14 Subsidiaries. Schedule 7.14 sets forth the name of, and the ownership
interest of the Borrower (as such Schedule may be updated from time to time, including pursuant to
a notice delivered in accordance with Section 8.01(l))in, each Subsidiary of the Borrower.
As of the Effective Date there are no Unrestricted Subsidiaries other than the Subsidiaries set
forth in clause (iii) of the definition of “Unrestricted Subsidiaries” in Section 1.01.



     Section 7.15 Location of Business and Offices. The Borrower’s jurisdiction of organization is
Delaware; the name of the Borrower as listed in the public records of Delaware is Magnum Hunter
Resources Corporation; and the organizational identification number of the Borrower in Delaware is
2758331 (or, in each case, as set forth in a notice delivered to the Administrative Agent pursuant
to Section 8.01(l) in accordance with Section 12.01). Each Subsidiary’s
jurisdiction of organization, name as listed in the public records of its jurisdiction of
organization and organizational identification number in
its jurisdiction of organization is stated on Schedule 7.14 (as such Schedule may be
updated from time to time, including pursuant to a notice delivered in accordance with Section
8.01(l)).



     Section 7.16 Properties; Titles, Etc.. Except as disclosed in Schedule 7.16, each of the
Borrower and the Restricted Subsidiaries has good and defensible title to the proved Oil and Gas
Properties evaluated in the most recently delivered Reserve Report (excluding, to the extent this
representation and warranty is deemed to be made after the Effective Date, any such Oil and Gas
Properties sold or transferred in compliance with Section 9.11) and good title to all its
personal Properties, in each case, free and clear of all Liens except Liens permitted by
Section 9.03. After giving full effect to the Excepted Liens, the Borrower or the
Restricted Subsidiary specified as the owner owns the net interests in production attributable to
the Hydrocarbon Interests as reflected in the most recently delivered Reserve Report, and the
ownership of such Properties shall not in any material respect obligate the Borrower or such
Restricted Subsidiary to bear the costs and expenses relating to the maintenance, development and
operations of each such Property in an amount in excess of the working interest of each Property
set forth in the most recently delivered Reserve Report that is not offset by a corresponding
proportionate increase in the Borrower’s or such Restricted Subsidiary’s net revenue interest in
such Property.



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



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



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



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



     Section 7.17 Maintenance of Properties. Except for such acts or failures to act as could not be
reasonably expected to have a Material Adverse Effect, the Oil and Gas Properties (and Properties
unitized therewith) have been maintained, operated and developed in a good and workmanlike manner
and in conformity with all Government Requirements and in conformity with the provisions of all
leases, subleases or other contracts comprising a part of the Hydrocarbon Interests and other
contracts and agreements forming a part of the Oil and Gas Properties. Specifically in connection
with the foregoing, except for those as could not be reasonably expected to have a Material Adverse
Effect, (i) no Oil and Gas Property is subject to having allowable production reduced below the
full and regular allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) and (ii) to the knowledge of
Borrower, none of the wells comprising a part of the Oil and Gas Properties (or Properties
unitized therewith) is deviated from the vertical more than the maximum permitted by Government
Requirements, and such wells are, in fact, bottomed under and are producing from, and the well
bores are wholly within, the Oil and Gas Properties (or in the case of wells located on Properties
unitized therewith, such unitized Properties). All pipelines, wells, gas processing plants,
platforms and other material improvements, fixtures and equipment owned in whole or in part by the
Borrower or any of its Subsidiaries that are necessary to conduct normal operations are being
maintained in a state adequate to conduct normal operations, and with respect to such of the
foregoing that are operated by the Borrower or any of its Subsidiaries, in a manner consistent with
the Borrower’s or its Subsidiaries’ past practices (other than those the failure of which to
maintain in accordance with this Section 7.17 could not reasonably be expect to have a
Material Adverse Effect).



     Section 7.18 Gas Imbalances, Prepayments. As of the Effective Date, except as set forth on
Schedule 7.18 or on the most recent Reserve Report Certificate delivered pursuant to
Section 8.12(c), on a net basis there are no gas imbalances, take or pay or other
prepayments which would require the Borrower or any of the Restricted Subsidiaries to deliver
Hydrocarbons produced from the Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor exceeding 500 mmcf equivalent in the aggregate.



     Section 7.19 Marketing of Production. Except for contracts listed and in effect on the Effective
Date on Schedule 7.19, and thereafter either disclosed in writing to the Administrative
Agent or included in the most recently delivered Reserve Report (with respect to all of which
contracts the Borrower represents that it or its Subsidiaries are receiving a price for all
production sold thereunder which is computed substantially in accordance with the terms of the



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relevant contract and are not having deliveries curtailed substantially below the subject
Property’s delivery capacity), no material agreements exist which are not cancelable on 60 days
notice or less without penalty or detriment for the sale of production from the Borrower’s or the
Restricted Subsidiaries’ Hydrocarbons (including, without limitation, calls on or other rights to
purchase, production, whether or not the same are currently being exercised) that (a) pertain to
the sale of production at a fixed price and (b) have a maturity or expiry date of longer than six
(6) months from the Effective Date.




     Section 7.20 Swap Agreements. Each report required to be delivered by the Borrower pursuant to
Section 8.01(d), sets forth, a true and complete list of all Swap Agreements of the
Borrower and each Restricted Subsidiary, the material terms thereof (including the type, term,
effective date, termination date and notional amounts or volumes), the net mark to market value
thereof, all credit support agreements relating thereto (including any margin required or supplied)
and the counterparty to each such agreement.



     Section 7.21 Use of Loans. The proceeds of the Loans shall be used (i) to provide working capital
for drilling, exploration and production, midstream trading and marketing operations, (ii) for
general corporate purposes of the Borrower and its Subsidiaries, including the acquisition of
exploration and production and midstream properties, (iii) to pay amounts outstanding under the
First Lien Credit Facility, or (iv) to pay fees and expenses in connection with the First Lien
Credit Facility and this Agreement. The Borrower and its Subsidiaries are not engaged principally,
or as one of its or their important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock (within the
meaning of Regulation T, U or X of the Board). No part of the proceeds of the Loans will be used
for any purpose which violates the provisions of Regulations T, U or X of the Board.



     Section 7.22 Solvency. Before and after giving effect to the Transactions, (a) the aggregate
assets, at a fair valuation, of the Borrower and its Restricted Subsidiaries, taken as a whole,
will exceed the aggregate Debt of the Borrower on a consolidated basis, as the Debt becomes
absolute and matures, (b) none of the Borrower nor any Restricted Subsidiary will have incurred or
intended to incur, and will not believe that it will incur, Debt beyond its ability to pay such
Debt as such Debt becomes absolute and matures and (c) none of the Borrower nor any Restricted
Subsidiary will have (nor will have any reason to believe that it will have thereafter)
unreasonably small capital for the conduct of its business.



ARTICLE VIII




Affirmative Covenants



     Until the principal of and interest on each Loan and all fees payable hereunder and all other
amounts payable under the Loan Documents shall have been paid in full, the Borrower covenants and
agrees with the Lenders that:



     Section 8.01 Financial Statements; Other Information. The Borrower will furnish to the
Administrative Agent and each Lender:



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     (a) Annual Financial Statements. As soon as available, but in any event in accordance
with then applicable law and not later than 90 days after the end of each fiscal year of the
Borrower, its audited consolidated (and, if there are any Unrestricted Subsidiaries,
consolidating) balance sheet and related statements of operations, stockholders’ equity and
cash flows as of the end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by a firm of independent public accountants
proposed by Borrower and approved by the Administrative Agent (without a “going concern” or
like qualification or exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the Borrower and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently applied.



     (b) Quarterly Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than 45 days after the end of each of the first
three fiscal quarters of each fiscal year of the Borrower, its consolidated (and, if there are any
Unrestricted Subsidiaries, consolidating) balance sheet and related statements of operations,
stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes.



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



     (d) Certificate of Financial Officer — Swap Agreements. Concurrently with the
delivery of each Reserve Report hereunder, a certificate of a Financial Officer, in form and
substance reasonably satisfactory to the Administrative Agent, setting forth as of a recent date, a
true and complete list of all Swap Agreements of the Borrower and each Restricted Subsidiary, the
material terms thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark-to-market value therefor, any new credit support agreements
relating thereto, any margin required or supplied under any credit support document, and the
counterparty to each such agreement.



     (e) Certificate of Insurer — Insurance Coverage. Concurrently with any delivery of
financial statements under Section 8.01(a), a certificate of insurance coverage from each
insurer with respect to the insurance required by Section 8.07, in form and substance
satisfactory to the



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Administrative Agent, and, if requested by the Administrative Agent or any
Lender, all copies of the applicable policies.




     (f) Other Accounting Reports. Promptly upon receipt thereof, a copy of each other
report or letter (except standard and customary correspondence) submitted to the Borrower or any of
its Restricted Subsidiaries by independent accountants in connection with any annual, interim or
special audit made by them of the books of the Borrower or any such Restricted Subsidiary, and a
copy of any response by the Borrower or any such Restricted Subsidiary, or the board of directors
of the Borrower or any such Restricted Subsidiary, to such letter or report.



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



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



     (i) Lists of Purchasers. Concurrently with the delivery of any Reserve Report to the
Administrative Agent pursuant to Section 8.12, a list of Persons purchasing Hydrocarbons
from the Borrower or any Restricted Subsidiary accounting for at least 80% of the revenues
resulting from the sale of all Hydrocarbons in the one year period prior to the “as of” date of
such Reserve Report.



     (j) Notice of Sales of Oil and Gas Properties. In the event the Borrower or any
Restricted Subsidiary intends to sell, transfer, assign or otherwise dispose of any Oil or Gas
Properties or any Equity Interests in any Restricted Subsidiary owning Oil and Gas Properties, in
either case, having a fair market value in excess of 5% of the Borrowing Base then in effect in
accordance with Section 9.11, prior written notice of such disposition, the anticipated
price thereof and the anticipated date of closing.



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



     (l) Information Regarding the Loan Parties. Prompt written notice (and in any event
within ten (10) Business Days prior thereto) of any change, (i) in any Loan Party’s corporate name
or in any trade name used to identify the Borrower in the conduct of its business or in the
ownership of its Properties, (ii) in any Loan Party’s identity or corporate structure or in the
jurisdiction in which such Loan Party is incorporated or formed, (iii) in any Loan Party’s
jurisdiction of organization or any Loan Party’s organizational identification number in such
jurisdiction of organization, and (iv) in any Loan Party’s federal taxpayer identification number.



     (m) Production Report and Lease Operating Statements. Within 30 days after the end of
each calendar month, a report setting forth, for each calendar month during the then current



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fiscal
year to date, the volume of production and sales attributable to production (and the prices at
which such sales were made and the revenues derived from such sales) for each such calendar
month from the Oil and Gas Properties, and setting forth the related ad valorem, severance and
production taxes and lease operating expenses attributable thereto and incurred for each such
calendar month.




     (n) Notices of Certain Changes. Promptly, but in any event within five (5) Business
Days after the execution thereof, copies of any amendment, modification or supplement to the
certificate or articles of incorporation, by-laws, any preferred stock designation or any other
organic document of the Borrower or any Restricted Subsidiary.



     (o) Other Requested Information. Promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition of the Borrower or
any Subsidiary (including, without limitation, any Plan or Multiemployer Plan and any reports or
other information required to be filed under ERISA), or compliance with the terms of this Agreement
or any other Loan Document, as the Administrative Agent or any Lender may reasonably request.



     Section 8.02 Notices of Material Events. The Borrower will furnish to the Administrative Agent
prompt written notice of the following:



     (a) the occurrence of any Default;



     (b) the filing or commencement of, or the threat in writing of, any action, suit, proceeding,
investigation or arbitration by or before any arbitrator or Governmental Authority against the
Borrower or any Affiliate thereof not previously disclosed in writing to the Lenders or any
material adverse development in any action, suit, proceeding, investigation or arbitration
previously disclosed to the Lenders that, in either such case, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;



     (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that
have occurred, could reasonably be expected to result in a Material Adverse Effect; and



     (d) any other development that results in, or could reasonably be expected to result in, a
Material Adverse Effect.


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




     Section 8.03 Existence; Conduct of Business. The Borrower will, and will cause each Subsidiary to,
do or cause to be done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges and franchises material to the
conduct of its business and maintain, if necessary, its qualification to do business in each other
jurisdiction in which its Oil and Gas Properties are located or the ownership of its Properties
requires such qualification, except where
the failure to so qualify could not reasonably



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be expected to have a Material Adverse Effect;
provided that the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 9.10.




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



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



     Section 8.06 Operation and Maintenance of Properties. Except, in each case, where the failure to
comply could not reasonably be expected to have a Material Adverse Effect, the Borrower, at its own
expense, will, and will cause each Subsidiary to:



     (a) operate its Oil and Gas Properties and other material Properties or cause such Oil and Gas
Properties and other material Properties to be operated in accordance with the practices of the
industry and in compliance with all applicable contracts and agreements and in compliance with all
Governmental Requirements, including, without limitation, applicable pro ration requirements and
Environmental Laws, and all applicable laws, rules and regulations of every other Governmental
Authority from time to time constituted to regulate the development and operation of its Oil and
Gas Properties and the production and sale of Hydrocarbons and other minerals therefrom;



     (b) keep and maintain all Property material to the conduct of its business in good working
order and condition (ordinary wear and tear excepted), preserve, maintain and keep in good repair,
working order and efficiency (ordinary wear and tear excepted) all of its material producing Oil
and Gas Properties and other material Properties, including, without limitation, all equipment,
machinery and facilities;



     (c) promptly pay and discharge, or make reasonable and customary efforts to cause to be paid
and discharged, all delay rentals, royalties, expenses and obligations accruing under the leases or
other agreements affecting or pertaining to its proved producing Oil and Gas Properties and will do
all other things necessary to keep unimpaired their rights with respect thereto and prevent any
forfeiture thereof or default thereunder;



     (d) promptly perform or make reasonable and customary efforts to cause to be performed, in
accordance with industry standards, the obligations required by each and all of the assignments,
deeds, leases, sub-leases, contracts and agreements affecting its interests in its proved producing
Oil and Gas Properties and other material Properties; and



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



     Section 8.07 Insurance. The Borrower will, and will cause each Restricted Subsidiary to, maintain,
with financially sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations. The loss payable clauses or provisions in said
insurance policy or policies insuring any of the collateral for the Loans shall be endorsed in
favor of and made payable to the Administrative Agent as its interests may appear and such policies
shall name the Administrative Agent and the Lenders as “additional insureds” and provide that the
insurer will endeavor to give at least 30 days prior notice of any cancellation to the
Administrative Agent.



     Section 8.08 Books and Records; Inspection Rights. The Borrower will, and will cause each
Restricted Subsidiary to, keep proper books of record and account in which full, true and correct
entries are made of all dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each Restricted Subsidiary to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its
Properties, to examine and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at such reasonable times
during normal business hours and as often as reasonably requested on an individual and aggregate
basis.



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



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



     (b) The Borrower will promptly, but in no event later than five Business Days of the
occurrence of a triggering event, notify the Administrative Agent in writing of any threatened
action, investigation or inquiry by any Governmental Authority or any threatened demand or lawsuit
by any landowner or other third party against the Borrower or its Subsidiaries or their Properties
of which the Borrower has knowledge in connection with any applicable Environmental Laws (excluding
routine testing and corrective action) if the Borrower reasonably anticipates that such action
could reasonably result in a Material Adverse Effect.



     (c) The Borrower will, and will cause each Restricted Subsidiary to, undertake reasonable
environmental audits in connection with any future acquisition of producing Oil and Gas Properties.



     Section 8.11 Further Assurances.  The Borrower at its expense will, and will cause each
Subsidiary to, promptly execute and deliver to the Administrative Agent all such other documents,
agreements and instruments reasonably requested by the Administrative Agent to comply with, cure
any defects or accomplish the conditions precedent, covenants and agreements of the Borrower or any
Subsidiary, as the case may be, in the Loan Documents, including the Notes, or to further evidence
and more fully describe the collateral intended as security for the Obligations, or to correct any
omissions in this Agreement or the Security Instruments, or to state



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more fully the obligations
secured therein, or to perfect, protect or preserve any Liens created pursuant to this Agreement or
any of the Security Instruments or the priority thereof, or to make any recordings, file any
notices or obtain any consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith.




     (b) The Borrower hereby authorizes the Administrative Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of the
Mortgaged Property. A carbon, photographic or other reproduction of the Security Instruments
or any financing statement covering the Mortgaged Property or any part thereof shall be sufficient
as a financing statement where permitted by law.



     Section 8.12 Reserve Reports.  Promptly after January 1st of each calendar year and in any
event before April 1st of each calendar year, and promptly after July 1st of each
calendar year, commencing April 1, 2012, and in any event before October 1st of each
year, the Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report. The
Reserve Report as of January 1st of each year and the Reserve Report delivered in connection with
the first redetermination of the Total Reserves after the Effective Date shall be prepared by
Borrower or an Approved Petroleum Engineer and audited by one or more Approved Petroleum Engineers,
and the July 1st Reserve Report of each year shall be prepared by or under the supervision of the
chief engineer of the Borrower. In each case, the chief engineer of Borrower shall certify such
Reserve Report is based on information that was prepared in good faith based upon assumptions
believed to be reasonable at the time and to have been prepared in accordance with the procedures
used in the immediately preceding Reserve Report.



     (b) In the event of an Interim Redetermination, the Borrower shall furnish to the
Administrative Agent and the Lenders a Reserve Report prepared by or under the supervision of the
chief engineer of the Borrower who shall certify such Reserve Report to be based on information
that was prepared in good faith based upon assumptions believed to be reasonable at the time and to
have been prepared in accordance with the procedures used in the immediately preceding Reserve
Report. For any Interim Redetermination requested by the Borrower pursuant to Section
2.07(d), the Borrower shall provide such Reserve Report with an “as of” date as required by the
Administrative Agent as soon as possible, but in any event no later than forty-five (45) days
following the receipt of such request.



     (c) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative
Agent and the Lenders a certificate (each a “Reserve Report Certificate”) from a
Responsible Officer certifying that to his knowledge, after reasonable investigation, in all
material respects: (i) the information contained in the Reserve Report and any other information
delivered in connection therewith is based on information that was prepared in good faith based
upon assumptions believed to be reasonable at the time, (ii) the Borrower or its Subsidiaries owns
good and defensible title to the proved Oil and Gas Properties evaluated in such Reserve Report and
such Properties are free of all Liens except for Liens permitted by Section 9.03, (iii)
except as set forth on an exhibit to the certificate, on a net basis there are no gas imbalances,
take or pay or other prepayments in excess of the volume specified in Section 7.18 with
respect to its Oil and Gas Properties evaluated in such Reserve Report which would require the
Borrower or any Subsidiary to deliver Hydrocarbons either generally or produced from such Oil and
Gas Properties at some future time without then or thereafter receiving full payment therefor, (iv)



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none of the Borrower’s and its Subsidiaries’ proved Oil and Gas Properties have been sold since the
date of the last determination of the Total Reserve Value except as set forth on an exhibit to the
certificate, which certificate shall list all of its proved Oil and Gas Properties sold and in such
detail as reasonably required by the Administrative Agent, (v) attached to the certificate is a
list of all marketing agreements entered into subsequent to the later of the Effective Date or the
most
recently delivered Reserve Report which the Borrower could reasonably be expected to have been
obligated to list on Schedule 7.19 had such agreement been in effect on the Effective Date
and (vi) attached thereto is a schedule of the proved Oil and Gas Properties evaluated by such
Reserve Report that are Mortgaged Properties and demonstrating the percentage of the Total Reserve
Value that the value of such Mortgaged Properties represent.




     Section 8.13 Title Information. On or before the delivery to the Administrative Agent and the
Lenders of each Reserve Report required by Section 8.12(a), the Borrower will deliver
title information in form and substance acceptable to the Administrative Agent covering enough of
the proved Oil and Gas Properties evaluated by such Reserve Report that were not included in the
immediately preceding Reserve Report, so that the Administrative Agent shall have received together
with title information previously delivered, satisfactory title information on at least 80% of the
total value of the proved Oil and Gas Properties evaluated by such Reserve Report.



     (b) If the Borrower has provided title information for additional Properties under
Section 8.13(a), the Borrower shall, within 60 days of notice from the Administrative
Agent that title defects or exceptions exist with respect to such additional Properties, either (i)
cure any such title defects or exceptions (including defects or exceptions as to priority) which
are not permitted by Section 9.03 raised by such information, (ii) substitute acceptable
Mortgaged Properties with no title defects or exceptions except for Excepted Liens (other than
Excepted Liens described in clauses (e), (g) and (h) of such definition) having an equivalent value
or (iii) deliver title information in form and substance acceptable to the Administrative Agent so
that they shall have received, together with title information previously delivered, satisfactory
title information on at least 80% of the value of the Oil and Gas Properties evaluated by such
Reserve Report.



     (c) If the Borrower is unable to cure any title defect requested to be cured within the 60-day
period or the Borrower does not comply with the requirement to provide acceptable title information
covering 80% of the value of the Oil and Gas Properties evaluated in the most recent Reserve
Report, such default shall not be a Default, but instead the Administrative Agent and/or the
Required Lenders shall have the right to exercise the following remedy in their sole discretion
from time to time, and any failure to so exercise this remedy at any time shall not be a waiver as
to future exercise of the remedy by the Administrative Agent or the Lenders. To the extent that
the Administrative Agent or the Required Lenders are not satisfied with title to any Mortgaged
Property after the 60-day period has elapsed, such unacceptable Mortgaged Property shall not count
towards the 80% requirement and the Administrative Agent may send a notice to the Borrower and the
Lenders that the Total Reserve Value then in effect shall be reduced by an amount as determined by
the Required Lenders to cause the Borrower to be in compliance with the requirement to provide
acceptable title information on 80% of the total value of the Oil and Gas Properties. This new
Total Reserve Value shall become effective immediately after receipt of such notice.



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     Section 8.14 Additional Collateral. In connection with each calculation of the Total Reserve
Value, the Borrower shall review the Reserve Report and the list of current Mortgaged Properties
(as described in
Section 8.12(c)) to ascertain whether the Mortgaged Properties represent at least 80%
of the total value of the proved Oil and Gas Properties owned by Borrower and the Restricted
Subsidiaries and evaluated in the most recently completed Reserve Report after giving effect to
exploration and production activities, acquisitions, dispositions and production. In the event
that the Mortgaged Properties do not represent at least 80% of such total value evaluated in the
most recently completed Reserve Report, then the Borrower shall, and shall cause its Restricted
Subsidiaries to, grant to the Administrative Agent as security for the Obligations a
second-priority Lien interest (subject only to Excepted Liens of the type described in clauses (a)
to (d) and (f) of the definition thereof, but subject to the provisos at the end of such
definition) on additional Oil and Gas Properties not already subject to a Lien of the Security
Instruments such that after giving effect thereto, the Mortgaged Properties will represent at least
80% of the total value of the Oil and Gas Properties evaluated in the most recently delivered
Reserve Report. All such Liens will be created and perfected by and in accordance with the
provisions of mortgages, deeds of trust, security agreements and financing statements or other
Security Instruments, all in form and substance satisfactory to the Administrative Agent and in
sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording
purposes.



     (b) The Borrower agrees that it will not, and will not permit any Subsidiary to, grant a Lien
on any Property to secure the First Lien Credit Agreement without first granting to the
Administrative Agent to secure the Indebtedness a perfected Lien (subject only to Liens securing
the First Lien Credit Agreement) on this same Property pursuant to Security Instruments in form and
substance satisfactory to the Administrative Agent.



     Section 8.15 ERISA Compliance. In addition to and without limiting the generality of Section
8.09, the Borrower shall and shall cause each of its Subsidiaries to (a) comply in all material
respects with all applicable provisions of ERISA and the regulations and published interpretations
thereunder with respect to all employee benefit plans (as defined in ERISA), (b) not take any
action or fail to take action the result of which could be (i) a liability to the PBGC (other than
liability for PBGC premiums) or (ii) a past due liability to any Multiemployer Plan, (c) not
participate in any prohibited transaction that could result in any material civil penalty under
ERISA or any tax under the Code, (d) operate each employee benefit plan in such a manner that will
not incur any material tax liability under Section 4980B of the Code or any liability to any
qualified beneficiary as defined in Section 4980B of the Code except to the extent such failure to
comply could not reasonably be expected to have Material Adverse Effect and (e) furnish to the
Administrative Agent upon the Administrative Agent’s request such additional information about any
employee benefit plan as may be reasonably requested by the Administrative Agent.



     Section 8.16 New Subsidiary Requirements. Concurrently with the acquisition or formation of any
Subsidiary which is to be a Restricted Subsidiary and in any event prior to or concurrently with
the Borrower’s advancing or contributing any amounts to or into such Restricted Subsidiary (other
than de minimis organizational costs such as filing fees), the Borrower shall cause to be delivered
to the Administrative Agent (i) the Guaranty and a Security Agreement executed by such Restricted
Subsidiary, (ii) a Security Agreement covering the



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Equity Interests of such Restricted Subsidiary,
(iii) stock certificates or other instruments representing all the Equity Interests of such
Restricted Subsidiary and stock powers and instruments of transfer, endorsed in blank, with respect
to such stock certificates or other instruments, or, if any Equity Interests pledged pursuant to
such Security Agreement are uncertificated securities, confirmation and evidence satisfactory to
the Administrative Agent that the security interest in such uncertificated securities has been
transferred to and perfected by the Administrative Agent in accordance with the UCC, (iv) all
documents and instruments, including UCC Financing Statements (Form UCC-1), required by law or
reasonably requested by the Administrative Agent to be filed, registered or recorded to create or
perfect the Liens intended to be created under each Security Agreement, (v) UCC searches, all dated
reasonably close to the date of the Security Agreements and in form and substance satisfactory to
the Administrative Agent, and evidence reasonably satisfactory to the Administrative Agent that any
Liens indicated in such UCC searches are Excepted Liens or have been released, (vi) the corporate
resolutions or similar approval documents of such Restricted Subsidiary approving the execution and
delivery of the Guaranty and the Security Agreement by such Restricted Subsidiary, (vii) the
corporate resolutions or similar approval documents of the Borrower or other Loan Party approving
the execution and delivery of the Security Agreement by the Borrower or other Loan Party, and
(viii) the legal opinion reasonably acceptable to the Administrative Agent, opining favorably on
the execution, delivery and enforceability of the Guaranty and the Security Agreements and
otherwise being in form and substance reasonably satisfactory to the Administrative Agent and its
counsel.




ARTICLE IX




Negative Covenants



     Until the principal of and interest on each Loan and all fees payable hereunder and all other
amounts payable under the Loan Documents have been paid in full, the Borrower covenants and agrees
with the Lenders that:



     Section 9.01 Financial Covenants. Current Ratio. Commencing with the fiscal quarter
ending September 30, 2011, the Borrower will not permit, as of the last day of any fiscal quarter,
its ratio of (i) consolidated current assets of the Borrower and the Restricted Subsidiaries
(including the unused amount of the total commitments under the First Lien Credit Agreement), but
excluding non-cash assets under FAS 133) to (ii) consolidated current liabilities of the Borrower
and the Restricted Subsidiaries (excluding non-cash obligations under FAS 133) to be less than (x)
0.85 to 1.0 for the fiscal quarters ending September 30, 2011, December 31, 2011, and March 31,
2012, and (y) 1.0 to 1.0 for each fiscal quarter thereafter.



     (b) Interest Coverage Ratio. The Borrower will not permit, as of the last day of any
fiscal quarter commencing with the fiscal quarter ending September 30, 2011, its ratio of (i)
EBITDAX of the Borrower and the Restricted Subsidiaries for the trailing four quarter period then
ended to (ii) actual cash interest paid by the Borrower and the Restricted Subsidiaries during such
period to be less than 2.125 to 1.0.



     (c) Total Debt to EBITDAX. The Borrower will not permit, as of the last day of any
fiscal quarter, its ratio of (i) total Debt of the Borrower and the Restricted Subsidiaries as of
such



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date to
(ii) EBITDAX of the Borrower and the Restricted Subsidiaries for the trailing four
quarter period then ended to exceed (x) 5.25 to 1.0 for the fiscal quarter ending September 30,
2011, and (y) 4.75 to 1.0 for each fiscal quarter thereafter.




     (d) Asset Coverage Test. The Borrower will not as of any date of determination
permit its ratio of (i) Total Reserve Value as in effect on such date of determination to (ii) Debt
under the First Lien Credit Agreement and this Agreement as of any date of determination to be less
than 1.5 to 1.0.



     (e) Asset Coverage Test Cure Right. Notwithstanding anything to the contrary set
forth in this Agreement, the parties hereto acknowledge and agree that if any redetermination of or
adjustment to the Total Reserve Value in accordance with Section 2.07, Section
8.13 or Section 9.11 shall result in non-compliance by the Borrower with the financial
covenant set forth in Section 9.01(d), then the Borrower shall be permitted to prepay or
repay Debt, enter into Swap Agreements or take any other actions permitted under this Agreement in
order to cure such non-compliance; provided, that (i) within two (2) Business Days of its
determination that Section 9.01(d) has been violated, the Borrower shall have delivered to
the Administrative Agent a written notice of its intent to cure and (ii) within sixty (60) days
following the delivery of such notice, the Total Reserve Value shall have been recalculated in
accordance with the provisions of Section 2.07(b); provided, further, that
neither the Administrative Agent nor the Lenders shall exercise any rights or remedies with respect
to any Event of Default that exists as a result of the non-compliance with Section 9.01(d)
during the sixty (60) day period following the Borrower’s notice that it intends to take action to
affect a recalculation. If, after giving effect to such recalculation, the Loan Parties are in
compliance with the financial covenant set forth in Section 9.01(d), the Loan Parties shall
be deemed to have satisfied the requirements of such financial covenant as of the relevant date of
determination with the same effect as though there had been no failure to comply therewith at such
date.



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



     (a) the Notes or other Obligations arising under the Loan Documents or any guaranty of or
suretyship arrangement for the Notes or other Obligations arising under the Loan Documents;



     (b) Debt of the Borrower and its Subsidiaries existing on the Effective Date that is reflected
in the Financial Statements and described on Schedule 9.02;



     (c) accounts payable and accrued expenses, liabilities or other obligations to pay the
deferred purchase price of Property or services, from time to time incurred in the ordinary course
of business which are not greater than ninety (90) days past the date of invoice or which are being
contested in good faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP;



     (d) Debt under Capital Leases or nonrecourse purchase money Debt in respect of equipment
purchases not to exceed $10,000,000 at any time;



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     (e) Debt associated with worker’s compensation claims, performance, bid, surety or similar
bonds or surety obligations required by Governmental Requirements or third parties in connection
with the operation of the Oil and Gas Properties;



     (f) intercompany Debt between the Borrower and any Restricted Subsidiary or between Restricted
Subsidiaries to the extent permitted by Sections 9.05(g), (q) or (s);



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



     (h) Debt arising under take-or-pay agreements or gas balancing agreements which do not give
rise to liability in the aggregate on a consolidated basis for the Borrower in excess of $2,000,000
at any one time outstanding;



     (i) Debt incurred in the ordinary course of Borrower’s business in connection with Swap
Agreements provided they are permitted under Section 9.18 of this Agreement;



     (j) Debt of Unrestricted Subsidiaries for which neither the Borrower nor any Restricted
Subsidiary shall be liable as an obligor, under any guarantee or otherwise;



     (k) obligations with respect to Series C preferred stock issued by the Borrower prior to the
Effective Date, so long as any dividends with respect thereto comply with the provisions of
Section 9.04;



     (l) obligations with respect to Series D preferred stock issued by the Borrower under the
certificate of designations therefor filed by the Borrower with the Secretary of State of Delaware,
so long as any dividends with respect thereto comply with the provisions of Section 9.04;



     (m) Debt of Alpha Hunter Drilling, LLC, Hunter Real Estate, LLC and Triad Hunter LLC
guaranteed by the Borrower in an amount not to exceed $10,000,000 in the aggregate which Debt shall
be on terms and conditions reasonably satisfactory to the Administrative Agent and have terms and
conditions no more restrictive that the terms and conditions set forth in this Agreement;



     (n) the Hall Houston Debt in an amount not to exceed $640,695 at any one time outstanding;



     (o) Debt of the Borrower for the acquisition and/or financing of a corporate airplane in an
amount not to exceed $4,100,000 and otherwise on terms and conditions reasonably satisfactory to
the Administrative Agent;



     (p) Debt under the First Lien Credit Agreement and any guarantees thereof, and any refinancing
or replacement thereof, provided that such Debt is subject to, and in compliance with, the
Intercreditor Agreement;



     (q) (i) guarantees by the Borrower and any Guarantor in respect of Debt otherwise permitted by
this Section 9.02 and (ii) unsecured guarantees by the Borrower and its Subsidiaries



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at any
one time outstanding not to exceed $2,000,000 in respect of Debt of Unrestricted Subsidiaries
incurred in the ordinary course of business in connection with accounts payable which are not
greater than ninety (90) days past the date of invoice or which are being contested in good faith
by appropriate action and for which adequate reserves have been maintained in accordance with GAAP;
and




     (r) other Debt not to exceed $3,000,000 in the aggregate at any one time outstanding.



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



     (a) Liens securing the payment of Obligations;



     (b) Excepted Liens;



     (c) Liens securing Capital Leases or purchase money Debt permitted by Section 9.02(d)
but only on the Property under lease;



     (d) Liens described on Schedule 9.03;



     (e) Liens on Property not constituting collateral for the Obligations and not otherwise
permitted by the foregoing clauses of this Section 9.03; provided that the
aggregate principal or face amount of all Debt secured under this clause (d) shall not
exceed $500,000 at any time;



     (f) Liens in favor of Lenders securing Debt permitted by Section 9.02(i);



     (g) Liens on the assets of Unrestricted Subsidiaries securing Debt permitted by Sections
9.02(j) and (m) and Liens on the assets of Triad Hunter LLC securing Debt permitted by
Section 9.02(m);



     (h) Liens securing Debt permitted by Section 9.02(o); provided such Liens extend only
to the property purchased and/or financed with the proceeds of such Debt and the proceeds thereof;



     (i) a Lien on the Equity Interests in Eureka Hunter securing Debt of Eureka Hunter;



     (j) Liens securing Debt permitted pursuant to Section 9.02(r); provided, that
(i) the Debt secured by such Liens shall not exceed $2,000,000 at any one time outstanding and (ii)
such Liens extend only to the property purchased and/or financed with the proceeds of such Debt;
and



     (k) Liens securing the obligations of the Borrower and the Guarantors under the First Lien
Credit Agreement and the other First Lien Loan Documents; provided that, such Liens shall not
encumber any Property that is not subject to a Lien in favor of, or for the benefit of, the
Administrative Agent for the benefit of the Lenders to secure the Indebtedness, this Agreement
and other Loan Documents.



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     Section 9.04 Restricted Payments. The Borrower will not, and will not permit any Restricted
Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, return any capital to its stockholders or make any distribution of its Property to its
Equity Interest holders, except:



     (a) Restricted Subsidiaries may declare and pay dividends ratably with respect to their Equity
Interests;



     (b) the Borrower may (i) declare and pay dividends in respect of its Equity Interests so long
as such dividends (A) are in the form of the issuance of stock (common or preferred), warrants,
options or other rights or interests and (B) do not include cash or other Property of the Borrower
not specified in the foregoing clause (A), and (ii) may pay cash in lieu of fractional shares in
connection with any stock splits or reverse stock splits of the Borrower’s Equity Interests, up to
a maximum of $500,000 during the term of this Agreement;



     (c) without limiting the dividends permitted by Section 9.04(b), the Borrower may
declare and pay cash dividends on its preferred stock permitted hereunder, so long as (i) no Event
of Default exists at the time of, or is caused by, such payment, (ii) after giving effect to such
payment, Liquidity is equal to or greater than the greater of (x) five percent (5%) of the
Borrowing Base (as determined under the First Lien Credit Agreement) then in effect and (y)
$5,000,000, and (iii) such dividends do not exceed $20,000,000 in any calendar year;



     (d) without limiting the dividends permitted by Section 9.04(b), the Borrower may (i)
issue Series D preferred stock in exchange for outstanding Series C preferred stock (and pay cash
in lieu of fractional shares in connection with such exchange), (ii) redeem its Series C preferred
stock with the proceeds of an equity issuance by the Borrower, (iii) redeem its Series D preferred
stock with the proceeds of an equity issuance by the Borrower and (iv) issue common stock in
exchange for outstanding Series C and Series D preferred stock (and pay cash in lieu of fractional
shares in connection with such exchange);



     (e) the Borrower may repurchase warrants, options or other rights entitling the holder thereof
to purchase or acquire any Equity Interest in the Borrower for cash consideration in an amount not
to exceed $100,000 during the term of this Agreement; and



     (f) the Borrower may (i) so long as no Event of Default is occurring, make payments to
directors, officers, members of management, employees or consultants of the Borrower or any
Subsidiary (or their transferees, estates or beneficiaries under their estates) upon their death,
disability, retirement, severance or termination of employment or service for the acquisition by
the Borrower from such Persons of Equity Interests in the Borrower, provided that the aggregate
cash consideration paid for all such payments shall not exceed $500,000 in any calendar year, and
(ii) make cashless repurchases of securities that are deemed to occur upon the exercise or vesting
of options, rights or shares of stock held by directors, officers, members of management, employees
or consultants of the Borrower or any Subsidiary to the extent such securities represent a portion
of the exercise price of or withholding taxes attributable to such options,
rights or shares.




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



     (a) Investments reflected in the Financial Statements or which are disclosed to the Lenders in
Schedule 9.05;



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



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



     (d) commercial paper maturing within one year from the date of creation thereof rated in the
highest grade by S&P or Moody’s;



     (e) deposits maturing within one year from the date of creation thereof with, including
certificates of deposit issued by, any Lender or any office located in the United States of any
other bank or trust company which is organized under the laws of the United States or any state
thereof, has capital, surplus and undivided profits aggregating at least $100,000,000 (as of the
date of such bank or trust company’s most recent financial reports) and has a short term deposit
rating of no lower than A2 or P2, as such rating is set forth from time to time, by S&P or Moody’s,
respectively or, in the case of any Foreign Subsidiary, a bank organized in a jurisdiction in which
the Foreign Subsidiary conducts operations having assets in excess of $500,000,000 (or its
equivalent in another currency);



     (f) deposits in money market funds investing exclusively in Investments described in
 Section 9.05(c),  Section 9.05(d) or  Section 9.05(e);



     (g) Investments made by the Borrower in or to any Restricted Subsidiary or by any Restricted
Subsidiary in or to another Restricted Subsidiary (except as set forth in clause (q) or (s) below)
in an aggregate amount at any one time outstanding not to exceed $3,000,000;



     (h) subject to the limits in Section 9.06, Investments in direct ownership interests
in additional Oil and Gas Properties, gas gathering, processing and transportation systems and all
other assets contemplated by the permitted business of Borrower located within the geographic
boundaries of the United States of America and Canada;



     (i) entry into operating agreements, working interests, royalty interests, mineral leases,
processing agreements, farm-out agreements, contracts for the sale, transportation or exchange of
oil and natural gas, unitization agreements, pooling arrangements, area of mutual interest
agreements, production sharing agreements or other similar or customary agreements, transactions,
properties, interests or arrangements, and Investments and expenditures in connection therewith or
pursuant thereto, in each case made or entered into in the ordinary course of the oil and gas
business, excluding, however, Investments in other Persons; provided,
however, that none of the foregoing shall involve the incurrence of any Debt not
permitted by  Section 9.02;



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     (j) loans and advances to directors, officers and employees in connection with the acquisition
of Equity Interests in the Borrower or any Restricted Subsidiary and loans and advances to
directors, officers and employees permitted by applicable law not to exceed $500,000 in the
aggregate at any time;



     (k) travel advances in the ordinary course of business;



     (l) repurchase agreements of a commercial bank in the United States and Canada if the
commercial paper of such bank or of the bank holding company of which such bank is a wholly owned
subsidiary is rated in the highest rating categories of S&P, Moody’s, or any other rating agency
satisfactory to the Required Lenders, that are fully secured by securities described in Section
9.04;



     (m) Investments in stock of publicly traded companies not to exceed $100,000 in the aggregate
outstanding at any time;



     (n) Investments arising from the endorsement of financial instruments in the ordinary course
of business;



     (o) guarantees permitted under Section 9.02;



     (p) Investments by the Borrower or any Restricted Subsidiaries in Unrestricted Subsidiaries
(other than Eureka Hunter or Eureka Hunter Pipeline Partners), not to exceed $2,000,000 in the
aggregate at any time outstanding;



     (q) Investments in Eureka Hunter or Eureka Hunter Pipeline Partners (or another direct or
indirect Subsidiary of Eureka Hunter), whether such Subsidiaries are Restricted Subsidiaries or
Unrestricted Subsidiaries, in an aggregate amount at any one time outstanding not to exceed, in the
aggregate in any calendar year, (i) the Investments in such Persons existing on the Effective Date
as set forth on Schedule 9.05 and (ii) $2,000,000; provided that to the extent the
Borrower reasonably determines that funds in excess of such amount are necessary for the
construction, operation, maintenance or expansion of the Eureka Hunter Pipeline or any related
natural gas processing plants (including the financing of the foregoing), the Borrower may
distribute such excess funds to Eureka Hunter, Eureka Hunter Pipeline Partners or such other
Subsidiary for the purpose of paying any such construction, operation, maintenance or expansion
expenses of the Eureka Hunter Pipeline or such natural gas processing plants (including the costs,
expenses, fees or other amounts relating to the financing of the foregoing), so long as (A) such
funds are net cash proceeds or such payment is made in the form of the issuance of stock from the
offering of common or preferred equity securities by the Borrower on or after January 1, 2011 and
(B) after giving effect to such distribution, Liquidity is equal to or greater than 5% of the
Borrowing Base then in effect;



     (r) To the extent the Eureka Hunter Pipeline is owned by Eureka Hunter Pipeline J.V. and prior
to the occurrence and continuance of an Event of Default, investments by Eureka Hunter Pipeline
Partners in Eureka Hunter Pipeline J.V., not to exceed the amount the Borrower
is permitted to invest in Eureka Hunter and Eureka Hunter Pipeline Partners pursuant to
Section 9.05(q); and



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     (s) Investments made by the Borrower in PRC Williston, LLC (i) prior to the Effective Date as
reflected on Schedule 9.05 and (ii) on or after the Effective Date, in an aggregate amount
not to exceed $5,000,000.



     Section 9.06 Nature of Business; International Operations. The Borrower will not, and will not
permit any Subsidiary to, allow any material change to be made in the character of its business as
an independent oil and gas exploration and production company with midstream, marketing and trading
components, including gathering systems, processing plants, pipelines and related equipment and
facilities, including the Eureka Hunter Pipeline. From and after the Effective Date, the Borrower
and its Subsidiaries will not acquire or make any other expenditure (whether such expenditure is
capital, operating or otherwise) in or related to, any Oil and Gas Properties not located within
the geographical boundaries or territorial waters of the United States or Canada.



     Section 9.07 Limitation on Leases. The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or suffer to exist any obligation for the payment of rent or hire of Property
of any kind whatsoever (real or personal but excluding Capital Leases and leases of Hydrocarbon
Interests), under leases or lease agreements which would cause the aggregate amount of all payments
made by the Borrower and the Subsidiaries pursuant to all such leases or lease agreements,
including, without limitation, any residual payments at the end of any lease, to exceed $2,000,000
in any period of twelve (12) consecutive calendar months during the life of such leases.



     Section 9.08 Proceeds of Notes/Loans. The Borrower will not permit the Loans or the proceeds of
the Notes to be used for any purpose other than those permitted by  Section 7.21. Neither
the Borrower nor any Person acting on behalf of the Borrower has taken or will take any action
which might cause any of the Loan Documents to violate Regulations T, U or X or any other
regulation of the Board or to violate Section 7 of the Securities Exchange Act of 1934 or any rule
or regulation thereunder, in each case as now in effect or as the same may hereinafter be in
effect. If requested by the Administrative Agent, the Borrower will furnish to the Administrative
Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR
Form U-1 or such other form referred to in Regulation U, Regulation T or Regulation X of the Board,
as the case may be.



     Section 9.09 Sale or Discount of Receivables. Except for receivables obtained by the Borrower or
any Subsidiary out of the ordinary course of business or the settlement of joint interest billing
accounts in the ordinary course of business or discounts granted to settle collection of accounts
receivable or the sale of defaulted accounts arising in the ordinary course of business in
connection with the compromise or collection thereof and not in connection with any financing
transaction, neither the Borrower nor
any Subsidiary will discount or sell (with or without recourse) to any other Person that is
not the Borrower any of its notes receivable or accounts receivable.



     Section 9.10 Mergers, Etc. Neither the Borrower nor any Subsidiary will merge into or with or
consolidate with any other Person, or sell, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its Property to any other
Person (any such transaction, a “consolidation”); provided that (a) any Subsidiary may



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participate in a consolidation with the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or any Restricted Subsidiary (provided that such
Restricted Subsidiary shall be the continuing or surviving Person) and any Unrestricted Subsidiary
may merge with another Unrestricted Subsidiary and (b) in the case of an Unrestricted Subsidiary
merging into Borrower, no Default or Event of Default shall result.




     Section 9.11 Sale of Assets. The Borrower will not, and will not permit any Subsidiary to, sell,
assign, farm-out, convey or otherwise transfer any asset, including, without limitation, Property
containing Proved Reserves except for:



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



     (b) farmouts, sales or other dispositions of undeveloped acreage and assignments in connection
with such transactions; provided that




     (i) if the Net Cash Proceeds from any such farmout, sale or other disposition are less
than $25,000,000, an amount equal to 100% of the Net Cash Proceeds received from such
farmout, sale or other disposition shall be used (1) within 180 days of such disposition to
acquire Property, plant and equipment or any business entity used or useful in carrying on
the business of the Borrower and its Subsidiaries or to improve or replace any existing
Property of the Borrower and its Subsidiaries used or useful in carrying on the business of
the Borrower and its Subsidiaries, (2) within 180 days of such disposition, to repay Debt
under the First Lien Credit Agreement or (3) subject to the limitations set forth in
Section 3.04(c)(iii), within 180 days of such disposition, to prepay the Notes (or
any combination of the foregoing); and




     (ii) if the Net Cash Proceeds from any such farmout, sale or other disposition are
$25,000,000 or more, an amount equal to 100% of the Net Cash Proceeds received from such
farmout, sale or other disposition shall be used to prepay the Notes (and, if applicable,
the Debt under the First Lien Credit Agreement) to the extent required by Section
3.04(c);


provided, further, that for any such sale, assignment, farm-out, conveyance or
other transfer that comprises assets governed by both this Section 9.11(b) and Section
9.11(d), the aggregate Net Cash Proceeds thereof shall be considered for purposes of clauses
(i) and (ii) above, without regard to relative proportions of such sale attributable to certain
types or categories of such disposed asset;




     (c) the sale or transfer of equipment in the ordinary course of business or that is no longer
necessary for the business of the Borrower or such Subsidiary or is replaced by equipment of at
least comparable value and use;



     (d) the sale or other disposition (including Casualty Events) of any Oil and Gas Property or
any interest therein or any Restricted Subsidiary owning Oil and Gas Properties; provided
that




     (i) 100% of the consideration received in respect of such sale or other disposition
shall be cash,



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     (ii) the consideration received in respect of such sale or other disposition shall be
equal to or greater than the fair market value of the Oil and Gas Property, interest therein
or the Restricted Subsidiary subject of such sale or other disposition (as reasonably
determined by the board of directors of the Borrower and, if requested by the Administrative
Agent, the Borrower shall deliver a certificate of a Responsible Officer of the Borrower
certifying to that effect),




     (iii) if such sale or other disposition of Oil and Gas Property or Restricted
Subsidiary owning Oil and Gas Properties included in the most recently delivered Reserve
Report during any period between two successive dates on which the Total Reserve Value is
determined in accordance with Section 2.07, has a fair market value in excess of 5%
of the Borrowing Base then in effect (as determined under the First Lien Credit Agreement),
individually or in the aggregate, the Total Reserve Value shall be reduced, effective
immediately upon such sale or disposition, by an amount equal to the value, if any, assigned
such Property in the most recently delivered Reserve Report,




     (iv) the Borrower confirms that either (1) it shall remain in compliance under
Section 8.14(a) immediately subsequent to such sale or disposition or (2) within 30
days from the date of such sale or disposition it shall complete such actions as are
necessary to ensure compliance under Section 8.14(a),




     (v) subject to the last proviso of Section 9.11(b) (which shall apply mutatis
mutantis), if the Net Cash Proceeds from such sale, lease or other disposition are less than
$25,000,000, an amount equal to 100% of the Net Cash Proceeds received from such sale, lease
or other disposition shall be used (1) within 180 days of such disposition to acquire
Property, plant and equipment or any business entity used or useful in carrying on the
business of the Borrower and its Subsidiaries or to improve or replace any existing Property
of the Borrower and its Subsidiaries used or useful in carrying on the business of the
Borrower and its Subsidiaries, (2) within 180 days of such disposition, to repay Debt under
the First Lien Credit Agreement or (3) subject to the limitations set forth in Section
3.04(c)(iii), within 180 days of such disposition, to prepay the Notes (or any
combination of the foregoing);




     (vi) subject to the last proviso of Section 9.11(b) (which shall apply mutatis
mutantis), if the Net Cash Proceeds from such sale, lease or other disposition are
$25,000,000 or more, an amount equal to 100% of the Net Cash Proceeds received from
such sale, lease or other disposition shall be used to prepay the Notes (and, if
applicable, the Debt under the First Lien Credit Agreement) to the extent required by
Section 3.04(c); and




     (vii) if any such sale or other disposition is of a Restricted Subsidiary owning Oil
and Gas Properties, such sale or other disposition shall include all the Equity Interests of
such Restricted Subsidiary.



     (e) sales and other dispositions of Properties not regulated by the foregoing provisions of
this  Section 9.11  having a fair market value not to exceed $1,000,000 during any



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6-month
period, and the sale, trade or other disposition of seismic, geologic or other data, licenses and
similar rights or assets; and




     (f) sales, transfers and dispositions to the Borrower or a Restricted Subsidiary; and



     (g) the transfer by Triad Hunter, LLC of the Equity Interests in Eureka Hunter to an
Unrestricted Subsidiary.



     Section 9.12 Environmental Matters. The Borrower will not, and will not permit any Subsidiary to,
cause or permit any of its Property to be in violation of, or do anything or permit anything to be
done which will subject any such Property to any Remedial Work under any applicable Environmental
Laws, assuming disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property where such violations or remedial
obligations could reasonably be expected to have a Material Adverse Effect.



     Section 9.13 Transactions with Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction, including, without limitation, any purchase, sale, lease
or exchange of Property or the rendering of any service, with any Affiliate (other than the Loan
Parties) unless such transactions are otherwise permitted under this Agreement and are upon fair
and reasonable terms no less favorable to it than it would obtain in a comparable arm’s length
transaction with a Person not an Affiliate and other than reasonable and customary director,
officer and employee compensation (including bonuses and severance) and other benefits (including
retirement, health, stock option and other benefit plans and indemnification arrangements for the
benefit of Borrower’s or any Subsidiary’s officers, directors and employees entered into in the
ordinary course of business and in good faith or to the extent approved in good faith by the board
of directors of the Borrower.



     Section 9.14 Subsidiaries. The Borrower shall not, and shall not permit any Subsidiary to, create
or acquire any additional Subsidiary unless the Borrower gives prior written notice to the
Administrative Agent of such creation or acquisition. The Borrower shall not, and shall not permit
any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in any Subsidiary
except in compliance with  Section 9.11. Neither the Borrower nor any Subsidiary shall
acquire or form any Foreign Subsidiaries other than Subsidiaries organized under Canadian law.



     Section 9.15 Subsidiary Obligations and Preferred Stock. The Borrower will not and will not permit
any of Subsidiary to issue preferred stock or create, incur or assume any Debt, except for
preferred stock and Debt, in each case permitted under  Section 9.02.



     Section 9.16 Negative Pledge Agreements; Dividend Restrictions. The Borrower will not, and will
not permit any Restricted Subsidiary to, create, incur, assume or suffer to exist any contract,
agreement or understanding which in any way prohibits or restricts the granting, conveying,
creation or imposition of any Lien on any of its Property in favor of the Administrative Agent and
the Lenders or restricts any Loan Party from paying dividends or making distributions to any other
Loan Party, or which requires the consent of or notice to other Persons in connection therewith;
provided, however, that the preceding restrictions will not apply



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to encumbrances
or restrictions arising under or by reason of (a) the First Lien Credit Agreement, this Agreement
or the Security Instruments, (b) any leases or licenses or similar contracts as they affect any
Property or Lien subject to a lease or license, (c) any contract, agreement or understanding
creating Liens on Capital Leases permitted by  Section 9.03(c) (but only to the extent
related to the Property on which such Liens were created), (d) any restriction with respect to a
Subsidiary imposed pursuant to an agreement entered into for the direct or indirect sale or
disposition of all or substantially all the equity or Property of such Subsidiary (or the Property
that is subject to such restriction) pending the closing of such sale or disposition, (e) the
agreement described on Schedule 9.16, (f) customary provisions with respect to the
distribution of Property in joint venture agreements or (g) the agreement creating the Lien
described in Section 9.03(h).




     Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments. The Borrower will not allow gas
imbalances, take-or-pay or other prepayments with respect to the Oil and Gas Properties of the
Borrower or any Restricted Subsidiary that would require the Borrower or such Restricted Subsidiary
to deliver Hydrocarbons at some future time without then or thereafter receiving full payment
therefor to exceed 500 mmcf equivalent in the aggregate at all times except for such amounts that
are covered by adequate reserves, which reserves (or the future cash flow therefrom) are excluded
from the most recent Reserve Report.



     Section 9.18 Swap Agreements.  The Borrower will not, and will not permit any Subsidiary to,
enter into any Swap Agreements with any Person other than:




     (i) Swap Agreements in respect of commodities (A) with an Approved Counterparty and (B)
the notional volumes for which (when aggregated with other commodity Swap Agreements in
effect for the same year or years as such Swap Agreement, other than basis differential
swaps on volumes already hedged pursuant to other Swap Agreements) do not exceed, as of the
date such Swap Agreement is executed, for each of crude oil and natural gas, calculated
separately, (1) 80% of the reasonably anticipated production of its Total Proved Reserves
for each month during the period in which such Swap Agreement is in effect, and (2) the
following percentage of the most
recent production as provided in the report most recently delivered by the Borrower
pursuant to Section 8.01(m) for the same year or years such Swap Agreements is in
effect:



	 	 	 	 	 	 	 	 	 

	2011
	 	 	—	 	 	 	100	%
	2012
	 	 	—	 	 	 	90	%
	2013-2015
	 	 	—	 	 	 	75	%
	Thereafter
	 	 	—	 	 	 	50	%;







     (ii) Swap Agreements in respect of interest rates with an Approved Counterparty, as
follows: (A) Swap Agreements effectively converting interest rates from fixed to floating,
the notional amounts of which (when aggregated with all other Swap Agreements of the
Borrower and its Subsidiaries then in effect effectively converting interest rates from
fixed to floating) do not exceed 75% of the then outstanding principal amount of the
Borrower’s fixed rate Debt for borrowed money and (B) Swap Agreements effectively converting
interest rates from floating to fixed, the



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notional amounts of which (when aggregated with
all other Swap Agreements of the Borrower and its Subsidiaries then in effect effectively
converting interest rates from floating to fixed) do not exceed 75% of the then outstanding
principal amount of the Borrower’s Debt for borrowed money which bears interest at a
floating rate; and




     (iii) Swap Agreements with respect to which Debt is allowed pursuant to Section
9.02.



     In no event shall any Swap Agreement to which the Borrower or any Subsidiary is a party
contain any requirement, agreement or covenant for the Borrower or any Subsidiary to post cash or
other collateral or margin to secure their obligations under such Swap Agreement or to cover market
exposures.



     (b) For purposes of this Section 9.18, put options and price floors shall not be
considered to the Swap Agreements.



     Section 9.19 Sale and Leaseback Transactions. 



     The Borrower will not, and will not permit any of its Restricted Subsidiaries to, enter into
any arrangement, directly or indirectly, whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereinafter acquired, and thereafter
rent or lease such property or other property that it intends to use for substantially the same
purpose or purposes as the property sold or transferred.



     Section 9.20 Anti-Layering. 



     Notwithstanding the foregoing, the Borrower will not, and will not permit any Subsidiary to,
incur, create, assume or suffer to exist any Debt if such Debt is subordinate or junior in ranking
in right of payment to the First Lien Credit Agreement, unless such Debt is expressly subordinated
in right of payment to the obligations under this Agreement on terms reasonably acceptable to the
Administrative Agent and the Required Lenders.



ARTICLE X




Events of Default; Remedies



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



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



     (b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount
(other than an amount referred to in  Section 10.01(a)) payable under any Loan Document,
when and as the same shall become due and payable, and such failure shall continue unremedied for a
period of three (3) Business Days.



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



     (d) the Borrower or any Restricted Subsidiary shall fail to observe or perform any covenant,
condition or agreement contained in  Section 8.01(h),  Section 8.01(l),
 Section 8.02,  Section 8.03, Section 8.12,  Section 8.15 or in
 ARTICLE IX (other than Section 9.02, Section 9.03 and Section
9.18).



     (e) any Loan Party shall fail to observe or perform any covenant, condition or agreement
contained in this Agreement (other than those specified in Section 10.01(a),  Section
10.01(b) or Section 10.01(d)) or any other Loan Document, and such failure shall
continue unremedied for a period of 30 days after the earlier to occur of (i) notice thereof from
the Administrative Agent to the Borrower (which notice will be given at the request of any Lender)
or (ii) a Responsible Officer of the Borrower or such Subsidiary otherwise becoming aware of such
default.



     (f) the Borrower or any Restricted Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material Indebtedness, when and
as the same shall become due and payable if the effect of such event is to cause, or (with the
giving of any notice or the lapse of time or both) to permit the holder or holders of such Debt (or
a trustee or agent on behalf of such holder or holders) to cause, such Debt to become due prior to
its stated maturity.



     (g) any event or condition occurs that results in any Material Indebtedness becoming due prior
to its scheduled maturity or to require the Redemption thereof or any offer to Redeem to be made in
respect thereof, prior to its scheduled maturity or require the Borrower or any Restricted
Subsidiary to make an offer in respect thereof.



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



     (i) the Borrower or any Restricted Subsidiary shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii)
consent to the institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 10.01(h), (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for
the Borrower or



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any Restricted Subsidiary or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose
of effecting any of the foregoing.




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



     (k) one or more judgments for the payment of money in an aggregate amount in excess of
$3,500,000 (to the extent not covered by independent third party insurance provided by insurers of
the highest claims paying rating or financial strength as to which the insurer does not dispute
coverage and is not subject to an insolvency proceeding) shall be rendered against the Borrower,
any Restricted Subsidiary or any combination thereof and the same shall remain undischarged for a
period of 60 consecutive days during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or
any Restricted Subsidiary to enforce any such judgment.



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



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



     (n) a Change in Control shall occur.



     Section 10.02 Remedies.
 In the case of an Event of Default other than one described in  Section 10.01(h),
  Section 10.01(i) or  Section 10.01(j), at any time thereafter during the
continuance of such Event of Default, the Administrative Agent may, and at the request of the
Required Lenders shall, by notice to the Borrower, declare the Notes and the Loans then outstanding
to be due and payable in whole (or in part, in which case any principal not so declared to be due
and payable may thereafter be declared to be due and payable), and thereupon the principal of the
Loans so declared to be due and payable, together with accrued interest thereon, premium, if any,
and all fees and other obligations of the Borrower accrued hereunder and under the Notes and the
other Loan Documents, shall become due and payable immediately, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other notice of any kind, all of
which are hereby waived by the Borrower and each Guarantor; and in case of an Event of Default
described in  Section 10.01(h),  Section 10.01(i) or  Section 10.01(j), the
Notes and the principal of the Loans then outstanding, together with accrued interest thereon,
premium, if any, and all fees and the other obligations of the Borrower accrued hereunder and under
the Notes and the other Loan Documents, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are hereby waived by the
Borrower.



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



     (c) All proceeds realized from the liquidation or other disposition of collateral or otherwise
received after maturity of the Loans or the Notes, whether by acceleration or otherwise, shall be
applied: first, to reimbursement of expenses and indemnities provided for in this Agreement and
the Security Instruments; second, to accrued interest on the Loans; third, to fees; fourth, pro
rata to principal outstanding on the Loans; fifth, to any other Obligations; and any excess shall
be paid to the Borrower or as otherwise required by any Governmental Requirement.



ARTICLE XI




The Administrative Agent



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



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



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



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



     Section 11.05 Subagents. The Administrative Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more sub-agents appointed by it.



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The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the preceding Sections of
this  ARTICLE XI shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.




     Section 11.06 Resignation or Removal of Administrative Agent. Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this  Section 11.06, the
Administrative Agent may resign at any time by notifying the Lenders and the Borrower, and the
Administrative Agent may be removed at any time with or without cause by the Required Lenders.
Upon any such resignation or removal, the Required Lenders shall have the right, in consultation
with and upon the approval of the Borrower (so long as no Event of Default has occurred and is
continuing), which approval shall not be unreasonably withheld, to appoint a successor. If no
successor shall have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice of its resignation
or removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and
become vested with all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as those payable to
its predecessor unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent’s resignation hereunder, the provisions of this  ARTICLE XI and
 Section 12.03 shall continue in effect for the benefit of such retiring Administrative
Agent, its sub-agents and their respective Related Parties in respect of any actions taken or
omitted to be taken by any of them while it was acting as Administrative Agent.



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



     Section 11.08 No Reliance Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and each other Loan Document to which it is a party. Each Lender also acknowledges
that it will, independently and without reliance upon the Administrative Agent or any other Lender
and based on such documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document, any related agreement or any document furnished hereunder or
thereunder. The Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or



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any of its Subsidiaries of this Agreement, the Loan
Documents or any other document referred to or provided for herein or to inspect the Properties or
books of the Borrower or its Subsidiaries. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, neither the Administrative Agent nor the Arranger shall have any duty or responsibility
to provide any Lender with any credit or other information concerning the affairs, financial
condition or business of the Borrower (or any of its Affiliates) which may come into the possession
of the Administrative Agent or any of its Affiliates. In this regard, each Lender acknowledges
that Simpson Thacher & Bartlett LLP is acting in this transaction as special counsel to the
Administrative Agent and Arrangers only, except to the extent otherwise expressly stated in any
legal opinion or any Loan Document. Each other party hereto will consult with its own legal
counsel to the extent that it deems necessary in connection with the Loan Documents and the matters
contemplated therein.




     (b) The Lenders acknowledge that BMO Capital Markets Corp., in its capacity as an Arranger
hereunder, and Bank of Montreal, as First Lien Administrative Agent and as Syndication Agent, are
acting solely in administrative capacities with respect to the structuring and syndication of this
Agreement and have no duties, responsibilities or liabilities under this Agreement and the other
Loan Documents other than their administrative duties, responsibilities and liabilities
specifically as set forth in the Loan Documents and, in the case of Bank of
Montreal, its capacity as a Lender hereunder. In structuring, arranging or syndicating this
Agreement, each Lender acknowledges that BMO Capital Markets Corp. and Bank of Montreal may be an
agent or lender under these Notes, the First Lien Credit Agreement, other loans or other securities
and waives any existing or future conflicts of interest associated with the their role in such
other debt instruments. If in its administration of this facility or any other debt instrument,
either BMO Capital Markets Corp. or Bank of Montreal determines (or is given written notice by any
Lender that a conflict exists), then it shall eliminate such conflict within ninety (90) days or
resign and shall have no liability for action taken or not taken while such conflict existed.



     Section 11.09 Authority to Release Collateral and Liens. Each Lender hereby authorizes the
Administrative Agent to release any collateral that is permitted to be sold or released pursuant to
the terms of the Loan Documents. Each Lender hereby authorizes the Administrative Agent to execute
and deliver to the Borrower, at the Borrower’s sole cost and expense, any and all releases of
Liens, termination statements, assignments or other documents reasonably requested by the Borrower
in connection with any sale or other disposition of Property to the extent such sale or other
disposition is permitted by the terms of  Section 9.11 or is otherwise authorized by the
terms of the Loan Documents.



     Section 11.10 The Arrangers, the Syndication Agent and the Documentation Agent. None of the
Arrangers, the Syndication Agent or the Documentation Agent shall have any duties, responsibilities
or liabilities under this Agreement and the other Loan Documents other than, in the case of any
Persons that are also Lenders, their duties, responsibilities and liabilities in their capacities
as Lenders hereunder.



     Section 11.11 Filing of Proofs of Claim. In case of any Default or Event of Default under
 Section 10.01(g), Section 10.01(h) or Section 10.01(i), the Administrative
Agent (regardless of whether the principal of any Loan shall then be due and payable and regardless
of



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whether the Administrative Agent has made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise:




     (a) to (i) file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans and all other Obligations that is owing and unpaid and (ii) file
such other documents as may be necessary or advisable in order to have the claims of the Lenders
and the Administrative Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders, the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders, the Administrative Agent under  Section 3.03
and  Section 12.03) allowed in such judicial proceeding; and



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


Each Lender hereby authorizes any custodian, receiver, assignee, trustee, conservator, sequestrator
or other similar official in any such judicial proceeding: (i) to make such payments to the
Administrative Agent; and (ii) if the Administrative Agent shall consent to the making of such
payments directly to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its
agents and counsel, and any other amounts due the Administrative Agent under   Section 3.03
and  Section 12.03. Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights
of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any
Lender in any such proceeding. Each Lender retains its right to file and prove a claim separately.




     Section 11.12 Acknowledgement Regarding Securities Laws. In making its decision to become a Lender
hereunder, each Lender acknowledges that the Loans made hereunder to the Borrower and any Notes (or
other promissory note) made by the Borrower pursuant hereto are not securities and that this
Agreement, the Loans, the Notes and the syndication and/or sale or assignment of Loans hereunder,
are not subject to any federal or state securities laws.



ARTICLE XII




Miscellaneous



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




     (i) if to the Borrower, to it at Magnum Hunter Resources Corporation, 777 Post Oak
Blvd., Suite 650, Houston, Texas 77056, Attention Ronald D. Ormand (Telecopy No.
832-369-6992);



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     (ii) if to the Administrative Agent, to it at Capital One Energy Banking, Underwriting
Manager, 5718 Westheimer, Suite 1430, Houston, TX 77057, Attention David Reid (Telecopy No.
713-435-7106);




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



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



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



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



     (b) Neither this Agreement nor any provision hereof nor any Security Instrument nor any
provision thereof may be waived, amended or modified except pursuant to an agreement or agreements
in writing entered into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no such agreement
shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii)
reduce the principal amount of any Lender’s Loan or reduce the rate of interest thereon, without
the written consent of such Lender, (iii) postpone the scheduled date of payment of the principal
amount of any Loan, or any interest thereon, or any fees payable hereunder, or any other
Obligations hereunder or under any other Loan Document, or reduce the amount of, waive or excuse
any such payment, or postpone or extend the Maturity Date without the written



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consent of each
Lender affected thereby (it being understood that a waiver of a mandatory prepayment shall not
constitute a waiver, excuse or postponement of a scheduled date or payment), (iv) change
 Section 4.01(b) or Section 4.01(c) in a manner that would alter the pro rata
sharing of payments required thereby, without the written consent of each Lender, (v) waive or
amend Section 8.14, without the written consent of each Lender, (vi) release any of the
collateral (other than as provided in  Section 11.09), or (vii) change any of the
provisions of this  Section 12.02(b) or the definition of “Required Lenders” or any
other provision hereof specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or under any other Loan Documents or make any determination or grant
any consent hereunder or any other Loan Documents, without the written consent of each Lender;
provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent hereunder or under any other Loan Document without the prior written consent
of the Administrative Agent. Notwithstanding the foregoing, any supplement to Schedule
7.14 (Subsidiaries) shall be effective simply by delivering to the Administrative Agent a
supplemental schedule clearly marked as such and, upon receipt, the Administrative Agent will
promptly deliver a copy thereof to the Lenders.




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



     (b) The Borrower shall indemnify the Arranger, the Administrative Agent and each Lender, and
each Related Party of any of the foregoing persons (each such person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of,
in connection with, or as a result of (i) the execution or delivery of this Agreement or any other
Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto or the parties to any other Loan Document of their



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




     (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the
Administrative Agent under  Section 12.03(a) or  (b), each Lender severally agrees
to pay to the Administrative Agent such Lender’s pro rata percentage of the total
Loans (determined as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such



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unpaid amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or asserted against the
Administrative Agent in its capacity as such.




     (d) To the extent permitted by applicable law, the Borrower and the Indemnified Parties shall
not assert, and hereby waive, any claim against each other, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the Transactions, or
the use of the proceeds thereof.



     (e) All amounts due under this  Section 12.03 shall be payable promptly after written
demand therefor.



     Section 12.04 Successors and Assigns.  The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance
with this  Section 12.04. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants (to the extent provided in Section 12.04(c)) and, to
the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent
and the Lenders) any legal or equitable right, remedy or claim under or by reason of this
Agreement.



     (b) (i) Subject to the conditions set forth in  Section 12.04(b)(ii), any Lender may
assign to one or more assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld or delayed) of: (1) the Borrower, provided
that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a
Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other
assignee, provided further that the Borrower shall be deemed to have consented to
any such assignment unless it shall object thereto by written notice to the Administrative Agent
within five Business Days after having received written notice thereof; and (2) the Administrative
Agent.




     (ii) Assignments shall be subject to the following additional conditions: (1) except in
the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender’s Loans, the amount of the Loans of the
assigning Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the Administrative Agent)
shall not be less than $2,500,000, and the Loans of any assigning Lender remaining a party
hereto after giving effect to the assignment shall be at least $2,500,000, unless, in each
case, each of the Borrower, the Administrative Agent otherwise consents, provided
that no such consent of the Borrower shall be required if an Event of Default has occurred
and is continuing; (2) each partial assignment shall be



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made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under this
Agreement; (3) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing and
recordation fee of $3,500; (4) the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire and shall deliver notice of the
Assignment and Assumption to the Borrower; and (5) in the case of an assignment to a CLO,
the assigning Lender shall retain the sole right to approve any
amendment, modification or waiver of any provision of this Agreement, provided
that the Assignment and Assumption between such Lender and such CLO may provide that such
Lender will not, without the consent of such CLO, agree to any amendment, modification or
waiver described in the first proviso to  Section 12.02 that affects such CLO.




     (iii) Subject to  Section 12.04(b)(iv) and the acceptance and recording thereof,
from and after the effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement (and, in
the case of an Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Section 5.01,  Section 5.02,
Section 5.03 and  Section 12.03). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section
12.04 shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 12.04(c).




     (iv) The Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption delivered to
it and a register for the recordation of the names and addresses of the Lenders, and
principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time
to time (the “Register”). The entries in the Register shall be conclusive, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be available
for inspection by the Borrower and any Lender, at any reasonable time and from time to time
upon reasonable prior notice. In connection with any changes to the Register, if necessary,
the Administrative Agent will reflect the revisions on Annex I and forward a copy of
such revised Annex I to the Borrower and each Lender.




     (v) Upon its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire
(unless the assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in  Section 12.04(b) and any written consent to such assignment
required by  Section 12.04(b), the Administrative Agent shall accept such Assignment
and Assumption and record the information contained therein in the



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Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this  Section 12.04(b).



     (c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell
participations to one or more banks or other entities (a “Participant”) in all or a portion
of such Lender’s rights and obligations under this Agreement (including all or a portion of the
Loans owing to it); provided that (1) such Lender’s obligations under this Agreement shall
remain unchanged, (2) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (3) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement
or instrument pursuant to which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the proviso to Section 12.02 that affects such
Participant. In addition such agreement must provide that the Participant be bound by the
provisions of  Section 12.03. Subject to Section 12.04(c)(ii), the Borrower agrees
that each Participant shall be entitled to the benefits of Section 5.01, Section
5.02 and  Section 5.03 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to  Section 12.04(b). To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 12.08 as though it were a
Lender, provided such Participant agrees to be subject to  Section 4.01(c) as though it
were a Lender.




     (ii) A Participant shall not be entitled to receive any greater payment under
Section 5.01 or  Section 5.03 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of  Section 5.03 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 5.03(e) as though it were a Lender.



     (d) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this  Section 12.04(d)
shall not apply to any such pledge or assignment of a security interest; provided that no
such pledge or assignment of a security interest shall release a Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.



     (e) Notwithstanding any other provisions of this Section 12.04, no transfer or
assignment of the interests or obligations of any Lender or any grant of participations therein
shall be permitted if such transfer, assignment or grant would require the Borrower to file a
registration statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any state.



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     Section 12.05 Survival; Revival; Reinstatement.  All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the execution and delivery of
this Agreement and the making of any Loans, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at the time any credit
is
extended hereunder, and shall continue in full force and effect as long as the principal of or
any accrued interest on any Loan or any fee or any other amount payable under this Agreement is
outstanding and unpaid. The provisions of Section 5.01, Section 5.02, Section
5.03 and Section 12.03 and ARTICLE XI shall survive and remain in full force
and effect regardless of the consummation of the transactions contemplated hereby, the repayment of
the Loans, or the termination of this Agreement, any other Loan Document or any provision hereof or
thereof.



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



     Section 12.06 Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.



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



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



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     Section 12.07 Severability. Any provision of this Agreement or any other Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability of the remaining provisions hereof or thereof; and the
invalidity of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.



     Section 12.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each
Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations (of whatsoever kind,
including, without limitation, Swap Agreements with the Borrower or any Restricted Subsidiary) at
any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower or
any Restricted Subsidiary against any of and all the obligations of the Borrower or any Restricted
Subsidiary owed to such Lender now or hereafter existing under this Agreement or any other Loan
Document, irrespective of whether or not such Lender shall have made any demand under this
Agreement or any other Loan Document and although such obligations may be unmatured. The rights of
each Lender under this Section 12.08 are in addition to other rights and remedies
(including other rights of setoff) which such Lender or its Affiliates may have.



     Section 12.09 Governing Law; Jurisdiction; Consent to Service of Process.  This Agreement and
the Loan Documents shall be governed by, and construed in accordance with, the laws of the State of
New York without regard to any choice-of-law provisions that would require the application of the
law of another jurisdiction; provided, to the extent any of the Security Instruments recite that
they are governed by the law of another jurisdiction, or any action or event taken thereunder (such
as foreclosure of the Mortgaged Property) requires application of or compliance with the law of
another jurisdiction, such provisions and concepts shall apply.



     (b) Any legal action or proceeding with respect to the Loan Documents shall be brought in the
courts of the Supreme Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and, by execution and delivery of this
Agreement, each party hereby accepts for itself and (to the extent permitted by law) in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each party
hereby irrevocably waives any objection, including, without limitation, any objection to the laying
of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions. This submission to
jurisdiction is non-exclusive and does not preclude a party from obtaining jurisdiction over
another party in any court otherwise having jurisdiction.



     (c) Each party irrevocably consents to the service of process of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to it at the address specified in Section 12.01 or such other
address as is specified pursuant to Section 12.01 (or its assignment and assumption), such
service to become effective thirty (30) days after such mailing. Nothing herein shall affect the
right of a party or any holder of a note to serve process in any other manner permitted by law



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or
to commence legal proceedings or otherwise proceed against another party in any other jurisdiction.




     (d) Each party hereby (i) irrevocably and unconditionally waives, to the fullest extent
permitted by law, trial by jury in any legal action or proceeding relating to this Agreement or any
other Loan Document and for any counterclaim therein; (ii) irrevocably waives, to the maximum
extent not prohibited by law, any right it may have to claim or recover in any such litigation
any special, exemplary, punitive or consequential damages, or damages other than, or in addition
to, actual damages; (iii) certifies that no party hereto nor any representative or agent of counsel
for any party hereto has represented, expressly or otherwise, or implied that such party would not,
in the event of litigation, seek to enforce the foregoing waivers, and (iv) acknowledges that it
has been induced to enter into this Agreement, the Loan Documents and the transactions contemplated
hereby and thereby by, among other things, the mutual waivers and certifications contained in this
Section 12.09.



     Section 12.10 Headings. Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement and shall not affect the construction
of, or be taken into consideration in interpreting, this Agreement.



     Section 12.11 Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain
the confidentiality of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory authority or
self-regulatory body; provided Borrower has been given reasonable advance notice thereof and been
afforded an opportunity to limit or protest the disclosure, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process; provided Borrower has
been given reasonable advance notice thereof and been afforded an opportunity to limit or protest
the disclosure, (d) to any other party to this Agreement or any other Loan Document, (e) in
connection with the exercise of any remedies hereunder or under any other Loan Document or any
suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement
of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially
the same as those of this Section 12.11, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any Swap Agreement relating to the
Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of this Section
12.11 or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential
basis from a source other than the Borrower. For the purposes of this Section 12.11,
“Information” means all information received from the Borrower or any Subsidiary relating
to the Borrower or any Subsidiary and their businesses, other than any such information that is
available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure
by the Borrower or a Subsidiary. Any Person required to maintain the confidentiality of
Information as provided in this Section 12.11 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to



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maintain the
confidentiality of such Information as such Person would accord to its own confidential
information.




     Section 12.12 Exculpation Provisions.
Each of the parties hereto specifically agrees that it has a duty to read this Agreement and
the other Loan Documents and agrees that it is charged with notice and knowledge of the terms of
this Agreement and the other Loan Documents; that it has in fact read this Agreement and is fully
informed and has full notice and knowledge of the terms and conditions of this Agreement; that it
has been represented by independent legal counsel of its choice throughout the negotiations
preceding its execution of this Agreement and the other Loan Documents; and has received the advice
of its attorney in entering into this Agreement and the other Loan Documents; and that it
recognizes that certain of the terms of this Agreement and the other Loan Documents may result,
subject to the terms hereof and thereof and applicable law, in one party assuming the liability
inherent in some aspects of the transaction and relieving the other party of its responsibility for
such liability. Each party hereto agrees and covenants that it will not contest the validity or
enforceability of any exculpatory provision of this Agreement and the other loan documents on the
basis that the party had no notice or knowledge of such provision or that the provision is not
“conspicuous.”



     Section 12.13 No Third Party Beneficiaries. This Agreement, the other Loan Documents, and the
agreement of the Lenders to make Loans hereunder are solely for the benefit of the Borrower, and no
other Person (including, without limitation, any Subsidiary of the Borrower, any obligor,
contractor, subcontractor, supplier or materialmen) shall have any rights, claims, remedies or
privileges hereunder or under any other Loan Document against the Administrative Agent or any
Lender for any reason whatsoever. There are no third party beneficiaries.



     Section 12.14 USA Patriot Act Notice. Each Lender hereby notifies the Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Patriot Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance with the Patriot
Act.



     Section 12.15 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any
time the interest rate applicable to any Loan or reimbursement obligation, together with all fees,
charges and other amounts that are treated as interest on such Loan or reimbursement obligation
under applicable law (collectively the “Charges”), shall exceed the Highest Lawful Rate
that may be contracted for, charged, taken, received or reserved by the Lender holding such Loan or
reimbursement obligation in accordance with applicable law, the rate of interest payable in respect
of such Loan or reimbursement obligation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Highest Lawful Rate and, to the extent lawful, the interest and
Charges that would have been payable in respect of such Loan or reimbursement obligation but were
not payable as a result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans, reimbursement obligations or periods
shall be increased (but not above the Highest Lawful Rate therefor) until such cumulated amount
shall have been received by such Lender and in the event that, notwithstanding the foregoing, under
any circumstances the aggregate amounts taken,



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reserved, charged, received or paid on the
Loans include amounts which by applicable law are deemed interest which would exceed the
Highest Lawful Rate, then such excess shall be deemed to be a mistake and each Lender receiving
same shall credit the same on the principal of its Loans (or if such Loans shall have been paid in
full, refund said excess to the Borrower). In the event that the maturity of the Obligations are
accelerated by reason of any election of the holder thereof resulting from any Event of Default
under this Agreement or otherwise, or in the event of any required or permitted prepayment, then
such consideration that constitutes interest may never include more than the Highest Lawful Rate,
and excess interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be
credited on the Obligations (or, if the applicable Loans shall have been paid in full, refunded to
the Borrower of such interest). The provisions of this Section shall control over all other
provisions of this Agreement or the other Loan Documents which may be in apparent conflict
herewith.




[Signatures Begin Next Page]




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



	 	 	 	 	 
	 	BORROWER:



MAGNUM HUNTER RESOURCES

CORPORATION,

a Delaware corporation

 	 
	 	By:  	/s/ Ronald D. Ormand
 	 
	 	 	Ronald D. Ormand 	 
	 	 	Chief Financial Officer 	 
	 



Signature Page to Credit Agreement






 









 








	 	 	 	 	 
	 	ADMINISTRATIVE AGENT AND LENDER:



CAPITAL ONE, NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Nancy M. Mak
 	 
	 	 	Name:  	Nancy M. Mak 	 
	 	 	Title:  	Vice President 	 
	 



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	 	LENDERS:



BMO HARRIS FINANCING, INC.

 	 
	 	By:  	/s/ Gumaro Tijerina
 	 
	 	 	Name:  	Gumaro Tijerina 	 
	 	 	Title:  	Director 	 
	 
	 	CITIBANK, N.A.

 	 
	 	By:  	/s/ Don Dimitrievich
 	 
	 	 	Name:  	Don Dimitrievich 	 
	 	 	Title:  	Vice President 	 
	 
	 	DEUTSCHE BANK TRUST COMPANY AMERICAS

 	 
	 	By:  	/s/ Marguerite Sutton
 	 
	 	 	Name:  	Marguerite Sutton 	 
	 	 	Title:  	Director 	 
	 
	 	 	 
	 	By:  	           /s/ Omayra Laucella
 	 
	 	 	Name:  	Omayra Laucella 	 
	 	 	Title:  	Vice President 	 
	 
	 
	 	SUNTRUST BANK

 	 
	 	By:  	/s/ Andrew Johnson
 	 
	 	 	Name:  	Andrew Johnson 	 
	 	 	Title:  	Director 	 
	 



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	 	UNIONBANCAL EQUITIES, INC

 	 
	 	By:  	/s/ John W. Schmidt
 	 
	 	 	Name:  	John W. Schmidt 	 
	 	 	Title:  	Vice President 	 
	 
	 	 	 
	 	By:  	            /s/ Margaret Flower
 	 
	 	 	Name:  	Margaret Flower 	 
	 	 	Title:  	Vice President 	 
	 



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ANNEX I




LIST OF COMMITMENTS



	 	 	 	 	 
	Name of Lender	 	Commitments	 
	BMO Harris Financing, Inc.
	 	$	25,000,000	 
	 
	 	 	 	 
	Capital One, National Association
	 	$	23,000,000	 
	 
	 	 	 	 
	Citibank, N. A.
	 	$	15,000,000	 
	 
	 	 	 	 
	Deutsche Bank Trust Company Americas
	 	$	13,500,000	 
	 
	 	 	 	 
	UnionBanCal Equities, Inc.
	 	$	13,500,000	 
	 
	 	 	 	 
	SunTrust Bank, N.A.
	 	$	10,000,000	 
	 
	 	 	 
	 
	TOTAL
	 	$	100,000,000.00	 






Annex-1