**Exhibit 10.1**

 

Execution Version

 

 

 

 

$55,000,000 Revolving Loan

 

CREDIT AGREEMENT

 

dated as of

 

February 15, 2005

 

among

 

HILAND OPERATING, LLC,as Borrower

 

The Lenders Party Hereto

 

and

 

MIDFIRST BANK,

as Administrative Agent

 

----

 

 

 

 

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TABLE OF CONTENTS

 
|               | ARTICLE I  Definitions                                  |   |
|--------------------|--------------------------------------------------------------|--------|
|               |                                                         |   |
| SECTION 1.01. | Defined Terms                                                |   |
| SECTION 1.02. | Classification of Loans and Borrowings                       |   |
| SECTION 1.03. | Terms Generally                                              |   |
| SECTION 1.04. | Accounting Terms; GAAP                                       |   |
| SECTION 1.05. | Annualized Financial Information                             |   |
|               |                                                         |   |
|               | ARTICLE II The Credits                                  |   |
|               |                                                         |   |
| SECTION 2.01. | Commitments                                                  |   |
| SECTION 2.02. | Loans and Borrowings                                         |   |
| SECTION 2.03. | Requests for Revolving Borrowings                            |   |
| SECTION 2.04. | Agent Advances                                               |   |
| SECTION 2.05. | Intentionally Deleted                                        |   |
| SECTION 2.06. | Letters of Credit                                            |   |
| SECTION 2.07. | Funding of Borrowings                                        |   |
| SECTION 2.08. | Interest Elections                                           |   |
| SECTION 2.09. | Termination and Reduction of Commitments                     |   |
| SECTION 2.10. | Repayment of Loans; Evidence of Debt                    |   |
| SECTION 2.11. | Prepayment of Loans                                          |   |
| SECTION 2.12. | Fees                                                         |   |
| SECTION 2.13. | Interest                                                     |   |
| SECTION 2.14. | Alternate Rate of Interest                                   |   |
| SECTION 2.15. | Increased Costs                                              |   |
| SECTION 2.16. | Break Funding Payments                                       |   |
| SECTION 2.17. | Taxes                                                        |   |
| SECTION 2.18. | Payments Generally; Pro Rata Treatment;  Sharing of Set-offs |   |
| SECTION 2.19. | Mitigation Obligations; Replacement of  Lenders              |   |
| SECTION 2.20. | Increase of Revolver A Commitments                           |   |
|               |                                                         |   |
|               | ARTICLE III Representations and  Warranties             |   |
|               |                                                         |   |
| SECTION 3.01. | Organization; Powers                                         |   |
| SECTION 3.02. | Authorization; Enforceability                                |   |
| SECTION 3.03. | No Undisclosed Liabilities                                   |   |
| SECTION 3.04. | Governmental Approvals; No Conflicts                         |   |
| SECTION 3.05. | Financial Condition; No Material Adverse  Change             |   |
| SECTION 3.06. | Properties                                                   |   |
| SECTION 3.07. | Litigation and Environmental Matters                         |   |
| SECTION 3.08. | Compliance with Laws and Agreements                          |   |
| SECTION 3.09. | Investment and Holding Company Status                        |   |
| SECTION 3.10. | Taxes                                                        |   |
| SECTION 3.11. | ERISA                                                        |   |
| SECTION 3.12. | Disclosure                                                   |   |
| SECTION 3.13. | Labor Matters                                                |   |
| SECTION 3.14. | Subsidiaries                                                 |   |

 

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| SECTION 3.15. | Margin Stock                                                |   |
|--------------------|-------------------------------------------------------------|--------|
| SECTION 3.16. | Licenses and Permits                                        |   |
| SECTION 3.17. | Reportable Transaction                                      |   |
| SECTION 3.18. | Public Utility Holding Company Act                          |   |
| SECTION 3.19. | Senior Debt Status                                          |   |
| SECTION 3.20. | Priority; Security Matters                                  |   |
| SECTION 3.21. | Solvency                                                    |   |
| SECTION 3.22. | Foreign Assets Control Regulation                           |   |
| SECTION 3.23. | Claims and Liabilities                                      |   |
| SECTION 3.24. | Material Contracts                                          |   |
| SECTION 3.25. | Certain Representations Regarding the  Parent               |   |
|               |                                                        |   |
|               | ARTICLE IV Conditions                                  |   |
|               |                                                        |   |
| SECTION 4.01. | Effective Date                                              |   |
| SECTION 4.02. | Each Credit Event                                           |   |
|               |                                                        |   |
|               | ARTICLE V Affirmative Covenants                        |   |
|               |                                                        |   |
| SECTION 5.01. | Financial Statements; Ratings Change and  Other Information |   |
| SECTION 5.02. | Notices of Material Events                                  |   |
| SECTION 5.03. | Existence; Conduct of Business                              |   |
| SECTION 5.04. | Payment of Obligations                                      |   |
| SECTION 5.05. | Maintenance of Properties; Insurance                        |   |
| SECTION 5.06. | Books and Records; Inspection Rights                        |   |
| SECTION 5.07. | Compliance with Laws                                        |   |
| SECTION 5.08. | Use of Proceeds and Letters of  Credit                      |   |
| SECTION 5.09. | Compliance with ERISA                                       |   |
| SECTION 5.10. | Real Property Collateral                                    |   |
| SECTION 5.11. | Compliance with Environmental Laws                          |   |
| SECTION 5.12. | Further Assurances                                          |   |
| SECTION 5.13. | Tax Shelter Regulations                                     |   |
| SECTION 5.14. | Compliance with Leases; Material  Contracts                 |   |
| SECTION 5.15. | Clean-Down Period                                           |   |
| SECTION 5.16. | Subsidiaries                                                |   |
| SECTION 5.17. | Information Regarding Collateral                            |   |
| SECTION 5.18. | Post Closing Matters                                        |   |
| SECTION 5.19. | Deposit Accounts                                            |   |
|               |                                                        |   |
|               | ARTICLE VI Negative Covenants                          |   |
|               |                                                        |   |
| SECTION 6.01. | Indebtedness                                                |   |
| SECTION 6.02. | Liens                                                       |   |
| SECTION 6.03. | Fundamental Changes                                         |   |
| SECTION 6.04. | Investments, Loans, Advances and  Guarantees                |   |
| SECTION 6.05. | Swap Agreements                                             |   |
| SECTION 6.06. | Restricted Payments                                         |   |
| SECTION 6.07. | Transactions with Affiliates                                |   |
| SECTION 6.08. | Sales of Assets                                             |   |
| SECTION 6.09. | Constituent Documents                                       |   |

 

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| SECTION 6.10. | Regulation T, U and X Compliance                            |   |
|--------------------|-------------------------------------------------------------|--------|
| SECTION 6.11. | Sales and Leasebacks                                        |   |
| SECTION 6.12. | Changes in Fiscal Year                                      |   |
| SECTION 6.13. | Change in the Nature of Business                            |   |
| SECTION 6.14. | Limitation on Restrictions on  Subsidiary Distributions     |   |
| SECTION 6.15. | Changes to the Omnibus Agreement                            |   |
| SECTION 6.16. | Minimum Consolidated Tangible Net  Worth                    |   |
| SECTION 6.17. | Minimum Interest Coverage Ratio                             |   |
| SECTION 6.18. | Maximum Leverage Ratio                                      |   |
| SECTION 6.19. | Permitted Acquisitions                                      |   |
| SECTION 6.20. | Negative Pledges, Restrictive  Agreements, etc.             |   |
|               |                                                        |   |
|               | ARTICLE VII Events of Default                          |   |
|               |                                                        |   |
|               | ARTICLE VIII The Administrative  Agent                 |   |
|               |                                                        |   |
|               | ARTICLE IX Miscellaneous                               |   |
|               |                                                        |   |
| SECTION 9.01. | Notices                                                     |   |
| SECTION 9.02. | Waivers; Amendments                                         |   |
| SECTION 9.03. | Expenses; Indemnity; Damage Waiver                          |   |
| SECTION 9.04. | Successors and Assigns                                      |   |
| SECTION 9.05. | Survival                                                    |   |
| SECTION 9.06. | Counterparts; Integration;  Effectiveness                   |   |
| SECTION 9.07. | Severability                                                |   |
| SECTION 9.08. | Right of Setoff                                             |   |
| SECTION 9.09. | Governing Law; Jurisdiction; Consent  to Service of Process |   |
| SECTION 9.10. | WAIVER OF JURY TRIAL                                        |   |
| SECTION 9.11. | Headings                                                    |   |
| SECTION 9.12. | Confidentiality                                             |   |
| SECTION 9.13. | Interest Rate Limitation                                    |   |
| SECTION 9.14. | USA PATRIOT Act                                             |   |
| SECTION 9.15. | Separateness                                                |   |
| SECTION 9.16. | No Personal Liability of Directors,  Officers and Employees |   |
| SECTION 9.17. | Collateral Matters; Swap Agreements                         |   |

 

SCHEDULES:

Schedule 1.01 — SecurityDocuments

Schedule 2.01 — Commitments

Schedule 3.03 — DisclosedMatters

Schedule 3.06(a) — TitleIssues

Schedule 3.06(b) — Leases

Schedule 3.06(d) — Locationof Each Loan Party

Schedule 3.14 — Subsidiaries

Schedule 3.24 — MaterialContracts

Schedule 5.18 — PostClosing Matters

Schedule 6.01 — ExistingIndebtedness

Schedule 6.02 — ExistingLiens

 

 

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Schedule 6.14 —Existing Restrictions

 

EXHIBITS:
| Exhibit A  — Form of Assignment and Assumption              |   |
|----------------------------------------------------------------------------|--------|
| Exhibit B  — Form of Commitment Increase Agreement          |   |
| Exhibit C  — Form of New Lender Agreement                   |   |
| Exhibit D  — Form of Guaranty Agreement (Subsidiary/Parent) |   |
| Exhibit E  — Form of Borrowing Request                      |   |
| Exhibit F  — Form of Compliance Certificate                 |   |
| Exhibit G  — Form of Partnership Agreement                  |   |

 

 

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CREDIT AGREEMENT (this “Agreement”)dated as of February 15, 2005, among HILAND OPERATING, LLC, the LENDERSparty hereto, and MIDFIRST BANK, as Administrative Agent.

 

The parties hereto agreeas follows:

 

**ARTICLE I**

 

# **Definitions**

 

SECTION 1.01.                 DefinedTerms.  As used in this Agreement,the following terms have the meanings specified below:

 

“ABR”, when usedin reference to any Loan or Borrowing, refers to whether such Loan, or theLoans comprising such Borrowing, are bearing interest at a rate determined byreference to the Alternate Base Rate.

 

“Adjusted LIBO Rate”means, with respect to any Eurodollar Borrowing for any Interest Period, aninterest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%)equal to (a) the LIBO Rate for such Interest Period multiplied by(b) the Statutory Reserve Rate.

 

“Administrative Agent”means MidFirst Bank, a federally chartered savings association, in its capacityas administrative agent for the Lenders hereunder.

 

“AdministrativeQuestionnaire” means an Administrative Questionnaire in a form supplied bythe Administrative Agent.

 

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

 

“Agent Advances”shall have the meaning set forth in Section 2.04 hereof.

 

“Agreement” shallhave the meaning set forth in the introductory paragraph hereof.

 

“Alternate Base Rate”means, for any day, a rate per annum equal to the greatest of (a) thePrime Rate in effect on such day, (b) the Base CD Rate in effect on suchday plus 1.50% and (c) the Federal Funds Effective Rate in effect onsuch day plus 1⁄2 of 1%.  Any changein the Alternate Base Rate due to a change in the Prime Rate, the BaseCD Rate or the Federal Funds Effective Rate shall be effective from andincluding the effective date of such change in the Prime Rate, the BaseCD Rate or the Federal Funds Effective Rate, respectively.

 

“Applicable Percentage”means, with respect to any Lender, the percentage of the total Commitments representedby the sum of such Lender’s Revolver A Commitment and Revolver BCommitment.  If the Commitments haveterminated or expired, the Applicable Percentages shall be determined basedupon the Commitments most recently in effect, giving effect to any assignments.

 

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“Applicable Rate”means, for any day during any period between two successive Financial StatementDelivery Dates commencing on the first Financial Statement Delivery Date insuch period and ending on the day before the following Financial StatementDelivery Date, with respect to any ABR Loan, Eurodollar Revolving Loan, or withrespect to the commitment fees payable hereunder, as the case may be, theapplicable margin per annum set forth in the appropriate column below under thecaption “ABR Spread,” “Eurodollar Spread” or “Commitment Fee Rate,” as the casemay be, for the Leverage Ratio for the fiscal period for which such financialstatements were delivered as of the Financial Statement Delivery Date:

 
| **Leverage Ratio:**                                      | ** ** | **ABR  Spread** | ** ** | **Eurodollar  Spread** | ** ** | **Unused  Commitment   Fee Rate** | ** ** |
|----------------------------------------------------------|------------|-----------------|------------|------------------------|------------|----------------------------------------|------------|
| Less than 1.0:1.0                                        |       | 0.50            | %          | 1.50                   | %          | 0.30                                   | %          |
| Greater than or equal to 1.0:1.0 but less than  2.5:1.0  |       | 0.75            | %          | 1.75                   | %          | 0.375                                  | %          |
| Greater than or equal to 2.5:1.0 but less than  3.0:1.0  |       | 1.00            | %          | 2.00                   | %          | 0.50                                   | %          |
| Greater than or equal to 3.0:1.0 but less than  3.50:1.0 |       | 1.25            | %          | 2.25                   | %          | 0.50                                   | %          |
| Greater than or equal to 3.50 to 1.0                     |       | 1.75            | %          | 2.75                   | %          | 0.50                                   | %          |

 

For purposes of theforegoing, (a) if sufficient information does not exist to calculate theApplicable Rate, or the Borrower has not delivered such information to theAdministrative Agent in a timely manner, Eurodollar Borrowings shall not beavailable to the Borrower and the Applicable Rate for ABR Loans shall be 1.75%per annum and for the commitment fee shall be 0.50% per annum; and (b) ifthe Leverage Ratio shall change upon delivery of any financial statementsrequired under Section 5.01, such change in the Applicable Rateshall be effective as of the date on which any such financial statement isdelivered, irrespective of whether it is in the middle of an Interest Period orwhen notice of such change shall have been furnished by the Borrower to theAdministrative Agent and the Lenders pursuant to Section 5.01hereof or otherwise.  Each change in theApplicable Rate shall apply during the period commencing on the effective dateof such change and ending on the date immediately preceding the effective dateof the next such change.  Notwithstandingthe above, the Applicable Rate from the Effective Date through the firstFinancial Statement Delivery Date shall be 0.75% for ABR Loans, 1.75% forEurodollar Revolving Loans and 0.375% with respect to the commitment fee.

 

“Approved Fund”has the meaning assigned to such term in Section 9.04.

 

“Assessment Rate”means, for any day, the annual assessment rate in effect on such day that ispayable by a member of the Bank Insurance Fund classified as “well-capitalized”and within supervisory subgroup “B” (or a comparable successor riskclassification) within the meaning of 12 C.F.R. Part 327 (or any successorprovision) to the Federal Deposit Insurance Corporation for insurance by suchCorporation of time deposits made in dollars at the offices of such member inthe United States; provided that if, as a result of any change in anylaw, rule or regulation, it is no longer possible to determine theAssessment Rate as aforesaid, then the Assessment Rate shall be such annualrate as shall be determined by the Administrative Agent to be representative ofthe cost of such insurance to the Lenders.

 

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“Assignment andAssumption” means an assignment and assumption entered into by a Lender andan assignee (with the consent of any party whose consent is required by Section 9.04),and accepted by the Administrative Agent, in the form of Exhibit Aor any other form approved by the Administrative Agent.

 

“Available Cash”has the meaning set forth in the Partnership Agreement.

 

“Availability Period”means the period from and including the Effective Date to but excluding theearlier of the Maturity Date and the date of termination of the Commitments.

 

“Bakken System”means the Bakken field gas gathering and processing system in eastern Montana,located primarily in Richland County, Montana.

 

“Base CD Rate”means the sum of (a) the Three-Month Secondary CD Rate multiplied by theStatutory Reserve Rate plus (b) the Assessment Rate.

 

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

 

“Borrower” meansHiland Operating, LLC, a Delaware limited liability company.

 

“Borrowing” meansRevolver A Borrowing or a Revolver B Borrowing, as applicable.

 

“Borrowing Request”means a request by the Borrower for a Borrowing in accordance with Section 2.03and made in a form substantially similar to the form attached hereto as Exhibit Eand incorporated herein by reference.

 

“Business Day”means any day that is not a Saturday, Sunday or other day on which commercialbanks in Oklahoma City, Oklahoma are authorized or required by Law to remainclosed; provided that, when used in connection with a Eurodollar Loan,the term “Business Day” shall also exclude any day on which banks arenot open for dealings in dollar deposits in the London interbank market.

 

“Capital Expenditures”means, for any period, the aggregate amount of all expenditures of the LoanParties for fixed or capital assets made during such period which, inaccordance with GAAP, would be classified as capital expenditures.

 

“Capital LeaseObligations” of any Person means the obligations of such Person to pay rentor other amounts under any lease of (or other arrangement conveying the rightto use) real or personal property, or a combination thereof, which obligationsare required to be classified and accounted for as capital leases on a balancesheet of such Person under GAAP, and the amount of such obligations shall bethe capitalized amount thereof determined in accordance with GAAP.

 

“Change in Control”means the occurrence of any of the following events:  (a) the Hamm Parties cease to own andcontrol, directly or indirectly, more than 50% of the economic or votinginterests in the General Partner; (b) the General Partner shall cease to ownand control, of record and beneficially, directly, 100% of the general partnerinterests in the Parent; (c) the Parent shall 

 

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cease to own andcontrol, of record and beneficially, 100% of the membership interests of theBorrower; or (d) any “person” or “group” (as such terms are used in Sections13(d) and 14(d) under the Exchange Act), other than the HammParties, shall become, or obtain rights (whether by means or warrants, optionsor otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3and 13(d)-5 under the Exchange Act) directly or indirectly, of, in theaggregate, more than 20% of the total number of Outstanding Units orOutstanding Partnership Securities (as defined in the Partnership Agreement).

 

“Change in Law”means (a) the adoption of any law, rule or regulation after the date ofthis Agreement, (b) any change in any law, rule or regulation or in theinterpretation or application thereof by any Governmental Authority after thedate of this Agreement or (c) compliance by any Lender or the Issuing Bank (or,for purposes of Section 2.15(b), by any lending office of suchLender or by such Lender’s or the Issuing Bank’s holding company, if any) withany request, guideline or directive (whether or not having the force of law) ofany Governmental Authority made or issued after the date of this Agreement.

 

“Class”, when usedin reference to any Loan or Borrowing, refers to such Loan, or the Loanscomprising such Borrowing, as Revolver A Loans or Revolver B Loans.

 

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

 

“Collateral” meansall of the assets of the Borrower and its Subsidiaries, including all accounts,contract rights/ownership interests in Subsidiaries, all gas purchaseagreements, all gas processing and treating agreements, all gas sales agreements,gas gathering pipelines, liquids pipelines, gas processing plants, gas treatingplants, gas fractionation facilities, air injection plants, water injectionplants, inventory, vehicles, equipment, furniture, fixtures, generalintangibles, capital stock of Subsidiaries and all real property and leaseholdestates (including improvements thereon) held by such Person.

 

“Commitments”means the aggregate amount of all of the Lenders’ Revolver A Commitments andRevolver B Commitments.

 

“Commitment Increase Agreement”has the meaning assigned to such term in Section 2.20.

 

“Commitment IncreaseNotice” has the meaning assigned to such term in Section 2.20.

 

“Consolidated EBITDA”means, with respect to the Parent, the Borrower and its Subsidiaries for anyperiod, Consolidated Net Income for such period plus, withoutduplication and to the extent reflected as a charge in the statement of suchConsolidated Net Income for such period, the sum of (a) income taxexpense, (b) interest expense, amortization or write-off of debt discountand debt issuance costs and commissions, discounts and other fees and chargesassociated with Indebtedness (including the Indebtedness hereunder),(c) depreciation and amortization expense, (d) amortization ofintangibles and organization costs, (e) any extraordinary non-cashexpenses or losses, and (f) any extraordinary, unusual or non-recurringcash losses, and minus, (i) to the extent included in the statementof such Consolidated Net Income for such period, any extraordinary, unusual ornon-recurring non-cash income or gains (including, whether or not otherwiseincludable as a separate item in the statement of such 

 

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Consolidated NetIncome for such period, gains on the sales of assets outside of the ordinarycourse of business) and (ii) any cash payments made during such period inrespect of non-cash expenses or losses and subsequent to the fiscal quarter inwhich the relevant non-cash expenses or losses were reflected as a charge in thestatement of Consolidated Net Income, all as determined on a consolidatedbasis.  For purposes of calculatingConsolidated EBITDA of the Parent, the Borrower and its Subsidiaries for anyperiod for the purposes of Section 6.17 and Section 6.18and of this Agreement, (i) the earnings before interest, taxes, depreciationand amortization calculated as set forth above of any Person or assets acquiredby the Borrower or its Subsidiaries during such period shall be included (usingthe historical financial results of such Person or assets for the trailing fourfiscal quarters prior to such acquisition; provided that with respect toan acquisition of the Bakken System prior to September 1, 2006, using onlythe historical financial results for the trailing three months on an annualizedbasis) on a pro forma basis for such period as if such acquisition, andthe incurrence or assumption of any Indebtedness in connection therewith, hadoccurred on the first day of such period and based upon the financialstatements and other information delivered to the Administrative Agent pursuantto Section 5.01 hereof, and (ii) the earnings before interest,taxes, depreciation and amortization calculated as set forth above of anyPerson or assets Disposed of by the Borrower or its Subsidiaries during suchperiod shall be excluded, on a pro forma basis for such period as ifsuch Disposition, and the payment of any Indebtedness in connection therewith,had occurred on the first day of such period and based upon the financialstatements and other information delivered to the Administrative Agent pursuantto Section 5.01 hereof.

 

“ConsolidatedIndebtedness” means the consolidated Indebtedness of the Parent, theBorrower and its Subsidiaries.

 

“Consolidated InterestExpense” means, for any period, the sum of aggregate interest expense andcapitalized interest (including the interest portion of any Capital LeaseObligations) of the Parent, the Borrower and its Subsidiaries determined on aconsolidated basis for such period.

 

“ConsolidatedLease Expense” means, for the relevant period, with respect to the Parent,the Borrower, and its Subsidiaries on a consolidated basis, the sum of allrentals in respect of all leases whereunder the Parent, the Borrower or anySubsidiary is lessee, excluding Capital Lease Obligations to the extent suchare included in Consolidated Interest Expense; provided that,notwithstanding anything contained in this Agreement to the contrary,Consolidated Lease Expense shall be deemed to equal zero for any period in questionunless the amount of Consolidated Lease Expense for such period equals orexceeds $250,000.

 

“ConsolidatedMaintenance Capital Expenditures” means, for any period, the sum of theMaintenance Capital Expenditures of the Parent, the Borrower and its Subsidiariesdetermined on a consolidated basis for such period.

 

“ConsolidatedNet Income” means for anyperiod, the consolidated net income (or loss) of the Parent, the Borrower andits Subsidiaries, as applicable, determined on a consolidated basis in accordancewith GAAP; provided that there shall be excluded (a) the income (ordeficit) of any Person accrued prior to the date it becomes a Subsidiary of theBorrower, or is merged into or consolidated with the Borrower or any of itsSubsidiaries, as applicable, (b) the income 

 

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(or deficit) ofany Person (other than a Subsidiary of the Borrower, as applicable) in whichthe Borrower or any of its Subsidiaries, as applicable, has an ownershipinterest, except to the extent that any such income is actually received by theBorrower or any of its Subsidiaries, as applicable, in the form of dividends orsimilar distributions, and (c) the undistributed earnings of any Subsidiary ofthe Borrower, to the extent that the declaration or payment of dividends orsimilar distributions by such Subsidiary is not at the time permitted by theterms of any Contractual Obligation or by any Law applicable to suchSubsidiary.

 

“Consolidated TangibleNet Worth” means the excess of total assets over total liabilities for theParent, the Borrower and its Subsidiaries on a consolidated basis, total assetsand total liabilities each to be determined in accordance with GAAP, *excluding, however*, from the determinationof total assets (a) goodwill, organizational expenses, research anddevelopment expenses, trademarks, trade names, copyrights, patents, patentapplications, licenses and rights in any thereof, and other similarintangibles, including the value of contracts for the marketing of natural gas,(b) all unamortized debt discount and expense, (c) all reservescarried and not deducted from assets, (d) treasury stock and capitalstock, obligations or other securities of, or capital contributions to, orinvestments in, any Subsidiary, (e) securities that are not readilymarketable, (f) cash held in a sinking or other analogous fund establishedfor the purpose of redemption, retirement or prepayment of capital stock orIndebtedness, (g) any write-up in the book value of any asset resultingfrom a revaluation thereof, (h) notes receivable from current or formerofficers, employees or equity-holders of the Parent, the Borrower or anySubsidiary, (i) cash pledged or deposited for the purposes described inclauses (c) and (d) of the definition of “Permitted Encumbrances,”and (j) any items not included in clauses (a) through (i) abovethat are treated as intangibles in conformity with GAAP.

 

“ContractualObligation” means as to anyPerson, any provision of any security issued by such Person or of any materialagreement, instrument or other undertaking to which such Person is a party orby which it or any of its property is bound.

 

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

 

“Default” meansany event or condition which constitutes an Event of Default or which uponnotice, lapse of time or both would, unless cured or waived, become an Event ofDefault.

 

“Default Rate”shall have the meaning set forth in Section 2.13(c).

 

“Disclosed Matters”means the actions, suits and proceedings and the environmental mattersdisclosed in Section 3.03.

 

“Dispose” means with respect to any property,to sell, lease, engage in a sale and leaseback with respect thereto, assign,convey, transfer or otherwise dispose thereof. The term “Disposition” shall have a correlative meaning.

 

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

 

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“EDGAR”:  the Electronic Data Gathering, Analysis, andRetrieval computer system for the receipt, acceptance, review and disseminationof documents submitted to the SEC in electronic format.

 

“Effective Date”means the date on which the conditions specified in Section 4.01are satisfied (or waived in accordance with Section 9.02).

 

“Environmental Laws”means all applicable laws, rules, regulations, codes, ordinances, orders,decrees, judgments, injunctions, or legally enforceable directives issued,promulgated or entered into by any Governmental Authority, relating in any wayto the environment, preservation or reclamation of natural resources, themanagement or release of any Hazardous Material or to health (with respect toexposure to Hazardous Materials) and safety matters.

 

“EnvironmentalLiability” means any liability (including any liability for damages, costsof environmental remediation, fines, penalties or indemnities), of the Parent,the Borrower or any Subsidiary directly or indirectly resulting from or basedupon (a) violation of any Environmental Law, (b) the generation, use,handling, transportation, storage, treatment or disposal of any HazardousMaterials, (c) the exposure to any Hazardous Materials, (d) therelease of any Hazardous Materials into the environment or (e) any contract,agreement or other consensual arrangement pursuant to which liability isassumed or imposed with respect to any of the foregoing.

 

“Equity Interests”means shares of capital stock, partnership interests, membership interests in alimited liability company, beneficial interests in a trust or other equityownership interests in a Person, and any warrants, options or other rightsentitling the holder thereof to purchase or acquire any such equity interest.

 

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

 

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

 

“ERISA Event”means (a) any “reportable event”, as defined in Section 4043 of ERISAor the regulations issued thereunder with respect to a Plan (other than anevent for which the 30-day notice period is waived); (b) the existencewith respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412of the Code or Section 302 of ERISA), whether or not waived; (c) thefiling pursuant to Section 412(d) of the Code or Section 303(d) ofERISA of an application for a waiver of the minimum funding standard withrespect to any Plan; (d) the incurrence by the Borrower or any of itsERISA Affiliates of any liability under Title IV of ERISA with respect tothe termination of any Plan; (e) the receipt by the Borrower or any ERISAAffiliate from the PBGC or a plan administrator of any notice relating to anintention to terminate any Plan or Plans or to appoint a trustee to administerany Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates ofany liability with respect to the withdrawal or partial withdrawal from anyPlan or Multiemployer Plan; or (g) the receipt by the Borrower or 

 

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any ERISAAffiliate of any notice, or the receipt by any Multiemployer Plan from theBorrower or any ERISA Affiliate of any notice, concerning the imposition ofWithdrawal Liability or a determination that a Multiemployer Plan is, or isexpected to be, insolvent or in reorganization, within the meaning ofTitle IV of ERISA.

 

“Eurodollar”, whenused in reference to any Loan or Borrowing, refers to whether such Loan, or theLoans comprising such Borrowing, are bearing interest at a rate determined byreference to the Adjusted LIBO Rate.

 

“Event of Default”has the meaning assigned to such term in Article VII.

 

“Exchange Act”means the Securities Exchange Act of 1934, as amended, and the rules andregulations promulgated thereunder.

 

“Excluded Assets”means any contracts, agreements or permits as to which the granting of asecurity interest in same would cause a default, termination or penaltythereunder or under any applicable requirement of a Governmental Authority.

 

“Excluded Taxes”means, with respect to the Administrative Agent, any Lender, the Issuing Bankor any other recipient of any payment to be made by or on account of anyobligation of the Borrower hereunder, (a) income or franchise taxes imposed on(or measured by) its net income by the United States of America, or by thejurisdiction under the laws of which such recipient is organized or in whichits principal office is located or, in the case of any Lender, in which itsapplicable lending office is located, (b) any branch profits taxes imposed bythe United States of America or any similar tax imposed by any other jurisdictionin which the Borrower is located and (c) in the case of a Foreign Lender (otherthan an assignee pursuant to a request by the Borrower under Section 2.19(b)),any withholding tax that is imposed on amounts payable to such Foreign Lenderat the time such Foreign Lender becomes a party to this Agreement (ordesignates a new lending office) or is attributable to such Foreign Lender’sfailure to comply with Section 2.17(e), except to the extent thatsuch Foreign Lender (or its assignor, if any) was entitled, at the time ofdesignation of a new lending office (or assignment), to receive additionalamounts from the Borrower with respect to such withholding tax pursuant to Section 2.17(a).

 

“Federal FundsEffective 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 fundstransactions with members of the Federal Reserve System arranged by Federalfunds brokers, as published on the next succeeding Business Day by the FederalReserve Bank of New York, or, if such rate is not so published for any daythat is a Business Day, the average (rounded upwards, if necessary, to the next1/100 of 1%) of the quotations for such day for such transactions received bythe Administrative Agent from three Federal funds brokers of recognizedstanding selected by it.

 

“Fee Letter” meansthe letter agreement between the Borrower and MidFirst Bank pertaining tocertain fees and expenses payable by Borrower to such parties as set forth insuch letter.

 

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“Financial Officer”means the chief financial officer, principal accounting officer, treasurer orcontroller of the Parent or the Borrower as applicable.

 

“Financial StatementDelivery Date” means the earlier of the date on which the financialstatements of the Parent are delivered or are required to be delivered to theAdministrative Agent and the Lenders pursuant to Section 5.01(a) orSection 5.01(b), as the case may be.

 

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

 

“GAAP” meansgenerally accepted accounting principles in the United States of America, as ineffect from time to time.

 

“General Partner”:Hiland Partners GP, LLC, a Delaware limited liability company and the solegeneral partner of the Parent.

 

“Governmental Approval”means (i) any authorization, consent, approval, license, waiver, ruling,permit, tariff, rate, certification, exemption, filing, variance, claim, order,judgment, decree, sanction or publication of, by or with; (ii) any notice to;(iii) any declaration of or with; or (iv) any registration by or with, or anyother action by or on behalf of, any Governmental Authority.

 

“GovernmentalAuthority” means the government of the United States of America, any othernation or any political subdivision thereof, whether state or local, and anyagency, authority, instrumentality, regulatory body, court, central bank orother entity exercising executive, legislative, judicial, taxing, regulatory oradministrative powers or functions of or pertaining to government.

 

“Guarantee” of orby any Person (the “guarantor”) means any obligation, contingent orotherwise, of the guarantor guaranteeing or having the economic effect ofguaranteeing any Indebtedness or other obligation of any other Person (the “primaryobligor”) in any manner, whether directly or indirectly, and including anyobligation of the guarantor, direct or indirect, (a) to purchase or pay(or advance or supply funds for the purchase or payment of) such Indebtednessor other obligation or to purchase (or to advance or supply funds for thepurchase of) any security for the payment thereof, (b) to purchase orlease property, securities or services for the purpose of assuring the owner ofsuch Indebtedness or other obligation of the payment thereof, (c) tomaintain working capital, equity capital or any other financial statementcondition or liquidity of the primary obligor so as to enable the primaryobligor to pay such Indebtedness or other obligation or (d) as an account partyin respect of any letter of credit or letter of guaranty issued to support suchIndebtedness or obligation; provided that the term Guarantee shall notinclude endorsements for collection or deposit in the ordinary course ofbusiness.

 

“Guarantor” means(i) the Parent, and (ii) each Subsidiary of the Borrower in existence on theEffective Date, along with each Person who becomes a Subsidiary of the Borrowerafter the Effective Date.

 

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“Guaranty Agreement”means any guaranty agreement executed by a Guarantor in favor of theAdministrative Agent and the Lenders and in the form attached hereto as Exhibit D,together with all extensions, renewals, amendments, substitutions andreplacements thereof or thereto.

 

“Hamm Parties”means (i) Mr. Harold Hamm, individually, (ii) the Harold Hamm DST Trustcreated pursuant to that certain Trust Agreement Establishing Harold Hamm DSTTrust dated December 10, 1998, (iii) the Harold Hamm HJ Trust createdpursuant to that certain Trust Agreement Establishing Harold Hamm HJ Trustdated December 10, 1998, and (iv) any other foundations, trusts or otherentities formed by Harold Hamm and Controlled by the Hamm Parties.

 

“Hazardous Materials”  means all explosive or radioactive substancesor wastes and all hazardous or toxic substances, wastes or other pollutants,including petroleum or petroleum distillates, asbestos or asbestos containingmaterials, polychlorinated biphenyls, radon gas and all other substances orwastes of any nature regulated pursuant to any Environmental Law.

 

“Indebtedness” ofany Person means, without duplication, (a) all obligations of such Personfor borrowed money, (b) all obligations of such Person evidenced by bonds,debentures, notes or similar instruments, (c) all obligations of suchPerson under conditional sale or other title retention agreements relating toproperty acquired by such Person, (d) all obligations of such Person inrespect of the deferred purchase price of property or services (excludingcurrent accounts payable incurred in the ordinary course of business),(e) all Indebtedness of others secured by (or for which the holder of suchIndebtedness has an existing right to be secured by) any Lien on property ownedor acquired by such Person, whether or not the Indebtedness secured thereby hasbeen assumed, (f) all Guarantees by such Person of Indebtedness of others,(g) all Capital Lease Obligations of such Person, (h) allobligations, contingent or otherwise, of such Person as an account party inrespect of letters of credit and letters of guaranty and (i) allobligations, contingent or otherwise, of such Person in respect of bankers’acceptances.  The Indebtedness of anyPerson shall include the Indebtedness of any other entity (including anypartnership in which such Person is a general partner) to the extent suchPerson is liable therefor as a result of such Person’s ownership interest in orother relationship with such entity, except to the extent the terms of suchIndebtedness provide that such Person is not liable therefor.

 

“Indemnified Taxes”means Taxes other than Excluded Taxes.

 

“InformationMemorandum” means the Confidential Information Memorandum dated December,2004 relating to the Borrower and the Transactions.

 

“Interest CoverageRatio” means, at any date, the ratio of (i) Consolidated EBITDA to(ii) the sum of (a) Consolidated Interest Expense, plus(b) Consolidated Lease Expense, plus (c) Consolidated Maintenance CapitalExpenditures, in each case for the period of four consecutive fiscal quartersmost recently ended on or prior to such date for which financial information isavailable.

 

“Interest ElectionRequest” means a request by the Borrower to convert or continue a RevolvingBorrowing in accordance with Section 2.08.

 

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“Interest Payment Date”means (a) with respect to any ABR Loan, the last day of each March, June, September andDecember, and (b) with respect to any Eurodollar Loan, the last day of theInterest 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 thanthree months’ duration, each day prior to the last day of such Interest Periodthat occurs at intervals of three months’ duration after the first day of suchInterest Period.

 

“Interest Period”means with respect to any Eurodollar Borrowing, the period commencing on thedate of such Borrowing and ending on the numerically corresponding day in thecalendar month that is one, two or three months thereafter, as the Borrower mayelect; provided that (i) if any Interest Period would end on a day otherthan a Business Day, such Interest Period shall be extended to the nextsucceeding Business Day unless, in the case of a Eurodollar Borrowing only, suchnext succeeding Business Day would fall in the next calendar month, in whichcase such Interest Period shall end on the next preceding Business Day and (ii)any Interest Period pertaining to a Eurodollar Borrowing that commences on thelast Business Day of a calendar month (or on a day for which there is nonumerically corresponding day in the last calendar month of such InterestPeriod) shall end on the last Business Day of the last calendar month of suchInterest Period.  For purposes hereof,the date of a Borrowing initially shall be the date on which such Borrowing ismade and thereafter shall be the effective date of the most recent conversionor continuation of such Borrowing.

 

“Issuing Bank”means MidFirst Bank, in its capacity as the issuer of Letters of Credithereunder, and its successors in such capacity as provided in Section 2.06(i).  The Issuing Bank may, in its discretion,arrange for one or more Letters of Credit to be issued by Affiliates of theIssuing Bank, in which case the term “Issuing Bank” shall include any suchAffiliate with respect to Letters of Credit issued by such Affiliate.

 

“Law” means alllaws, statutes, treaties, ordinances, codes, acts, rules, regulations,Government Approvals and orders of all Governmental Authorities, whether now orhereafter in effect.

 

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

 

“LC Exposure”means, at any time, the sum of (a) the aggregate undrawn amount of alloutstanding Letters of Credit at such time plus (b) the aggregate amount of allLC Disbursements that have not yet been reimbursed by or on behalf of theBorrower or converted into a Revolver A Loan pursuant to Section 2.06(e)at such time.  The LC Exposure of anyLender at any time shall be its Revolver A Applicable Percentage of the totalLC Exposure at such time.

 

“Leases” meansthose certain lease agreements executed by any Person, as lessor, and any LoanParty, as lessee (or any lease agreement, sublease or other similar arrangemententered into by any Loan Party after the Effective Date) under the terms ofwhich the applicable Loan Party occupies or uses real property and anyimprovements located thereon in the ordinary course of its business.

 

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“Lenders” meansthe Persons listed on Schedule 2.01 (and any Lender or Affiliate ofa Lender that is a counterparty to a Swap Agreement) and any other Person thatshall 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 anAssignment and Assumption.

 

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

 

“Letter of CreditCollateral Account” shall have the meaning set forth in Section 2.06(k).

 

“Leverage Ratio”means, at any date, the ratio of (i) Consolidated Indebtedness at such date to(ii) Consolidated EBITDA for the four consecutive fiscal quarters most recentlyended on or prior to such date for which financial information is available.

 

“LIBO Rate” means,with respect to any Eurodollar Borrowing for any Interest Period, the rateappearing on Page 3750 of the Dow Jones Market Service (or on anysuccessor or substitute page of such Service, or any successor to orsubstitute for such Service, providing rate quotations comparable to thosecurrently provided on such page of such Service, as determined by theAdministrative Agent from time to time for purposes of providing quotations ofinterest rates applicable to dollar deposits in the London interbank market) atapproximately 11:00 a.m., London time, two Business Days prior to thecommencement of such Interest Period, as the rate for dollar deposits with amaturity comparable to such Interest Period. In the event that such rate is not available at such time for anyreason, then the “LIBO Rate” with respect to such Eurodollar Borrowingfor such Interest Period shall be the comparable rate as displayed in theBloomberg Financial Markets system.

 

“Lien” means, withrespect to any asset, (a) any mortgage, deed of trust, lien, pledge,hypothecation, encumbrance, charge, security interest in, or similararrangement, on or of such asset, (b) the interest of a vendor or a lessorunder any conditional sale agreement, capital lease or title retention agreement(or any financing lease having substantially the same economic effect as any ofthe foregoing) relating to such asset and (c) in the case of securities,any purchase option, call or similar right of a third party with respect tosuch securities.

 

“Loan Documents”means this Agreement, the Security Documents, the Guaranty Agreements, anypromissory notes executed in connection herewith, the Letters of Credit (andany applications therefor and reimbursement agreements relating thereto), theFee Letter, any Swap Agreements and any other agreements and documents executedand delivered in connection with this Agreement.

 

“Loan Party” and “LoanParties” means, singularly and collectively, the Parent, the Borrower andeach Guarantor.

 

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

 

“Maintenance CapitalExpenditures” means Capital Expenditures that are required for themaintenance of any asset of any of the Loan Parties to the extent permittedunder the Loan Documents.

 

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“Material AdverseEffect” means a material adverse effect on (a) the business, assets,operations or condition, financial or otherwise, of the Parent, the Borrowerand its Subsidiaries taken as a whole, (b) the ability of the Borrower toperform any of its obligations under this Agreement or (c) the rights ofor benefits available to the Lenders under this Agreement.

 

“Material Contracts”shall have the meaning set forth in Section 3.24 hereof.

 

“Material Indebtedness”means (i) Indebtedness (other than the Loans and Letters of Credit), and (ii)obligations in respect of one or more Swap Agreements, of any one or more ofthe Parent, the Borrower and its Subsidiaries in an aggregate principal amountexceeding $1,000,000.  For purposes ofdetermining Material Indebtedness, the “principal amount” of the obligations ofthe Parent, the Borrower or any Subsidiary in respect of any Swap Agreement atany time shall be the maximum aggregate amount (giving effect to any nettingagreements) that the Parent, the Borrower or such Subsidiary would be requiredto pay if such Swap Agreement were terminated at such time.

 

“Maturity Date”means February 15, 2008.

 

“Maximum Rate”shall have the meaning set forth in Section 9.13.

 

“Moody’s” meansMoody’s Investors Service, Inc.

 

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

 

“New Lender” hasthe meaning assigned to such term in Section 2.20(c).

 

“New Lender Agreement”has the meaning assigned to such term in Section 2.20(c).

 

“Obligations”means all obligations (monetary or otherwise) of each Loan Party arising underor in connection with this Agreement and each other Loan Document.

 

“Omnibus Agreement”means that certain Omnibus Agreement, dated February 15, 2005, by andamong Continental Resources, Inc., Hiland Partners, LLC, Harold Hamm,Hiland Partners GP, LLC and Hiland Partners, LP, which provides, among otherthings, certain non-competition provisions and indemnities for environmentaland tax liabilities.

 

“Other Taxes”means any and all present or future stamp or documentary taxes or any otherexcise or property taxes, charges or similar levies arising from any paymentmade hereunder or from the execution, delivery or enforcement of, or otherwisewith respect to, this Agreement.

 

“Parent” meansHiland Partners, LP, a Delaware limited partnership.

 

“Participant” has the meaning setforth in Section 9.04(c).

 

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“Partnership Agreement”means the First Amended and Restated Agreement of Limited Partnership of theParent dated as of February 15, 2005 and in the form attached hereto as Exhibit G,but shall not include any amendments or changes thereto subsequent to suchdate.

 

“PBGC” means thePension Benefit Guaranty Corporation referred to and defined in ERISA and anysuccessor entity performing similar functions.

 

“PermittedEncumbrances” means:

 

(a)                                  Liensimposed by law for taxes that are not yet due or are being contested incompliance with Section 5.04;

 

(b)                                 carriers’,warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liensimposed by law, arising in the ordinary course of business and securingobligations that are not overdue by more than 30 days or are being contested incompliance with Section 5.04;

 

(c)                                  pledgesand deposits made in the ordinary course of business in compliance with workers’compensation, unemployment insurance and other social security laws orregulations;

 

(d)                                 depositsto secure the performance of bids, trade contracts, leases, statutoryobligations, surety and appeal bonds, performance bonds and other obligationsof a like nature, in each case in the ordinary course of business;

 

(e)                                  judgmentliens in respect of judgments that do not constitute an Event of Default underclause (k) of Article VII;

 

(f)                                    easements,zoning restrictions, rights-of-way and similar encumbrances on real propertyimposed by law or arising in the ordinary course of business that do not secureany monetary obligations and do not materially detract from the value of theaffected property or interfere with the ordinary conduct of business of theBorrower or any of its Subsidiaries;

 

(g)                                 Lienssecuring obligations (other than obligations representing Indebtedness forborrowed money) under operating, reciprocal easement or similar agreementsentered into in the ordinary course of business of the Borrower and itsSubsidiaries;

 

(h)                                 licensesof patents, trademarks and other intellectual property rights granted by theBorrower or any of its Subsidiaries in the ordinary course of business and notinterfering in any material respect with the ordinary conduct of the businessof the Borrower and its Subsidiaries;

 

(i)                                     thelien reserved in leases for rent and for compliance with the terms of the leasein the case of leasehold estates;

 

(j)                                     Liensarising solely by virtue of any statutory or common law provision relating tobanker’s liens, rights of set-off or similar rights and remedies and burdeningonly deposit accounts or other funds maintained with a creditor depositoryinstitution.

 

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providedthat the term “Permitted Encumbrances” shall not include any Lien securingIndebtedness except as otherwise permitted above.

 

“Permitted Investments”means:

 

(a)                                  directobligations of, or obligations the principal of and interest on which areunconditionally guaranteed by, the United States of America (or by any agencythereof to the extent such obligations are backed by the full faith and creditof the United States of America), in each case maturing within one year fromthe date of acquisition thereof;

 

(b)                                 investmentsin commercial paper, asset-backed securities, auction rate securities orsimilar instruments maturing within 270 days from the date of acquisitionthereof and having, at such date of acquisition, a credit rating of at least A-2from S&P or P-2 from Moody’s;

 

(c)                                  investmentsin certificates of deposit, banker’s acceptances and time deposits maturingwithin 180 days from the date of acquisition thereof issued or guaranteed by orplaced with, and money market deposit accounts issued or offered by, anydomestic office of any commercial bank organized under the laws of the UnitedStates of America or any State thereof which has a combined capital and surplusand undivided profits of not less than $250,000,000;

 

(d)                                 fullycollateralized repurchase agreements with a term of not more than 30 days forsecurities described in clause (a) above and entered into with a financialinstitution satisfying the criteria described in clause (c) above;

 

(e)                                  moneymarket funds that (i) comply with the criteria set forth in SEC Rule 2a-7under the Investment Company Act of 1940, as amended, (ii) are rated AAA byS&P and Aaa by Moody’s and (iii) have portfolio assets of at least$5,000,000,000;

 

(f)                                    securitieswith maturities of six months or less from the date of acquisition backed bystandby letters of credit issued by any Lender or any commercial banksatisfying the requirements of clause (b) of this definition; and

 

(g)                                 sharesof money market mutual or similar funds which invest exclusively in assetssatisfying the requirements of clauses (a) through (f) of this definition,except that with respect to the maturities of the assets included in such fundsthe requirements of clauses (a) through (f) shall not be applied to theindividual assets included in such funds but to the weighted-average maturityof all assets included in such funds.

 

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

 

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

 

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“Prime Rate” meansthe rate of interest per annum publicly announced from time to time by MidFirstBank as its prime rate in effect at its principal office in Oklahoma City,Oklahoma; each change in the Prime Rate shall be effective from and includingthe date such change is publicly announced as being effective.

 

“Prior CreditAgreements” means (i) that certain Credit Agreement by and amongMidFirst Bank, as lender, and Hiland Energy Partners, LLC, as borrower, dated November 24,2004, as amended and (ii) that certain Credit Agreement by and among UnionBank of California, as lender, and Continental Gas, Inc., as borrower,dated October 22, 2003.

 

“QuarterlyDistributions” means the distributions by the Parent of Available Cash.

 

“Re-Allocation Date”has the meaning assigned to such term in Section 2.20.

 

“Register” has themeaning set forth in Section 9.04.

 

“Regulation D”means Regulation D of the Board, as the same is from time to time in effect,and all official rulings and interpretations thereunder or thereof.

 

“Regulation T” meansRegulation T of the Board, as the same is from time to time in effect, and allofficial rulings and interpretations thereunder or thereof.

 

“Regulation U”means Regulation U of the Board, as the same is from time to time in effect,and all official rulings and interpretations thereunder or thereof.

 

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

 

“Required Lenders”means, at any time, Lenders having Revolving Credit Exposures representing morethan fifty percent (50%) of the sum of the total Revolving Credit Exposures or,if at such time no Lenders have Revolving Credit Exposure, Lenders havingunused Commitments representing more than fifty percent (50%) of the unusedCommitments at such time, but in any event including the Administrative Agent,in its capacity as a Lender; provided, however, that notwithstanding theabove, Lenders having Revolving Credit Exposures representing more thansixty-six and two-thirds percent (66 2/3%) of the sum of the total RevolvingCredit Exposures or, if at such time no Lenders have Revolving Credit Exposure,Lenders having unused Commitments representing more than sixty-six andtwo-thirds percent (66 2/3%) of the unused Commitments at such time, willconstitute Required Lenders irrespective of the fact that the AdministrativeAgent, in its capacity as a Lender, is not one of such Lenders.

 

“Response” means(a) “response” as such term is defined in CERCLA, 42 U.S.C. §9601(25), and (b)all other actions required by any Governmental Authority or voluntarilyundertaken to:  (i) clean up, remove,treat, abate, or in any other way address any Hazardous Material in theenvironment; (ii) prevent the release of any Hazardous Material; or (iii)perform studies and investigations in connection with clause (i) or (ii) above.

 

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“Restricted Payment”means any dividend or other distribution (whether in cash, securities or otherproperty) with respect to any Equity Interests in the Borrower or anySubsidiary, 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 suchEquity Interests in the Borrower or any option, warrant or other right toacquire any such Equity Interests in the Borrower.

 

“Revolver AApplicable Percentage” means, with respect to any Lender, the percentage ofthe total Revolver A Commitments represented by such Lender’sRevolver A Commitment.  If theRevolver A Commitments have terminated or expired, the Revolver AApplicable Percentages shall be determined based upon the Revolver ACommitments most recently in effect, giving effect to any assignments.

 

“Revolver A Borrowing”means a Revolver A Loan of the same Type, made, converted or continued on thesame date and, in the case of Eurodollar Loans, as to which a single InterestPeriod is in effect

 

“Revolver ACommitment” means, with respect to each Lender, the commitment of suchLender to make Revolver A Loans and to acquire participations in Lettersof Credit hereunder, expressed as an amount representing the maximum aggregateamount of such Lender’s Revolver A Credit Exposure hereunder, as suchcommitment may be (a) reduced from time to time pursuant to Section 2.09,(b) increased from time to time pursuant to Section 2.20, and (c)reduced or increased from time to time pursuant to assignments by or to suchLender pursuant to Section 9.04. The initial amount of each Lender’s Revolver A Commitment is setforth on Schedule 2.01, or in the Assignment and Assumption pursuantto which such Lender shall have assumed its Commitment, as applicable.  The initial aggregate amount of the Lenders’Revolver A Commitments is $47,500,000.

 

“Revolver A CreditExposure” means, with respect to any Lender at any time, the sum of theoutstanding principal amount of such Lender’s Revolver A Loans and its LCExposure at such time.

 

“Revolver A Loan”means a loan made pursuant to Section 2.01(a).

 

“Revolver B Borrowing”means a Revolver B Loan of the same Type, made, converted or continued on thesame date and, in the case of Eurodollar Loans, as to which a single InterestPeriod is in effect

 

“Revolver BCommitment” means, with respect to each Lender, the commitment of suchLender to make Revolver B Loans, expressed as an amount representing themaximum aggregate amount of such Lender’s Revolver B Credit Exposurehereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09,and (b) reduced or increased from time to time pursuant to assignments by or tosuch Lender pursuant to Section 9.04.  The initial amount of each Lender’sRevolver B Commitment is set forth on Schedule 2.01, or in theAssignment and Assumption pursuant to which such Lender shall have assumed itsCommitment, as applicable.  The aggregateamount of the Lenders’ Revolver B Commitments is $7,500,000.

 

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“Revolver B CreditExposure” means, with respect to any Lender at any time, the sum of theoutstanding principal amount of such Lender’s Revolver B Loans at suchtime.

 

“Revolver B Loan”means a loan made pursuant to Section 2.01(b).

 

“Revolving Borrowing”means either a Revolver A Borrowing or a Revolver B Borrowing.

 

“Revolving CreditExposure” means, with respect to any Lender at any time, the sum of theoutstanding principal amount of such Lender’s (i) Revolver A Loans, (ii)Revolver B Loans, and (iii) such Lender’s LC Exposure at such time.

 

“Revolving Loan”means a Revolver A Loan or a Revolver B Loan made pursuant to Section 2.03.

 

“S&P” meansStandard & Poor’s.

 

“SEC” means theSecurities and Exchange Commission (or successors thereto or an analogousGovernmental Authority).

 

“Security Documents”means the guaranty of each of the Guarantors, together with any guarantydelivered pursuant to Section 5.16 hereof, and any and all othersecurity agreements, pledge agreements, mortgages, deeds of trust, leaseholdmortgages, leasehold deeds of trust, guaranty agreements, landlord’s consents,estoppels, assignments, UCC financing statements and all similar documentsexecuted by any Person in connection herewith, including, without limitation,all documents and instruments listed on Schedule 1.01 attachedhereto, together with any agreements delivered pursuant to Section 5.12hereof, granting to the Administrative Agent for the benefit of the Lenders afirst Lien and security interest in substantially all of the Collateral of theBorrower and its Subsidiaries as security for the Obligations, subject only toPermitted Encumbrances.

 

“Solvent” means,with respect to any Person on a particular date, that on such date (i) thefair value of the property of such Person is greater than the total amount ofliabilities, including contingent liabilities, of such Person, (ii) thepresent fair salable value of the assets of such Person is not less than theamount that will be required to pay the probable liability of such Person onits debts as they become absolute and matured, (iii) such Person is ableto realize upon its assets and pay its debts and other liabilities, contingentobligations and other commitments as they mature in the normal course ofbusiness, (iv) such Person does not intend to, and does not believe thatit will, incur debts or liabilities beyond such Person’s ability to pay as suchdebts and liabilities mature, taking into account the possibility ofrefinancing such debt or selling such assets, and (v) such Person is notengaged in business or a transaction, and is not about to engage in business ora transaction, for which such Person’s property would constitute unreasonablysmall capital.  In computing the amountof contingent liabilities at any time, it is intended that such liabilitieswill be computed at the amount which, in light of all the facts and circumstancesexisting at such time, represents the amount that can reasonably be expected tobecome an actual or matured liability.

 

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“Statutory ReserveRate” means a fraction (expressed as a decimal), the numerator of which isthe number one and the denominator of which is the number one minus theaggregate of the maximum reserve percentages (including any marginal, special,emergency or supplemental reserves) expressed as a decimal established by theBoard to which the Administrative Agent is subject (a) with respect to theBase CD Rate, for new negotiable non-personal time deposits in dollars of over$100,000 with maturities approximately equal to three months and(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currentlyreferred to as “Eurocurrency Liabilities” in Regulation D of theBoard).  Such reserve percentages shallinclude those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed toconstitute eurocurrency funding and to be subject to such reserve requirementswithout benefit of or credit for proration, exemptions or offsets that may beavailable from time to time to any Lender under such Regulation D or anycomparable regulation.  The StatutoryReserve Rate shall be adjusted automatically on and as of the effective date ofany change in any reserve percentage.

 

“subsidiary(ies)”means, singularly and collectively, with respect to any Person (the “parent”)at any date, any corporation, limited liability company, partnership,association or other entity the accounts of which would be consolidated withthose of the parent in the parent’s consolidated financial statements if suchfinancial statements were prepared in accordance with GAAP as of such date, aswell as any other corporation, limited liability company, partnership,association or other entity (a) of which securities or other ownershipinterests representing more than 50% of the equity or more than 50% of theordinary voting power or, in the case of a partnership, more than 50% of thegeneral partnership interests are, as of such date, owned, controlled or held,or (b) that is, as of such date, otherwise Controlled, by the parent orone or more subsidiaries of the parent or by the parent and one or moresubsidiaries of the parent.

 

“Subsidiary” meansany direct or indirect subsidiary of the Borrower.

 

“Swap Agreement” means any agreement with respect to any swap,forward, future or derivative transaction or option or similar agreementinvolving, or settled by reference to, one or more rates, currencies,commodities, equity or debt instruments or securities, or economic, financialor pricing indices or measures of economic, financial or pricing risk or valueor any similar transaction or any combination of these transactions; providedthat no phantom stock or similar plan providing for payments only onaccount of services provided by current or former directors, officers,employees or consultants of the Borrower or the Subsidiaries shall be a SwapAgreement.

 

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

 

“Three-Month SecondaryCD Rate” means, for any day, the secondary market rate for three-monthcertificates of deposit reported as being in effect on such day (or, if suchday is not a Business Day, the next preceding Business Day) by the Boardthrough the public information telephone line of the Federal Reserve Bank ofNew York (which rate will, under the current practices of the Board, bepublished in Federal Reserve Statistical Release H.15(519) during the weekfollowing such day).

 

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“Transactions”means the execution, delivery and performance by the Borrower of thisAgreement, the borrowing of Loans, the use of the proceeds thereof and theissuance of Letters of Credit hereunder and the Security Documents.

 

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

 

“UCC” means theUniform Commercial Code as from time to time in effect in the State of Oklahomaor, where applicable as to specific Collateral, any other relevant state.

 

“Withdrawal Liability”means liability to a Multiemployer Plan as a result of a complete or partialwithdrawal from such Multiemployer Plan, as such terms are defined in Part Iof Subtitle E of Title IV of ERISA.

 

SECTION 1.02.                 Classificationof Loans and Borrowings.  Forpurposes of this Agreement, Loans may be classified and referred to by Class (e.g.,a “Revolver A Loan” or a “Revolver B Loan”) or by Type (e.g., a “EurodollarLoan”) or by Class and Type (e.g., a “Eurodollar Revolver A Loan” or “EurodollarRevolver B Loan”).  Borrowings also maybe classified and referred to by Class (e.g., a “Revolver A Borrowing” ora “Revolver B Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class andType (e.g., a “Eurodollar Revolver A Borrowing” or a “Eurodollar Revolver BBorrowing”).

 

SECTION 1.03.                 TermsGenerally.  The definitions of termsherein shall apply equally to the singular and plural forms of the termsdefined.  Whenever the context mayrequire, any pronoun shall include the corresponding masculine, feminine andneuter forms.  The words “include”, “includes”and “including” shall be deemed to be followed by the phrase “withoutlimitation”.  The word “will” shall beconstrued to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) anydefinition of or reference to any agreement, instrument or other documentherein shall be construed as referring to such agreement, instrument or otherdocument as from time to time amended, supplemented or otherwise modified(subject to any restrictions on such amendments, supplements or modificationsset forth herein), (b) any reference herein to any Person shall be construed toinclude such Person’s successors and assigns, (c) the words “herein”, “hereof”and “hereunder”, and words of similar import, shall be construed to refer tothis Agreement in its entirety and not to any particular provision hereof, (d)all references herein to Articles, Sections, Exhibits and Schedules shall beconstrued to refer to Articles and Sections of, and Exhibits and Schedules to,this Agreement and (e) the words “asset” and “property” shall be construed tohave the same meaning and effect and to refer to any and all tangible andintangible assets and properties, including cash, securities, accounts andcontract rights.

 

SECTION 1.04.                 AccountingTerms; GAAP.  Except as otherwiseexpressly provided herein, all terms of an accounting or financial nature shallbe construed in accordance with GAAP, as in effect from time to time; providedthat, if the Borrower notifies the Administrative Agent that the Borrowerrequests an amendment to any provision hereof to eliminate the effect of anychange occurring after the date hereof in GAAP or in the application thereof onthe operation of such provision (or if the Administrative Agent notifies theBorrower 

 

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that the Required Lendersrequest an amendment to any provision hereof for such purpose), regardless ofwhether any such notice is given before or after such change in GAAP or in theapplication thereof, then such provision shall be interpreted on the basis ofGAAP as in effect and applied immediately before such change shall have becomeeffective until such notice shall have been withdrawn or such provision amendedin a manner satisfactory to the Borrower and the Required Lenders.

 

SECTION 1.05.                 AnnualizedFinancial Information.  Until theexpiration of four fiscal quarters following the Effective Date, compliancewith Section 6.17 and Section 6.18 shall be computed onan annualized basis.

 

**ARTICLE II**

 

# **The Credits**

 

SECTION 2.01.                 Commitments.  (a) Subject to the terms and conditions setforth herein, each Lender agrees to make Revolver A Loans to the Borrowerfrom time to time during the Availability Period in an aggregate principalamount that will not result in (i) such Lender’s Revolver A CreditExposure exceeding such Lender’s Revolver A Commitment, or (ii) thesum of the total Revolver A Credit Exposures exceeding the totalRevolver A Commitments.  Within theforegoing limits and subject to the terms and conditions set forth herein, theBorrower may borrow, prepay and re-borrow Revolver A Loans.

 

### (b)                                 Subjectto the terms and conditions set forth herein, each Lender agrees to makeRevolver B Loans to the Borrower from time to time during the AvailabilityPeriod in an aggregate principal amount that will not result in (i) suchLender’s Revolver B Credit Exposure exceeding such Lender’s Revolver BCommitment, or (ii) the sum of the total Revolver B Credit Exposuresexceeding the total Revolver B Commitments. Within the foregoing limits and subject to the terms and conditions setforth herein, the Borrower may borrow, prepay and re-borrow Revolver B Loans.

 

SECTION 2.02.                 Loansand Borrowings.  (a) Each RevolvingLoan shall be made as part of a Borrowing consisting of Revolving Loans made bythe Lenders ratably in accordance with their respective Revolver A Commitmentsor Revolver B Commitments, as applicable. The failure of any Lender to make any Loan required to be made by itshall not relieve any other Lender of its obligations hereunder; providedthat the Commitments of the Lenders are several and no Lender shall beresponsible for any other Lender’s failure to make Loans as required.

 

### (b)                                 Subjectto Section 2.14, each Revolving Borrowing shall be comprisedentirely of ABR Loans or Eurodollar Loans as the Borrower may request inaccordance herewith.  Each Lender at itsoption may make any Eurodollar Loan by causing any domestic or foreign branchor Affiliate of such Lender to make such Loan; provided that anyexercise of such option shall not affect the obligation of the Borrower torepay such Loan in accordance with the terms of this Agreement.

 

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### (c)                                  Atthe commencement of each Interest Period for any Eurodollar RevolvingBorrowing, such Borrowing shall be in an aggregate amount that is an integralmultiple of $1,000,000 and not less than $1,000,000.  At the time that each ABR Revolving Borrowingis made, such Borrowing shall be in an aggregate amount that is an integralmultiple of $1,000,000 and not less than $1,000,000; provided that anABR Revolving Borrowing may be in an aggregate amount that is equal to theentire unused balance of the total Revolver A Commitments or Revolver BCommitments, as applicable, or that is required to finance the reimbursement ofan LC Disbursement as contemplated by Section 2.06(e).  Borrowings of more than one Type may beoutstanding at the same time; provided that there shall not at any timebe more than a total of five (5) Eurodollar Revolving Borrowings outstanding.

###  

### (d)                                 Notwithstandingany other provision of this Agreement, the Borrower shall not be entitled torequest, or to elect to convert or continue, any Borrowing if the InterestPeriod requested with respect thereto would end after the Maturity Date.

###  

SECTION 2.03.                 Requestsfor Revolving Borrowings.  To requesta Revolving Borrowing, the Borrower shall notify the Administrative Agent ofsuch request by telephone (a) in the case of a Eurodollar Borrowing, notlater than 11:00 a.m., Oklahoma City, Oklahoma time, three Business Daysbefore the date of the proposed Borrowing or (b) in the case of an ABRBorrowing, not later than 11:00 a.m., Oklahoma City, Oklahoma time, on thedate of the proposed Borrowing; provided that any such notice of an ABRRevolving Borrowing to finance the reimbursement of an LC Disbursement ascontemplated by Section 2.06(e) may be given not later than 10:00 a.m.,Oklahoma City, Oklahoma time, on the date of the proposed Borrowing.  Each such telephonic Borrowing Request shallbe irrevocable and shall be confirmed promptly by hand delivery or telecopy tothe Administrative Agent of a written Borrowing Request in a form approved bythe Administrative Agent and signed by the Borrower.  Each such telephonic and written BorrowingRequest shall specify the following information in compliance with Section 2.02:

 

#### (i)                                     theaggregate amount of the requested Borrowing;

####  

#### (ii)                                  thedate of such Borrowing, which shall be a Business Day;

####  

#### (iii)                               whethersuch Borrowing is a Revolver A Borrowing or a Revolver B Borrowing;

####  

#### (iv)                              whethersuch Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

####  

#### (v)                                 inthe case of a Eurodollar Borrowing, the initial Interest Period to beapplicable thereto, which shall be a period contemplated by the definition ofthe term “Interest Period”; and

####  

#### (vi)                              thelocation and number of the Borrower’s account to which funds are to bedisbursed, which shall comply with the requirements of Section 2.07.

####  

If no election as to theType of Revolving Borrowing is specified, then the requested RevolvingBorrowing shall be an ABR Borrowing.  Ifno Interest Period is specified with respect to any 

 

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requested EurodollarRevolving Borrowing, then the Borrower shall be deemed to have selected anInterest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance withthis Section, the Administrative Agent shall advise each Lender of the detailsthereof and of the amount of such Lender’s Loan to be made as part of therequested Borrowing.

 

SECTION 2.04.                 AgentAdvances.  Subject to the limitationsset forth below, the Administrative Agent is authorized by the Borrower and theLenders, from time to time, at the request of the Required Lenders and afterthe occurrence of a Default or an Event of Default, to make Revolver A Loansand/or Revolver B Loans on behalf of the Borrower which the Required Lenders,in their reasonable business judgment, deem necessary or desirable (i) topreserve or protect the Collateral or any portion thereof, (ii) to enhance thelikelihood of, or maximize the amount of, repayment of the Loans and otherObligations, or (iii) to pay any other amount chargeable to Borrower pursuantto the terms of this Agreement, including costs, fees and expenses (any of suchadvances are herein referred to as “Agent Advances”); provided,that the Required Lenders may at any time revoke the Administrative Agent’s authorizationto make Agent Advances.  Any suchrevocation must be in writing and shall become effective prospectively upon theAdministrative Agent’s receipt thereof. The Agent Advances shall be secured by the liens in the Collateralcreated under the Security Documents and shall constitute ABR RevolvingBorrowings and for all purposes shall be part of the Obligations hereunder.

 

SECTION 2.05.                 IntentionallyDeleted.

 

SECTION 2.06.                 Lettersof Credit.  (a) General.  Subject to the terms and conditions set forthherein, the Borrower may request the issuance of Letters of Credit under theRevolver A Commitment for its own account or for the account of any Subsidiary,in a form reasonably acceptable to the Administrative Agent and the IssuingBank, at any time and from time to time during the Availability Period.  In the event of any inconsistency between theterms and conditions of this Agreement and the terms and conditions of any formof letter of credit application or other agreement submitted by the Borrowerto, or entered into by the Borrower with, the Issuing Bank relating to anyLetter of Credit, the terms and conditions of this Agreement shall control.

 

### (b)                                 Noticeof 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 electroniccommunication, if arrangements for doing so have been approved by the IssuingBank) to the Issuing Bank and the Administrative Agent (reasonably in advanceof the requested date of issuance, amendment, renewal or extension) a noticerequesting the issuance of a Letter of Credit, or identifying the Letter ofCredit to be amended, renewed or extended, and specifying the date of issuance,amendment, renewal or extension (which shall be a Business Day), the date onwhich such Letter of Credit is to expire (which shall comply withparagraph (c) of this Section), the amount of such Letter of Credit, thename and address of the beneficiary thereof and such other information as shallbe necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, theBorrower also shall submit a letter of credit application on the Issuing Bank’sstandard form in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended,renewed or extended only if (and upon issuance, amendment, renewal or extensionof each Letter of Credit the Borrower shall be 

 

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### deemed to represent and warrant that), after givingeffect to such issuance, amendment, renewal or extension (i) the LCExposure shall not exceed $5,000,000 and (ii) the sum of the total Revolver ACredit Exposures shall not exceed the total Revolver A Commitments.

###  

### (c)                                  ExpirationDate.  Each Letter of Credit shallexpire at or prior to the close of business on the earlier of (i) the dateone year after the date of the issuance of such Letter of Credit (or, in thecase of any renewal or extension thereof, one year after such renewal orextension) and (ii) the date that is five Business Days prior to theMaturity Date; provided, however, that any Letter of Credit with a oneyear tenor may provide for the renewal thereof for additional one year periodswhich shall in no event extend beyond the date that is five Business Days priorto the Maturity Date unless cash collateral, as set forth in Section 2.06(k)below shall have been granted to the Issuing Bank as security for theIndebtedness under the Loan Documents no later than five Business Days prior tothe Maturity Date, in which case such cash collateralized Letter of Creditshall not have an expiration date later than one year after the Maturity Date.

###  

### (d)                                 Participations.  By the issuance of a Letter of Credit (or anamendment to a Letter of Credit increasing the amount thereof) and without anyfurther action on the part of the Issuing Bank or the Lenders, the Issuing Bankhereby grants to each Lender, and each Lender hereby acquires from the IssuingBank, a participation in such Letter of Credit equal to such Lender’sRevolver A Applicable Percentage of the aggregate amount available to bedrawn under such Letter of Credit.  Inconsideration and in furtherance of the foregoing, each Lender herebyabsolutely and unconditionally agrees to pay to the Administrative Agent, forthe account of the Issuing Bank, such Lender’s Revolver A ApplicablePercentage of each LC Disbursement made by the Issuing Bank and not reimbursedby the Borrower on the date due as provided in paragraph (e) of this Section,or of any reimbursement payment required to be refunded to the Borrower for anyreason.  Each Lender acknowledges and agreesthat its obligation to acquire participations pursuant to this paragraph inrespect of Letters of Credit is absolute and unconditional and shall not beaffected by any circumstance whatsoever, including any amendment, renewal orextension of any Letter of Credit or the occurrence and continuance of aDefault or reduction or termination of the Revolver A Commitments, andthat each such payment shall be made without any offset, abatement, withholdingor reduction whatsoever.  Promptlyfollowing receipt of a notice from Borrower requesting the issuance of a Letterof Credit in accordance with Section 2.06(b), the AdministrativeAgent shall advise each Lender of the details thereof and of the amount of suchLender’s participation in such Letter of Credit.

###  

### (e)                                  Reimbursement.  If the Issuing Bank shall make any LCDisbursement in respect of a Letter of Credit, the Borrower shall reimbursesuch LC Disbursement by paying to the Administrative Agent an amount equal tosuch LC Disbursement not later than 12:00 noon, Oklahoma City, Oklahoma time,on the date that such LC Disbursement is made, if the Borrower shall havereceived notice of such LC Disbursement prior to 10:00 a.m., OklahomaCity, Oklahoma, on such date, or, if such notice has not been received by theBorrower prior to such time on such date, then not later than 12:00 noon,Oklahoma City, Oklahoma time, on (i) the Business Day that the Borrowerreceives such notice, if such notice is received prior to 10:00 a.m.,Oklahoma City, Oklahoma time, on the day of receipt, or (ii) the Business Day immediatelyfollowing the day that the Borrower receives such notice, if such notice is notreceived prior to such time on the day of receipt; provided that theBorrower may, subject to the 

 

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### conditions to borrowing set forth herein, request inaccordance with Section 2.03 that such payment be financed with anABR Revolver A Borrowing in an equivalent amount and, to the extent sofinanced, the Borrower’s obligation to make such payment shall be discharged andreplaced by the resulting ABR Revolver A Borrowing.  If the Borrower fails to make such paymentwhen due, the Administrative Agent shall notify each Lender of the applicableLC Disbursement, the payment then due from the Borrower in respect thereof and suchLender’s Revolver A Applicable Percentage thereof.  Promptly following receipt of such notice,each Lender shall pay to the Administrative Agent its Revolver AApplicable Percentage of the payment then due from the Borrower, in the samemanner as provided in Section 2.07 with respect to Loans made bysuch Lender (and Section 2.07 shall apply, mutatismutandis,to the payment obligations of the Lenders), and the Administrative Agent shallpromptly pay to the Issuing Bank the amounts so received by it from theLenders.  Promptly following receipt bythe Administrative Agent of any payment from the Borrower pursuant to thisparagraph, the Administrative Agent shall distribute such payment to theIssuing Bank or, to the extent that Lenders have made payments pursuant to thisparagraph to reimburse the Issuing Bank, then to such Lenders and the IssuingBank as their interests may appear.  Anypayment made by a Lender pursuant to this paragraph to reimburse the Issuing Bankfor any LC Disbursement (other than the funding of ABR Revolver A Loans ascontemplated above) shall not constitute a Loan and shall not relieve theBorrower of its obligation to reimburse such LC Disbursement.

###  

### (f)                                    ObligationsAbsolute.  The Borrower’s obligationto reimburse LC Disbursements as provided in paragraph (e) of this Section shallbe absolute, unconditional and irrevocable, and shall be performed strictly inaccordance with the terms of this Agreement under any and all circumstanceswhatsoever and irrespective of (i) any lack of validity or enforceability ofany Letter of Credit or this Agreement, or any term or provision therein, (ii)any draft or other document presented under a Letter of Credit proving to beforged, fraudulent or invalid in any respect or any statement therein beinguntrue or inaccurate in any respect, (iii) payment by the Issuing Bank under aLetter of Credit against presentation of a draft or other document that doesnot comply with the terms of such Letter of Credit, or (iv) any other event orcircumstance whatsoever, whether or not similar to any of the foregoing, thatmight, but for the provisions of this Section, constitute a legal or equitabledischarge of, or provide a right of setoff against, the Borrower’s obligationshereunder.  Neither the AdministrativeAgent, the Lenders nor the Issuing Bank, nor any of their Related Parties,shall have any liability or responsibility by reason of or in connection withthe issuance or transfer of any Letter of Credit or any payment or failure tomake any payment thereunder (irrespective of any of the circumstances referredto in the preceding sentence), or any error, omission, interruption, loss ordelay in transmission or delivery of any draft, notice or other communicationunder or relating to any Letter of Credit (including any document required tomake a drawing thereunder), any error in interpretation of technical terms orany consequence arising from causes beyond the control of the Issuing Bank; providedthat the foregoing shall not be construed to excuse the Issuing Bank fromliability to the Borrower to the extent of any direct damages (as opposed toconsequential damages, claims in respect of which are hereby waived by theBorrower to the extent permitted by applicable Law) suffered by the Borrowerthat are caused by the Issuing Bank’s failure to exercise care when determiningwhether drafts and other documents presented under a Letter of Credit complywith the terms thereof.  The partieshereto expressly agree that, in the absence of gross negligence or willfulmisconduct on the part of the Issuing Bank (as finally determined by a court ofcompetent jurisdiction), the Issuing Bank shall be deemed to have exercisedcare in each such 

 

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### determination. In furtherance of the foregoing and without limiting the generalitythereof, the parties agree that, with respect to documents presented whichappear on their face to be in substantial compliance with the terms of a Letterof Credit, the Issuing Bank may, in its sole discretion, either accept and makepayment upon such documents without responsibility for further investigation,regardless of any notice or information to the contrary, or refuse to acceptand make payment upon such documents if such documents are not in strictcompliance with the terms of such Letter of Credit.

###  

### (g)                                 DisbursementProcedures.  The Issuing Bank shall,promptly following its receipt thereof, examine all documents purporting torepresent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify theAdministrative Agent and the Borrower by telephone (confirmed by telecopy) ofsuch demand for payment and whether the Issuing Bank has made or will make anLC Disbursement thereunder; provided that any failure to give or delayin giving such notice shall not relieve the Borrower of its obligation toreimburse the Issuing Bank and the Lenders with respect to any such LCDisbursement.

###  

### (h)                                 InterimInterest.  If the Issuing Bank shallmake any LC Disbursement, then, unless the Borrower shall reimburse such LCDisbursement in full on the date such LC Disbursement is made, the unpaidamount thereof shall bear interest, for each day from and including the datesuch LC Disbursement is made to but excluding the date that the Borrowerreimburses such LC Disbursement, at the rate per annum then applicable to ABRRevolving Loans; provided that, if the Borrower fails to reimburse suchLC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(d)shall apply.  Interest accrued pursuantto this paragraph shall be for the account of the Issuing Bank, except thatinterest accrued on and after the date of payment by any Lender pursuant toparagraph (e) of this Section to reimburse the Issuing Bank shall be forthe account of such Lender to the extent of such payment.

###  

### (i)                                     Replacementof the Issuing Bank.  The IssuingBank may be replaced at any time by written agreement among the Borrower, theAdministrative Agent, the replaced Issuing Bank and the successor IssuingBank.  The Administrative Agent shallnotify the Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall becomeeffective, the Borrower shall pay all unpaid fees accrued for the account ofthe replaced Issuing Bank pursuant to Section 2.12(b).  From and after the effective date of any suchreplacement, (i) the successor Issuing Bank shall have all the rights andobligations of the Issuing Bank under this Agreement with respect to Letters ofCredit to be issued thereafter and (ii) references herein to the term “IssuingBank” shall be deemed to refer to such successor or to any previous IssuingBank, or to such successor and all previous Issuing Banks, as the context shallrequire.  After the replacement of anIssuing Bank hereunder, the replaced Issuing Bank shall remain a party heretoand shall continue to have all the rights and obligations of an Issuing Bankunder this Agreement with respect to Letters of Credit issued by it prior tosuch replacement, but shall not be required to issue additional Letters ofCredit.

###  

### (j)                                     CashCollateralization.  If any Event ofDefault shall occur and be continuing, on the Business Day that the Borrowerreceives notice from the Administrative Agent or the Required Lenders (or, ifthe maturity of the Loans has been accelerated, the Lenders with LC Exposurerepresenting greater than 50% of the total LC Exposure) demanding the 

 

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### deposit of cash collateral pursuant to this paragraph,the Borrower shall deposit in an account with the Administrative Agent, in thename of the Administrative Agent and for the benefit of the Lenders, an amountin cash equal to the LC Exposure as of such date plus any accrued and unpaidinterest thereon; provided that the obligation to deposit such cashcollateral shall become effective immediately, and such deposit shall becomeimmediately due and payable, without demand or other notice of any kind, uponthe occurrence of any Event of Default with respect to the Borrower describedin clause (h), (i) or (j) of Article VII.  Such deposit shall be held by theAdministrative Agent as collateral for the payment and performance of theobligations of the Borrower under this Agreement.  The Administrative Agent shall have exclusivedominion and control, including the exclusive right of withdrawal, over suchaccount.  Funds held in such accountshall be invested in money market funds of the Administrative Agent or inanother investment if mutually agreed upon by the Borrower and theAdministrative Agent, but the Administrative Agent shall have no otherobligation to make any other investment of the funds therein.  The Administrative Agent shall exercisereasonable care in the custody and preservation of any funds held in such accountand shall be deemed to have exercised such care if such funds are accordedtreatment substantially equivalent to that which the Administrative Agentaccords its own property, it being understood that the Administrative Agentshall not have any responsibility for taking any necessary steps to preserverights against any parties with respect to any such funds.  Interest or profits, if any, on suchinvestments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent toreimburse the Issuing Bank for LC Disbursements for which it has not beenreimbursed and, to the extent not so applied, shall be held for thesatisfaction of the reimbursement obligations of the Borrower for the LCExposure at such time or, if the maturity of the Loans has been accelerated(but subject to the consent of the Lenders with LC Exposure representinggreater than 50% of the total LC Exposure), be applied to satisfy otherobligations of the Borrower under this Agreement.  If the Borrower is required to provide anamount of cash collateral hereunder as a result of the occurrence of an Eventof Default, such amount (to the extent not applied as aforesaid) shall bereturned to the Borrower within three Business Days after all Events of Defaulthave been cured or waived.

###  

### (k)                                  Inthe event any Letters of Credit shall be outstanding according to their termsafter the Maturity Date, the Borrower shall pay to the Administrative Agent, nolater than the date that is five Business Days prior to the Maturity Date, anamount equal to the undrawn amount of such Letters of Credit to be held in aspecial interest bearing cash collateral account pledged to the AdministrativeAgent (the “Letter of Credit Collateral Account”).  The Borrower and the Administrative Agentshall establish the Letter of Credit Collateral Account and the Borrower shallexecute all documents and agreements, including the Administrative Agent’sstandard form of assignment of deposit accounts, that the Administrative Agentreasonably requests in connection therewith to establish the Letter of CreditCollateral Account and grant the Administrative Agent, for the benefit of theLenders, a first priority security interest in such account and the fundstherein.  The Borrower hereby pledges tothe Administrative Agent and grants the Administrative Agent a securityinterest in the Letter of Credit Collateral Account, whenever established, inall funds held in the Letter of Credit Collateral Account from time to time,and in all proceeds thereof as security for the payment of all Indebtednessexisting under the Loan Documents.  Fundsheld in the Letter of Credit Collateral Account shall be held as cashcollateral for obligations described in this Section 2.06 and allother Indebtedness under the Loan Documents and promptly applied by theAdministrative Agent at the request of the Issuing Bank 

 

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### to any reimbursement or other obligations underLetters of Credit that exist or occur in the future during such time as theBorrower has any outstanding obligations to the Issuing Bank.  To the extent that any surplus funds are heldin the Letters of Credit Collateral Account above the undrawn amount of anyoutstanding Letters of Credit, during the existence of an Event of Default theAdministrative Agent may (A) hold such surplus funds in the Letter of CreditCollateral Account as cash collateral or (B) apply such surplus funds tosatisfy any outstanding Indebtedness under the Loan Documents.  If no Default exists, the AdministrativeAgent shall release to the Borrower at the Borrower’s written request any fundsheld in the Letter of Credit Collateral Account above the amount required bythis Section.  Funds held in the Letterof Credit Collateral Account shall be invested in money market funds of theAdministrative Agent or in another investment if mutually agreed upon by theBorrower and the Administrative Agent, but the Administrative Agent shall haveno other obligation to make any other investment of the funds therein.  The Administrative Agent shall exercisereasonable care in the custody and preservation of any funds held in the Letterof Credit Collateral Account and shall be deemed to have exercised such care ifsuch funds are accorded treatment substantially equivalent to that which theAdministrative Agent accords its own property, it being understood that theAdministrative Agent shall not have any responsibility for taking any necessarysteps to preserve rights against any parties with respect to any such funds.

###  

SECTION 2.07.                 Fundingof Borrowings.  (a) Each Lender shallmake each Loan to be made by it hereunder on the proposed date thereof by wiretransfer of immediately available funds by 12:00 noon, Oklahoma City, Oklahomatime, to the account of the Administrative Agent most recently designated by itfor such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrowerby promptly crediting the amounts so received, in like funds, to an account ofthe Borrower maintained with the Administrative Agent in Oklahoma City,Oklahoma and designated by the Borrower in the applicable Borrowing Request; providedthat ABR Revolver A Loans made to finance the reimbursement of an LCDisbursement as provided in Section 2.06(e) shall be remitted bythe Administrative Agent to the Issuing Bank.

 

### (b)                                 Unlessthe Administrative Agent shall have received notice from a Lender prior to theproposed date of any Borrowing that such Lender will not make available to theAdministrative Agent such Lender’s share of such Borrowing, the AdministrativeAgent may assume that such Lender has made such share available on such date inaccordance with paragraph (a) of this Section and may, in reliance uponsuch assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in factmade its share of the applicable Borrowing available to the AdministrativeAgent, then the applicable Lender and the Borrower severally agree to pay tothe Administrative Agent forthwith on demand such corresponding amount withinterest thereon, for each day from and including the date such amount is madeavailable to the Borrower to but excluding the date of payment to theAdministrative Agent, at (i) in the case of such Lender, the greater of theFederal Funds Effective Rate and a rate determined by the Administrative Agentin 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 theAdministrative Agent, then such amount shall constitute such Lender’s Loanincluded in such Borrowing.

 

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SECTION 2.08.                 InterestElections.  (a) Each Borrowing initiallyshall be of the Type specified in the applicable Borrowing Request and, in thecase of a Eurodollar Borrowing, shall have an initial Interest Period asspecified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to adifferent Type or to continue such Borrowing and, in the case of a EurodollarBorrowing, may elect Interest Periods therefor, all as provided in thisSection.  The Borrower may electdifferent options with respect to different portions of the affected Borrowing,in which case each such portion shall be allocated ratably among the Lendersholding the Loans comprising such Borrowing, and the Loans comprising each suchportion shall be considered a separate Borrowing.

 

### (b)                                 Tomake an election pursuant to this Section, the Borrower shall notify theAdministrative Agent of such election by telephone by the time that a BorrowingRequest would be required under Section 2.03 if the Borrower wererequesting a Borrowing of the Type resulting from such election to be made onthe effective date of such election. Each such telephonic Interest Election Request shall be irrevocable andshall be confirmed promptly by hand delivery or telecopy to the AdministrativeAgent of a written Interest Election Request in a form approved by theAdministrative Agent and signed by the Borrower.

###  

### (c)                                  Eachtelephonic and written Interest Election Request shall specify the followinginformation in compliance with Section 2.02:

###  

#### (i)                                     theBorrowing to which such Interest Election Request applies and, if differentoptions are being elected with respect to different portions thereof, theportions thereof to be allocated to each resulting Borrowing (in which case theinformation to be specified pursuant to clauses (iii) and (iv) below shall bespecified for each resulting Borrowing);

####  

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

####  

#### (iii)                               whetherthe resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

####  

#### (iv)                              ifthe resulting Borrowing is a Eurodollar Borrowing, the Interest Period to beapplicable thereto after giving effect to such election, which shall be aperiod contemplated by the definition of the term “Interest Period”.  If any such Interest Election Requestrequests a Eurodollar Borrowing but does not specify an Interest Period, thenthe Borrower shall be deemed to have selected an Interest Period of one month’sduration.

####  

### (d)                                 Promptlyfollowing receipt of an Interest Election Request, the Administrative Agentshall advise each Lender of the details thereof and of such Lender’s portion ofeach resulting Borrowing.

###  

### (e)                                  Ifthe Borrower fails to deliver a timely Interest Election Request with respectto a Eurodollar Borrowing prior to the end of the Interest Period applicablethereto, then, unless such Borrowing is repaid as provided herein, at the endof such Interest Period such Borrowing shall be converted to an ABRBorrowing.  Notwithstanding any contraryprovision hereof, if an Event of Default has occurred and is continuing and theAdministrative Agent, at 

 

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### the request of the Required Lenders, so notifies theBorrower, then, so long as an Event of Default is continuing (i) no outstandingBorrowing may be converted to or continued as a Eurodollar Borrowing and (ii)unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowingat the end of the Interest Period applicable thereto.

###  

SECTION 2.09.                 Terminationand Reduction of Commitments. (a) Unless previously terminated, the Commitments shall terminateon the Maturity Date.

 

### (b)                                 TheBorrower may at any time terminate, or from time to time reduce pro rata, theCommitments as specified in the notice set forth in (c) below; providedthat (i) each reduction of the Commitments shall be in an amount that is anintegral multiple of $1,000,000 and not less than $10,000,000 and (ii) theBorrower shall not terminate or reduce the Commitments if, after giving effectto any concurrent prepayment of the Loans in accordance with Section 2.11,(i) the sum of the Revolving Credit Exposures would exceed the totalCommitments**,**(ii) the sum of theRevolver A Credit Exposures would exceed the Revolver A Commitments, or (iii)the sum of the Revolver B Credit Exposures would exceed the Revolver BCommitments.

###  

### (c)                                  TheBorrower shall notify the Administrative Agent of any election to terminate orreduce the Commitments under paragraph (b) of this Section at leastthree Business Days prior to the effective date of such termination orreduction, specifying such election and the effective date thereof as well aswhether such reduction applies to the Revolver A Commitments or theRevolver B Commitments.  Promptlyfollowing receipt of any notice, the Administrative Agent shall advise theLenders of the contents thereof.  Eachnotice delivered by the Borrower pursuant to this Section shall beirrevocable; provided that a notice of termination of the Commitmentsdelivered by the Borrower may state that such notice is conditioned upon theeffectiveness of other credit facilities, in which case such notice may berevoked by the Borrower (by notice to the Administrative Agent on or prior tothe specified effective date) if such condition is not satisfied.  Any termination or reduction of theCommitments shall be permanent and such Commitments shall not bereinstated.  Each reduction of theCommitments shall be made ratably among the Lenders in accordance with theirrespective Commitments.

###  

SECTION 2.10.                 Repayment ofLoans; Evidence of Debt.  (a) TheBorrower hereby unconditionally promises to pay to the Administrative Agent forthe account of each Lender the then unpaid principal amount of each RevolvingLoan on the Maturity Date.

 

### (b)                                 EachLender shall maintain in accordance with its usual practice an account oraccounts evidencing the indebtedness of the Borrower to such Lender resultingfrom each Loan made by such Lender, including the amounts of principal andinterest payable and paid to such Lender from time to time hereunder.

###  

### (c)                                  TheAdministrative Agent shall maintain accounts in which it shall record(i) the amount of each Loan made hereunder, the Type thereof, the InterestPeriod applicable thereto and whether such loan is a Revolver A Loan or aRevolver B Loan, (ii) the amount of any principal or interest due andpayable or to become due and payable from the Borrower to each Lenderhereunder, and (iii) the amount of any sum received by the AdministrativeAgent hereunder for the account of the Lenders and each Lender’s share thereof.

 

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### (d)                                 Theentries made in the accounts maintained pursuant to paragraph (b)or (c) of this Section shall be primafacie evidence ofthe existence and amounts of the obligations recorded therein; providedthat the failure of any Lender or the Administrative Agent to maintain suchaccounts or any error therein shall not in any manner affect the obligation ofthe Borrower to repay the Loans in accordance with the terms of this Agreement.

###  

### (e)                                  AnyLender may request that Loans made by it be evidenced by promissory notes.  In such event, the Borrower shall prepare,execute and deliver to such Lender two promissory notes, one in the amount ofsuch Lender’s Revolver A Commitment and one in the amount of such Lender’sRevolver B Commitment, payable to the order of such Lender (or, ifrequested by such Lender, to such Lender and its registered assigns) and in aform approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory notes and interestthereon shall at all times (including after assignment pursuant to Section 9.04)be represented by promissory notes in such form payable to the order of thepayee named therein (or, if such promissory notes are registered notes, to suchpayee and its registered assigns).

###  

SECTION 2.11.                 Prepaymentof Loans.  (a) The Borrower shallhave the right at any time and from time to time to prepay any Borrowing inwhole or in part, subject to prior notice in accordance with paragraph (b) ofthis Section; provided that each such prepayment shall be in an amountthat is an integral multiple of $1,000,000 and not less than $1,000,000.

 

### (b)                                 TheBorrower shall notify the Administrative Agent by telephone (confirmed bytelecopy) of any prepayment hereunder (i) in the case of prepayment of aEurodollar Revolving Borrowing, not later than 11:00 a.m., Oklahoma City,Oklahoma time, two Business Days before the date of prepayment, or (ii) inthe case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m.,Oklahoma City, Oklahoma time, on the date of prepayment.  Each such notice shall be irrevocable andshall specify the prepayment date and the principal amount of each Borrowing orportion thereof to be prepaid; provided that, if a notice of prepaymentis given in connection with a conditional notice of termination of theCommitments as contemplated by Section 2.09, then such notice ofprepayment may be revoked if such notice of termination is revoked inaccordance with Section 2.09. 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 Borrowingshall be in an amount that would be permitted in the case of an advance of aBorrowing of the same Type as provided in Section 2.02.  Each prepayment of a Borrowing shall beapplied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accruedinterest to the extent required by Section 2.13.

###  

SECTION 2.12.                 Fees.  (a) The Borrower agrees to pay to theAdministrative Agent for the account of each Lender an unused commitment fee,which shall accrue at the Applicable Rate on the daily amount of the unusedCommitment of such Lender during the period from and including the date of thisAgreement to but excluding the date on which such Commitment terminates.  Accrued unused commitment fees shall bepayable in arrears on the last day of March, June, September and December ofeach year and on the date on which the Commitments terminate, commencing on thefirst such date to occur after the date hereof; provided that anycommitment fees accruing after the date on which the Commitments terminate

 

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shall be payable ondemand.  All commitment fees shall becomputed on the basis of a year of 360 days and shall be payable for the actualnumber of days elapsed (including the first day but excluding the last day).

 

### (b)                                 TheBorrower agrees to pay (i) to the Administrative Agent for the account ofeach Lender a participation fee with respect to its participations in Lettersof Credit, which shall accrue at the same Applicable Rate used to determine theinterest rate applicable to Eurodollar Revolving Loans on the average dailyamount of such Lender’s LC Exposure (excluding any portion thereof attributableto un-reimbursed LC Disbursements) during the period from and including theEffective Date to but excluding the later of the date on which such Lender’sCommitment terminates and the date on which such Lender ceases to have any LCExposure, and (ii) to the Issuing Bank a fronting fee, which shall accrueat the rate of one percent (1.00%) per annum, on the average daily amount ofthe LC Exposure (excluding any portion thereof attributable to un-reimbursed LCDisbursements) during the period from and including the Effective Date to butexcluding the later of the date of termination of the Commitments and the dateon which there ceases to be any LC Exposure, as well as the Issuing Bank’sstandard fees with respect to the issuance, amendment, renewal or extension ofany Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accruedthrough and including the last day of March, June, September and December ofeach year shall be payable on the third Business Day following such last day,commencing on the first such date to occur after the Effective Date; providedthat all such fees shall be payable on the date on which the Commitmentsterminate and any such fees accruing after the date on which the Commitmentsterminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraphshall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basisof a year of 360 days and shall be payable for the actual number of dayselapsed (including the first day but excluding the last day).

###  

### (c)                                  TheBorrower agrees to pay to the Administrative Agent, for its own account and forthe benefit of the Lenders, fees payable in the amounts and at the timesseparately agreed upon between the Borrower and the Administrative Agent.

###  

### (d)                                 Allfees payable hereunder shall be paid on the dates due, in immediately availablefunds, to the Administrative Agent (or to the Issuing Bank, in the case of feespayable to it) for distribution, in the case of commitment fees andparticipation fees or to the Lenders, as applicable.  Fees paid shall not be refundable under anycircumstances.

###  

SECTION 2.13.                 Interest.  (a) The Loans comprising eachABR Borrowing shall bear interest at the Alternate Base Rate plus theApplicable Rate.

 

### (b)                                 TheLoans comprising each Eurodollar Borrowing shall bear interest at the AdjustedLIBO Rate for the Interest Period in effect for such Borrowing plus theApplicable Rate.

###  

### (c)                                  Notwithstandingthe foregoing, if any principal of or interest on any Loan or any fee or otheramount payable by the Borrower hereunder is not paid when due, whether atstated maturity, upon acceleration or otherwise, such overdue amount shall bearinterest, after as well as before judgment, at a rate per annum equal to (i) inthe case of overdue principal of any 

 

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### Loan, two percent (2%) plus the rate otherwiseapplicable to such Loan as provided in the preceding paragraphs of this Section or(ii) in the case of any other amount, two percent (2%) plus the rate applicableto ABR Loans as provided in paragraph (a) of this Section (such applicablerate being herein referred to as the “Default Rate”).

###  

### (d)                                 Accruedinterest on each Loan shall be payable in arrears on each Interest Payment Datefor such Loan and upon termination of the Commitments; provided that (i)interest accrued pursuant to paragraph (c) of this Section shall bepayable on demand, (ii) in the event of any repayment or prepayment of any Loan(other than a prepayment of an ABR Revolving Loan prior to the end of theAvailability Period), accrued interest on the principal amount repaid orprepaid shall be payable on the date of such repayment or prepayment, and (iii)in the event of any conversion of any Eurodollar Revolving Loan prior to theend of the current Interest Period therefor, accrued interest on such Loanshall be payable on the effective date of such conversion.

###  

### (e)                                  Allinterest hereunder shall be computed on the basis of a year of 360 days, exceptthat interest computed by reference to the Alternate Base Rate at times whenthe Alternate Base Rate is based on the Prime Rate shall be computed on thebasis of a year of 365 days (or 366 days in a leap year), and in each caseshall be payable for the actual number of days elapsed (including the first daybut excluding the last day).  Theapplicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall bedetermined by the Administrative Agent, and such determination shall beconclusive absent manifest error.

###  

SECTION 2.14.                 AlternateRate of Interest.  If prior to thecommencement of any Interest Period for a Eurodollar Borrowing:

 

### (a)                                  theAdministrative Agent determines (which determination shall be conclusive absentmanifest error) that adequate and reasonable means do not exist forascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for suchInterest Period; or

###  

### (b)                                 theAdministrative Agent is advised by the Required Lenders that the Adjusted LIBORate or the LIBO Rate, as applicable, for such Interest Period will notadequately and fairly reflect the cost to such Lenders (or Lender) of making ormaintaining their Loans (or its Loan) included in such Borrowing for suchInterest Period;

###  

then the AdministrativeAgent shall give notice thereof to the Borrower and the Lenders by telephone ortelecopy as promptly as practicable thereafter and, until the AdministrativeAgent notifies the Borrower and the Lenders that the circumstances giving riseto such notice no longer exist, (i) any Interest Election Request thatrequests the conversion of any Borrowing to, or continuation of any Borrowingas, a Eurodollar Borrowing shall be ineffective, and (ii) if any BorrowingRequest requests a Eurodollar Borrowing, such Borrowing shall be made as an ABRBorrowing; provided that if the circumstances giving rise to such noticeaffect only one Type of Borrowings, then the other Type of Borrowings shall bepermitted.

 

SECTION 2.15.                 IncreasedCosts.  (a) If any Change in Lawshall:

 

#### (i)                                     impose,modify or deem applicable any reserve, special deposit or similar requirementagainst assets of, deposits with or for the account of, or credit extended by, 

 

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#### any Lender (except any such reserve requirement reflected in theAdjusted LIBO Rate) or the Issuing Bank; or

####  

#### (ii)                                  imposeon any Lender or the Issuing Bank or the London interbank market any othercondition affecting this Agreement or Eurodollar Loans made by such Lender orany Letter of Credit or participation therein;

####  

and the result of any ofthe foregoing shall be to increase the cost to such Lender of making ormaintaining any Eurodollar Loan (or of maintaining its obligation to make anysuch Loan) or to increase the cost to such Lender or the Issuing Bank ofparticipating in, issuing or maintaining any Letter of Credit or to reduce theamount of any sum received or receivable by such Lender or the Issuing Bankhereunder (whether of principal, interest or otherwise), then the Borrower willpay to such Lender or the Issuing Bank, as the case may be, such additionalamount or amounts as will compensate such Lender or the Issuing Bank, as thecase may be, for such additional costs incurred or reduction suffered.

 

### (b)                                 Ifany Lender or the Issuing Bank determines that any Change in Law regardingcapital requirements has or would have the effect of reducing the rate ofreturn on such Lender’s or the Issuing Bank’s capital or on the capital of suchLender’s or the Issuing Bank’s holding company, if any, as a consequence ofthis Agreement or the Loans made by, or participations in Letters of Creditheld by, such Lender, or the Letters of Credit issued by the Issuing Bank, to alevel below that which such Lender or the Issuing Bank or such Lender’s or theIssuing 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 thepolicies of such Lender’s or the Issuing Bank’s holding company with respect tocapital adequacy), then from time to time the Borrower will pay to such Lenderor the Issuing Bank, as the case may be, such additional amount or amounts aswill compensate such Lender or the Issuing Bank or such Lender’s or the IssuingBank’s holding company for any such reduction suffered.

###  

### (c)                                  Acertificate of a Lender or the Issuing Bank setting forth the amount or amountsnecessary to compensate such Lender or the Issuing Bank or its holding company,as the case may be, as specified in paragraph (a) or (b) of this Section shallbe delivered to the Borrower and shall be conclusive absent manifesterror.  The Borrower shall pay suchLender or the Issuing Bank, as the case may be, the amount shown as due on anysuch certificate within 10 days after receipt thereof.

###  

### (d)                                 Failureor delay on the part of any Lender or the Issuing Bank to demand compensationpursuant to this Section shall not constitute a waiver of such Lender’s orthe Issuing Bank’s right to demand such compensation; provided that theBorrower shall not be required to compensate a Lender or the Issuing Bankpursuant to this Section for any increased costs or reductions incurredmore than 180 days prior to the date that such Lender or the Issuing Bank, asthe case may be, notifies the Borrower of the Change in Law giving rise to suchincreased costs or reductions and of such Lender’s or the Issuing Bank’sintention to claim compensation therefor; providedfurther that,if the Change in Law giving rise to such increased costs or reductions isretroactive, then the 180-day period referred to above shall be extended toinclude the period of retroactive effect thereof.

 

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SECTION 2.16.                 BreakFunding Payments.  In the event of(a) the payment of any principal of any Eurodollar Loan other than on the lastday of an Interest Period applicable thereto (including as a result of an Eventof Default), (b) the conversion of any Eurodollar Loan other than on the lastday of the Interest Period applicable thereto, (c) the failure to borrow,convert, continue or prepay any Eurodollar Loan on the date specified in anynotice delivered pursuant hereto (regardless of whether such notice may berevoked under Section 2.11(b) and is revoked in accordancetherewith), or (d) the assignment of any Eurodollar Loan other than on the lastday of the Interest Period applicable thereto as a result of a request by theBorrower pursuant to Section 2.19, then, in any such event, theBorrower shall compensate each Lender for the loss, cost and expenseattributable to such event.  In the caseof a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemedto 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 suchLoan had such event not occurred, at the Adjusted LIBO Rate that would havebeen applicable to such Loan, for the period from the date of such event to thelast day of the then current Interest Period therefor (or, in the case of afailure to borrow, convert or continue, for the period that would have been theInterest Period for such Loan), over (ii) the amount of interest which wouldaccrue on such principal amount for such period at the interest rate which suchLender would bid were it to bid, at the commencement of such period, for dollardeposits of a comparable amount and period from other banks in the eurodollarmarket.  A certificate of any Lendersetting forth any amount or amounts that such Lender is entitled to receivepursuant to this Section shall be delivered to the Borrower and shall beconclusive absent manifest error.  TheBorrower shall pay such Lender the amount shown as due on any such certificatewithin 10 days after receipt thereof.

 

SECTION 2.17.                 Taxes.  (a) Any and all payments by or on account ofany obligation of the Borrower hereunder shall be made free and clear of andwithout deduction for any Indemnified Taxes or Other Taxes; providedthat if the Borrower shall be required to deduct any Indemnified Taxes or OtherTaxes from such payments, then (i) the sum payable shall be increased asnecessary so that after making all required deductions (including deductionsapplicable to additional sums payable under this Section) the AdministrativeAgent, Lender or Issuing Bank (as the case may be) receives an amount equal tothe sum it would have received had no such deductions been made, (ii) theBorrower shall make such deductions and (iii) the Borrower shall pay thefull amount deducted to the relevant Governmental Authority in accordance withapplicable Law.

 

### (b)                                 Inaddition, the Borrower shall pay any Other Taxes to the relevant GovernmentalAuthority in accordance with applicable Law.

###  

### (c)                                  TheBorrower shall indemnify the Administrative Agent, each Lender and the IssuingBank, within 10 days after written demand therefor, for the full amount of anyIndemnified Taxes or Other Taxes paid by the Administrative Agent, such Lenderor the Issuing Bank, as the case may be, on or with respect to any payment byor on account of any obligation of the Borrower hereunder (includingIndemnified Taxes or Other Taxes imposed or asserted on or attributable to amountspayable under this Section) and any penalties, interest and reasonable expensesarising therefrom or with respect thereto, whether or not such IndemnifiedTaxes or Other Taxes were correctly or legally imposed or asserted by therelevant Governmental Authority, except to the extent such sums are determinedby a court of competent jurisdiction by 

 

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### final and non-appealable judgment to have resultedfrom the gross negligence or willful misconduct of the Administrative Agent,the Issuing Bank or such Lender, as applicable. A certificate as to the amount of such payment or liability delivered tothe Borrower by a Lender or the Issuing Bank, or by the Administrative Agent onits own behalf or on behalf of a Lender or the Issuing Bank, shall beconclusive absent manifest error. Neither the Administrative Agent, the Issuing Bank nor any Lender shallbe entitled to receive any payment with respect to Indemnified Taxes that areincurred or accrued more than 180 days prior to the date such party givesnotice and demand with respect thereto to the Borrower.

###  

### (d)                                 Assoon as practicable after any payment of Indemnified Taxes or Other Taxes bythe Borrower to a Governmental Authority, the Borrower shall deliver to theAdministrative Agent the original or a certified copy of a receipt issued bysuch Governmental Authority evidencing such payment, a copy of the returnreporting such payment or other evidence of such payment reasonablysatisfactory to the Administrative Agent.

###  

### (e)                                  AnyForeign Lender that is entitled to an exemption from or reduction ofwithholding tax under the law of the jurisdiction in which the Borrower islocated, or any treaty to which such jurisdiction is a party, with respect topayments under this Agreement shall deliver to the Borrower (with a copy to theAdministrative Agent), at the time or times prescribed by applicable Law, suchproperly completed and executed documentation prescribed by applicable Law orreasonably requested by the Borrower as will permit such payments to be madewithout withholding or at a reduced rate of withholding.

###  

### (f)                                    If the Administrative Agent or a Lenderdetermines, in its sole discretion, that it has received a refund of any Taxesor Other Taxes as to which it has been indemnified by the Borrower or withrespect to which the Borrower has paid additional amounts pursuant to this Section 2.17,it shall pay over such refund to the Borrower (but only to the extent ofindemnity payments made, or additional amounts paid, by the Borrower under thisSection 2.17 with respect to the Taxes or Other Taxes giving riseto such refund), net of all out-of-pocket expenses of the Administrative Agentor such Lender and without interest (other than any interest paid by therelevant Governmental Authority with respect to such refund); provided,that the Borrower, upon the request of the Administrative Agent or such Lender,agrees to repay the amount paid over to the Borrower (plus any penalties,interest or other charges imposed by the relevant Governmental Authority) tothe Administrative Agent or such Lender in the event the Administrative Agentor such Lender is required to repay such refund to such Governmental Authority.This Section shall not be construed to require the Administrative Agent orany Lender to make available its tax returns (or any other information relatingto its taxes which it deems confidential) to the Borrower or any other Person.

###  

### (g)                                 Ifthe Administrative Agent or any Lender or Issuing Bank becomes entitled to receivepayment of Indemnified Taxes, Other Taxes or additional sums pursuant to this Section 2.17, it shall givenotice and demand thereof to the Borrower, and the Borrower (unless theAdministrative Agent, Lender or Issuing Bank shall withdraw such notice anddemand or the Borrower is not obligated to pay such amounts) shall pay suchIndemnified Taxes, Other Taxes or additional sums within 10 days after theBorrower’s receipt of such notice and demand; provided that any failureor delay on the part of the Administrative Agent or any Lender or Issuing Bankto demand compensation pursuant to the Section shall not constitute awaiver of 

 

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### the Administrative Agent’s, such Lender’s or theIssuing Bank’s right to demand such compensation.

###  

SECTION 2.18.                 PaymentsGenerally; Pro Rata Treatment; Sharing of Set-offs.  (a) The Borrower shall make each paymentrequired to be made by it hereunder (whether of principal, interest, fees orreimbursement of LC Disbursements, or of amounts payable under Section 2.15,Section 2.16 or Section 2.17,or otherwise) prior to 12:00 noon, Oklahoma City, Oklahoma time, on the datewhen due, in immediately available funds, without set-off or counterclaim.  Any amounts received after such time on anydate may, in the discretion of the Administrative Agent, be deemed to have beenreceived on the next succeeding Business Day for purposes of calculatinginterest thereon.  All such paymentsshall be made to the Administrative Agent at its offices at MidFirst Bank,MidFirst Plaza, 501 NW Grand Boulevard, Suite 100, Oklahoma City,Oklahoma, Attention: James P. Boggs, Vice President, except payments to be madedirectly to the Issuing Bank as expressly provided herein and except thatpayments pursuant to Section 2.15, Section 2.16, Section 2.17 and Section 9.03shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute anysuch payments received by it for the account of any other Person to theappropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on aday that is not a Business Day, the date for payment shall be extended to thenext succeeding Business Day, and, in the case of any payment accruinginterest, interest thereon shall be payable for the period of suchextension.  All payments hereunder shallbe made in dollars.

 

### (b)                                 Ifat any time insufficient funds are received by and available to theAdministrative Agent to pay fully all amounts of principal, un-reimbursed LCDisbursements, interest and fees then due hereunder, such funds shall beapplied (i) first, towards payment of interest and fees then due hereunder,ratably among the parties entitled thereto in accordance with the amounts ofinterest and fees then due to such parties, (ii) second, towards payment ofprincipal and un-reimbursed LC Disbursements then due hereunder, ratably amongthe parties entitled thereto in accordance with the amounts of principal andun-reimbursed LC Disbursements then due to such parties, and (iii) third,toward the payment of the Borrower’s obligations under any Swap Agreements, ifany, owing to the Lenders or their Affiliates, in each case ratably to eachLender and Affiliate.

###  

### (c)                                  Ifany Lender shall, by exercising any right of set-off or counterclaim orotherwise, obtain payment in respect of any principal of or interest on any ofits Revolving Loans or participations in LC Disbursements resulting in suchLender receiving payment of a greater proportion of the aggregate amount of itsRevolving Loans and participations in LC Disbursements and accrued interestthereon than the proportion received by any other Lender, then the Lenderreceiving such greater proportion shall purchase (for cash at face value)participations in the Revolving Loans and participations in LC Disbursements ofother Lenders to the extent necessary so that the benefit of all such paymentsshall be shared by the Lenders ratably in accordance with the aggregate amountof principal of and accrued interest on their respective Revolving Loans andparticipations in LC Disbursements; provided that (i) if any suchparticipations are purchased and all or any portion of the payment giving risethereto is recovered, such participations shall be rescinded and the purchaseprice restored to the extent of such recovery, without interest, and (ii) theprovisions of this paragraph shall not be construed to apply to any paymentmade by the Borrower pursuant to and in accordance with the express 

 

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### terms of this Agreement or any payment obtained by aLender as consideration for the assignment of or sale of a participation in anyof its Loans or participations in LC Disbursements to any assignee orparticipant, other than to the Borrower or any Subsidiary or Affiliate thereof(as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing andagrees, to the extent it may effectively do so under applicable Law, that anyLender acquiring a participation pursuant to the foregoing arrangements mayexercise against the Borrower rights of set-off and counterclaim with respectto such participation as fully as if such Lender were a direct creditor of theBorrower in the amount of such participation.

###  

### (d)                                 Unlessthe Administrative Agent shall have received notice from the Borrower prior tothe date on which any payment is due to the Administrative Agent for theaccount of the Lenders or the Issuing Bank hereunder that the Borrower will notmake such payment, the Administrative Agent may assume that the Borrower hasmade such payment on such date in accordance herewith and may, in reliance uponsuch assumption, distribute to the Lenders or the Issuing Bank, as the case maybe, the amount due.  In such event, ifthe Borrower has not in fact made such payment, then each of the Lenders or theIssuing Bank, as the case may be, severally agrees to repay to theAdministrative Agent forthwith on demand the amount so distributed to suchLender or Issuing Bank with interest thereon, for each day from and includingthe date such amount is distributed to it to but excluding the date of paymentto the Administrative Agent, at the greater of the Federal Funds Effective Rateand a rate determined by the Administrative Agent in accordance with bankingindustry rules on interbank compensation.

###  

### (e)                                  Ifany Lender shall fail to make any payment required to be made by it pursuant toSection 2.06(e), Section 2.07(b), Section 2.18(d)or Section 9.03(c), then the Administrative Agent may, in itsdiscretion (notwithstanding any contrary provision hereof), apply any amountsthereafter received by the Administrative Agent for the account of such Lenderto satisfy such Lender’s obligations under such Sections until all suchunsatisfied obligations are fully paid.

###  

SECTION 2.19.                 MitigationObligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15,or if the Borrower is required to pay any additional amount to any Lenderor any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lendershall use reasonable efforts to designate a different lending office forfunding or booking its Loans hereunder or to assign its rights and obligationshereunder to another of its offices, branches or affiliates, if, in thejudgment of such Lender, such designation or assignment (i) would eliminate orreduce amounts payable pursuant to Section 2.15 or Section 2.17, as the case may be,in the future and (ii) would not subject such Lender to any un-reimbursed costor expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay allreasonable costs and expenses incurred by any Lender in connection with anysuch designation or assignment.

 

### (b)                                 Ifany Lender requests compensation under Section 2.15, or if theBorrower is required to pay any additional amount to any Lender or anyGovernmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lenderdefaults in its obligation to fund Loans hereunder, then the Borrower may, atits sole expense and effort, upon notice to such Lender and the AdministrativeAgent, require such Lender to assign and delegate, without 

 

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### recourse (in accordance with and subject to therestrictions contained in Section 9.04), all its interests, rightsand obligations under this Agreement to an assignee that shall assume suchobligations (which assignee may be another Lender, if a Lender accepts suchassignment); provided that (i) the Borrower shall have received theprior written consent of the Administrative Agent (and if a Commitment is beingassigned, the Issuing Bank), which consent shall not unreasonably be withheld,(ii) such Lender shall have received payment of an amount equal to theoutstanding principal of its Loans and participations in LC Disbursements,accrued interest thereon, accrued fees and all other amounts payable to ithereunder, from the assignee (to the extent of such outstanding principal andaccrued 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 forcompensation under Section 2.15 or payments required to be madepursuant to Section 2.17,such assignment will result in a reduction in such compensation orpayments.  A Lender shall not be requiredto make any such assignment and delegation if, prior thereto, as a result of awaiver by such Lender or otherwise, the circumstances entitling the Borrower torequire such assignment and delegation cease to apply.

###  

SECTION 2.20.                 Increaseof Revolver A Commitments.  (a) If,prior to and after giving effect to any increase in the Revolver A Commitmentspursuant to this Section 2.20, no Default, Event of Default orMaterial Adverse Effect shall have occurred and be continuing, the Borrower mayat any time and from time to time, but in no event more than one (1) time inany fiscal year, request an increase of the aggregate Revolver ACommitments by notice to the Administrative Agent in writing of the amount ofsuch proposed increase (such notice, a “Commitment Increase Notice”); provided,however, that (i) each such increase shall be at least $10,000,000,(ii) the cumulative increase in Revolver A Commitments pursuant tothis Section 2.20 shall not exceed $35,000,000, (iii) theRevolver A Commitment of any Lender may not be increased without such Lender’sconsent, (iv) the aggregate amount of the Lenders’ Revolver ACommitments shall not exceed $82,500,000, and (v)****Borrower shall have provided reasonable evidence thatcollateral reasonably acceptable to the Required Lenders, in addition to anyand all Collateral securing the Obligations as of the date of the CommitmentIncrease Notice, has been acquired, or will be acquired with Borrowings made inconnection with such increase in the Revolver A Commitments, to secure the fullamount of the Obligations, as increased as contemplated by the CommitmentIncrease Notice.  Each Lender will notifythe Administrative Agent within fifteen (15) days after receipt of the evidencedescribed in clause (v) immediately above whether or not the additionalcollateral, and the evidence thereof, is acceptable to such Lender providedthat if such notice is not received by the Administrative Agent within suchtime, such Lender shall be deemed to be satisfied with such evidence.  If the conditions in clauses (i) through (v)above have been satisfied, the Administrative Agent shall, within five (5) BusinessDays after Administrative Agent is aware that such conditions have beensatisfied, notify each Lender thereof. Each Lender desiring to increase its Revolver A Commitment shallnotify the Administrative Agent in writing no later than fifteen (15) daysafter receipt by the Lender of such notice from the Administrative Agent.  Any Lender that accepts an offer to it by theBorrower to increase its Revolver A Commitment pursuant to this Section 2.20shall, in each case, execute an agreement (a “Commitment Increase Agreement”),in substantially the form attached hereto as Exhibit B, with theBorrower and the Administrative Agent, whereupon such Lender shall be bound byand entitled to the benefits of this Agreement with respect to the full amountof its Revolver A Commitment as so increased, and the definition ofRevolver A Commitment in Section 1.01 and Schedule 2.01hereof shall be deemed to be amended to reflect such increase.  

 

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Any Lender thatdoes not notify the Administrative Agent within such period that it willincrease its Revolver A Commitment shall be deemed to have rejected suchoffer to increase its Revolver A Commitment.  No Lender shall have any obligationwhatsoever to agree to increase its Revolver A Commitment.  Any agreement to increase a Lender’s pro ratashare of the increased Revolver A Commitment shall be irrevocable andshall be effective upon notice thereof by the Administrative Agent at the sametime as that of all other increasing Lenders.

 

### (b)                                 Ifany portion of the increased Revolver A Commitments is not subscribed forby such Lenders, the Borrower may, in its sole discretion, but with the consentof the Administrative Agent as to any Person that is not at such time a Lender(which consent shall not be unreasonably withheld or delayed), offer to anyexisting Lender or to one or more additional banks or financial institutionsthe opportunity to participate in all or a portion of such unsubscribed portionof the increased Revolver A Commitments pursuant to paragraph (c)below by notifying the Administrative Agent. Promptly and in any event within five (5) Business Days after receipt ofnotice from the Borrower of its desire to offer such unsubscribed commitmentsto certain existing Lenders, to the additional banks or to financialinstitutions identified therein or such additional banks or financialinstitutions identified by the Administrative Agent and approved by theBorrower, the Administrative Agent shall notify such proposed lenders of theopportunity to participate in all or a portion of such unsubscribed portion ofthe increased Revolver A Commitments.

###  

### (c)                                  Anyadditional bank or financial institution that the Borrower selects to offerparticipation in the increased Revolver A Commitments shall execute and deliverto the Administrative Agent a New Lender Agreement (a “New Lender Agreement”),in substantially the form attached hereto as Exhibit C, settingforth its Revolver A Commitment, and upon the effectiveness of such New LenderAgreement such bank or financial institution (a “New Lender”) shallbecome a Lender for all purposes and to the same extent as if originally aparty hereto and shall be bound by and entitled to the benefits of thisAgreement, and the signature pages hereof shall be deemed to be amended toadd the name of such New Lender and the definition of Revolver A Commitment in Section 1.01and Schedule 2.01 hereof shall be deemed amended to increase theaggregate Revolver A Commitments of the Lenders by the Revolver A Commitment ofsuch New Lender, provided that the Revolver A Commitment of any NewLender shall be an amount not less than $5,000,000.  Each New Lender Agreement shall beirrevocable and shall be effective upon notice thereof by the AdministrativeAgent at the same time as that of all other New Lenders.

###  

### (d)                                 Theeffectiveness of any New Lender Agreement or Commitment Increase Agreementshall be contingent upon (i) receipt by the Administrative Agent of (x) suchcorporate resolutions of the Borrower and legal opinions of counsel to theBorrower as the Administrative Agent shall reasonably request with respectthereto, in each case in form and substance reasonably satisfactory to theAdministrative Agent, and (y) mortgages, deeds of trust, security agreementsand other documents (including, without limitation, those described in Article IVapplicable to such additional collateral) in form and substance reasonablyacceptable to the Administrative Agent, granting a first priority perfectedLien subject to the Liens permitted by Section 6.02 hereof on andotherwise relating to the additional collateral securing the Obligationsincreased as contemplated in clause (v) of Section 2.20(a) above,and (ii) there not having occurred any event that would cause a materialdiminution in value of the additional collateral.  

 

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### Once a New Lender Agreement or Commitment IncreaseAgreement becomes effective, the Administrative Agent shall reflect theincreases in the Commitments effected by such agreements by appropriate entriesin the Register.

###  

### (e)                                  Ifany bank or financial institution becomes a New Lender pursuant to Section 2.20(c)or any Lender’s Revolver A Commitment is increased pursuant to Section 2.20(a),additional Revolver A Loans made on or after the effectiveness thereof(the “Re-Allocation Date”) shall be made pro rata based on theirrespective Revolver A Commitments in effect on or after such Re-Allocation Date(except to the extent that any such pro rata borrowings would result in anyLender making an aggregate principal amount of Loans in excess of its RevolverA Commitment, in which case such excess amount will be allocated to, and madeby, such New Lender and/or Lenders with such increased Revolver A Commitmentsto the extent of, and pro rata based on, their respective Revolver ACommitments), and continuations of Loans outstanding on such Re-Allocation Dateshall be effected by repayment of such Loans on the last day of the InterestPeriod applicable thereto or, in the case of ABR Loan, on the date of suchincrease, and the making of new Loans of the same Type pro rata based on therespective Revolver A Commitments in effect on and after such Re-AllocationDate.

###  

### (f)                                    Ifon any Re-Allocation Date there is an unpaid principal amount of EurodollarLoans, such Eurodollar Loans shall remain outstanding with the respectiveholders thereof until the expiration of their respective Interest Periods(unless the Borrower elects to prepay any thereof in accordance with theapplicable provisions of this Agreement), and interest on and repayments ofsuch Eurodollar Loans will be paid thereon to the respective Lenders holdingsuch Eurodollar Loans pro rata based on the respective principal amountsthereof outstanding.

###  

**ARTICLE III**

 

# **Representations andWarranties**

 

The Borrower representsand warrants to the Lenders that:

 

SECTION 3.01.                 Organization;Powers.  Each Loan Party and eachgeneral partner or managing member of each Loan Party is (i) duly organized,validly existing and in good standing under the laws of the jurisdiction of itsorganization, (ii) has all requisite power and authority to carry on itsbusiness as now conducted, and (iii) is qualified to do business in, and is ingood standing in, every jurisdiction where such qualification is required,except in each case where the failure to do so, individually or in theaggregate, could not reasonably be expected to result in a Material AdverseEffect.

 

SECTION 3.02.                 Authorization;Enforceability.  The Transactions arewithin each Loan Party’s corporate, partnership or limited liability companypowers and have been duly authorized by all necessary corporate, partnership orlimited liability company action.  ThisAgreement and each Loan Document have been duly executed and delivered by theLoan Party(ies) thereto and constitute legal, valid and binding obligations ofsuch Loan Party(ies) thereto, enforceable in accordance with their terms,subject to applicable bankruptcy, insolvency, 

 

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reorganization,moratorium or other laws affecting creditors’ rights generally and subject togeneral principles of equity, regardless of whether considered in a proceedingin equity or at law.

 

SECTION 3.03.                 NoUndisclosed Liabilities.  The LoanParties have no material liabilities or obligations of any nature except for(i) liabilities or obligations reflected or reserved against in the financialstatements described in Section 3.05 below or in the financialstatements most recently delivered by the Parent pursuant to Section 5.01,as applicable, (ii) current liabilities incurred in the ordinary course ofbusiness since the date of such financial statements, (iii) liabilities orobligations that are not required to be included in financial statementsprepared in accordance with GAAP, and (iv) those set forth in Schedule 3.03attached to this Agreement or previously disclosed in the Parent’s filings withthe SEC or otherwise disclosed in writing to the Administrative Agent and theLenders.

 

SECTION 3.04.                 GovernmentalApprovals; No Conflicts.  TheTransactions (a) do not require any consent or approval of, registrationor filing with, or any other action by, any Governmental Authority, except suchas have been obtained or made and are in full force and effect, (b) will notviolate any applicable law or regulation or the charter, by-laws or otherorganizational documents of any Loan Party or any order of any GovernmentalAuthority, (c) will not violate or result in a default under anyindenture, agreement or other instrument binding upon any Loan Party or itsassets, or give rise to a right thereunder to require any payment to be made byany Loan Party, and (d) will not result in the creation or imposition of anyLien on any asset of the Borrower or any Loan Party other than such Liens createdby the Security Documents.

 

SECTION 3.05.                 FinancialCondition; No Material Adverse Change. (a) The Borrower has heretofore furnished to the Lenders the Parent’sconsolidated balance sheet and statements of income and cash flows (i) as ofand for the fiscal year ended December 31, 2003, reported on by GrantThornton LLP, independent public accountants, and (ii) as of and for the fiscalquarter and the portion of the fiscal year ended September 30, 2004,certified by its Financial Officer.  Suchfinancial statements present fairly, in all material respects, the financialposition and results of operations and cash flows of the Parent and itsconsolidated Subsidiaries as of such dates and for such periods in accordancewith GAAP, subject to year-end audit adjustments and the absence of footnotesin the case of the statements referred to in clause (ii) above.

 

### (b)                                 SinceDecember 31, 2003, no event has occurred that could reasonably expected tohave a Material Adverse Effect.

###  

SECTION 3.06.                 Properties.  (a) Except as set forth in Schedule 3.06(a),Borrower has good and marketable title to, or, as applicable, valid leaseholdinterests in, all its real and personal property material to its business,which is free and clear of any and all Liens or encumbrances of any nature orkind except for the Permitted Encumbrances and Liens in favor of theAdministrative Agent and other Liens permitted by Section 6.02hereof and has full corporate power and lawful authority to bargain, grant,sell, mortgage, assign, transfer, convey and grant a security interest in allof the property and without obtaining the waiver, consent or approval of anylessor, sublessor, governmental agency or entity or other party whomsoever or 

 

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whatsoever other thanwith respect to the Excluded Assets and then only to the extent that thefailure to obtain such waiver, consent or approval would not cause a MaterialAdverse Effect.

 

### (b)                                 Schedule 3.06(b)describes all of the Leases (whether or not material, but not includingrights-of-way or similar agreements that are part of the Collateral covered bythe Security Documents) in effect as of the Effective Date (copies of each ofwhich have been provided to the Administrative Agent), each of which to the knowledgeof the Loan Party that is a party thereto, (i) has been duly executed anddelivered by and constitutes the legal, valid and binding obligation of, theLoan Party that is party thereto in accordance with its terms, except forcreditors’ rights and equitable principles, (ii) is in full force and effectand there is no default thereunder in the payment of rent or otherwise and(iii) has not been amended or modified, nor any provisions thereof waived,except, in each case, for matters which in the aggregate could not reasonablybe expected to result in a Material Adverse Effect.

###  

### (c)                                  EachLoan Party owns, or is licensed to use, all trademarks, trade names,copyrights, patents and other intellectual property material to its business,and the use thereof by the Loan Parties does not infringe upon the rights ofany other Person, except for any such infringements that, individually or inthe aggregate, could not reasonably be expected to result in a Material AdverseEffect.

###  

### (d)                                 Theplace of business or chief executive office of each Loan Party is at thelocation shown on Schedule 3.06(d) or at such other locations asdisclosed to the Administrative Agent in writing after the date hereof.  The “Location” of each Loan Party asdetermined by Section 9.307 of the UCC is shown on Schedule 3.06(d).  The federal employee identification numberfor each Loan Party is set forth on Schedule 3.06(d).

###  

### (e)                                  Borrowerhas all easements, rights of way, licenses, permits, leases and fee simpleownership necessary for the operation of the pipelines, the plants, and thesystems.  Borrower has obtained allnecessary consents from third parties necessary for the operation of thepipelines, plants and systems.

###  

SECTION 3.07.                 Litigationand Environmental Matters.  (a) Thereare no actions, suits or proceedings by or before any arbitrator orGovernmental Authority pending against or, to the knowledge of the Borrower,threatened against or affecting any Loan Party (i) as to which there is areasonable possibility of an adverse determination and that, if adverselydetermined, would reasonably be expected, individually or in the aggregate, toresult in a Material Adverse Effect (other than the Disclosed Matters) or(ii) that involve this Agreement or the Transactions.

 

### (b)                                 Exceptfor the Disclosed Matters and except with respect to any other matters that,individually or in the aggregate, would not reasonably be expected to result ina Material Adverse Effect, no Loan Party (i) has failed to comply with anyEnvironmental Law or to obtain, maintain or comply with any permit, license orother approval required under any Environmental Law, (ii) has becomesubject to any Environmental Liability, (iii) has received notice of anyclaim with respect to any Environmental Liability or (iv) knows of anybasis for any Environmental Liability.

 

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### (c)                                  Sincethe date of this Agreement, there has been no change in the status of theDisclosed Matters that, individually or in the aggregate, has resulted in, ormaterially increased the likelihood of, a Material Adverse Effect.

###  

SECTION 3.08.                 Compliancewith Laws and Agreements.  Each LoanParty is in compliance with all laws, regulations and orders of anyGovernmental Authority applicable to it or its property and all indentures,agreements and other instruments binding upon it or its property, except wherethe failure to do so, individually or in the aggregate, could not reasonably beexpected to result in a Material Adverse Effect.  No Default has occurred and is continuing.

 

SECTION 3.09.                 Investmentand Holding Company Status.  No LoanParty is (a) an “investment company” as defined in, or subject toregulation under, the Investment Company Act of 1940 or (b) a “holding company”as defined in, or subject to regulation under, the Public Utility HoldingCompany Act of 1935.

 

SECTION 3.10.                 Taxes.  Each Loan Party has timely filed or caused tobe filed all Tax returns and reports required to have been filed and has paidor caused to be paid all Taxes required to have been paid by it, except (a)Taxes that are being contested in good faith by appropriate proceedings and forwhich such Loan Party has set aside on its books adequate reserves or (b) tothe extent that the failure to do so could not reasonably be expected to resultin a Material Adverse Effect.

 

SECTION 3.11.                 ERISA.  No ERISA Event has occurred or is reasonablyexpected to occur that, when taken together with all other such ERISA Eventsfor which liability is reasonably expected to occur, could reasonably beexpected to result in a Material Adverse Effect.  The present value of all accumulated benefitobligations under each Plan (based on the assumptions used for purposes ofStatement of Financial Accounting Standards No. 87) did not, as of thedate of the most recent financial statements reflecting such amounts, exceedthe fair market value of the assets of such Plan by an amount that wouldreasonably be expected to have a Material Adverse Effect, and the present valueof all accumulated benefit obligations of all underfunded Plans (based on theassumptions used for purposes of Statement of Financial Accounting Standards No. 87)did not, as of the date of the most recent financial statements reflecting suchamounts, exceed the fair market value of the assets of all such underfundedPlans by an amount that would reasonably be expected to have a Material AdverseEffect.

 

SECTION 3.12.                 Disclosure.  The Borrower has disclosed to the Lenders allagreements, instruments and corporate or other restrictions to which any LoanParty is subject, and all other matters known to it, that, individually or inthe aggregate, could reasonably be expected to result in a Material AdverseEffect.  Neither the InformationMemorandum nor any of the other reports, financial statements, certificates orother information furnished by or on behalf of the Borrower to theAdministrative Agent or any Lender in connection with the negotiation of thisAgreement or delivered hereunder (as modified or supplemented by otherinformation so furnished) contains any material misstatement of fact or omitsto state any material fact necessary to make the statements therein, in thelight of the circumstances under which they were made, not misleading; providedthat, with respect to projected financial information, the Borrower representsonly that such information was prepared in good faith based upon assumptionsbelieved to be reasonable at the time.

 

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SECTION 3.13.                 LaborMatters.  There are no strikes,lockouts or slowdowns against any Loan Party pending or, to the knowledge ofthe Borrower, threatened that could reasonably be expected to have a MaterialAdverse Effect.  The hours worked by andpayments made to employees of the Borrower and its Subsidiaries have not beenin violation of the Fair Labor Standards Act or any other Law dealing with suchmatters to the extent that such violation could reasonably be expected to havea Material Adverse Effect.

 

SECTION 3.14.                 Subsidiaries.  Schedule 3.14 lists, for eachSubsidiary of the Borrower as of the date hereof, its full legal name, itsjurisdiction of organization, the number of shares of capital stock or otherEquity Interests outstanding and the owner(s) of such shares or EquityInterests.  The Parent is the sole memberof the Borrower and the Borrower is the sole Subsidiary of the Parent.

 

SECTION 3.15.                 MarginStock.  No Loan Party is engagedprincipally, or as one of its important activities, in the business ofextending credit for the purpose of purchasing or carrying margin stock (withinthe meaning of Regulation T, U or X of the Board), and no part of the proceedsof any Loan will be used to purchase or carry any margin stock in violation ofsaid Regulation T, U or X or to extend credit to others for the purpose ofpurchasing or carrying margin stock in violation of said Regulation T, U or X.

 

SECTION 3.16.                 Licensesand Permits.  Each Loan Partypossesses all licenses, permits, authorizations, registrations, approvals andsimilar rights necessary under Law for such Person to conduct its operations asnow being conducted, each of such licenses, permits, authorizations,registrations, approvals and similar rights is valid and subsisting, in fullforce and effect and enforceable by such Person, and such Person is incompliance with all terms, conditions or other provisions of such permits,authorizations, registrations, approvals and similar rights except where, ineach case, such failure to possess, such invalidity, or such noncompliancewould not reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.17.                 ReportableTransaction.  The Borrower does notintend to treat the Loans as being a “reportable transaction” (within themeaning of Treasury Regulation Section 1.6011-4).  In the event the Borrower determines to takeany action inconsistent with such intention, it will promptly notify theAdministrative Agent thereof. Furthermore, the Borrower acknowledges that one or more of the Lendersmay treat its Loans as part of a transaction that is subject to TreasuryRegulation Section 1.6011-4 or Section 301.6112-1, and theAdministrative Agent and such Lender or Lenders, as applicable, may file suchIRS forms or maintain such lists and other records as they may determine arerequired by such Treasury Regulations.

 

SECTION 3.18.                 PublicUtility Holding Company Act.  No LoanParty is a non-exempt “holding company,” or subject to regulation as such, or,to the knowledge of the Borrower’s or such Subsidiary’s officers, an “affiliate”of a “holding company” or a “subsidiary company” of a “holding company,” withinthe meaning of the Public Utility Holding Company Act of 1935, as amended.

 

SECTION 3.19.                 SeniorDebt Status.  As of the EffectiveDate, all Indebtedness outstanding under the Loan Documents constitutes seniorIndebtedness of the 

 

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Borrower and ranks atleast pari passu in priority of payment with all other Indebtedness owed by theBorrower, except Indebtedness of the Borrower which may be secured by Lienspermitted pursuant to Section 6.02 hereof.

 

SECTION 3.20.                 Priority;Security Matters.  The Obligationsare and shall be at all times secured by valid, perfected Liens in favor of theAdministrative Agent for the benefit of the Lenders in all Collateral to theextent perfection has or will occur by the filing of a Uniform Commercial CodeFinancing Statement in the relevant jurisdiction, filing or recording amortgage in real property records of the county in which such real property orfixtures is located, or by possession or control, and, except for Lienspermitted by Section 6.02 hereof, all such Liens shall be firstpriority Liens.

 

SECTION 3.21.                 Solvency.  After giving effect to the Loans and theterms of this Agreement, the Borrower is, and will be, individually andtogether with its Subsidiaries, and the Parent, Solvent.

 

SECTION 3.22.                 ForeignAssets Control Regulation.  Borrower’suse of the proceeds of the Loans will not violate the Trading with the EnemyAct, as amended, or any of the foreign assets control regulations of the UnitedStates Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or anyenabling legislation or executive order relating thereto.

 

SECTION 3.23.                 Claimsand Liabilities*. *No Loan Party has accrued anyliabilities under gas purchase contracts for gas not taken, but for which it isliable to pay if not made up and which, if not paid, could reasonably beexpected to have a Material Adverse Effect. No known claims exist against theBorrower or any of its Subsidiaries for gas imbalances, which claims, ifadversely determined, could reasonably be expected to have a Material AdverseEffect. To the knowledge of the Borrower, no purchaser of product supplied bythe Borrower or any of its Subsidiaries has any claim against the Borrower orany of its Subsidiaries for product paid for, but for which delivery was nottaken as and when paid for, which claim, if adversely determined, couldreasonably be expected to have a Material Adverse Effect.

 

SECTION 3.24.                 MaterialContracts.  The agreements, leases,indentures, purchase agreements, obligations in respect of letters of credit,guarantees, joint venture agreements and other instruments set forth on Schedule 3.24include all material contracts and agreements (including, without limitation,any contract, lease, agreement, or commitment, written or oral, providing forreceipt or payment, contingent or otherwise, of $250,000 or more annually orwhich may not be terminated without payment or penalty in excess of $50,000with notice of thirty (30) days or less) of the Borrower and its Subsidiariesas of the date of this Agreement relating to the ownership and operation of theassets of the Borrower and its Subsidiaries (collectively, the “MaterialContracts”).  Except as set forth on Schedule 3.24,as of the date of this Agreement, each Material Contract is in full force andeffect, except for such matters in respect of all Material Contracts thatindividually, or in the aggregate, are not reasonably likely to have a MaterialAdverse Effect.  The Borrower and itsSubsidiaries (or their predecessors in interest) have in all respects performedall obligations required to be performed by them as of the date of thisAgreement under the Material Contracts, and are not in default under anyobligation of any Material Contract except where the failure to perform ordefault is, in respect of all Material Contracts, individually or in theaggregate, not reasonably likely to 

 

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have a Material AdverseEffect.  As of the date of thisAgreement, to the knowledge of the Borrower, no other party to any MaterialContract is in default thereunder.  As ofthe date of this Agreement, the Borrower and its Subsidiaries have not assignedto any Person any of their rights under the Material Contracts.  As of the date of this Agreement, theBorrower and its Subsidiaries have not waived any of their rights of materialvalue under the Material Contracts.

 

SECTION 3.25.                 CertainRepresentations Regarding the Parent. (i) The Parent has not amended its charter or by-laws or otherconstituent documents in any manner that would materially and adversely affectthe rights of the Lenders under this Agreement or their ability to enforce thesame; (ii) the Parent has not changed the end of its fiscal year to a dateother than December 31; (iii) the Parent has not engaged in any businessthat a master limited partnership would not be entitled to engage in pursuantto applicable Law nor has the Parent engaged in any business activity thatwould cause less than 90% of the gross income of the Parent to constitute “qualifyingincome” within the meaning of Section 7704(d) of the Code; (iv) the Parenthas not made any changes to the Omnibus Agreement that the Borrower and itsSubsidiaries would be prohibited from making pursuant to Section 6.15of this Agreement; and (v) the Parent has kept proper books of record andaccount in which full, true and correct entries have been made of all dealingsand transactions in relation to its business and activities.

 

**ARTICLE IV**

 

# **Conditions**

 

SECTION 4.01.                 EffectiveDate.  The obligations of the Lendersto make Loans and of the Issuing Bank to issue Letters of Credit hereundershall not become effective until the date on which each of the followingconditions is satisfied (or waived in accordance with Section 9.02):

 

### (a)                                  TheAdministrative Agent (or its counsel) shall have received from each partyhereto either (i) a counterpart of this Agreement and all other documentsrequired by Lender in connection with this Agreement signed on behalf of suchparty or (ii) written evidence satisfactory to the Administrative Agent (whichmay include telecopy transmission of a signed signature page of thisAgreement) that such party has signed a counterpart of this Agreement and allother documents required by Lender in connection with this Agreement.

###  

### (b)                                 TheAdministrative Agent shall have received each of the Security Documents, dulyexecuted and completed in sufficient number of counterparts for recording, if necessary,and they shall constitute satisfactory security documentation to create firstpriority security interests in the Collateral (free and clear of all Liens,other than Liens permitted by Section 6.02 hereof).

###  

### (c)                                  TheAdministrative Agent shall have received the following:

###  

#### (i)                                     UniformCommercial Code Financing Statements (Form UCC-1) and such evidence offiling or arrangements for filing as may be acceptable to the AdministrativeAgent, naming the relevant Loan Party as the debtor and the AdministrativeAgent as the secured party, or other similar instruments or documents, filed orto be filed under the 

 

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#### Uniform Commercial Code of all jurisdictions as may be necessary or, inthe opinion of the Administrative Agent, desirable to perfect the securityinterest of the Administrative Agent pursuant to the Security Documents; and

####  

#### (ii)                                  certifiedcopies of Uniform Commercial Code Requests for Information or Copies (Form UCC-11),or a similar search report certified by a party acceptable to theAdministrative Agent, dated a date reasonably near to the date of the initialBorrowing, listing all effective financing statements which name any Loan Party(under its present name and any previous names) as the debtor and which arefiled in the jurisdictions in which filings of any Security Documents are madepursuant to this Agreement, together with copies of such financing statementsnone of which (other than those (i) securing the Obligations, if such Form UCC-11or search report, as the case may be, is current enough to list such financingstatements, or (ii) that are terminated as of the Effective Date or withina time frame otherwise acceptable to the Administrative Agent) shall cover anyCollateral described in the Security Documents; and

####  

#### (iii)                               copiesof tax Lien searches for each jurisdiction in which a Security Document isfiled or recorded pursuant to this Agreement, certified by a party acceptableto the Administrative Agent, listing all tax Liens imposed on any Loan Party orany of its assets (none of which shall cover any Collateral described in theSecurity Documents).

####  

### (d)                                 TheAdministrative Agent shall have received, and be satisfied with, the titleinformation with respect to the Collateral and shall, in its sole and absolutediscretion, be satisfied with the status of title to the Collateral.

###  

### (e)                                  TheParent shall have (i) consummated its initial public offering of Common Units(as such term is defined in the Partnership Agreement) as contemplated in theS-1 filed by the Parent with the SEC and shall have delivered to theAdministrative Agent copies of all filings (including any filings on Form S-1or Form 8 or Form 10) made with the SEC in connection therewith,including, without limitation, that Vinson & Elkins, as counsel to theParent, shall have issued a tax opinion in connection therewith acceptable tothe parties underwriting such initial public offering; and (ii) has receivednet proceeds of an aggregate amount of not less than $38,000,000 as a result ofsuch initial public offering.

###  

### (f)                                    TheAdministrative Agent shall have received, and shall be satisfied in its solediscretion with the contents, results and scope of, the report by Barnes &Click with respect to the Collateral.

###  

### (g)                                 TheAdministrative Agent shall have received a favorable written opinion (addressedto the Administrative Agent and the Lenders and dated the Effective Date) ofVinson Elkins, LLP, counsel for the Borrower, relating to the Parent, theBorrower and its Subsidiaries, this Agreement or the Transactions and any othermatters as the Required Lenders shall reasonably request.  The Borrower hereby requests such counsel todeliver such opinion.

###  

### (h)                                 TheAdministrative Agent shall have received a favorable written opinion (addressedto the Administrative Agent and the Lenders and dated the Effective Date) ofoutside counsel for the Borrower, relating to the Parent, the Borrower and itsSubsidiaries, this 

 

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### Agreement or the Transactions and any other matters asthe Required Lenders shall reasonably request. The Borrower hereby requests such counsel to deliver such opinion.

###  

### (i)                                     TheAdministrative Agent shall have received favorable written opinions (addressedto the Administrative Agent and the Lenders and dated the Effective Date) ofeach local counsel of the Borrower approved by Administrative Agent, for eachstate where any portion of the Collateral is located, relating to theenforceability of the Security Documents in such State and any other matters asthe Required Lenders shall reasonably request.

###  

### (j)                                     TheAdministrative Agent shall have received such documents and certificates as theAdministrative Agent or its counsel may reasonably request relating to theorganization, existence and good standing of the Borrower, Parent and theGeneral Partner, the authorization of the Transactions and any other legalmatters relating to the Borrower, Parent and the General Partner, thisAgreement or the Transactions, all in form and substance satisfactory to theAdministrative Agent and its counsel.

###  

### (k)                                  TheAdministrative Agent shall have received a certificate, dated the EffectiveDate and signed by the President, a Vice President or a Financial Officer ofthe Borrower, confirming compliance with the conditions set forth inparagraphs (a) and (b) of Section 4.02.

###  

### (l)                                     TheAdministrative Agent shall have received a fully executed copy of the FeeLetter and all fees and other amounts due and payable on or prior to theEffective Date, including, to the extent invoiced, reimbursement or payment ofall out-of-pocket expenses required to be reimbursed or paid by the Borrowerhereunder.

###  

### (m)                               TheLenders shall have received (i) satisfactory audited consolidated financialstatements of Hiland Partners, LLC and Continental Gas, Inc. for theperiod ended December 31, 2003 and for the two (2) most recent fiscalyears ended prior to the Effective Date as to which such financial statementsare available, and (ii) satisfactory unaudited interim consolidatedfinancial statements of September 30, 2004 for each quarterly period endedsubsequent to the date of the latest financial statements delivered pursuant toclause (i) immediately above as to which such financial statements areavailable.

###  

### (n)                                 TheAdministrative Agent shall have received satisfactory evidence that the PriorCredit Agreements have been terminated and of the occurrence of the followingwith respect to the Prior Credit Agreements: (i) all obligations owing to any lender, agent or any other Personthereunder shall have been paid in full and all commitments of any lender,agent or any other Person thereunder to make any future loans shall have beenterminated, (ii) each Letter of Credit issued thereunder shall have beenterminated or canceled, or the Issuer thereof shall have accepted cashcollateral or a Letter of Credit as security therefor; and (iii) there shallhave been no defaults thereunder immediately prior to the satisfaction of theitems set forth in (i) and (ii) immediately above.

###  

### (o)                                 TheAdministrative Agent shall have received certificates of insurance showing theAdministrative Agent as loss payee or additional insured, as appropriate, and aschedule of existing insurance, in each case reasonably satisfactory tothe Administrative Agent 

 

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evidencing the existenceof all insurance required to be maintained pursuant to Section 5.05hereof.

###  

### (p)                                 TheAdministrative Agent shall have received evidence that all governmental andthird-party approvals or consents necessary, or in the discretion of theAdministrative Agent, advisable in connection with the Transactions and thecontinuing operations of the Loan Parties have been granted.

###  

### (q)                                 TheAdministrative Agent shall have received a reliance letter from EnvirotechEngineering and Consulting, Inc. with respect to the followingenvironmental reports, which reliance letter entitles the Administrative Agentand Lenders to rely on such reports as if such reports had been issued directlyto the Administrative Agent for the benefit of the Lenders: (i) Phase IEnvironmental Site Assessment for the Hiland Gas Gathering System, Washakie andBig Horn Counties, Wyoming, dated September 2004; (ii) Phase IEnvironmental Site Assessment for the Badlands Gas Gathering System, Bowman &Slope Counties, North Dakota, dated September 2003; (iii) Phase IEnvironmental Site Assessment for the Eagle Chief Gas Gathering System, Alfalfaand Major Counties, Oklahoma, dated September 2003; (iv) Phase IEnvironmental Site Assessment for the Matli Gas Gathering System, BlaineCounty, Oklahoma, dated September 2003; and (v) Phase I Environmental SiteAssessment for the Great Plains Pipeline, Major, Woods, and Alfalfa Counties,Oklahoma, dated August 2003.

###  

### (r)                                    Noevent shall have occurred with respect to the Parent, the Borrower and itsSubsidiaries, taken as a whole, which has had, or could reasonably be expectedto have, a Material Adverse Effect.

###  

TheAdministrative Agent shall notify the Borrower and the Lenders of the EffectiveDate, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, theobligations of the Lenders to make Loans and of the Issuing Bank to issueLetters of Credit hereunder shall not become effective unless each of the foregoingconditions is satisfied (or waived pursuant to Section 9.02) at orprior to 3:00 p.m., Oklahoma City, Oklahoma time, on February 28,2005 (and, in the event such conditions are not so satisfied or waived, theCommitments shall terminate at such time).

 

SECTION 4.02.                 EachCredit Event.  The obligation of eachLender to make a Loan on the occasion of any Borrowing, and of the Issuing Bankto issue, amend, renew or extend any Letter of Credit, is subject to thesatisfaction of the following conditions:

 

### (a)                                  Therepresentations and warranties of the Borrower set forth in this Agreementshall be true and correct on and as of the date of such Borrowing or the dateof issuance, amendment, renewal or extension of such Letter of Credit, asapplicable, except to the extent any such representation or warranty is statedto relate to an earlier date in which case such representation and warrantywill be true and correct on and as of such earlier date.

###  

### (b)                                 Atthe time of and immediately after giving effect to such Borrowing or theissuance, amendment, renewal or extension of such Letter of Credit, asapplicable, no Default or Event of Default shall have occurred and becontinuing.

 

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Each Borrowing and eachissuance, amendment, renewal or extension of a Letter of Credit shall be deemedto constitute a representation and warranty by the Borrower on the date thereofas to the matters specified in paragraphs (a) and (b) of this Section.

 

**ARTICLE V**

 

# **Affirmative Covenants**

 

Until the Commitmentshave expired or been terminated and the principal of and interest on each Loanand all fees payable hereunder shall have been paid in full and all Letters ofCredit shall have expired or terminated and all LC Disbursements shall have beenreimbursed, the Borrower covenants and agrees with the Lenders that:

 

SECTION 5.01.                 FinancialStatements; Ratings Change and Other Information.  The Borrower will furnish to theAdministrative Agent:

 

### (a)                                  within90****days after the end of eachfiscal year of the Parent, on EDGAR (or (i) upon the request of any Lender, theBorrower shall provide a copy of such statement or report described below toany Lender that does not have access to EDGAR, or (ii) if such statement orreport is no longer available on EDGAR for any reason, a copy of such statementor report described below to each Lender and the Administrative Agent), theParent audited consolidated balance sheet and related statements of operations,partners’ capital and cash flows as of the end of and for such year, settingforth in each case in comparative form the figures for the previous fiscalyear, all reported on by Grant Thornton LLP or other independent publicaccountants of recognized national standing (without a “going concern” or likequalification or exception and without any qualification or exception as to thescope of such audit) to the effect that such consolidated financial statementspresent fairly in all material respects the financial condition and results ofoperations of the Parent, the Borrower and its consolidated Subsidiaries on aconsolidated basis in accordance with GAAP consistently applied;

###  

### (b)                                 within45 days after the end of each of the first three fiscal quarters of eachfiscal year of the Parent on EDGAR (or (i) upon the request of any Lender, theBorrower shall provide a copy of such statement or report described below toany Lender that does not have access to EDGAR, or (ii) if such statementor report is no longer available on EDGAR for any reason, a copy of such statementor report described below to each Lender and the Administrative Agent), theParent’s consolidated balance sheet and related statements of operations andcash flows as of the end of and for such fiscal quarter and the then elapsedportion of the fiscal year, setting forth in each case in comparative form thefigures for the corresponding period or periods of (or, in the case of thebalance sheet, as of the end of) the previous fiscal year, all certified by oneof the Parent’s Financial Officers as presenting fairly in all materialrespects the financial condition and results of operations of the Parent, theBorrower and its consolidated Subsidiaries on a consolidated basis inaccordance with GAAP consistently applied, subject to normal year-end audit adjustmentsand the absence of footnotes;

###  

### (c)                                  concurrentlywith any delivery of financial statements under clause (a) or(b) above, a certificate of a Financial Officer of the Borrowersubstantially in the form of Exhibit F attached hereto(i) certifying as to whether a Default has occurred and is continuing and,if a 

 

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### Default has occurred, specifying the details thereofand any action taken or proposed to be taken with respect thereto,(ii) setting forth reasonably detailed calculations demonstratingcompliance with Section 6.16, Section 6.17 and Section 6.18,and (iii) stating whether any change in GAAP or in the application thereofhas occurred since the date of the last audited financial statements deliveredpursuant to Section 5.01(a) above and, if any such change hasoccurred, specifying the effect of such change on the financial statementsaccompanying such certificate;

###  

### (d)                                 promptlyafter the same become publicly available, on EDGAR (or (i) upon the request ofany Lender, the Borrower shall provide a copy of such statement or reportdescribed below to any Lender that does not have access to EDGAR, or (ii) ifsuch statement or report is no longer available on EDGAR for any reason, a copyof such statement or report described below to each Lender and theAdministrative Agent) copies of all periodic and other reports, proxystatements and other materials filed by the Parent, the Borrower or anySubsidiary with the SEC, or with any national securities exchange, as the casemay be;

###  

### (e)                                  withinfifteen (15) days after the filing thereof, copies of all income tax returns,attachments, forms, exhibits and extensions of each Loan Party; and

###  

### (f)                                    promptlyfollowing any request therefor, such other information regarding theoperations, business affairs and financial condition of the Parent, theBorrower or any Subsidiary, or compliance with the terms of this Agreement, asthe Administrative Agent or any Lender may reasonably request.

###  

SECTION 5.02.                 Noticesof Material Events.  The Borrowerwill furnish to the Administrative Agent and each Lender prompt written noticeof the following:

 

### (a)                                  theoccurrence of any Default of which Borrower has, or could reasonably beexpected to have, knowledge;

###  

### (b)                                 thefiling or commencement of any action, suit or proceeding by or before anyarbitrator or Governmental Authority against or affecting the Parent, theBorrower or any Subsidiary thereof that, if adversely determined, couldreasonably be expected to result in a Material Adverse Effect;

###  

### (c)                                  theoccurrence of any ERISA Event that, alone or together with any other ERISAEvents that have occurred, could reasonably be expected to result in liabilityof the Parent, the Borrower and its Subsidiaries in an aggregate amount thatcould reasonably be expected to have a Material Adverse Effect; and

###  

### (d)                                 anyother development that results in, or could reasonably be expected to resultin, a Material Adverse Effect.

###  

Each notice deliveredunder this Section shall be accompanied by a statement of a FinancialOfficer or other executive officer of the Borrower setting forth the details ofthe event or development requiring such notice and any action taken or proposedto be taken with respect thereto.

 

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SECTION 5.03.                 Existence;Conduct of Business.  Each Loan Partywill do or cause to be done all things necessary to preserve, renew and keep infull force and effect its legal existence and the rights, licenses, permits,privileges and franchises material to the conduct of its business except wherethe failure to do so in each case could not reasonably be expected to have aMaterial Adverse Effect; provided that the foregoing shall not prohibitany merger, consolidation, liquidation or dissolution permitted under Section 6.03.

 

SECTION 5.04.                 Payment ofObligations.  Each Loan Party willpay its obligations before the same shall become delinquent or in default,including Tax liabilities, that, if not paid, could result in a MaterialAdverse Effect, except where (a) the validity or amount thereof is beingcontested in good faith by appropriate proceedings, (b) such Loan Party has setaside on its books adequate reserves with respect thereto in accordance withGAAP, and (c) the failure to make payment pending such contest could notreasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.05.                 Maintenance ofProperties; Insurance.  (a) TheBorrower will, and will cause each of its Subsidiaries to, keep and maintainall property material to the conduct of its business in good working order andcondition in accordance with industry practice, ordinary wear and tearexcepted.

 

### (b)                                 The Borrowerwill, and will cause each of its Subsidiaries to, maintain insurance withrespect to its properties and businesses against such liabilities, causalities,risks and contingencies as is customary in the relevant industry and sufficientto prevent a Material Adverse Effect; all such insurance to be in amounts andfrom insurers reasonably acceptable to the Administrative Agent and on theEffective Date or upon any renewal, of any such insurance and at other timesupon the reasonable request of the Administrative Agent, furnish to theAdministrative Agent, for the review and distribution to the Lenders, evidence,satisfactory in the good faith judgment of the Administrative Agent of themaintenance of such insurance. All insurance policies required pursuant to thisSection 5.05 shall (i) name the Administrative Agent on behalf ofthe Lenders as mortgagee (in the case of property insurance) or additionalinsured (in the case of liability insurance), as applicable, and provide thatno cancellation or modification of the policies will be made without thirty(30) days’ prior written notice to the Administrative Agent.

###  

SECTION 5.06.                 Books andRecords; Inspection Rights.  EachLoan Party will keep proper books of record and account in which full, true andcorrect entries are made of all dealings and transactions in relation to itsbusiness and activities.  Each Loan Partywill, and will cause each of its Subsidiaries to, permit any representativesdesignated by the Administrative Agent or any Lender, upon reasonable priornotice and subject to applicable safety rules and regulations, to visitand inspect its properties, to examine and make extracts from its books andrecords, and to discuss its affairs, finances and condition with its officersand independent accountants, all at such reasonable times and as often asreasonably requested.

 

SECTION 5.07.                 Compliancewith Laws.  Each Loan Party will, andwill cause each of its Subsidiaries to, comply with all laws, rules,regulations and orders of any Governmental Authority applicable to it or itsproperty, except where the failure to do so,

 

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individually or in the aggregate, could notreasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.08.                 Use ofProceeds and Letters of Credit.  (a)The proceeds of the Revolver A Loans will be used only (i) to pay the fees, expensesand other transaction costs of the Transactions contemplated hereby; (ii) fordevelopment capital expenditure projects, (iii) to fund acquisitions permittedhereunder and engage in other transactions permitted hereby, (iv) in connectionwith the issuances of Letters of Credit as set forth herein, (v) forMaintenance Capital Expenditures, and (vi) for other general corporatepurposes.  Notwithstanding anything tothe contrary contained in this Agreement, in no event shall proceeds of theRevolver A Loans be used to make Restricted Payments.

 

### (b)                                 The proceeds ofthe Revolver B Loans will be used only (i) to fund working capital needs, and(ii) to fund Restricted Payments permitted pursuant to Section 6.06.

###  

### (c)                                  No part of theproceeds of any Loan will be used, whether directly or indirectly, for anypurpose that entails a violation of any of the regulations of the Board,including Regulations T, U and X. Letters of Credit will be issued only to support the working capitalneeds and general corporate obligations of the Borrower and its Subsidiariesrelating to their respective lines of business.

###  

SECTION 5.09.                 Compliancewith ERISA.  In addition to andwithout limiting the generality of Section 5.07, each Loan Partyshall (a) comply in all material respects with all applicable provisions ofERISA and the regulations and published interpretations thereunder with respectto all employee benefit plans (as defined in ERISA), (b) not take any action orfail to take action the result of which could be (i) a liability to the PBGC or(ii) a past due liability to any Multiemployer Plan, (c) not participate in anyprohibited transaction that could result in any civil penalty under ERISA orany tax under the Code, and (d) operate each employee benefit plan in such a mannerthat will not incur any tax liability under Section 4980B of the Code orany liability to any qualified beneficiary as defined in Section 4980B ofthe Code except to the extent, in each case, where the failure to do so wouldnot reasonably be expected to result in a Material Adverse Effect.  Each Loan Party shall furnish to theAdministrative Agent upon the Administrative Agent’s request such additionalinformation about any employee benefit plan sponsored, maintained orcontributed to by any of said Persons and/or the Parent, as may be reasonablyrequested by the Administrative Agent.

 

SECTION 5.10.                 Real PropertyCollateral.  (a) Except with respectto Excluded Assets, within thirty (30) days of the acquisition of any fee,leasehold, easement estate or other interest in any real property by theBorrower or any Subsidiary that (A) at any time causes the aggregate book valueof all real property interests then owned by Borrower and its Subsidiaries andnot covered by a deed of trust, mortgage, leasehold deed of trust or leaseholdmortgage, as applicable, to exceed $500,000; or (B) is material to theoperation of any portion of the Borrower’s or any Subsidiary’s business, theBorrower will, and will cause each of such Subsidiaries to, (i) execute inform and substance reasonably satisfactory to the Administrative Agent, a deedof trust or mortgage, as applicable, in respect of any such fee interest oreasement estate as well as in respect of all other fee interests or easementestates of the Borrower and its Subsidiaries not then subject to a deed oftrust or mortgage, as applicable, and (ii) execute in

 

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form and substance reasonably satisfactory to the Administrative Agent,a leasehold deed of trust or mortgage, as applicable, in respect of anyleasehold interest as well as in respect of all other leasehold interests ofthe Borrower and its Subsidiaries not then subject to a deed of trust ormortgage, in each case granting a first priority perfected Lien on suchproperty as collateral for the Obligations, subject only to Liens permittedpursuant to Section 6.02 hereof, (iii) provide other titleinformation in form and substance reasonably satisfactory to the AdministrativeAgent for any property on which a lien is granted pursuant to clause (i) or(ii) above, and (iv) for any property acquired for which the Borrower or anysuch Subsidiary obtains an owner’s policy of title insurance, provide a copy ofsuch owner’s policy.   The Borrowershall, concurrently with any delivery of financial statements under Section 5.01(a) or (b) and otherwise within ten (10) days following thedate that any interest in real property described in clause (A) or (B) of this Section 5.10(a)is acquired, deliver a report in form and substance reasonably acceptable tothe Administrative Agent describing all real property interests then owned byBorrower and its Subsidiaries and not covered by a deed of trust, mortgage,leasehold deed of trust or leasehold mortgage, as applicable, along with thebook value of each such real property interest as determined in accordance withGAAP.

 

### (b)                                 The Borrowerwill, and will cause each of its Subsidiaries to, use commercially reasonableefforts in negotiating any new Lease, right-of-way or similar instrument or therenewal or extension of any existing Lease, easement estate, right-of-way orsimilar instrument covering real property to provide in such Lease, easementestate, right-of-way or similar instrument that the interest of the lessee orgrantee may be hypothecated without any further approval of or notice to thelandlord under such lease or the grantor under any such easement, right-of-wayor similar instrument.

###  

SECTION 5.11.                 Compliancewith Environmental Laws.  (a) Inaddition to and without limiting the generality of Section 5.07,each Loan Party shall (i) comply in all material respects with allEnvironmental Laws applicable to its operations and real property except wherethe failure to do so, individually or in the aggregate, could not reasonably beexpected to have a Material Adverse Effect; (ii) obtain and renew allmaterial Governmental Approvals required under Environmental Laws applicable toits operations and real property except where the failure to do so,individually or in the aggregate, could not reasonably be expected to have aMaterial Adverse Effect; and (iii) conduct any Response legally requiredby any Loan Party in accordance with applicable Environmental Laws except wherethe failure to do so, individually or in the aggregate, could not reasonably beexpected to have a Material Adverse Effect.

 

### (b)                                 Withoutlimiting the Borrower’s obligations pursuant to Section 5.11(a)above, the Borrower covenants and agrees that:

###  

#### (i)                                     With regard tothe Main Plant, formerly known as the RAM Energy Carmen Gas Plant, SW/4 Section 12-24N-13W,Woods County, Oklahoma, the Borrower shall, or shall cause its applicableSubsidiary to, promptly commence and diligently pursue to completion any andall actions necessary to comply with and complete all requirements forremediation as directed by the Oklahoma Corporation Commission’s PollutionAbatement Section and shall, or shall cause its applicable Subsidiary to,diligently pursue and obtain written confirmation from the Oklahoma Corporation

 

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#### Commission that no further remediation of such site will be requiredand that the open pollution abatement case with respect thereto has beenclosed.

####  

#### (ii)                                  With regard tothe North Booster Station, Section 18-23N-12W, Alfalfa County, Oklahoma,the Borrower shall, or shall cause its applicable Subsidiary to, promptly, butin any event within 90 days following the date of this Agreement, implement allremediation recommendations made by EnviroTech Engineering & Consulting, Inc.in that certain Site Remediation Update For Earl Land Farm Site, North BoosterStation and Ram (Magic Circle) Main Plant prepared for Continental Gas, Inc.and dated January 2005, and shall, or shall cause its applicableSubsidiary to, diligently pursue the completion of such remediation.

####  

#### (iii)                               With regard tothe Earl Land Farm Site, Section 2-23N-14W, Woods County, Oklahoma, theBorrower shall, or shall cause its applicable Subsidiary to, promptly, but inany event within 90 days following the date of this Agreement, implement allremediation recommendations made by EnviroTech Engineering &Consulting, Inc. in that certain Site Remediation Update For Earl LandFarm Site, North Booster Station and Ram (Magic Circle) Main Plant prepared forContinental Gas, Inc. and dated January 2005, and shall, or shallcause its applicable Subsidiary to, diligently pursue, the completion of suchremediation.

####  

SECTION 5.12.                 FurtherAssurances.  (a) The Borrower willcause each Loan Party, at its own cost and expense, to promptly(i) correct any material defect or error that may be discovered in anyLoan Document or in the execution, acknowledgment, filing or recordationthereof and (ii) do, execute, acknowledge, deliver, record, re-record,file, re-file, register and re-register any and all such further acts, deeds,certificates, assurances and other instruments the Administrative Agent mayreasonably require from time to time in order to carry out more effectively thepurposes of the Loan Documents.

 

### (b)                                 The Borroweragrees to promptly (and in any event within fifteen (15) days afterrequest therefor) deliver and to cause its Subsidiaries to deliver, to furthersecure the Obligations whenever reasonably requested by the AdministrativeAgent in good faith, deeds of trust, mortgages, chattel mortgages, securityagreements, pledge agreements, financing statements, continuation statements,extension agreements and opinions or other evidence or other similar agreementsor instruments, substantially similar to the Security Documents deliveredpursuant to Article IV or otherwise in form and substancereasonably satisfactory to the Administrative Agent for the purpose ofgranting, confirming, perfecting and maintaining first and prior liens orsecurity interests in any and all real or personal property which (i) isat such time Collateral or which was intended to be or purported to beCollateral pursuant to any Loan Document and not then released by theAdministrative Agent; or (ii) constitutes real or personal property of anyLoan Party, which is requested by the Administrative Agent to be mortgaged,pledged or otherwise used as security for the Obligations. The Borrower alsoagrees to deliver, and to cause its Subsidiaries to deliver, whenever requestedby the Administrative Agent in good faith, promptly but in no event later thanninety (90) days after request therefor, additional favorable titleopinions (in addition to any title opinions previously delivered to theAdministrative Agent) from legal counsel reasonably acceptable to theAdministrative Agent in good faith, or favorable title insurance policies frominsurers acceptable to the Administrative

 

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### Agentin good faith, with respect to any material Collateral (with the determinationas to materiality being made by the Administrative Agent in its reasonablediscretion), as to which the Administrative Agent in good faith believes thatthe record ownership of such Collateral, or the status of Liens securing theObligations, is in question, and (A) stating that the Borrower has goodand marketable title to such properties and interest, free and clear of allLiens, except for Liens permitted pursuant to Section 6.02;(B) confirming that such properties and interest are subject to SecurityDocuments securing Obligations that constitute and create legal, valid and dulyperfected first priority deed of trust or mortgage liens in such properties andinterests and first priority assignments of and security interests in suchproperties and interests and the proceeds thereof except for Liens permittedpursuant to Section 6.02; and (C) covering such other mattersas the Administrative Agent may request in good faith.

###  

### (c)                                  The Borrower(i) will from time to time deliver or cause to be delivered to theAdministrative Agent any financing statements, continuation statements,extension agreements and other documents, properly completed (and executed andacknowledged when required) by the relevant Loan Party, as the case may be, inform and substance satisfactory to the Administrative Agent, which theAdministrative Agent reasonably requests for the purpose of perfecting,confirming or protecting any Liens or other rights in the Collateral; and(ii) hereby authorizes the Administrative Agent to execute and file orrecord, on behalf of such Loan Party, any financing statements, continuationstatements, extension agreements and other documents that the AdministrativeAgent deems necessary or advisable to perfect, confirm or protect any Liens orother rights in the Collateral in favor or the Administrative Agent for thebenefit of the Lenders.

###  

SECTION 5.13.                 Tax ShelterRegulations.  If the Borrowerdetermines to take any action inconsistent with Section 3.17, theBorrower will promptly notify the Administrative Agent thereof and willpromptly deliver to the Administrative Agent a duly completed copy of IRS Form 8886(or any successor form).  The Borroweracknowledges that, upon any such notification, any Lender may treat its Loanshereunder as part of a transaction that is subject to Treasury Regulation Section 301.6112-1,and such Lender will maintain the lists and other records required by suchTreasury Regulation.

 

SECTION 5.14.                 Compliancewith Leases; Material Contracts. Each Loan Party will perform and observe, or cause to be performed andobserved, all of the covenants and conditions required to be performed by it orany of its Subsidiaries under each Lease and each Material Contract, exceptwhere such failure could not reasonably be expected to have a Material AdverseEffect.  The Borrower will promptlynotify the Administrative Agent in writing of the receipt by the Borrower orany Subsidiary of any notice from any third party to the Borrower or any Subsidiaryof any material default under, or the termination of, any Material Contractpursuant to the provisions of such Material Contract, and will promptly cause acopy of each such notice received by the Borrower or any Subsidiary from anythird party to be delivered to the Administrative Agent.  The Borrower will not, nor will it permit anySubsidiary to, without the prior written consent of the Required Lenders, (i)terminate or surrender, or suffer or permit any termination or surrender, ofany Material Contract during the initial term thereof or any valid extensionthereto; or (ii) amend any Material Contract in any manner which would, orcould reasonably be expected to, have a Material Adverse Effect.

 

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SECTION 5.15.                 Clean-DownPeriod. The Borrower will cause the aggregate outstanding principal balanceof the Revolver B Loans to be zero for a period of at least fifteen (15)consecutive days during each twelve month period.

 

SECTION 5.16.                 Subsidiaries.Immediately upon the formation or acquisition of any entity which meets thedefinition of a Guarantor, such Guarantor shall execute and deliver to theAdministrative Agent for the benefit of the Lenders a Guaranty Agreementsubstantially in the form of Exhibit D attached hereto.  Each such Guarantor shall also execute anddeliver to the Administrative Agent one or more (i) mortgages or deeds oftrust granting, as security for the Obligations, a first priority lien subjectto the liens permitted by Section 6.02 hereunder in all realproperty of such Subsidiary, and (ii) security agreements (or supplementsthereto) granting, as security for the Obligations, a security interest to theAdministrative Agent for the benefit of the Lenders in all the assets of eachsuch Person in which a security interest can be created under the UCC, and alldocuments and instruments, including UCC financing statements, required by lawor reasonably requested by the Administrative Agent to be filed, registered orrecorded to create the security interests intended to be created by suchsecurity agreements and perfect such Liens to the extent required by, and withthe priority required by, the security agreements, shall have been filed,registered or recorded (or arrangements satisfactory to the Collateral Agentfor such filing, registration or recording shall have been made).  Additionally, the Borrower and eachSubsidiary shall have pledged at all times 100% of such Person’s EquityInterest in any Subsidiary to the Administrative Agent for the benefit of theLenders pursuant to a pledge agreement in form and substance reasonablysatisfactory to the Administrative Agent. The Borrower will, and will cause each of its Subsidiaries to, ensurethat all Equity Interests in its Subsidiaries are owned directly or indirectlyat all times only by the Borrower or one or more of the Subsidiaries and thatall the Equity Interests of such Subsidiaries are pledged to secure theObligations.

 

SECTION 5.17.                 InformationRegarding Collateral.  The Borrowerwill furnish to the Administrative Agent prompt written notice of any change(i) in any Loan Party’s corporate name or in any trade name used to identify itin the conduct of its business or in the ownership of its properties, (ii) inthe location of any Loan Party’s chief executive office, its principal place ofbusiness, any office in which it maintains books or records relating toCollateral owned by it or any office or facility at which Collateral owned byit is located (including the establishment of any such new office or facility),(iii) in any Loan Party’s identity or corporate structure or (iv) in any LoanParty’s Federal Taxpayer Identification Number. The Borrower agrees not to effect or permit any change referred to inthe preceding sentence unless all filings have been made under the UCC orotherwise that are required in order for the Administrative Agent to continueat all times following such change to have a valid, legal and perfectedsecurity interest in all the Collateral. The Borrower also agrees promptly to notify the Administrative Agent ifany material portion of the Collateral is damaged or destroyed.

 

SECTION 5.18.                 Post ClosingMatters.  The Borrower shall executeand deliver, or cause to be executed and delivered, the documents and completethe other items set forth on Schedule 5.18, in each case, withinthe time limits set forth on such Schedule.

 

SECTION 5.19.                 DepositAccounts.  The Borrower will, andwill cause each Loan Party to, maintain its primary bank depositoryrelationship with MidFirst Bank.

 

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# **ARTICLE VI**

 

# **Negative Covenants**

#  

Until the Commitments have expired orterminated and the principal of and interest on each Loan and all fees payablehereunder have been paid in full and all Letters of Credit have expired orterminated and all LC Disbursements shall have been reimbursed, the Borrowercovenants and agrees with the Lenders that:

 

SECTION 6.01.                 Indebtedness.  The Borrower will not, and will not permitany Subsidiary to, create, incur, assume or permit to exist any Indebtedness,except:

 

### (a)                                  Indebtednesscreated hereunder;

###  

### (b)                                 unsecuredIndebtedness of the Borrower so long as the incurrence or maintenance of suchIndebtedness does not cause a Default or an Event of Default under any otherprovision of this Agreement; provided that the aggregate principal amount ofIndebtedness permitted by this clause (b) shall not exceed $5,000,000 at anytime outstanding;

###  

### (c)                                  Indebtednessexisting on the date hereof and set forth in Schedule 6.01, and anyextensions, refinancing, renewals or replacements of any such Indebtedness; providedthat such Indebtedness is not increased in connection therewith except forincreases in an amount equal to a reasonable premium or other reasonable amountpaid, and fees and expenses reasonably incurred, in connection with suchextension, renewal, refinancing, or replacement and in an amount equal to anyexisting commitments unutilized thereunder, and is not secured by anyadditional assets;

###  

### (d)                                 purchase moneyIndebtedness (including Capital Lease Obligations) of the Subsidiariesrepresenting the portion of the purchase price of any office equipment, dataprocessing equipment (including, without limitation, computer and computerperipheral equipment), compression equipment, trucks, tractors, trailers andother transportation equipment which may be secured by Liens permitted under Section 6.02hereof; provided that the aggregate principal amount of Indebtednesspermitted by this clause (d) shall not exceed $2,000,000 at any timeoutstanding;

###  

### (e)                                  anyIndebtedness incurred or assumed in connection with any transaction oracquisition permitted by Section 6.19 hereof; provided that theaggregate principal amount of Indebtedness permitted by this clause (e) shallnot exceed $5,000,000 at any time outstanding;

###  

### (f)                                    Indebtedness ofthe Borrower to any Subsidiary and of any Subsidiary to the Borrower or anyother Subsidiary;

###  

### (g)                                 Guarantees bythe Borrower of Indebtedness of any Subsidiary and by any Subsidiary ofIndebtedness of the Borrower or any other Subsidiary;

###  

### (h)                                 Indebtednessconsisting of surety bonds that the Borrower or any Subsidiary is required toobtain in order to comply with applicable Law or the requirements of anyGovernmental Authority.

 

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SECTION 6.02.                 Liens.  The Borrower will not, and will not permitany Subsidiary to, create, incur, assume or permit to exist any Lien on anyproperty or asset now owned or hereafter acquired by it, or assign or sell anyincome or revenues (including accounts receivable) or rights in respect of anythereof, except:

 

### (a)                                  PermittedEncumbrances;

###  

### (b)                                 any Lien on anyproperty or asset of the Borrower or any Subsidiary existing on the date hereofand set forth in Schedule 6.02 hereof; provided that (i)such Lien shall not apply to any other property or asset of the Borrower or anySubsidiary and (ii) such Lien shall secure only those obligations which itsecures on the date hereof, and any extensions, renewals and replacementsthereof;

###  

### (c)                                  any Lien on anyproperty or asset prior to the acquisition thereof by the Borrower or anySubsidiary or existing on any property or asset of any Person that becomes aSubsidiary after the date hereof prior to the time such Person becomes aSubsidiary; provided that (i) such Lien is not created incontemplation of or in connection with such acquisition or such Person becominga Subsidiary, as the case may be, (ii) such Lien shall not apply to anyother property or assets of the Borrower or any Subsidiary; (iii) such Lienshall secure only those obligations which it secures on the date of suchacquisition or the date such Person becomes a Subsidiary, as the case may be,and any extensions, renewals and replacements thereof; and (iv) theIndebtedness secured by such Lien does not exceed 100% of the fair market valueof the assets acquired in such transaction or acquisition;

###  

### (d)                                 Liens securingthe Indebtedness permitted by clause (d) of Section 6.01 and placedon the property described therein contemporaneously with the purchase thereofor within 90 days thereafter, by the Borrower or any of its Subsidiaries tosecure all or a portion of the purchase price thereof; provided thatsuch Lien shall not extend to any other property or assets of the Borrower orits Subsidiaries;

###  

### (e)                                  Liens securingIndebtedness on fixed or capital assets acquired, constructed or improved bythe Borrower or any Subsidiary; provided that (i) such securityinterests and the Indebtedness secured thereby are incurred prior to or within180 days after such acquisition or the completion of such construction orimprovement, (ii) the Indebtedness secured thereby does not exceed 100% ofthe cost of acquiring, constructing or improving such fixed or capital assets;(iii) such security interests shall not apply to any other property orassets of the Borrower or any Subsidiary; and (iv) the aggregate outstandingprincipal amount of the Indebtedness secured thereby does not exceed (as to theBorrower and all its Subsidiaries) $2,000,000 at any one time;

###  

### (f)                                    any interest ortitle of a lessor under any lease entered into by the Borrower or any of itsSubsidiaries in the ordinary course of its business and covering only theassets so leased, and any interest of a landowner in the case of easementsentered into by the Borrower or any of its Subsidiaries in the ordinary courseof its business and covering only the property subject to the easement;

 

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### (g)                                 Liens nototherwise permitted by this Section so long as the aggregate outstandingprincipal amount of the obligations secured thereby does not exceed (as to theBorrower and all its Subsidiaries) $500,000 at any one time;

###  

### (h)                                 any Liencreated or assumed by the Borrower or any Subsidiary in connection with theissuance of Indebtedness, the interest on which is excludable from gross incomeof the holder of such Indebtedness pursuant to the Code, for the purpose offinancing, in whole or in part, the acquisition or construction of property orassets to be used by the Borrower or its Subsidiaries;

###  

### (i)                                     Liens on anyadditions, improvements, replacements, repairs, fixtures, appurtenances orcomponent parts thereof attaching to or required to be attached to property orassets pursuant to the terms of any mortgage, pledge agreement, securityagreement or other similar instrument, creating a Lien upon such property orasset otherwise permitted under this Section;

###  

### (j)                                     any Liensarising out of the refinancing, extension, renewal or refunding of anyIndebtedness secured by any Lien permitted by any of the foregoing clauses ofthis Section, provided that such Indebtedness is not increased exceptfor increases in an amount equal to a reasonable premium or other reasonableamount paid, and fees and expenses reasonably incurred, in connection with suchextension, renewal, refinancing, or replacement and in an amount equal to anyexisting commitments unutilized thereunder, and is not secured by anyadditional assets; and

###  

### (k)                                  Liens securingIndebtedness permitted by Section 6.01(e); provided that theIndebtedness secured thereby does not exceed 100% of the fair market value ofthe assets or Equity Interests acquired in such transaction or acquisition.

###  

SECTION 6.03.                 FundamentalChanges. Neither the Borrower nor any Subsidiary will merge or consolidatewith or into any other Person nor shall any Subsidiary liquidate or dissolve,except that if before and after giving effect to such merger or consolidation,there exists no Default or Event of Default (A) the Borrower or any Subsidiarymay merge or consolidate with any Person so long as the Borrower or suchSubsidiary is the surviving Person; (B) a Subsidiary may merge into theBorrower in a transaction in which the Borrower is the surviving Person; (C) aSubsidiary may merge into any other Subsidiary; and (D) any Subsidiary mayliquidate or dissolve if such liquidation or dissolution is in the bestinterests of the Borrower and is not materially disadvantageous to the Lenders.

 

SECTION 6.04.                 Investments,Loans, Advances and Guarantees.  TheBorrower will not, and will not permit any of its Subsidiaries to, purchase,hold or acquire (including pursuant to any merger with any Person that was nota wholly-owned Subsidiary prior to such merger) any capital stock, evidences ofindebtedness or other securities (including any option, warrant or other rightto acquire any of the foregoing) of, make or permit to exist any loans oradvances to, or Guarantee any Indebtedness of, or make or permit to exist anyinvestment or any other interest in, any other Person, except that, so long asno Default or Event of Default shall have occurred and be continuing or willresult therefrom, the Borrower and its Subsidiaries may make:

 

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### (a)                                  PermittedInvestments;

###  

### (b)                                 investments bythe Borrower in the Equity Interests of its Subsidiaries and investments by anySubsidiary in the Borrower or any other Subsidiary;

###  

### (c)                                  loans oradvances made by the Borrower to any Subsidiary and made by any Subsidiary tothe Borrower or any other Subsidiary;

###  

### (d)                                 Guaranteesconstituting Indebtedness permitted by Section 6.01;

###  

### (e)                                  Swap Agreementsto the extent permitted under Section 6.05;

###  

### (f)                                    any purchasesor other acquisitions of all or substantially all of the Equity Interests inany Person permitted by Section 6.19; provided that,immediately upon consummation thereof, such Person will be a Guarantor(including, without limitation, as a result of a merger or consolidationotherwise permitted under this Agreement) and any other purchase or acquisitionof any property or assets of any Person permitted by Section 6.19;

###  

### (g)                                 investmentsconsisting of extensions of credit, including without limitation, in the natureof accounts receivable arising from the grant of trade credit or prepayments orsimilar transactions entered into in the ordinary course of business andinvestments by the Borrower or any Subsidiary in satisfaction or partialsatisfaction thereof from financially troubled account debtors to prevent orlimit financial loss; and

###  

### (h)                                 investments nototherwise permitted by this Section 6.04 in an aggregate amount notto exceed $500,000 at anytime outstanding.

###  

SECTION 6.05.                 SwapAgreements.  The Borrower will not,and will not permit any of its Subsidiaries to, enter into any Swap Agreement,except (a) Swap Agreements entered into between (i) the Borrower or one ofits Subsidiaries, and (ii) the Administrative Agent or any Person that isa Lender at the time of the execution of such agreement or arrangement or anyAffiliate of such Person; provided, that such Swap Agreements are inrespect of interest rates which are entered into with the purpose and effect offixing or capping interest rates on a principal amount of indebtedness of theBorrower that is accruing interest at a variable rate; provided, furtherthat (A) the floating rate index of each such Swap Agreement generallymatches the index used to determine the floating rates of interest on thecorresponding indebtedness of the Borrower to be hedged by such Swap Agreement;and (B) the Borrower shall not establish or maintain any margin accountswith respect to such Swap Agreements; and (C) such Swap Agreements are incompliance with the Borrowers’ risk management policies, and (b) SwapAgreements entered into to hedge or mitigate risks to which the Borrower or anyof its Subsidiaries has actual exposure.

 

SECTION 6.06.                 RestrictedPayments.  The Borrower will not, andwill not permit any of its Subsidiaries to, declare or make, or agree to pay ormake, directly or indirectly, any Restricted Payments, except that so long asno Default or Event of Default shall have occurred and be continuing andprovided that no Default or Event of Default would result from the making ofsuch Restricted Payment:

 

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#### (i)                                     any Subsidiarymay make Restricted Payments to the Borrower or any Subsidiary; and

####  

#### (ii)                                  the Borrowermay declare, make or incur a liability to make distributions to the Parent tofund Quarterly Distributions; provided that (A) such QuarterlyDistributions are made in accordance with the provisions of the PartnershipAgreement, and (B) the aggregate amount of Quarterly Distributions made bythe Parent with respect to any fiscal quarter shall not exceed Available Cashfor such fiscal quarter.

####  

SECTION 6.07.                 Transactionswith Affiliates.  Except as otherwisepermitted hereunder, the Borrower will not, and will not permit any of itsSubsidiaries to, sell, lease or otherwise transfer any property or assets to,or purchase, lease or otherwise acquire any property or assets from, orotherwise engage in any other transactions with, any of its Affiliates, except(a) as permitted by the Partnership Agreement, and (b) transactions between oramong the Borrower and its Subsidiaries not involving any other Affiliate.

 

SECTION 6.08.                 Sales ofAssets.  Neither the Borrower nor anySubsidiary shall enter into any arrangement, direct or indirect, with anyPerson other than a Loan Party pursuant to which the Borrower or any Subsidiaryshall sell or otherwise transfer or dispose of any property, real, personal ormixed, whether now owned or hereafter acquired, except (i) sales,transfers or dispositions in the ordinary course of business and the grantingof any option or other right to purchase or otherwise acquire property in theordinary course of business, (ii) sales, transfers or dispositions not inthe ordinary course of business provided that the aggregate proceeds of allsuch sales, transfers and dispositions permitted by this item (ii) shallnot exceed, (A) from the date hereof during any period of twelve (12)consecutive months more than $1,000,000 and (B) during the term hereofmore than $2,500,000, (iii) sales of wetlands credits; (iv) sales,transfers or dispositions of property that are no longer commercially viable tomaintain or obsolete, surplus or worn-out property, whether now owned orhereafter acquired; (v) sales, transfers or dispositions of equipment orreal property to the extent that (A) such equipment or real property isexchanged for credit against the purchase price of similar replacementequipment or real property, or (B) the proceeds of such sales, transfersor dispositions are reasonably promptly, but in any event within 90 days,applied to the purchase price of such replacement equipment or real property;(vi) dispositions resulting from the bona fide exercise by a GovernmentalAuthority of its actual power of eminent domain or other dispositions otherwiserequired by applicable law, and (vii) dispositions of property subject toa Permitted Encumbrance that are transferred to a lienholder or its designee insatisfaction or settlement of the lienholder’s claim or a realization upon asecurity interest permitted under this Agreement.  The Lender’s hereby authorize and direct theAdministrative Agent to execute and deliver releases on the Liens on theCollateral created by the Security Documents with respect to Assets permittedto be sold under this Section.

###  

SECTION 6.09.                 ConstituentDocuments.  No Loan Party will amendits charter or by-laws or other constituent documents in any manner that wouldmaterially and adversely affect the rights of the Lenders under this Agreementor their ability to enforce the same.

 

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SECTION 6.10.                 Regulation T,U and X Compliance.  The Borrowershall not and shall not permit any Subsidiary to use the proceeds of the Loansto purchase or carry Margin Stock (as defined in Regulation U), orotherwise act so as to cause any Lender, in extending credit hereunder, to bein contravention of Regulations T, U or X.

 

SECTION 6.11.                 Sales andLeasebacks.  Except to the extentsuch leases in the aggregate would not require total payments of more than$2,000,000 per annum, the Borrower shall not, and shall not permit any of itsSubsidiaries to, directly or indirectly, become or remain liable as lessee oras a guarantor or other surety with respect to any lease of any property(whether real, personal or mixed), whether now owned or hereafter acquired that(i) the Borrower or any of its Subsidiaries has sold or transferred or is tosell or transfer to any other Person (other than the Borrower or any of itsSubsidiaries) or (ii) the Borrower or any of its Subsidiaries intends to usefor substantially the same purpose as any other property that has been or is tobe sold or transferred by the Borrower or any of its Subsidiaries to any Person(other than the Borrower or any of its Subsidiaries) in connection with suchlease.

 

SECTION 6.12.                 Changes inFiscal Year.  No Loan Party shallchange the end of its fiscal year to a date other than December 31.

 

SECTION 6.13.                 Change in theNature of Business.  The Borrowershall not engage directly or indirectly in any business activity that wouldcause less than 90% of the gross income of such Person to constitute “qualifyingincome” within the meaning of Section 7704(d) of the Code.

 

SECTION 6.14.                 Limitation onRestrictions on Subsidiary Distributions. The Borrower shall not, and shall not permit any of its Subsidiaries toenter into or suffer to exist or become effective any consensual encumbrance orrestriction on the ability of any Subsidiary to make Restricted Payments inrespect of any Equity Interests of such Subsidiary held by, or pay anyIndebtedness owed to, the Borrower or any other Subsidiary; providedthat (i) the foregoing shall not apply to restrictions and conditions imposedby applicable Law or by this Agreement, (ii) the foregoing shall not apply torestrictions and conditions existing on the date hereof (but shall apply to anyextension or renewal of, or any amendment or modification expanding the scopeof, any such restriction or condition) to the extent such restrictions arelisted on Schedule 6.14 attached hereto, (iii) the foregoing shallnot apply to customary restrictions and conditions contained in agreementsrelating to the sale of a Subsidiary pending such sale, provided suchrestrictions and conditions apply only to the Subsidiary that is to be sold andsuch sale is permitted hereunder, and (iv) the foregoing shall not apply torestrictions and conditions contained in the documentation evidencing anyIndebtedness permitted hereunder; provided that in no event shall suchrestrictions and conditions contained in such documentation evidencing suchpermitted Indebtedness be more restrictive than the restrictions and conditionsset forth in Section 6.06 of this Agreement and this Section 6.14.

 

SECTION 6.15.                 Changes to theOmnibus Agreement.  Without the priorwritten consent of the Administrative Agent, which consent shall not beunreasonably withheld or delayed, neither the Borrower nor any of itsSubsidiaries shall (i) make any material change to the terms of theOmnibus Agreement, (ii) release any party from its obligations under theOmnibus Agreement or (iii) fail to diligently enforce the OmnibusAgreement and avail itself of

 

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the rights and indemnities availablethereunder, except in each case, where such change, release or failure couldnot reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.16.                 MinimumConsolidated Tangible Net Worth.  TheBorrower will not permit Consolidated Tangible Net Worth as of any date to beless than $55,000,000.

 

SECTION 6.17.                 MinimumInterest Coverage Ratio.  TheBorrower shall not permit the Interest Coverage Ratio as of the last day of anyfiscal quarter to be less than 3.0 to 1.0.

 

SECTION 6.18.                 MaximumLeverage Ratio.  The Borrower shallnot permit the Leverage Ratio as of the last day of any fiscal quarter toexceed 4.0 to 1.0.

 

SECTION 6.19.                 PermittedAcquisitions.  The Borrower shallnot, except as otherwise permitted or required in this Agreement, purchase orotherwise acquire, or permit any Subsidiary to purchase or acquire, any EquityInterests in, any obligations or stock of, or any other interest in, or all orsubstantially all of the assets of, any Person whatsoever unless(i) permitted by Section 6.03 above, or (ii)(a) immediately prior to and after giving effect to any such purchase oracquisition, no Default or Event of Default shall have occurred or becontinuing or will result therefrom, (b) such purchase or acquisition isconsummated in accordance with applicable Law, and (c) immediately after givingeffect to such purchase or acquisition of a company or business pursuant tothis Section 6.19, the Borrower shall be in pro forma compliancewith the covenants set forth in Section 6.16, Section 6.17and Section 6.18 above, as evidenced by a certificate of theFinancial Officer of the Borrower delivered to the Administrative Agent on theearlier of (i) the date that Borrower submits a Borrowing Request if Borroweris making a Borrowing in connection therewith, or (ii) the date that Borrowerconsummates the transaction requiring the delivery of such certificate.

 

SECTION 6.20.                 NegativePledges, Restrictive Agreements, etc.  The Borrower will not, andwill not permit any of its Subsidiaries to, enter into (a) any agreement forthe borrowing of money (excluding this Agreement) prohibiting the creation orassumption of any Lien upon its properties, revenues or assets, whether nowowned or hereafter acquired (provided that this provision is notintended to limit in any manner the Borrower’s and its Subsidiaries’obligations to grant liens securing the Collateral as otherwise set forth inthis Agreement or any of the Loan Documents); or (b) any agreement (excludingthis Agreement) prohibiting the ability of any Borrower or any other Loan Partyto amend or otherwise modify this Agreement or any other Loan Document.  The Borrower shall, and shall cause each ofits Subsidiaries to, use good faith efforts to cause any other agreemententered into by the Borrower or its Subsidiaries to not contain theprohibitions set forth in (a) above.

 

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# **ARTICLE VII**

 

# **Events of Default**

#  

If any of the following events (“Events ofDefault”) shall occur:

 

### (a)                                  the Borrowershall fail to pay any principal of any Loan or any reimbursement obligation inrespect of any LC Disbursement when and as the same shall become due andpayable, whether at the due date thereof or at a date fixed for prepaymentthereof or otherwise;

###  

### (b)                                 the Borrowershall fail to pay any interest on any Loan or any fee or any other amount(other than an amount referred to in clause (a) of this Article) payableunder this Agreement, when and as the same shall become due and payable, andsuch failure shall continue unremedied for a period of three Business Days;

###  

### (c)                                  anyrepresentation or warranty made or deemed made by or on behalf of any Loan Partyin or in connection with this Agreement, the Loan Documents or any amendment ormodification hereof or thereof or waiver hereunder, or in any report,certificate, financial statement or other document furnished pursuant to or inconnection with this Agreement or any amendment or modification hereof orwaiver hereunder, shall prove to have been incorrect when made or deemed made;

###  

### (d)                                 any Loan Partyshall fail to observe or perform any covenant, condition or agreement containedin Section 5.02, Section 5.03 (with respect toexistence) or Section 5.08 or in Article VI;

###  

### (e)                                  any Loan Partyshall fail to observe or perform any covenant, condition or agreement containedin this Agreement (other than those specified in clause (a), (b) or (d) of thisArticle) or in any other Loan Document, and such failure shall continueunremedied for a period of 30 days after notice thereof from theAdministrative Agent to the Borrower (which notice will be given at the requestof any Lender);

###  

### (f)                                    any Loan Partyshall fail to make any payment (whether of principal or interest andregardless of amount) in respect of any Material Indebtedness, when and as thesame shall become due and payable or within any applicable grace period;

###  

### (g)                                 any event orcondition occurs that results in any Material Indebtedness becoming due priorto its scheduled maturity or that enables or permits (with or without thegiving of notice, the lapse of time or both) the holder or holders of anyMaterial Indebtedness or any trustee or agent on its or their behalf to causeany Material Indebtedness to become due, or to require the prepayment,repurchase, redemption or defeasance thereof, prior to its scheduled maturity; providedthat this clause (g) shall not apply to secured Indebtedness that becomesdue as a result of the voluntary sale or transfer of the property or assetssecuring such Indebtedness;

###  

### (h)                                 an involuntaryproceeding shall be commenced or an involuntary petition shall be filed seeking(i) liquidation, reorganization or other relief in respect of any LoanParty or the General Partner or its debts, or of a substantial part of itsassets, under any  Federal, state or

 

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### foreignbankruptcy, insolvency, receivership or similar law now or hereafter in effector (ii) the appointment of a receiver, trustee, custodian, sequestrator,conservator or similar official for any Loan Party or for a substantial part ofits assets, and, in any such case, such proceeding or petition shall continueundismissed for 60 days or an order or decree approving or ordering any ofthe foregoing shall be entered;

###  

### (i)                                     any Loan Partyor the General Partner shall (i) voluntarily commence any proceeding orfile any petition seeking liquidation, reorganization or other relief under anyFederal, state or foreign bankruptcy, insolvency, receivership or similar lawnow or hereafter in effect, (ii) consent to the institution of, or fail tocontest in a timely and appropriate manner, any proceeding or petitiondescribed in clause (h) of this Article, (iii) apply for or consent to theappointment of a receiver, trustee, custodian, sequestrator, conservator orsimilar official for any Loan Party or for a substantial part of its assets,(iv) file an answer admitting the material allegations of a petition filedagainst it in any such proceeding, (v) make a general assignment for thebenefit of creditors or (vi) take any action for the purpose of effectingany of the foregoing;

###  

### (j)                                     any Loan Partyor the General Partner shall become unable, admit in writing its inability orfail generally to pay its debts as they become due;

###  

### (k)                                  one or morefinal non-appealable judgments for the payment of money in an aggregate amountin excess of $500,000 (net of insurance coverage which is reasonably expectedto be paid by the insurer thereunder as confirmed by such insurer) shall berendered against any Loan Party or any combination thereof and the same shallremain undischarged for a period of 60 consecutive days during whichexecution shall not be effectively stayed, or any action shall be legally takenby a judgment creditor to attach or levy upon any assets of any Loan Party toenforce any such judgment and is not released, vacated or fully bonded within60 days after its attachment or levy;

###  

### (l)                                     an ERISA Eventshall have occurred that, when taken together with all other ERISA Events thathave occurred, could reasonably be expected to result in liability of theParent, the Borrower and its Subsidiaries in an aggregate amount that couldreasonably be expected to have a Material Adverse Effect;

###  

### (m)                               a Change inControl shall occur;

###  

### (n)                                 this Agreementor any other Loan Document ceases to be valid and binding on any Loan Party inany material respect or is declared null and void in any material respect, orthe validity or enforceability thereof is contested by any Loan Party or anyLoan Party denies it has any or further liability under this Agreement or underthe other Loan Documents to which it is a party or there shall occur a “Default”or “Event of Default” as defined in any Loan Document;

###  

then, and in every such event (other than an event with respect to theBorrower described in clause (h) or (i) of this Article), and at any timethereafter during the continuance of such event, the Administrative Agent, atthe request of the Required Lenders, shall, by notice to the Borrower, takeeither or both of the following actions, at the same or different

 

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times: (i) terminate the Commitments, and thereupon the Commitmentsshall terminate immediately, and (ii) declare the Loans then outstanding to bedue and payable in whole (or in part, in which case any principal not sodeclared to be due and payable may thereafter be declared to be due andpayable), and thereupon the principal of the Loans so declared to be due andpayable, together with accrued interest thereon and all fees and otherobligations of the Borrower accrued hereunder, shall become due and payableimmediately, without presentment, demand, protest or other notice of any kind,all of which are hereby waived by the Borrower; and in case of any event withrespect to the Borrower described in clause (h) or (i) of this Article, theCommitments shall automatically terminate and the principal of the Loans then outstanding,together with accrued interest thereon and all fees and other obligations ofthe Borrower accrued hereunder, shall automatically become due and payable,without presentment, demand, protest or other notice of any kind, all of whichare hereby waived by the Borrower.

 

# **ARTICLE VIII**

 

# **The Administrative Agent**

#  

Each of the Lenders and the Issuing Bankhereby irrevocably appoints the Administrative Agent as its agent andauthorizes the Administrative Agent to take such actions on its behalf and toexercise such powers as are delegated to the Administrative Agent by the termshereof, together with such actions and powers as are reasonably incidentalthereto.

 

The bank serving as the Administrative Agenthereunder shall have the same rights and powers in its capacity as a Lender asany other Lender and may exercise the same as though it were not theAdministrative Agent, and such bank and its Affiliates may accept depositsfrom, lend money to and generally engage in any kind of business with theBorrower or any Subsidiary or other Affiliate thereof as if it were not theAdministrative Agent hereunder.

 

The Administrative Agent shall not have anyduties or obligations except those expressly set forth herein.  Without limiting the generality of theforegoing, (a) the Administrative Agent shall not be subject to anyfiduciary or other implied duties, regardless of whether a Default has occurredand is continuing, (b) the Administrative Agent shall not have any duty totake any discretionary action or exercise any discretionary powers, exceptdiscretionary rights and powers expressly contemplated hereby that theAdministrative Agent is required to exercise in writing as directed by theRequired Lenders (or such other number or percentage of the Lenders as shall benecessary under the circumstances as provided in Section 9.02), and(c) except as expressly set forth herein, the Administrative Agent shall nothave any duty to disclose, and shall not be liable for the failure to disclose,any information relating to the Borrower or any of its Subsidiaries that iscommunicated to or obtained by the bank serving as Administrative Agent or anyof its Affiliates in any capacity.  TheAdministrative Agent shall not be liable for any action taken or not taken byit with the consent or at the request of the Required Lenders (or such othernumber or percentage of the Lenders as shall be necessary under thecircumstances as provided in Section 9.02) or in the absence of itsown gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of anyDefault unless and until written notice thereof is given to the AdministrativeAgent by the Borrower or a Lender, and the Administrative Agent shall not beresponsible for or have any duty to ascertain or inquire into (i) anystatement, warranty or representation made in or in connection with thisAgreement,

 

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(ii) the contents of any certificate, report or other documentdelivered hereunder or in connection herewith, (iii) the performance orobservance of any of the covenants, agreements or other terms or conditions setforth herein, (iv) the validity, enforceability, effectiveness orgenuineness of this Agreement or any other agreement, instrument or document,or (v) the satisfaction of any condition set forth in Article IVor elsewhere herein, other than to confirm receipt of items expressly requiredto be delivered to the Administrative Agent.

 

The Administrative Agent shall be entitled torely upon, and shall not incur any liability for relying upon, any notice,request, certificate, consent, statement, instrument, document or other writingbelieved by it to be genuine and to have been signed or sent by the properPerson.  The Administrative Agent alsomay rely upon any statement made to it orally or by telephone and believed byit to be made by the proper Person, and shall not incur any liability forrelying thereon.  The AdministrativeAgent may consult with legal counsel (who may be counsel for the Borrower),independent accountants and other experts selected by it, and shall not beliable for any action taken or not taken by it in accordance with the advice ofany such counsel, accountants or experts.

 

The Administrative Agent may perform any andall its duties and exercise its rights and powers by or through any one or moresub-agents appointed by the Administrative Agent.  The Administrative Agent and any suchsub-agent may perform any and all its duties and exercise its rights and powersthrough their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply toany such sub-agent and to the Related Parties of the Administrative Agent andany such sub-agent, and shall apply to their respective activities inconnection with the syndication of the credit facilities provided for herein aswell as activities as Administrative Agent.

 

Subject to the appointment and acceptance ofa successor Administrative Agent as provided in this paragraph, theAdministrative Agent may resign at any time by notifying the Lenders, theIssuing Bank and the Borrower.  Upon anysuch resignation, the Required Lenders shall have the right, with the consentof the Borrower (which consent shall not be unreasonably withheld, conditionedor delayed), to appoint a successor.  Ifno successor shall have been so appointed by the Required Lenders and shallhave accepted such appointment within 30 days after the retiringAdministrative Agent gives notice of its resignation, then the retiring AdministrativeAgent may, on behalf of the Lenders and the Issuing Bank, appoint a successorAdministrative Agent.  Upon theacceptance 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 retiringAdministrative Agent shall be discharged from its duties and obligationshereunder.  The fees payable by the Borrowerto a successor Administrative Agent shall be the same as those payable to itspredecessor unless otherwise agreed between the Borrower and suchsuccessor.  After the AdministrativeAgent’s resignation hereunder, the provisions of this Article and Section 9.03shall continue in effect for the benefit of such retiring Administrative Agent,its sub-agents and their respective Related Parties in respect of any actionstaken or omitted to be taken by any of them while it was acting asAdministrative Agent.

 

Each Lender acknowledges that it has, independentlyand without reliance upon the Administrative Agent or any other Lender andbased on such documents and information as it

 

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has deemed appropriate, made its own credit analysis and decision toenter into this Agreement.  Each Lenderalso acknowledges that it will, independently and without reliance upon theAdministrative Agent or any other Lender and based on such documents andinformation as it shall from time to time deem appropriate, continue to makeits own decisions in taking or not taking action under or based upon thisAgreement, any related agreement or any document furnished hereunder orthereunder.

 

# **ARTICLE IX**

 

# **Miscellaneous**

#  

SECTION 9.01.                 Notices.  (a) Except in the case of notices and othercommunications expressly permitted to be given by telephone (and subject toparagraph (b) below), all notices and other communications provided for hereinshall be in writing and shall be delivered by hand or overnight courierservice, mailed by certified or registered mail or sent by telecopy, asfollows:

 

#### (i)                                     if to theBorrower, to it at Hiland Partners, LP, 205 West Maple, Suite 1100, Enid,Oklahoma 73701, Attention of Ken Maples (Telecopy No. (580)548-5188);

####  

#### (ii)                                  if to theAdministrative Agent, to it at MidFirst Bank, 501 NW Grand Boulevard, Suite 100,Oklahoma City, Oklahoma 73188, Attention of James P. Boggs (Telecopy No. (405)767-7120); and

####  

#### (iii)                               if to any otherLender, to it at its address (or telecopy number) set forth in its AdministrativeQuestionnaire.

####  

### (b)                                 Notices andother communications to the Lenders hereunder may be delivered or furnished byelectronic communications pursuant to procedures approved by the AdministrativeAgent; provided that the foregoing shall not apply to notices pursuantto Article II unless otherwise agreed by the Administrative Agent and theapplicable Lender.  The AdministrativeAgent or the Borrower may, in its discretion, agree to accept notices and othercommunications to it hereunder by electronic communications pursuant toprocedures approved by it; provided that approval of such procedures maybe limited to particular notices or communications.

###  

### (c)                                  Any partyhereto may change its address, telecopy number for notices and othercommunications hereunder by notice to the other parties hereto.  All notices and other communications given toany party hereto in accordance with the provisions of this Agreement shall bedeemed to have been given on the date of receipt.

###  

SECTION 9.02.                 Waivers;Amendments.  (a) No failure or delayby the Administrative Agent, the Issuing Bank or any Lender in exercising anyright or power hereunder shall operate as a waiver thereof, nor shall anysingle or partial exercise of any such right or power, or any abandonment ordiscontinuance of steps to enforce such a right or power, preclude any other orfurther exercise thereof or the exercise of any other right or power.  The rights and remedies of the AdministrativeAgent, the Issuing Bank and the Lenders hereunder are

 

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cumulative and are not exclusive of anyrights or remedies that they would otherwise have.  No waiver of any provision of this Agreementor consent to any departure by the Borrower therefrom shall in any event be effectiveunless the same shall be permitted by paragraph (b) of this Section, andthen such waiver or consent shall be effective only in the specific instanceand for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loanor issuance of a Letter of Credit shall not be construed as a waiver of anyDefault, regardless of whether the Administrative Agent, any Lender or theIssuing Bank may have had notice or knowledge of such Default at the time.

 

### (b)                                 Neither thisAgreement nor any provision hereof may be waived, amended or modified exceptpursuant to an agreement or agreements in writing entered into by the Borrowerand the Required Lenders or by the Borrower and the Administrative Agent withthe consent of the Required Lenders; provided that no such agreementshall (i) increase the Commitment of any Lender without the written consent ofsuch Lender, (ii) reduce the principal amount of any Loan or LC Disbursement orreduce the rate of interest thereon, or reduce any fees payable hereunder,without the written consent of each Lender affected thereby, (iii) releaseany Guarantor or release any Collateral (except for releases of Collateralrelated to asset sales otherwise expressly permitted pursuant to the terms of thisAgreement) securing the Obligations without the written consent of each Lender,(iv) postpone the scheduled date of payment of the principal amount of any Loanor LC Disbursement, or any interest thereon, or any fees payable hereunder, orreduce the amount of, waive or excuse any such payment, or postpone thescheduled date of expiration of any Commitment, without the written consent ofeach Lender affected thereby, (v) change Section 2.18(b) or (c)in a manner that would alter the pro rata sharing of payments required thereby,without the written consent of each Lender, or (vi) change any of theprovisions of this Section or the definition of “Required Lenders” or anyother provision hereof specifying the number or percentage of Lenders requiredto waive, amend or modify any rights hereunder or make any determination orgrant any consent hereunder, without the written consent of each Lender; providedfurther that nosuch agreement shall amend, modify or otherwise affect the rights or duties ofthe Administrative Agent or the Issuing Bank hereunder without the priorwritten consent of the Administrative Agent or the Issuing Bank, as the casemay be.

###  

SECTION 9.03.                 Expenses;Indemnity; Damage Waiver.  (a) TheBorrower shall pay (i) all reasonable out-of-pocket expenses incurred bythe Administrative Agent and its Affiliates, including the reasonable fees,charges and disbursements of counsel (including local counsel) for theAdministrative Agent, in connection with the syndication of the creditfacilities provided for herein, the preparation and administration of thisAgreement or any amendments, modifications or waivers of the provisions hereof(whether or not the Transactions contemplated hereby or thereby shall beconsummated), (ii) all reasonable out-of-pocket expenses incurred by theIssuing Bank in connection with the issuance, amendment, renewal or extensionof any Letter of Credit or any demand for payment thereunder and (iii) allreasonable out-of-pocket expenses incurred by the Administrative Agent, the IssuingBank or any Lender, including the fees, charges and disbursements of anycounsel for the Administrative Agent, the Issuing Bank or any Lender, inconnection with the enforcement or protection of its rights in connection withthis Agreement, including its rights under this Section, or in connection withthe Loans made or Letters of Credit issued hereunder, including all such out-of-pocketexpenses incurred during  any workout,restructuring or negotiations in respect of such Loans or Letters of Credit.

 

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### (b)                                 The Borrowershall indemnify the Administrative Agent, the Issuing Bank and each Lender, andeach Related Party of any of the foregoing Persons (each such Person beingcalled an “Indemnitee”) against, and hold each Indemnitee harmless from,any and all losses, claims, damages, liabilities and related expenses,including the fees, charges and disbursements of any counsel for anyIndemnitee, incurred by or asserted against any Indemnitee arising out of, inconnection with, or as a result of (i) the execution or delivery of thisAgreement or any agreement or instrument contemplated hereby, the performanceby the parties hereto of their respective obligations hereunder or theconsummation of the Transactions or any other transactions contemplated hereby,(ii) any Loan or Letter of Credit or the use of the proceeds therefrom(including any refusal by the Issuing Bank to honor a demand for payment undera Letter of Credit if the documents presented in connection with such demand donot strictly comply with the terms of such Letter of Credit), (iii) anyactual or alleged presence or release of Hazardous Materials on or from anyproperty owned or operated by the Borrower or any of its Subsidiaries, or anyEnvironmental Liability related in any way to the Borrower or any of itsSubsidiaries, or (iv) any actual or prospective claim, litigation,investigation or proceeding relating to any of the foregoing, whether based oncontract, tort or any other theory and regardless of whether any Indemnitee isa party thereto; provided that such indemnity shall not, as to anyIndemnitee, be available to the extent that such losses, claims, damages,liabilities or related expenses are determined by a court of competent jurisdictionby final and non-appealable judgment to have resulted from the gross negligenceor willful misconduct of such Indemnitee.

###  

### (c)                                  To the extentthat the Borrower fails to pay any amount required to be paid by it to theAdministrative Agent or the Issuing Bank under paragraph (a) or (b) of thisSection, each Lender severally agrees to pay to the Administrative Agent or theIssuing Bank, as the case may be, such Lender’s Applicable Percentage(determined as of the time that the applicable un-reimbursed expense orindemnity payment is sought) of such unpaid amount; provided that theun-reimbursed expense or indemnified loss, claim, damage, liability or relatedexpense, as the case may be, was incurred by or asserted against theAdministrative Agent or the Issuing Bank in its capacity as such.

###  

### (d)                                 Each Loan Partyshall defend and indemnify the Administrative Agent and each Lender and holdthem harmless from and against all loss, liability, damage, expense, claims,costs, fines, penalties, assessments (including interest on any of theforegoing) and reasonable attorneys’ fees, suffered or incurred by theAdministrative Agent or any Lender which arise, result from or in any wayrelate to a breach or violation by any Loan Party of any applicableEnvironmental Laws, either prior to or subsequent to the date hereof, includingthe assertion or imposition of any Lien on any Loan Party’s assets, or whichrelate to or arise out of any Environmental Liability.  Each Loan Party’s obligations hereunder shallsurvive the termination of this Agreement and the repayment of the Loans.

###  

### (e)                                  To the extentpermitted 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 actualdamages) arising out of, in connection with, or as a result of, this Agreementor any agreement or instrument contemplated hereby, the Transactions, any Loanor Letter of Credit or the use of the proceeds thereof.

 

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### (f)                                    All amounts dueunder this Section shall be payable not later than ten (10) days afterwritten demand therefor.

###  

SECTION 9.04.                 Successors andAssigns.  (a) The provisions of thisAgreement shall be binding upon and inure to the benefit of the parties heretoand their respective successors and assigns permitted hereby (including anyAffiliate 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 orobligations hereunder without the prior written consent of each Lender (and anyattempted assignment or transfer by the Borrower without such consent shall benull and void) and (ii) no Lender may assign or otherwise transfer its rightsor obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed orimplied, shall be construed to confer upon any Person (other than the partieshereto, their respective successors and assigns permitted hereby (including anyAffiliate of the Issuing Bank that issues any Letter of Credit), Participants(to the extent provided in paragraph (c) of this Section) and, to the extentexpressly contemplated hereby, the Related Parties of each of the AdministrativeAgent, the Issuing Bank and the Lenders) any legal or equitable right, remedyor claim under or by reason of this Agreement.

 

### (b)                                 (i) Subjectto the conditions set forth in paragraph (b)(ii) below, any Lender may assignto one or more assignees all or a portion of its rights and obligations underthis Agreement (including all or a portion of its Commitment and the Loans atthe time owing to it) with the prior written consent (such consent not to beunreasonably withheld) of:

###  

##### (A)                              the Borrower, providedthat no consent of the Borrower shall be required for an assignment to aLender, an Affiliate of a Lender, an Approved Fund or, if an Event of Defaulthas occurred and is continuing, any other assignee;

#####  

##### (B)                                theAdministrative Agent, provided that no consent of the AdministrativeAgent shall be required for an assignment to a Lender, an Affiliate of a Lenderor an Approved Fund; and

#####  

##### (C)                                the IssuingBank.

#####  

#### (ii)                                  Assignmentsshall be subject to the following additional conditions:

####  

##### (A)                              except in the caseof an assignment to a Lender or an Affiliate of a Lender or an assignment ofthe entire remaining amount of the assigning Lender’s Commitment or Loans ofany Class, the amount of the Commitment or Loans of the assigning Lendersubject to each such assignment (determined as of the date the Assignment andAssumption with respect to such assignment is delivered to the AdministrativeAgent) shall not be less than $5,000,000 unless each of the Borrower and theAdministrative Agent otherwise consent, provided that no such consent ofthe Borrower shall be required if an Event of Default has occurred and iscontinuing;

 

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##### (B)                                each partialassignment shall be made as an assignment of a proportionate part of all theassigning Lender’s rights and obligations under this Agreement, providedthat this clause shall not be construed to prohibit the assignment of aproportionate part of all the assigning Lender’s rights and obligations inrespect of one Class of Commitments or Loans;

#####  

##### (C)                                the parties toeach assignment shall execute and deliver to the Administrative Agent anAssignment and Assumption, together with a processing and recordation fee of$3,500; and

#####  

##### (D)                               the assignee,if it shall not be a Lender, shall deliver to the Administrative Agent anAdministrative Questionnaire.

#####  

For the purposes of this Section 9.04(b),the term “Approved Fund” has the following meaning:

 

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

 

#### (iii)                               Subject toacceptance and recording thereof pursuant to paragraph (b)(iv) of thisSection, from and after the effective date specified in each Assignment andAssumption the assignee thereunder shall be a party hereto and, to the extentof the interest assigned by such Assignment and Assumption, have the rights andobligations of a Lender under this Agreement, and the assigning Lenderthereunder shall, to the extent of the interest assigned by such Assignment andAssumption, be released from its obligations under this Agreement (and, in thecase of an Assignment and Assumption covering all of the assigning Lender’srights and obligations under this Agreement, such Lender shall cease to be aparty hereto but shall continue to be entitled to the benefits of Section 2.15,Section 2.16, Section 2.17 and Section 9.03).  Any assignment or transfer by a Lender ofrights or obligations under this Agreement that does not comply with this Section 9.04shall be treated for purposes of this Agreement as a sale by such Lender of aparticipation in such rights and obligations in accordance with paragraph (c)of this Section.

####  

#### (iv)                              TheAdministrative Agent, acting for this purpose as an agent of the Borrower,shall maintain at one of its offices a copy of each Assignment and Assumptiondelivered to it and a register for the recordation of the names and addressesof the Lenders, and the Commitment of, and principal amount of the Loans and LCDisbursements owing to, each Lender pursuant to the terms hereof from time totime (the “Register”).  Theentries in the Register shall be conclusive, and the Borrower, theAdministrative Agent, the Issuing Bank and the Lenders may treat each Personwhose name is recorded in the Register pursuant to the terms hereof as a Lenderhereunder for all purposes of this Agreement, notwithstanding notice to thecontrary.  The Register

 

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#### shall be available for inspection by the Borrower, the Issuing Bank andany Lender, at any reasonable time and from time to time upon reasonable priornotice.

####  

#### (v)                                 Upon itsreceipt of a duly completed Assignment and Assumption executed by an assigningLender and an assignee, the assignee’s completed Administrative Questionnaire(unless the assignee shall already be a Lender hereunder), the processing andrecordation fee referred to in paragraph (b) of this Section and anywritten consent to such assignment required by paragraph (b) of this Section,the Administrative Agent shall accept such Assignment and Assumption and recordthe information contained therein in the Register; provided that ifeither the assigning Lender or the assignee shall have failed to make anypayment required to be made by it pursuant to Section 2.06 (d), Section 2.06(e),Section 2.07(b), Section 2.18(d) or Section 9.03(c),the Administrative Agent shall have no obligation to accept such Assignment andAssumption and record the information therein in the Register unless and untilsuch payment shall have been made in full, together with all accrued interestthereon.  No assignment shall beeffective for purposes of this Agreement unless it has been recorded in theRegister as provided in this paragraph.

####  

### (c)                                  (i) Any Lendermay, without the consent of the Borrower, the Administrative Agent or theIssuing 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 thisAgreement (including all or a portion of its Commitment and the Loans owing toit); provided that (A) such Lender’s obligations under thisAgreement shall remain unchanged, (B) such Lender shall remain solelyresponsible to the other parties hereto for the performance of such obligationsand (C) the Borrower, the Administrative Agent, the Issuing Bank and theother Lenders shall continue to deal solely and directly with such Lender inconnection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to whicha Lender sells such a participation shall provide that such Lender shall retainthe sole right to enforce this Agreement and to approve any amendment,modification or waiver of any provision of this Agreement; provided thatsuch agreement or instrument may provide that such Lender will not, without theconsent of the Participant, agree to any amendment, modification or waiverdescribed in the first proviso to Section 9.02(b) that affects suchParticipant.  Subject to paragraph(c)(ii) of this Section, the Borrower agrees that each Participant shall beentitled to the benefits of Section 2.15, Section 2.16and Section 2.17 to the same extent as if it were a Lender and hadacquired its interest by assignment pursuant to paragraph (b) of thisSection.  To the extent permitted by law,each Participant also shall be entitled to the benefits of Section 9.08as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c)as though it were a Lender.

###  

#### (ii)                                  A Participantshall not be entitled to receive any greater payment under Section 2.15or Section 2.17 than the applicable Lender would have been entitledto receive with respect to the participation sold to such Participant, unlessthe sale of the participation to such Participant is made with the Borrower’s priorwritten consent.  A Participant thatwould be a Foreign Lender if it were a Lender shall not be entitled to thebenefits of Section 2.17 unless the Borrower is notified of theparticipation sold to such Participant and such Participant agrees, for thebenefit of the Borrower, to comply with Section 2.17(e) as thoughit were a Lender.

 

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### (d)                                 Any Lender mayat any time pledge or assign a security interest in all or any portion of itsrights under this Agreement to secure obligations of such Lender, includingwithout limitation any pledge or assignment to secure obligations to a FederalReserve Bank, and this Section shall not apply to any such pledge orassignment of a security interest; provided that no such pledge orassignment of a security interest shall release a Lender from any of itsobligations hereunder or substitute any such pledgee or assignee for suchLender as a party hereto.

###  

SECTION 9.05.                 Survival.  All covenants, agreements, representations andwarranties made by the Borrower herein and in the certificates or otherinstruments  delivered in connection withor pursuant to this Agreement shall be considered to have been relied upon bythe other parties hereto and shall survive the execution and delivery of thisAgreement 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 behalfand notwithstanding that the Administrative Agent, the Issuing Bank or anyLender may have had notice or knowledge of any Default or incorrectrepresentation or warranty at the time any credit is extended hereunder, andshall continue in full force and effect as long as the principal of or anyaccrued interest on any Loan or any fee or any other amount payable under thisAgreement is outstanding and unpaid or any Letter of Credit is outstanding andso long as the Commitments have not expired or terminated.  The provisions of Section 2.15, Section 2.16,Section 2.17 and Section 9.03 and Article VIIIshall survive and remain in full force and effect regardless of theconsummation of the Transactions contemplated hereby, the repayment of theLoans, the expiration or termination of the Letters of Credit and theCommitments or the termination of this Agreement or any provision hereof.

 

SECTION 9.06.                 Counterparts;Integration; Effectiveness.  ThisAgreement may be executed in counterparts (and by different parties hereto ondifferent counterparts), each of which shall constitute an original, but all ofwhich when taken together shall constitute a single contract.  This Agreement and any separate letteragreements with respect to fees payable to the Administrative Agent constitutethe entire contract among the parties relating to the subject matter hereof andsupersede any and all previous agreements and understandings, oral or written,relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shallbecome effective when it shall have been executed by the Administrative Agentand when the Administrative Agent shall have received counterparts hereofwhich, when taken together, bear the signatures of each of the other partieshereto, and thereafter shall be binding upon and inure to the benefit of theparties hereto and their respective successors and assigns.  Delivery of an executed counterpart of asignature page of this Agreement by telecopy shall be effective asdelivery of a manually executed counterpart of this Agreement.

 

SECTION 9.07.                 Severability.  Any provision of this Agreement held to beinvalid, illegal or unenforceable in any jurisdiction shall, as to suchjurisdiction, be ineffective to the extent of such invalidity, illegality orunenforceability without affecting the validity, legality and enforceability ofthe remaining provisions hereof; and the invalidity of a particular provisionin a particular jurisdiction shall not invalidate such provision in any otherjurisdiction.

 

SECTION 9.08.                 Right ofSetoff.  If an Event of Default shallhave occurred and be continuing, each Lender and each of its Affiliates ishereby authorized at any time and from time to time, to the fullest extentpermitted by law, to set off and apply any and all deposits

 

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(general or special, time or demand,provisional or final) at any time held and other obligations at any time owingby such Lender or Affiliate to or for the credit or the account of the Borroweragainst any of and all the obligations of the Borrower now or hereafter existingunder this Agreement held by such Lender, irrespective of whether or not suchLender shall have made any demand under this Agreement and although suchobligations may be unmatured.  The rightsof each Lender under this Section are in addition to other rights andremedies (including other rights of setoff) which such Lender may have.

 

SECTION 9.09.                 Governing Law;Jurisdiction; Consent to Service of Process.  (a) This Agreement shall be construed inaccordance with and governed by the law of the State of Oklahoma.

 

### (b)                                 The Borrowerhereby irrevocably and unconditionally submits, for itself and its property, tothe nonexclusive jurisdiction of the courts of the State of Oklahoma sitting inOklahoma City, Oklahoma County, Oklahoma, and any appellate court from anythereof, in any action or proceeding arising out of or relating to thisAgreement, or for recognition or enforcement of any judgment, and each of theparties hereto hereby irrevocably and unconditionally agrees that all claims inrespect of any such action or proceeding may be heard and determined in suchState of Oklahoma or, to the extent permitted by law, in such Federalcourt.  Each of the parties hereto agreesthat a final judgment in any such action or proceeding shall be conclusive andmay be enforced in other jurisdictions by suit on the judgment or in any othermanner provided by law.  Nothing in thisAgreement shall affect any right that the Administrative Agent, the IssuingBank or any Lender may otherwise have to bring any action or proceedingrelating to this Agreement against the Borrower or its properties in the courtsof any jurisdiction.

###  

### (c)                                  The Borrowerhereby irrevocably and unconditionally waives, to the fullest extent it maylegally and effectively do so, any objection which it may now or hereafter haveto the laying of venue of any suit, action or proceeding arising out of orrelating to this Agreement in any court referred to in paragraph (b) of thisSection.  Each of the parties heretohereby irrevocably waives, to the fullest extent permitted by law, the defenseof an inconvenient forum to the maintenance of such action or proceeding in anysuch court.

###  

### (d)                                 Each party tothis Agreement irrevocably consents to service of process in the mannerprovided for notices in Section 9.01.  Nothing in this Agreement will affect theright of any party to this Agreement to serve process in any other mannerpermitted by law.

###  

SECTION 9.10.                 WAIVER OF JURYTRIAL.  EACH PARTY HERETO HEREBYWAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVETO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUTOF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NOREPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLYOR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEKTO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHERPARTIES HERETO HAVE

 

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BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THEMUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11.                 Headings.  Article and Section headings andthe Table of Contents used herein are for convenience of reference only, arenot part of this Agreement and shall not affect the construction of, or betaken into consideration in interpreting, this Agreement.

 

SECTION 9.12.                 Confidentiality.  Each of the Administrative Agent, the IssuingBank and the Lenders agrees to maintain the confidentiality of the Information(as defined below), except that Information may be disclosed (a) to itsand its Affiliates’ directors, officers, employees and agents, includingaccountants, legal counsel and other advisors (it being understood that thePersons to whom such disclosure is made will be informed of the confidentialnature of such Information and instructed to keep such Informationconfidential), (b) to the extent requested by any regulatory authority,(c) to the extent required by applicable Laws or regulations or by anysubpoena or similar legal process, (d) to any other party to this Agreement,(e) in connection with the exercise of any remedies hereunder or any suit,action or proceeding relating to this Agreement or the enforcement of rightshereunder, (f) subject to an agreement containing provisions substantially thesame as those of this Section, to (i) any assignee of or Participant in, or anyprospective assignee of or Participant in, any of its rights or obligationsunder this Agreement or (ii)  any actualor prospective counterparty (or its advisors) to any swap or derivativetransaction relating to the Borrower and its obligations, (g) with the consentof the Borrower or (h) to the extent such Information (i) becomespublicly available other than as a result of a breach of this Section or(ii) becomes available to the Administrative Agent, the Issuing Bank orany Lender on a non-confidential basis from a source other than theBorrower.  For the purposes of thisSection, “Information” means all information received from the Borrowerrelating to the Borrower or its business, other than any such information thatis available to the Administrative Agent, the Issuing Bank or any Lender on anon-confidential basis prior to disclosure by the Borrower; providedthat, in the case of information received from the Borrower after the datehereof, such information is clearly identified at the time of delivery asconfidential.  Any Person required tomaintain the confidentiality of Information as provided in this Section shallbe considered to have complied with its obligation to do so if such Person hasexercised the same degree of care to maintain the confidentiality of suchInformation as such Person would accord to its own confidential information.

 

SECTION 9.13.                 Interest RateLimitation.  Notwithstanding anythingherein to the contrary, if at any time the interest rate applicable to anyLoan, together with all fees, charges and other amounts which are treated asinterest on such Loan under applicable law (collectively the “Charges”),shall exceed the maximum lawful rate (the “Maximum Rate”) which may becontracted for, charged, taken, received or reserved by the Lender holding suchLoan in accordance with applicable law, the rate of interest payable in respectof such Loan hereunder, together with all Charges payable in respect thereof,shall be limited to the Maximum Rate and, to the extent lawful, the interestand Charges that would have been payable in respect of such Loan but were notpayable as a result of the operation of this Section shall be cumulatedand the interest and Charges payable to such Lender in respect of other Loansor periods shall be increased (but not above the Maximum Rate therefor) untilsuch cumulated amount, together with interest thereon at the Federal FundsEffective Rate to the date of repayment, shall have been received by suchLender.

 

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SECTION 9.14.                 USA PATRIOTAct.  Each Lender that is subject tothe requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signedinto law October 26, 2001)) (the “Act”) hereby notifies theBorrower that pursuant to the requirements of the Act, it is required toobtain, verify and record information that identifies the Borrower, whichinformation includes the name and address of the Borrower and other informationthat will allow such Lender to identify the Borrower in accordance with theAct.

 

SECTION 9.15.                 Separateness.  The Lenders acknowledge that (i) the Lendershave advanced funds to the Borrower in reliance upon the separateness of theParent and the Borrower from each other and from any other Persons, and (ii)the Borrower has assets and liabilities that are separate from those of otherPersons, including the Parent.

 

SECTION 9.16.                 No PersonalLiability of Directors, Officers and Employees.  No director, officer, partner, employee,member or manager of the General Partner will have any liability for anyobligations of the Borrower, or for any claim based on, in respect of, or byreason of, such obligations or their creation. Each Lender waives and releases all such liability. This waiver andrelease are part of the consideration for the making of the Loans and theissuance of Letters of Credit.

 

SECTION 9.17.                 CollateralMatters; Swap Agreements.    The benefit of theSecurity Documents and of the provisions of this Agreement relating to theCollateral shall also extend to and be available to any counterparty to anySwap Agreements on a pro rata basis (subject to Section 2.18(b)hereof) in respect of any obligations of the Borrowers which arise under anySwap Agreement, provided that such counterparty is a Lender or an Affiliate ofa Lender at the time such counterparty entered into such Swap Agreement.

 

**[ENDOF TEXT]**

 

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

 
|   | BORROWER:                            |
|--------|--------------------------------------|
|   |                                 |
|   | **HILAND OPERATING, LLC**,           |
|   | a Delaware limited liability company |
|   |                                 |
|   | By:                                  | /s/ Randy Moeder |   |
|   |                                 | Randy Moeder |
|   |                                 | Chief Executive Officer, President |
|   |                                 | and Director |

 

[Signature Page to Credit Agreement]

 

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|   | **MIDFIRST BANK**,                                  |
|--------|-----------------------------------------------------|
|   | a federally chartered savings association,          |
|   | in its capacity as Administrative Agent             |
|   |                                                |
|   |                                                |
|   |  /s/ James P. Boggs                            |   |
|   | By:                                                 | James P. Boggs |
|   | Title:                                              | Vice President |
|   |                                                |
|   | Address:                                            |   |
|   |                                                |   |
|   | MidFirst Bank                                       |   |
|   | MidFirst Plaza                                      |   |
|   | 501 N.W. Grand Blvd., Suite 100                |   |
|   | Oklahoma City, Oklahoma 73118                       |   |
|   | Attention: James P. Boggs                           |   |
|   | Telephone No. (405) 767-7115                   |   |
|   | Telecopy No. (405) 767-7120                    |   |
|   | e-mail: james.boggs@midfirst.com                    |   |
|   | State:   Oklahoma                    |   |
|   | Wire Instructions:                                  |   |
|   | MidFirst Bank (OKC, OK)                             |   |
|   | ABA No.:                                            | 303087995 |
|   | Reference:                                          | Account 1901000 for Hiland |
|   | Operating, LLC for Further Credit to Loan #  909590 |
|   | Attention:                                          | Mary Nash/Sharon Bales |
|   |                                                | (MFB Loan Operations) |
|        |                                                     |  |  |  |  |  |

 

[Signature Page to Credit Agreement]

 

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|   | **MIDFIRST BANK**,                                  |
|--------|-----------------------------------------------------|
|   | a federally chartered savings association,          |
|   | in its capacity as a Lender                         |
|   |                                                |
|   |                                                |
|   |  /s/ James P. Boggs                            |   |
|   | By:                                                 | James P. Boggs |
|   | Title:                                              | Vice President |
|   |                                                |
|   | Address:                                            |   |
|   |                                                |   |
|   | MidFirst Bank                                       |   |
|   | MidFirst Plaza                                      |   |
|   | 501 N.W. Grand Blvd., Suite 100                |   |
|   | Oklahoma City, Oklahoma 73118                       |   |
|   | Attention: James P. Boggs                           |   |
|   | Telephone No. (405) 767-7115                   |   |
|   | Telecopy No. (405) 767-7120                    |   |
|   | e-mail: james.boggs@midfirst.com                    |   |
|   | State:   Oklahoma                    |   |
|   | Wire Instructions:                                  |   |
|   | MidFirst Bank (OKC, OK)                             |   |
|   | ABA No.:                                            | 303087995 |
|   | Reference:                                          | Account 1901000 for Hiland |
|   | Operating, LLC for Further Credit to Loan #  909590 |
|   | Attention:                                          | Mary Nash/Sharon Bales |
|   |                                                | (MFB Loan Operations) |
|        |                                                     |  |  |  |  |  |

 

[Signature Page to Credit Agreement]

 

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|   | **BANK OF SCOTLAND** |
|--------|----------------------|
|   |                 |
|   |                 |
|   | By:                  |  /s/ Amena Nabi |   |
|   | Name:                | Amena Nabi |   |
|   | Title:               | Assistant  Vice President |   |
|        |                      |  |  |  |  |

 

[Signature Page to Credit Agreement]

 

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|   | **FORTIS CAPITAL CORP.** |
|--------|--------------------------|
|   |                     |
|   |                     |
|   | By:                      | /s/ Christopher S. Parada |   |
|   | Name:                    | Christopher  S. Parada |   |
|   | Title:                   | Vice  President |   |
|   |                     |   |   |
|   |                     |   |   |
|   | By:                      |  /s/  Darrell Holley |   |
|   | Name:                    | Darrell  Holley |   |
|   | Title:                   | Managing  Director |   |
|        |                          |  |  |  |  |

 

[Signature Page to Credit Agreement]

 

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|   | **COMPASS BANK** |
|--------|------------------|
|   |             |
|   |             |
|   | By:              |  /s/ Kathleen J. Bowen |   |
|   | Name:            | Kathleen J.  Bowen |   |
|   | Title:           | Senior Vice  President |   |
|        |                  |  |  |  |  |

 

[Signature Page to Credit Agreement]

 

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|   | **U.S. BANK NATIONAL ASSOCIATION** |
|--------|------------------------------------|
|   |                               |
|   |                               |
|   | By:                                |  /s/  Matthew J. Purchase |   |
|   | Name:                              | Matthew J.  Purchase |   |
|   | Title:                             | Vice  President |   |
|        |                                    |  |  |  |  |

 

[Signature Page to Credit Agreement]

 

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|   | **BANK OF OKLAHOMA** |
|--------|----------------------|
|   |                 |
|   |                 |
|   | By:                  | /s/ Mark  Morris |   |
|   | Name:                | Mark Morris |   |
|   | Title:               | Vice  President |   |
|        |                      |  |  |  |  |

 

[Signature Page to Credit Agreement]

 

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**EXHIBIT A**

 

 

**ASSIGNMENTAND ASSUMPTION**

 

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**EXHIBIT B**

 

**FORM OFCOMMITMENT INCREASE AGREEMENT**

 

1

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** **

**EXHIBIT C**

 

**FORM OFNEW LENDER AGREEMENT**

 

1

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**EXHIBIT D**

 

**FORM OFGUARANTY AGREEMENT**

 

1

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**EXHIBIT E**

 

**FORM OFBORROWING REQUEST**

 

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**EXHIBIT F**

 

**FORM OFCOMPLIANCE CERTIFICATE**

 

**HILANDOPERATING, LLC**

 

**COMPLIANCECERTIFICATE**

 

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**EXECUTIONCOPY**

 

 

**EXHIBIT G**

 

**FORM OFPARTNERSHIP AGREEMENT**

 

**HILANDPARTNERS, LP**

 

**FIRSTAMENDED AND RESTATEDAGREEMENT OF LIMITED PARTNERSHIP**

 

 

**OF**

 

 

**HILANDPARTNERS, LP**

 

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