exv10w1






Exhibit 10.1






 









Credit Agreement



dated as of September [ ], 2011



among



Memorial Production Operating LLC,

as Borrower,



Memorial Production Partners LP,

as Parent Guarantor,



Wells Fargo Bank, National Association,

as Administrative Agent,



JPMorgan Chase Bank, N.A.,

as Syndication Agent,



[          ],

as Documentation Agent,



and



The Lenders Party Hereto



 





Wells Fargo Securities, LLC and J.P. Morgan Securities LLC

Co-Lead Arrangers and Joint Bookrunners



 








 









 








Table Of Contents




	 	 	 	 	 
	 	 	Page
	ARTICLE I

	DEFINITIONS AND ACCOUNTING MATTERS

	 
	 	 	 	 
	Section 1.01 Terms Defined Above

	 	 	1	 
	Section 1.02 Certain Defined Terms

	 	 	1	 
	Section 1.03 Types of Loans and Borrowings

	 	 	26	 
	Section 1.04 Terms Generally; Rules of Construction

	 	 	26	 
	Section 1.05 Accounting Terms and Determinations; GAAP

	 	 	27	 
	 
	 	 	 	 
	ARTICLE II

	THE CREDITS

	 
	 	 	 	 
	Section 2.01 Commitments

	 	 	27	 
	Section 2.02 Loans and Borrowings

	 	 	27	 
	Section 2.03 Requests for Borrowings

	 	 	28	 
	Section 2.04 Interest Elections

	 	 	29	 
	Section 2.05 Funding of Borrowings

	 	 	30	 
	Section 2.06 Termination and Reduction of Aggregate Maximum Credit Amounts

	 	 	31	 
	Section 2.07 Borrowing Base

	 	 	32	 
	Section 2.08 Letters of Credit

	 	 	34	 
	Section 2.09 Defaulting Lenders

	 	 	39	 
	 
	 	 	 	 
	ARTICLE III

	PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

	 
	 	 	 	 
	Section 3.01 Repayment of Loans

	 	 	40	 
	Section 3.02 Interest

	 	 	40	 
	Section 3.03 Alternate Rate of Interest

	 	 	41	 
	Section 3.04 Prepayments

	 	 	42	 
	Section 3.05 Fees

	 	 	44	 
	 
	 	 	 	 
	ARTICLE IV

	PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS

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

	 	 	45	 
	Section 4.02 Presumption of Payment by the Borrower

	 	 	46	 
	Section 4.03 Certain Deductions by the Administrative Agent

	 	 	46	 
	Section 4.04 Disposition of Proceeds

	 	 	46	 
	 
	 	 	 	 
	ARTICLE V

	INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY

	 
	 	 	 	 
	Section 5.01 Increased Costs

	 	 	47	 
	Section 5.02 Break Funding Payments

	 	 	48	 
	Section 5.03 Taxes

	 	 	48	 
	Section 5.04 Mitigation Obligations; Replacement of Lenders

	 	 	52	 
	Section 5.05 Illegality

	 	 	52	 






i









 






	 	 	 	 	 
	 	 	Page
	ARTICLE VI

	CONDITIONS PRECEDENT

	 
	 	 	 	 
	Section 6.01 Effective Date

	 	 	53	 
	Section 6.02 Each Credit Event

	 	 	56	 
	 
	 	 	 	 
	ARTICLE VII

	REPRESENTATIONS AND WARRANTIES

	 
	 	 	 	 
	Section 7.01 Organization; Powers

	 	 	57	 
	Section 7.02 Authority; Enforceability

	 	 	57	 
	Section 7.03 Approvals; No Conflicts

	 	 	58	 
	Section 7.04 Financial Condition; No Material Adverse Change

	 	 	58	 
	Section 7.05 Litigation

	 	 	59	 
	Section 7.06 Environmental Matters

	 	 	59	 
	Section 7.07 Compliance with the Laws and Agreements; No Defaults or
Borrowing Base Deficiency

	 	 	60	 
	Section 7.08 Investment Company Act

	 	 	60	 
	Section 7.09 Taxes

	 	 	60	 
	Section 7.10 ERISA

	 	 	61	 
	Section 7.11 Disclosure; No Material Misstatements

	 	 	61	 
	Section 7.12 Insurance

	 	 	62	 
	Section 7.13 Restriction on Liens

	 	 	62	 
	Section 7.14 Subsidiaries

	 	 	62	 
	Section 7.15 Location of Business and Offices

	 	 	62	 
	Section 7.16 Properties; Titles, Etc

	 	 	63	 
	Section 7.17 Maintenance of Properties

	 	 	64	 
	Section 7.18 Gas Imbalances, Prepayments

	 	 	64	 
	Section 7.19 Marketing of Production

	 	 	64	 
	Section 7.20 Swap Agreements

	 	 	65	 
	Section 7.21 Use of Loans and Letters of Credit

	 	 	65	 
	Section 7.22 Solvency

	 	 	65	 
	Section 7.23 Foreign Corrupt Practices

	 	 	65	 
	Section 7.24 OFAC

	 	 	66	 
	 
	 	 	 	 
	ARTICLE VIII

	AFFIRMATIVE COVENANTS

	 
	 	 	 	 
	Section 8.01 Financial Statements; Other Information

	 	 	66	 
	Section 8.02 Notices of Material Events

	 	 	69	 
	Section 8.03 Existence; Conduct of Business

	 	 	70	 
	Section 8.04 Payment of Obligations

	 	 	70	 
	Section 8.05 Performance of Obligations under Loan Documents

	 	 	70	 
	Section 8.06 Operation and Maintenance of Properties

	 	 	70	 
	Section 8.07 Insurance

	 	 	71	 
	Section 8.08 Books and Records; Inspection Rights

	 	 	71	 
	Section 8.09 Compliance with Laws

	 	 	72	 
	Section 8.10 Environmental Matters

	 	 	72	 
	Section 8.11 Further Assurances

	 	 	73	 






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	 	 	Page
	Section 8.12 Reserve Reports

	 	 	73	 
	Section 8.13 Title Information

	 	 	74	 
	Section 8.14 Additional Collateral; Additional Guarantors

	 	 	75	 
	Section 8.15 ERISA Compliance

	 	 	76	 
	Section 8.16 Commodity Price Risk Management Policy

	 	 	76	 
	 
	 	 	 	 
	ARTICLE IX

	NEGATIVE COVENANTS

	 
	 	 	 	 
	Section 9.01 Financial Covenants

	 	 	77	 
	Section 9.02 Debt

	 	 	77	 
	Section 9.03 Liens

	 	 	78	 
	Section 9.04 Dividends, Distributions and Repayment of Permitted Senior Unsecured Notes

	 	 	78	 
	Section 9.05 Investments and Loans

	 	 	79	 
	Section 9.06 Nature of Business; No International Operations

	 	 	80	 
	Section 9.07 Limitation on Leases

	 	 	80	 
	Section 9.08 Proceeds of Notes

	 	 	80	 
	Section 9.09 ERISA Compliance

	 	 	80	 
	Section 9.10 Sale or Discount of Receivables

	 	 	82	 
	Section 9.11 Mergers, Etc

	 	 	82	 
	Section 9.12 Sale of Properties

	 	 	82	 
	Section 9.13 Environmental Matters

	 	 	83	 
	Section 9.14 Transactions with Affiliates

	 	 	83	 
	Section 9.15 Subsidiaries

	 	 	83	 
	Section 9.16 Negative Pledge Agreements; Dividend Restrictions

	 	 	83	 
	Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments

	 	 	84	 
	Section 9.18 Swap Agreements

	 	 	84	 
	Section 9.19 Acquisition Documents

	 	 	85	 
	Section 9.20 Marketing Activities

	 	 	85	 
	Section 9.21 Holding Company

	 	 	85	 
	Section 9.22 Sale and Leaseback

	 	 	85	 
	Section 9.23 Amendments to Organizational Documents; Changes in Fiscal Year End

	 	 	86	 
	 
	 	 	 	 
	ARTICLE X

	EVENTS OF DEFAULT; REMEDIES

	 
	 	 	 	 
	Section 10.01 Events of Default

	 	 	86	 
	Section 10.02 Remedies

	 	 	88	 
	 
	 	 	 	 
	ARTICLE XI

	THE AGENTS

	 
	 	 	 	 
	Section 11.01 Appointment; Powers

	 	 	89	 
	Section 11.02 Duties and Obligations of Administrative Agent

	 	 	89	 
	Section 11.03 Action by Administrative Agent

	 	 	90	 
	Section 11.04 Reliance by Administrative Agent

	 	 	91	 
	Section 11.05 Subagents

	 	 	91	 
	Section 11.06 Resignation of Administrative Agent

	 	 	92	 
	Section 11.07 Agents as Lenders

	 	 	92	 






iii









 






	 	 	 	 	 
	 	 	Page
	Section 11.08 No Reliance

	 	 	92	 
	Section 11.09 Administrative Agent May File Proofs of Claim

	 	 	93	 
	Section 11.10 Authority of Administrative Agent to Release Collateral and Liens

	 	 	93	 
	Section 11.11 The Arranger, the Syndication Agent and the Documentation Agent

	 	 	94	 
	Section 11.12 Intercreditor Agreements

	 	 	94	 
	 
	 	 	 	 
	ARTICLE XII

	MISCELLANEOUS

	 
	 	 	 	 
	Section 12.01 Notices

	 	 	94	 
	Section 12.02 Waivers; Amendments

	 	 	95	 
	Section 12.03 Expenses, Indemnity; Damage Waiver

	 	 	96	 
	Section 12.04 Successors and Assigns

	 	 	99	 
	Section 12.05 Survival; Revival; Reinstatement

	 	 	102	 
	Section 12.06 Counterparts; Integration; Effectiveness

	 	 	103	 
	Section 12.07 Severability

	 	 	103	 
	Section 12.08 Right of Setoff

	 	 	103	 
	Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

	 	 	104	 
	Section 12.10 Headings

	 	 	105	 
	Section 12.11 Confidentiality

	 	 	105	 
	Section 12.12 Interest Rate Limitation

	 	 	106	 
	Section 12.13 EXCULPATION PROVISIONS

	 	 	107	 
	Section 12.14 Collateral Matters; Swap Agreements

	 	 	107	 
	Section 12.15 No Third Party Beneficiaries

	 	 	107	 
	Section 12.16 USA Patriot Act Notice

	 	 	108	 










iv









 








ANNEXES, EXHIBITS AND SCHEDULES




	 	 	 

	Annex I
	 	List of Maximum Credit Amounts

	 	 	 

	Exhibit A
	 	Form of Note

	Exhibit B
	 	Form of Borrowing Request

	Exhibit C
	 	Form of Interest Election Request

	Exhibit D
	 	Form of Compliance Certificate

	Exhibit E-1
	 	Security Instruments as of the Effective Date

	Exhibit E-2
	 	Form of Guaranty Agreement

	Exhibit E-3
	 	Form of Security Agreement

	Exhibit F
	 	Form of Assignment and Assumption

	Exhibit G-1
	 	Form of U.S. Tax Compliance Certificate (Foreign Lenders; not partnerships)

	Exhibit G-2
	 	Form of U.S. Tax Compliance Certificate (Foreign Participants; not partnerships)

	Exhibit G-3
	 	Form of U.S. Tax Compliance Certificate (Foreign Participants; partnerships)

	Exhibit G-4
	 	Form of U.S. Tax Compliance Certificate (Foreign Lenders; partnerships)

	 	 	 

	Schedule 7.05
	 	Litigation

	Schedule 7.06
	 	Environmental Matters

	Schedule 7.14
	 	Loan Parties and Subsidiaries

	Schedule 7.18
	 	Gas Imbalances

	Schedule 7.19
	 	Marketing Contracts

	Schedule 7.20
	 	Swap Agreements

	Schedule 9.05
	 	Investments







v









 





     This Credit Agreement dated as of September [__], 2011, is among: Memorial
Production Operating LLC, a limited liability company duly formed and existing under the laws of
the State of Delaware (the “Borrower”), Memorial Production Partners LP, a limited
partnership duly formed and existing under the laws of the State of Delaware (the
“Parent”); each of the Lenders from time to time party hereto; Wells Fargo Bank, National
Association (in its individual capacity, “Wells Fargo”), as administrative agent for the
Lenders (in such capacity, together with its successors in such capacity, the “Administrative
Agent”); JPMorgan Chase Bank, N.A., as syndication agent for the Lenders (in such capacity,
together with its successors in such capacity, the “Syndication Agent”); and
[______________], as documentation agent for the Lenders (in such capacity, together with its
successors in such capacity, the “Documentation Agent”).



R E C I T A L S




     A. The Borrower has requested that the Lenders provide certain loans to and extensions of
credit on behalf of the Borrower.



     B. The Lenders have agreed to make such loans and extensions of credit subject to the terms
and conditions of this Agreement.



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



ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS



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



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



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



     “Acquisition” means one or more acquisitions of certain oil, gas and mineral
Properties pursuant to the terms and conditions of Acquisition Documents.



     “Acquisition Documents” means (a) the Initial Acquisition Documents and (b) definitive
documentation for other Acquisitions including documents similar to the Initial Acquisition
Documents for such other Acquisitions.



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



     “Act” has the meaning assigned such term in Section 12.16.



 









 





     “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 the LIBO Rate for such Interest Period multiplied by the Statutory Reserve Rate.



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



     “Affected Loans” has the meaning assigned 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. “Affiliated” shall have the correlative meaning
thereto.



     “Agency Fee Letter” means that certain fee letter agreement dated as of July 18, 2011
among Wells Fargo, Wells Fargo Securities, LLC and the Borrower, as the same may from time to time
be amended, modified, supplemented or restated.



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



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



     “Agreement” means this 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 Adjusted LIBO Rate for a one month Interest Period on such day
(or if such day is not a Business Day, the immediately preceding Business Day) plus 1%;
provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the
rate (rounded upwards, if necessary, to the next 1/100 of 1%) at which dollar deposits of
$5,000,000 with a one month maturity 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, on such day (or the immediately preceding Business Day if such day is not
a day on which banks are open for dealings in dollar deposits in the London interbank market). Any
change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective
Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such
change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.



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



2









 





Borrowing Base Utilization Grid




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Borrowing Base	 	 	 	 	 	 	 	 	 	 	 	 
	Utilization	 	 	 	 	 	3 25%	 	3 50%	 	3 75%	 	 
	Percentage	 	<25%	 	<50%	 	<75%	 	<90%	 	390%
	Eurodollar Loans

	 	 	1.750	%	 	 	2.000	%	 	 	2.250	%	 	 	2.500	%	 	 	2.750	%
	ABR Loans

	 	 	0.750	%	 	 	1.000	%	 	 	1.250	%	 	 	1.500	%	 	 	1.750	%
	Commitment Fee Rate

	 	 	0.375	%	 	 	0.375	%	 	 	0.500	%	 	 	0.500	%	 	 	0.500	%






     Each change in the Applicable Margin shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective date of the next
such change; provided that if at any time the Borrower fails to deliver a Reserve Report pursuant
to Section 8.12 and such failure continues for more than 10 Business Days from the date when such
Reserve Report is due, then the “Applicable Margin” means the rate per annum set forth on
the grid when the Borrowing Base Utilization Percentage is at its highest level until such Reserve
Report is delivered.



     “Applicable Percentage” means, with respect to any Lender, the percentage of the
Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit Amount as such
percentage is set forth on Annex I; provided that in the case of Section 2.09 when a Defaulting
Lender shall exist, “Applicable Percentage” as used in such Section 2.09 shall mean the percentage
of the Aggregate Maximum Credit Amounts (disregarding any Defaulting Lender’s Maximum Credit
Amounts) represented by such Lender’s Maximum Credit Amount.



     “Appointed Directors” means members of the board of directors of Devco that were
appointed or nominated by any NGP Party.



     “Approved Counterparty” means (i) any Lender or any Affiliate of a Lender or (ii) any
other Person whose long term senior unsecured debt rating is BBB+/Baa1 by S&P or Moody’s (or their
equivalent) or higher.



     “Approved Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.



     “Approved Petroleum Engineers” means (a) Netherland, Sewell & Associates, Inc., (b)
Ryder Scott Company Petroleum Consultants, L.P., (c) W.D. Von Gonten & Co. Petroleum Engineering,
(d) Cawley, Gillespie & Associates, Inc., (e) Miller and Lents, Ltd., and (f) any other independent
petroleum engineers reasonably acceptable to the Administrative Agent.



     “Arranger” means Wells Fargo Securities, LLC and J.P. Morgan Securities LLC, in their
capacities as the co-lead arrangers and joint bookrunners hereunder.



     “Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required by Section



3









 




12.04(a)), and accepted by the Administrative Agent, in the form of Exhibit F or any other
form approved by the Administrative Agent.




     “Availability” means, at any time, (a) the then effective Borrowing Base minus
(b) the total Revolving Credit Exposures.



     “Availability Period” means the period from and including the Effective Date to but
excluding the Termination Date.



     “Available Cash” has the meaning ascribed to such term in the Partnership Agreement as
in effect on the Effective Date, with such amendments thereto as consented to in writing by the
Majority Lenders; provided that, unless the Borrower and the Majority Lenders otherwise agree in
writing, if at any time the Borrower owns, directly or indirectly, 100% of the Equity Interests of
the Parent, “Available Cash” will be calculated in a manner which is consistent with, and has a
substantially similar economic effect as, the calculation of “Available Cash” during prior periods,
except that the “Partnership Group” as defined in the Partnership Agreement will consist of the
Borrower and its Subsidiaries (rather than the Parent and its Subsidiaries) and the “Partnership”
as defined in the Partnership Agreement will be the Borrower (rather than the Parent).



     “Bank Products” means any of the following bank services: (a) commercial credit
cards, (b) stored value cards, and (c) treasury management services (including, without limitation,
controlled disbursement, automated clearinghouse transactions, return items, overdrafts and
interstate depository network services).



     “Bank Products Provider” means any Lender or Affiliate of a Lender that provides Bank
Products to the Parent, the Borrower, or any other Guarantor.



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



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



     “Borrowing Base” means at any time an amount equal to the amount determined in
accordance with Section 2.07, as the same may be adjusted from time to time pursuant to Section
8.13(c).



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



     “Borrowing Base Utilization Percentage” means, as of any day, the fraction expressed
as a percentage, the numerator of which is the sum of the Revolving Credit Exposures of the Lenders
on such day, and the denominator of which is the Borrowing Base in effect on such day.



     “Borrowing Base Value” means, with respect to any Oil and Gas Property of a Loan Party
or any Swap Agreement in respect of commodities, the value the Administrative Agent



4









 




attributed to such asset in connection with the most recent determination of the Borrowing
Base (which Borrowing Base was approved by the requisite Lenders in accordance with Section 2.07).




     “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 New York City or Houston, Texas are authorized or required by law to remain
closed; and if such day relates to a Borrowing or continuation of, a payment or prepayment of
principal of or interest on, or a conversion of or into, or the Interest Period for, a Eurodollar
Loan or a notice by the Borrower with respect to any such Borrowing or continuation, payment,
prepayment, conversion or Interest Period, any day which is also a day on which banks are open for
dealings in dollar deposits in the London interbank market.



     “Capital Leases” means, in respect of any Person, all leases which shall have been, or
should have been, in accordance with GAAP, recorded as capital leases on the balance sheet of the
Person liable 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 any other Loan Party having a fair market value in excess of
$15,000,000.



     “Change in Control” means the occurrence of any of the following:



     (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any
Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof) other than Devco, the Borrower or any NGP Party, of
Equity Interests representing more than 35% of the aggregate ordinary voting power represented by
the issued and outstanding Equity Interests of the Parent;



     (b) at any time prior to a Devco IPO, members of the board of directors of Devco that are not
Appointed Directors shall constitute a majority of the board of directors of Devco;



     (c) the General Partner shall cease to be the sole general partner of the Parent, with
substantially the same powers to manage the Parent as are granted to the General Partner under the
Partnership Agreement on the Effective Date, other than as a result of the acquisition, directly or
indirectly, by the Borrower or Devco of 100% of the Equity Interests of the Parent;



     (d) the Parent shall at any time cease to own 100% of the Equity Interests of the Borrower,
other than as a result of the acquisition, directly or indirectly, by the Borrower of 100% of the
Equity Interests of the Parent;



     (e) Devco shall fail to directly, or indirectly, own beneficially, or to have the power to
vote or direct the voting of, Equity Interests representing more than a majority of the aggregate
ordinary voting power represented by the issued and outstanding Equity Interests of the General
Partner, other than as a result of the acquisition, directly or indirectly, by the Parent or the
Borrower of Equity Interests representing more than a majority of the aggregate ordinary



5









 




voting power represented by the issued and outstanding Equity Interests of the General
Partner; or




     (f) the Borrower or another Loan Party ceases to own 100% of the Equity Interests of each
Guarantor (other than the Parent).



     “Change in Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender or the Issuing Bank (or, for purposes of Section 5.01(b)), by any lending
office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement; provided that notwithstanding anything
herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all
requests, rules, guidelines or directives promulgated by the Bank for International Settlements,
the Basel Committee on Banking Supervision (or any successor or similar authority) or the United
States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to
be a “Change in Law,” regardless of the date enacted, adopted or issued.



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



     “Commitment” means, with respect to each Lender, the commitment of such Lender to make
Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as
such commitment may be (a) modified from time to time pursuant to Section 2.06 and (b) modified
from time to time pursuant to assignments by or to such Lender pursuant to Section 12.04(a). The
amount representing each Lender’s Commitment shall at any time be the lesser of such Lender’s
Maximum Credit Amount and such Lender’s Applicable Percentage of the then effective Borrowing Base.



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



     “Consolidated EBITDAX” means, with respect to the Parent and the Consolidated
Subsidiaries, for any period, Consolidated Net Income for such period plus, without
duplication and to the extent reflected as a charge in the statement of such Consolidated Net
Income for such period, the sum of interest expense (including realized and unrealized losses on
interest rate derivative contracts); income tax expense; depreciation, depletion and amortization
expense; impairment of goodwill and long-lived assets (including Oil and Gas Properties); accretion
of asset retirement obligations; unrealized losses on commodity derivative contracts; realized
losses upon the early termination or other monetization of commodity derivative contracts; losses
on sale of assets; noncash unit-based compensation expenses; exploration costs; and fees and
expenses expensed and paid in cash in connection with the Parent IPO and the credit facility
provided under this Agreement; minus, without duplication and to the extent included in the



6









 




statement of such Consolidated Net Income for such period, the sum of interest income
(including realized and unrealized gains on interest rate derivative contracts); income tax
benefit; unrealized gains on commodity derivative contracts; realized gains upon the early
termination or other monetization of commodity derivative contracts; and gains on sales of assets.
For the purposes of calculating Consolidated EBITDAX for any period of four consecutive fiscal
quarters (each, a “Reference Period”) pursuant to any determination of the financial ratio
contained in Section 9.01(a), if during such Reference Period, the Parent or any Consolidated
Subsidiary shall have made a Material Disposition or Material Acquisition, the Consolidated EBITDAX
for such Reference Period shall be calculated after giving pro forma effect thereto as if such
Material Disposition or Material Acquisition, as applicable, occurred on the first day of such
Reference Period. As used in this definition, “Material Acquisition” means any acquisition
of Property or series of related acquisitions of Property that involves the payment of
consideration by the Parent and the Consolidated Subsidiaries in excess of (1) $5,000,000 in the
aggregate during a fiscal quarter or (2) $3,000,000 for any single acquisition or series of related
acquisitions of Property; and “Material Disposition” means any disposition of Property or
series of related dispositions of Property that yields gross proceeds to the Parent or any of the
Consolidated Subsidiaries in excess of (1) $5,000,000 in the aggregate during a fiscal quarter or
(2) $3,000,000 for any single disposition or series of related dispositions of Property.




     “Consolidated Net Income” means, with respect to the Parent and the Consolidated
Subsidiaries, for any period, the aggregate of the net income (or loss) of the Parent and the
Consolidated Subsidiaries after allowances for taxes for such period determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded from such net income (to the
extent otherwise included therein) the following: (a) the net income of any Person in which the
Parent or any Consolidated Subsidiary has an interest (which interest does not cause the net income
of such other Person to be consolidated with the net income of the Parent and the Consolidated
Subsidiaries in accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in cash during such period by such other Person to the Parent or to a
Consolidated Subsidiary, as the case may be; (b) the net income (but not loss) during such period
of any Consolidated Subsidiary to the extent that the declaration or payment of dividends or
similar distributions or transfers or loans by that Consolidated Subsidiary is not at the time
permitted by operation of the terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary or is otherwise restricted or prohibited, in
each case determined in accordance with GAAP; (c) the net income (or loss) of any Person acquired
in a pooling-of-interests transaction for any period prior to the date of such transaction; (d) any
extraordinary gains or losses during such period; and (e) any gains or losses attributable to
writeups or writedowns of assets, including ceiling test writedowns.



     “Consolidated Net Interest Expense” means, with respect to the Parent and the
Consolidated Subsidiaries, for any period, the difference between (a) the sum of (i) all interest,
premium payments, debt discount, fees, charges and related expenses of the Parent and the
Consolidated Subsidiaries in connection with borrowed money (including capitalized interest) or in
connection with the deferred purchase price of assets, in each case to the extent treated as
interest in accordance with GAAP, and (ii) the portion of rent expense of the Parent and the
Consolidated Subsidiaries with respect to such period under Capital Leases that is treated as
interest in accordance with GAAP, and (b) the sum of (i) interest income actually received in



7









 




cash by the Parent and the Consolidated Subsidiaries and (ii) net amounts of realized cash on
interest rate Swap Agreements, in the case of (a) and (b), for such period.




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



     “Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. For the purposes of this definition, and without
limiting the generality of the foregoing, any Person that owns directly or indirectly 10% 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 (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) a Lien on any Property of such Person,
whether or not such Debt is assumed by such Person; (g) all Debt (as defined in the other clauses
of this definition) of others guaranteed by such Person or in which such Person otherwise assures a
creditor against loss of the Debt (howsoever such assurance shall be made) to the extent of the
lesser of the amount of such Debt and the maximum stated amount of such guarantee or assurance
against loss; (h) all obligations or undertakings of such Person to maintain or cause to be
maintained the financial position or covenants of others or to purchase the Debt or Property of
others; (i) obligations to deliver commodities, goods or services, including, without limitation,
Hydrocarbons, in consideration of one or more advance payments, other than gas balancing
arrangements in the ordinary course of business; (j) obligations to pay for goods or services even
if such goods or services are not actually received or utilized by such Person; (k) any Debt (as
defined in the other clauses of this definition) 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; (l) Disqualified Capital Stock; and (m) the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly or indirectly
received payment. The Debt of any Person shall include all obligations of such Person of the
character described above to the extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is not included as a liability of such Person under GAAP.
Direct or indirect obligations of a Person in respect of Swap Agreements shall not constitute Debt.



     “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.



8









 





     “Defaulting Lender” means any Lender that (a) has failed, within two Business Days of
the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion
of its participations in Letters of Credit or (iii) pay over to any Loan Party any other amount
required to be paid by it hereunder; (b) has notified the Borrower or any Loan Party in writing, or
has made a public statement, to the effect that it does not intend or expect to comply with any of
its funding obligations under this Agreement or generally under other agreements in which it
commits to extend credit; (c) has failed, within three Business Days after request by the
Administrative Agent or a Loan Party, acting in good faith, to provide a certification in writing
from an authorized officer of such Lender that it will comply with its obligations to fund
prospective Loans and participations in then outstanding Letters of Credit under this Agreement;
provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon
such Loan Party’s receipt of such certification in form and substance satisfactory to it and the
Administrative Agent; or (d) has (or whose bank holding company has) been placed into receivership,
conservatorship or bankruptcy; provided that a Lender shall not become a Defaulting Lender solely
as a result of the acquisition or maintenance of an ownership interest in such Lender or Person
controlling such Lender or the exercise of control over a Lender or Person controlling such Lender
by a Governmental Authority or an instrumentality thereof, so long as such ownership interest does
not result in or provide such Lender with immunity from the jurisdiction of courts within the
United States or from the enforcement of judgments or writs of attachment on its assets or permit
such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any
contracts or agreements made with such Lender.



     “Devco” means Memorial Resources Development LLC, a Delaware limited liability
company.



     “Devco IPO” means the initial public offering of Equity Interests of Devco on the New
York Stock Exchange, NASDAQ or another nationally recognized stock exchange reasonably acceptable
to the Administrative Agent.



     “Disqualified Capital Stock” means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible or for which it is exchangeable) or upon the
happening of any event, matures or is mandatorily redeemable for any consideration other than other
Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking
fund obligation or otherwise, or is convertible or exchangeable for Debt or redeemable for any
consideration other than other Equity Interests (which would not constitute Disqualified Capital
Stock) at the option of the holder thereof, in whole or in part, on or prior to the date that is
one year after the earlier of (a) the Maturity Date and (b) the date on which there are no Loans,
LC Exposure or other obligations hereunder outstanding and all of the Commitments are terminated.



     “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.



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



9









 





     “Engineering Reports” has the meaning assigned such term in Section 2.07(c)(i).



     “Environmental Laws” means any and all Governmental Requirements pertaining in any way
to health, safety, the environment or the preservation or reclamation of natural resources or the
management, Release or threatened Release of any Hazardous Materials, in effect in any and all
jurisdictions in which the Borrower or any of the other Loan Parties is conducting or at any time
has conducted business, or where any Property of the Borrower or any of the other Loan Parties is
located, including without limitation, the Oil Pollution Act of 1990, as amended (“OPA”),
the Clean Air Act, as amended, the Comprehensive Environmental, Response, Compensation, and
Liability Act of 1980, as amended (“CERCLA”), the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976, as amended (“RCRA”), 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.



     “Environmental Permit” means any permit, registration, license, notice, approval,
consent, exemption, variance, or other authorization required under or issued pursuant to
applicable Environmental Laws.



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



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



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



     “ERISA Event” means (a) a “Reportable Event” described in section 4043 of ERISA and
the regulations issued thereunder, (b) the withdrawal of the Parent, the Borrower, any other Loan
Party or any ERISA Affiliate from a Plan during a plan year in which it was a “substantial
employer” as defined in section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a termination under section 4041 of ERISA,
(d) the institution of proceedings to terminate a Plan by the PBGC, (e) receipt of a notice of
withdrawal liability pursuant to Section 4202 of ERISA or (f) any other event or condition which
constitutes grounds under section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.



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



10









 





     “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 which arise in the ordinary course of business under operating
agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale, transportation or exchange of oil and
natural gas, unitization and pooling declarations and agreements, area of mutual interest
agreements, overriding royalty agreements, marketing agreements, processing agreements, net profits
agreements, development agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements, seismic or other
geophysical permits or agreements, and other agreements which are usual and customary in the oil
and gas business and are for claims which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained in accordance with
GAAP; provided that any such Lien referred to in this clause does not materially impair the use of
the Property covered by such Lien for the purposes for which such Property is held by the Borrower
or any of the other Loan Parties 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 the Borrower or any of the other Loan Parties to provide collateral to the
depository institution; (f) Immaterial Title Deficiencies and easements, restrictions, servitudes,
permits, conditions, covenants, exceptions or reservations in any Property of the Borrower or any
of the other Loan Parties for the purpose of roads, pipelines, transmission lines, transportation
lines, distribution lines for the removal of gas, oil, coal or other minerals or timber, and other
like purposes, or for the joint or common use of real estate, rights of way, facilities and
equipment, that do not secure any monetary obligations and which in the aggregate do not materially
impair the use of such Property for the purposes of which such Property is held by the Borrower or
any of the other Loan Parties 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 and (h) judgment and attachment Liens not giving rise to an Event
of Default; provided that any appropriate legal proceedings which may have been duly initiated for
the



11









 




review of such judgment shall not have been finally terminated or the period within which such
proceeding may be initiated shall not have expired and no action to enforce such Lien has been
commenced; provided, further that (i) Liens described in clauses (a) through (e) shall remain
“Excepted Liens” only for so long as no action to enforce such Lien has been commenced and no
intention to subordinate the first priority Lien granted in favor of the Administrative Agent and
the Lenders is to be hereby implied or expressed by the permitted existence of such Excepted Liens
and (ii) the term “Excepted Liens” shall not include any Lien securing Debt for borrowed money
other than the Indebtedness.




     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of
the Borrower or any Guarantor hereunder or under any other Loan Document, (a) taxes imposed on (or
measured by) its net income and franchise taxes (including the Texas Margin Tax) imposed on it (in
lieu of income taxes), in each case, 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 or any Guarantor is located, (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(f), 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) and (d) any United States federal withholding taxes imposed
by FATCA.



     “FATCA” means Sections 1471 through 1474 of the Code as of the date of this Agreement
and any regulations or official interpretations thereof.



     “FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.



     “Federal Flood Insurance” means federally backed Flood Insurance available under the
National Flood Insurance Program to owners of real property improvements located in Special Flood
Hazard Areas in a community participating in the National Flood Insurance Program.



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



     “FEMA” means the Federal Emergency Management Agency, a component of the United States
Department of Homeland Security that administers the National Flood Insurance Program.



12









 





     “Financial Officer” means, for any Person, the chief financial officer (or prior to
the appointment of a chief financial officer, the Vice President of Finance), 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 General Partner.



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



     “Flood Insurance” means, for any owned real property located in a Special Flood Hazard
Area, Federal Flood Insurance or private insurance that meets or exceeds the requirements set forth
by FEMA in its Mandatory Purchase of Flood Insurance Guidelines. Flood Insurance shall be in
commercially reasonable amounts not less than the minimum policy amounts required under the
National Flood Insurance Program, or as otherwise required by the Administrative Agent in good
faith and in the exercise of reasonable credit judgment, with deductibles not to exceed $250,000
for losses to buildings and $250,000 for losses to contents of buildings.



     “Flood Insurance Regulations” means (i) the National Flood Insurance Act of 1968 as
now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act
of 1973 as now or hereafter in effect or any successor statute thereto, (iii) the National Flood
Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended or
recodified from time to time, and (iv) the Flood Insurance Reform Act of 2004 and any regulations
promulgated thereunder.



     “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.



     “General Partner” means Memorial Production Partners GP LLC, a Delaware limited
liability company.



     “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.



     “Governmental Requirement” means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate,
license, rules of common law, authorization or other directive or requirement, whether now or
hereinafter in effect, of any Governmental Authority.



13









 





     “Guarantors” means, collectively, the Parent, each Material Subsidiary and each other
Domestic Subsidiary or other Person that guarantees the Indebtedness pursuant to Section 8.14(b).



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



     “Hazardous Material” means any substance regulated or as to which liability might
arise under any applicable Environmental Law including: (a) any chemical, compound, material,
product, byproduct, substance or waste defined as or included in the definition or meaning of
“hazardous substance,” “hazardous material,” “hazardous waste,” “solid waste,” “toxic waste,”
“extremely hazardous substance,” “toxic substance,” “contaminant,” “pollutant,” or words of similar
meaning or import found in any applicable Environmental Law; (b) Hydrocarbons, petroleum products,
petroleum substances, natural gas, oil, oil and gas waste, crude oil, and any components,
fractions, or derivatives thereof; and (c) radioactive materials, explosives, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon, infectious or medical wastes.



     “Highest Lawful Rate” means, with respect to each Lender, the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Notes or on other Indebtedness under laws applicable to such
Lender which are presently in effect or, to the extent allowed by law, under such applicable laws
which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.



     “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. Unless otherwise indicated herein, each reference to the term “Hydrocarbon
Interests” shall mean Hydrocarbons of the Loan Parties.



     “Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or
separated therefrom. Unless otherwise indicated herein, each reference to the term “Hydrocarbons”
shall mean Hydrocarbons of the Loan Parties.



     “Immaterial Title Deficiencies” means minor defects or deficiencies in title which do
not diminish more than 2% of the aggregate value of the Oil and Gas Properties evaluated in the
Reserve Report used in the most recent determination of the Borrowing Base.



     “Indebtedness” means any and all amounts owing or to be owing by the Borrower or any
other Loan Party (whether direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising): (a) to any Agent, the
Issuing Bank or any Lender under any Loan Document including, without limitation, all interest on
any of the Loans (including any interest that accrues after the commencement of any case,



14









 




proceeding or other action relating to the bankruptcy, insolvency or reorganization of any
Loan Party (or could accrue but for the operation of applicable bankruptcy or insolvency laws),
whether or not such interest is allowed or allowable as a claim in any such case, proceeding or
other action); (b) to any Secured Swap Provider under any Swap Agreement including any Swap
Agreement in existence prior to the date hereof, but excluding any additional transactions or
confirmations entered into (i) (x) in the case of a Secured Swap Provider of the type described in
clauses (a) or (b) of the definition thereof, after such Secured Swap Provider ceases to be a
Lender or an Affiliate of a Lender or (y) in the case of a Secured Swap Provider of the type
described in clause (c) of the definition thereof, after there are three or more Lenders party to
this Agreement (or Affiliates of such Lenders) that are recognized providers of Swap Agreements, or
(ii) after assignment by a Secured Swap Provider to another Secured Swap Provider that is not a
Lender or an Affiliate of a Lender; (c) to any Bank Products Provider in respect of Bank Products;
and (d) all renewals, extensions and/or rearrangements of any of the above.




     “Indemnified Parties” means the Administrative Agent, each other Secured Party and
their respective officers, directors, employees, representatives, agents, attorneys, accountants
and experts.



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Information Memorandum” means the Confidential Information Memorandum dated July,
2011 relating to the Loan Parties and the Transactions.



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



     “Initial Acquisition Documents” means (a) [INSERT DESCRIPTIONS OF PURCHASE
AGREEMENT(S)] and (b) all bills of sale, assignments, agreements, instruments and documents
executed and delivered in connection therewith, as amended.



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



     “Initial Reserve Report” means, collectively, the one or more Reserve Reports with
respect to the Initial Acquisition Properties as of December 31, 2010 or January 1, 2011,
as the case may be, upon which the Lenders have relied upon in the determination of the initial
Borrowing Base hereunder.



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



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



15









 





     “Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months 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” has the meaning assigned such term in Section 2.07(b).



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



     “Investment” means, for any Person: (a) the acquisition (whether for cash, Property,
services or securities or otherwise) of Equity Interests of any other Person or any agreement to
make any such acquisition (including, without limitation, any “short sale” or any sale of any
securities at a time when such securities are not owned by the Person entering into such short
sale); (b) the making of any deposit with, or advance, loan or capital contribution to, assumption
of Debt of, purchase or other acquisition of any other Debt or equity participation or interest in,
or other extension of credit to, any other Person (including the purchase of Property from another
Person subject to an understanding or agreement, contingent or otherwise, to resell such Property
to such Person, but excluding any such advance, loan or extension of credit having a term not
exceeding 90 days representing the purchase price of inventory or supplies sold by such Person in
the ordinary course of business); (c) the purchase or acquisition (in one or a series of
transactions) of Property of another Person that constitutes a business unit; or (d) the entering
into of any guarantee of, or other contingent obligation (including the deposit of any Equity
Interests to be sold) with respect to, Debt or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such Person.



     “Issuing Bank” means Wells Fargo, in its capacity as the issuer of Letters of
Credit hereunder, and its successors in such capacity as provided in Section 2.08(i). The Issuing
Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates
of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.



     “LC Commitment” at any time means $30,000,000.



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



16









 





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



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



     “Letter of Credit” means any standby letter of credit issued pursuant to this
Agreement.



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



     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period,
the rate appearing on Reuters Screen LIBOR01 Page (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 (rounded upwards, if necessary, to the next 1/100 of 1%) at which
dollar deposits of an amount comparable to such Eurodollar Borrowing and 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.



     “Lien” means any interest in Property securing an obligation owed to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on the common law,
statute or contract, and whether such obligation or claim is fixed or contingent, and including but
not limited to (a) the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or bailment for
security purposes or (b) production payments and the like payable out of Oil and Gas Properties.
The term “Lien” shall include easements, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations. For the purposes of this Agreement, the Borrower or any
other Loan Party 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,” “Liquidated” and “Liquidation” when used in reference to
any Swap Agreement or any portion thereof have the correlative meanings to the term “Swap
Liquidation”.



17









 





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



     “Loan Parties” means the Borrower, the Parent and each other Guarantor.



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



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



     “Material Adverse Effect” means a material adverse change in, or material adverse
effect on (a) the business, operations, Property, or condition (financial or otherwise) of the
Borrower and the other Loan Parties taken as a whole, (b) the ability of the Borrower individually,
or the other Loan Parties, taken as a whole, to perform any of its or their 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, any other Agent, the Issuing Bank or
any Lender under any Loan Document.



     “Material Indebtedness” means Debt (other than the Loans and Letters of Credit), or
obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and the
other Loan Parties in an aggregate principal amount exceeding $15,000,000. For purposes of
determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any
other Loan Party in respect of any Swap Agreement at any time shall be the Swap Termination Value.



     “Material Subsidiary” means, as of any date, any Domestic Subsidiary that (a) is a
Wholly-Owned Subsidiary and (b) together with its Subsidiaries, owns Property having a fair market
value of $5,000,000 or more.



     “Maturity Date” means September [ ], 2016.



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



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



18









 





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



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



     “National Flood Insurance Program” means the program created by the United States
Congress pursuant to the Flood Insurance Regulations, that mandates the purchase of flood insurance
to cover real property improvements located in Special Flood Hazard Areas in participating
communities and provides protection to property owners through a federal insurance program.



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



     “NGP Parties” means, collectively, Natural Gas Partners VIII, L.P., a Delaware limited
partnership, Natural Gas Partners IX, L.P., a Delaware limited partnership, and each of their
Affiliated private equity funds or management companies.



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



     “OFAC” means the Office of Foreign Assets Control of the United States Department of
Treasury.



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



19









 




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.




     “Organizational Documents” means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non US jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.



     “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.



     “Parent IPO” means the initial public offering of Equity Interests of the Parent.



     “Parent IPO Prospectus” means the prospectus filed as part of the S-1 Registration
Statement filed by the Parent with the SEC regarding the Parent IPO.



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



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



     “Partnership Agreement” means the First Amended and Restated Agreement of Limited
Partnership of the Parent, dated [_____], 2011, by and among the General Partner, Devco and the
other Persons party thereto.



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



     “Permitted Senior Unsecured Notes” means those notes that may be issued by the Parent
or the Borrower (or by any Loan Party as co-issuer); provided that such Senior Unsecured Notes
shall: (a) be in a principal amount not to exceed the greater of (i) $300,000,000 and (ii) 100% of
the Borrowing Base in effect at the time of issuance (before giving effect to any reduction thereto
pursuant to Section 2.07(e)) in the aggregate; (b) be unsecured; (c) not provide for any scheduled
payment of principal, scheduled mandatory Redemption or scheduled sinking fund payment on or before
the date that is at least 180 days following the Maturity Date in effect at the time of issuance;
and (d) contain covenants and events of default that are, taken as a whole, no more restrictive
with respect to the Loan Parties than the covenants and Events of Default herein (as determined in
good faith by senior management of the General Partner).



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



20









 





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



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



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



     “Proposed Borrowing Base” has the meaning assigned to such term in Section 2.07(c)(i).



     “Proposed Borrowing Base Notice” has the meaning assigned to such term in Section
2.07(c)(ii).



     “Proved Developed Non-Producing Reserves” has the meaning assigned such term in the
SPE Definitions.



     “Proved Reserves” has the meaning assigned such term in the SPE Definitions.



     “Proved Undeveloped Reserves” has the meaning assigned such term in the SPE
Definitions.



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



     “Redetermination Date” means, with respect to any Scheduled Redetermination or any
Interim Redetermination, the date that the redetermined Borrowing Base related thereto becomes
effective pursuant to Section 2.07(d).



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



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



21









 





     “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.



     “Release” means any depositing, spilling, leaking, pumping, pouring, placing,
emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching,
dumping, or disposing.



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



     “Required Lenders” means, at any time while no Loan or LC Exposure is outstanding,
Lenders having at least sixty-six and two-thirds percent (66 2/3%) of the Aggregate Maximum Credit
Amounts; and at any time while any Loan or LC Exposure is outstanding, Lenders holding at least
sixty-six and two-thirds percent (66 2/3%) of the outstanding aggregate principal amount of the
Loans and participation interests in Letters of Credit (without regard to any sale by a Lender of a
participation in any Loan under Section 12.04(c)); provided that the Maximum Credit Amounts and the
principal amount of the Loans and participation interests in Letters of Credit of the Defaulting
Lenders (if any) shall be excluded from the determination of Required Lenders.



     “Reserve Report” means a report, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth, as of each January 1st or July 1st (or such other date in the
event of an Interim Redetermination) the oil and gas reserves attributable to the Oil and Gas
Properties of the Borrower and the other Loan Parties, 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 pricing assumptions consistent with SEC reporting requirements
at the time of such report and reflecting Swap Agreements in place with respect to such production.



     “Responsible Officer” means, as to any Person, the Chief Executive Officer, the
President, any Financial Officer or any Vice President of such Person. Unless otherwise specified,
all references to a Responsible Officer herein shall mean a Responsible Officer of the 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 of the
other Loan Parties, 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 of the other Loan
Parties or any option, warrant or other right to acquire any such Equity Interests in the Borrower
or any of the other Loan Parties.



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



     “Rolling Period” means (a) for the fiscal quarters ending on September 30, 2011,
December 31, 2011 and March 31, 2012, the period commencing on July 1, 2011 and ending on the last
day of such applicable fiscal quarter and (b) for the fiscal quarter ending on June 30,



22









 




2012, and for each fiscal quarter thereafter, the period of four (4) consecutive fiscal
quarters ending on the last day of such applicable fiscal quarter.




     “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.



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



     “Scheduled Redetermination Date” means the date on which a Borrowing Base that has
been redetermined pursuant to a Scheduled Redetermination becomes effective as provided in Section
2.07(d).



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



     “Secured Parties” means each Lender, each Issuing Bank, each Secured Swap Provider,
each Bank Products Provider, each Indemnified Party and any legal owner, holder, assignee or
pledgee of any of the Indebtedness.



     “Secured Swap Provider” means any (a) Person that is a party to a Swap Agreement with
the Parent or any of its Subsidiaries that entered into such Swap Agreement before or while such
Person was a Lender or an Affiliate of a Lender, whether or not such Person at any time ceases to
be a Lender or an Affiliate of a Lender, as the case may be, (b) assignee of any Person described
in clause (a) above so long as such assignee is a Lender or an Affiliate of a Lender, or (c) any
other Approved Counterparty that (i) entered into such Swap Agreement at any time after the
Effective Date when there were less than three Lenders party to this Agreement (or Affiliates of
such Lenders) that are recognized providers of Swap Agreements and (ii) entered into an
intercreditor agreement with the Administrative Agent in form and substance reasonably acceptable
to the Administrative Agent and providing for any proceeds realized from the liquidation or other
disposition of collateral under the Security Instruments to be applied in accordance with Section
10.02(c).



     “Security Agreement” means a Pledge and Security Agreement among the Borrower, the
Guarantors and the Administrative Agent in substantially the form of Exhibit E-3 (or otherwise in
form and substance reasonably acceptable to the Administrative Agent) granting Liens and a security
interest on the Loan Parties’ personal property constituting Collateral (as defined therein) in
favor of the Administrative Agent for the benefit of the Secured Parties to secure the
Indebtedness, as the same may be amended, modified, supplemented or restated from time to time.



     “Security Instruments” means the Guaranty Agreement, the Security Agreement,
mortgages, deeds of trust and other agreements, instruments or certificates described or referred
to in Exhibit F-1, and any and all other agreements, instruments, consents or certificates now or
hereafter executed and delivered by the Borrower or any other Loan Party (other than Swap
Agreements or participation or similar agreements between any Lender and any other lender or
creditor with respect to any Indebtedness pursuant to this Agreement) in connection with, or as
security for the payment or performance of the Indebtedness, the Notes, this Agreement, or



23









 




reimbursement obligations under the Letters of Credit, as such agreements may be amended,
modified, supplemented or restated from time to time.




     “Sellers” mean, collectively, Classic Hydrocarbons Holdings, L.P., a Texas limited
partnership, and/or certain of its Affiliates, BlueStone Natural Resources Holdings, LLC, a
Delaware limited liability company, and/or certain of its Affiliates (including Columbus Energy,
LLC, a Delaware limited liability company), and WHT Energy Partners LLC, a Delaware limited
liability company, and/or certain of its Affiliates.



     “Special Flood Hazard Area” means an area that FEMA’s current flood maps indicate has
at least a one percent (1%) chance of a flood equal to or exceeding the base flood elevation (a
100-year flood) in any given year.



     “Specified Acquisition” means an Acquisition for which: (a) a binding and enforceable
purchase and sale agreement has been signed by a Loan Party; and (b) at the time of the signing of
the applicable purchase and sale agreement, the ratio of Availability to the then effective
Borrowing Base is at least 0.10 to 1.0.



     “SPE Definitions” means with respect to any term, the definition thereof adopted by
the Board of Directors, Society for Petroleum Engineers (SPE) Inc., March 1997.



     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D). Such reserve percentages shall include those imposed pursuant to
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 Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.



     “subsidiary” means, with respect to any Person (the “parent”) at any date, any
other Person the accounts of which would be consolidated with those of the parent in the parent’s
consolidated financial statements if such financial statements were prepared in accordance with
GAAP as of such date, as well as any other Person (a) of which Equity Interests representing more
than 50% of the equity or more than 50% of the ordinary voting power (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) or, in the case of a partnership,
any general partnership interests are, as of such date, owned, controlled or held, or (b) that is,
as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.



     “Subsidiary” means (a) any subsidiary of the Parent or (b) at any time when the
Borrower owns, directly or indirectly, 100% of the Equity Interests of the Parent, any subsidiary
of the Borrower.



24









 





     “Swap Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction (including floors, caps and collars) 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 phantom stock or
similar plan providing for payments only on account of services provided by current or former
directors, officers, employees or consultants of the Borrower or the other Loan Parties shall be a
Swap Agreement.



     “Swap Liquidation” means the sale, assignment, novation, liquidation, unwind or
termination of all or any part of any Swap Agreement (other than, in each case, at its scheduled
maturity).



     “Swap Termination Value” means, in respect of any Swap Agreement, after taking into
account the effect of any legally enforceable netting agreement relating to such Swap Agreement,
(a) for any date on or after the date such Swap Agreement has been closed out and the termination
value determined in accordance therewith, such termination value and (b) for any date prior to the
date referenced in clause (a), the amount determined as the mark-to-market value for such Swap
Agreement, as determined by the Borrower in good faith, so long as no Event of Default has occurred
and is continuing.



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



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



     “Termination Date” means the earlier of the Maturity Date and the date of termination
of the Commitments pursuant to this Agreement, whether pursuant to Section 2.06(b), Section 10.02
or otherwise.



     “Transactions” means, with respect to (a) the Borrower, the execution, delivery and
performance by the Borrower of this Agreement, each other Loan Document and the Initial Acquisition
Documents to which it is a party, the Initial Acquisition, the borrowing of Loans, the use of the
proceeds thereof and the issuance of Letters of Credit hereunder, and the grant of Liens by the
Borrower on Mortgaged Properties and other Properties pursuant to the Security Instruments, (b)
each Guarantor, the execution, delivery and performance by such Guarantor of each Loan Document and
Initial Acquisition Document to which it is a party, the Initial Acquisition, the guaranteeing of
the Indebtedness and the other obligations under the Guaranty Agreement by such Guarantor and such
Guarantor’s grant of the security interests and provision



25









 




of collateral under the Security Instruments, and the grant of Liens by such Guarantor on
Mortgaged Properties and other Properties pursuant to the Security Instruments and (c) with respect
to the Parent, the Parent IPO.




     “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.



     “Unused Commitment” means (a) the then effective Borrowing Base minus (b) the
total Revolving Credit Exposures. With respect to each Lender, such Lender’s Unused Commitment is
such Lender’s Applicable Percentage of the Unused Commitment.



     “U.S. Tax Compliance Certificate” has the meaning set forth in Section 5.03(f).



     “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 Parent or one or more of the Wholly-Owned Subsidiaries or are
owned by the Parent and one or more of the Wholly-Owned Subsidiaries.



     “Withholding Agent” means any Loan Party or the Administrative Agent.



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



26









 





     Section 1.05 Accounting Terms and Determinations; GAAP. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial statements and certificates and
reports as to financial matters required to be furnished to the Administrative Agent or the Lenders
hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with the
Financial Statements except for changes in which Borrower’s independent certified public
accountants concur and which are disclosed to Administrative Agent on the next date on which
financial statements are required to be delivered to the Lenders pursuant to Section 8.01(a);
provided that, unless the Borrower and the Majority Lenders shall otherwise agree in writing, no
such change shall modify or affect the manner in which compliance with the covenants contained
herein is computed such that all such computations shall be conducted utilizing financial
information presented consistently with prior periods.



ARTICLE II

THE CREDITS



     Section 2.01 Commitments. Subject to the terms and conditions set forth herein, each
Lender agrees to make Loans to the Borrower during the Availability Period in an aggregate
principal amount that will not result in (a) such Lender’s Revolving Credit Exposure exceeding such
Lender’s Commitment or (b) the total Revolving Credit Exposures exceeding the total Commitments.
Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, repay and reborrow the Loans.



     Section 2.02 Loans and Borrowings.



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




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




          (c) Minimum Amounts; Limitation on Number of Borrowings. At the commencement of each
Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that
is an integral multiple of $1,000,000. At the time that each ABR Borrowing is made, such Borrowing
shall be in an aggregate amount that is an integral multiple of $500,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total
Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated
by Section 2.08(e). Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of ten Eurodollar Borrowings outstanding.
Notwithstanding any other






27









 







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. The Loans made by each Lender shall be evidenced by a single promissory
note of the Borrower in substantially the form of Exhibit A, dated, in the case of (i) any Lender
party hereto as of the date of this Agreement, as of the date of this Agreement, or (ii) any Lender
that becomes a party hereto pursuant to an Assignment and Assumption, as of the effective date of
the Assignment and Assumption, payable to such Lender in a principal amount equal to its Maximum
Credit Amount as in effect on such date, and otherwise duly completed. In the event that any
Lender’s Maximum Credit Amount increases or decreases for any reason (whether pursuant to Section
2.06, Section 12.04(b) or otherwise), the Borrower shall deliver or cause to be delivered on the
effective date of such increase or decrease, a new Note payable to such Lender in a principal
amount equal to its Maximum Credit Amount after giving effect to such increase or decrease, and
otherwise duly completed. The date, amount, Type, interest rate and, if applicable, Interest
Period of each Loan made by each Lender, and all payments made on account of the principal thereof,
shall be recorded by such Lender on its books for its Note, and, prior to any transfer, may be
endorsed by such Lender on a schedule attached to such Note or any continuation thereof or on any
separate record maintained by such Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender’s or the Borrower’s rights or obligations in respect of such
Loans or affect the validity of such transfer by any Lender of its Note.




     Section 2.03 Requests for Borrowings. To request a Borrowing, the Borrower shall
notify the Administrative Agent of such request by telephone (or electronic communication approved
by the Administrative Agent) in the case of a Eurodollar Borrowing, not later than 12:00 noon, New
York City time, three Business Days before the date of the proposed Borrowing or in the case of an
ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the proposed
Borrowing; provided that no such notice shall be required for any deemed request of an ABR
Borrowing to finance the reimbursement of an LC Disbursement as provided in Section 2.08(e). Each
such telephonic (or electronic communication) Borrowing Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing
Request in substantially the form of Exhibit B and signed by the Borrower. Each such telephonic
(or electronic communication) and written Borrowing Request shall specify the following information
in compliance with Section 2.02:



               (i) the aggregate amount of the requested Borrowing;



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



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



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



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



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


If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an
ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s
duration. Each Borrowing Request shall constitute a representation that the amount of the
requested Borrowing shall not cause the total Revolving Credit Exposures to exceed the total
Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and the then effective
Borrowing Base).



Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the
Administrative Agent shall advise each Lender of the details thereof and of the amount of such
Lender’s Loan to be made as part of the requested Borrowing.




     Section 2.04 Interest Elections.



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



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



          (c) Information in Interest Election Requests. Each telephonic (or electronic
communication) 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



29









 




thereof to be allocated to each resulting Borrowing (in which case the information to be
specified pursuant to Section 2.04(c)(iii) and (iv) shall be specified for each resulting
Borrowing);




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



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



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


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




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



          (e) Effect
of Failure to Deliver Timely Interest Election Request and Events of Default and
Borrowing Base Deficiencies on Interest Election. If the Borrower fails to deliver a timely
Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of
such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any
contrary provision hereof, if an Event of Default or a Borrowing Base Deficiency has occurred and
is continuing: (i) no outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing (and any Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective) and (ii) unless
repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.



     Section 2.05 Funding of Borrowings.



          (a) Funding by Lenders. Each Lender shall make each Loan to be made by it hereunder
on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., New York
City time, to the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an account of the
Borrower maintained with the Administrative Agent and designated by the Borrower in the applicable
Borrowing Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.08(e) shall be remitted by the Administrative Agent to the Issuing Bank.
Nothing herein shall be deemed to obligate any Lender to obtain the funds for its Loan in any
particular place or manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for its Loan in any particular place or manner.



30









 





          (b) Presumption of Funding by the Lenders. Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.05(a) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i)
in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on interbank compensation or
(ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays
such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.



     Section 2.06 Termination and Reduction of Aggregate Maximum Credit Amounts.



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



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



               (i) The Borrower may at any time terminate, or from time to time reduce, the Aggregate Maximum
Credit Amounts; provided that (A) each reduction of the Aggregate Maximum Credit Amounts shall be
in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (B) the
Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if (1) after giving
effect to any concurrent prepayment of the Loans in accordance with Section 3.04(c), the total
Revolving Credit Exposures would exceed the total Commitments or (2) the Aggregate Maximum Credit
Amounts would be less than $10,000,000 (unless with respect to this clause (2), the Aggregate
Credit Amounts are reduced to $0).



               (ii) The Borrower shall notify the Administrative Agent of any election to terminate or reduce
the Aggregate Maximum Credit Amounts under Section 2.06(b)(i) at least three Business Days prior to
the effective date of such termination or reduction, specifying such election and the effective
date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section
2.06(b)(ii) shall be irrevocable; provided that a notice of termination of the Aggregate Maximum
Credit Amounts delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities or other agreements, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction of the Aggregate
Maximum Credit Amounts shall be permanent and may not be reinstated. Each reduction of the
Aggregate Maximum Credit



31









 




Amounts shall be made ratably among the Lenders in accordance with each Lender’s Applicable
Percentage.




     Section 2.07 Borrowing Base.



          (a) Initial Borrowing Base. For the period from and including the Effective Date to
but excluding the first Redetermination Date, the amount of the Borrowing Base shall be
$300,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject to further
adjustments from time to time pursuant to Section 2.07(e), Section 2.07(f), or Section 8.13(c).



          (b) Scheduled and Interim Redeterminations. The Borrowing Base shall be redetermined
semi-annually in accordance with this Section 2.07 (a “Scheduled Redetermination”), and,
subject to Section 2.07(d), such redetermined Borrowing Base shall become effective and applicable
to the Borrower, the Agents, the Issuing Bank and the Lenders on April 1st and October 1st of each
year (or, in each case, such date promptly thereafter as reasonably practicable), commencing April
1, 2012. In addition, the Borrower may, by notifying the Administrative Agent thereof, and the
Administrative Agent may, at the direction of the Required Lenders, by notifying the Borrower
thereof, one time between each Scheduled Redetermination, each elect to cause the Borrowing Base to
be redetermined between Scheduled Redeterminations (an “Interim Redetermination”) in
accordance with this Section 2.07.



          (c) Scheduled and Interim Redetermination Procedure.



               (i) Each Scheduled Redetermination and each Interim Redetermination shall be effectuated as
follows: Upon receipt by the Administrative Agent of (A) the Reserve Report and the certificate
required to be delivered by the Borrower to the Administrative Agent, in the case of a Scheduled
Redetermination, pursuant to Section 8.12(a) and (c), and, in the case of an Interim
Redetermination, pursuant to Section 8.12(b) and (c), and (B) such other reports, data and
supplemental information, including, without limitation, the information provided pursuant to
Section 8.12(c), as may, from time to time, be reasonably requested by the Majority Lenders (the
Reserve Report, such certificate and such other reports, data and supplemental information being
the “Engineering Reports”), the Administrative Agent shall evaluate the information
contained in the Engineering Reports and shall, in its sole discretion, propose a new Borrowing
Base (the “Proposed Borrowing Base”) based upon such information and such other information
(including, without limitation, the status of title information with respect to the Oil and Gas
Properties as described in the Engineering Reports and the existence of any other Debt, the Loan
Parties’ other assets, liabilities, fixed charges, cash flow, business, properties, prospects,
management and ownership, hedged and unhedged exposure to price, price and production scenarios,
interest rate and operating cost changes) as the Administrative Agent deems appropriate in its sole
discretion and consistent with its normal and customary oil and gas lending criteria as it exists
at the particular time. In no event shall the Proposed Borrowing Base exceed the Aggregate Maximum
Credit Amounts;



               (ii) The Administrative Agent shall notify the Borrower and the Lenders of the Proposed
Borrowing Base (the “Proposed Borrowing Base Notice”) after the Administrative Agent has
received complete Engineering Reports from the Borrower and has



32









 




had a reasonable opportunity to determine the Proposed Borrowing Base in accordance with
Section 2.07(c)(i); and




               (iii) Any Proposed Borrowing Base that would increase the Borrowing Base then in effect must
be approved by all of the Lenders as provided in this Section 2.07(c)(iii); and any Proposed
Borrowing Base that would decrease or maintain the Borrowing Base then in effect must be approved
by the Required Lenders as provided in this Section 2.07(c)(iii). Upon receipt of the Proposed
Borrowing Base Notice, each Lender shall have 15 days to agree with the Proposed Borrowing Base or
disagree with the Proposed Borrowing Base by proposing an alternate Borrowing Base. If at the end
of such 15-day period, all of the Lenders, in the case of a Proposed Borrowing Base that would
increase the Borrowing Base then in effect, or the Required Lenders, in the case of a Proposed
Borrowing Base that would decrease or maintain the Borrowing Base then in effect, have approved, as
aforesaid, then the Proposed Borrowing Base shall become the new Borrowing Base, effective on the
date specified in Section 2.07(d). If, however, at the end of such 15-day period, all of the
Lenders or the Required Lenders, as applicable, have not approved, as aforesaid, then the
Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable
to (x) in the case of a decrease or reaffirmation, a number of Lenders sufficient to constitute the
Required Lenders and (y) in the case of an increase, all of the Lenders, and such amount shall
become the new Borrowing Base, effective on the date specified in Section 2.07(d).



          (d) Effectiveness of a Redetermined Borrowing Base. After a redetermined Borrowing
Base is approved by all of the Lenders or the Required Lenders, as applicable, pursuant to Section
2.07(c)(iii), the Administrative Agent shall notify the Borrower and the Lenders of the amount of
the redetermined Borrowing Base (the “New Borrowing Base Notice”), and such amount shall
become the new Borrowing Base, effective and applicable to the Borrower, the Administrative Agent,
the Issuing Bank and the Lenders:



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



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


Such amount shall then become the Borrowing Base until the next Scheduled Redetermination Date, the
next Interim Redetermination Date or the next adjustment to the Borrowing Base under Section
2.07(e), Section 2.07(f), or Section 8.13(c), whichever occurs first. Notwithstanding the
foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the
New Borrowing Base Notice related thereto is received by the Borrower.







33









 








          (e) Automatic Reduction of Borrowing Base — Issuance of Permitted Senior Unsecured
Notes. In addition to other automatic reductions of the Borrowing Base set forth herein, upon
any issuance of Permitted Senior Unsecured Notes (other than Permitted Senior Unsecured Notes that
refinance or replace then existing Permitted Senior Unsecured Notes, up to the principal amount of
such then existing Permitted Senior Unsecured Notes), the Borrowing Base shall automatically be
decreased an amount equal to 25% of the notional amount of Permitted Senior Unsecured Notes issued
at such time. Such decrease in the Borrowing Base shall occur without any vote of Lenders or
action by Administrative Agent. Upon any such redetermination, the Administrative Agent shall
promptly deliver a New Borrowing Base Notice to the Borrower and the Lenders.



          (f) Automatic Reduction of the Borrowing Base — Asset Dispositions or Swap
Liquidations. In addition to the other automatic reductions of the Borrowing Base set forth
herein, if at any time the aggregate Borrowing Base Value of Oil and Gas Properties sold or
disposed of pursuant to Section 9.12(d), together with the Swap Agreements in respect of
commodities Liquidated, in any period between redeterminations of the Borrowing Base, exceeds ten
percent (10%) of the Borrowing Base as of the last redetermination, then the Borrowing Base shall
be automatically reduced, effective immediately upon such sale, disposition or Swap Liquidation by
an amount equal to the Borrowing Base Value of such Properties sold or disposed of and Swap
Agreements in respect of commodities Liquidated and such new Borrowing Base shall be effective and
applicable to the Borrower, the Administrative Agent, the Issuing Banks and the Lenders until the
next redetermination or modification of the Borrowing Base pursuant to this Agreement; provided
that for purposes of this Section 2.07(f), a Swap Agreement shall not be deemed to have been
Liquidated if, (x) such Swap Agreement is novated from the existing counterparty to an Approved
Counterparty, with the Borrower or the applicable Loan Party being the “remaining party” for
purposes of such novation, or (y) upon its termination, it is replaced, in a substantially
contemporaneous transaction, with one or more Swap Agreements with approximately the same
mark-to-market value and without cash payments to any Loan Party in connection therewith. Such
decrease in the Borrowing Base shall occur without any vote of Lenders or action by Administrative
Agent. Upon any such redetermination, the Administrative Agent shall promptly deliver a New
Borrowing Base Notice to the Borrower and the Lenders.



     Section 2.08 Letters of Credit.



          (a) General. Subject to the terms and conditions set forth herein, the Borrower may
request the issuance of dollar denominated Letters of Credit for its own account or for the account
of any of its Subsidiaries, in a form reasonably acceptable to the Administrative Agent and the
Issuing Bank, at any time and from time to time during the Availability Period; provided that the
Borrower may not request the issuance, amendment, renewal or extension of Letters of Credit
hereunder if a Borrowing Base Deficiency exists at such time or would exist as a result thereof.
In the event of any inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.



34









 





          (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request
the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter
of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication,
if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (not less than five Business Days in advance of the requested date of
issuance, amendment, renewal or extension) a notice:



               (i) requesting the issuance of a Letter of Credit or identifying the Letter of Credit to be
amended, renewed or extended;



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



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



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



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



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


Each notice shall constitute a representation by the Borrower that after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (x) the LC Exposure shall not
exceed the LC Commitment and (y) the total Revolving Credit Exposures shall not exceed the total
Commitments (i.e. the lesser of the Aggregate Maximum Credit Amounts and the then effective
Borrowing Base). No letter of credit issued by the Issuing Bank (if the Issuing Bank is not the
Administrative Agent) shall be deemed to be a “Letter of Credit” issued under this Agreement unless
the Issuing Bank has requested and received written confirmation from the Administrative Agent that
the representations by Borrower contained in the foregoing clauses (x) and (y) are true and
correct.



If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on
the Issuing Bank’s standard form in connection with any request for a Letter of Credit; provided
that, in the event of any conflict between such application and the terms of the Loan Documents,
the terms of the Loan Documents shall control.




          (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of
business on the earlier of (i) the date one year after the date of the issuance of such Letter of
Credit (or, in the case of any renewal, which renewal may be provided for in the initial Letter of



35









 




Credit, or extension thereof, one year after such renewal or extension) and (ii) the date that
is five Business Days prior to the Maturity Date.




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



          (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a
Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative
Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, (i) on
the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such notice is not
received prior to such time on the day of receipt; provided that the Borrower shall, subject to the
conditions to Borrowing set forth herein, be deemed to have requested, and the Borrower does hereby
request under such circumstances, that such payment be financed with an ABR Borrowing in an
equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment
shall be discharged and replaced by the resulting ABR Borrowing. If the Borrower fails to make
such payment when due, the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s
Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to
the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in
the same manner as provided in Section 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the
Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this Section 2.08(e), the Administrative Agent shall distribute such payment to the
Issuing Bank or, to the extent that Lenders have made payments pursuant to this Section 2.08(e) to
reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may
appear. Any payment made by a Lender pursuant to this Section 2.08(e) to reimburse the Issuing
Bank for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not
constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.



36









 





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



          (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment under a Letter of
Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made
or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the
Lenders with respect to any such LC Disbursement.



          (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, until
the Borrower shall have reimbursed the Issuing Bank for such LC Disbursement (either with its own
funds or a Borrowing under Section 2.08(e)), the unpaid amount thereof shall bear interest, for
each day from and including the date such LC Disbursement is made to



37









 




but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per
annum then applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall be for
the account of the Issuing Bank, except that interest accrued on and after the date of payment by
any Lender pursuant to Section 2.08(e) to reimburse the Issuing Bank shall be for the account of
such Lender to the extent of such payment.




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



          (j) Cash Collateralization. If (i) any Event of Default shall occur and be continuing
and the Borrower receives notice from the Administrative Agent or the Majority Lenders demanding
the deposit of cash collateral pursuant to this Section 2.08(j), or (ii) the Borrower is required
to pay to the Administrative Agent the excess attributable to an LC Exposure in connection with any
prepayment pursuant to Section 3.04(c), then the Borrower shall deposit, in an account with the
Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders,
an amount in cash equal to, in the case of an Event of Default, the LC Exposure, and in the case of
a payment required by Section 3.04(c), the amount of such excess as provided in Section 3.04(c), as
of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence of any Event of
Default with respect to the Borrower or any Loan Party described in Section 10.01(h) or Section
10.01(i). The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing
Bank and the Lenders, an exclusive first priority and continuing perfected security interest in and
Lien on such account and all cash, checks, drafts, certificates and instruments, if any, from time
to time deposited or held in such account, all deposits or wire transfers made thereto, any and all
investments purchased with funds deposited in such account, all interest, dividends, cash,
instruments, financial assets and other Property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any or all of the foregoing, and all proceeds,
products, accessions, rents, profits, income and benefits therefrom, and any substitutions and
replacements therefor. The Borrower’s obligation to deposit amounts pursuant to this Section
2.08(j) shall be absolute and unconditional, without regard to whether any beneficiary of any such
Letter of Credit has attempted to draw down all or a portion of such amount under the terms of a
Letter of Credit, and, to the fullest extent permitted by applicable law, shall not be subject to
any defense or be affected by a right of set-off, counterclaim or recoupment which the Borrower or
any of its



38









 




Subsidiaries may now or hereafter have against any such beneficiary, the Issuing Bank, the
Administrative Agent, the Lenders or any other Person for any reason whatsoever. Such deposit
shall be held as collateral securing the payment and performance of the Borrower’s and the
Guarantor’s obligations under this Agreement and the other Loan Documents. The Administrative
Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over
such account. Other than any interest earned on the investment of such deposits, which investments
shall be made at the option and reasonable discretion of the Administrative Agent and at the
Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any,
on such investments shall accumulate in such account. Moneys in such account shall be applied by
the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not
been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of
the Loans has been accelerated, be applied to satisfy other obligations of the Borrower and the
Guarantors under this Agreement or the other Loan Documents. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of an Event of
Default, and the Borrower is not otherwise required to pay to the Administrative Agent the excess
attributable to an LC Exposure in connection with any prepayment pursuant to Section 3.04(c), then
such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three
Business Days after all Events of Default have been cured or waived. If the Borrower is required
to pay to the Administrative Agent as cash collateral the excess attributable to an LC Exposure in
connection with any prepayment pursuant to Section 3.04(c), then upon the expiration or termination
of any Letter of Credit, so long as no Event of Default is then continuing, and so long as the
Borrower does not have any obligation at such time to deposit cash collateral pursuant to Section
2.09, the Administrative Agent shall return to the Borrower, within three Business Days after such
expiration or termination, all or such portion of any such cash collateral (to the extent not
previously applied as aforesaid) as exceeds the excess, if any, of the total of the then existing
Revolving Credit Exposures over the total Commitments then in effect.




     Section 2.09 Defaulting Lenders. Notwithstanding any provision of this Agreement to
the contrary, if any Lender becomes a Defaulting Lender, and any LC Exposure exists at the time a
Lender becomes a Defaulting Lender, then:



          (a) all or any part of such LC Exposure shall be reallocated among the non-Defaulting Lenders
in accordance with their respective Applicable Percentages but only to the extent (x) the sum of
all non-Defaulting Lenders’ Revolving Credit Exposures does not exceed the total of all
non-Defaulting Lenders’ Commitments and (y) the conditions set forth in Section 6.02 are satisfied
at such time;



          (b) if the reallocation described in clause (a) above cannot, or can only partially, be
effected, the Borrower shall within one Business Day following notice by the Administrative Agent,
cash collateralize such Defaulting Lender’s LC Exposure (after giving effect to any partial
reallocation pursuant to clause (a) above) in accordance with the procedures set forth in Section
2.08(j) for so long as such LC Exposure is outstanding;



          (c) if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure
pursuant to this Section 2.09, the Borrower shall not be required to pay



39









 




any fees to such Defaulting Lender pursuant to Section 3.05(b) with respect to such Defaulting
Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;




          (d) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to this Section
2.09, then the fees payable to the Lenders pursuant to Section 3.05(a) and Section 3.05(b) shall be
adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; or



          (e) if any Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocated
pursuant to this Section 2.09, then, without prejudice to any rights or remedies of the Issuing
Bank or any Lender hereunder, all commitment fees that otherwise would have been payable to such
Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Commitment that
was utilized by such LC Exposure) under Section 3.05(a) and letter of credit fees payable under
Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the
Issuing Bank until such LC Exposure is cash collateralized and/or reallocated.


Notwithstanding any provision of this Agreement to the contrary, so long as any Lender is a
Defaulting Lender, the Issuing Bank shall not be required to issue, amend or increase any Letter of
Credit, unless it is satisfied that the related exposure will be 100% covered by the Commitments of
the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance
with Section 2.08(j), and participating interests in any such newly issued or increased Letter of
Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.09(a)
(and any Defaulting Lender shall not participate therein). Nothing in this Section 2.09 shall
relieve any Defaulting Lender from any liability it may have to the Administrative Agent, any Loan
Party, any non-Defaulting Lender, any Issuing Bank or any other Agent in connection with any
obligation any such Defaulting Lender has under this Agreement.




ARTICLE III

PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES




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



     Section 3.02 Interest.



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



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



40









 





          (c) Post-Default Rate and Borrowing Base Deficiency Rate. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing, or if any principal of or
interest on any Loan, including payments due resulting from Borrowing Base Deficiencies or any fee
or other amount payable by the Borrower or any Guarantor hereunder or under any other Loan Document
is not paid when due, whether at stated maturity, upon acceleration or otherwise, and including any
payments in respect of a Borrowing Base Deficiency under Section 3.04(c), then, all Loans
outstanding, in the case of an Event of Default, and such overdue amount, in the case of a failure
to pay amounts when due, shall bear interest, after as well as before judgment, at a rate per annum
equal to two percent (2%) plus the rate applicable to ABR Loans as provided in Section 3.02(a), but
in no event to exceed the Highest Lawful Rate.



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



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


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







41









 







continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made either as an ABR
Borrowing or at an alternate rate of interest determined by the Majority Lenders as their cost of
funds.




     Section 3.04 Prepayments.



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



          (b) Notice and Terms of Optional Prepayment. The Borrower shall notify the
Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the
case of prepayment of a Eurodollar Borrowing, not later than 12:00 p.m., New York City time, three
Business Days before the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing,
not later than 12:00 p.m., New York City time, one Business Day before the date of prepayment.
Each such notice shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment
is given in connection with a conditional notice of termination of the Commitments as contemplated
by Section 2.06(b), then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.06(b). Promptly following receipt of any such notice relating
to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02. Each prepayment of a
Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 3.02.



          (c) Mandatory Prepayments.



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



               (ii) Upon any redetermination of the amount of the Borrowing Base in accordance with Section
2.07 (other than Section 2.07(e) or Section 2.07(f)) or adjustment to the amount of the Borrowing
Base in accordance with Section 8.13(c), if a Borrowing Base Deficiency exists, then the Borrower
shall within 30 days following receipt of the New Borrowing Base Notice in accordance with Section
2.07(d) or the date the adjustment occurs, as applicable, provide written notice (the “Election
Notice”) to the Administrative Agent stating the action which the Borrower proposes to remedy
such Borrowing Base Deficiency, and the Borrower shall thereafter, at its option, either (A) on the
date of delivery of the Election Notice, prepay the Borrowings in an aggregate principal amount
sufficient to eliminate such Borrowing



42









 




Base Deficiency, (B) eliminate such Borrowing Base
Deficiency by making five consecutive mandatory prepayments of principal on the Borrowings, each of which shall be in the amount of
1/5th of the amount of such Borrowing Base Deficiency, with each such payment being due on the date
that is 30 days, 60 days, 90 days, 120 days and 150 days, respectively, following the Borrower’s
receipt of the New Borrowing Base Notice in accordance with Section 2.07(d) or the date the
adjustment occurs, as applicable, (C) within 30 days following the delivery of the Election Notice,
submit (and pledge as Mortgaged Properties) additional Oil and Gas Properties owned by the Loan
Parties for consideration in connection with the determination of the Borrowing Base which the
Administrative Agent and the Lenders deem sufficient in their sole discretion to eliminate such
Borrowing Base Deficiency, or (D) within 30 days following the delivery of the Election Notice,
eliminate such excess through a combination of prepayments and submission of additional Oil and Gas
Properties as set forth in subclauses (A) and (C) above. If any Borrowing Base Deficiency remains
after prepaying all of the Borrowings as a result of LC Exposure, then the Borrower shall pay to
the Administrative Agent on behalf of the Lenders an amount equal to such remaining Borrowing Base
Deficiency to be held as cash collateral as provided in Section 2.08(j). The Borrower shall be
obligated to deposit such cash collateral amount within five Business Days following its receipt of
the New Borrowing Base Notice in accordance with Section 2.07(d) or the date the adjustment occurs,
as applicable; provided that all payments required to be made pursuant to this Section 3.04(c)(ii)
must be made on or prior to the Termination Date.




               (iii) Upon any adjustments to the Borrowing Base pursuant to Section 2.07(e) or Section
2.07(f), if the total Revolving Credit Exposures exceeds the Borrowing Base as adjusted, then the
Borrower shall (A) prepay the Borrowings in an aggregate principal amount equal to such excess, and
(B) if any excess remains after prepaying all of the Borrowings as a result of an LC Exposure, pay
to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as
cash collateral as provided in Section 2.08(j). The Borrower shall be obligated to make such
prepayment and/or deposit of cash collateral on the date it or any Subsidiary receives proceeds as
a result of such issuance of Permitted Senior Unsecured Notes or disposition; provided that all
payments required to be made pursuant to this Section 3.04(c)(iii) must be made on or prior to the
Termination Date.



               (iv) Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied, first,
ratably to any ABR Borrowings then outstanding, and, second, to any Eurodollar Borrowings then
outstanding, and if more than one Eurodollar Borrowing is then outstanding, to such Eurodollar
Borrowing in such order as the Borrower may direct.



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



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



43









 





     Section 3.05 Fees.



          (a) Commitment Fees. The Borrower agrees to pay to the Administrative Agent for the
account of each Lender a commitment fee, which shall accrue at the applicable Commitment Fee Rate
on the average daily amount of the Unused Commitment of such Lender during the period from and
including the date of this Agreement to but excluding the Termination Date. Accrued commitment
fees shall be payable in arrears on the last day of March, June, September and December of each
year and on the Termination Date, commencing on the first such date to occur after the date hereof.
All commitment fees shall be computed on the basis of a year of 360 days, unless such computation
would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).



          (b) Letter of Credit Fees. The Borrower agrees to pay (i) to the Administrative Agent
for the account of each Lender a participation fee with respect to its participations in Letters of
Credit, which shall accrue at the same Applicable Margin used to determine the interest rate
applicable to Eurodollar Loans on the average daily amount of such Lender’s LC Exposure (excluding
any portion thereof attributable to unreimbursed LC Disbursements) during the period from and
including the date of this Agreement to but excluding the later of the date on which such Lender’s
Commitment terminates and the date on which such Lender ceases to have any LC Exposure, (ii) to the
Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the date of this Agreement to but excluding the
later of the date of termination of the Commitments and the date on which there ceases to be any LC
Exposure, provided that in no event shall such fee be less than $500 during any quarter, and (iii)
to the Issuing Bank, for its own account, its standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder.
Participation fees and fronting fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the third Business Day following such last
day, commencing on the first such date to occur after the date of this Agreement; provided that all
such fees shall be payable on the Termination Date and any such fees accruing after the Termination
Date shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this
Section 3.05(b) shall be payable within 10 Business Days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days, unless such computation would
cause interest hereunder to exceed the Highest Lawful Rate, in which case such fees shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for
the actual number of days elapsed (including the first day but excluding the last day).



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



44









 





          (d) Defaulting Lender Fees. The Borrower shall not be obligated to pay the
Administrative Agent any Defaulting Lender’s ratable share of the fees described in Sections
3.05(a) and (b) for the period commencing on the day such Defaulting Lender becomes a Defaulting
Lender and continuing for so long as such Lender continues to be a Defaulting Lender.



ARTICLE IV

PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS



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



          (a) Payments by the Borrower. The Borrower shall make each payment required to be
made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 5.01, Section 5.02, Section 5.03 or otherwise) prior to 12:00
p.m., New York City time, on the date when due, in immediately available funds, without defense,
deduction, recoupment, set-off or counterclaim. Fees, once paid, shall be fully earned and shall
not be refundable under any circumstances. Any amounts received after such time on any date may,
in the discretion of the Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such payments shall be
made to the Administrative Agent at its offices specified in Section 12.01, except payments to be
made directly to the Issuing Bank as expressly provided herein and except that payments pursuant to
Section 5.01, Section 5.02, Section 5.03 and Section 12.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly following receipt thereof.
If any payment hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.



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



          (c) Sharing of Payments by Lenders. If any Lender shall, by exercising any right of
set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on
any of its Loans or participations in LC Disbursements resulting in such Lender receiving payment
of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements
and accrued interest thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in



45









 




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




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



     Section 4.03 Certain Deductions by the Administrative Agent. If any Lender shall fail
to make any payment required to be made by it pursuant to Section 2.05(a), Section 2.08(d), Section
2.08(e), or Section 4.02 or otherwise hereunder, then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received
by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations
under such Sections until all such unsatisfied obligations are fully paid. If at any time prior to
the acceleration or maturity of the Loans, the Administrative Agent shall receive any payment in
respect of principal of a Loan or a reimbursement of an LC Disbursement while one or more
Defaulting Lenders shall be party to this Agreement, the Administrative Agent shall apply such
payment first to the Borrowing(s) for which such Defaulting Lender(s) shall have failed to fund its
pro rata share until such time as such Borrowing(s) are paid in full or each Lender (including each
Defaulting Lender) is owed its Applicable Percentage of all Loans then outstanding. After
acceleration or maturity of the Loans, all principal will be paid ratably as provided in Section
10.02(c).



     Section 4.04 Disposition of Proceeds. The Security Instruments contain an assignment
by the Borrower and/or the Guarantors unto and in favor of the Administrative Agent for the benefit
of the Secured Parties of all of the Borrower’s or each Guarantor’s interest in and to



46









 




production and all proceeds attributable thereto which may be produced from or allocated to
the Mortgaged Property. The Security Instruments further provide in general for the application of
such proceeds to the satisfaction of the Indebtedness and other obligations described therein and
secured thereby. Notwithstanding the assignment contained in such Security Instruments, until the
occurrence of an Event of Default, (a) the Administrative Agent and the Lenders agree that they
will neither notify the purchaser or purchasers of such production nor take any other action to
cause such proceeds to be remitted to the Administrative Agent or the Lenders, but the
Administrative Agent and the Lenders will instead permit such proceeds to be paid to the Borrower
and its Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to take such
actions as may be necessary to cause such proceeds to be paid to the Borrower and/or such
Subsidiaries.




ARTICLE V

INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY



     Section 5.01 Increased Costs.



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



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



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


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




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



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



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




          (d) Effect of Failure or Delay in Requesting Compensation. Failure or delay on the
part of any Lender or the Issuing Bank to demand compensation pursuant to this Section 5.01 shall
not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation;
provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section 5.01 for any increased costs or reductions incurred more than 365 days
prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower
of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the
Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the 365-day period
referred to above shall be extended to include the period of retroactive effect thereof.



     Section 5.02 Break Funding Payments. In the event of (a) the payment of any principal
of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan into an
ABR Loan other than on the last day of the Interest Period applicable thereto, (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(a), then, in any such event, the Borrower shall compensate each Lender for the loss,
cost and expense attributable to such event (exclusive of any lost profits or opportunity costs or
processing or other related fees). In the case of a Eurodollar Loan, such loss, cost or expense to
any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount of such Loan had
such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan,
for the period from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the period that would
have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue
on such principal amount for such period at the interest rate which such Lender would bid were it
to bid, at the commencement of such period, for dollar deposits of a comparable amount and period
from other banks in the eurodollar market.


A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section 5.02 shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 Business Days after receipt thereof; provided, that the Borrower shall not
have any obligation to make any payment for any loss, cost or expense incurred by a Lender as a
result of an event described in this Section 5.02 if such event occurred more than 180 days prior
to the date such Lender notifies the Borrower of the amount thereof.




     Section 5.03 Taxes.



          (a) Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Borrower or any Guarantor under any Loan Document shall be made free and



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




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



          (c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent, each Lender and the Issuing Bank, within 10 Business Days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such
Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 5.03) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified
Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate of the Administrative Agent, a Lender or the Issuing Bank as to the
amount of such payment or liability under this Section 5.03 shall be delivered to the Borrower and
shall be conclusive absent manifest error; provided, that the Borrower shall not have any
obligation to indemnify the Administrative Agent, such Lender or the Issuing Bank for any amounts
paid by the Administrative Agent, such Lender or the Issuing Bank under this Section 5.03 more than
two years prior to the date the Administrative Agent, such Lender or the Issuing Bank notifies the
Borrower of the amount of such payment.



          (d) Indemnification by the Lenders. Each Lender shall severally indemnify the
Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes
attributable to such Lender (but only to the extent that Borrower has not already indemnified the
Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower
to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of
Section 12.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes
attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in
connection with any Loan Document, and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or liability delivered to
any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender
hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time
owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to
the Lender from any other source against any amount due to the Administrative Agent under this
paragraph (d).



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          (e) Evidence of Payments. As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower or a Guarantor 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.



          (f) Status of Lenders.



               (i) Any Lender that is entitled to an exemption from or reduction of withholding tax with
respect to payments made under any Loan Document shall deliver to the Withholding Agent, at the
time or times reasonably requested by the Withholding Agent, such properly completed and executed
documentation reasonably requested by the Withholding Agent as will permit such payments to be made
without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably
requested by the Withholding Agent, shall deliver such other documentation prescribed by applicable
law or reasonably requested by the Withholding Agent as will enable the Withholding Agent to
determine whether or not such Lender is subject to backup withholding or information reporting
requirements. Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such documentation set forth
in Section 5.03(f)(ii)(A) and (ii)(B) and Section 5.03(g) below) shall not be required if in the
Lender’s reasonable judgment such completion, execution or submission would subject such Lender to
any material unreimbursed cost or expense or would materially prejudice the legal or commercial
position of such Lender.



               (ii) Without limiting the generality of the foregoing, in the event that the Borrower is a
“United States person” as defined in Section 7701(a)(30) of the Code,



                    (A) any Lender that is a “United States person” as defined in Section 7701(a)(3) of the Code
shall deliver to the Withholding Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the reasonable request of the
Withholding Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from
U.S. federal backup withholding tax;



                    (B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the
Withholding Agent (in such number of copies as shall be requested by the recipient) on or prior to
the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Withholding Agent), whichever of the following is
applicable:



                         (1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the
United States is a party (x) with respect to payments of interest under any Loan Document, executed
originals of IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal
withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any
other applicable payments under any Loan Document, IRS Form W-8BEN establishing an exemption from,
or reduction of, U.S. federal withholding tax pursuant to the “business profits” or “other income”
article of such tax treaty;



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                         (2) executed originals of IRS Form W-8ECI;



                         (3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio
interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit
G-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section
881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section
871(h)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C)
of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form
W-8BEN; or



                         (4) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form
W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate
substantially in the form of Exhibit G-2 or Exhibit G-3, IRS Form W-9, and/or other certification
documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more direct or indirect partners of such Foreign Lender are claiming the
portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate
substantially in the form of Exhibit G-4 on behalf of each such direct and indirect partner; and



                    (C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the
Withholding Agent (in such number of copies as shall be requested by the recipient) on or prior to
the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Withholding Agent), executed originals of any other
form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S.
federal withholding tax, duly completed, together with such supplementary documentation as may be
prescribed by applicable law to permit the Withholding Agent to determine the withholding or
deduction required to be made.


Each Lender agrees that if any form or certification it previously delivered expires or becomes
obsolete or inaccurate in any respect, it shall update such form or certification or promptly
notify the Withholding Agent in writing of its legal inability to do so.




          (g) FATCA. If a payment made to a Lender under this Agreement would be subject to
United States Federal withholding tax imposed by FATCA if such Lender fails to comply with the
applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b)
of the Code, as applicable), such Lender shall deliver to the Withholding Agent, at the time or
times prescribed by law and at such time or times reasonably requested by the Withholding Agent,
such documentation prescribed by applicable law (including as prescribed by Section
1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the
Withholding Agent as may be necessary for the Withholding Agent to comply with its obligations
under FATCA, to determine that such Lender has complied with such Lender’s obligations under FATCA
or to determine the amount to deduct and withhold from such payment. Solely for purposes of this
Section 5.03(g), “FATCA” shall include any amendments made to FATCA after the date of this
Agreement.



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     Section 5.04 Mitigation Obligations; Replacement of Lenders.



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



          (b) Replacement of Lenders. If 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, or if any Lender shall require
that its Loans be made and/or maintained as ABR Loans rather than Eurodollar Loans pursuant to
Section 5.05, or if any Lender becomes a Defaulting Lender hereunder, 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(a)), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) the Borrower shall have received the prior written
consent of the Administrative Agent, which consent shall not unreasonably be withheld, (ii) such
Lender shall have received payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued fees (subject to Section
3.05(d)) and all other amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the case of all other
amounts), and (iii) in the case of any such assignment resulting from a claim for compensation
under Section 5.01 or payments required to be made pursuant to Section 5.03, such assignment will
result in a reduction in such compensation or payments. 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



52









 




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 Effective Date. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance with Section 12.02):



          (a) the Administrative Agent, the Arranger and the Lenders shall have received all commitment,
facility and agency fees and all other fees and amounts due and payable on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or payment of all reasonable
out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder (including,
without limitation, the reasonable fees and expenses of Vinson & Elkins L.L.P., counsel to the
Administrative Agent);



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



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



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



          (e) the Administrative Agent shall have received duly executed Notes payable to each Lender in
a principal amount equal to its Maximum Credit Amount dated as of the date hereof;



          (f) the Administrative Agent shall have received from each party thereto duly executed
counterparts (in such number as may be requested by the Administrative Agent) of the Security
Instruments, including the Security Agreement, the Guaranty Agreement, the mortgages



53









 




and the other Security Instruments described on Exhibit E-1. In connection with the execution
and delivery of the Security Instruments, the Administrative Agent shall:




               (i) be reasonably satisfied that the Security Instruments will, when properly recorded (or
when the applicable financing statements related thereto are properly filed) create first priority,
perfected Liens (subject only to Excepted Liens identified in clauses (a) to (d) and (f) of the
definition thereof, but subject to the provisos at the end of such definition) on at least 80% of
the total value of the Oil and Gas Properties evaluated in the Initial Reserve Report and on all
other Property purported to be pledged as collateral pursuant to the Security Instruments; and



               (ii) have received certificates, together with undated, blank stock powers for each such
certificate, representing all of the issued and outstanding Equity Interests required to be pledged
pursuant to Section 8.14;



          (g) the Administrative Agent shall have received an opinion of Akin Gump Strauss Hauer & Feld
L.L.P., special counsel to the Loan Parties, in form and substance reasonably acceptable to the
Administrative Agent and its counsel;



          (h) the Administrative Agent shall have received a certificate of insurance coverage of the
Loan Parties evidencing that the Loan Parties are carrying insurance in accordance with Section
7.12;



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



          (j) the Administrative Agent shall be reasonably satisfied with the environmental condition of
the Oil and Gas Properties of the Loan Parties (including the Initial Acquisition Properties);



          (k) the Administrative Agent shall have received a certificate of a Responsible Officer of the
Borrower certifying that the Borrower has received all consents and approvals required by Section
7.03;



          (l) the Administrative Agent shall have received the financial statements referred to in
Section 7.04(a) and the Initial Reserve Report accompanied by a certificate covering the matters
described in Section 8.12(c);



          (m) the Administrative Agent shall have received appropriate UCC search certificates and
county-level real property record search results reflecting no prior Liens encumbering the
Properties of the Loan Parties for each jurisdiction requested by the Administrative Agent;
other than those being assigned or released on or prior to the Effective Date or Liens
permitted by Section 9.03;



          (n) the Administrative Agent shall have received (i) a certificate of a Responsible Officer of
the Borrower certifying: (A) that the Borrower is concurrently



54









 




consummating the Initial Acquisition in accordance with all Governmental Requirements the
terms of the Initial Acquisition Documents (with all of the material conditions precedent thereto
having been satisfied in all material respects by the parties thereto and with no provision of such
Initial Acquisition Documents having been waived, amended, supplemented or otherwise modified in
any material respect without the approval of the Administrative Agent (such approval not to be
unreasonably withheld or delayed)) and acquiring substantially all of the Initial Acquisition
Properties contemplated by the Initial Acquisition Documents; and (B) as to the final purchase
price for the Initial Acquisition Properties after giving effect to all adjustments as of the
closing date contemplated by the Initial Acquisition Documents and specifying, by category, the
amount of such adjustment; (ii) a true and complete executed copy of each of the Initial
Acquisition Documents, which Initial Acquisition Documents shall have terms and conditions
reasonably satisfactory to the Administrative Agent; (iii) original counterparts or copies,
certified as true and complete, of the assignments, deeds and leases for all of the Initial
Acquisition Properties; and (iv) such other related documents and information as the Administrative
Agent shall have reasonably requested;




          (o) the Administrative Agent shall have received from the Borrower a written policy regarding
the Loan Parties’ marketing activities for Hydrocarbons and furnish a copy thereof to the
Administrative Agent and the Lenders, such policy to be in form and substance reasonably
satisfactory to the Majority Lenders;



          (p) on the Effective Date, none of the Loan Parties shall have any Debt (other than
Indebtedness or Debt permitted hereunder);



          (q) the Administrative Agent shall have received the Initial Reserve Report;



          (r) the consummation of the Parent IPO pursuant to an effective registration statement under
the Securities Act filed on Form S-1 shall have occurred on terms and conditions acceptable to the
Administrative Agent, and such Parent IPO shall have resulted in gross cash equity proceeds of not
less than $200,000,000 to the Parent, which gross cash equity proceeds shall have been used in a
manner consistent with the “Use of Proceeds” set forth in the Parent IPO Prospectus;



          (s) the Administrative Agent shall have received evidence reasonably satisfactory to
Administrative Agent, concurrently with the funding of the initial Loan under this Agreement and
that upon such payment, all Liens encumbering the Initial Acquisition Properties will be released
(other than the Liens securing the Indebtedness and created pursuant to the Security Instruments
and Excepted Liens identified in clauses (a) to (d) and (f) of the definition thereof, subject to
the provisos at the end of such definition);



          (t) since December 31, 2010, there shall not have occurred any Material Adverse Effect;



          (u) all governmental and third party approvals necessary in connection with the Transactions,
the financing contemplated hereby and the continuing operations of the Loan Parties (including
shareholder approvals, if any) shall have been obtained on terms reasonably satisfactory to the
Administrative Agent and shall be in full force and effect;



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          (v) the Administrative Agent shall have received, and satisfactorily completed its review of,
information regarding litigation, tax, accounting, labor, insurance, pension liabilities (actual or
contingent), real estate leases, material contracts, debt agreements, property ownership, and
contingent liabilities of the Parent, the Borrower and their respective subsidiaries;



          (w) the Administrative Agent and the Lenders shall have received a pro forma balance sheet as
to the Parent and the Consolidated Subsidiaries after giving effect to all elements of the
Transactions to be effected on or before the Effective Date, and forecasts prepared by management
of the Borrower, of balance sheets and income statements on a quarterly basis for the first year
following the Effective Date and on an annual basis for each year thereafter during the term of
this Agreement;



          (x) the capitalization, structure and equity ownership of each Loan Party after giving effect
to the consummation of the Transactions shall be reasonably satisfactory to the Administrative
Agent; and



          (y) the Administrative Agent shall have received such other documents as the Administrative
Agent or special counsel to the Administrative Agent may reasonably request.



     Without limiting the generality of the provisions of Section 11.04, for purposes of
determining compliance with the conditions specified in this Section 6.01, each Lender that has
signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required under this Section 6.01 to be consented to or approved
by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the Effective Date specifying its objection thereto. All
documents executed or submitted pursuant to this Section 6.01 by and on behalf of the Parent or any
of its Subsidiaries shall be in form and substance reasonably satisfactory to the Administrative
Agent and its counsel. The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.



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



          (a) at the time of and immediately after giving effect to such Borrowing or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no Default or Borrowing
Base Deficiency shall have occurred and be continuing;



          (b) at the time of and immediately after giving effect to such Borrowing or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no event, development or
circumstance has occurred or shall then exist that has resulted in, or could reasonably be expected
to have, a Material Adverse Effect;



          (c) the representations and warranties of the Loan Parties set forth in this Agreement and in
the other Loan Documents shall be true and correct in all material respects on and as of the date
of such Borrowing or the date of issuance, amendment, renewal or extension



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of such Letter of Credit, as applicable, except that (i) to the extent any such
representations and warranties are expressly limited to an earlier date, in which case, on and as
of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, such representations and warranties shall continue to be true and
correct in all material respects as of such specified earlier date and (ii) to the extent that any
such representation and warranty is qualified by materiality, such representation and warranty
shall continue to be true and correct in all respects;




          (d) the making of such Loan or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, shall not be prohibited by any applicable Governmental Requirement, and no
litigation shall be pending or threatened, which does or, with respect to any threatened
litigation, seeks to, enjoin, prohibit or restrain, the making or repayment of any Loan, the
issuance, amendment, renewal, extension or repayment of any Letter of Credit or any participations
therein or the consummation of the transactions contemplated by this Agreement or any other Loan
Document; and



          (e) the receipt by the Administrative Agent of a Borrowing Request in accordance with Section
2.03 or a request for a Letter of Credit in accordance with Section 2.08(b), as applicable.



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



ARTICLE VII

REPRESENTATIONS AND WARRANTIES



     The Borrower represents and warrants to the Lenders that:



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



     Section 7.02 Authority; Enforceability. The Transactions are within the Loan Parties’
respective 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 the Borrower or any other Person, whether interested or disinterested, in
order to ensure the due authorization of the Transactions). Each Loan Document and Initial
Acquisition Document to which any Loan Party is a party has been duly executed and delivered by the
Borrower and such Guarantor and constitutes a legal, valid and binding obligation of the Loan
Parties, as applicable, enforceable in accordance with its terms, subject to applicable



57









 




bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.




     Section 7.03 Approvals; No Conflicts. The Transactions (a) do not require any consent
or approval of, registration or filing with, or any other action by, any Governmental Authority or
any other third Person (including shareholders, members, partners or any class of directors or
managers, whether interested or disinterested, of the Borrower 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, bylaws or other Organizational Documents of any Loan Party or any order of any
Governmental Authority, (c) will not violate or result in a default under any indenture or other
material agreement binding upon any Loan Party or its Properties, or give rise to a right
thereunder to require any payment to be made by any Loan Party and (d) will not result in the
creation or imposition of any Lien on any material Property of any Loan Party (other than the Liens
created by the Loan Documents).



     Section 7.04 Financial Condition; No Material Adverse Change.



          (a) The Borrower has heretofore furnished to the Lenders the combined balance sheet and
statements of income, unit holders equity and cash flows of “Memorial Production Partners LP
Predecessor” as described in Note 1 to such financial statements (i) as of and for the fiscal year
ended December 31, 2010, reported on by KPMG LLP, independent public accountants, and (ii) as of
and for the fiscal quarter and the portion of the fiscal year ended June 30, 2011, certified by its
chief financial officer. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Parent and its Consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the unaudited quarterly financial
statements.



          (b) 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 the other Loan Parties has been conducted only in the ordinary course consistent with
past business practices.



          (c) No Loan Party has on the date hereof any material Debt (including Disqualified Capital
Stock) or any contingent liabilities, off-balance sheet liabilities or partnerships, liabilities
for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for in the Financial
Statements.



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     Section 7.05 Litigation.



          (a) Except as set forth on Schedule 7.05, there are no actions, suits, investigations or
proceedings by or before any arbitrator or Governmental Authority pending against or, to the
knowledge of the Borrower, threatened against or affecting any Loan Party (i) not fully covered by
insurance (except for normal deductibles) as to which there is a reasonable possibility of an
adverse determination that, if adversely determined, could reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect, (ii) that involve any Loan Document, any
Initial Acquisition Document or the Transactions or (iii) that could impair the consummation of the
Initial Acquisition on the time and in the manner contemplated by the Initial Acquisition Documents
or of the Parent IPO.



          (b) Since the date of this Agreement, there has been no change in the status of the matters
disclosed in Schedule 7.05 that, individually or in the aggregate, has resulted in a Material
Adverse Effect.



     Section 7.06 Environmental Matters. Except for such matters as set forth on Schedule
7.06 or that, individually or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect on any Loan Party:



          (a) the Loan Parties and each of their respective Properties and operations thereon are, and
within all applicable statute of limitation periods have been, in compliance with all applicable
Environmental Laws;



          (b) the Loan Parties have obtained all Environmental Permits required for their respective
operations and each of their Properties, with all such Environmental Permits being currently in
full force and effect, and none of Borrower or the other Loan Parties has received any written
notice or otherwise has knowledge that any such existing Environmental Permit will be revoked or
that any application for any new Environmental Permit or renewal of any existing Environmental
Permit will be protested or denied;



          (c) there are no claims, demands, suits, orders, inquiries, or proceedings concerning any
violation of, or any liability (including as a potentially responsible party) under, any applicable
Environmental Laws that is pending or, to Borrower’s knowledge, threatened against any Loan Party
or any of their respective Properties or as a result of any operations at such Properties;



          (d) none of the Properties of the Loan Parties contain or have contained any: (i) underground
storage tanks; (ii) asbestos-containing materials; (iii) landfills or dumps; (iv) hazardous waste
management units as defined pursuant to RCRA or any comparable state law; or (v) sites on or
nominated for the National Priority List promulgated pursuant to CERCLA or any state remedial
priority list promulgated or published pursuant to any comparable state law;



          (e) there has been no Release or, to the Borrower’s knowledge, threatened Release, of
Hazardous Materials at, on, under or from the Loan Parties’ Properties, there are no
investigations, remediations, abatements, removals, or monitorings of Hazardous Materials required
under applicable Environmental Laws at such Properties and, to the knowledge of the



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Borrower, none of such Properties are adversely affected by any Release or threatened Release
of a Hazardous Material originating or emanating from any other real property;




          (f) none of the Loan Parties has received any written notice asserting an alleged liability or
obligation under any applicable Environmental Laws with respect to the investigation, remediation,
abatement, removal, or monitoring of any Hazardous Materials at, under, or Released or threatened
to be Released from any real properties offsite the Borrower’s or any other Loan Party’s Properties
and, to the Borrower’s knowledge, there are no conditions or circumstances that could reasonably be
expected to result in the receipt of such written notice;



          (g) there has been no exposure of any Person or Property to any Hazardous Materials as a
result of or in connection with the operations and businesses of any of the Loan Parties’
Properties that could reasonably be expected to form the basis for a claim for damages or
compensation; and



          (h) the Loan Parties have provided to the Lenders complete and correct copies of all material
environmental site assessment reports, investigations, studies, analyses, and correspondence on
environmental matters (including matters relating to any alleged non-compliance with or liability
under Environmental Laws) that are in any of the Borrower’s or any other Loan Party’s possession or
control and relating to their respective Properties or operations thereon.



     Section 7.07 Compliance with the Laws and Agreements; No Defaults or Borrowing Base
Deficiency.



          (a) Each of the Loan Parties 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) None of the Loan Parties 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 any other Loan Party 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 other Loan Party or any of
their Properties is bound.



          (c) No Default or Borrowing Base Deficiency has occurred and is continuing.



     Section 7.08 Investment Company Act. None of the Loan Parties 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 Loan Parties 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



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appropriate proceedings and for which the Borrower or such other Loan Party, 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 Loan Parties in respect of Taxes and other
governmental charges are, in the reasonable opinion of the Borrower, adequate. No Tax Lien 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.



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



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



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



          (d) Full payment when due has been made of all amounts which the Borrower, the other Loan
Parties or any ERISA Affiliate is required under the terms of each Plan or applicable law to have
paid as contributions to such Plan as of the date hereof.



          (e) None of the Loan Parties nor any ERISA Affiliate sponsors, maintains, or contributes to an
employee welfare benefit plan, as defined in section 3(1) of ERISA, including, without limitation,
any such plan maintained to provide benefits to former employees of such entities, that may not be
terminated by the Borrower, any other Loan Party or any ERISA Affiliate in its sole discretion at
any time without any material liability.



          (f) None of the Loan Parties nor any ERISA Affiliate sponsors, maintains or contributes to, or
has at any time in the six-year period preceding the date hereof sponsored, maintained or
contributed to, any employee pension benefit plan, as defined in section 3(2) of ERISA, that is
subject to Title IV of ERISA, section 302 of ERISA or section 412 of the Code.



     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 any Loan Party is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. Neither the Information Memorandum nor any of the other reports, financial statements,
certificates or other information furnished by or on behalf of the Loan Parties 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



61









 




that, with respect to projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be reasonable at the
time. There is no fact peculiar to the Loan Parties 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 Loan Parties prior to, or on, the date hereof in connection with the transactions contemplated
hereby. There are no statements or conclusions in any Reserve Report which are based upon or
include misleading information or fail to take into account material information regarding the
matters reported therein, it being understood that projections concerning volumes attributable to
the Oil and Gas Properties of the Borrower and the other Loan Parties 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 other Loan Parties do not warrant that such
opinions, estimates and projections will ultimately prove to have been accurate.




     Section 7.12 Insurance. The Loan Parties have (a) all insurance policies sufficient
for the compliance by each of them with all material Governmental Requirements and all material
agreements including, without limitation, Flood Insurance, if required 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 Loan Parties. 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. No
Loan Party owns any material Building (as defined in the applicable Flood Insurance Regulation) or
material Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulation) for
which such Loan Party has not delivered to the Administrative Agent evidence reasonably
satisfactory to the Administrative Agent that (a) such Loan Party maintains Flood Insurance for
such Building or Manufactured (Mobile) Home or (b) such Building or Manufactured (Mobile) Home is
not located in a Special Flood Hazard Area.



     Section 7.13 Restriction on Liens. None of the Loan Parties is a party to any
material agreement or arrangement, or subject to any order, judgment, writ or decree, which either
restricts or purports to restrict its ability to grant Liens to the Administrative Agent and the
Secured Parties on or in respect of their Properties to secure the Indebtedness and the Loan
Documents.



     Section 7.14 Subsidiaries. Except as set forth on Schedule 7.14 or as disclosed in
writing to the Administrative Agent (which shall promptly furnish a copy to the Lenders), which
shall be a supplement to Schedule 7.14, the Parent has no Subsidiaries, the Parent has no Foreign
Subsidiaries and each Subsidiary on such schedule is a Wholly-Owned Subsidiary.



     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 its
jurisdiction of organization is Memorial Production Operating LLC; and the organizational
identification number of the Borrower in its jurisdiction of organization is 4992976 (or, in each
case, as set forth in a notice delivered to the Administrative Agent pursuant to Section 8.01(n) in



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accordance with Section 12.01). The Borrower’s principal place of business and chief
executive offices are located at the address specified in Section 12.01 (or as set forth in a
notice delivered pursuant to Section 8.01(n) and Section 12.01(c)). Each Guarantor’s jurisdiction
of organization, name as listed in the public records of its jurisdiction of organization,
organizational identification number in its jurisdiction of organization, and the location of its
principal place of business and chief executive office is stated on Schedule 7.14 (or as set forth
in a notice delivered pursuant to Section 8.01(n)).




     Section 7.16 Properties; Titles, Etc.



          (a) Each of the Loan Parties has good and defensible title to the Oil and Gas Properties
evaluated in the most recently delivered Reserve Report and good title to all its material 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 Loan Party 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 such Loan Party 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 other Loan Party’s net revenue
interest in such Property.



          (b) All material leases and agreements necessary for the conduct of the business of the Loan
Parties 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 leases or agreements, which could reasonably be expected to have a Material
Adverse Effect.



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



          (d) All of the Properties of the Loan Parties which are reasonably necessary for the operation
of their businesses are in good working condition and are maintained in accordance with prudent
business standards except for such failure as to condition or maintenance as could not be
reasonably expected to have a Material Adverse Effect.



          (e) Each Loan Party 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 other Loan Parties 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 Loan Parties 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



63









 




exploration and production of Hydrocarbons, with such exceptions as could not reasonably be
expected to have a Material Adverse Effect.




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



     Section 7.18 Gas Imbalances, Prepayments. Except as set forth on Schedule 7.18 or on
the most recent certificate delivered pursuant to Section 8.12(c), on a net basis there are no gas
imbalances, take or pay or other prepayments which would require the Parent or any of its
Subsidiaries to deliver Hydrocarbons produced from their Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor exceeding one-half bcf of gas (on an mcf
equivalent basis) in the aggregate.



     Section 7.19 Marketing of Production. Except for contracts listed and in effect on
the date hereof on Schedule 7.19, and thereafter either disclosed in writing to the Administrative
Agent or included in the most recently delivered Reserve Report (with respect to all of which
contracts the Borrower represents that it or its Subsidiaries are receiving a price for all
production sold thereunder which is computed substantially in accordance with the terms of the
relevant contract and are not having deliveries curtailed substantially below the subject
Property’s delivery capacity), no material agreements exist which are not cancelable on 60 days
notice or less without penalty or detriment for the sale of production from the Borrower’s or the
other Loan Parties’ Hydrocarbons (including, without limitation, calls on or other rights to
purchase, production, whether or not the same are currently being exercised) that (a) pertain to
the sale of production at a fixed price and (b) have a maturity or expiry date of longer than six
(6) months from the date hereof.



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



     Section 7.21 Use of Loans and Letters of Credit. The proceeds of the Loans and the
Letters of Credit shall be used to provide working capital for exploration and production
operations, to fund a portion of the purchase price of the Initial Acquisition, for general
corporate purposes (including financing Acquisitions and Investments permitted hereunder), for
Restricted Payments permitted by Section 9.04 and to pay fees, commissions and expenses incurred in
connection with the Transactions. The Loan Parties are not engaged principally, or as one of its
or their important activities, in the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying margin stock (within the meaning of
Regulation T, U or X of the Board). No part of the proceeds of any Loan or Letter of Credit will
be used for any purpose which violates the provisions of Regulations T, U or X of the Board. No
Letter of Credit will be used to post margin or collateral to secure any Loan Party’s obligations
under any Swap Agreement with a Person other than a Lender or an Affiliate of a Lender.



     Section 7.22 Solvency. After giving effect to the transactions contemplated hereby,
(a) the aggregate assets (after giving effect to amounts that could reasonably be received by
reason of indemnity, offset, insurance or any similar arrangement), at a fair valuation, of the
Loan Parties, taken as a whole, will exceed the aggregate Debt of the Loan Parties on a
consolidated basis, as the Debt becomes absolute and matures, (b) each of the Loan Parties will not
have incurred or intended to incur, and will not believe that it will incur, Debt beyond its
ability to pay such Debt (after taking into account the timing and amounts of cash to be received
by each of the Borrower and the Guarantors and the amounts to be payable on or in respect of its
liabilities, and giving effect to amounts that could reasonably be received by reason of indemnity,
offset, insurance or any similar arrangement) as such Debt becomes absolute and matures and (c)
each of the Loan Parties will not have (and will have no reason to believe that it will have
thereafter) unreasonably small capital for the conduct of its business.



     Section 7.23 Foreign Corrupt Practices. No Loan Party, nor any director, officer,
agent, employee or Affiliate of the Loan Parties is aware of or has taken any action, directly or
indirectly, that would result in a material violation by such Persons of the FCPA, including
without limitation, making use of the mails or any means or instrumentality of interstate commerce
corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of
any money, or other property, gift, promise to give, or authorization of the giving of anything of
value to any “foreign official” (as such term is defined in the FCPA) or any foreign political
party or official thereof or any candidate for foreign political office, in contravention of the
FCPA; and, the Loan Parties and their Affiliates have conducted their business in material
compliance with the FCPA and have instituted and maintain policies and procedures designed to
ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.



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     Section 7.24 OFAC. No Loan Party, nor any director, officer, agent, employee or
Affiliate of the Loan Parties is currently subject to any material U.S. sanctions administered by
OFAC, and the Borrower will not directly or indirectly use the proceeds from the Loans or lend,
contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or
other Person, for the purpose of financing the activities of any Person currently subject to any
U.S. sanctions administered by OFAC.



ARTICLE VIII

AFFIRMATIVE COVENANTS



     Until the Commitments have expired or been terminated and the principal of and interest on
each Loan and all fees payable hereunder and all other amounts payable under the Loan Documents
then outstanding shall have been paid in full and all Letters of Credit shall have expired or
terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees
with the Lenders that:



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



          (a) Annual Financial Statements. As soon as available, but in any event in accordance
with then applicable law and not later than 15 days after annual financial statements are required
to be delivered to the SEC, the Parent’s audited consolidated balance sheet and related statements
of operations, partners’ 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 KPMG LLP
or other independent public accountants of recognized national standing (without a “going concern”
or like qualification or exception and without any qualification or exception as to the scope of
such audit) to the effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the Parent and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
provided that the timely filing with the SEC of the Parent’s annual report on Form 10-K will
satisfy the reporting requirements of this Section 8.01(a).



          (b) Quarterly Financial Statements. For each of the first three fiscal quarters of
the Parent’s fiscal year, as soon as available, but in any event in accordance with then applicable
law and not later than 15 days after quarterly financial statements are required to be delivered to
the SEC, the Parent’s consolidated balance sheet and related statements of operations, partners’
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 Parent 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; provided that the timely filing with the SEC of the
Parent’s quarterly reports on Form 10-Q will satisfy the reporting requirements of this Section
8.01(b).



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          (c) Certificate of Financial Officer — Compliance. Concurrently with any delivery of
financial statements under Section 8.01(a) or Section 8.01(b), a certificate of a Financial Officer
in substantially the form of Exhibit D hereto (i) certifying as to whether a Default has occurred
and, if a Default has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 8.13(a), Section 8.14(a) and Section 9.01 and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of the audited financial
statements referred to in Section 7.04 and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such certificate.



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



          (e) Certificate of Financial Officer — Swap Agreements. Concurrently with any
delivery of financial statements under Section 8.01(a) and Section 8.01(b) and the delivery of each
Reserve Report hereunder, a certificate of a Financial Officer, in form and substance satisfactory
to the Administrative Agent, setting forth as of a recent date, a reasonably detailed summary of
the Swap Agreements to which any Loan Party is a party on such date, which summary shall include
information that is sufficient (as reasonably determined by the Administrative Agent) for purposes
of determining the Borrowing Base hereunder including, without limitation, the type, term,
effective date, termination date and notional amounts or volumes).



          (f) Certificate of Insurer — Insurance Coverage. Concurrently with any delivery of
financial statements under Section 8.01(a), a certificate of insurance coverage from each insurer
with respect to the insurance required by Section 8.07, in form and substance satisfactory to the
Administrative Agent, and, if requested by the Administrative Agent or any Lender, all copies of
the applicable policies.



          (g) Other Accounting Reports. Promptly upon receipt thereof, a copy of any
“management letter” received by the Borrower or any of the Loan Parties by independent accountants
that indicates, in the reasonable good faith judgment of the board of directors (or comparable
governing body), as applicable, of the Borrower or any such other Loan Party, a material weakness
in such Person’s internal controls or procedures and the management’s responses thereto.



          (h) SEC and Other Filings; Reports to Shareholders. Promptly after the same become
publicly available, copies of all periodic and other reports, proxy statements and other materials
filed by the Borrower or any other Loan Party with the SEC, or with any national or foreign
securities exchange, or distributed by the Borrower to its equityholders generally, as the case may
be; provided that the timely filing with the SEC of any such materials or the posting of such
documents (or providing a link thereto) on the Borrower’s or such other Loan Party’s



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website on the Internet at the Borrower’s or such other Loan Party’s website address will
satisfy the reporting requirements of this Section 8.01(h).




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



          (j) Lists of Purchasers. Promptly following the written request of the Administrative
Agent, a list of all Persons purchasing material quantities of Hydrocarbons from the Borrower or
any other Loan Party.



          (k) Notice of Sales of Oil and Gas Properties. In the event the Borrower or any other
Loan Party intends to sell, transfer, assign or otherwise dispose of any Oil or Gas Properties or
any Equity Interests in any Subsidiary in accordance with Section 9.12, prior written notice of
such disposition, the price thereof and the anticipated date of closing and any other details
thereof reasonably requested by the Administrative Agent or any Lender.



          (l) Notice of Casualty Events. Prompt written notice, and in any event within five
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.



          (m) Issuance of Permitted Senior Unsecured Notes. In the event the Parent or the
Borrower intends to issue Permitted Senior Unsecured Notes, prior written notice of such intended
offering of such Permitted Senior Unsecured Notes, the amount thereof, and the anticipated date of
closing and promptly when available will furnish a copy of the preliminary offering memorandum (if
any) and the final offering memorandum (if any).



          (n) Information Regarding Borrower and Guarantors. Prompt written notice (and in any
event within 30 days prior thereto) of any change (i) in the Borrower or any Guarantor’s corporate
name or in any trade name used to identify such Person in the conduct of its business or in the
ownership of its Properties, (ii) in the location of the Borrower’s or any Guarantor’s chief
executive office or principal place of business, (iii) in the Borrower’s or any Guarantor’s
identity or corporate structure or in the jurisdiction in which such Person is incorporated or
formed, (iv) in the Borrower’s or any Guarantor’s jurisdiction of organization or such Person’s
organizational identification number in such jurisdiction of organization, and (v) in the
Borrower’s or any Guarantor’s federal taxpayer identification number.



          (o) Production Report and Lease Operating Statements. Concurrently with any delivery
of financial statements under Section 8.01(a) and Section 8.01(b), a report setting forth, for each
calendar month during the then current fiscal year to date, the volume of production and sales
attributable to production (and the prices at which such sales were made and the revenues derived
from such sales) for each such calendar month from the Oil and Gas Properties, and setting forth
the related ad valorem, severance and production taxes and lease operating expenses attributable
thereto and incurred for each such calendar month.



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          (p) Notices of Certain Changes. Promptly, but in any event within five Business Days
after the execution thereof, copies of any amendment, modification or supplement to any
Organizational Document, any preferred stock designation or any other organic document of the
Borrower or any other Loan Party.



          (q) Notices Relating to an Acquisition. In the event that (i) any Loan Party is
required or elects to purchase any of the Acquisition Properties which had been excluded from, or
return any of the Acquisition Properties which had been included in, the Acquisition Properties in
accordance with the terms of the Acquisition Documents, (ii) any Loan Party is required to honor
any preferential purchase right in respect of any Acquisition Property which has not been waived,
(iii) any material matter being disputed in accordance with the terms of the Acquisition Documents
is resolved or (iv) the applicable Loan Party and the seller(s) calculate and agree upon the
“closing adjustment statement” or “post-closing adjustment statement” as contemplated by the
Acquisition Documents, then, in each such case, the Borrower shall promptly give the Administrative
Agent notice in reasonable detail of such circumstances.



          (r) Annual Budget and Updated Forecasted Financial Statements. Concurrently with any
delivery of financial statements under Section 8.01(a), an annual budget of the Loan Parties in
form and detail reasonably satisfactory to the Administrative Agent and forecasts prepared by
management of the Borrower of consolidated balance sheets and income statements for the Loan
Parties on a quarterly basis for the first year following the year for which such financial
statements are then being delivered under Section 8.01(a) and on an annual basis for each year
thereafter during the term of this Agreement.



          (s) Other Requested Information. Promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition of the Borrower or
any other Loan Party (including, without limitation, any Plan and any reports or other information
required to be filed with respect thereto under the Code or 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 and each Lender prompt written notice of the following:



          (a) the occurrence of any Default;



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



          (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that
have occurred, could reasonably be expected to result in liability of the Borrower and the other
Loan Parties in an aggregate amount exceeding $500,000; and



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          (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
other Loan Party to, do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business and maintain, if necessary, its qualification to
do business in each other jurisdiction in which its Oil and Gas Properties is located or the
ownership of its Properties requires such qualification, except where the failure to so qualify
could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section
9.11.



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



     Section 8.05 Performance of Obligations under Loan Documents. The Borrower will pay
the Notes according to the reading, tenor and effect thereof, and the Borrower will, and will cause
each other Loan Party to, do and perform every act and discharge all of the obligations to be
performed and discharged by it under the Loan Documents, including, without limitation, this
Agreement, at the time or times and in the manner specified, taking into consideration any grace
periods therein.



     Section 8.06 Operation and Maintenance of Properties. The Borrower at its sole
expense will, and will cause each other Loan Party to:



          (a) operate its Oil and Gas Properties and other material Properties or cause such Oil and Gas
Properties and other material Properties to be operated in a careful and efficient manner in
accordance with the practices of the industry and in compliance with all applicable contracts and
agreements and in compliance with all Governmental Requirements, including, without limitation,
applicable pro ration requirements and Environmental Laws, and all applicable laws, rules and
regulations of every other Governmental Authority from time to time constituted to regulate the
development and operation of its Oil and Gas Properties and the production and sale of Hydrocarbons
and other minerals therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect;



          (b) keep and maintain all Property material to the conduct of its business in good working
order and condition (ordinary wear and tear excepted), preserve, maintain and



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keep in good repair, working order and efficiency (ordinary wear and tear and obsolescence
excepted) all of its material 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 indebtedness accruing under the leases
or other agreements affecting or pertaining to its Oil and Gas Properties and will do all other
things necessary to keep materially unimpaired its rights with respect thereto and prevent any
forfeiture thereof or default thereunder, except, in each case, where the failure to comply could
not reasonably be expected to have a Material Adverse Effect;



          (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 Oil and Gas
Properties and other material Properties, except, in each case, where the failure to comply could
not reasonably be expected to have a Material Adverse Effect;



          (e) operate its Oil and Gas Properties and other material Properties or cause or make
reasonable and customary efforts to cause such Oil and Gas Properties and other material Properties
to be operated in accordance with the practices of the industry and in material compliance with all
applicable contracts and agreements and in compliance in all material respects with all
Governmental Requirements; and



          (f) to the extent that a Loan Party 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 other Loan Party to,
maintain, with financially sound and reputable insurance companies, insurance (a) 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 and (b) in accordance with all Governmental
Requirements including, without limitation, Flood Insurance, if required. Within 30 days following
the Effective Date, 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 other Loan Party 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 other Loan Party to, permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its
Properties, to examine and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at such reasonable times
and as often as reasonably requested.



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



     Section 8.10 Environmental Matters.



          (a) The Borrower shall at its sole expense: (i) comply, and shall cause its Properties and
operations and each other Loan Party and each other Loan Party’s Properties and operations to
comply, with all applicable Environmental Laws, the violation of which could be reasonably expected
to have a Material Adverse Effect; (ii) not Release or threaten to Release, and shall cause each
Subsidiary not to Release or threaten to Release, any Hazardous Material on, under, about or from
any of the Borrower’s or any other Loan Party’s Properties or any other property offsite the
Property to the extent caused by the Borrower’s or any other Loan Party’s operations except in
compliance with applicable Environmental Laws, the Release or threatened 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 material Environmental Permits, if any,
required under applicable Environmental Laws to be obtained or filed in connection with the
operation or use of the Borrower’s or any other Loan Party’s Properties, which failure to obtain or
file could reasonably be expected to have a Material Adverse Effect; (iv) promptly commence and
diligently prosecute to completion, and shall cause each other Loan Party 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 Release or threatened Release of any Hazardous Material
on, under, about or from any of the Borrower’s or any other Loan Party’s Properties, which failure
to commence and diligently prosecute to completion could reasonably be expected to have a Material
Adverse Effect; (v) conduct, and cause each other Loan Party to conduct, its operations and
businesses in a prudent manner relative to the exposure of any Property or Person to Hazardous
Materials that could reasonably be expected to form the basis for a claim for damages or
compensation; and (vi) establish and implement, and shall cause each other Loan Party to establish
and implement, such procedures as may be necessary to continuously determine and assure that the
Borrower’s and each other Loan Party’s 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 after obtaining
knowledge of the occurrence of a triggering event, notify the Administrative Agent and the Lenders
in writing of any threatened action, investigation or inquiry by any Governmental Authority or any
threatened demand or lawsuit by any Person against the Borrower or any other Loan Party or their
Properties in connection with any Environmental Laws that, if adversely determined, could
reasonably be expected to result in liability (whether individually or in the aggregate) in excess
of $5,000,000, not fully covered by insurance (subject to normal deductibles).



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          (c) The Borrower will, and will cause each other Loan Party to, provide environmental
assessments, audits and tests in accordance with the most current version of the American Society
of Testing Materials standards upon request by the Administrative Agent and the Lenders and no more
than once per year in the absence of any Event of Default (or as otherwise required to be obtained
by any Governmental Authority), or in connection with any future Acquisitions; provided that
notwithstanding anything to the contrary in this Section 8.10(c), no boring, subsurface sampling or
phase II environmental review shall be required with respect to any environmental assessments,
audits or tests conducted pursuant to this Section 8.10(c).



     Section 8.11 Further Assurances.



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



          (b) The Borrower hereby authorizes the Administrative Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of the Mortgaged
Property without the signature of the Borrower or any other Guarantor where permitted by law. A
carbon, photographic or other reproduction of the Security Instruments or any financing statement
covering the Mortgaged Property or any part thereof shall be sufficient as a financing statement
where permitted by law. The Borrower acknowledges and agrees that any such financing statement may
describe the collateral as “all assets” of the applicable Loan Party or words of similar effect as
may be required by the Administrative Agent.



     Section 8.12 Reserve Reports.



          (a) On or before February 28 and August 31 of each year, commencing February 28, 2012, the
Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report evaluating the
Oil and Gas Properties of the Borrower and the other Loan Parties as of the immediately preceding
January 1 and July 1 (or December 31 and June 30). The Reserve Report as of July 1 (or June 30) of
each year shall be prepared by or under the supervision of the chief engineer of the Borrower who
shall certify (i) there are no statements or conclusions in such 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 any Reserve Report are
necessarily based upon professional opinions, estimates and projections and that the Borrower and
the other Loan Parties



73









 




do not warrant that such opinions, estimates and projections will ultimately prove to have
been accurate, and (ii) that such Reserve Report has been prepared in accordance with the
procedures used in the immediately preceding January 1 (or December 31) Reserve Report. The
Reserve Report as of January 1 of each year (or December 31 of the preceding year) shall be
prepared by one or more Approved Petroleum Engineers.




          (b) In the event of an Interim Redetermination, the Borrower shall furnish to the
Administrative Agent and the Lenders a Reserve Report prepared by or under the supervision of the
chief engineer of the Borrower who shall certify such Reserve Report to be true and accurate and to
have been prepared in accordance with the procedures used in the immediately preceding January 1
(or December 31) Reserve Report. For any Interim Redetermination requested by the Administrative
Agent or the Borrower pursuant to Section 2.07(b), the Borrower shall provide such Reserve Report
with an “as of” date as required by the Administrative Agent as soon as possible, but in no event
later than 30 days following the receipt of such request.



          (c) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative
Agent and the Lenders a certificate from a Responsible Officer certifying that in all material
respects: (i) the information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct, (ii) the Borrower or a Loan Party owns good and
defensible title to the Oil and Gas Properties evaluated in such Reserve Report and such Properties
are free of all Liens except for Liens permitted by Section 9.03, (iii) except as set forth on an
exhibit to the certificate, on a net basis there are no gas imbalances, take or pay or other
prepayments in excess of the volume specified in Section 7.18 with respect to its Oil and Gas
Properties evaluated in such Reserve Report which would require the Borrower or any of the other
Loan Parties to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties
at some future time without then or thereafter receiving full payment therefor, (iv) none of their
Oil and Gas Properties have been sold since the date of the last Borrowing Base determination
except as set forth on an exhibit to the certificate, which certificate shall list all of its Oil
and Gas Properties sold and in such detail as reasonably required by the Administrative Agent, (v)
attached to the certificate is a list of all marketing agreements entered into subsequent to the
later of the date hereof or the most recently delivered Reserve Report which the Borrower could
reasonably be expected to have been obligated to list on Schedule 7.19 had such agreement been in
effect on the date hereof and (vi) attached thereto is a schedule of the Oil and Gas Properties
evaluated by such Reserve Report that are Mortgaged Properties and demonstrating the percentage of
the total value of the Loan Parties’ Oil and Gas Properties that the value of such Mortgaged
Properties represent in compliance with Section 8.14(a).



     Section 8.13 Title Information.



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



74









 




on at least 80% of the total value of the Oil and Gas Properties evaluated by such Reserve
Report.




          (b) If the Borrower has provided title information for additional Properties under Section
8.13(a), the Borrower shall, within 90 days of notice from the Administrative Agent that material
title defects or exceptions exist with respect to such additional Properties, either (i) cure any
such material title defects or exceptions (including defects or exceptions as to priority) that do
not constitute Excepted Liens pursuant to Section 9.03, raised by such information, (ii) substitute
acceptable Mortgaged Properties with no material title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such definition) having
an equivalent value, or (iii) deliver title information in form and substance acceptable to the
Administrative Agent so that the Administrative Agent shall have received, together with title
information previously delivered to the Administrative Agent, satisfactory title information on at
least 80% of the value of the Oil and Gas Properties evaluated by such Reserve Report.



          (c) If the Borrower is unable to cure any material title defect requested by the
Administrative Agent or the Lenders to be cured within the 90-day period or the Borrower does not
comply with the requirements to provide acceptable title information covering 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 Majority Lenders shall have the right to
exercise the following remedy in their sole discretion from time to time, and any failure to so
exercise this remedy at any time shall not be a waiver as to future exercise of the remedy by the
Administrative Agent or the Lenders. To the extent that the Administrative Agent or the Majority
Lenders are not satisfied with title to any Mortgaged Property after the 90-day period has elapsed,
such unacceptable Mortgaged Property shall not count towards the 80% requirement, and the
Administrative Agent may send a notice to the Borrower and the Lenders that the Borrowing Base 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
value of the Oil and Gas Properties. This new Borrowing Base shall become effective immediately
after receipt of such notice.



     Section 8.14 Additional Collateral; Additional Guarantors.



          (a) In connection with each redetermination of the Borrowing Base, the Borrower shall review
the Reserve Report and the list of current Mortgaged Properties (as described in Section
8.12(c)(vi)) to ascertain whether the Mortgaged Properties represent at least 80% of the total
value of the Oil and Gas Properties evaluated in the most recently completed Reserve Report after
giving effect to exploration and production activities, acquisitions, dispositions and production.
In the event that the Mortgaged Properties do not represent at least 80% of such total value, then
the Borrower shall, and shall cause the other Loan Parties to, grant, within 30 days of delivery of
the certificate required under Section 8.12(a), to the Administrative Agent as security for the
Indebtedness a first-priority Lien interest (provided that Excepted Liens of the type described in
clauses (a) to (d) and (f) of the definition thereof may exist, but subject to the provisos at the
end of such definition) on additional Oil and Gas Properties of the Loan Parties 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 such total value. All such Liens



75









 




will be created and perfected by and in accordance with the provisions of deeds of trust,
security agreements and financing statements or other Security Instruments, all in form and
substance reasonably satisfactory to the Administrative Agent and in sufficient executed (and
acknowledged where necessary or appropriate) counterparts for recording purposes.




          (b) Each Loan Party shall, and shall cause each of its Material Subsidiaries to: (i)
unconditionally guaranty, on a joint and several basis, the prompt payment and performance of the
Indebtedness pursuant to the Guaranty Agreement and (ii) grant to the Administrative Agent,
pursuant to the Security Agreement, a perfected, first-priority security interest in all of the
issued and outstanding Equity Interests in each Subsidiary of the Parent owned by such Material
Subsidiary. In connection therewith, the Parent shall, or shall cause such Material Subsidiary, to
promptly, but in any event within 10 Business Days after the creation or acquisition thereof (or
other similar event), (A) execute and deliver an amendment or a supplement to the Guaranty
Agreement as required by the Administrative Agent, (B) execute and deliver an amendment or
supplement to the Security Agreement to pledge all of the Equity Interests in each Subsidiary of
the Parent owned by such Material Subsidiary (including, without limitation, delivery of original
stock or equity certificates evidencing the Equity Interests of any such Subsidiary so owned,
together with an appropriate undated stock power for each certificate duly executed in blank by the
registered owner thereof), and (C) execute and deliver such other additional closing documents,
certificates and legal opinions as shall reasonably be requested by the Administrative Agent.
Parent and Borrower shall cause any Person that guarantees the obligations with respect to any
Permitted Senior Unsecured Notes to execute and deliver to the Administrative Agent a Guaranty
Agreement.



          (c) The Parent will at all times cause the other material tangible and intangible assets of
the Parent and each Material Subsidiary to be subject to a Lien of the Security Instruments.



     Section 8.15 ERISA Compliance. The Borrower will promptly furnish and will cause the
other Loan Parties and any ERISA Affiliate to promptly furnish to the Administrative Agent (i)
promptly after the filing thereof with the United States Secretary of Labor or the Internal Revenue
Service, copies of each annual and other report with respect to each Plan that is subject to Title
IV of ERISA, section 302 of ERISA, or section 412 of the Code or any trust created thereunder, and
(ii) immediately upon becoming aware of the occurrence of any “prohibited transaction,” as
described in section 406 of ERISA or in section 4975 of the Code, in connection with any Plan or
any trust created thereunder that could reasonably be expected to result in liability of the
Borrower and the other Loan Parties in an aggregate amount exceeding $500,000 (when taken together
with all other such prohibited transactions that have occurred within the preceding 12 months), a
written notice signed by the President or the principal Financial Officer, the Subsidiary or the
ERISA Affiliate, as the case may be, specifying the nature thereof, what action the Borrower, such
other Loan Party or the ERISA Affiliate is taking or proposes to take with respect thereto, and,
when known, any action taken or proposed by the Internal Revenue Service or the Department of Labor
with respect thereto.



     Section 8.16 Commodity Price Risk Management Policy. The Loan Parties shall maintain
a commodity price risk management policy, which policy shall be reasonably



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acceptable to the Administrative Agent; provided that such policy shall be subject to the
review of the Administrative Agent no more than once every three years.




ARTICLE IX

NEGATIVE COVENANTS



     Until the Commitments have expired or terminated and the principal of and interest on each
Loan and all fees payable hereunder and all other amounts payable under the Loan Documents then
outstanding have been paid in full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:



     Section 9.01 Financial Covenants.



          (a) Interest Coverage Ratio. The Borrower will not, as of the last day of any fiscal
quarter, permit the Parent’s ratio of (i) Consolidated EBITDAX for the Rolling Period ending on
such day to (ii) Consolidated Net Interest Expense for the Rolling Period ending on such day to be
less than 2.50 to 1.00.



          (b) Current Ratio. The Borrower will not permit, as of the last day of any fiscal
quarter, the Parent’s ratio of (i) consolidated current assets (including the unused amount of the
total Commitments (but only to the extent that the Borrower is permitted to borrow such amount
under the terms of this Agreement including, without limitation, Section 6.02 hereof), and
excluding non-cash assets under ASC 815) to (ii) consolidated current liabilities (excluding
non-cash obligations under ASC 815 and current maturities under this Agreement) of the Parent to be
less than 1.0 to 1.0.



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



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



          (b) 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 90 days past the date of invoice or 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) Debt under Capital Leases not to exceed $15,000,000;



          (d) Debt associated with bonds or surety obligations required by Governmental Requirements in
connection with the operation of the Oil and Gas Properties;



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



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          (f) Debt under the Permitted Senior Unsecured Notes and guarantees thereof by any Loan Party;
and



          (g) other Debt not to exceed $15,000,000 in the aggregate at any one time outstanding.



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



          (a) Liens securing the payment of any Indebtedness;



          (b) Excepted Liens;



          (c) Liens securing Capital Leases permitted by Section 9.02(c) but only on the Property under
lease;



          (d) Liens securing Debt permitted by Section 9.02(g); and



          (e) Liens on cash in an aggregate amount of up to $10,000,000 securing any Swap Agreement with
any Approved Counterparty that is neither a Lender nor an Affiliate of a Lender.


Notwithstanding the foregoing, none of the Liens permitted pursuant to this Section 9.03 (other
than Liens securing the Indebtedness and Excepted Liens) may at any time attach to any Oil and Gas
Properties evaluated in the Reserve Report used in the most recent determination of the Borrowing
Base.




     Section 9.04 Dividends, Distributions and Repayment of Permitted Senior Unsecured
Notes.



          (a) Restricted Payments. The Borrower will not, and will not permit any other Loan
Party 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 (i) the Parent may declare and pay dividends with respect to its Equity
Interests payable solely in additional shares of its Equity Interests (other than Disqualified
Capital Stock), (ii) Subsidiaries may declare and pay dividends ratably with respect to their
Equity Interests, (iii) the Loan Parties may make Restricted Payments pursuant to and in accordance
with stock option plans or other benefit plans for management or employees of Devco or the General
Partner and its Subsidiaries, and (iv) so long as no Borrowing Base Deficiency or Event of Default
has occurred and is continuing, or would exist after giving effect thereto, the Parent (and, at any
time when the Borrower owns, directly or indirectly, 100% of the Equity Interests of the Parent,
the Borrower) may make Restricted Payments of Available Cash to holders of its Equity Interests in
compliance with the terms of its Organizational Documents; provided that the making of any such
Restricted Payment under this clause (iv) shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof that the conditions set forth in this clause (iv) have
been met.



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          (b) Repayment of Permitted Senior Unsecured Notes; Amendment of Terms of Permitted Senior
Unsecured Notes. The Borrower will not, and will not permit any other Loan Party to, prior to
the date that is 180 days after the Maturity Date: (i) call, make or offer to make any optional or
voluntary Redemption of or otherwise optionally or voluntarily Redeem (whether in whole or in part)
the Permitted Senior Unsecured Notes, except that, so long as no Default exists, the Borrower may,
substantially contemporaneously with its receipt of any cash proceeds from any such issuance of
Permitted Senior Unsecured Notes or sale of Equity Interests, prepay or otherwise Redeem the
Permitted Senior Unsecured Notes in an amount equal to the amount of the net cash proceeds of a new
issuance of Permitted Senior Unsecured Notes or any sale of Equity Interests (other than
Disqualified Capital Stock) of the Borrower or the Parent or (ii) amend, modify, waive or otherwise
change, consent or agree to any amendment, modification, waiver or other change to, any of the
terms of the Permitted Senior Unsecured Notes (except to the extent a new issuance of Permitted
Senior Unsecured Notes the proceeds of which were used to Redeem such existing Permitted Senior
Unsecured Notes pursuant to clause (i) would be permitted to have such terms as so amended,
modified, waived or otherwise changed) if the effect thereof would be to (A) shorten its maturity
or average life, (B) increase the amount of any payment of principal thereof, (C) increase the rate
or shorten any period for payment of interest thereon, or (D) modify or amend covenants or events
of default such that the resulting covenants and events of default in respect thereof, taken as a
whole, are more restrictive with respect to the Loan Parties than the covenants and Events of
Default in this Agreement without this Agreement being contemporaneously amended to add similar
provisions (as determined in good faith by senior management of the General Partner).



     Section 9.05 Investments and Loans. The Borrower will not, and will not permit any
other Loan Party to, make or permit to remain outstanding any Investments in or to any Person or
any loans made between the Parent and Borrower or any intercompany loans, except that the foregoing
restriction shall not apply to:



          (a) Investments as of the Effective Date which are disclosed to the Lenders in Schedule 9.05;



          (b) accounts receivable arising in the ordinary course of business and promissory notes
received in settlement of any such accounts receivable;



          (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 having a
rating of at least P-2 or A-2 from either Moody’s or S&P, respectively;



          (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



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deposit rating of no lower than A2 or P2, as such rating is set forth from time to time, by
S&P or Moody’s, respectively;




          (f) deposits in money market funds investing not less than 90% of their assets in Investments
described in Section 9.05(c), Section 9.05(d) or Section 9.05(e);



          (g) Investments (i) made by the Parent in or to the Borrower or any of the Guarantors, (ii)
made by any Subsidiary in or to the Borrower or any Guarantor, and (iii) in an aggregate amount at
any one time outstanding not to exceed $15,000,000, made by the Parent or any Subsidiary in or to
all other Domestic Subsidiaries which are not Guarantors; and



          (h) other Investments not to exceed $15,000,000 in the aggregate at any time.



     Section 9.06 Nature of Business; No International Operations. The Borrower will not,
and will not permit any other Loan Party to, allow any material change to be made in the character
of its business as an independent oil and gas exploration and production company. The Borrower
will not, and will not permit any of the other Loan Parties to, 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 of the United States.



     Section 9.07 Limitation on Leases. The Borrower will not, and will not permit any
other Loan Party 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 to
the extent such Capital Leases do not go beyond the value and terms of the leased property 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 other Loan Parties pursuant to all such leases
or lease agreements, including, without limitation, any residual payments at the end of any lease,
to exceed $15,000,000 in any period of twelve consecutive calendar months during the life of such
leases.



     Section 9.08 Proceeds of Notes. The Borrower will not permit the proceeds of the
Notes to be used for any purpose other than those described in the first sentence of 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 ERISA Compliance. The Borrower will not, and will not permit any other
Loan Party to, at any time:



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



80









 





          (b) terminate, or permit any ERISA Affiliate to terminate, any Plan in a manner, or take any
other action with respect to any Plan, which could result in any liability of the Borrower, any
other Loan Party or any ERISA Affiliate to the PBGC;



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



          (d) permit to exist, or allow any ERISA Affiliate to permit to exist, any accumulated funding
deficiency within the meaning of section 302 of ERISA or section 412 of the Code, whether or not
waived, with respect to any Plan;



          (e) permit, or allow any ERISA Affiliate to permit, the actuarial present value of the benefit
liabilities under any Plan maintained by the Borrower, any other Loan Party or any ERISA Affiliate
which is regulated under Title IV of ERISA to materially exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities such that a determination would result that any Plan is, or is expected
to be, in “at risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the
Code); provided that the term “actuarial present value of the benefit liabilities” shall have the
meaning specified in section 4041 of ERISA;



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



          (g) acquire, or permit any ERISA Affiliate to acquire, an interest in any Person that causes
such Person to become an ERISA Affiliate with respect to the Borrower or any other Loan Party or
with respect to any ERISA Affiliate of the Borrower or any other Loan Party if such Person
sponsors, maintains or contributes to, or at any time in the six-year period preceding such
acquisition has sponsored, maintained, or contributed to, (1) any Multiemployer Plan, or (2) any
other Plan that is subject to Title IV of ERISA under which the actuarial present value of the
benefit liabilities under such Plan materially exceeds the current value of the assets (computed on
a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities such that a determination would result that any Plan is, or is expected to be,
in “at risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code);



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



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



81









 





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



     Section 9.10 Sale or Discount of Receivables. Except for receivables obtained by the
Loan Parties out of the ordinary course of business or the settlement of joint interest billing
accounts in the ordinary course of business or discounts granted to settle collection of accounts
receivable or the sale of defaulted accounts arising in the ordinary course of business in
connection with the compromise or collection thereof and not in connection with any financing
transaction, the Borrower will not, and will not permit any other Loan Party to, discount or sell
(with or without recourse) any of its notes receivable or accounts receivable.



     Section 9.11 Mergers, Etc. The Borrower will not, and will not permit any other Loan
Party to, merge into or with or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or sell, transfer, 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 (whether now owned or hereafter acquired) (any such transaction, a “consolidation”)
or liquidate, wind-up or dissolve (or suffer any liquidation or dissolution), terminate or
discontinue its business; provided that so long as no Default has occurred and is continuing, or
would result after giving effect thereto, any Wholly-Owned Subsidiary of the Borrower may
participate in a consolidation with any other Wholly-Owned Subsidiary of the Borrower and the
Borrower may participate in a consolidation with any Wholly-Owned Subsidiary of the Borrower so
long as the Borrower is the surviving Person.



     Section 9.12 Sale of Properties. The Borrower will not, and will not permit any other
Loan Party to, sell, assign, farm-out, convey or otherwise transfer any Property except for:



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



          (b) farmouts of undeveloped acreage and assignments in connection with such farmouts;



          (c) the sale or transfer of equipment that is no longer necessary for the business of the Loan
Party or is replaced by equipment of at least comparable value and use;



          (d) sales or other dispositions (including Casualty Events), other than as provided in clauses
(a) through (c) or (e), of Oil and Gas Properties or any interest therein or Subsidiaries owning
Oil and Gas Properties; provided that (i) 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 Subsidiary subject of such sale or other disposition (in each case,
as reasonably determined by the Borrower and, if requested by the Administrative Agent, the
Borrower shall deliver a certificate of a Responsible Officer certifying to that effect), (ii) not
less than 80% of the proceeds of such sale or other disposition of Oil and Gas Property shall be in
cash, (iii) no Default or Event of Default has occurred and is continuing or would result from such
sale or disposition, as applicable, (iv) if such sale or disposition would result in an automatic
redetermination of the Borrowing Base pursuant to Section 2.07(f), the Borrower delivers reasonable
prior written notice thereof to the Administrative Agent, (v) if a Borrowing



82









 




Base Deficiency would result from such sale or disposition as a result of an automatic
redetermination of the Borrowing Base pursuant to Section 2.07(f), the Borrower prepays Borrowings,
prior to or contemporaneously with the consummation of such sale or disposition, to the extent that
such prepayment would have been required under Section 3.04(c)(iii) after giving effect to such
automatic redetermination of the Borrowing Base, and (vi) if any such sale or other disposition is
of a Subsidiary owning Oil and Gas Properties, such sale or other disposition shall include all the
Equity Interests of such Subsidiary; and




          (e) sales and other dispositions of Properties not regulated by Section 9.12(a) to (d) having
a fair market value not to exceed $5,000,000 in the aggregate during any 12-month period.



     Section 9.13 Environmental Matters. The Borrower will not, and will not permit any
other Loan Party 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 a Release or threatened Release
of Hazardous Materials, exposure to any Hazardous Materials, or to any Remedial Work, under any
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,
Release or threatened Release, exposure, or Remedial work could reasonably be expected to have a
Material Adverse Effect.



     Section 9.14 Transactions with Affiliates. The Borrower will not, and will not permit
any other Loan Party 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 Guarantors) 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; provided that the foregoing restriction shall not apply
to (a) reasonable and customary fees paid to members of the board of directors (or comparable
governing body) of the Borrower or the Loan Parties, (b) compensation arrangements for directors
(or the members of the comparable governing body), officers and other employees of the Borrower or
the Loan Parties entered into in the ordinary course of business, (c) transactions approved by the
independent directors (or the independent members of the comparable governing body) or the
conflicts committee of the board of directors (or comparable governing body) of the General
Partner.



     Section 9.15 Subsidiaries. The Borrower will not, and will not permit any other Loan
Party to, create or acquire any additional subsidiary unless such subsidiary is a Wholly-Owned
Subsidiary and the Borrower gives written notice to the Administrative Agent of such creation or
acquisition and complies with Section 8.14(b) and Section 8.14(c). The Parent shall not, and shall
not permit any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in any
Subsidiary except in compliance with Section 9.11. Neither the Parent nor any Subsidiary shall
have any Foreign Subsidiaries.



     Section 9.16 Negative Pledge Agreements; Dividend Restrictions. The Borrower will
not, and will not permit any other Loan Party to, create, incur, assume or suffer to exist any
contract, agreement or understanding (other than this Agreement, the Security Instruments, Capital
Leases creating Liens permitted by Section 9.03(c) or contracts, agreements or



83









 




understandings creating Liens permitted by Section 9.03(d)) 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 Secured Parties or, except for restrictions substantially
no more restrictive than those in Section 9.04(a) hereof, restricts any Subsidiary from paying
dividends or making distributions to the Borrower or any Guarantor, or which, except for dividend
or distribution restrictions as aforesaid, requires the consent of or notice to other Persons in
connection therewith.




     Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments. The Borrower will not,
and will not permit any other Loan Party to, allow gas imbalances, take-or-pay or other prepayments
with respect to the Oil and Gas Properties of the Borrower or any other Loan Party that would
require the Borrower or such other Loan Party to deliver Hydrocarbons at some future time without
then or thereafter receiving full payment therefor to exceed three bcf of gas (on an mcf equivalent
basis) in the aggregate.



     Section 9.18 Swap Agreements. The Borrower will not, and will not permit any other
Loan Party to, enter into any Swap Agreements with any Person other than (a) Swap Agreements in
respect of commodities (i) with an Approved Counterparty and (ii) the notional volumes for which
(when aggregated with other commodity Swap Agreements then in effect other than basis differential
swaps on volumes already hedged pursuant to other Swap Agreements) do not exceed, as of the date
such Swap Agreement is executed, 85% of the reasonably anticipated projected production from proved
Oil and Gas Properties included in the most recent Reserve Report for each month during the period
during which such Swap Agreement is in effect for each of crude oil, natural gas and natural gas
liquids, which may be hedged with Swap Agreements for crude oil, each calculated separately;
provided that Proved Developed Non-Producing Reserves and Proved Undeveloped Reserves, in the
aggregate, do not account for greater than 25% of the total Proved Reserves, (b) Swap Agreements
that would be permitted by clause (a) hereof pertaining to Oil and Gas Properties to be acquired
pursuant to a Specified Acquisition; provided that Swap Agreements pursuant to this Section 9.18(b)
must be Liquidated upon the earlier to occur of: (i) the date that is 90 days after the execution
of the purchase and sale agreement relating to the Specified Acquisition to the extent that such
Specified Acquisition has not been consummated by such date and (ii) any Loan Party knows with
reasonable certainty that the Specified Acquisition will not be consummated, and (c) Swap
Agreements in respect of interest rates with an Approved Counterparty, as follows: (i) Swap
Agreements effectively converting interest rates from fixed to floating, the notional amounts of
which (when aggregated with all other Swap Agreements of the Loan Parties then in effect
effectively converting interest rates from fixed to floating) do not exceed 100% of the then
outstanding principal amount of the Loan Parties’ Debt for borrowed money which bears interest at a
fixed rate and (ii) Swap Agreements effectively converting interest rates from floating to fixed,
the notional amounts of which (when aggregated with all other Swap Agreements of the Borrower and
the other Loan Parties then in effect effectively converting interest rates from floating to fixed)
do not exceed 100% of the then outstanding principal amount of the Loan Parties’ Debt for borrowed
money which bears interest at a floating rate. In no event shall any Swap Agreement contain any
requirement, agreement or covenant for a Loan Party to post collateral or margin to secure their
obligations under such Swap Agreement or to cover market exposures, except to the extent permitted
under Section 9.03(e). Notwithstanding the foregoing, the Borrower will not, and will not permit
any of the other Loan Parties to, incur or permit to exist any speculative Swap Agreements.
Further, the



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Borrower will not, and will not permit any other Loan Party to, Liquidate any Swap Agreement
in respect of commodities unless (x) if such Swap Liquidation would result in an automatic
redetermination of the Borrowing Base pursuant to Section 2.07(f), the Borrower delivers reasonable
prior written notice thereof to the Administrative Agent, and (y) if a Borrowing Base Deficiency
would result from such Swap Liquidation as a result of an automatic redetermination of the
Borrowing Base pursuant to Section 2.07(f), the Borrower prepays Borrowings, prior to or
contemporaneously with the consummation of such Swap Liquidation to the extent that such prepayment
would have been required under Section 3.04(c)(iii) after giving effect to such automatic
redetermination of the Borrowing Base.




     Section 9.19 Acquisition Documents. The Borrower will not, and will not permit any
other Loan Party to, amend, modify or supplement any of the Acquisition Documents if the effect
thereof could reasonably be expected to be materially adverse to the Lenders or in contravention of
the Loan Documents or any Governmental Requirement (and provided that the Borrower promptly
furnishes to the Administrative Agent a copy of such amendment, modification or supplement).



     Section 9.20 Marketing Activities.



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



          (b) The Borrower will not, and will not permit any other Loan Party to, amend in any material
respect the written Hydrocarbon Marketing Policy delivered to the Lenders pursuant to Section
6.01(o) without the prior written consent of the Administrative Agent and the Majority Lenders.



     Section 9.21 Holding Company. The Parent will remain a holding company and not own
any real property, immovable property or material assets or engage in any operations or business
(other than its direct or indirect ownership of its Subsidiaries, providing employees and related
services to its Subsidiaries, making or holding Investments permitted under Section 9.05 or issuing
Permitted Senior Unsecured Notes or providing guarantees thereof or of Indebtedness, in each case
as permitted hereunder).



     Section 9.22 Sale and Leaseback. The Borrower shall not, and shall not permit any
other Loan Party to, enter into any arrangement, directly or indirectly, with any Person whereby



85









 




it shall sell or transfer any Property, whether now owned or hereafter acquired, and
thereafter rent or lease such Property which it intends to use for substantially the same purpose
or purposes as the Property being sold or transferred.




     Section 9.23 Amendments to Organizational Documents; Changes in Fiscal Year End.



          (a) The Borrower shall not, and shall not permit any other Loan Party to, amend, supplement or
otherwise modify (or permit to be amended, supplemented or modified) its Organizational Documents
in any manner that would be adverse to the Lenders in any material respect.



          (b) The Borrower shall not, and shall not permit any other Loan Party to, change the last day
of its fiscal year from December 31 of each year, or the last days of the first three fiscal
quarters in each of its fiscal years from March 31, June 30 and September 30 of each year,
respectively.



ARTICLE X

EVENTS OF DEFAULT; REMEDIES



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



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



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



          (c) any representation or warranty made or deemed made by or on behalf of the Borrower or any
other Loan Party 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 in any
material respect when made or deemed made;



          (d) any Loan Party shall fail to observe or perform any covenant, condition or agreement
contained in Section 8.01(i), Section 8.01(n), Section 8.02, Section 8.03, Section 8.14, Section
8.15 or in Article IX of this Agreement;



          (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),
Section 10.01(c) or Section 10.01(d)) or any other Loan Document, and such failure shall continue
unremedied for a period of 30 days after the earlier to occur of (A) notice thereof



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from the Administrative Agent to the Borrower (which notice will be given at the request of
any Lender) or (B) a Responsible Officer of the Borrower or such other Loan Party otherwise
becoming aware of such default;




          (f) any Loan Party 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;



          (g) (i) any event or condition occurs that results in any Material Indebtedness becoming due
prior to its scheduled maturity or (ii) any event or condition (other than a “termination event” as
set forth in Sections 5(b)(1), 5(b)(2), 5(b)(3) and 5(b)(4) of the 1992 ISDA Master Agreement form
of the International Swaps and Derivatives Association or in Sections 5(b)(1), 5(b)(2), 5(b)(3),
5(b)(4) and 5(b)(5) of the 2002 ISDA Master Agreement form of the International Swaps and
Derivatives Association) that enables or permits (after giving effect to all applicable notice and
cure periods) the holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the Redemption thereof
or any offer to Redeem to be made in respect thereof, prior to its scheduled maturity or require
the Borrower or any other Loan Party 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 other
Loan Party 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 other Loan Party 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) any Loan Party shall (i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution
of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in
Section 10.01(h), (iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any other Loan Party 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; or any
stockholder of the Borrower shall make any request or take any action for the purpose of calling a
meeting of the equityholders of the Borrower to consider a resolution to dissolve and wind-up the
Borrower’s affairs;



          (j) any Loan Party shall become unable, admit in writing its inability or fail generally to
pay its debts as they become due;



          (k) (i) one or more final, non-appealable judgments for the payment of money in an aggregate
amount in excess of $15,000,000 (to the extent not covered by independent third



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party insurance provided by insurers of the highest claims paying rating or financial strength
as to which the insurer does not dispute coverage and is not subject to an insolvency proceeding)
or (ii) any one or more final, non-appealable non-monetary judgments that have, or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect, shall be rendered
against any Loan Party or any combination thereof and the same shall remain undischarged for a
period of 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 any Loan Party
to enforce any such judgment;




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



          (m) a Change in Control shall occur;



          (n) an ERISA Event shall have occurred that, in the opinion of the Majority Lenders, when
taken together with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Parent and its Subsidiaries in an aggregate amount exceeding $10,000,000
for all periods; or



          (o) the Parent shall cease to be a reporting company under Section 12 of the Securities
Exchange Act of 1934, as amended from time to time, and any successor statute or the Equity
Interests of the Parent shall cease to be listed on a nationally recognized stock exchange.



     Section 10.02 Remedies.



          (a) In the case of an Event of Default other than one described in Section 10.01(h), Section
10.01(i) or Section 10.01(j), at any time thereafter during the continuance of such Event of
Default, the Administrative Agent may, and at the request of the Majority Lenders, shall, by notice
to the Borrower, take either or both of the following actions, at the same or different times: (i)
terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Notes and the Loans then outstanding to be due and payable in whole (or in part, in
which case any principal not so declared to be due and payable may thereafter be declared to be due
and payable), and thereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the Borrower and the Guarantors
accrued hereunder and under the Notes and the other Loan Documents (including, without limitation,
the payment of cash collateral to secure the LC Exposure as provided in Section 2.08(j)), shall
become due and payable immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are hereby waived by
the Borrower and each Guarantor; and in case of an Event of Default described in Section 10.01(h),
Section 10.01(i) or Section 10.01(j), the Commitments shall automatically terminate and the Notes
and the principal of the Loans then outstanding, together with accrued interest thereon and all
fees and the other



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




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



          (c) All proceeds realized from the liquidation or other disposition of collateral or otherwise
received after maturity of the Notes, whether by acceleration or otherwise, shall be applied:



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



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



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



               (iv) fourth, pro rata to payment of principal outstanding on the Loans and Indebtedness
referred to in clause (b) of the definition of Indebtedness owing to a Secured Swap Provider;



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



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



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



ARTICLE XI

THE AGENTS



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



     Section 11.02 Duties and Obligations of Administrative Agent. The Administrative
Agent shall not have any duties or obligations except those expressly set forth in the Loan
Documents. Without limiting the generality of the foregoing, except as may be necessary for the
Administrative Agent to be an “agent,” “collateral agent” or “representative” of the Secured



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Parties within the meaning of such terms under Section 9-102(a)(72), 9-502 and 9-503 of the
Uniform Commercial Code, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is continuing (the use of
the term “agent” herein and in the other Loan Documents with reference to the Administrative Agent
is not intended to connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law; rather, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative relationship between
independent contracting parties), (b) the Administrative Agent shall have no duty to take any
discretionary action or exercise any discretionary powers, except as provided in Section 11.03, and
(c) except as expressly set forth herein, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information relating to the
Borrower or any of the other Loan Parties that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until written notice thereof is given to
the Administrative Agent by the Borrower or a Lender, and shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered (or deemed delivered) hereunder or under any other Loan Document
or in connection herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or in any other Loan Document,
(iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, (v) the satisfaction of any condition set
forth in Article VI or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to the Administrative Agent or as to those conditions precedent expressly required
to be to the Administrative Agent’s satisfaction, (vi) the existence, value, perfection or priority
of any collateral security or the financial or other condition of the Borrower and the other Loan
Parties or any other obligor or guarantor, or (vii) any failure by the Borrower or any other Person
(other than itself) to perform any of its obligations hereunder or under any other Loan Document or
the performance or observance of any covenants, agreements or other terms or conditions set forth
herein or therein. For purposes of determining compliance with the conditions specified in Article
VI, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to a Lender unless the Administrative Agent shall have received written notice from
such Lender prior to the proposed closing date specifying its objection thereto.




     Section 11.03 Action by Administrative Agent. The Administrative Agent shall have no
duty to take any discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent is required to exercise in writing as directed by the 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 the Administrative Agent shall be fully justified in
failing or refusing to take any discretionary action or exercise any discretionary power 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



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liability and expenses which may be incurred by it by reason of taking or continuing to take
any such action. The instructions as aforesaid and any action taken or failure to act pursuant
thereto by the Administrative Agent shall be binding on all of the Lenders. If a Default has
occurred and is continuing, then the Administrative Agent shall take such action with respect to
such Default as shall be directed by the requisite Lenders in the written instructions (with
indemnities) described in this Section 11.03, provided that, unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such Default as it shall
deem advisable in the best interests of the Lenders. In no event, however, shall the
Administrative Agent be required to take any action which exposes the Administrative Agent to
personal liability or which is contrary to this Agreement, the Loan Documents or applicable law.
If a Default has occurred and is continuing, neither the Syndication Agent nor the Documentation
Agent shall have any obligation to perform any act in respect thereof. The Administrative Agent
shall not be liable to any Lender or any Issuing Bank 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 reasonably 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 reasonably believed by it to be made
by the proper Person, and shall not incur any liability for relying thereon and each of the
Borrower, the Lenders and the Issuing Bank hereby waives the right to dispute the Administrative
Agent’s record of such statement, except in the case of gross negligence or willful misconduct by
the Administrative Agent. The Administrative Agent may consult with legal counsel (who may be
counsel for the Borrower), independent accountants and other experts selected by it, and shall not
be liable for any action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts. The Administrative Agent may deem and treat the payee of any Note
as the holder thereof for all purposes hereof unless and until a written notice of the assignment
or transfer thereof permitted hereunder shall have been filed with the Administrative Agent.



     Section 11.05 Subagents. The Administrative Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its
duties and exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding Sections of this Article XI shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall
apply to their respective activities in connection with the syndication of the credit facilities
provided for herein as well as activities as Administrative Agent.



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     Section 11.06 Resignation of Administrative Agent. Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this Section 11.06, the
Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the
Borrower. Upon any such resignation, the Majority Lenders shall have the right, in consultation
with the Borrower, to appoint a successor. If no successor shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may,
on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent which shall
be a bank with an office in New York, New York that has capital, surplus and undivided profits
aggregating at least $100,000,000 (as of the date of such bank’s most recent financial reports), 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 Agents as Lenders. Each bank serving as an Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not an Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Borrower or any other Loan
Party or other Affiliate thereof as if it were not an Agent hereunder.



     Section 11.08 No Reliance. Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent, any other Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and each other Loan Document to which it is a party. Each
Lender also acknowledges that it will, independently and without reliance upon the Administrative
Agent, any other Agent or any other Lender and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any other Loan Document, any related agreement or any
document furnished hereunder or thereunder. The Agents shall not be required to keep themselves
informed as to the performance or observance by the Borrower or any of the other Loan Parties 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 the other Loan Parties. Except for notices,
reports and other documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent or the 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 such Agent or any of its Affiliates. In this regard, each Lender acknowledges that Vinson &
Elkins L.L.P. is acting in this transaction as special counsel to the Administrative Agent only,
except to the extent otherwise expressly stated in any legal opinion or any Loan Document. Each
other party hereto will consult with its own



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legal counsel to the extent that it deems necessary in connection with the Loan Documents and
the matters contemplated therein.




     Section 11.09 Administrative Agent May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Borrower or any of the other Loan Parties,
the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered,
by intervention in such proceeding or otherwise:



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



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


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



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




     Section 11.10 Authority of Administrative Agent to Release Collateral and Liens. Each
Lender and the Issuing Bank hereby authorizes the Administrative Agent to release any collateral
that is permitted to be sold or released pursuant to the terms of the Loan Documents. Each Lender
and the Issuing Bank hereby authorizes the Administrative Agent to execute and deliver to the
Borrower, at the Borrower’s sole cost and expense and without the consent of any Lender or the
“Majority Lenders” or the “Required Lenders” being required, 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 9.12 or is otherwise authorized by the terms of
the Loan Documents.



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     Section 11.11 The Arranger, the Syndication Agent and the Documentation Agent. The
Arranger, the Syndication Agent and the Documentation Agent shall have no duties, responsibilities
or liabilities under this Agreement and the other Loan Documents other than their respective
duties, responsibilities and liabilities in their respective capacities as Lenders hereunder.



     Section 11.12 Intercreditor Agreements. The Lenders hereby authorize the
Administrative Agent to enter into any intercreditor agreement with any Secured Swap Provider.
Each Lender (by receiving the benefits thereunder and of the collateral pledged pursuant to the
Security Instruments) agrees to the terms of each such intercreditor agreement and agrees that the
terms thereof shall be binding on such Lender and its successors and assigns, as if it were a party
thereto.



ARTICLE XII

MISCELLANEOUS



     Section 12.01 Notices.



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



               (i) if to the Borrower or the Parent, to it at Memorial Production Operating LLC, 5 Houston
Center, 1401 McKinney, Suite 1025, Houston, Texas, 77010, Attn: Andrew J. Cozby, Vice President -
Finance (Telecopy No. (713) 579-5740);



               (ii) if to the Administrative Agent, to it at Wells Fargo Bank, National Association, 1525 W
WT Harris Blvd., Charlotte, NC 28262, Attn: Cathy Burke (Telecopy No. (704) 715-0017), with a copy
to Wells Fargo Bank, National Association, 1000 Louisiana Street, 9th Floor, Houston, Texas 77002,
Attn: Richard A. Gould (Telecopy No. (713) 319-1925) and a further copy to Wells Fargo Bank,
National Association, 1000 Louisiana Street, 9th Floor, Houston, Texas 77002, Attn: Michael Real
(Telecopy No. (713) 319-1925);



               (iii) if to the Issuing Bank, to it at Wells Fargo Bank, National Association, 1525 W WT
Harris Blvd., Charlotte, NC 28262, Attn: Cathy Burke (Telecopy No. (704) 715-0017); and



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



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



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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.



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



          (b) Neither this Agreement nor any provision hereof nor any Security Instrument nor any
provision thereof may be waived, amended or modified except pursuant to an agreement or agreements
in writing entered into by the Borrower and the Majority Lenders or by the Borrower and the
Administrative Agent with the consent of the Majority Lenders; provided that no such agreement
shall (i) increase the Commitment or the Maximum Credit Amount of any Lender without the written
consent of such Lender, (ii) increase the Borrowing Base without the written consent of each
Lender, decrease or maintain the Borrowing Base without the consent of the Required Lenders, or
modify in any manner Section 2.07 without the consent of each Lender (other than any Defaulting
Lender); provided that a Scheduled Redetermination may be postponed by Required Lenders, (iii)
reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon,
or reduce any fees payable hereunder, or reduce any other Indebtedness hereunder or under any other
Loan Document, without the written consent of each Lender affected thereby, (iv) postpone the
scheduled date of payment or prepayment of the principal amount of any Loan or LC Disbursement, or
any interest thereon, or any fees payable hereunder, or any other Indebtedness hereunder or under
any other Loan Document, or reduce the amount of, waive or excuse any such payment, or postpone or
extend the Termination Date without the written consent of each Lender affected thereby, (v) change
Section 4.01(b) or Section 4.01(c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (vi) waive or amend Section 3.04(c),
Section 6.01, Section 8.14 or Section 10.02(c) or change the definition of the terms



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“Domestic Subsidiary,” “Foreign Subsidiary,” “Material Subsidiary” or “Subsidiary,” without
the written consent of each Lender (other than any Defaulting Lender), (vii) waive or amend Section
12.14 without the written consent of each Lender (other than any Defaulting Lender) and each
Secured Swap Provider affected thereby, (viii) waive or amend Section 12.15 without the written
consent of each Secured Swap Provider affected thereby, (ix) release any Guarantor (except as set
forth in the Guaranty Agreement), release all or substantially all of the collateral (other than as
provided in Section 11.10), or reduce the percentage set forth in Section 8.14(a) to less than 80%,
without the written consent of each Lender (other than any Defaulting Lender), or (x) change any of
the provisions of this Section 12.02(b) or the definitions of “Required Lenders” or “Majority
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 (other than any Defaulting Lender); provided further that no such agreement
shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, any other
Agent or the Issuing Bank hereunder or under any other Loan Document without the prior written
consent of the Administrative Agent, such other Agent or the Issuing Bank, as the case may be.
Notwithstanding the foregoing, any supplement to Schedule 7.14 (Loan Parties and 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.



          (a) The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred
by the Administrative Agent and its Affiliates, including, without limitation, the reasonable and
documented fees, charges and disbursements of counsel and other outside consultants for the
Administrative Agent, the reasonable and documented travel, photocopy, mailing, courier, telephone
and other similar expenses, including all Syndtrak (or similar service) expenses, and the
reasonable and documented cost of environmental assessments and 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 reasonable and documented costs, expenses, Taxes, assessments and other
charges incurred by any Agent or any Lender in connection with any filing, registration, recording
or perfection of any security interest contemplated by this Agreement or any Security Instrument or
any other document referred to therein, (iii) all reasonable and documented out-of-pocket expenses
incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder, and (iv) if a Default has occurred, all
documented out-of-pocket expenses incurred by any Agent, the Issuing Bank or any Lender, including
the fees, charges and disbursements of any counsel for any Agent, the Issuing Bank or any Lender,
in connection with the enforcement or protection of its rights in connection with this Agreement or
any other Loan Document, including its rights under this Section 12.03, or in connection with the
Loans made or Letters of Credit issued hereunder, including, without limitation, all such
out-of-pocket expenses



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incurred during any workout, restructuring or negotiations in respect of such Loans or Letters
of Credit.




          (b) THE BORROWER SHALL INDEMNIFY EACH AGENT, THE ARRANGER, THE ISSUING BANK AND EACH LENDER,
AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN
“INDEMNITEE”) AGAINST, AND DEFEND AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL
LOSSES, CLAIMS, DAMAGES, PENALTIES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE REASONABLE
FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST
ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY
OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR
THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR
RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR BY ANY OTHER LOAN DOCUMENT (PROVIDED THAT THE INDEMNIFICATION IN THIS CLAUSE (i) SHALL
NOT EXTEND TO DISPUTES SOLELY BETWEEN OR AMONG ANY AGENT, THE LENDERS OR THEIR RESPECTIVE
AFFILIATES), (ii) THE FAILURE OF THE BORROWER OR ANY OTHER LOAN PARTY 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 OR ANY
GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS
DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS
THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR
PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT
STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT, OR (B) THE PAYMENT OF A DRAWING UNDER ANY
LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF
THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi)
THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND THE OTHER LOAN PARTIES BY THE BORROWER AND THE
OTHER LOAN PARTIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS
RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE
BORROWER OR ANY OTHER LOAN PARTY REGARDING ANY OF THEIR PROPERTIES OR OPERATIONS, INCLUDING, THE
PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT
OF DISPOSAL OR TREATMENT OF HAZARDOUS MATERIALS ON OR AT ANY OF THEIR PROPERTIES, (ix) THE BREACH
OR NON-COMPLIANCE BY THE BORROWER OR ANY OTHER LOAN PARTY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO
THE BORROWER OR ANY OTHER LOAN PARTY, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY OTHER



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LOAN PARTY 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, (xi) THE
PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT,
ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF HAZARDOUS MATERIALS ON OR AT ANY OF THE
PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY OTHER LOAN PARTY 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 THE OTHER LOAN PARTIES, (xii) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO
THE BORROWER OR ANY OF THE OTHER LOAN PARTIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY
CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) 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 OR (B) ARE 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 HAVE OBTAINED TITLE AND POSSESSION OF SUCH PROPERTY BY FORECLOSURE OR DEED IN
LIEU OF FORECLOSURE).




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



          (d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby
waives, any claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or any



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agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter
of Credit or the use of the proceeds thereof.




          (e) All amounts due under this Section 12.03 shall be payable not later than ten Business Days
after written demand therefor accompanied by appropriate documentation thereof.



     Section 12.04 Successors and Assigns.



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



          (b) (i) Subject to the conditions set forth in Section 12.04(b)(ii), any Lender may assign to
one or more assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:



                    (A) the Borrower, provided that no consent of the Borrower shall be required if such
assignment is to an assignee that is a Lender immediately prior to giving effect to such
assignment, an Affiliate of such a Lender, an Approved Fund or, if an Event of Default has occurred
and is continuing, is to any other assignee; and



                    (B) the Administrative Agent, provided that no consent of the Administrative Agent shall be
required for an assignment to an assignee that is a Lender immediately prior to giving effect to
such assignment.



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



                    (A) except in the case of an assignment to an assignee that is a Lender immediately prior to
giving effect to such assignment or an Affiliate of a Lender or an assignment of the entire
remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or
Loans of the assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent)
shall not be less than $5,000,000 unless each of the



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Borrower and the Administrative Agent otherwise consent, provided that no such consent of the
Borrower shall be required if an Event of Default has occurred and is continuing;




                    (B) each partial assignment shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations under this Agreement;



                    (C) 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;



                    (D) the assignee, if it shall not already be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire; and



                    (E) in no event may any Lender assign all or a portion of its rights and obligations under
this Agreement to the Parent or any Affiliate of the Parent.



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



               (v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire and applicable tax
forms (unless the assignee shall already be a Lender hereunder), the processing and recordation fee
referred to in Section 12.04(b) and any written



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consent to such assignment required by Section 12.04(b), the Administrative Agent shall accept
such Assignment and Assumption and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this Section 12.04(b).




          (c) (i) Any Lender may, without the consent of the Borrower, the Administrative Agent or the
Issuing Bank, sell participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations
under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement. 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 (in
each case, without duplication of any benefits afforded the Lender granting such participation) to
the same extent as if it were a Lender and had acquired its interest by assignment pursuant to
Section 12.04(b). Each Lender that sells a participation shall, acting solely for this purpose as
an agent of the Borrower, maintain a register on which it enters the name and address of each
Participant and the principal amounts (and stated interest) of each Participant’s interest in the
Loans or other obligations under the Loan Documents (the “Participant Register”); provided
that no Lender shall have any obligation to disclose all or any portion of the Participant Register
(including the identity of any Participant or any information relating to a Participant’s interest
in any commitments, loans, letters of credit or its other obligations under any Loan Document) to
any Person except to the extent that such disclosure is necessary to establish that such
commitment, loan, letter of credit or other obligation is in registered form under Section
5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is
recorded in the Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the
Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for
maintaining a Participant Register.



               (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(f) as though it were a Lender.



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          (d) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including, without
limitation, any pledge or assignment to secure obligations to a Federal Reserve Bank, and this
Section 12.04(d) shall not apply to any such pledge or assignment of a security interest; provided
that no such pledge or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.



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



     Section 12.05 Survival; Revival; Reinstatement.



          (a) All covenants, agreements, representations and warranties made by the Borrower herein and
in the certificates or other instruments delivered in connection with or pursuant to this Agreement
or any other Loan Document shall be considered to have been relied upon by the other parties hereto
and shall survive the execution and delivery of this Agreement and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any such other party or
on its behalf and notwithstanding that the Administrative Agent, any other Agent, the Issuing Bank
or any Lender may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of Section 5.01 (subject
to Section 5.01(d)), Section 5.02 (subject to the proviso in the last sentence thereof), Section
5.03 (subject to the proviso in the last sentence of Section 5.03(c)) and Section 12.03 (for a
period of two years after the Maturity Date) and Article XI shall survive and remain in full force
and effect regardless of the consummation of the transactions contemplated hereby, the repayment of
the Loans, the expiration or termination of the Letters of Credit and the Commitments or the
termination of this Agreement, any other Loan Document or any provision hereof or thereof;
provided, that any time limitation on the survival of any provision hereunder shall be tolled for
any claims filed prior to the expiration of such time limitation until two months after final,
non-appealable adjudication of any such claim.



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



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such action as may be reasonably requested by the Administrative Agent and the Lenders to
effect such reinstatement.




     Section 12.06 Counterparts; Integration; Effectiveness.



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



          (b) This Agreement, the other Loan Documents and any separate letter agreements with respect
to fees payable to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof and thereof. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.



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



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



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



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



          (a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.



          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, IN EITHER CASE LOCATED IN NEW YORK COUNTY, 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 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY
HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.



          (d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR
ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv)



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ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.




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



     Section 12.11 Confidentiality. Each of the Administrative Agent, the Issuing Bank and
the Lenders agrees to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the extent requested by
any regulatory authority, (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process; provided that, subject to the Borrower’s obligation to reimburse
expenses under Section 12.03, it shall use commercially reasonable efforts to seek to obtain
confidential treatment of such Information; provided further, that it shall not be liable for
failure to obtain such confidential treatment, (d) to any other party to this Agreement or any
other Loan Document, (e) in connection with the exercise of any remedies hereunder or under any
other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 12.11, to (i) any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors)
to any Swap Agreement relating to the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section 12.11 or (ii) becomes available to the Administrative Agent, the
Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrower. For
the purposes of this Section 12.11, “Information” means all information received from the Borrower
or any other Loan Party relating to the Borrower or any other Loan Party and their businesses,
other than any such information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to disclosure by the Borrower or any other Loan Party;
provided that, in the case of information received from the Borrower or any other Loan Party after
the date hereof, such information is clearly identified at the time of delivery as confidential.
Any Person required to maintain the confidentiality of Information as provided in this Section
12.11 shall be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information. Notwithstanding anything herein to the
contrary, “Information” shall not include, and the Borrower, the other Loan Parties, the
Administrative Agent, each Lender and the respective Affiliates of each of the foregoing (and the
respective partners, directors, officers, employees, agents, advisors and other representatives of
the aforementioned Persons), and any other party, may disclose to any and all Persons, without
limitation of any kind (a) any information with respect to the United States federal and state
income tax treatment of the transactions contemplated hereby and any facts that may be relevant to
understanding the United States federal or state income tax treatment of such



105









 




transactions (“tax structure”), which facts shall not include for this purpose the
names of the parties or any other person named herein, or information that would permit
identification of the parties or such other persons, or any pricing terms or other nonpublic
business or financial information that is unrelated to such tax treatment or tax structure, and (b)
all materials of any kind (including opinions or other tax analyses) that are provided to the
Borrower, the Administrative Agent or such Lender relating to such tax treatment or tax structure.




     Section 12.12 Interest Rate Limitation. It is the intention of the parties hereto
that each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the
transactions contemplated hereby would be usurious as to any Lender under laws applicable to it
(including the laws of the United States of America, the State of Texas or any other jurisdiction
whose laws may be mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary in any of the Loan
Documents or any agreement entered into in connection with or as security for the Notes, it is
agreed as follows: (i) the aggregate of all consideration which constitutes interest under law
applicable to any Lender that is contracted for, taken, reserved, charged or received by such
Lender under any of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be canceled automatically and if theretofore paid shall be credited by such Lender on
the principal amount of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (ii) in the event that the maturity of the Notes is accelerated by reason of an
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 under law applicable to any Lender may never include more than the maximum
amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement
or otherwise shall be canceled automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the principal amount of
the Indebtedness (or, to the extent that the principal amount of the Indebtedness shall have been
or would thereby be paid in full, refunded by such Lender to the Borrower). All sums paid or
agreed to be paid to any Lender for the use, forbearance or detention of sums due hereunder shall,
to the extent permitted by law applicable to such Lender, be amortized, prorated, allocated and
spread throughout the stated term of the Loans evidenced by the Notes until payment in full so that
the rate or amount of interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the amount of interest
payable to any Lender on any date shall be computed at the Highest Lawful Rate applicable to such
Lender pursuant to this Section 12.12 and (ii) in respect of any subsequent interest computation
period the amount of interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable to such Lender, then
the amount of interest payable to such Lender in respect of such subsequent interest computation
period shall continue to be computed at the Highest Lawful Rate applicable to such Lender until the
total amount of interest payable to such Lender shall equal the total amount of interest which
would have been payable to such Lender if the total amount of interest had been computed without
giving effect to this Section 12.12. To the extent that Chapter 303 of the Texas Finance Code is
relevant for the purpose of determining the Highest Lawful Rate applicable to a Lender, such Lender
elects to determine the applicable rate ceiling under such Chapter by the weekly ceiling from time
to time



106









 




in effect. Chapter 346 of the Texas Finance Code does not apply to the Borrower’s obligations
hereunder.




     Section 12.13 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, CONDITIONS AND EFFECTS 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 RESULT 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 12.14 Collateral Matters; Swap Agreements. The benefit of the Security
Instruments and of the provisions of this Agreement relating to any collateral securing the
Indebtedness shall also extend to and be available to the Secured Swap Providers with respect to
any Swap Agreement including any Swap Agreement in existence prior to the date hereof, but
excluding any additional transactions or confirmations entered into (a) after such Secured Swap
Provider ceases to be a Secured Swap Provider or (b) after assignment by a Secured Swap Provider to
a Person who is not, at the time of such assignment, a Secured Swap Provider. No Secured Swap
Provider shall have any voting rights under any Loan Document as a result of the existence of
obligations owed to it under any such Swap Agreements. No Secured Swap Provider that is not a
Lender or an Affiliate of a Lender will be entitled to the benefit of the Security Instruments and
the collateral pledged thereunder with respect to any Swap Agreement (including any trade or
confirmation with respect thereto) for which such Secured Swap Provider has not provided written
notice to the Administrative Agent of such Swap Agreement and the material terms thereof.



     Section 12.15 No Third Party Beneficiaries. This Agreement, the other Loan Documents,
and the agreement of the Lenders to make Loans and the Issuing Bank to issue, amend, renew or
extend Letters of Credit hereunder are solely for the benefit of the Borrower, and no other Person
(including, without limitation, any other Loan Party, any obligor, contractor, subcontractor,
supplier or materialsman) shall have any rights, claims, remedies or privileges hereunder or under
any other Loan Document against the Administrative Agent, any other Agent, the Issuing Bank or any
Lender for any reason whatsoever. Except as specified in Section 12.14 and Section 12.03, there
are no third party beneficiaries, except that any Secured



107









 




Swap Provider that is not a Lender or an Affiliate of a Lender, shall be a beneficiary of
Section 12.14 and the Security Instruments pursuant to the terms thereof.




     Section 12.16 USA Patriot Act Notice. Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)) (the “Act”), it is required to obtain, verify and record information
that identifies the 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 Act.



[SIGNATURES BEGIN NEXT PAGE]




108









 





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



	 	 	 	 	 	 	 

	BORROWER:	 	MEMORIAL PRODUCTION OPERATING LLC, a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	PARENT:	 	MEMORIAL PRODUCTION PARTNERS LP, a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Signature Page to Credit Agreement

Memorial Production Operating LLC








 









 








	 	 	 	 	 	 	 
	ADMINISTRATIVE AGENT:	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, Issuing Bank and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Signature Page to Credit Agreement

Memorial Production Operating LLC








 









 








	 	 	 	 	 	 	 
	SYNDICATION AGENT:	 	JPMORGAN CHASE BANK, N.A., as Syndication Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Signature Page to Credit Agreement

Memorial Production Operating LLC








 









 








	 	 	 	 	 	 	 
	CO-DOCUMENTATION AGENT:	 	BNP PARIBAS, as Co-Documentation Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Signature Page to Credit Agreement

Memorial Production Operating LLC








 









 








	 	 	 	 	 	 	 
	CO-DOCUMENTATION AGENT:	 	CITIBANK, N.A., as Co-Documentation Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Signature Page to Credit Agreement

Memorial Production Operating LLC








 









 








	 	 	 	 	 	 	 
	CO-DOCUMENTATION AGENT:	 	COMERICA BANK, as Co-Documentation Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Signature Page to Credit Agreement

Memorial Production Operating LLC








 









 








	 	 	 	 	 	 	 
	LENDER:	 	ROYAL BANK OF CANADA, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Signature Page to Credit Agreement

Memorial Production Operating LLC








 









 








	 	 	 	 	 	 	 
	LENDER:	 	TEXAS CAPITAL BANK, N.A., as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Signature Page to Credit Agreement

Memorial Production Operating LLC







 









 








	 	 	 	 	 	 	 
	LENDER:	 	U.S. BANK NATIONAL ASSOCIATION, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Signature Page to Credit Agreement

Memorial Production Operating LLC








 









 








	 	 	 	 	 	 	 
	LENDER:	 	UNION BANK, N.A., as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Signature Page to Credit Agreement

Memorial Production Operating LLC









 









 








ANNEX I

LIST OF MAXIMUM CREDIT AMOUNTS

Aggregate Maximum Credit Amounts




	 	 	 	 	 	 	 	 	 	 
	Name of Lender	 	Applicable Percentage	 	Maximum Credit Amount
	Wells Fargo Bank,
National Association
	 	 	20.83333333	%	 	 	$	208,333,333.33	 
	JPMorgan Chase Bank, N.A.
	 	 	20.83333333	%	 	 	$	208,333,333.33	 
	BNP Paribas
	 	 	11.66666666	%	 	 	$	111,666,666.66	 
	Citibank, N.A.
	 	 	11.66666666	%	 	 	$	111,666,666.66	 
	Comerica Bank
	 	 	11.66666666	%	 	 	$	111,666,666.66	 
	Royal Bank of Canada
	 	 	5.83333333	%	 	 	$	58,333,333.34	 
	Texas Capital Bank, N.A.
	 	 	5.83333333	%	 	 	$	58,333,333.34	 
	U.S. Bank National
Association
	 	 	5.83333333	%	 	 	$	58,333,333.34	 
	Union Bank, N.A.
	 	 	5.83333333	%	 	 	$	58,333,333.34	 
	 
	 	 	 	 	 	 	 	 	 
	TOTAL
	 	 	100.00	%	 	 	$	1,000,000,000.00	 
	 
	 	 	 	 	 	 	 	 	 






Annex 1






 









 








EXHIBIT A




FORM OF NOTE



			
	$[__________]
	 	[_______], 20[___]






     FOR VALUE RECEIVED, Memorial Production Operating LLC, a Delaware limited liability company
(the “Borrower”), hereby promises to pay to [ ] (the “Lender”), at the
principal office of Wells Fargo Bank, National Association (the “Administrative Agent”), at
[________], the principal sum of [________] Dollars ($[________]) (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Loans made by the Lender to the Borrower under
the Credit Agreement, as hereinafter defined), in lawful money of the United States of America and
in immediately available funds, on the dates and in the principal amounts provided in the Credit
Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in
like money and funds, for the period commencing on the date of such Loan until such Loan shall be
paid in full, at the rates per annum and on the dates provided in the Credit Agreement.



     The date, amount, Type, interest rate, and, if applicable, Interest Period of each Loan made
by the Lender to the Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books and, prior to any transfer of this Note, may be endorsed by the
Lender on the schedules attached hereto or any continuation thereof or on any separate record
maintained by the 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 this Note.



     This Note is one of the Notes referred to in the Credit Agreement dated as of September [ ],
2011 among the Borrower, the Administrative Agent, and the other agents and lenders signatory
thereto (including the Lender), and evidences Loans made by the Lender thereunder (such Credit
Agreement as the same may be amended, supplemented or restated from time to time, the “Credit
Agreement”). Capitalized terms used but not defined in this Note have the respective meanings
assigned to them in the Credit Agreement.



     This Note is issued pursuant to, and is subject to the terms and conditions set forth in, the
Credit Agreement and is entitled to the benefits provided for in the Credit Agreement and the other
Loan Documents. The Credit Agreement provides for the acceleration of the maturity of this Note
upon the occurrence of certain events, for prepayments of Loans upon the terms and conditions
specified therein and other provisions relevant to this Note.



     THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.



	 	 	 	 	 	 	 

	 	 	MEMORIAL PRODUCTION OPERATING LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Exhibit A-1






 









 








EXHIBIT B




FORM OF BORROWING REQUEST



[[__________]], 20[___]



     Memorial Production Operating LLC, a Delaware limited liability company (the
“Borrower”), pursuant to Section 2.03 of the Credit Agreement dated as of September [ ],
2011 (together with all amendments, restatements, supplements or other modifications thereto, the
“Credit Agreement”) among the Borrower, Wells Fargo Bank, National Association, as
Administrative Agent and the other agents and lenders (the “Lenders”) which are or become
parties thereto (unless otherwise defined herein, each capitalized term used herein is defined in
the Credit Agreement), hereby requests a Borrowing as follows:



     (i) Aggregate amount of the requested Borrowing is $[ __________];



     (ii) Date of such Borrowing is [__________], 20[___];



     (iii) Requested Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing];



     (iv) In the case of a Eurodollar Borrowing, the initial Interest Period applicable thereto is
[__________];



     (v) Amount of Borrowing Base in effect on the date hereof is $[ __________];



     (vi) Total Revolving Credit Exposures on the date hereof (i.e., outstanding principal amount
of Loans and total LC Exposure) is $[ __________]; and



     (vii) Pro forma total Revolving Credit Exposures (giving effect to the requested Borrowing) is
$[ __________]; and



     (viii) 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 of the Credit Agreement, is as follows:




			
	     	 	[                    ]
[                    ]
[                    ]
[           
         ]





Exhibit B-1





 









 








     The undersigned certifies that he/she is the [__________] of the Borrower, and that as such
he/she is authorized to execute this certificate on behalf of the Borrower. The undersigned
further certifies, represents and warrants on behalf of the Borrower that the Borrower is entitled
to receive the requested Borrowing under the terms and conditions of the Credit Agreement.



	 	 	 	 	 	 	 

	 	 	MEMORIAL PRODUCTION OPERATING LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Exhibit B-2




 









 








EXHIBIT C

FORM OF INTEREST ELECTION REQUEST




[__________], 20[___]



     Memorial Production Operating LLC, a Delaware limited liability company (the
“Borrower”), pursuant to Section 2.04 of the Credit Agreement dated as of September [ ],
2011 (together with all amendments, restatements, supplements or other modifications thereto, the
“Credit Agreement”) among the Borrower, Wells Fargo Bank, National Association, as
Administrative Agent and the other agents and lenders (the “Lenders”) which are or become
parties thereto (unless otherwise defined herein, each capitalized term used herein is defined in
the Credit Agreement), hereby makes an Interest Election Request as follows:



     (i) The Borrowing to which this 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 specified pursuant to (iii) and (iv)
below shall be specified for each resulting Borrowing) is [ ];



     (ii) The effective date of the election made pursuant to this Interest Election Request is
[__________], 20[___];[and]



     (iii) The resulting Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing][; and]



     [(iv) [If the resulting Borrowing is a Eurodollar Borrowing] The Interest Period applicable to
the resulting Borrowing after giving effect to such election is [__________]].



     The undersigned certifies that he/she is the [__________] of the Borrower, and that as such
he/she is authorized to execute this certificate on behalf of the Borrower. The undersigned
further certifies, represents and warrants on behalf of the Borrower that the Borrower is entitled
to receive the requested continuation or conversion under the terms and conditions of the Credit
Agreement.



	 	 	 	 	 	 	 

	 	 	MEMORIAL PRODUCTION OPERATING LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Exhibit C-1





 









 








EXHIBIT D




FORM OF

COMPLIANCE CERTIFICATE



     The undersigned hereby certifies that he/she is the [__________] of Memorial Production
Operating LLC, a Delaware limited liability company (the “Borrower”), and that as such
he/she is authorized to execute this certificate on behalf of the Borrower. With reference to the
Credit Agreement dated as of September [ ], 2011 (together with all amendments, restatements,
supplements or other modifications thereto being the “Agreement”) among the Borrower, Wells
Fargo Bank, National Association, as Administrative Agent, and the other agents and lenders (the
“Lenders”) which are or become a party thereto, and such Lenders, the undersigned
represents and warrants as follows (each capitalized term used herein having the same meaning given
to it in the Agreement unless otherwise specified):



     (a) The representations and warranties of the Borrower contained in Article VII of the
Agreement and in the Loan Documents and otherwise made in writing by or on behalf of the Borrower
pursuant to the Agreement and the Loan Documents were true and correct when made, and are repeated
at and as of the time of delivery hereof and are true and correct in all material respects at and
as of the time of delivery hereof, except to the extent such representations and warranties are
expressly limited to an earlier date or the Majority Lenders have expressly consented in writing to
the contrary.



     (b) The Borrower has performed and complied with all agreements and conditions contained in
the Agreement and in the Loan Documents required to be performed or complied with by it prior to or
at the time of delivery hereof [or specify default and describe].



     (c) Since [same date as audited financials in Section 7.04(a)], no change has occurred, either
in any case or in the aggregate, in the condition, financial or otherwise, of the Borrower or any
Subsidiary which could reasonably be expected to have a Material Adverse Effect [or specify event].



     (d) There exists no Default or Event of Default [or specify Default and describe].



     (e) Attached hereto are the detailed computations necessary to determine whether the Borrower
is in compliance with Section 8.13(a), Section 8.14(a), and Section 9.01 as of the end of the
[fiscal quarter][fiscal year] ending [__________].



     [(f) The Parent filed [Annual] [Quarterly] financial statements with the SEC on [ ], 20[
].]



Exhibit D-1




 









 





     EXECUTED AND DELIVERED this [__________] day of [__________].



	 	 	 	 	 	 	 

	 	 	MEMORIAL PRODUCTION OPERATING LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Exhibit D-2




 









 






EXHIBIT E-1




SECURITY INSTRUMENTS AS OF EFFECTIVE DATE




	(1)	 	Pledge and Security Agreement dated as of September [ ], 2011 among the Loan Parties and the
Administrative Agent.
	 
	(2)	 	Mortgage, Assignment of As-Extracted Collateral, Security Agreement, Fixture Filing and
Financing Statement dated as of September [ ], 2011 by the Borrower, as mortgagor, in favor
of the Administrative Agent for the benefit of the Lenders and others.
	 
	(3)	 	Mortgage, Assignment of As-Extracted Collateral, Security Agreement, Fixture Filing and
Financing Statement dated as of September [ ], 2011 by Columbus Energy, LLC, as mortgagor, in
favor of the Administrative Agent for the benefit of the Lenders and others.
	 
	(4)	 	Mortgage, Assignment of As-Extracted Collateral, Security Agreement, Fixture Filing and
Financing Statement dated as of September [ ], 2011 by ETX I LLC, as mortgagor, in favor of
the Administrative Agent for the benefit of the Lenders and others.
	 
	(5)	 	Financing Statements in respect of items 1, 2, 3 and 4.
	 
	(6)	 	Guaranty Agreement dated as of September [___], 2011 by the Guarantors party thereto in favor
of the Administrative Agent.
	 
	(7)	 	[Deposit Account Control Agreements.]
	 
	(8)	 	[Others?]





Exhibit E-1 - 1





 









 








EXHIBIT E-2




FORM OF GUARANTY AGREEMENT



[to be attached]



Exhibit E-2 - 1





 









 








EXHIBIT E-3




FORM OF SECURITY AGREEMENT



[to be attached]



Exhibit E-3 - 1






 









 








EXHIBIT F




FORM OF ASSIGNMENT AND ASSUMPTION



     This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the
“Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used
but not defined herein shall have the meanings given to them in the Credit Agreement identified
below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment
and Assumption as if set forth herein in full.



     For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below (including any letters of credit and
guarantees included in such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the Assignor (in its
capacity as a Lender) against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”). Such sale and assignment is
without recourse to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.



	 	 	 	 	 	 	 

	1.

	 	Assignor:
	 	____________________	 	 
	 
	 	 	 	 	 	 
	2.

	 	Assignee:
	 	____________________	 	 
	 

	 	 	 	[and is an Affiliate/Approved Fund of [identify Lender]1]	 	 
	 
	 	 	 	 	 	 
	3.

	 	Borrower:
	 	Memorial Production Operating LLC	 	 
	 
	 	 	 	 	 	 
	4.	 	Administrative Agent:Wells Fargo Bank, National Association, as the administrative agent under the Credit Agreement








 




			
	1	 	Select as applicable.





Exhibit F-1






 









 








	 	 	 	 	 

	5.

	 	Credit Agreement:
	 	The Credit Agreement dated as of September [ ], 2011 among Memorial Production Operating LLC,
the Lenders parties thereto, Wells Fargo Bank, National Association, as Administrative Agent, and
the other agents parties thereto
	 
	 	 	 	 
	6.

	 	Assigned Interest:	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Aggregate Amount of	 	 	Amount of	 	 	 	 
	 	 	Commitment/Loans	 	 	Commitment/Loans	 	 	Percentage Assigned of	 
	Commitment Assigned	 	for all Lenders	 	 	Assigned	 	 	Commitment/Loans2	 
	 
	 	$	 	 	 	$	 	 	 	 	%	 
	 
	 	$	 	 	 	$	 	 	 	 	%	 
	 
	 	$	 	 	 	$	 	 	 	 	%	 





Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL
BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]



The terms set forth in this Assignment and Assumption are hereby agreed to:




	 	 	 	 	 
	 	ASSIGNOR



[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 
	 	ASSIGNEE





[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 





 




			
	2	 	Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.





Exhibit F-2




 









 








	 	 	 	 	 

	[Consented to and]3 Accepted:	 	 
	 
	 	 	 	 
	WELLS FARGO BANK, NATIONAL ASSOCIATION, as 

Administrative Agent	 	 
	 
	 	 	 	 
	By

	 	 

 
	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	[Consented to:]4	 	 
	 
	 	 	 	 
	[NAME OF RELEVANT PARTY]	 	 
	 
	 	 	 	 
	By

	 	 

	 	 
	 

	 	Title:	 	 








 




			
	3	 	To be added only if the consent of the
Administrative Agent is required by the terms of the Credit Agreement.
	 
	4	 	To be added only if the consent of the
Borrower and/or other parties (e.g. Issuing Bank) is required by the terms of
the Credit Agreement.





Exhibit F-3





 









 








ANNEX 1




[__________________]5




STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION



          1. Representations and Warranties.




          1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit Agreement or any
other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective obligations under any
Loan Document.




          1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement
that are required to be satisfied by it in order to acquire the Assigned Interest and become a
Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements delivered pursuant to Section 8.01 thereof, as
applicable, and such other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision independently and
without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender, attached to the Assignment and Assumption is any documentation required to be delivered by
it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and
(b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the
Assignor or any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be performed by it as a
Lender.






 




			
	5	 	Describe Credit Agreement at option of
Administrative Agent.





Exhibit F-4




 









 








          2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignor for amounts which have accrued to but excluding the
Effective Date and to the Assignee for amounts which have accrued from and after the Effective
Date.




          3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.




Exhibit F - 5









 









 








EXHIBIT G-1




FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN LENDERS; NOT PARTNERSHIPS)



Exhibit G-1 - 1






 









 








EXHIBIT G-2




FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN PARTICIPANTS; NOT PARTNERSHIPS)



Exhibit G-2 - 1






 









 








EXHIBIT G-3




FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN PARTICIPANTS; PARTNERSHIPS)



Exhibit G-3 - 1






 









 








EXHIBIT G-4




FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN LENDERS; PARTNERSHIPS)



Exhibit G-4 - 1








 









 








SCHEDULE 7.05




LITIGATION



[to be completed]



Schedule 7.05 - 1









 









 








SCHEDULE 7.06




ENVIRONMENTAL MATTERS



[to be completed]



Schedule 7.06 - 1









 









 








SCHEDULE 7.14




LOAN PARTIES AND SUBSIDIARIES



	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	(d) Principal Place	 	(e) Holder(s) of
	 	 	 	 	(c) Organizational	 	of Business	 	Equity Interests in
	 	 	(b) Jurisdiction of	 	Identification	 	and Chief Executive	 	Subsidiary (and %
	(a) Loan Party	 	Organization	 	Number	 	Office	 	ownership)
	Memorial
Production Partners 

LP

	 	Delaware
	 	 	4968591	 	 	[5 Houston Center,
1401 McKinney,
Suite 1025,
Houston, TX 77010]
	 	Public unitholders
— 45.95% lp
interest
Memorial Production
Partners GP LLC -.1% gp interest and
49.95% lp interest
	Memorial Production 

Operating LLC

	 	Delaware
	 	 	4992976	 	 	[5 Houston Center,
1401 McKinney,
Suite 1025,
Houston, TX 77010]
	 	Memorial Production
Partners LP — 100%






Schedule 7.14 - 1









 









 








SCHEDULE 7.18




GAS IMBALANCES



[to be completed]



Schedule 7.18 - 1









 









 








SCHEDULE 7.19




MARKETING CONTRACTS



[to be completed]



Schedule 7.19 - 1









 









 








SCHEDULE 7.20




SWAP AGREEMENTS



[to be completed]



Schedule 7.20 - 1









 









 








SCHEDULE 9.05




INVESTMENTS



[to be completed]



Schedule 9.05 - 1