exv10w1






Exhibit 10.1




Execution
Version


CREDIT AGREEMENT




DATED AS OF SEPTEMBER 6, 2011




AMONG




QUICKSILVER RESOURCES INC.,

as BORROWER,




JPMORGAN CHASE BANK, N.A.,

as ADMINISTRATIVE AGENT,




BANK OF AMERICA, N.A.,

as SYNDICATION AGENT,




DEUTSCHE BANK SECURITIES INC., BNP PARIBAS, AND WELLS FARGO BANK,

N.A.,

as CO-DOCUMENTATION AGENTS,




AND




THE LENDERS PARTY HERETO




JOINT BOOKRUNNERS




J.P. MORGAN SECURITIES LLC AND MERRILL LYNCH, PIERCE, FENNER &

SMITH INCORPORATED






 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1

	Definitions and Accounting Matters

	 
	 	 	 	 
	Section 1.01 Terms Defined Above
	 	 	1	 
	Section 1.02 Certain Defined Terms
	 	 	1	 
	Section 1.03 Types of Loans and Borrowings
	 	 	27	 
	Section 1.04 Terms Generally; Rules of Construction
	 	 	27	 
	Section 1.05 Accounting Terms and Determinations; GAAP
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 2

	The Credits

	 
	 	 	 	 
	Section 2.01 Commitments
	 	 	28	 
	Section 2.02 Loans and Borrowings
	 	 	28	 
	Section 2.03 Requests for Borrowings
	 	 	29	 
	Section 2.04 Interest Elections
	 	 	29	 
	Section 2.05 Funding of Borrowings
	 	 	31	 
	Section 2.06 Termination and Reduction of Aggregate Maximum Credit Amounts
	 	 	31	 
	Section 2.07 Borrowing Base
	 	 	32	 
	Section 2.08 Letters of Credit
	 	 	34	 
	Section 2.09 Increase in the Maximum Credit Amounts
	 	 	38	 
	Section 2.10 Swingline Loans
	 	 	39	 
	Section 2.11 Defaulting Lenders
	 	 	41	 
	 
	 	 	 	 
	ARTICLE 3
	Payments of Principal and Interest; Prepayments; Fees
	 
	 	 	 	 
	Section 3.01 Repayment of Loans
	 	 	43	 
	Section 3.02 Interest
	 	 	43	 
	Section 3.03 Alternate Rate of Interest
	 	 	44	 
	Section 3.04 Prepayments
	 	 	44	 
	Section 3.05 Fees
	 	 	46	 
	 
	 	 	 	 
	ARTICLE 4
	Payments; Pro Rata Treatment; Sharing of Set-Offs
	 
	 	 	 	 
	Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
	 	 	47	 
	Section 4.02 Presumption of Payment by the Borrower
	 	 	48	 
	Section 4.03 Certain Deductions by the Administrative Agent
	 	 	48	 
	Section 4.04 Disposition of Proceeds
	 	 	48	 






i









 






	 	 	 	 	 
	 	 	Page	 
	ARTICLE 5
	Increased Costs; Break Funding Payments; Payments; Taxes; Illegality
	 
	 	 	 	 
	Section 5.01 Increased Costs
	 	 	48	 
	Section 5.02 Break Funding Payments
	 	 	49	 
	Section 5.03 Taxes
	 	 	50	 
	Section 5.04 Mitigation Obligations; Replacement of Lenders
	 	 	53	 
	Section 5.05 Illegality
	 	 	54	 
	 
	 	 	 	 
	 ARTICLE 6
	Conditions Precedent
	 
	 	 	 	 
	Section 6.01 Effective Date
	 	 	54	 
	Section 6.02 Each Credit Event
	 	 	56	 
	 
	 	 	 	 
	ARTICLE 7
	Representations and Warranties
	 
	 	 	 	 
	Section 7.01 Organization; Powers
	 	 	57	 
	Section 7.02 Authority; Enforceability
	 	 	57	 
	Section 7.03 Approvals; No Conflicts
	 	 	57	 
	Section 7.04 Financial Condition; No Material Adverse Effect
	 	 	58	 
	Section 7.05 Litigation
	 	 	58	 
	Section 7.06 Environmental Matters
	 	 	58	 
	Section 7.07 Compliance with the Laws and Agreements
	 	 	59	 
	Section 7.08 Investment Company Act
	 	 	59	 
	Section 7.09 Taxes
	 	 	59	 
	Section 7.10 Disclosure; No Material Misstatements
	 	 	60	 
	Section 7.11 Subsidiaries
	 	 	60	 
	Section 7.12 Insurance
	 	 	60	 
	Section 7.13 Location of Business and Offices
	 	 	60	 
	Section 7.14 Properties; Title, Etc.
	 	 	60	 
	Section 7.15 Federal Reserve Regulations
	 	 	61	 
	Section 7.16 ERISA
	 	 	61	 
	Section 7.17 Status As Senior Indebtedness
	 	 	62	 
	Section 7.18 Solvency
	 	 	62	 
	Section 7.19 Priority; Security Matters
	 	 	62	 
	 
	 	 	 	 
	ARTICLE 8
	Affirmative Covenants
	 
	 	 	 	 
	Section 8.01 Financial Statements; Other Information
	 	 	62	 
	Section 8.02 Notices of Material Events
	 	 	64	 
	Section 8.03 Existence; Conduct of Business
	 	 	65	 
	Section 8.04 Payment of Obligations
	 	 	65	 
	Section 8.05 Operation and Maintenance of Properties
	 	 	65	 
	Section 8.06 Insurance
	 	 	65	 






ii









 






	 	 	 	 	 
	 	 	Page	 
	Section 8.07 Books and Records; Inspection Rights
	 	 	66	 
	Section 8.08 Compliance with Laws
	 	 	66	 
	Section 8.09 Environmental Matters
	 	 	66	 
	Section 8.10 Further Assurances
	 	 	67	 
	Section 8.11 Reserve Reports
	 	 	67	 
	Section 8.12 Title Information
	 	 	68	 
	Section 8.13 Additional Collateral; Additional Guarantors
	 	 	69	 
	Section 8.14 ERISA Compliance
	 	 	70	 
	Section 8.15 Unrestricted Subsidiaries
	 	 	70	 
	Section 8.16 Section 1031 Exchange
	 	 	71	 
	Section 8.17 Use of Proceeds
	 	 	71	 
	Section 8.18 Fiscal Year
	 	 	71	 
	 
	 	 	 	 
	ARTICLE 9
	Negative Covenants
	 
	 	 	 	 
	Section 9.01 Financial Covenants
	 	 	71	 
	Section 9.02 Debt
	 	 	71	 
	Section 9.03 Liens
	 	 	73	 
	Section 9.04 Dividends and Distributions
	 	 	75	 
	Section 9.05 Repayment of Debt; Amendment of Indentures
	 	 	76	 
	Section 9.06 Investments, Loans and Advances
	 	 	76	 
	Section 9.07 Designation and Conversion of Restricted and Unrestricted Subsidiaries
	 	 	79	 
	Section 9.08 Nature of Business; International Operations
	 	 	79	 
	Section 9.09 Mergers, Etc.
	 	 	80	 
	Section 9.10 Sale of Properties and Termination of Oil and Gas Swap Agreements
	 	 	80	 
	Section 9.11 Transactions with Affiliates
	 	 	82	 
	Section 9.12 Negative Pledge Agreements; Dividend Restrictions
	 	 	82	 
	Section 9.13 Swap Agreements
	 	 	82	 
	Section 9.14 Ownership of Restricted Subsidiaries
	 	 	83	 
	Section 9.15 Amendments to Organizational Documents
	 	 	83	 
	 
	 	 	 	 
	ARTICLE 10
	Events of Default; Remedies
	 
	 	 	 	 
	Section 10.01 Events of Default
	 	 	83	 
	Section 10.02 Remedies
	 	 	85	 
	 
	 	 	 	 
	ARTICLE 11
	The Agents
	 
	 	 	 	 
	Section 11.01 Appointment; Powers
	 	 	86	 
	Section 11.02 Duties and Obligations of Administrative Agent
	 	 	86	 
	Section 11.03 Action by Administrative Agent
	 	 	87	 
	Section 11.04 Reliance by Administrative Agent
	 	 	88	 
	Section 11.05 Subagents
	 	 	88	 






iii









 






	 	 	 	 	 
	 	 	Page	 
	Section 11.06 Resignation of Administrative Agent
	 	 	88	 
	Section 11.07 Agents as Lenders
	 	 	88	 
	Section 11.08 No Reliance
	 	 	89	 
	Section 11.09 Administrative Agent May File Proofs of Claim
	 	 	89	 
	Section 11.10 Authority Of Administrative Agent To Release Collateral And Liens
	 	 	90	 
	Section 11.11 The Arrangers, Syndication Agent and Co-Documentation Agents
	 	 	90	 
	 
	 	 	 	 
	ARTICLE 12
	Miscellaneous
	 
	 	 	 	 
	Section 12.01 Notices
	 	 	90	 
	Section 12.02 Waivers; Amendments
	 	 	91	 
	Section 12.03 Expenses, Indemnity; Damage Waiver
	 	 	92	 
	Section 12.04 Successors and Assigns
	 	 	94	 
	Section 12.05 Survival; Revival; Reinstatement
	 	 	97	 
	Section 12.06 Counterparts; Integration; Effectiveness
	 	 	98	 
	Section 12.07 Severability
	 	 	98	 
	Section 12.08 Right of Setoff
	 	 	98	 
	Section 12.09 GOVERNING LAW; JURISDICTION
	 	 	99	 
	Section 12.10 Headings
	 	 	100	 
	Section 12.11 Confidentiality
	 	 	100	 
	Section 12.12 Interest Rate Limitation
	 	 	100	 
	Section 12.13 EXCULPATION PROVISIONS
	 	 	101	 
	Section 12.14 Collateral Matters; Swap Agreements
	 	 	101	 
	Section 12.15 No Third Party Beneficiaries
	 	 	102	 
	Section 12.16 Flood Insurance Regulation
	 	 	102	 
	Section 12.17 USA Patriot Act Notice
	 	 	102	 
	Section 12.18 No Fiduciary Duty
	 	 	102	 
	 
	 	 	 	 
	Annex I           List of Maximum Credit Amounts
	 	 	 	 






iv









 






	 	 	 	 	 
	 	 	Page	 
	Exhibit A
	 Form of Note 	 	 	 
	Exhibit B
	 Form of Borrowing Request	 	 	 
	Exhibit C 
	Form of Interest Election Request	 	 	 
	Exhibit D 
	Form of Compliance Certificate	 	 	 
	Exhibit E-1 
	Security Instruments	 	 	 
	Exhibit E-2
	 Form of Guaranty Agreement	 	 	 
	Exhibit F 
	Form of Assignment and Assumption	 	 	 
	Exhibit G 
	Form of Pledge Agreement	 	 	 
	Exhibit H-1 
	Form of U.S. Tax Compliance Certificate
(Foreign Lenders; not partnerships)	 	 	 
	Exhibit H-2 
	Form of U.S. Tax Compliance Certificate
(Foreign Participants; not partnerships)	 	 	 
	Exhibit H-3 
	Form of U.S. Tax Compliance Certificate
(Foreign Participants; partnerships)	 	 	 
	Exhibit H-4 
	Form of U.S. Tax Compliance Certificate
(Foreign Lenders; partnerships)	 	 	 
	 
	 	 	 	 
	Schedule 1.02 
	Initial Guarantors	 	 	 
	Schedule 3.05 
	Grandfathered Letters of Credit	 	 	 
	Schedule 7.11
	 Subsidiaries and Partnerships; Unrestricted Subsidiaries	 	 	 
	Schedule 7.12 
	Insurance	 	 	 
	Schedule 9.02 
	Existing Debt	 	 	 
	Schedule 9.03
	 Liens	 	 	 
	Schedule 9.06
	 Investments	 	 	 
	Schedule 9.08
	 Nature of Business	 	 	 






v









 






     THIS CREDIT AGREEMENT dated as of September 6, 2011, is among QUICKSILVER RESOURCES INC.,
a Delaware corporation (the “Borrower”); each of the Lenders from time to time party
hereto; JPMORGAN CHASE BANK, N.A., as administrative agent for the Lenders (in such capacity,
together with its successors in such capacity, the “Administrative Agent”); BANK OF
AMERICA, N.A., as syndication agent for the Lenders (in such capacity, the “Syndication
Agent”); and DEUTSCHE BANK SECURITIES INC., BNP PARIBAS, and WELLS FARGO BANK, N.A., as
co-documentation agents for the Lenders (in such capacity, the “Co-Documentation Agents”).
The joint lead arrangers for the credit facility provided under this Agreement are J.P. MORGAN
SECURITIES LLC, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, DEUTSCHE BANK SECURITIES INC.
and BNP PARIBAS SECURITIES CORP. (collectively, the “Joint Lead Arrangers”).



R E C I T A L S




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



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



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



ARTICLE 1

Definitions and Accounting Matters




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



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



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



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



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



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



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



     “Agents” means, collectively, the Administrative Agent, the Syndication Agent and the
Co-Documentation Agents; and “Agent” means the Administrative Agent, the Syndication Agent
or any Co-Documentation Agent, as the context requires.



1









 





     “Aggregate Maximum Credit Amounts” at any time shall equal the sum of the Maximum
Credit Amounts, as the same may be reduced or terminated pursuant to Section 2.06 or increased
pursuant to Section 2.09.



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



     “Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period on such day plus
1.00% (or if such day is not a Business Day, the immediately preceding Business Day); provided
that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate
appearing at Reuters Reference Screen LIBOR01 (or on any successor or substitute screen of such
service, or any successor to or substitute for such service, providing rate quotations comparable
to those currently provided on such screen of such service, as determined by the Administrative
Agent from time to time for purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m., London time on such day, as
the rate for dollar deposits with a one-month maturity; provided further that, in the event that
such rate is not available at such time for any reason, then the Adjusted LIBO Rate for such day
shall be based on the rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits in the approximate amount of the applicable ABR Borrowing with a one month maturity are
offered by the principal London office of the Administrative Agent in immediately available funds
in the London interbank market at approximately 11:00 a.m., London time, on such day (or the
immediately preceding Business Days if such day is not a day on which banks are open for dealings
in dollar deposits in the London interbank market). Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be
effective from and including the effective date of such change in the Prime Rate, the Federal Funds
Effective Rate or the Adjusted LIBO Rate, respectively.



     “Applicable Margin” means, for any day with respect to the commitment fees payable
hereunder, or with respect to any Eurodollar Loan or ABR Loan, as the case may be, the rate per
annum set forth in the appropriate column below under the caption “Commitment Fee Rate”,
“Eurodollar Spread,” or “ABR Spread,” as the case may be, for the Borrowing Base Utilization
Percentage then in effect:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Commitment	 	 	Eurodollar	 	 	 	 
	Borrowing Base Utilization Percentage	 	Fee Rate	 	 	Spread	 	 	ABR Spread	 
	Greater than 90%
	 	 	0.500	%	 	 	2.50	%	 	 	1.50	%
	Greater than 75% but less than or equal to 90%
	 	 	0.500	%	 	 	2.25	%	 	 	1.25	%
	Greater than 50% and less than or equal to 75%
	 	 	0.500	%	 	 	2.00	%	 	 	1.00	%
	Greater than 25% and less than or equal to 50%
	 	 	0.375	%	 	 	1.75	%	 	 	0.75	%
	Less than or equal to 25%
	 	 	0.375	%	 	 	1.50	%	 	 	0.50	%






Each change in the Applicable Margin shall apply during the period commencing on the effective date
of such change and ending on the date immediately preceding the effective date of the next such
change.




     “Applicable Percentage” means, with respect to any Lender, the percentage of the
Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit
Amount as such percentage is set forth on Annex I; provided that in the case of Section 2.11
when a Defaulting Lender shall exist, “Applicable Percentage” as used in such Section 2.11 shall
mean the percentage of the Aggregate Maximum Credit Amounts (disregarding any Defaulting Lender’s
Maximum Credit Amounts) represented by such Lender’s Maximum Credit Amount.



2









 





     “Approved Counterparty” means (a) any Lender, (b) any Affiliate of a Lender, or (c)
any counterparty with a rating of its senior, unsecured, long-term indebtedness for borrowed money
that is not guaranteed by any other Person or subject to any other credit enhancement of better
than or equal to “BBB-” or “Baa3” by S&P and Moody’s, respectively.



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



     “Approved Petroleum Engineers” means (a) Schlumberger Data and Consulting Services and
(b) any other independent petroleum engineers or other independent petroleum consultant(s)
reasonably acceptable to the Administrative Agent.



     “Arrangers” means the Joint Lead Arrangers and Joint Bookrunners.



     “ASC” means the Financial Accounting Standards Board Accounting Standards
Codification, as in effect from time to time.



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



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



     “Bank Products” means treasury management services (including, without limitation,
controlled disbursement, automated clearinghouse transactions, return items, overdrafts and
interstate depository network services).



     “Bank Products Obligation” means an obligation in respect of a Bank Product provided
by a Bank Products Provider.



     “Bank Products Provider” means any Lender or Affiliate of a Lender that provides Bank
Products to the Borrower or any Restricted Subsidiary.



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



     “BBEP Common Units” means Common Units of BBEP, and shall include any securities into
or for which such Common Units are reclassified, converted or exchanged in connection with (a) a
consolidation, merger, reorganization or other business combination transaction to which BBEP is a
party and in which BBEP is the continuing or surviving Person or (b) a transfer of all or
substantially all of the assets of BBEP.



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



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



3









 





     “Borrowing Base” means at any time an amount determined in accordance with Section
2.07, as the same may be adjusted from time to time pursuant to Section 8.12(c), Section 9.02(n),
or Section 9.10.



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



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



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



     “Business Day” means any day that is not a Saturday, Sunday or a United States federal
holiday or any other day on which the Chicago office of the Administrative Agent is closed or any
other day in which commercial banks in New York City are authorized or required by law to be
closed; provided that if such day relates to a Borrowing or continuation of, a payment or
prepayment of principal of or interest on, or a conversion of or into, or the Interest Period for,
a Eurodollar Loan or a notice by the Borrower with respect to any such Borrowing or continuation,
payment, prepayment, conversion or Interest Period, any day which is also a day on which banks are
open for dealings in dollar deposits in the London interbank market.



     “Canadian Subsidiaries” means, collectively, QRCI and its Subsidiaries.



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



     “Cash Interest Expense” shall mean, with respect to the Borrower and the Consolidated
Restricted Subsidiaries on a consolidated basis for any period, Interest Expense for such period,
less the sum of (a) pay-in-kind Interest Expense or other non-cash Interest Expense (including as a
result of the effects of purchase accounting), (b) to the extent included in Interest Expense, the
amortization of any financing fees paid by, or on behalf of, the Borrower or any Consolidated
Restricted Subsidiary, including such fees paid in connection with the Transactions, (c) the
amortization of debt discounts, if any, or fees and deferred gains or losses with respect to Swap
Agreements in respect of interest rates, (d) interest income of the Borrower and the Consolidated
Restricted Subsidiaries actually received in cash for such period, (e) any charges related to any
premium or penalty paid, capitalized interest, write off of deferred financing costs or other
financial recapitalization charges in connection with redeeming or retiring any indebtedness prior
to its stated maturity, and (f) to the extent included in Interest Expense, any interest paid on
property and income tax payments, litigation settlements or any other obligation that does not
constitute Debt; provided that (i) Cash Interest Expense shall exclude any
one-time financing fees paid in connection with the Transactions or any amendment of this
Agreement and (ii) that if any such Person shall have Redeemed any Existing Debt or Permitted
Additional Debt during such period, Cash Interest Expense shall be subject to pro forma adjustments
for such Redemption as if such Redemption had occurred on the first day of such period in a manner
satisfactory to the Administrative Agent.



     “Casualty Event” means any loss, casualty or other damage to, or any nationalization,
taking under power of eminent domain or by condemnation or similar proceeding of, any Oil and Gas
Property of the Borrower or any of its Restricted Subsidiaries.



4









 





     “Change in Control” means, after the Effective Date, the occurrence of any of the
following: (a) any “person” or “group” of related persons (as such terms are used in Section 13(d)
and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such
person or group shall be deemed to have “beneficial ownership” of all Equity Interests that such
person or group has the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 35% of the total voting power of
the Equity Interests of the Borrower (or its successor by merger, consolidation or purchase of all
or substantially all of its assets) (for the purposes of this clause, such person or group shall be
deemed to beneficially own any Equity Interest of the Borrower held by a parent entity of the
Borrower, if such person or group “beneficially owns” (as defined above), directly or indirectly,
more than 50% of the voting power of the Equity Interests of such parent entity); (b) a majority of
the members of the board of directors of the Borrower are not Continuing Directors; (c) the sale,
lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially all of the assets of Borrower and
its Restricted Subsidiaries taken as a whole to any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act); (d) the adoption by the stockholders of the Borrower of a
plan or proposal for the liquidation or dissolution of the Borrower; or (e) a “Change in Control”
or similar event occurs under and as defined in any indenture or similar governing document in
respect of Existing Debt or Permitted Additional Debt but only to the extent, in the case of this
clause (e), the occurrence of any such event gives rise to an obligation of the Borrower or any
other Restricted Subsidiary to redeem, repay or repurchase, or otherwise offer to redeem, repay or
repurchase, all or any portion of such Existing Debt or Permitted Additional Debt, which
redemption, repayment or repurchase is not otherwise permitted by the terms of this Agreement.



     “Change in Law” means (a) the adoption of any law, rule or regulation after the
Effective Date (including, without limitation, any rule or regulation adopted by any Governmental
Authority after the Effective Date under the framework of the Dodd-Frank Wall Street Reform and
Consumer Protection Act or in connection with the Bank for International Settlements, the Basel
Committee on Banking Supervision or the United States or foreign regulatory authorities, in each
case, pursuant to Basel III), (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the Effective Date or (c)
compliance by any Lender or any Issuing Bank (or, for purposes of Section 5.01(b), by any lending
office of such Lender or by such Lender’s or such Issuing Bank’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the Effective Date (including, without limitation, any requests,
guidelines or directives made or issued after the Effective Date in connection with the Dodd-Frank
Wall Street Reform and Consumer Protection Act or promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision or the United States or foreign regulatory
authorities, in each case, pursuant to Basel III).



     “Chicago” means Chicago, Illinois.



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



     “Commitment” means, with respect to each Lender, the commitment of such Lender to make
Loans, to acquire participations in Letters of Credit hereunder and to make Refunded Swingline
Loans and purchase participations in Swingline Loans pursuant to Section 2.10, expressed as an
amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure
hereunder, as such commitment may be (a) modified from time to time pursuant to Section 2.06 or
Section 2.09 and (b) modified from time to time pursuant to assignments by or to such Lender
pursuant to Section 12.04(b).




5











 







The amount representing each Lender’s Commitment shall be the lesser of such Lender’s Maximum
Credit Amount and such Lender’s Applicable Percentage of the then effective Borrowing Base.  


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


     “Consolidated Net Income” means with respect to the Borrower and the Consolidated
Restricted Subsidiaries, for any period, the aggregate of the net income (or loss) of the Borrower
and the Consolidated Restricted Subsidiaries after allowances for taxes for such period determined
on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such
net income (or loss) (to the extent otherwise included therein) the following (without
duplication):



     (a)         the net income (or loss) for such period of any Person which is not a
Consolidated Restricted Subsidiary, except that the amount of dividends, distributions or other
payments in respect of equity actually paid in cash during such period by such other Person to the
Borrower or to a Consolidated Restricted Subsidiary (or to the extent any non-cash dividend,
distribution or other payment made during such period by such other Person to the Borrower or to a
Consolidated Restricted Subsidiary was converted into cash by the Borrower or such Consolidated
Restricted Subsidiary during such period) shall be included in such net income (or loss), as the
case may be;



     (b)     the net income (but not loss) during such period of any Consolidated Restricted
Subsidiary to the extent that the declaration or payment of dividends or similar distributions or
transfers or loans by that Consolidated Restricted Subsidiary is not at the time permitted by the
terms of its charter or any agreement, instrument or Governmental Requirement applicable to such
Consolidated Restricted Subsidiary or is otherwise restricted or prohibited;



     (c)     any extraordinary gains (net of extraordinary losses) during such period;



     (d)     non-cash gains, losses or adjustments, including non-cash gains, losses or
adjustments under authoritative guidance from the FASB as a result of changes in the fair market
value of derivatives and any gains or losses attributable to writeups or writedowns of assets,
including ceiling test writedowns and writedowns under authoritative guidance from the FASB as a
result of accounting for oil and gas activities, goodwill and other intangible assets, and
property, plant and equipment (for the avoidance of doubt, realized gains or losses will be counted
in Consolidated Net Income in the quarter that cash is actually received or paid);



     (e)     any premium or penalty paid, capitalized interest, write off of deferred
financing costs or other financial recapitalization charges in connection with redeeming or
retiring any indebtedness prior to its stated maturity;



     (f)     any non-cash employee, officer or director based compensation; and



     (g)     any gain realized (net of losses) in connection with asset sales.  


     “Consolidated Restricted Subsidiaries” means any Restricted Subsidiaries that are
Consolidated Subsidiaries.  


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


6









 






     “Continuing Directors” means the individuals (i) who were members of the board of
directors or other equivalent governing body of the Borrower on the Effective Date, (ii) whose
election or nomination to such board or body was approved by individuals referred to in clause (i)
above constituting at the time of such election or nomination at least a majority of such board or
body or (iii) whose election or nomination to such board or body was approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of such election or nomination
at least a majority of such board or body.  


     “Control” means the power to direct the management and policies of a Person, directly
or indirectly, whether through the ownership of voting securities, by contract or otherwise and the
terms “Controlling” and “Controlled” have meanings correlative of the foregoing.  


     “Debt” means, for any Person, the sum of the following (without duplication):



     (a)     all obligations of such Person for borrowed money or evidenced by bonds,
debentures, notes or other similar instruments;



     (b)     all obligations of such Person (whether contingent or otherwise) in respect of
unreimbursed draws under letters of credit, bankers’ acceptances, surety or other bonds and similar
instruments;



     (c)     all amounts owed by such Person representing the deferred purchase price of
Property or services (other than liabilities of such Person to trade creditors arising in the
ordinary course of business (including guarantees thereof or instruments evidencing such
liabilities) that are either (i) not greater than 90 days past the invoice or billing date or (ii)
are being contested in good faith by appropriate proceedings and adequate reserves therefore have
been established under GAAP);



     (d)     all obligations under Capital Leases;



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



     (f)     obligations to deliver commodities, goods or services, including, without
limitation, Hydrocarbons, in consideration of one or more advance payments, other than gas
balancing arrangements in the ordinary course of business;



     (g)     all Debt (as defined in the other clauses of this definition) of others secured
by a Lien on any Property of such Person, whether or not such Debt is assumed by such Person to the
extent of the lesser of the fair market value of the property subject to such Lien and the amount
of such Debt;



     (h)     all Debt (as defined in the other clauses of this definition) of others
Guaranteed by such Person to the extent of the lesser of the amount of such Debt and the maximum
stated amount of such Guarantee;



     (i)     any Debt of a partnership for which such Person is liable either by agreement,
by operation of law or by a Governmental Requirement but only to the extent of such liability;



7









 








     (j)     Disqualified Capital Stock; and



     (k)     the undischarged balance of any production payment created by such Person or for
the creation of which such Person directly or indirectly received payment.  


     The Debt of any Person shall include all obligations of such Person of the character described
above notwithstanding that any such obligation is not included as a liability of such Person under
GAAP.  For the avoidance of doubt, “Debt” does not include obligations in respect of Swap
Agreements, indemnities incurred in the ordinary course of business or in connection with the
disposition of assets, any non-cash employee, officer or director compensation, any compensation
paid to employees, officers or directors pursuant to stock appreciation rights, or, except to the
extent set forth in the foregoing clause (e), obligations under operating leases.  


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


     “Default Rate” means a rate per annum equal to 2% plus the rate applicable to ABR
Loans as provided in Section 3.02(a).  


     “Defaulting Lender” means any Lender, as reasonably determined by the Administrative
Agent, that has (a) failed to comply with its obligation to fund any portion of its Loans or
participations in Letters of Credit or Swingline Loans within two (2) Business Days of the date
required to be funded by it hereunder, (b) notified the Borrower, the Administrative Agent, any
Issuing Bank, the Swingline Lender or any Lender in writing that it does not intend to comply with
any portion of its funding obligations under this Agreement or has made a public statement to the
effect that it does not intend to comply with any portion of its funding obligations under this
Agreement, (c) failed, within three (3) Business Days after written request by the Administrative
Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations
to fund prospective Loans and participations in the then outstanding Letters of Credit and
Swingline Loans; provided, that any such Lender will cease to be a Defaulting Lender under this
clause (c) upon receipt of such confirmation by the Administrative Agent, (d) otherwise failed to
pay over to the Administrative Agent or any other Lender any other amount required to be paid by it
hereunder within two (2) Business Days of the date when due, or (e) (i) become or is insolvent or
has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or
insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it,
or has taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that has become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or
custodian appointed for it, or has taken any action in furtherance of, or indicating its consent
to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall
not be a Defaulting Lender solely by virtue of the ownership or acquisition of an Equity Interest
in such Lender or a parent company thereof by a Governmental Authority or an instrumentality
thereof.  For avoidance of doubt (A) an assignee of a Defaulting Lender shall not be deemed to be a
Defaulting Lender solely by virtue of the fact that it is an assignee of a Defaulting Lender, (B)
neither the reallocation of funding obligations provided for in Section 2.11 as a result of a
Lender being a Defaulting Lender nor the performance by non-Defaulting Lenders of such reallocated
funding obligations will by themselves cause the relevant Defaulting Lender to become a
non-Defaulting Lender and (C) when a Defaulting Lender ceases to be a Defaulting Lender (due to
assignment to a new or existing Lender, commitment reduction pursuant to Section 2.11 or
otherwise), all cash collateral deposited with respect to LC Exposure or Swingline Loans pursuant
to Section 2.11(b) shall be promptly released to the Borrower (unless such cash collateral is
otherwise required to remain on deposit pursuant to any other provision hereof) and all commitment
reallocations under Section 2.11 shall be promptly adjusted.  


8









 






     “Disqualified Capital Stock” means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible or for which it is exchangeable) or upon the
happening of any event, matures or is mandatorily redeemable for any consideration other than other
Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking
fund obligation or otherwise, or is convertible or exchangeable for Debt or redeemable for any
consideration other than other Equity Interests (which would not constitute Disqualified Capital
Stock) at the option of the holder thereof, in whole or in part, on or prior to the date that is 91
days after the earlier of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments are terminated.  


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


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


     “EBITDAX” means, for any period, the sum of Consolidated Net Income for such period
plus (i) the following expenses or charges to the extent deducted in determining
Consolidated Net Income in such period (without duplication): interest; sales, franchise and income
taxes; depreciation; depletion; amortization; exploration expenses; seismic, geologic and
geophysical services performed in connection with oil and gas exploration; accretion of asset
retirement obligations in accordance with ASC Topic 410, Accounting for Asset Retirement
Obligations, and any similar accounting in prior periods; and other non-cash expenses, adjustments,
losses or charges, plus (ii) an amount equal to twenty-five percent (25%) of the Net
Proceeds received by the Borrower during such period from sales of BBEP Common Units owned by the
Borrower on or prior to the Effective Date, and minus (iii) all non-cash income included in
the calculation of Consolidated Net Income; provided, however, that if any such Person shall have
consummated any Material Acquisition or Material Disposition during such period, EBITDAX shall be
subject to pro forma adjustments for such acquisition or disposition, as if such acquisition or
disposition had occurred on the first day of such period and shall also include adding back to
Consolidated Net Income any non-recurring or one-time cash or non-cash charges or expenses
associated with such acquisition or disposition; provided, however, that such pro forma adjustments
shall be in a manner satisfactory to the Administrative Agent.  


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


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


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


     “Environmental Laws” means any and all Governmental Requirements pertaining in any way
to health and safety (with respect to exposure to hazardous substances), the environment or the
preservation or reclamation of natural resources, as applicable in any jurisdictions in which the
Borrower or any
Restricted Subsidiary is conducting or at any time has conducted business, or where any Oil
and Gas Property of the Borrower or any Restricted Subsidiary is located, including without
limitation, the Oil Pollution Act of 1990, as amended (“OPA”), the Clean Air Act, as
amended, the Comprehensive



9









 






Environmental, Response, Compensation, and Liability Act of 1980, as amended
(“CERCLA”), the Federal Water Pollution Control Act, as amended, the Occupational Safety
and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976, as amended
(“RCRA”), the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous
Materials Transportation Act, as amended.  The term “oil” has the meaning specified in OPA,
the terms “release” (or “threatened release”) have the meanings specified in
CERCLA, the terms “solid waste” and “disposal” (or “disposed”) have the
meanings specified under applicable State Environmental Law; provided, however, that to the extent
the applicable Environmental Laws of the state or local jurisdiction in which any Oil and Gas
Property of the Borrower or any Subsidiary is located establish an equivalent meaning for “oil”,
“release”, or “disposal” which is broader than that specified above, such broader meaning shall
apply to the extent applicable to such state or local jurisdiction.  



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


     “Equity Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such Equity Interest.  Convertible debt (including, without limitation, the
Existing Convertible Debentures) shall not constitute “Equity Interests” for purposes hereof.  


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


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


     “ERISA Event” means (a) a “Reportable Event” described in section 4043 of ERISA and
the regulations issued thereunder with respect to a Pension Plan, (b) the withdrawal of the
Borrower, a Restricted Subsidiary or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a “substantial employer” as defined in section 4001(a)(2) of ERISA or from a
Multiemployer Plan, (c) the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under section 4041 of ERISA, (d) the
institution of proceedings to terminate a Pension Plan by the PBGC, (e) receipt by Borrower, a
Restricted Subsidiary, or any ERISA Affiliate of a notice of withdrawal liability pursuant to
Section 4202 of ERISA, (f) any other event or condition which might constitute grounds under
section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan, (g) the incurrence or assumption by Borrower, a Restricted Subsidiary, or any ERISA
Affiliate of any liability under Title IV of ERISA with respect to
any Pension Plan or Multiemployer Plan (other than to make contributions in the ordinary
course of business for the payment of current premiums which are not past due), (h) the occurrence
of a non-exempt prohibited transaction under section 406 of ERISA or section 4975 of the Code that
is reasonably likely to result in liability to the Borrower, (i) the failure with respect to a
Pension Plan, to satisfy the minimum funding standard under section 412 of the Code or section 302
of ERISA, or (j) the receipt by Borrower, a Restricted Subsidiary, or any ERISA Affiliate of any
notice concerning the determination that a Multiemployer Plan



10









 






is in endangered or critical status, within the meaning of section 305 of ERISA, or insolvent
or in reorganization, within the meaning of Title IV of ERISA.  



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


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


     “Excepted Liens” means:



     (a)     Liens for Taxes, assessments or other governmental charges or levies which (i)
are not delinquent or which are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP or (ii) result from a failure by the
third-party lessor of any Oil and Gas Property to pay such Taxes, assessments or other governmental
charges or levies owing by such third-party lessor, which is satisfied within 60 days after a
Responsible Officer of the Borrower becomes aware thereof;



     (b)     Liens incurred or deposits made in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public liability obligations
which are not delinquent or in default (except to the extent that non-payment of such obligations
is permitted by Section 8.04);



     (c)     statutory landlord’s Liens, operators’, vendors’, carriers’, warehousemen’s,
repairmen’s, mechanics’, suppliers’, workers’, materialmen’s, journeymen’s, landlord’s and
construction Liens, Liens on pipelines and pipeline facilities or other like Liens, in each case
arising by operation of law in the ordinary course of business or incident to the exploration,
development, operation and maintenance of Properties each of which is in respect of obligations
that are not delinquent or in default (except to the extent that non-payment of such obligations is
permitted by Section 8.04);



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



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



     (f)     (i) Immaterial Title Deficiencies and (ii) other minor defects in title which
(A) for purposes of this Agreement, shall include, but not be limited to, easements, restrictions,
zoning restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any
Property of the



11









 





Borrower or any Restricted Subsidiary for the purpose of roads, streets, alleys, highways,
telephone lines, power lines, pipelines, transmission lines, transportation lines, distribution
lines for the removal of gas, oil, coal or other minerals or timber, and other like purposes, or
for the joint or common use of real estate, rights of way, facilities and equipment, surface leases
and other similar rights in respect of surface operations, (B) in the aggregate do not materially
impair the use of such Property for the purposes of which such Property is held by the Borrower or
any Restricted Subsidiary and (C) in the aggregate do not materially impair the value of such
Property subject thereto;




     (g)     (i) Liens on cash or securities pledged to secure performance of tenders, surety
bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases,
statutory obligations, regulatory obligations, and other obligations of a like nature incurred, in
each case, in the ordinary course of business, and (ii) Liens on cash or securities pledged to
secure performance of appeal bonds, injunction bonds and other obligations of a like nature,
including, in the case of clauses (i) and (ii), cash on deposit with a court or any Person in lieu
of or in connection with any of the items referenced in this clause (g);



     (h)     judgment and attachment Liens not giving rise to an Event of Default under
Section 10.01(k); and



     (i)     Liens arising from or perfected by precautionary Uniform Commercial Code
financing statement filings or other applicable precautionary filings regarding operating leases
entered into by the Borrower and the Restricted Subsidiaries in the ordinary course of business
covering only the Property under lease and accessions thereto, rights under warranties with respect
thereto and other similar rights and interests;



     provided, that (i) no intention to subordinate the first priority Lien in the collateral
granted in favor of the Administrative Agent and the Secured Parties pursuant to the Security
Instruments is to be hereby implied or expressed by the permitted existence of such Excepted Liens,
and (ii) the term “Excepted Liens” shall not include any Lien securing Debt for borrowed money
other than the Secured Indebtedness.  


     “Exchange Act” the Securities Exchange Act of 1934, as amended.  


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


     “Existing Convertible Debentures” means, collectively, each of Borrower’s 1.875%
Convertible Subordinated Debentures due 2024, as amended, restated, renewed, extended,
supplemented, increased,



12









 






replaced, refinanced or otherwise modified from time to time to the extent permitted under
Section 9.05(b).  



     “Existing Credit Agreement” means the Amended and Restated Credit Agreement dated as
of February 9, 2007 among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent and the
lenders and other agents party thereto, as amended.  


     “Existing Debt” means the Existing Convertible Debentures, Existing Subordinate Notes,
Existing 2015 Senior Notes, Existing 2016 Senior Notes and Existing 2019 Senior Notes.  


     “Existing Subordinate Notes” means, collectively, each of Borrower’s 71⁄8% Senior
Subordinated Notes due 2016, as amended, restated, renewed, extended, supplemented, increased,
replaced, refinanced or otherwise modified from time to time to the extent permitted under Section
9.05(b).  


     “Existing 2015 Senior Notes” means, collectively, each of the Borrower’s 81/4% Senior
Notes due 2015, as amended, restated, renewed, extended, supplemented, replaced, refinanced or
otherwise modified from time to time to the extent permitted under Section 9.05(b).  


     “Existing 2016 Senior Notes” means, collectively, each of the Borrower’s 113/4 % Senior
Notes due 2016, as amended, restated, renewed, extended, supplemented, replaced, refinanced or
otherwise modified from time to time to the extent permitted under Section 9.05(b).  


     “Existing 2019 Senior Notes” means, collectively, each of the Borrower’s 91⁄8% Senior
Notes due 2019, as amended, restated, renewed, extended, supplemented, replaced, refinanced or
otherwise modified from time to time to the extent permitted under Section 9.05(b).  


     “FASB” means the Financial Accounting Standards Board.  


     “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement
(or any amended or successor version that is substantively comparable and not materially more
onerous to comply with) and any current or future regulations or official interpretations thereof.  


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


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


     “Financial Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of the Borrower.  


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


     “Flood Insurance Regulation” means (a) the National Flood Insurance Act of 1968 as now
or hereafter in effect or any successor statute thereto, (b) the Flood Disaster Protection Act of
1972 as now or hereafter in effect or any successor statute thereto, (c) the National Flood
Insurance Reform Act of



13









 







1994 (amending 42 USC §4001, et.  seq.), as the same may be amended or recodified from time to
time, (d) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor
statute thereto and (e) any regulations promulgated under any of the foregoing statutes.  



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


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


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


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


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


     “Grandfathered Letters of Credit” means the letters of credit issued by JPMorgan under
the Existing Credit Agreement outstanding on the Effective Date and set forth on Schedule 3.05.  


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


     “Guarantors” means the entities listed on Schedule 1.02, any other Person that must
guarantee the Secured Indebtedness in order for the Borrower to comply with Section 8.13 and any
other Person that executes the Guaranty Agreement guaranteeing the payment of the Secured
Indebtedness.  


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


14









 








     “Hazardous Discharge” means any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping of any
Hazardous Material from or onto any real property owned, leased or operated at any time by the
Borrower or any Subsidiary or any real property owned, leased or operated by any other Person.  


     “Hazardous Material” means all explosive or radioactive substances or wastes, all
hazardous or toxic substances, pollutants, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other hazardous or toxic
substances or wastes (including oil and natural gas exploration, production and development wastes)
of any nature, in each case, to the extent regulated pursuant to any Environmental Law, and any
petroleum, petroleum products or petroleum distillates.  


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


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


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


     “Immaterial Title Deficiencies” means minor defects or deficiencies in title which do
not diminish by more than 5% the aggregate value of the Oil and Gas Properties evaluated in the
Reserve Report used in the most recent determination of the Borrowing Base.  


     “Increasing Lender” has the meaning set forth in Section 2.09.  


     “Indemnified Taxes” means Taxes other than Excluded Taxes.  


     “Initial Reserve Report” means the Reserve Report with respect to the value of certain
Oil and Gas Properties of the Borrower and its Restricted Subsidiaries as of July 1, 2011.  


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


     “Interest Expense” means, with respect to the Borrower and its Consolidated Restricted
Subsidiaries for any period, (determined without duplication) the gross interest expense of the
Borrower and its Consolidated Restricted Subsidiaries for such period on a consolidated basis,
including (i) the amortization of debt discounts, (ii) the amortization of all fees (including fees
and deferred gains or losses with respect to Swap Agreements in respect of interest rates) payable
in
connection with the incurrence of Debt to the extent included in interest expense, (iii) the
portion of any payments or accruals with respect to Capital Leases allocable to interest expense,
(iv) the portion of any payments or accruals with respect to obligations of the type described in
clause (e) of the definition of “Debt” in this Agreement allocable to interest expense whether or
not the same constitutes interest expense under GAAP, and (v) capitalized interest.  For purposes
of the foregoing, gross interest expense shall be determined after giving effect to



15









 







any net
payments made or received and costs incurred by the Borrower and its Consolidated Restricted
Subsidiaries with respect to Swap Agreements in respect of interest rates.  



     “Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each
March, June, September and December, (b) with respect to any Eurodollar Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to
the last day of such Interest Period that occurs at intervals of three months’ duration after the
first day of such Interest Period, and (c) with respect to any Swingline Loan, the day that such
Swingline Loan is required to be repaid pursuant to Section 2.10(b).  


     “Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three, six or, if available to all Lenders, nine or 12 months or
one or two weeks thereafter, as the Borrower may elect; provided, that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next preceding Business Day, and (b) any
Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the
date on which such Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.  


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


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


     “Investment” means, for any Person any investment including, without limitation: (a)
the acquisition (whether for cash, Property, services or securities or otherwise) of Equity
Interests of any other Person; (b) the making of any deposit with, or advance, loan or capital
contribution to, purchase or other acquisition of any other Debt or equity participation or
interest in, or other extension of credit to, any other Person; (c) the purchase or acquisition (in
one or a series of transactions) of Property of another Person that constitutes a business unit or
(d) the entering into of any Guarantee of Debt or other liability of any other Person.  


     “Issuing Bank” means JPMorgan and each Lender that agrees to act as an issuer of
Letters of Credit hereunder at the request of the Borrower, in each case, in its capacity as an
issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section
2.08(i).  Any Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be
issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall include any
such Affiliate with respect to Letters of Credit issued by such Affiliate.  


     “Joinder Agreement” has the meaning set forth in Section 2.09(a).  


     “Joint Bookrunners” means J.P.  Morgan Securities LLC and Merrill Lynch, Pierce, Fenner
& Smith Incorporated, in their capacity as the joint bookrunners hereunder.  


     “JPMorgan” means JPMorgan Chase Bank, N.A., in its individual capacity.  



16












 







     “LC Commitment” at any time means $75,000,000.  


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


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


     “Lenders” means the Persons listed on Annex I and any Person that shall have become a
party hereto pursuant to Section 2.09 or pursuant to an Assignment and Assumption, other than any
such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.  Unless
context otherwise requires, the term “Lenders” shall include the Swingline Lender.  


     “Letter of Credit” means any letter of credit issued pursuant to this Agreement,
including any Grandfathered Letters of Credit.  


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


     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period,
the rate appearing at Reuters Reference Screen LIBOR01 (or on any successor or substitute screen of
such service, or any successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such screen of such service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period.  In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar
Borrowing for such Interest Period shall be the rate (rounded upwards, if necessary, to the next
1/16 of 1%) at which dollar deposits in the approximate amount of such Eurodollar Borrowing and for
a maturity comparable to such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.  


     “Lien” means any interest in Property securing an obligation owed to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on the common law,
statute or contract, and whether such obligation or claim is fixed or contingent, and including but
not limited to (a) the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or bailment for
security purposes or (b) production payments and the like payable out of Oil and Gas Properties.  The term “Lien” shall include easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations.  For the purposes of this Agreement, Borrower and its Restricted
Subsidiaries shall be deemed to own subject to a Lien any asset which is acquired or held subject
to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.  


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


17









 







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


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


     “Material Acquisition” means the acquisition of the Equity Interests of a Person or
the acquisition of assets from a Person, in each case for consideration of at least $25,000,000.  


     “Material Adverse Effect” means a material adverse effect on (a) the business,
operations, Property or financial condition of the Borrower and the Restricted Subsidiaries taken
as a whole; provided that changes in the prices of Hydrocarbons will not constitute a Material
Adverse Effect, (b) the validity or enforceability of any of the Loan Documents or the ability of
the Borrower and the Restricted Subsidiaries to perform any of their respective obligations under
any Loan Document or (c) the rights and remedies of or benefits available to the Administrative
Agent, any other Agent, any Issuing Bank or any Lender under any Loan Document.  


     “Material Debt” means Debt (other than the Loans and Letters of Credit) or obligations
in respect of one or more Swap Agreements, of any one or more of the Borrower and its Restricted
Subsidiaries in an aggregate principal amount exceeding $45,000,000.  For purposes of determining
Material Debt, the “principal amount” of the obligations of the Borrower or any Restricted
Subsidiary in respect of any Swap Agreement at any time shall be the net amount (after giving
effect to any netting agreements on collateral arrangements) that the Borrower or such Restricted
Subsidiary would be required to pay if such Swap Agreement were terminated at such time.  


     “Material Disposition” means the sale, lease, assignment, conveyance or transfer of
the Equity Interests of a Person or the assets of a Person, in each case for consideration of at
least $25,000,000.  


     “Material Restricted Subsidiary” means, at any time, each Restricted Subsidiary that
is a Domestic Subsidiary and owns assets representing 7.5% or more of the total assets of the
Borrower and its Restricted Subsidiaries or whose EBITDAX represents 7.5% or more of the EBITDAX of
the Borrower and its Restricted Subsidiaries.  For purposes of this definition, the total EBITDAX
of the Borrower and its Restricted Subsidiaries shall be determined as of the end of the Borrower’s
most recent fiscal quarter for which financial statements are available.  


     “Maturity Date” means the earliest of (i) the fifth anniversary of the Effective Date
(the “Scheduled Maturity Date”), (ii) ninety (90) days prior to the maturity of the
Existing 2015 Senior Notes to the extent the Existing 2015 Senior Notes are not repurchased,
redeemed or refinanced to have a termination date of at least ninety (90) days after the
Scheduled Maturity Date, (iii) ninety (90) days prior to the maturity of the Existing
Subordinate Notes to the extent the Existing Subordinate Notes are not repurchased, redeemed or
refinanced to have a termination date at least ninety (90) days after the Scheduled Maturity Date
or (iv) ninety (90) days prior to the maturity of the Existing 2016 Senior Notes to the extent the
Existing 2016 Senior Notes are not repurchased, redeemed or refinanced to have a termination date
at least ninety (90) days after the Scheduled Maturity Date.  


18









 







     “Maximum Credit Amount” means, as to each Lender, the amount set forth opposite such
Lender’s name on Annex I under the caption “Maximum Credit Amounts”, as the same may be (a) reduced
or terminated from time to time in connection with a reduction or termination of the Aggregate
Maximum Credit Amounts pursuant to Section 2.06(b), (b) increased pursuant to Section 2.09, (c)
modified from time to time pursuant to any assignment permitted by Section 12.04(b) or (d)
established pursuant to a Joinder Agreement executed by an Increasing Lender pursuant to Section
2.09.  


     “Minimum Liquidity” means, as of any date of determination, the sum of (a) the
aggregate unused amount of the Commitments under this Agreement as of such date (but only to the
extent that the Borrower is permitted to borrow such amounts under the terms of this Agreement
including, without limitation, Section 6.02 hereof) plus (b) all unrestricted and unencumbered cash
and Investments of the type described in Section 9.06(b), (c), (e), (f), (g), (h), and (i)
reflected on the Borrower’s balance sheet as of such date.  


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


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


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


     “Net Proceeds” means the aggregate cash proceeds received by the Borrower or any
Restricted Subsidiary in respect of any sale of BBEP Common Units, net of (a) the costs relating to
such sale, (b) taxes paid or payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements) and (c) Debt (other than the Secured
Indebtedness) which is secured by a Lien upon any of the BBEP Common Units subject to such sale and
which must be repaid as a result of such sale.  


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


     “New Parent” means a direct parent of QRCI (other than the Borrower) to which 100% of
the Equity Interests in QRCI will be transferred by the Borrower in contemplation of a Qualified
IPO.  


     “Non-Recourse Debt” means any Debt of any Subsidiary which does not own any Oil and
Gas Properties included in Borrowing Base in which the Borrower or a Restricted Subsidiary made an
Investment which Debt is (a) secured solely by the assets acquired with the proceeds of such Debt
and (b) with respect to which (i) neither the Borrower nor any Restricted Subsidiary shall have any
liability to any Person for repayment of all or any portion of such Debt beyond the assets so
secured and (ii) the holders thereof (A) shall have recourse only to, and the right to require the
obligations of such Subsidiary to be performed, satisfied or paid only out of, the assets so
secured and
(B) shall have no direct or indirect recourse (including by way of indemnity or guaranty) to
the Borrower or any Restricted Subsidiary, whether for principal, interest, fees, expenses or
otherwise; provided, however, that any such Debt shall not cease to be “Non-Recourse Debt” solely
as a result of the instrument governing such Debt containing terms pursuant to which such Debt
becomes recourse upon (i) fraud or misrepresentation by the Subsidiary in connection with such
Debt, (ii) such Subsidiary failing to pay taxes or other charges that result in the creation of
Liens on any portion of the specific property securing such Debt or failing to maintain any
insurance on such property required under the instruments securing such Debt, (iii) the conversion
of any of the collateral for such Debt, (iv) such Subsidiary failing to maintain any of the
collateral for such Debt in the condition required under the instruments securing the Debt, (v) any
income



19









 







generated by the specific property securing such Debt being applied in a manner not otherwise
allowed in the instruments securing such Debt, (vi) the violation of any Environmental Law or
otherwise affecting the environmental condition of the specific property securing the Debt or (vii)
the rights of the holder of such Debt to the specific property becoming impaired, suspended or
reduced by any act, omission or misrepresentation of such Person; provided further, however, that,
upon the occurrence of any of the foregoing clauses (i) through (vii) above, any such Debt shall
cease to be “Non-Recourse Debt”.  



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


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


     “Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the Properties now or
hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently existing or future
unitization, pooling agreements and declarations of pooled units and the units created thereby
(including without limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests; (d) all
operating agreements, contracts and other agreements, including production sharing contracts and
agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase,
transportation, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon
Interests; (e) all Hydrocarbons in and under and which may be produced and saved or attributable to
the Hydrocarbon Interests, including all oil in tanks, and all rents, issues, profits, proceeds,
products, revenues and other incomes from or attributable to the Hydrocarbon Interests; (f) all
tenements, hereditaments, appurtenances and Properties in any manner appertaining, belonging,
affixed or incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all Property, real or
personal, now owned or hereinafter acquired and situated upon, used, held for use or useful in
connection with the operating, working or development of any of such Hydrocarbon Interests or
Property (excluding drilling rigs, automotive equipment, rental equipment or other personal
Property which may be on such premises for the purpose of drilling a well or for other similar
temporary uses and surface buildings, structures and the contents thereof which contents are not
otherwise Oil and Gas Properties situated on such Hydrocarbon Interests or Property) and (x)
including any and all oil wells, gas wells, injection wells or other wells, fuel separators, liquid
extraction plants, plant compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus,
equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface
leases, rights-of-way, easements and servitudes together with all additions, substitutions,
replacements, accessions and attachments to any and all of the foregoing and (y) excluding any of
the foregoing assets described in clause (x) manufactured for sale to third parties to the extent
not used by the manufacturing Person in connection with the operating, working or development of
any of such Hydrocarbon Interests or Property; provided that notwithstanding anything to the
contrary contained
herein, “Oil and Gas Properties” shall not include cash, Deposit Accounts (as defined in the
New York Uniform Commercial Code) or Securities Accounts (as defined in the New York Uniform
Commercial Code).  


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


     “Organization Documents” means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non US jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; and (c) with respect
to any partnership, joint venture,



20









 







trust or other form of business entity, the partnership, joint venture or other applicable
agreement of formation or organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the applicable Governmental
Authority in the jurisdiction of its formation or organization and, if applicable, any certificate
or articles of formation or organization of such entity.  



     “Other Taxes” means any and all present or future stamp, court or documentary,
intangible, recording, filing taxes or any other excise or Property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery, performance,
enforcement or registration or, from the receipt or perfection of a security interest under, or
otherwise with respect to, this Agreement and any other Loan Document.  


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


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


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


     “Pension Plan” means any employee pension benefit plan as defined in section 3(2) of
ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
302 of ERISA or Section 412 of the Code and in respect of which the Borrower, a Restricted
Subsidiary or any ERISA Affiliate of the foregoing may have liability, including any liability by
reason of having been a substantial employer pursuant to section 4063 of ERISA at any time during
the preceding five years, or by reason of being deemed to be a contributing sponsor under section
4069 of ERISA.  


     “Permitted Additional Debt” means Debt permitted to be incurred pursuant to Section
9.02(n).  


     “Permitted Holders” means (a) the Borrower or any Restricted Subsidiary of the
Borrower, (b) a trustee or other fiduciary holding securities under any employee benefit plan (or
related trust) sponsored or maintained by the Borrower or any Restricted Subsidiary of the
Borrower, (c) Mercury Exploration Company, Mercury Production Company, Quicksilver Energy, L.P.,
The Discovery Fund, Pennsylvania Avenue Limited Partnership, Pennsylvania Management Company, the
estate of Frank Darden, Lucy Darden, Ann Darden Self, Glenn Darden or Thomas Darden, (d) with
respect to the natural persons listed in the foregoing clause (c), their respective successors,
assigns or designees which, in each case, are Controlled Affiliates of any Person referred to in
the foregoing clause (c), and their respective heirs, beneficiaries, trust, estates, and (e) with
respect to the Persons listed in the foregoing clause (c) that are not natural persons, their
respective successors, assigns or designees which, in each case, are Controlled Affiliates of any
Person referred to in the foregoing clause (c).  


     “Permitted Investments” means the Investments permitted by Section 9.06.  


     “Permitted Liens” means with respect to (a) any Oil and Gas Property of the Borrower
or its Restricted Subsidiaries of the types described in clauses (a), (b), (c), (e) and (f) of the
definition of “Oil and Gas Properties” evaluated in the Reserve Report used in the most recent
determination of the Borrowing Base, the Liens permitted under clauses (a), (b), (c), (g), (h), and
(j) of Section 9.03,(b) any Equity Interests issued by any Restricted Subsidiary, Liens of the type
described in clause (a) of the definition of “Excepted Liens” and (c) all property and assets
(other than those referred to in the foregoing clauses (a) and (b)), Liens of the type listed under
Section 9.03.  


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


21









 







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


     “Pledge Agreement” means a Pledge Agreement among the Borrower, the Restricted
Subsidiaries and the Administrative Agent in substantially the form of Exhibit G (or otherwise in
form and substance acceptable to the Administrative Agent) granting Liens and a security interest
on the Equity Interests issued by Restricted Subsidiaries in favor of the Administrative Agent for
the benefit of the Secured Parties to secure the Secured Indebtedness, as the same may be amended,
modified or supplemented from time to time.  


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


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


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


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


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


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


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


     “Qualified IPO” means the first underwritten sale to the public of Equity Interests in
New Parent which results in net cash proceeds to New Parent of not less than C$200,000,000, and
after which the Equity Interests in New Parent are listed on a recognized U.S.  or Canadian national
securities exchange or the NASDAQ Stock Market.  


     “Reclassification” means the owner of an Oil and Gas Property evaluated in the Reserve
Report used in the most recent determination of the Borrowing Base changing from a Restricted
Subsidiary to an Unrestricted Subsidiary as a result of either (a) the Borrower designating such
previously Restricted Subsidiary as an Unrestricted Subsidiary in accordance with Section 9.07(b),
or (b) such previously



22









 







Restricted Subsidiary merging with an Unrestricted Subsidiary, with the
Unrestricted Subsidiary being the continuing or surviving Person in accordance with Section
9.09(a).  “Reclassified” shall have the correlative meaning thereto, and an Oil and Gas Property is
“Reclassified” if a Reclassification occurs with respect to its owner.  



     “Recognized Value” means, (a) with respect to Oil and Gas Properties evaluated in the
most recently delivered Reserve Report, the discounted present value of the estimated net cash flow
to be realized from the production of Hydrocarbons from such Oil and Gas Properties as determined
by the Administrative Agent for purposes of determining the portion of the then effective Borrowing
Base which it attributes to such Oil and Gas Properties in accordance with Section 2.07, and (b)
with respect to any other Oil and Gas Properties, the discounted present value of the estimated net
cash flow to be realized from the production of Hydrocarbons from such Oil and Gas Properties as
determined by the Administrative Agent in the same manner as if it were evaluating such Oil and Gas
Properties for purposes of determining the Borrowing Base.  


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


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


     “Refunded Swingline Loans” has the meaning specified in Section 2.10(d).  


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


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


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


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


     “Reserve Report” means a report, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth, as of the dates set forth in Section 8.11(a) (or such other
date in the event of an Interim Redetermination), the oil and gas reserves attributable to the Oil
and Gas Properties of the Borrower and the Restricted Subsidiaries, together with a projection of
the rate of production and future net income, taxes, operating expenses and capital expenditures
with respect thereto as of such date, based upon the pricing assumptions consistent with SEC
reporting requirements at the time.  For the avoidance of doubt, any reference in this Agreement
(including Section 8.13 and Section 9.10) to Oil and Gas Properties described, included or
evaluated in a Reserve Report shall be deemed to refer solely to



23









 







Proved Hydrocarbon Interests and
to exclude possible or probable oil and gas reserves attributable to such Oil and Gas Properties.  



     “Responsible Officer” means, as to any Person, the Chief Executive Officer, the
President, any Financial Officer or any Vice President of such Person (a “Specified Responsible
Officer”) or any (a) other officer specified as such to the Administrative Agent in writing by
a Specified Responsible Officer, or (b) other employee specified as such to the Administrative
Agent in writing by the chief financial officer and by one other Financial Officer; provided that
any written designation of any officer or employee other than a Specified Responsible Officer as a
“Responsible Officer” shall include a specimen signature of such other officer or employee which is
certified by a Specified Responsible Officer.  Unless otherwise specified, all references to a
Responsible Officer herein shall mean a Responsible Officer of the Borrower.  


     “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any Equity Interests in the Borrower or any of its
Restricted Subsidiaries, or any payment (whether in cash, securities or other Property), including
any sinking fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests in the Borrower or any of its
Restricted Subsidiaries or any option, warrant or other right to acquire any such Equity Interests
in the Borrower or any of its Restricted Subsidiaries; provided that cash payments in connection
with restricted stock units, phantom stock plans or similar compensation arrangements shall not
constitute Restricted Payments.  


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


     “Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of
(i) the outstanding principal amount of such Lender’s Loans, (ii) its LC Exposure and (iii) its
Applicable Percentage of outstanding Swingline Loans, in each case at such time.  


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


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


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


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


     “Section 1031 Counterparty” means an entity that is not an Affiliate of the Borrower
and that will serve as an exchange accommodation titleholder in connection with the Section 1031
Exchange.  


     “Section 1031 Exchange” means a transaction intended to qualify for nonrecognition of
gain or loss under Section 1031 of the Code pursuant to which the Borrower or a Restricted
Subsidiary of the Borrower would exchange Oil and Gas Properties owned by it for Oil and Gas
Properties owned by a third party.  


     “Secured Indebtedness” means any and all amounts owing or to be owing by the Borrower,
any Restricted Subsidiary or any Guarantor (whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or hereafter arising): (a)
to any



24









 







Agent, any Issuing Bank or any Lender under any Loan Document, including, without
limitation, all interest on any of the Loans (including any interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Borrower or any Restricted Subsidiary (or could accrue but for the operation
of applicable bankruptcy or insolvency laws), whether or not such interest is allowed or allowable
as a claim in any such case, proceeding or other action); (b) to any Secured Swap Provider under
any Swap Agreement, but excluding any additional transactions or confirmations entered into (i)
after such Secured Swap Provider ceases to be a Lender or an Affiliate of a Lender or (ii) after
assignment by a Secured Swap Provider to a Person that is not a Lender or an Affiliate of a Lender
at the time of such assignment; (c) to any Bank Products Provider in respect of Bank Products; and
(d) all renewals, extensions and/or rearrangements of any of the above.  



     “Secured Parties” means the Lenders, Bank Product Providers and the Secured Swap
Providers.  


     “Secured Swap Provider” means any (a) Person that is a party to a Swap Agreement with
the Borrower or any of its Restricted Subsidiaries that entered into such Swap Agreement while such
Person was a Lender or an Affiliate of a Lender (or a lender or an Affiliate of a lender under the
Existing Credit Agreement), whether or not such Person at any time ceases to be a Lender or an
Affiliate of a Lender, as the case may be or (b) assignee of any Person described in clause (a)
above so long as such assignee is a Lender or an Affiliate of a Lender at the time of such
assignment.  


     “Security Instruments” means the Guaranty Agreement, the Pledge Agreement, mortgages,
deeds of trust and other agreements, instruments or certificates described or referred to in
Exhibit E-1, and any and all other agreements, instruments or certificates now or hereafter
executed and delivered by the Borrower or any other Person (other than Swap Agreements with the
Lenders or any Affiliate of a Lender or participation or similar agreements between any Lender and
any other lender or creditor with respect to any Secured Indebtedness pursuant to this Agreement
and other than agreements in respect of Bank Products Obligations) in connection with, or as
security for the payment or performance of the Secured Indebtedness, the Notes, this Agreement, or
reimbursement obligations under the Letters of Credit, as such agreements may be amended, modified,
supplemented or restated from time to time.  


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


     “Subsidiary” means: (a) any Person of which at least a majority of the outstanding
Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board
of directors, managers or other governing body of such Person (irrespective of whether or not at
the time Equity Interests of any other class or classes of such Person have or might have voting
power by reason of the happening of any contingency) is at the time directly or indirectly owned or
controlled by the Borrower or one or more of its Subsidiaries or by the Borrower and one or more of
its Subsidiaries and (b) any partnership of which the Borrower or any of its Subsidiaries is a
general partner.  Unless otherwise indicated herein, each reference to the term “Subsidiary” shall
mean a Subsidiary of the Borrower.  


25









 







     “Super-majority Lenders” means, at any time while no Loans or LC Exposure are
outstanding, Lenders having at least 95% of the Aggregate Maximum Credit Amounts; and at any time
while any Loans or LC Exposure is outstanding, Lenders holding at least 95% of the outstanding
aggregate principal amount of the Loans and participation interests in such Letters of Credit and
Swingline Loans (without regard to any sale by a Lender of a participation in any Loan under
Section 12.04(c)); provided that the Maximum Credit Amounts and the principal amount of the Loans
and participation interests in Letters of Credit and Swingline Loans of the Defaulting Lenders (if
any) shall be excluded from the determination of Super-majority Lenders.  


     “Swap Agreement” means any agreement with respect to any financial derivative
transaction, including any swap, forward, future or similar agreement, whether exchange traded,
“over-the-counter” or otherwise, involving, or settled by reference to, one or more rates,
currencies, commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that stock option or other benefit
or compensation plans providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or its Subsidiaries shall not
constitute a Swap Agreement.  


     “Sweep Accounts” means deposit accounts, the proceeds of which are transferred nightly
to an interest-bearing concentration account maintained by the Administrative Agent or another
Lender (provided that upon an Event of Default such Lender shall, at the request of the
Administrative Agent, enter into a control agreement with the Administrative Agent and the Borrower
or Restricted Subsidiary, as appropriate, in form and substance reasonably satisfactory to the
Administrative Agent), and re-transferred each morning to the Borrower’s or Restricted
Subsidiary’s, as applicable, deposit accounts, all on terms and conditions reasonably satisfactory
to the Administrative Agent.  


     “Swingline Commitment” means the obligation of the Swingline Lender to make its
Swingline Loans pursuant to Section 2.10 in an aggregate principal amount at any one time
outstanding not to exceed $50,000,000.  


     “Swingline Lender” means JPMorgan, in its capacity as a lender of Swingline Loans.  


     “Swingline Loans” has the meaning specified in Section 2.10.  


     “Swingline Participation Amount” has the meaning specified in Section 2.10(f).  


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


     “Termination Date” means the earlier of the Maturity Date and the date of termination
of the Commitments.  


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


26









 







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


     “U.S.  Person” means any Person that is a “United States Person” as defined in Section
7701(a)(30) of the Code.  


     “Unrestricted Subsidiary” means any Subsidiary of the Borrower designated as such on
Schedule 7.11 or which the Borrower has designated in writing to the Administrative Agent to be an
Unrestricted Subsidiary pursuant to Section 9.07 including, without limitation, the Canadian
Subsidiaries.  


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


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


     Section 1.05    Accounting Terms and Determinations; GAAP.  Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial statements and certificates and
reports as to financial matters required to be furnished to the Administrative Agent or the Lenders
hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with the
Financial Statements except for changes in which Borrower’s independent certified public
accountants concur and which are disclosed in such Financial Statements or to the Administrative
Agent on the next date on which financial statements are required to be delivered to the Lenders
pursuant to Section 8.01(a); provided that, if (i) the Borrower notifies the Administrative Agent
that the Borrower requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on the operation of or
calculation of compliance with such provision or (ii) the Administrative Agent notifies the
Borrower that the Majority Lenders request an amendment to any provision hereof for such purpose,
regardless of whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such notice shall have
been withdrawn




27











 







or such provision amended in accordance herewith.  Notwithstanding anything herein to the contrary,
for the purposes of calculating any of the ratios tested under Section 9.01, and the components of
each of such ratios, the following shall be excluded: all Unrestricted Subsidiaries, and their
Subsidiaries (including their assets, liabilities, income, expenses, losses, cash flows, and the
elements thereof), except as set forth in clause (a) of the definition of Consolidated Net Income.  



ARTICLE 2

The Credits




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


     Section 2.02    Loans and Borrowings.  (a) Borrowings; Several Obligations.  Each Loan
shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance
with their respective Commitments.  Any Swingline Loan shall be made in accordance with the
procedures set forth in Section 2.10.  The failure of any Lender to make any Loan required to be
made by it shall not relieve any other Lender of its obligations hereunder; provided that the
Commitments are several and no Lender shall be responsible for any other Lender’s failure to make
Loans as required.  


     (b)     Types of Loans.  Subject to Section 3.03, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith.  Each
Swingline Borrowing shall be comprised entirely of ABR Loans as the Borrower may request in
accordance with Section 2.10.  Each Lender at its option may make any Eurodollar Loan by causing
any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.  No such designation or transfer shall result in any
liability on the part of the Borrower for increased costs or expenses resulting solely from such
designation or transfer (except any such transfer which is made by a Lender pursuant to Section
5.04 or Section 5.05, or otherwise for the purpose of complying with any Governmental Requirement).  Increased costs for expenses resulting from a Change in Law occurring subsequent to any such
designation or transfer shall be deemed not to result solely from such designation or transfer.  


     (c)     Minimum Amounts; Limitation on Number of Borrowings.  Each Eurodollar Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than
$3,000,000.  Each ABR Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $500,000; provided that an ABR Borrowing may be in an aggregate amount
that is equal to the entire unused balance of the total Commitments or that is required to finance
the reimbursement of an LC Disbursement as contemplated by Section 2.08(e).  Borrowings of more
than one Type may be outstanding at the same time; provided that there shall not at any time be
more than a total of 10 Eurodollar Borrowings outstanding.  Notwithstanding any other provision of
this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end after the Maturity
Date.  


     (d)     Notes.  If requested by a Lender, the Loans made by such Lender shall be evidenced
by a single promissory note of the Borrower in substantially the form of Exhibit A, dated, in the
case of (i) any Lender party hereto as of the date of this Agreement, as of the Effective Date, and
(ii) any other Lender, as of the date such Lender becomes a party hereto, payable to such Lender in
a principal amount equal to its



28









 







Maximum Credit Amount as in effect on such date, and otherwise duly completed.  In the event that
any Lender’s Maximum Credit Amount increases or decreases for any reason (whether pursuant to
Section 2.06, Section 2.09, Section 12.04(b) or otherwise), the Borrower shall deliver or cause to
be delivered, to the extent such Lender is then holding a Note and upon the written request of such
Lender, on the effective date of such increase or decrease, a new Note payable to such Lender in a
principal amount equal to its Maximum Credit Amount after giving effect to such increase or
decrease, and otherwise duly completed.  Upon receipt of such replacement Note, such Lender shall
return the replaced Note to the Borrower.  The date, amount, Type, interest rate and, if
applicable, Interest Period of each Loan made by each Lender, and all payments made on account of
the principal thereof, shall be recorded by such Lender on its books for its Note, and, prior to
any transfer, may be endorsed by such Lender on a schedule attached to such Note or any
continuation thereof or on any separate record maintained by such Lender.  Failure to make any such
notation or to attach a schedule shall not affect any Lender’s or the Borrower’s rights or
obligations in respect of such Loans or affect the validity of such transfer by any Lender of its
Note.  



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




     (i)      the aggregate amount of the requested Borrowing;




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




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




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




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


     If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be
an ABR Borrowing.  If no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s
duration.  Each Borrowing Request shall be deemed to constitute a representation and warranty by the
Borrower that the matters specified in Section 6.02(a) through (d) will be satisfied on the date of
Borrowing specified in such Borrowing Request.  


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


     Section 2.04    Interest Elections.  (a) Conversion and Continuance.  Each
Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the
case of a Eurodollar



29









 






Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all
as provided in this Section 2.04.  The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.  No such conversion or continuation
shall be deemed the making of a new Borrowing for purposes of this Agreement, including without
limitation ARTICLE 6.  



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


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




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




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




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




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


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


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


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



30









 






any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective)
and (B) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end
of the Interest Period applicable thereto and (ii) a Borrowing Base Deficiency exists and the
Administrative Agent, at the request of the Majority Lenders, so notifies the Borrower, no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing with an Interest
Period longer than one month.  



     Section 2.05    Funding of Borrowings.  


     (a)     Funding by Lenders.  Each Lender shall make each Loan to be made by it hereunder
on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., Chicago
time, to the account of the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.10.  The Administrative Agent will make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower maintained with the
Administrative Agent and designated by the Borrower in the applicable Borrowing Request; provided
that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section
2.08(e) shall be remitted by the Administrative Agent to the Issuing Bank that made such LC
Disbursement.  Nothing herein shall be deemed to obligate any Lender to obtain the funds for its
Loan in any particular place or manner or to constitute a representation by any Lender that it has
obtained or will obtain the funds for its Loan in any particular place or manner.  


     (b)     Presumption of Funding by the Lenders.  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date (or, with respect to an ABR Borrowing,
1:00 p.m.  Chicago time on the date) of any Borrowing that such Lender will not make available to
the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume
that such Lender has made such share available on such date in accordance with Section 2.05(a) and
may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In
such event, if a Lender has not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to but excluding the
date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest
rate applicable to ABR Loans.  If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Loan included in such Borrowing.  


     Section 2.06    Termination and Reduction of Aggregate Maximum Credit Amounts.  (a)   
Scheduled Termination of Commitments.  Unless previously terminated, the Commitments shall
terminate on the Maturity Date.  If at any time the Aggregate Maximum Credit Amounts are terminated
or reduced to zero, then the Commitments shall terminate on the effective date of such termination
or reduction.  


     (b)     Optional Termination and Reduction of Aggregate Credit Amounts.  (i) The Borrower
may at any time terminate, or from time to time reduce, the Aggregate Maximum Credit Amounts;
provided that (A) each reduction of the Aggregate Maximum Credit Amounts shall be in an amount that
is an integral multiple of $1,000,000 and not less than $3,000,000 and (B) the Borrower shall not
terminate or reduce the Aggregate Maximum Credit Amounts if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 3.04(c), the total Revolving Credit Exposures would
exceed the total Commitments.  


31









 








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


     Section 2.07    Borrowing Base.  (a) Initial Borrowing Base.  For the period from and
including the Effective Date to but excluding the first Redetermination Date, the amount of the
Borrowing Base shall be $850,000,000.  Notwithstanding the foregoing, the Borrowing Base may be
subject to further adjustments from time to time, whether before or after such Redetermination
Date, pursuant to Section 8.12(c), Section 9.02(n) or Section 9.10.  


     (b)     Scheduled and Interim Redeterminations.  Subject to Section 2.07(d), the Borrowing
Base shall be redetermined semi-annually (a “Scheduled Redetermination”) on or about the
date that is 45 days following the Borrower’s delivery of a Reserve Report in accordance with
Section 8.11(a).  In addition, (i) the Borrower may, by notifying the Administrative Agent thereof,
and (ii) the Administrative Agent may, at the direction of the Required Lenders, by notifying the
Borrower thereof, each elect to cause the Borrowing Base to be redetermined one time between
Scheduled Redeterminations (an “Interim Redetermination”) in accordance with this Section
2.07.  


     (c)     Scheduled and Interim Redetermination Procedure.  (i) Each Scheduled
Redetermination and each Interim Redetermination shall be effectuated as follows: Upon receipt by
the Administrative Agent of (A) the Reserve Report and the certificate required to be delivered by
the Borrower to the Administrative Agent, in the case of a Scheduled Redetermination, pursuant to
Section 8.11(a) and (c), and, in the case of an Interim Redetermination, pursuant to Section
8.11(b) and (c), and (B) such other reports, data and supplemental information including, without
limitation, the information provided pursuant to Section 8.11(c) as may, from time to time, be
reasonably requested by the Required Lenders (the Reserve Report, such certificate and such other
reports, data and supplemental information being the “Engineering Reports”), the
Administrative Agent shall evaluate the information contained in the Engineering Reports and shall
propose a new Borrowing Base (the “Proposed Borrowing Base”) based upon such information
and such other information that is deemed appropriate by the Administrative Agent in its sole
discretion in good faith and consistent with its normal oil and gas lending criteria as it exists
at the particular time (including, without limitation, the status of title information with
respect to the Oil and Gas Properties as described in the Engineering Reports and the existence of
any other Debt, the Borrower’s other assets, liabilities, fixed charges, cash flow, business,
properties, prospects, management and ownership, hedged and unhedged exposure to price, price and
production scenarios, interest rate and operating cost changes).  In no event shall the Proposed
Borrowing Base exceed the Aggregate Maximum Credit Amounts.  



     (ii)      The Administrative Agent shall notify the Borrower and the Lenders of the Proposed
Borrowing Base (the “Proposed Borrowing Base Notice”):



32









 







     (A)      in the case of a Scheduled Redetermination (1) if the Administrative Agent
shall have received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.11(a) in a timely and complete manner, then on or before 30
days after the receipt of such Engineering Reports (or as promptly thereafter as may
be reasonably practicable) or (2) if the Administrative Agent shall not have
received the Engineering Reports required to be delivered by the Borrower pursuant
to Section 8.11(a) in a timely and complete manner, then promptly after the
Administrative Agent has received complete Engineering Reports from the Borrower and
has had a reasonable opportunity to determine the Proposed Borrowing Base in
accordance with Section 2.07(c)(i); and




     (B)      in the case of an Interim Redetermination, promptly, and in any event,
within 30 days after the Administrative Agent has received the required Engineering
Reports (or as promptly thereafter as may be reasonably practicable).  



     (iii)      Any Proposed Borrowing Base that would increase the Borrowing Base then in effect
must be approved or deemed to have been approved by the Super-majority Lenders as provided
in this Section 2.07(c)(iii); and any Proposed Borrowing Base that would decrease or
maintain the Borrowing Base then in effect must be approved or be deemed to have been
approved by the Required Lenders as provided in this Section 2.07(c)(iii).  Upon receipt of
the Proposed Borrowing Base Notice, each Lender shall have 15 days to agree with the
Proposed Borrowing Base or disagree with the Proposed Borrowing Base by proposing an
alternate Borrowing Base.  If, at the end of such 15 days, any Lender has not communicated
its approval or disapproval in writing to the Administrative Agent, such silence shall be
deemed to be an approval of the Proposed Borrowing Base.  If, at the end of such 15-day
period, the Super-majority Lenders, in the case of a Proposed Borrowing Base that would
increase the Borrowing Base then in effect, or the Required Lenders, in the case of a
Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect,
have approved or deemed to have approved, as aforesaid, then the Proposed Borrowing Base
shall become the new Borrowing Base effective on the date specified in Section 2.07(d).  If,
however, at the end of such 15-day period, the Required Lenders, in the case of a decrease
or reaffirmation of the Borrowing Base, or the Super-majority Lenders, in the case of an
increase to the Borrowing Base, have not approved or deemed to have approved, as aforesaid,
then the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base
then acceptable to a number of Lenders sufficient to constitute the Required Lenders or the
Super-majority Lenders, as applicable, and such amount shall become the new Borrowing Base,
effective on the date specified in Section 2.07(d).  The consent of the Borrower, in its
sole discretion, shall be required for any increase in the Borrowing Base.  


     (d)     Effectiveness of a Redetermined Borrowing Base.  After a redetermined Borrowing
Base is approved or is deemed to have been approved by the Required Lenders or the Super-majority
Lenders, as applicable, pursuant to Section 2.07(c)(iii) (and, in the case of an increase, the
Borrower), the Administrative Agent shall notify the Borrower and the Lenders of the amount of the
redetermined Borrowing Base (the “New Borrowing Base Notice”), and such amounts shall
become the new Borrowing Base, effective and applicable to the Borrower, the Agents, each Issuing
Bank and the Lenders:




     (i)      in the case of a Scheduled Redetermination, (A) if the Administrative Agent shall
have received the Engineering Reports required to be delivered by the Borrower pursuant to
Section 8.11(a) and (c) in a timely and complete manner, then on the date of such New
Borrowing Base Notice, or (B) if the Administrative Agent shall not have received the
Engineering Reports required to be delivered by the Borrower pursuant to Section 8.11(a) and
(c)



33









 







in a timely and complete manner, then on the Business Day next succeeding the date of such
New Borrowing Base Notice; and




     (ii)      in the case of an Interim Redetermination, on the Business Day next succeeding the
date of such New Borrowing Base Notice.  


     Such amount shall then become the Borrowing Base until the next Scheduled Redetermination
Date, the next Interim Redetermination Date or the next adjustment to the Borrowing Base under
Section 8.12(c), Section 9.02(n) or Section 9.10, whichever occurs first.  Notwithstanding the
foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the
New Borrowing Base Notice related thereto is received by the Borrower.  


     Section 2.08    Letters of Credit.  


     (a)     General.  Subject to the terms and conditions set forth herein, the Borrower may
request any Issuing Bank to issue dollar denominated Letters of Credit for its own account or for
the account of any of its Restricted Subsidiaries, in a form reasonably acceptable to the
Administrative Agent and such Issuing Bank, at any time and from time to time during the
Availability Period; provided, however, that no Letter of Credit shall be issued if, after such
issuance, the LC Exposure would exceed the lesser of (A) the LC Commitment and (B) an amount equal
to the aggregate Commitments minus the outstanding Loans, including Swingline Loans.  In the event
of any inconsistency between the terms and conditions of this Agreement and the terms and
conditions of any form of letter of credit application or other agreement submitted by the Borrower
to, or entered into by the Borrower with, an Issuing Bank relating to any Letter of Credit, the
terms and conditions of this Agreement shall control.  


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




     (i)     requesting the issuance of a Letter of Credit or identifying the Letter of Credit
issued by such Issuing Bank to be amended, renewed or extended;




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




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




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




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


Each such notice shall be deemed to constitute a representation and warranty by the Borrower that
the matters specified in Section 6.02(a) through (d) will be satisfied on the date specified in
clause (ii) of the immediately preceding sentence and that the LC Exposure will not exceed the LC Commitment on such
date.  No letter of credit issued by an Issuing Bank (if the Issuing Bank is not the
Administrative Agent) shall be deemed to be a “Letter of Credit” issued under this Agreement unless
such Issuing Bank has




34









 








confirmed with the Administrative Agent that the condition set forth in Section 6.02(d) hereof
is satisfied and that the LC Exposure does not exceed the LC Commitment (after giving effect to the
issuance of such letter of credit).  If requested by any Issuing Bank, the Borrower also shall
submit a letter of credit application on such Issuing Bank’s standard form in connection with any
request for a Letter of Credit.  



     (c)     Expiration Date.  Each Letter of Credit shall expire at or prior to the close of
business on the earlier of (i) the date one year after the date of the issuance of such Letter of
Credit (or, in the case of any renewal or extension thereof, one year after such renewal or
extension) and (ii) the date that is five Business Days prior to the Maturity Date; provided,
however, that any Letter of Credit with a one-year tenor may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date referred to in clause
(ii) above).  


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


     (e)     Reimbursement.  If any Issuing Bank shall make any LC Disbursement in respect of a
Letter of Credit issued by such Issuing Bank, the Borrower shall reimburse such LC Disbursement by
paying to the Administrative Agent an amount equal to such LC Disbursement not later than 1:00
p.m., Chicago time, on the date that such LC Disbursement is made, if the Borrower shall have
received notice of such LC Disbursement prior to 10:00 a.m., Chicago time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such date, then not later
than 1:00 p.m., Chicago time, on (i) the Business Day that the Borrower receives such notice, if
such notice is received prior to 10:00 a.m., Chicago time, on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrower receives such notice, if such notice
is not received prior to such time on the day of receipt; provided that the Borrower may request
that such payment be financed with an ABR Borrowing in an equivalent amount and, to the extent so
financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the
resulting ABR Borrowing.  For purposes of the first sentence of Section 2.01, the amount of such
ABR Borrowing shall be considered, but the amount of the LC Disbursement to be concurrently
reimbursed shall not be considered.  If the Borrower fails to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof.  Promptly
following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as provided in Section
2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to
the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the
Issuing Bank that issued such Letter of Credit the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to
this Section 2.08(e),



35









 






the Administrative Agent shall distribute such payment to the Issuing Bank that issued such Letter
of Credit or, to the extent that Lenders have made payments pursuant to this Section 2.08(e) to
reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may
appear.  Any payment made by a Lender pursuant to this Section 2.08(e) to reimburse an Issuing Bank
for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not
constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.  



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


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



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



36









 





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



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


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




37












 






investments shall be made at the option and sole discretion of the Administrative Agent and at the
Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account.  Moneys in such account shall be applied by the
Administrative Agent to reimburse, on a pro rata basis, each Issuing Bank for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or,
if the maturity of the Loans has been accelerated, be applied to satisfy other obligations of the
Borrower and the Guarantors under this Agreement or the other Loan Documents.  In the event of any
such payment by the Borrower of amounts contingently owing under outstanding Letters of Credit and
in the event that thereafter drafts or other demands for payment complying with the terms of such
Letters of Credit are not made on or prior to the respective expiration dates thereof, the
Administrative Agent agrees, if no Default is then continuing and the Borrower does not have any
obligation at such time to provide cash collateral under Section 2.11 hereof, or if no other
amounts are then outstanding under this Agreement, the Notes or the Loan Documents, to remit to the
Borrower amounts for which the contingent obligations evidenced by the Letters of Credit have
ceased (but only to the extent of the amount of cash collateral then on deposit with the
Administrative Agent in respect of such Letters of Credit).  If the Borrower is required to provide
an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, and
the Borrower is not otherwise required to pay to the Administrative Agent the excess attributable
to an LC Exposure in connection with any prepayment pursuant to Section 3.04(c), then such amount
(to the extent not applied as aforesaid) shall be returned to the Borrower within three Business
Days after all Events of Default have been cured or waived.  



     Section 2.09    Increase in the Maximum Credit Amounts.  (a) The Borrower may, with the
consent of the Administrative Agent (such consent not to be unreasonably withheld, conditioned or
delayed), on no more than five occasions during the period beginning on the Effective Date to and
including the date that is six months prior to the Maturity Date, by written notice to the
Administrative Agent executed by the Borrower and one or more financial institutions (any such
financial institution executing such notice being called an “Increasing Lender”), which may
include any Lender, cause the Maximum Credit Amounts to be extended by the Increasing Lenders if
such Increasing Lender is not already a Lender (or cause the Maximum Credit Amounts of the
Increasing Lenders that are already Lenders to be increased, as the case may be) in an amount for
each Increasing Lender set forth in such notice; provided, that (i) each extension of new Maximum
Credit Amounts or increase in existing Maximum Credit Amounts pursuant to this paragraph shall
result in the aggregate Maximum Credit Amounts being increased by no less than $17,500,000, (ii)
the sum of all new Maximum Credit Amounts and increases in existing Maximum Credit Amounts pursuant
to this paragraph shall not exceed $250,000,000 without the approval of all Lenders, (iii) each
Increasing Lender, if not already a Lender, shall be subject to the approval of the Administrative
Agent, each Issuing Bank and the Swingline Lender (which approval shall not be unreasonably
withheld, conditioned or delayed), (iv) each Increasing Lender, if not already a Lender hereunder,
shall become a party to this Agreement by completing and delivering to the Administrative Agent a
duly executed joinder agreement in a form reasonably satisfactory to the Administrative Agent and
the Borrower (a “Joinder Agreement”), (v) any Lender requested by the Borrower to become an
Increasing Lender may elect, or decline, such request in its sole discretion and (vi) no Default
has occurred and is continuing.  


     (b)     Upon the effectiveness of any Joinder Agreement to which any Increasing Lender is a party,
(i) such Increasing Lender shall thereafter be deemed to be a party to this Agreement and shall be
entitled to all rights, benefits and privileges accorded a Lender hereunder and subject to all
obligations of a Lender hereunder and (ii) Annex I shall be deemed to have been amended to reflect
the Maximum Credit Amount of such Increasing Lender as provided in such Joinder Agreement.  Upon
the effectiveness of any increase pursuant to this Section 2.09 in the Maximum Credit Amount of a
Lender already a party hereto, Annex I shall be deemed to have been amended to reflect the
increased Maximum Credit Amount of such



38









 





Lender.  Notwithstanding the foregoing, no increase in the Aggregate Maximum Credit Amounts (or in
the Maximum Credit Amount of any Lender) shall become effective under this Section unless, on the
date of such increase, the Administrative Agent shall have received (i) a certificate, dated as of
the effective date of such increase and executed by a Financial Officer of the Borrower, to the
effect that the conditions set forth in paragraphs (a) and (c) of Section 6.02 shall be satisfied
(with all references in such paragraphs to a Borrowing being deemed to be references to such
increase and attaching resolutions of the Borrower approving such increase) and (ii) if requested
by the Administrative Agent, a legal opinion in form and substance reasonably satisfactory to the
Administrative Agent.  The Administrative Agent shall provide notice to the Borrower and the
Lenders of the effectiveness of any such Joinder Agreement and/or any increase in the Aggregate
Maximum Credit Amounts (or in the Maximum Credit Amount of any Lender) and the foregoing shall be
effective as of the date of such notice.  



     (c)     The Borrower shall prepay any Loans outstanding prior to the effectiveness of such
increase or extension, together with any amounts due pursuant to Section 5.02, with new Loans made
pursuant to Section 2.01 ratably in accordance with the Maximum Credit Amounts in effect following
such extension or increase.  


     Section 2.10    Swingline Loans.  (a) Subject to the terms and conditions hereof, the
Swingline Lender agrees to make a portion of the credit otherwise available to the Borrower under
the Commitments from time to time until the Termination Date by making swing line loans
(“Swingline Loans”) to the Borrower; provided that (i) the aggregate outstanding principal
amount of Swingline Loans owed to the Swingline Lender at any time shall not exceed its Swingline
Commitment then in effect (notwithstanding that the outstanding Swingline Loans owed to the
Swingline Lender at any time, when aggregated with the Swingline Lender’s other outstanding Loans,
may exceed its Commitment then in effect) and (ii) the Borrower shall not request, and the
Swingline Lender shall not make, any Swingline Loan if, after giving effect to the making of such
Swingline Loan, the aggregate amount (without duplication) of the Loans, the Swingline Loans and
the LC Exposure would exceed the aggregate Commitments; provided that the Swingline Lender may not
make a Swingline Loan to refinance an outstanding Swingline Loan.  Prior to the Termination Date,
the Borrower may use the Swingline Commitment by borrowing, repaying (in whole or part) and
reborrowing, all in accordance with the terms and conditions hereof.  


     (b)     The Borrower shall repay to the Swingline Lender the then unpaid principal amount of each
Swingline Loan made by the Swingline Lender on or before the earlier of (i) the Termination Date
and (ii) the first date after such Swingline Loan is made that is the 15th or last day of a
calendar month and is at least five (5) Business Days after such Swingline Loan is made.  The
unpaid principal amount of each Swingline Loan shall bear interest at the per annum rate equal to
Alternate Base Rate in effect from time to time plus the Applicable Margin for ABR Loans.  


     (c)     The obligation of the Swingline Lender to make Swingline Loans to the Borrower is subject
to the same conditions precedent for the making of Loans under Section 6.02.  


     (d)     Whenever the Borrower desires that the Swingline Lender make Swingline Loans it shall give
irrevocable telephonic notice to JPMorgan, as Administrative Agent and the Swingline Lender,
confirmed promptly in writing (which telephonic notice must be received by the Swingline Lender not
later than 1:30 p.m., Chicago time, on the proposed date Swingline Loans are requested to be made),
specifying (i) the amount to be borrowed and (ii) the requested date such Swingline Loans are to be
advanced (which shall be a Business Day).  Each borrowing under the Swingline Commitment shall be
in an amount not less than $500,000 and a whole multiple of $100,000 in excess thereof.  As soon as
such funds are available, but in any event not later than 3:00 p.m., Chicago time, on the date such
Swingline
Loans are requested to be advanced pursuant to the Borrower’s corresponding written request
referenced above, the Swingline Lender shall make available to the Administrative Agent at the
office designated by



39









 





the Administrative Agent for such purpose an amount in immediately available funds equal to the
amount of the Swingline Loans to be made by the Swingline Lender.  The Administrative Agent shall
make the proceeds of such Swingline Loan available to the Borrower at such office in immediately
available funds as soon as such funds are available, but in any event not later than 3:00 p.m.,
Chicago time, on the date such Swingline Loans are requested to be advanced pursuant to the
Borrower’s corresponding written request.  



     (e)     The Swingline Lender, at any time and from time to time in its sole and absolute
discretion may, on behalf of the Borrower (which hereby irrevocably authorizes the Swingline Lender
to so act on its behalf), by written notice to the Administrative Agent and each Lender, with copy
to the Borrower, given by the Swingline Lender no later than 11:00 a.m., Chicago time, require each
Lender to make, and each Lender hereby agrees to make, a Loan, in an amount equal to such Lender’s
Applicable Percentage of the aggregate amount of the Swingline Lender’s Swingline Loans (the
“Refunded Swingline Loans”) outstanding on the date of such notice, to repay the Swingline
Lender.  Each Lender shall make the amount of such Loan available to the Administrative Agent at
such office in immediately available funds, not later than 10:00 a.m., Chicago time, one Business
Day after the date of such notice.  The proceeds of such Loans shall be immediately made available
by the Administrative Agent to the Swingline Lender for application by it to the repayment of the
Refunded Swingline Loans.  


     (f)     If prior to the time a Refunded Swingline Loan would have otherwise been made pursuant to
Section 2.10(e), one of the events described in Section 10.01(h) or Section 10.01(i) shall have
occurred and be continuing with respect to the Borrower or if for any other reason, as determined
by the Swingline Lender in its sole discretion, Loans may not be made as contemplated by Section
2.10(e), each Lender shall, on the date such Loan was to have been made pursuant to the notice
referred to in Section 2.10(e), purchase for cash an undivided participating interest in the then
outstanding Swingline Loans by paying to the Swingline Lender an amount (the “Swingline
Participation Amount”) equal to (i) such Lender’s Applicable Percentage times (ii) the sum of
the aggregate principal amount of Swingline Loans then outstanding to the Swingline Lender that
were to have been repaid with such Loans.  


     (g)     Whenever, at any time after the Swingline Lender has received from any Lender such
Lender’s Swingline Participation Amount, the Swingline Lender receives any payment on account of
outstanding Swingline Loans, the Swingline Lender will distribute to such Lender its Swingline
Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender’s participating interest was outstanding and funded and, in
the case of principal and interest payments, to reflect such Lender’s pro rata portion of such
payment if such payment is not sufficient to pay the principal of and interest on all Swingline
Loans then due); provided, however, that in the event that such payment received by the Swingline
Lender is required to be returned, such Lender will return to the Swingline Lender any portion
thereof previously distributed to it by the Swingline Lender.  


     (h)     Each Lender’s obligation to make the Loans referred to in Section 2.10(e) and to purchase
participating interests pursuant to Section 2.10(f) shall be absolute and unconditional and shall
not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or
other right that such Lender or the Borrower may have against the Swingline Lender, the Borrower or
any other Person for any reason whatsoever, (ii) the occurrence or continuance of an Event of
Default or the failure to satisfy any of the other conditions specified in Section 6.02, (iii) any
adverse change in the condition
(financial or otherwise) of the Borrower, (iv) any breach of this Agreement or any other Loan
Document by the Borrower, any Guarantor or any other Lender or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.  


40









 







     Section 2.11    Defaulting Lenders.  Notwithstanding any provision of this Agreement to
the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply
for so long as such Lender is a Defaulting Lender:



     (a)     Commitment fees will cease to accrue on the unfunded portion of the Commitment of the
Defaulting Lender pursuant to Section 3.05(a) and such Defaulting Lender shall not be entitled to
receive any commitment fee pursuant to Section 3.05(a);



     (b)     If any Swingline Loans are outstanding or any LC Exposure exists at the time a Lender is a
Defaulting Lender then solely for purposes of computing the amount of the obligation of each
non-Defaulting Lender to acquire, refinance or fund participations in Swingline Loans and Letters
of Credit pursuant to Section 2.08 and Section 2.10:




     (i)      all or any part of the Swingline Participation Amount and LC Exposure of such
Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with
their respective Applicable Percentages but only to the extent that (x) the sum of all
non-Defaulting Lenders’ Revolving Credit Exposures does not exceed the total of all
non-Defaulting Lenders’ Commitments, (y) each non-Defaulting Lender’s total Revolving Credit
Exposure may not in any event exceed the Commitment of such Non-Defaulting Lender as in
effect at the time of such reallocation and (z) the conditions set forth in Section 6.02 are
satisfied at such time;




     (ii)      if the reallocation described in clause (i) above cannot, or can only partially,
be effected, the Borrower shall within three Business Days following notice by the
Administrative Agent given no later than 12:00 noon, Chicago time (x) first, prepay the
Swingline Participation Amount of the Defaulting Lender to the Swingline Lender and (y)
second, cash collateralize such Defaulting Lender’s LC Exposure (after giving effect to any
partial reallocation pursuant to clause (i) above) in accordance with the procedures set
forth in Section 2.08(j) for so long as such LC Exposure is outstanding;




     (iii)      if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC
Exposure pursuant to this Section 2.11(b), the Borrower shall not be required to pay any
fees to such Defaulting Lender pursuant to Section 3.05(b) with respect to such Defaulting
Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash
collateralized; if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to
this Section 2.11, then the fees payable to the Lenders pursuant to Section 3.05(a) and
Section 3.05(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable
Percentages with the balance of such fee, if any, being retained by the Borrower for its own
account or, to the extent any LC Exposure shall then be outstanding, being payable to each
applicable Issuing Bank for its own account to the extent such fee relates to the amount of
such LC Exposure; or




     (iv)      if any Defaulting Lender’s LC Exposure is neither cash collateralized nor
reallocated pursuant to this Section 2.11, then, without prejudice to any rights or remedies
of any Issuing Bank or any Lender hereunder, all commitment fees that otherwise would have
been payable to such Defaulting Lender (solely with respect to the portion of such
Defaulting Lender’s Commitment that was utilized by such LC Exposure) and Letter of Credit
fees payable under Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure shall be payable
to each applicable Issuing Bank until such LC Exposure is cash collateralized and/or
reallocated.  


     (c)     Notwithstanding any provision of this Agreement to the contrary, so long as any Lender is
a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and no
Issuing Bank shall be required to issue, amend or increase any Letter of Credit unless it is
satisfied that the



41









 





related exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash
collateral will be provided by the Borrower in accordance with Section 2.08(j), and participating
interests in any such newly issued or increased Letter of Credit or newly made Swingline Loan shall
be allocated among non-Defaulting Lenders in a manner consistent with Section 2.11(b)(i) (and
Defaulting Lenders shall not participate therein).  



     (d)     Any amount payable to such Defaulting Lender hereunder (whether on account of principal,
interest, fees or otherwise and including any amount that would otherwise be payable to such
Defaulting Lender pursuant to Section 4.01(c) or Section 10.02(c), but excluding Section 5.04(b))
will, in lieu of being distributed to such Defaulting Lender, be retained by the Administrative
Agent in a segregated account and, subject to any applicable requirements of law, be applied at
such time or times as may be determined by the Administrative Agent (i) first, to the payment of
any amounts owing by such Defaulting Lender to the Administrative Agent hereunder, (ii) second, pro
rata, to the payment of any amounts owing by such Defaulting Lender to each Issuing Bank and the
Swingline Lender hereunder, (iii) third, to cash collateralize such Defaulting Lender’s LC Exposure
in accordance with Section 2.08(j), (iv) fourth, as the Borrower may request (so long as no Default
exists), to the funding of any Loan or Swingline Loan in respect of which such Defaulting Lender
has failed to fund its portion thereof as required by this Agreement, as determined by the
Administrative Agent, (v) fifth, if so determined by the Administrative Agent and the Borrower,
held in an interest bearing account and released pro rata in order to (A) satisfy such Defaulting
Lender’s potential future funding obligations with respect to Loans under this Agreement and (B)
cash collateralize such Defaulting Lender’s future LC Exposure in accordance with Section 2.08(j),
(vi) sixth, to the payment of any amounts then owing to the Lenders, any Issuing Bank or the
Swingline Lender as a result of any final and non-appealable judgment of a court of competent
jurisdiction obtained by any Lender, Issuing Bank or Swingline Lender against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement,
(vii) seventh, to the payment of any amounts then owing to the Borrower as a result of any final
and non-appealable judgment of a court of competent jurisdiction obtained by the Borrower against
such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this
Agreement and (viii) eighth, to such Defaulting Lender or as otherwise directed by a court of
competent jurisdiction; provided that if such payment is (x) a prepayment of the principal amount
of any Loans or reimbursement obligations in respect of LC Disbursement or Swingline Participation
Amount that a Defaulting Lender has not fully funded its participation obligations and (y) in the
case of such Loans which were made at a time when the conditions set forth in Section 6.02 were
satisfied or waived, such payment will be applied solely to prepay the Loans of, and reimbursement
obligations owed to, all non-Defaulting Lenders pro rata prior to being applied to the prepayment
of any Loans, or reimbursement obligations owed to, any Defaulting Lender.  Any payments,
prepayments or other amounts paid or payable to any Defaulting Lender that are applied (or held) to
pay amounts owed by such Defaulting Lender or to post cash collateral pursuant to Section 2.11
shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably
consents to the foregoing.  


     (e)     If any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and
effort, upon notice to such Lender and the Administrative Agent, require such Lender to be replaced
in accordance with Section 5.04(b).  


     (f)     In the event that the Administrative Agent, the Borrower, the Issuing Banks and the
Swingline Lender each agrees that a Defaulting Lender has adequately remedied all matters that
caused such Lender to be a Defaulting Lender, then the Swingline Participation Amounts and LC
Exposure of the Lenders shall be readjusted to reflect the inclusion of such Defaulting Lender’s
Commitment and on such date such Defaulting Lender shall purchase at par such of the Loans of the
other Lenders (other than Swingline Loans) as the Administrative Agent shall determine may be
necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage;
provided, that no adjustments will be



42









 






made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower
while such Lender was a Defaulting Lender; and provided, further, that except to the extent
otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to
Lender will constitute a waiver or release of any claim that the Borrower, the Administrative
Agent, the Issuing Banks, the Swingline Lender, or any other Lender may have against such
Defaulting Lender or cause such Defaulting Lender to be a non-Defaulting Lender except as expressly
set forth above.  



ARTICLE 3

Payments of Principal and Interest; Prepayments; Fees




     Section 3.01    Repayment of Loans.  The Borrower hereby unconditionally promises to pay
(a) to the Administrative Agent for the account of each Lender the then unpaid principal amount of
each Loan on the Termination Date and (b) the Swingline Lender the unpaid principal amount of each
Swingline Loan in accordance with Section 2.10(b).  


     Section 3.02
   Interest.  


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


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


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


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


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


43









 







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



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



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


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



     Section 3.04    Prepayments.  


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


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


     (c)     Mandatory Prepayments.  



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


44









 








     (ii)      Upon any redetermination of or adjustment to the amount of the Borrowing Base in
accordance with Section 2.07, Section 8.12(c) or Section 9.10 (solely as a result of a
Casualty Event), if the total Revolving Credit Exposures exceeds the redetermined or
adjusted Borrowing Base, then the Borrower shall, at its option, either (A) make (or cause
to be made) a single payment of principal in an amount equal to such Borrowing Base
Deficiency and, if any Borrowing Base Deficiency remains after prepaying all of the
Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the
Lenders an amount equal to such remaining excess to be held as cash collateral as provided
in Section 2.08(j), in each case, within thirty (30) days following its receipt of the New
Borrowing Base Notice in accordance with Section 2.07(d) or the date the adjustment occurs
(the “Deficiency Notification Date”), (B) make (or cause to be made) six payments of
principal each of which shall be in an amount equal to one-sixth (1/6th) of such Borrowing
Base Deficiency commencing on the 15th day of a calendar month that is at least thirty (30)
days following the Deficiency Notification Date and on the 15th day of each of the five
calendar months thereafter, (C) within forty-five (45) days following the Deficiency
Notification Date, submit (and pledge as Collateral) additional Oil and Gas Properties owned
by the Borrower or any of its Domestic Subsidiaries which are or shall become a Guarantor
contemporaneously with such submission pursuant to Section 8.13 for consideration in
connection with the determination of the Borrowing Base which the Administrative Agent and
the Required Lenders deem satisfactory, in their sole discretion, to eliminate such
Borrowing Base Deficiency or (D) within thirty (30) or forty-five (45) days following the
Deficiency Notification Date, as applicable, eliminate such Borrowing Base Deficiency
through a combination of a payment and submission of additional Oil and Gas Properties as
set forth in clauses (A) and (C) above; provided that all payments required to be made
pursuant to this Section 3.04(c)(ii) must be made on or prior to the Termination Date.  Not
later than 15 days following the Deficiency Notification Date, the Borrower shall provide
written notice to the Administrative Agent setting forth its election pursuant to the
immediately preceding sentence.  



     (iii)      Upon any adjustments to the Borrowing Base pursuant to Section 9.02(n) or Section
9.10 (other than adjustments resulting directly from Casualty Events), if the total
Revolving Credit Exposures exceeds the Borrowing Base as adjusted, then the Borrower shall
(A) prepay the Borrowings in an aggregate principal amount equal to such Borrowing Base
Deficiency, and (B) if any excess remains after prepaying all of the Borrowings as a result
of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal
to such excess to be held as cash collateral as provided in Section 2.08(j).  The Borrower
shall be obligated to make such prepayment and/or deposit of cash collateral (x) within thirty
(30) days following the effective date of any such adjustment to the Borrowing Base under
Section 9.02(n) or (y) prior to or contemporaneously with such adjustment to the Borrowing
Base under Section 9.10 (other than adjustments resulting directly from Casualty Events);
provided that all payments required to be made pursuant to this Section 3.04(c)(iii) must be
made on or prior to the Termination Date.  



     (iv)      Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied,
first, ratably to any ABR Borrowings then outstanding, and, second, to any Eurodollar
Borrowings then outstanding, and if more than one Eurodollar Borrowing is then outstanding,
to each such Eurodollar Borrowing in order of priority beginning with the Eurodollar
Borrowing with the highest interest rate applicable thereto and ending with the Eurodollar
Borrowing with the lowest interest rate applicable thereto.  



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


45









 







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


     Section 3.05   Fees.  


     (a)     Commitment Fees.  The Borrower agrees to pay to the Administrative Agent for the
account of each Lender (other than a Defaulting Lender to the extent set forth in Section 2.11) a
commitment fee, which shall accrue at the applicable Commitment Fee Rate on the average daily
amount of the unused Commitment of such Lender during the period from and including the Effective
Date to but excluding the Termination Date.  Accrued commitment fees shall be payable in arrears on
the third Business Day following the last day of March, June, September and December of each year
and on the Termination Date, commencing on the first such date to occur after the Effective Date.  All commitment fees shall be computed on the basis of a year of 360 days, unless such computation
would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a
year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).  


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


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


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ARTICLE 4

Payments; Pro Rata Treatment; Sharing of Set-Offs




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


     (a)     Payments by the Borrower.  The Borrower shall make each payment required to be
made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 5.01, Section 5.02, Section 5.03 or otherwise) prior to 2:00 p.m.,
Chicago time, on the date when due (for purposes of computing interest and fees, each such payment
made after such time on such due date to be deemed to have been made on the next succeeding
Business Day), in immediately available funds, without defense, deduction, recoupment, set-off or
counterclaim.  Fees, once paid, shall be fully earned and shall not be refundable under any
circumstances, absent manifest error.  Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon.  All such payments shall be made to the
Administrative Agent at its offices specified in Section 12.01, except payments to be made directly
to an Issuing Bank as expressly provided herein and except that payments pursuant to Section 5.01,
Section 5.02, Section 5.03 and Section 12.03 shall be made directly to the Persons entitled
thereto.  The Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following receipt thereof.  If
any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall
be extended to the next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension.  All payments hereunder shall
be made in Dollars.  


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


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



47









 






the Borrower rights of set-off and counterclaim with respect to such participation as fully as if
such Lender were a direct creditor of the Borrower in the amount of such participation.  



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


     Section 4.03    Certain Deductions by the Administrative Agent.  If any Lender shall fail
to make any payment required to be made by it hereunder, pursuant to Section 2.05(a), Section
2.08(d), Section 2.08(e) or Section 4.02 or otherwise, then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received
by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations
under such Sections until all such unsatisfied obligations are fully paid.  


     Section 4.04    Disposition of Proceeds.  The Security Instruments contain an assignment
by the Borrower and/or the Guarantors unto and in favor of the Administrative Agent for the benefit
of the Secured Parties of all of the Borrower’s or each Guarantor’s interest in and to production
and all proceeds attributable thereto which may be produced from or allocated to the Mortgaged
Property.  The Security Instruments further provide in general for the application of such proceeds
to the satisfaction of the Secured Indebtedness and other obligations described therein and secured
thereby.  Notwithstanding anything to the contrary contained in the Security Instruments, until the
occurrence of an Event of
Default, (a) the Administrative Agent and the Lenders agree that they will neither notify the
purchaser or purchasers of production from or allocated to the Mortgaged Property nor take any
other action to cause the proceeds thereof to be remitted to the Administrative Agent or the
Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and its
Restricted Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to take such
actions as may be necessary to cause such proceeds to be paid to the Borrower and/or such
Restricted Subsidiaries.  


ARTICLE 5

Increased Costs; Break Funding Payments; Payments; Taxes; Illegality




     Section 5.01   Increased Costs.  


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




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




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




48












 




and the result of any of the foregoing shall be to increase the cost to such Lender of making
or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to
reduce the amount of any sum received or receivable by such Lender (whether of principal, interest
or otherwise, but not including Excluded Taxes), then the Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.  



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


     (c)     Certificates.  A certificate of a Lender or any Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or such Issuing Bank or its holding company,
as the case may be, as specified in Section 5.01(a) or (b) shall be delivered to the Borrower and
shall be conclusive absent manifest error.  The Borrower shall pay such Lender or such Issuing
Bank, as the case may be, the amount shown as due on any such certificate within 30 days after
receipt thereof.  


     (d)     Effect of Failure or Delay in Requesting Compensation.  Failure or delay on the
part of any Lender or any Issuing Bank to demand compensation pursuant to this Section 5.01 shall
not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation;
provided that the Borrower shall not be required to compensate a Lender or an Issuing Bank pursuant
to this Section 5.01 for any increased costs or reductions incurred more than 180 days prior to the
date that such Lender or such Issuing Bank, as the case may be, notifies the Borrower of the Change
in Law giving rise to such increased costs or reductions and of such Lender’s or such Issuing
Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving
rise to such increased costs or reductions is retroactive, then the 180-day period referred to
above shall be extended to include the period of retroactive effect thereof.  


     Section 5.02
   Break Funding Payments.  In the event of (a) the payment of any principal
of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan into an
ABR Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to
borrow as a result of a failure to satisfy the conditions set forth in Section 6.02, any Eurodollar
Loan on the date specified in any notice delivered pursuant hereto, or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of
a request by the Borrower pursuant to Section 5.04(a), then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such event (exclusive of any
lost profits or opportunity costs or processing or other related fees).  In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate
that would have been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for such Loan), over
(ii) the amount of interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid



49









 




were it to bid, at the commencement of such period, for dollar deposits of a comparable amount
and period from other banks in the eurodollar market.  



     A certificate of any Lender setting forth any amount or amounts that such Lender is entitled
to receive pursuant to this Section 5.02 shall be delivered to the Borrower and shall be conclusive
absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 Business Days after receipt thereof.  


     Section 5.03    Taxes.  


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


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


     (c)     Indemnification by the Borrower.  The Borrower shall indemnify the Administrative
Agent, each Lender and each Issuing Bank, within 10 days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender
or such Issuing Bank, as the case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 5.03) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified
Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental
Authority; provided that the Borrower shall not be required to indemnify the Administrative Agent,
any Lender or any Issuing Bank for any amounts under this Section 5.03(c) to the extent that such
Person fails to notify the Borrower of its intent to make a claim for indemnification under this
Section 5.03(c) within 180 days after a claim is asserted against such Person by the relevant
Governmental Authority.  A certificate of the Administrative Agent, a Lender or an Issuing Bank as
to the amount of such payment or liability under this Section 5.03, together with, to the extent
available, reasonable supporting documentation relating to such payment or liability, shall be
delivered to the Borrower and shall be conclusive absent manifest error.  


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


     (e)     Status of Lenders.  (i) Any Lender that is entitled to an exemption from or
reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to
the Borrower and the Administrative Agent, at the time or times reasonably requested by the
Borrower or the Administrative Agent, such properly completed and executed documentation reasonably
requested by the Borrower or the Administrative Agent as will permit such payments to be made
without withholding or at



50









 




a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the
Borrower or the Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.  Notwithstanding anything to the contrary
in the preceding two sentences, the completion, execution and submission of such documentation
(other than such documentation set forth in Section 5.03(e)(ii)(A), (ii)(B) and (ii)(D) below)
shall not be required if in the Lender’s reasonable judgment such completion, execution or
submission would subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender.  



          (ii)     Without limiting the generality of the foregoing,





     (A)      any Lender that is a U.S.  Person shall deliver to the Borrower and the
Administrative Agent on or prior to the date on which such Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the reasonable request
of the Borrower or the Administrative Agent), executed originals of IRS Form W-9
certifying that such Lender is exempt from U.S.  federal backup withholding tax;




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




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




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




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




     (4)     to the extent a Foreign Lender is not the beneficial owner,
executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS
Form W-8BEN, a U.S.  Tax Compliance Certificate substantially in the form of
Exhibit H-2 or Exhibit H-3, IRS Form W-9, and/or other certification
documents from each beneficial owner, as applicable; provided that if the



51









 






Foreign Lender is a partnership and one or more direct or indirect
partners of such Foreign Lender are claiming the portfolio interest
exemption, such Foreign Lender may provide a U.S.  Tax Compliance Certificate
substantially in the form of Exhibit H-4 on behalf of each such direct and
indirect partner;




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




     (D)      if a payment made to a Lender under any Loan Document would be subject to
U.S.  federal withholding Tax imposed by FATCA if such Lender were to fail to comply
with the applicable reporting requirements of FATCA (including those contained in
Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to
the Borrower and the Administrative Agent at the time or times prescribed by law and
at such time or times reasonably requested by the Borrower or the Administrative
Agent such documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably
requested by the Borrower or the Administrative Agent as may be necessary for the
Borrower and the Administrative Agent to comply with their obligations under FATCA
and to determine that such Lender has complied with such Lender’s obligations under
FATCA or to determine the amount to deduct and withhold from such payment.  Solely
for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA
after the date of this Agreement.  

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



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


52









 





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


     Section 5.04    Mitigation Obligations; Replacement of Lenders.  


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


     (b)     Replacement of Lenders.  If (i) any Lender requests compensation under Section
5.01, or (ii) the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 5.03, or (iii) any Lender
is a Defaulting Lender, or (iv) any Lender has asserted that any adoption or change of the type
described in Section 5.05 has occurred, or (v) any Lender fails to approve an amendment, waiver or
other modification to this Agreement and at least the Required Lenders have approved such
amendment, waiver or other modification, or (vi) any Lender fails to approve an increase of the
Borrowing Base and at least the Required Lenders have approved such increase, then the Borrower
may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 12.04(b)), all its interests, rights and obligations under this
Agreement to an assignee that shall (A) assume such obligations and (B) in the case of clauses (v)
and (vi), consent to such amendment, waiver, modification, increase, decrease or reaffirmation
(which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) if
such assignee is not a Lender, the Borrower shall have received the prior written consent of the
Administrative Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans and participations in
LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 5.01 or payments required to be
made pursuant to Section 5.03, such assignment will result in a reduction in such compensation or
payments.  A Lender shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.  


53









 





     Section 5.05    Illegality.  Notwithstanding any other provision of this Agreement:



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



     (b)     If it becomes unlawful for any Lender or its applicable lending office to honor its
obligation to make any Loans to the Borrower, then such Lender shall promptly notify the Borrower
and the Administrative Agent thereof and such Lender’s obligation to make Loans shall be suspended
until such time as such Lender may again make and maintain Loans to the Borrower.  The Borrower
shall have no obligation to pay to such Lender the commitment fee described in Section 3.05(a) that
would otherwise accrue during such period of suspension.  


ARTICLE 6

Conditions Precedent




     Section 6.01    Effective Date.  The obligations of the Lenders to make Loans, of the
Swingline Lender to make Swingline Loans and of any Issuing Bank to issue or assume Letters of
Credit hereunder shall not become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 12.02):



     (a)     The Administrative Agent, the Arrangers and the Lenders shall have received all
commitment, facility and agency fees and all other fees and amounts due and payable on or prior to
the Effective Date, including, to the extent invoiced at least one (1) Business Day prior to such
date, reimbursement or payment of all out-of-pocket expenses for which invoices have been presented
required to be reimbursed or paid by the Borrower hereunder (including, without limitation, the
fees and expenses of Vinson & Elkins L.L.P., counsel to the Administrative Agent).  


     (b)     The Administrative Agent shall have received a certificate of the secretary or an
assistant secretary of the Borrower and of each Guarantor dated as of the Effective Date setting
forth (i) resolutions of its board of directors (or comparable governing body) with respect to the
authorization of the Borrower or such Guarantor to execute and deliver the Loan Documents to which
the Borrower or such Guarantor is a party and to enter into the transactions contemplated in those
documents, (ii) the officers of the Borrower or such Guarantor who are authorized to sign the Loan
Documents to which the Borrower or such Guarantor is a party, (iii) specimen signatures of such
authorized officers and (iv) the articles or certificate of incorporation and bylaws (or comparable
organizational documents) of the Borrower and such Guarantor.  The Administrative Agent and the
Lenders may conclusively rely on such certificate until the Administrative Agent receives notice in
writing from the Borrower to the contrary.  


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


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


     (e)     The Administrative Agent shall have received duly executed Notes payable to each Lender
requesting a Note at least three (3) Business Days prior to such date in a principal amount equal
to its Maximum Credit Amount dated as of the Effective Date.  


     (f)     The Administrative Agent shall have received from each party thereto duly executed
counterparts (in such number as may be requested by the Administrative Agent) of the Security
Instruments, including the Guaranty Agreement, the Pledge Agreement, the mortgages and the other
Security Instruments described on Exhibit E-1.  In connection with the execution and delivery of
the Security Instruments, the Administrative Agent shall:




     (i)      (i)     be reasonably satisfied that the Security Instruments create first priority,
perfected Liens (subject only to Permitted Liens) on at least 80% of the total value of the
Proved Hydrocarbon Interests of the Borrower and the Guarantors evaluated in the Initial
Reserve Report; and




     (ii)      have received certificates, together with undated, blank stock powers for each
such certificate, representing all of the issued and outstanding Equity Interests of each
Restricted Subsidiary.  


     (g)     The Administrative Agent shall have received evidence reasonably satisfactory to it that
any consent or approval of, registration or filing with, or any other action by, any Governmental
Authority or any other third Person necessary in connection with the Transactions shall have been
obtained and are in full force and effect other than those third party approvals or consents that,
if not made or obtained, would not reasonably be expected to have a Material Adverse Effect.  


     (h)     The Administrative Agent shall have received an opinion of (i) Davis Polk & Wardwell LLP,
special counsel to the Borrower, (ii) General Counsel of the Borrower, (iii) local counsel in the
State of Texas and (iv) local counsel in the State of Delaware, each dated the Effective Date and
in form and substance reasonably satisfactory to the Administrative Agent.  The Borrower hereby
requests Davis Polk & Wardwell LLP and such local counsel to deliver such opinions.  


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


     (j)     The Administrative Agent shall have received title information as the Administrative Agent
may reasonably require satisfactory to the Administrative Agent setting forth the status of title
to at least 75% of the total value of the Proved Hydrocarbon Interests of the Borrower and the
Guarantors evaluated in the Initial Reserve Report.  


     (k)     The Administrative Agent shall have received appropriate UCC search certificates
reflecting no prior Liens encumbering the personal property related to the Oil and Gas Properties
of the Borrower and the Guarantors for Delaware and Texas, other than those being assigned or
released on or prior to the Effective Date or Liens permitted by Section 9.03.  


     (l)     The Administrative Agent shall have received (i) (A) the audited consolidated balance
sheet and related statements of operations, stockholders’ equity and cash flows and (B)the
unaudited



55









 




consolidating balance sheet and related statements of operations, in each case, of the
Borrower and its Consolidated Subsidiaries (including the Canadian Subsidiaries) for the most
recent fiscal year of each ended prior to the Effective Date as to which such financial statements
are available, (ii) (A) the unaudited interim consolidated balance sheet and related statements of
operations, stockholders’ equity and cash flows and (B) the unaudited consolidating balance sheet
and related statements of operations, in each case, of the Borrower and its Consolidated
Subsidiaries (including the Canadian Subsidiaries) for each quarterly period ended subsequent to
the date of the financial statements delivered pursuant to clause (i) as to which such financial
statements are available and (iii) copies, to the extent of any, of all financial statements
(including pro forma financial statements), reports, notices and proxy statements sent by the
Borrower to its stockholders and all SEC filings concerning this Agreement filed at least one (1)
Business Day prior to such date; provided, that, any documents shall be deemed to have been
delivered to the Administrative Agent to the extent any of the foregoing are publicly available on
the SEC’s EDGAR website or the Borrower’s website on the Internet at www.qrinc.com.  



     (m)     The Administrative Agent shall have received a certificate, signed by a Responsible
Officer of the Borrower, stating that no event or condition has occurred since December 31, 2010,
which would reasonably be expected to have a Material Adverse Effect.  


     (n)     The Administrative Agent shall have received evidence that the Existing Credit Agreement
has been or concurrently with entry into this Agreement on such date is being terminated and all
Liens securing obligations under the Existing Credit Agreement have been or concurrently with entry
into this Agreement on such date are being released.  


     Without limiting the generality of the provisions of Section 11.04, for purposes of
determining compliance with the conditions specified in this Section 6.01, each Lender that has
signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required under this Section 6.01 to be consented to or approved
by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the Effective Date specifying its objection thereto.  All
documents executed or submitted pursuant to this Section 6.01 by and on behalf of the Borrower or
any of the Guarantors shall be in form and substance reasonably satisfactory to the Administrative
Agent and its counsel.  The obligations of the Lenders to make Loans and of any Issuing Bank to
issue Letters of Credit hereunder shall not become effective unless each of the foregoing
conditions is satisfied (or waived pursuant to Section 12.02) at or prior to 2:00 p.m., Chicago
time, on September 30, 2011 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).  The Administrative Agent shall notify the Borrower and
the Lenders of the Effective Date, and such notice shall be conclusive and binding.  


     Section 6.02    Each Credit Event.  The obligation of each Lender to make a Loan on the
occasion of any Borrowing (including the initial funding) (excluding any Loan made pursuant to
Section 2.08(e)), of the Swingline Lender to make a Swingline Loan and of any Issuing Bank to
issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following
conditions:



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


     (b)     At the time of and immediately after giving effect to such Borrowing or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no event or events, which
alone or in the aggregate would reasonably be expected to have a Material Adverse Effect shall have
occurred.  


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     (c)     The representations and warranties of the Borrower and the Guarantors set forth in this
Agreement and in the other Loan Documents shall be true and correct in all material respects on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, except that (i) to the extent any such representations and
warranties are expressly limited to an earlier date, in which case, on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, such representations and warranties shall continue to be true and correct in all
material respects as of such specified earlier date and (ii) to the extent that any such
representation and warranty is qualified by materiality, such representation and warranty (as so
qualified) shall continue to be true and correct in all respects.  


     (d)     The pro forma total Revolving Credit Exposures (after giving effect to the requested
Borrowing or the issuance of the requested Letter of Credit (or any amendment, renewal or extension
of any Letter of Credit that increases the LC Exposure)) shall not exceed the aggregate
Commitments.  


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


     Each Borrowing (excluding any Loan made pursuant to Section 2.08(e)) and each issuance,
amendment, renewal or extension of any Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as to the matters specified in
Section 6.02(a) through (d).  


ARTICLE 7

Representations and Warranties




     The Borrower represents and warrants to the Lenders that:



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


     Section 7.02    Authority; Enforceability.  The Transactions are within the Borrower’s
and each Restricted Subsidiary’s corporate, partnership or limited liability company powers and
have been duly authorized by all necessary corporate, partnership or limited liability company and,
if required, stockholder, partner or member action.  Each Loan Document to which the Borrower and
each Restricted Subsidiary is a party has been duly executed and delivered by the Borrower and such
Restricted Subsidiary and constitutes a legal, valid and binding obligation of the Borrower and
such Restricted Subsidiary, as applicable, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, fraudulent transfer or conveyance, moratorium or
other laws affecting creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law and an implied covenant of
good faith and fair dealing.  


     Section 7.03    Approvals; No Conflicts.  The Transactions:



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     (a)     do not require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority or any other third Person, nor is any such consent, approval,
registration, filing or other action necessary for the validity or enforceability of any Loan
Document or the consummation of the transactions contemplated thereby, except such as have been
obtained or made and are in full force and effect other than (i) the recording and filing of the
Security Instruments as required by this Agreement and (ii) those approvals or consents that, if
not made or obtained, would not reasonably be expected to have a Material Adverse Effect;



     (b)     will not violate (i) the charter, by-laws or other organizational documents of the
Borrower or any Restricted Subsidiary or (ii) any applicable Governmental Requirement or any order
of any Governmental Authority applicable to or binding upon the Borrower or any Restricted
Subsidiary (including, without limitation, FCPA and OFAC), except in the case of clause (ii),
violations that would not reasonably be expected to have a Material Adverse Effect;



     (c)     will not violate or result in a default under any indenture, agreement or other instrument
pursuant to which any Material Debt is outstanding, binding upon the Borrower or any Restricted
Subsidiary or their Properties, or give rise to a right thereunder to require any payment to be
made by the Borrower or any Restricted Subsidiary, except violations that would not reasonably be
expected to have a Material Adverse Effect; and



     (d)     will not result in the creation or imposition of any Lien on any Oil and Gas Property of
the Borrower or any Restricted Subsidiary (other than the Liens created or permitted by the Loan
Documents).  


     Section 7.04    Financial Condition; No Material Adverse Effect.  (a) The financial
statements the Borrower has furnished to the Administrative Agent pursuant to Section 6.01(l)
present fairly, in all material respects, the financial position and results of operations and cash
flows of the Borrower and its Consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP (subject, in the case of unaudited financial statements, to year end audit
adjustments and the absence of footnotes).  


     (b)     Since December 31, 2010, there has been no event or events, which alone or in the
aggregate would reasonably be expected to have, a Material Adverse Effect.  


     Section 7.05    Litigation.  Except as disclosed in the Borrower’s Annual Report on Form
10-K for the fiscal year ended December 31, 2010, there are no actions, suits, investigations or
proceedings by or before any arbitrator or Governmental Authority pending against or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any Restricted
Subsidiary that (a) would reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect or (b) involve any Loan Document or the Transactions.  


     Section 7.06    Environmental Matters.  Except as disclosed in the Borrower’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2010, or as would not be reasonably
expected to have a Material Adverse Effect:



     (a)     neither any Oil and Gas Property of the Borrower or any Restricted Subsidiary nor the
operations conducted by the Borrower or any Restricted Subsidiary thereon, and, to the knowledge of
the Borrower, no operations of any prior owner, lessee, or operator of any such properties (i) is
in violation of any order or requirement relating to Environmental Laws of any court or
Governmental Authority or any Environmental Laws or (ii) to the knowledge of Borrower, has been in
violation of any order or requirement relating to Environmental Laws of any court or Governmental
Authority or any Environmental Laws;



58









 





     (b)     neither the Borrower nor any Restricted Subsidiary nor any Oil and Gas Property of the
Borrower or any Restricted Subsidiary nor the operations currently conducted thereon or, to the
knowledge of the Borrower, conducted thereon by any prior owner or operator of such Oil and Gas
Property or operation, are subject to any existing, pending or, to the Borrower’s knowledge,
threatened Environmental Complaint;



     (c)     all notices, permits, licenses, exemptions, approvals or similar authorizations, if any,
required by Environmental Laws to be obtained or filed in connection with the operation or use of
any and all Oil and Gas Property of the Borrower and each Restricted Subsidiary, including, without
limitation, any past or present treatment, storage, disposal or release into the environment of a
Hazardous Material, have been duly obtained or filed, and the Borrower and each Restricted
Subsidiary are in compliance with the terms and conditions of all such notices, permits, licenses
and similar authorizations;



     (d)     all Hazardous Materials, if any, generated at any and all Oil and Gas Property of the
Borrower or any Restricted Subsidiary by the Borrower or any Restricted Subsidiary in the past have
been transported, treated and disposed of in accordance with Environmental Laws and, to the
knowledge of the Borrower, do not pose an imminent and substantial endangerment to public health or
welfare or the environment, and, to the knowledge of the Borrower, in connection with such
transport, treatment and disposal, all such transport carriers and treatment and disposal
facilities have been and are operating in compliance with Environmental Laws, do not pose an
imminent and substantial endangerment to public health or welfare or the environment and are not
the subject of any existing, pending or threatened action, investigation or inquiry by any
Governmental Authority in connection with any Environmental Laws;



     (e)     to the Borrower’s knowledge, there has been no Hazardous Discharge on or to any Oil and
Gas Property of the Borrower or any Restricted Subsidiary, in each case, except in compliance with
Environmental Laws and so as not to pose an imminent and substantial endangerment to public health
or welfare or the environment; and



     (f)     to the Borrower’s knowledge, neither the Borrower nor any Restricted Subsidiary has any
contingent liability under Environmental Law in connection with any Hazardous Discharge.  


     Section 7.07    Compliance with the Laws and Agreements.  Each of the Borrower and its
Restricted Subsidiaries is in compliance with all Governmental Requirements applicable to it or its
Oil and Gas Properties (including, without limitation, FCPA and OFAC) and all agreements and other
instruments binding upon it or its Oil and Gas Properties, and possesses all licenses, permits,
franchises, exemptions, approvals and other governmental authorizations necessary for the ownership
of its Oil and Gas Properties and the conduct of its business, except where the failure to do so,
individually or in the aggregate, would not reasonably be expected to result in a Material Adverse
Effect.  


     Section 7.08    Investment Company Act.  Neither the Borrower nor any Restricted
Subsidiary is required to register as an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.  


     Section 7.09    Taxes.  Each of the Borrower and its Restricted Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been filed (or obtained
extensions with respect thereto) and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and
for which the Borrower or such Restricted Subsidiary, as applicable, has set aside on its books
adequate reserves in accordance with GAAP or (b) to the extent that the failure to do so would not
reasonably be expected to result in a Material Adverse Effect.  No action to enforce any Tax Lien
has been commenced.  



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     Section 7.10    Disclosure; No Material Misstatements.  Taken as a whole, none of
the reports, financial statements, certificates or other written information (other than
projections) furnished by or on behalf of the Borrower or any Restricted Subsidiary to the
Administrative Agent or any Lender or any of their Affiliates in connection with the negotiation of
this Agreement or any other Loan Document or delivered hereunder or under any other Loan Document
(as modified or supplemented by other information so furnished), when furnished (and, with respect
to any such information delivered to the Administrative Agent or any Lender or any of their
Affiliates prior to the Effective Date, on the Effective Date), contains any material misstatement
of fact or omits to state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not materially misleading (other than omissions
that pertain to matters of a general economic nature or matters of public knowledge that generally
affect any of the industry segments of the Borrower or its Subsidiaries); provided that, with
respect to projected financial information, prospect information, geological and geophysical data
and engineering projections, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time, recognizing that (a) there
are industry-wide risks normally associated with the types of business conducted by the Borrower
and its Restricted Subsidiaries and (b) projections concerning volumes attributable to the Oil and
Gas Properties of the Borrower and its Restricted Subsidiaries and production and cost estimates
contained in each Reserve Report are necessarily based upon professional opinions, estimates and
projections and that the Borrower and the Restricted Subsidiaries do not warrant that such
opinions, estimates and projections will ultimately prove to have been accurate.  


     Section 7.11    Subsidiaries.  Schedule 7.11 lists the name, jurisdiction of organization
and organizational identification number of each Subsidiary of the Borrower as of the Effective
Date and identifies each such Subsidiary as either a Restricted or Unrestricted Subsidiary.  


     Section 7.12    Insurance.  All insurance reasonably necessary in the Borrower’s and its
Restricted Subsidiaries’ ordinary course of business is in effect and all premiums due on such
insurance have been paid.  Schedule 7.12 sets forth a list of all such insurance policies
maintained by the Borrower and its Restricted Subsidiaries as of the Effective Date.  


     Section 7.13    Location of Business and Offices.  As of the Effective Date, the
Borrower’s jurisdiction of organization is Delaware; the name of the Borrower as listed in the
public records of its jurisdiction of organization is Quicksilver Resources Inc.; and the
organizational identification number of the Borrower in its jurisdiction of organization is
75-2756163.  As of the Effective Date, each Restricted Subsidiary’s jurisdiction of organization,
name as listed in the public records of its jurisdiction of organization, organizational
identification number in its jurisdiction of organization, and the location of its principal place
of business and chief executive office is stated on Schedule 7.11.  


     Section 7.14    Properties; Title, Etc.  Except as would not have a Material Adverse
Effect and provided that no representation or warranty is made with respect to any Oil and Gas
Property or interest to which no proved oil or gas reserves are properly attributed:



     (a)     Each of the Borrower and the Restricted Subsidiaries has good and defensible title to the
material Oil and Gas Properties evaluated in the Reserve Report used in the most recent
determination of the Borrowing Base and good title to all its personal Properties that are
necessary to permit the Borrower and the Restricted Subsidiaries to conduct their business in all
material respects in the same manner as its business has been conducted prior to the date hereof,
in each case, subject to Immaterial Title Deficiencies and free and clear of all Liens except Liens
permitted by Section 9.03 (subject to the penultimate sentence thereof).  Subject to Immaterial
Title Deficiencies and after giving full effect to Liens permitted by Section 9.03 (subject to the
penultimate sentence thereof), the Borrower or the Restricted Subsidiary specified as the owner
owns the net interests in production attributable to the Hydrocarbon Interests as reflected in the



60









 




most recently delivered Reserve Report.  The ownership of such Oil and Gas Properties shall
not obligate the Borrower or such Restricted Subsidiary to bear the costs and expenses relating to
the maintenance, development and operations of each such Oil and Gas Property in an amount
materially in excess of the working interest of each Oil and Gas Property set forth in the most
recently delivered Reserve Report that is not offset by a corresponding proportionate increase in
the Borrower’s or such Restricted Subsidiary’s net revenue interest in such Oil and Gas Property;
provided that the Borrower or any applicable Restricted Subsidiary shall have the right to bear
costs disproportionate to the Borrower’s or such Restricted Subsidiary’s working interest with
respect to any Hydrocarbon Interest for a period of time in order to earn, or in connection with
the acquisition of, an interest in such Hydrocarbon Interest as evidenced by written agreement.  



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


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


     (d)     The Borrower and each Restricted Subsidiary owns, or is licensed to use, (i) all
trademarks, tradenames, copyrights, patents and other intellectual Property material to its
business, and the use thereof by the Borrower and such Restricted Subsidiary does not infringe upon
the rights of any other Person and (ii) all databases, geological data, geophysical data,
engineering data, seismic data, maps, interpretations and other technical information the use of
which is material to their businesses as presently conducted, subject to the limitations contained
in the agreements governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons.  


     Section 7.15    Federal Reserve Regulations.  The Borrower and its Restricted
Subsidiaries are not engaged principally, or as one of its or their important activities, in the
business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying
or carrying margin stock (within the meaning of Regulation T, U or X of the Board).  No part of the
proceeds of any Loan or Letter of Credit will be used for any purpose which violates the provisions
of Regulations T, U or X of the Board.  


     Section 7.16    ERISA.  As of the date hereof, neither the Borrower nor any Subsidiary
nor any ERISA Affiliate of the Borrower or any Subsidiary maintains sponsors, or contributes to (or
has at any time in the six-year period preceding the date hereof, maintained, sponsored, or
contributed to) any Pension Plan or Multiemployer Plan.  Except in such instances where an action,
omission or failure would not reasonably be expected to have a Material Adverse Effect, each Plan
maintained by the Borrower or any Restricted Subsidiary or any ERISA Affiliate of the Borrower or
any Restricted Subsidiary is in compliance with the terms of such Plan and the applicable
provisions of ERISA and the Code with respect to each Plan.  No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, would reasonably be expected to result in a Material
Adverse Effect.  Except in such instances where an action, omission or failure would not reasonably
be expected to have a Material Adverse Effect, (a) each Plan that is intended to be “qualified”
within the meaning of Section 401(a) of the Code is, and has been during the period from its
adoption to date, so qualified, both as to form and operation, and all necessary governmental
approvals, including a favorable determination as to the qualification under the Code of such Plan
and each amendment thereto, have been or will be timely obtained, and (b) the actuarial present



61









 




value of the benefit liabilities (within the meaning of section 4041 of ERISA) under each Plan
which is subject to Title IV of ERISA does not, as of the end of the most recently ended fiscal
year, exceed the current value of the assets (computed on a plan termination basis in accordance
with Title IV of ERISA) of such Plan allocable to such benefit liabilities.  Neither the Borrower
nor any Restricted Subsidiary nor any ERISA Affiliate of the Borrower or any Restricted Subsidiary
maintains or contributes to any Plan that provides a post-employment health benefit, other than a
benefit required under Section 601 of ERISA, or maintains or contributes to a Plan that provides
health benefits that is not fully funded except where the failure to fully fund such Plan would not
reasonably be expected to have a Material Adverse Effect.  As of the date hereof, neither the
Borrower nor any Restricted Subsidiary nor any ERISA Affiliate of the Borrower or any Restricted
Subsidiary maintains a multiple employer welfare benefit arrangement within the meaning of Section
3(40)(A) of ERISA.  



     Section 7.17    Status As Senior Indebtedness.  The Loans and other Secured Indebtedness
hereunder are “Bank Indebtedness,” “Senior Indebtedness” and “Designated Senior Indebtedness” under
both the Existing Subordinate Notes and the Existing Convertible Debentures, and this Agreement is
a “Senior Secured Credit Agreement” under the Existing Subordinate Notes and one of the “Combined
Credit Agreements” under the Existing Convertible Debentures.  


     Section 7.18    Solvency.  After giving effect to the transactions contemplated hereby,
(a) the aggregate assets (after giving effect to amounts that could reasonably be received by
reason of indemnity, offset, insurance or any similar arrangement), at a fair valuation, of the
Borrower and the Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower and
the Guarantors on a consolidated basis, as the Debt becomes absolute and matures, (b) each of the
Borrower and the Guarantors will not have incurred Debt beyond its ability to pay such Debt (after
taking into account the timing and amounts of cash to be received by each of the Borrower and the
Guarantors and the amounts to be payable on or in respect of its liabilities, and giving effect to
amounts that could reasonably be received by reason of indemnity, offset, insurance or any similar
arrangement) as such Debt becomes absolute and matures and (c) each of the Borrower and the
Guarantors will not have unreasonably small capital for the conduct of its business.  


     Section 7.19    Priority; Security Matters.  The Secured Indebtedness is and shall be at
all times secured by valid, perfected first priority Liens in favor of the Administrative Agent,
covering and encumbering the Mortgaged Properties and other Properties pledged pursuant to the
Security Instruments, to the extent perfection has occurred or will occur, by the recording of a
mortgage, the filing of a UCC financing statement or by possession; provided, that the priority of
the Liens in favor of the Administrative Agent may be subject to Permitted Liens.  


ARTICLE 8

Affirmative Covenants




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



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



     (a)     Annual Financial Statements.  As soon as available, but in any event in accordance
with then applicable law and not later than 20 days after the date on which the Borrower files its
Annual Report on Form 10-K with the SEC (but in no event more than 120 days after the end of the
applicable fiscal



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year), (i) its audited consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows as of the end of and for the fiscal year most recently ended,
setting forth in each case in comparative form the figures for the previous fiscal year, all
reported on by Deloitte & Touche LLP or other independent public accountants of recognized national
standing (without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied and (ii) its unaudited consolidating balance sheet and related
statements of operations as of the end of and for the fiscal year most recently ended (which
consolidating statements shall also demonstrate eliminating entries, if any, with respect to any
Consolidated Subsidiaries that are Unrestricted Subsidiaries).  



     (b)     Quarterly Financial Statements.  As soon as available, but in any event in
accordance with then applicable law and not later than 10 days after the Borrower files each
Quarterly Report on Form 10-Q with the SEC (but in no event more than 60 days after the end of the
applicable fiscal quarter), (i) its unaudited consolidated balance sheet and related statements of
operations, stockholders’ equity and cash flows as of the end of and for the fiscal quarter most
recently ended and the then elapsed portion of such fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of
footnotes and (ii) its unaudited consolidating balance sheet and related statements of operations
as of the end of and for the fiscal quarter most recently ended (which consolidating statements
shall also demonstrate eliminating entries, if any, with respect to any Consolidated Subsidiaries
that are Unrestricted Subsidiaries).  


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


     (d)     Certificate of Insurer — Insurance Coverage.  Within 60 days of the annual
renewal thereof, a certificate of insurance coverage from each insurer with respect to the
insurance required by Section 8.06, in form and substance satisfactory to the Administrative Agent,
and, if requested by the Administrative Agent or any Lender, all copies of the applicable policies.  


     (e)     Notice of Casualty Events.  Prompt written notice, and in any event within five
Business Days, of the occurrence of any Casualty Event with respect to Oil and Gas Properties
having an estimated dollar value in excess of $45,000,000 or the commencement of any action or
proceeding that would reasonably be expected to result in a Casualty Event with respect to Oil and
Gas Properties having an estimated dollar value in excess of $45,000,000.  


     (f)     Notice of Incurrence of Debt Resulting in Borrowing Base Reduction.  Written
notice of the incurrence by the Borrower or any Restricted Subsidiary of any Debt pursuant to
Section 9.02(n) which results in an automatic reduction in the Borrowing Base pursuant to such
Section, which written notice shall include the stated amount of such Debt and be delivered
promptly after the pricing of such Debt, but in no event later than one (1) day prior to settlement
of such Debt.  


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     (g)     Information Regarding Borrower and Guarantors.  Prompt written notice (and in any
event within thirty (30) days following any such change) of any change (i) in the Borrower’s or any
Guarantor’s corporate name, (ii) in the Borrower’s or any Guarantor’s identity or corporate
structure or in the jurisdiction in which such Person is incorporated or formed, and (iii) in the
Borrower’s or any Guarantor’s jurisdiction of organization or such Person’s organizational
identification number in such jurisdiction of organization.  


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


     Documents required to be delivered pursuant to Section 8.01 may be delivered electronically
and if so delivered, shall be deemed to have been delivered on the date (i) on which (A) the
Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet
at www.qrinc.com or (B) such documents are publically available on the SEC’s EDGAR website or (ii)
on which such documents are delivered to the Administrative Agent, including in electronic form.  Once received by the Administrative Agent, the Administrative Agent shall post such documents on
the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); provided that the Borrower shall deliver such documents in a form
acceptable to the Administrative Agent.  Except for such compliance certificates, the
Administrative Agent shall have no obligation to request the delivery or to maintain copies of the
documents referred to above, and in any event shall have no responsibility to monitor compliance by
the Borrower with any such request for delivery, and each Lender shall be solely responsible for
requesting delivery to it or maintaining its copies of such documents.  


     Section 8.02    Notices of Material Events.  Promptly following a Responsible Officer
becoming aware of the occurrence thereof, the Borrower will furnish to the Administrative Agent
written notice of the following:



     (a)     the occurrence of any Default;



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



     (c)     the filing or commencement of any action, suit, proceeding, investigation or arbitration
by or before any arbitrator or Governmental Authority involving or relating to the Loan Documents.  


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


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


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     Section 8.03    Existence; Conduct of Business.  The Borrower will, and will cause each
Restricted Subsidiary to, do or cause to be done all things necessary to preserve, renew and keep
in full force and effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business and maintain, if necessary, its qualification to
do business in each other jurisdiction in which its Oil and Gas Properties are located or the
ownership of such Properties requires such qualification, except where the failure to so qualify
would not reasonably be expected to have a Material Adverse Effect; provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section
9.09.  


     Section 8.04    Payment of Obligations.  The Borrower will, and will cause each
Restricted Subsidiary to, pay its obligations, including Tax liabilities of the Borrower and all of
its Restricted Subsidiaries, before the same shall become delinquent or in default, except where
(i) (A) the validity or amount thereof is being contested in good faith by appropriate proceedings,
and (B) the Borrower or such Restricted Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP or (ii) the failure to make payment would not
reasonably be expected to result in a Material Adverse Effect or result in the seizure or levy of
any Oil and Gas Property of the Borrower or any Restricted Subsidiary that was evaluated in the
Reserve Report used in the most recent determination of the Borrowing Base.  


     Section 8.05    Operation and Maintenance of Properties.  The Borrower will and will
cause each Restricted Subsidiary to, in all material respects: (a) promptly pay and discharge, or
make reasonable efforts to cause to be paid and discharged, when due all delay rentals, royalties
and expenses accruing under the leases or other agreements affecting or pertaining to its material
Oil and Gas Properties evaluated in the Reserve Report used in the most recent determination of the
Borrowing Base, provided that, in the case of delay rentals, the Borrower and/or the applicable
Restricted Subsidiary shall only be required to pay and discharge, or make reasonable efforts to
pay and discharge, delay rentals as and to the extent the Borrower or such Restricted Subsidiary
determines in good faith that payment and discharge thereof is in the Borrower’s or such Restricted
Subsidiary’s, as applicable, best interest, (b) perform, or make reasonable and customary efforts
to cause to be performed, the obligations of the Borrower or any such Restricted Subsidiary
required by each and all of the assignments, deeds, leases, subleases, contracts and agreements
affecting its interests in its material Oil and Gas Properties evaluated in the Reserve Report used
in the most recent determination of the Borrowing Base, (c) do all other things necessary to keep
unimpaired, except for Liens permitted by the Loan Documents, its rights with respect to its
material Oil and Gas Properties evaluated in the Reserve Report used in the most recent
determination of the Borrowing Base and prevent any forfeiture thereof or a default thereunder, (d)
keep and maintain all Oil and Gas Property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted and (e) to the extent the Borrower is not the
operator of any Property, the Borrower shall use reasonable efforts to cause the operator to comply
with this Section 8.05, except (x) to the extent a portion of such Oil and Gas Properties is no
longer capable of producing Hydrocarbons in economically reasonable amounts, (y) for dispositions
permitted by this Agreement or (z) when the failure to do so would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.  


     Section 8.06    Insurance.  The Borrower will, and will cause each Restricted Subsidiary
to, maintain, with financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.  The loss payable clauses or provisions in
said insurance policy or policies insuring any of the collateral for the Loans shall be endorsed in
favor of the Administrative Agent as its interests in the collateral may appear and such policies
shall name the Administrative Agent and the Lenders as “additional insureds” and provide that the
insurer will endeavor to give at least 30 days prior notice of any cancellation to the
Administrative Agent.  


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     Section 8.07   Books and Records; Inspection Rights.  The Borrower will, and will cause
each Restricted Subsidiary to, keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its business and
activities.  The Borrower will, and will cause each Restricted Subsidiary to, permit any
representatives designated by the Administrative Agent or any Lender (coordinated through and
together with the Administrative Agent), upon reasonable prior notice, to visit and inspect its Oil
and Gas Properties, to examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants, all at such
reasonable times during the Borrower’s or such Restricted Subsidiary’s normal business hours (and
in a manner so as to the extent practicable, not to unreasonably interfere with the normal business
operations of the Borrower or such Restricted Subsidiary) not more than one (1) time per fiscal
year; provided, that to the extent an Event of Default then exists, as often as reasonably
requested.  The Lenders shall bear the cost of such inspections and examinations unless an Event of
Default then exists, in which event the Borrower shall bear such cost.  


     Section 8.08   Compliance with Laws.  The Borrower will, and will cause each Restricted
Subsidiary to, comply with all Governmental Requirements applicable to it or its Oil and Gas
Properties, except where the failure to do so, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.  


     Section 8.09   Environmental Matters.  (a) Except to the extent that the failure to do
so would not reasonably be expected to have a Material Adverse Effect, (i) the Borrower shall, and
shall cause each Restricted Subsidiary to, comply with all applicable Environmental Laws,
including, without limitation, (x) all licensing, permitting, notification, and similar
requirements of Environmental Laws, and (y) all provisions of Environmental Laws regarding storage,
discharge, release, transportation, treatment and disposal of Hazardous Materials and (ii) the
Borrower shall, and shall cause each Restricted Subsidiary to, promptly pay and discharge when due
all claims, liabilities and obligations with respect to any clean-up or remediation measures
necessary to comply with applicable Environmental Laws, provided that such payment or discharge
shall not be required to the extent that (A) the amount, applicability or validity thereof is being
contested in good faith by appropriate proceedings promptly initiated and diligently conducted and
(B) Borrower or such Restricted Subsidiary, as and to the extent required in accordance with GAAP,
shall have set aside on its books reserves (segregated to the extent required by GAAP) deemed by
them to be adequate with respect thereto.  


     (b)     To the extent the Borrower or a Restricted Subsidiary is not the operator of any Property,
none of the Borrower and its Restricted Subsidiaries shall be obligated to directly perform any
undertakings contemplated by the covenants and agreements contained in this Section 8.09 which are
performable only by such operators or are beyond the control of the Borrower and its Restricted
Subsidiaries.  Notwithstanding the above and except to the extent that the failure to do so would
not reasonably be expected to have a Material Adverse Effect, the Borrower shall be obligated to
enforce such operators’ contractual obligations to maintain, develop and operate the Oil and Gas
Properties subject to such operating agreements, and the Borrower shall, and shall cause its
Restricted Subsidiaries to, use commercially reasonable efforts to cause the operator to comply
with this Section 8.09.  


     (c)     To the extent reasonably requested by the Administrative Agent, the Borrower will, and
will cause each Restricted Subsidiary to, provide environmental assessment, audit or test reports
of any Oil and Gas Properties of the Borrower or any Restricted Subsidiary, provided an Event of
Default then exists or the Administrative Agent has a reasonable suspicion that either an Event of
Default or a breach of any representation or warranty set forth in Section 7.06 hereof then exists.  


     (d)     In connection with any acquisition by Borrower or any Restricted Subsidiary of any Oil and
Gas Property for consideration of at least $25,000,000, other than an acquisition of additional
interests



66









 




in Oil and Gas Properties in which Borrower or any Subsidiary previously held an interest, to
the extent Borrower or such Restricted Subsidiary obtains or is provided with the same, the
Borrower shall, promptly following Borrower’s or such Restricted Subsidiary’s obtaining or being
provided with the same, deliver to the Administrative Agent such final and non-privileged material
environmental reports of such Oil and Gas Properties as are reasonably requested by the
Administrative Agent.  



     Section 8.10   Further Assurances.  (a) The Borrower at its sole expense will, and will
cause each Restricted Subsidiary to, promptly execute and deliver to the Administrative Agent all
such other documents, agreements and instruments reasonably requested by the Administrative Agent
to comply with, cure any defects or accomplish the conditions precedent, covenants and agreements
of the Borrower or any Restricted Subsidiary, as the case may be, in the Loan Documents, including
the Notes, or to further evidence and more fully describe the collateral intended as security for
the Secured Indebtedness, or to correct any omissions in this Agreement or the Security
Instruments, or to state more fully the obligations secured therein, or to perfect, protect or
preserve any Liens created pursuant to this Agreement or any of the Security Instruments or the
priority thereof, or to make any recordings, file any notices or obtain any consents, all as may be
reasonably necessary or appropriate, in the sole discretion of the Administrative Agent, in
connection therewith.  


     (b)     The Borrower hereby authorizes the Administrative Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of the Mortgaged
Property without the signature of the Borrower or any other Guarantor where permitted by law.  A
carbon, photographic or other reproduction of the Security Instruments or any financing statement
covering the Mortgaged Property or any part thereof shall be sufficient as a financing statement
where permitted by law.  


     Section 8.11   Reserve Reports.  (a) On or before May 1, 2012 and April 1st of each year
thereafter, the Borrower shall furnish to the Administrative Agent a Reserve Report prepared by one
or more Approved Petroleum Engineers (the “Prepared Reserve Report”) as of January
1st of such year.  On or before October 1st of each year, commencing October 1, 2012,
the Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report as of July
1st of such year prepared by or under the supervision of the chief engineer of the
Borrower in accordance with the procedures used in the most recent Prepared Reserve Report.  It is
understood that projections concerning volumes attributable to the Oil and Gas Properties and
production and cost estimates contained in each Reserve Report are necessarily based upon
professional opinions, estimates and projections and that the Borrower and the Restricted
Subsidiaries do not warrant that such opinions, estimates and projections will ultimately prove to
have been accurate.  


     (b)     In the event of an Interim Redetermination requested by the Administrative Agent or the
Borrower pursuant to Section 2.07(b), the Borrower shall, upon the request of the Administrative
Agent, furnish to the Administrative Agent and the Lenders a Reserve Report (i) prepared by or
under the supervision of the chief engineer of the Borrower and in accordance with the procedures
used in the immediately preceding Prepared Reserve Report delivered pursuant to Section 8.11(a),
and (ii) which shall have an “as of” date as required by the Administrative Agent, no later than a
date mutually agreed to by the Borrower and the Administrative Agent.  If the Administrative Agent
does not request an updated Reserve Report pursuant to the immediately preceding sentence, the
Administrative Agent and the Lenders may base such Interim Redetermination on the Reserve Report
most recently delivered by the Borrower hereunder.  


     (c)     With the delivery of each Reserve Report, the Borrower shall provide to the Administrative
Agent and the Lenders a certificate from a Responsible Officer certifying that in all material
respects: (i) the information contained in the Reserve Report and any other information delivered



67









 




in connection therewith is true and correct, (ii) subject to Immaterial Title Deficiencies,
the Borrower or a Guarantor owns good and defensible title to the Oil and Gas Properties evaluated
in such Reserve Report and such Properties are free of all Liens except for Permitted Liens and
Liens securing the Secured Indebtedness, (iii) except as set forth on an exhibit to the
certificate, on a net basis there are no gas imbalances, take or pay or other prepayments in excess
of one half bcf of gas in the aggregate with respect to its Oil and Gas Properties evaluated in
such Reserve Report which would require the Borrower or any Guarantor to deliver Hydrocarbons
either generally or produced from such Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor, (iv) attached to the certificate is a list of all
marketing agreements entered into subsequent to the later of the date hereof or the most recently
delivered Reserve Report which pertain to the sale of production at a fixed price and have a
maturity date of longer than six (6) months from the date of such certificate, and (v) a true and
complete list of all Oil and Gas Swap Agreements of the Borrower and each Restricted Subsidiary is
included, which list contains the material terms thereof (including the type, remaining term,
counterparty, mark-to-market value as of the end of the second month immediately preceding the date
of such certificate and notional amounts or volumes), any credit support agreements relating
thereto, any margin required or supplied under any credit support document, and the counterparty to
each such agreement.  



     Section 8.12   Title Information.  (a) On or before the date that is 45 days following
the delivery to the Administrative Agent and the Lenders of each Reserve Report required by Section
8.11(a), the Borrower will deliver title information in form and substance reasonably acceptable to
the Administrative Agent covering enough of the Oil and Gas Properties evaluated by such Reserve
Report that were not included in the immediately preceding Reserve Report, so that the
Administrative Agent shall have received together with title information previously delivered to
the Administrative Agent, satisfactory title information on at least 75% of the total value of the
Proved Hydrocarbon Interests evaluated by such Reserve Report.  


     (b)     If the Borrower has provided title information for additional Oil and Gas Properties under
Section 8.12(a), the Borrower shall, within 60 days of notice from the Administrative Agent that
title defects or exceptions exist with respect to such additional Properties, either (i) cure any
such title defects or exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03 raised by such information, (ii) substitute acceptable Mortgaged
Properties with no title defects or exceptions except for Permitted Liens having an equivalent
value or (iii) deliver title information in form and substance acceptable to the Administrative
Agent so that the Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, satisfactory title information on at least 75% of
the value of the Proved Hydrocarbon Interests evaluated by such Reserve Report.  For purposes of
this Section 8.12(b), the Administrative Agent must deliver any notice of title defects or
exceptions with respect to any Oil and Gas Properties within 60 days following the Administrative
Agent’s receipt of title information for such Oil and Gas Properties.  


     (c)     If the Borrower is unable to cure any title defect requested by the Administrative Agent
or the Lenders to be cured within the 60-day period or the Borrower does not comply with the
requirements to provide acceptable title information covering 75% of the value of the Proved
Hydrocarbon Interests evaluated in the most recent Reserve Report, such default shall not be a
Default, but instead the Administrative Agent, at the direction of the Required Lenders, shall have
the right to exercise the following remedy in their sole discretion from time to time, and any
failure to so exercise this remedy at any time shall not be a waiver as to future exercise of the
remedy by the Administrative Agent or the Lenders.  To the extent that the Administrative Agent is
not reasonably satisfied with title to any Mortgaged Property after the 60-day period has elapsed,
such unacceptable Mortgaged Property shall not count towards the 75% requirement, and the
Administrative Agent may send a notice to the Borrower and the Lenders that the then outstanding
Borrowing Base shall be reduced by an amount as determined by the Required Lenders to cause the
Borrower to be in compliance with the requirement to provide acceptable



68









 




title information on 75% of the value of the Proved Hydrocarbon Interests.  This new Borrowing
Base shall become effective immediately after receipt of such notice by the Borrower.  



     Section 8.13   Additional Collateral; Additional Guarantors.  (a) In connection with
each redetermination of the Borrowing Base, the Borrower shall review the Reserve Report and the
list of current Mortgaged Properties to ascertain whether the Mortgaged Properties represent at
least 80% of the total value of the Proved Hydrocarbon Interests evaluated in the most recently
completed Reserve Report after giving effect to exploration and production activities,
acquisitions, dispositions and production.  In the event that the Mortgaged Properties do not
represent at least 80% of such total value, then the Borrower shall, and shall cause its Restricted
Subsidiaries to, grant, within 30 days of the delivery of the certificate required under Section
8.11(c) (or such longer period as the Administrative Agent may agree in its discretion), to the
Administrative Agent as security for the Secured Indebtedness a first-priority Lien interest
(provided that Permitted Liens may exist) on additional Oil and Gas Properties evaluated in the
most recently completed Reserve Report containing Proved Hydrocarbon Interests not already subject
to a Lien of the Security Instruments such that after giving effect thereto, the Mortgaged
Properties will represent at least 80% of such total value.  All such Liens will be created and
perfected by and in accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments, all in form and substance reasonably
satisfactory to the Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes.  Notwithstanding anything to the
contrary contained in this Agreement, if any Restricted Subsidiary places a Lien on its Oil and Gas
Properties to secure the Secured Indebtedness and such Restricted Subsidiary is not a Guarantor,
then it shall become a Guarantor and comply with Section 8.13(c).  


     (b)     If the Borrower or any Restricted Subsidiary becomes the owner of a Restricted Subsidiary,
then the Borrower shall, or shall cause such Restricted Subsidiary to, promptly, but in any event
no later than 30 days after the date of becoming an owner thereof (or such longer period as the
Administrative Agent may agree in its discretion), (i) pledge (x) 100% of the Equity Interests of
such new Restricted Subsidiary if such Subsidiary is a Domestic Subsidiary or (y) 65% of the total
combined voting power of all classes of Equity Interests and 100% of all non-voting Equity
Interests of such new Restricted Subsidiary, if such new Restricted Subsidiary is a Foreign
Subsidiary (including, without limitation, delivery of original stock certificates evidencing the
Equity Interests of such new Restricted Subsidiary, together with appropriate undated stock powers
for each certificate duly executed in blank by the registered owner thereof) and (ii) execute and
deliver such other additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent.  


     (c)     The Borrower shall cause the following Persons to guarantee the Secured Indebtedness
pursuant to the Guaranty Agreement:




     (i)     each Material Restricted Subsidiary;




     (ii)     any Person required to guarantee the Secured Indebtedness in order for the
Borrower to be in compliance with Section 9.05(b);




     (iii)     any Person that guarantees any Existing Debt or any Permitted Additional Debt;




     (iv)     any Restricted Subsidiary that places a Lien as required by the last sentence of
Section 8.13(a) on its Oil and Gas Properties to secure the Secured Indebtedness; and




     (v)     one or more additional Restricted Subsidiaries to the extent necessary to cause (A)
the total assets of the Restricted Subsidiaries that are not Guarantors to be less than 15%
of



69









 







the combined assets of the Borrower and its Restricted Subsidiaries and (B) the
combined EBITDAX of such Restricted Subsidiaries to be less than 15% of the combined EBITDAX
of the Borrower and its Restricted Subsidiaries.  


     (d)     In connection with any guaranty required by Section 8.13(c), the Borrower shall, or shall
cause such Subsidiary or other Person to promptly, but in any event no later than 30 days (or such
longer period as the Administrative Agent may agree in its discretion) after the event requiring
such guaranty, execute and deliver (i) a supplement to the Guaranty Agreement and (ii) such other
additional closing documents, certificates and legal opinions as shall reasonably be requested by
the Administrative Agent.  If at any time any Person is not otherwise required to guarantee the
Secured Indebtedness hereunder (whether pursuant to the other provisions of this Section 8.13 or
otherwise) or under any other Loan Document, then upon receipt by the Administrative Agent of
evidence satisfactory to it that such Person has been fully and finally released from its guarantee
obligations in respect of the Existing Debt or, if applicable, any Permitted Additional Debt, as
the case may be, such Person shall be released from its guarantee obligations with respect to the
Secured Indebtedness and the Administrative Agent shall, at the sole cost and expense of the
Borrower, execute such further documents and do all such further acts so as to reasonably evidence
such release.  


     (e)     The Borrower shall not permit any Canadian Subsidiary to guarantee any Existing Debt or
any Permitted Additional Debt.  


     Section 8.14   ERISA Compliance.  The Borrower will promptly furnish to the
Administrative Agent immediately upon becoming aware of the occurrence of any ERISA Event that
alone or together with any other ERISA Events that have occurred, would reasonably be expected to
result in liability of Borrower, its Restricted Subsidiaries, or any ERISA Affiliates in an
aggregate amount which would reasonably be expected to have a Material Adverse Effect, a written
notice signed by a Responsible Officer, specifying the nature thereof, what action the Borrower,
any of its Restricted Subsidiaries or any ERISA Affiliate is taking or proposes to take with
respect thereto, and, when known, any action taken or proposed by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto.  With respect to each Pension Plan, the
Borrower will, and will cause each Restricted Subsidiary and ERISA Affiliate to, (A) satisfy in
full and in a timely manner, without incurring any late payment or underpayment charge or penalty
that would reasonably be expected to have a Material Adverse Effect and without giving rise to any
Lien securing an amount in excess of $50,000,000, all of the contribution and funding requirements
of section 412 of the Code (determined without regard to subsections (d), (e), (f) and (k) thereof)
and of section 302 of ERISA (determined without regard to sections 303, 304 and 306 of ERISA), and
(B) pay, or cause to be paid, to the PBGC in a timely manner, without incurring any late payment or
underpayment charge or penalty that would reasonably be expected to have a Material Adverse Effect,
all premiums required pursuant to sections 4006 and 4007 of ERISA.  


     Section 8.15   Unrestricted Subsidiaries.  The Borrower:



     (a)     will cause the management, business and affairs of each of the Borrower and its Restricted
Subsidiaries to be conducted in such a manner (including, without limitation, by keeping separate
books of account, furnishing separate financial statements of Unrestricted Subsidiaries to
creditors and potential creditors thereof and by not permitting Properties of the Borrower and its
respective Restricted Subsidiaries to be commingled) so that each Unrestricted Subsidiary that is a
corporation will be treated as a corporate entity separate and distinct from the Borrower and the
Restricted Subsidiaries;



     (b)     will not, and will not permit any of the Restricted Subsidiaries to, incur, assume,
guarantee or be or become liable for any Debt of any of the Unrestricted Subsidiaries; and



70









 





     (c)     will not permit any Unrestricted Subsidiary to hold any Equity Interest in, or any Debt
of, the Borrower or any Restricted Subsidiary.  


     Section 8.16   Section 1031 Exchange.  If the Borrower elects to participate in a
Section 1031 Exchange with respect to any Oil and Gas Properties, then on or before 180 days
following the acquisition by the Section 1031 Counterparty of such Oil and Gas Properties from the
Borrower, the Borrower shall receive from the Section 1031 Counterparty (a) Oil and Gas Properties
having a substantially equivalent value to the Oil and Gas Properties that the Section 1031
Counterparty acquired from the Borrower, (b) payment in full in cash of the note given by the
Section 1031 Counterparty to the Borrower or (c) any combination of Oil and Gas Properties and a
partial cash prepayment of such note, such that the Oil and Gas Properties received and such
partial cash prepayment have an aggregate value not less than the value of the Oil and Gas
Properties that the Section 1031 Counterparty acquired from the Borrower.  


     Section 8.17   Use of Proceeds.  The Borrower will use the proceeds of the Loans and
will use Letters of Credit for general corporate purposes, including acquisitions, Investments,
working capital, repayment of Debt and the making of Restricted Payments, in each case to the
extent not otherwise prohibited hereunder; provided that the aggregate amount of LC Exposure under
all Letters of Credit used as credit support for the Borrower’s or any Restricted Subsidiary’s
obligations under any Swap Agreement shall not exceed an amount equal to (a) $20,000,000 minus (b)
the amount of cash or treasury securities subject to Liens permitted by Section 9.03(l).  


     Section 8.18   Fiscal Year.  The Borrower’s fiscal year shall end on December 31.  


ARTICLE 9

Negative Covenants




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



     Section 9.01   Financial Covenants.  (a) Interest Coverage Ratio.  The Borrower will
not, as of the last day of any fiscal quarter, permit its ratio of (i) EBITDAX for the period of
four fiscal quarters then ending (ii) to Cash Interest Expense for such period, commencing with the
four fiscal quarter period ending September 30, 2011, to be less than 2.5 to 1.0.  


     (b)     Current Ratio.  The Borrower will not permit, as of the last day of any fiscal
quarter, its ratio of (i) consolidated current assets (including the unused amount of the total
Commitments (but only to the extent that the Borrower is permitted to borrow such amount under the
terms of this Agreement, including, without limitation, Section 6.02 hereof), but excluding current
assets resulting from the requirements of ASC Topic 815 and ASC Topic 410) to (ii) consolidated
current liabilities (excluding current maturities of long term debt and current liabilities
resulting from the requirements of ASC Topic 815 and ASC Topic 410) to be less than 1.0 to 1.0,
commencing with the fiscal quarter ending September 30, 2011; provided that for purposes of
calculating such ratio, the current assets and current liabilities of all Unrestricted Subsidiaries
shall be excluded as set forth in Section 1.05.  


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



     (a)     the Notes or other Secured Indebtedness;




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     (b)     the Guarantee by the Borrower or any Restricted Subsidiary of any Debt of any
Restricted Subsidiary that is otherwise permitted hereunder so long as such Guarantee guarantees
not more than the percentage of such Debt that equals the percentage of common equity owned
directly or indirectly by the Borrower or any Restricted Subsidiary, as applicable, in such
Restricted Subsidiary at the time such Guarantee is executed;



     (c)     Debt of the Borrower or any Restricted Subsidiary to the Borrower or any other Restricted
Subsidiary;



     (d)     Debt outstanding on the date hereof and set forth on Schedule 9.02, including without
limitation the Existing Debt;



     (e)     Debt of a Person which becomes a Restricted Subsidiary after the date hereof, provided
that (i) such Debt existed at the time such Person became a Restricted Subsidiary and was not
created in anticipation thereof, (ii) immediately after giving effect to the acquisition of such
Person by the Borrower or a Restricted Subsidiary, no Default or Event of Default shall have
occurred and be continuing and (iii) that all Debt incurred under this clause (e), together with
all Debt incurred pursuant to clause (j) below, does not exceed $45,000,000 in the aggregate at any
one time outstanding;



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



     (g)     Debt consisting of performance bonds, surety bonds, appeal bonds, injunctions bonds and
other obligations of a like nature provided by the Borrower or any Restricted Subsidiary;



     (h)     Non-Recourse Debt in an aggregate amount outstanding at any time not to exceed
$15,000,000;



     (i)     Debt constituting Permitted Investments;



     (j)     Debt incurred to finance the acquisition, construction or improvement of fixed or capital
assets (including, without limitation, obligations in connection with Capital Leases) secured by
Liens permitted by Section 9.03(i); provided that all Debt incurred under this clause (j), together
with all Debt incurred pursuant to clause (e) above, does not exceed $45,000,000 in the aggregate
at any one time outstanding;



     (k)     other Debt not to exceed $55,000,000 in the aggregate at any one time outstanding;



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



     (m)     Taxes, assessments or other governmental charges which are not yet due or are being
contested in good faith in accordance with Section 7.09;



     (n)     Debt and any guarantees thereof by the Guarantors (including any Persons becoming
Guarantors simultaneously with the incurrence of such Debt), provided that: (i) immediately before,
and after giving effect to, the incurrence of any such Debt (and any concurrent repayment of Debt
with the proceeds of such incurrence), no Default exists or would exist, (ii) such Debt is not
secured by any Lien, (iii) such Debt does not have any scheduled amortization of principal prior to
the Maturity Date, (iv) such Debt has a stated maturity no earlier than 91 days after the Maturity
Date, (v) such Debt does not have mandatory redemption events that are not Events of Default
hereunder, (vi) such Debt does not prohibit prior repayment of Loans, and (vii) at the time any
such Debt is incurred, the Borrowing Base then in



72









 




effect shall be automatically reduced by the lesser of (A) an amount equal to the product of
0.25 multiplied by the stated principal amount of such Debt, rounded to the nearest $1,000,000 and
(B) if requested by the Borrower, an amount (which may be zero) approved by the Required Lenders,
and the Borrowing Base as so reduced shall become the new Borrowing Base immediately upon the date
of such issuance or assumption, effective and applicable to the Borrower, the Agents, each Issuing
Bank and the Lenders on such date until the next redetermination or modification thereof hereunder.  For purposes of this Section 9.02(n), the “stated principal amount” shall mean the stated
face amount of such Debt without giving effect to any original issue discount;




     (o)     Any renewals, refinancings or extensions of (but, except to the extent permitted herein,
not increases in (except to cover premiums or penalties)) any Debt described in clauses (d), (e),
(j) or (n) of this Section 9.02; provided, however, that any refinancing of Debt described in
clause (n) shall comply with the provisions of such clause (n);



     (p)     Debt consisting of the financing of insurance premiums if the amount financed does not
exceed the premium payable for the current policy period;



     (q)     Debt consisting of obligations to deliver commodities, goods or services, including,
without limitation, Hydrocarbons, in consideration of one or more advance payments so long as
delivery of such commodities, goods or services is due within 60 days of such advance payment; and



     (r)     Debt consisting of deferred put premiums on Swap Agreements entered into by Borrower or
any Restricted Subsidiary with Approved Counterparties.  


     For the avoidance of doubt, to the extent any Debt could be attributable to more than one
subsection of this Section 9.02, the Borrower or any Restricted Subsidiary may categorize all or
any portion of such Debt to any one or more subsections of this Section 9.02 as it elects and
unless as otherwise expressly provided, in no event shall (x) the same portion of any Debt be
deemed to utilize or be attributable to more than one subsection of this Section 9.02 or (y) the
Borrower or any Restricted Subsidiary utilize Section 9.02(k) for the purposes of issuing unsecured
senior notes or unsecured subordinated notes in the capital markets.  


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



     (a)     Liens created by the Security Instruments.  


     (b)     Excepted Liens.  


     (c)     Lease burdens payable to third parties which are deducted in the calculation of discounted
present value in the Reserve Report including, without limitation, any royalty, overriding royalty,
net profits interest, production payment, carried interest or reversionary working interest in
existence as of the Effective Date or as a result of or in accordance with the Borrower’s or a
Restricted Subsidiary’s acquisition of the property burdened thereby.  


     (d)     Liens securing Non-Recourse Debt permitted by Section 9.02(h).  


     (e)     Liens on the BBEP Common Units.  


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     (f)     Pledges or deposits in the ordinary course of business securing liabilities to insurance
carriers under insurance or self-insurance arrangements.  


     (g)     Any Lien existing on any Oil and Gas Property or asset prior to the acquisition thereof by
the Borrower or any Restricted Subsidiary or existing on any Oil and Gas Property or asset of any
Person that becomes a Restricted Subsidiary after the date hereof prior to the time such Person
becomes a Restricted Subsidiary; provided that (i) such Lien is not created in contemplation of or
in connection with such acquisition or such Person becoming a Restricted Subsidiary, as applicable,
(ii) such Lien shall not apply to any other Oil and Gas Property or assets of the Borrower or any
Restricted Subsidiary and (iii) such Lien shall secure only those obligations which it secures on
the date of such acquisition or the date such Person becomes a Restricted Subsidiary, as
applicable, and extensions, renewals and replacements of such obligations that are not in excess of
the outstanding principal amount of such obligations as of such acquisition date or date such
Person becomes a Restricted Subsidiary (provided, that such obligations and such extensions,
renewals, and replacements thereof so secured by such Lien, together with the Debt secured by Liens
described in clause (i) below, shall at no time exceed $45,000,000 in the aggregate).  


     (h)     Liens in existence on the date hereof listed on Schedule 9.03.  


     (i)     Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any
of its Restricted Subsidiaries; provided that (i) such Liens secure Debt permitted by Section
9.02(j) hereof, (ii) such Liens and the Debt secured thereby are incurred prior to or within 180
days after such acquisition, construction or improvement, (iii) the Debt secured thereby does not
exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets, (iv)
such Liens shall not apply to any other property or assets of the Borrower or any of such
Restricted Subsidiaries, and (v) the Debt secured by such Liens, together with the obligations and
extensions, renewals and replacements of such obligations described in clause (g) above, shall at
no time exceed $45,000,000 in the aggregate.  


     (j)     Liens arising pursuant to Section 9.343 of the Texas Uniform Commercial Code or other
similar statutory provisions of other states with respect to production purchased from others.  


     (k)     Liens on real property and improvements thereon (other than on Oil and Gas Properties).  


     (l)     Liens relating to any cash or treasury securities used as credit support for any Swap
Agreement in an aggregate amount not to exceed the difference of (i) $20,000,000 minus (ii)
the aggregate amount of LC Exposure under all Letters of Credit used as credit support for the
Borrower’s or any Restricted Subsidiary’s obligations under any Swap Agreement.  


     (m)     Liens not otherwise included in this Section 9.03 so long as the sum of (i) the lesser of
(A) the aggregate outstanding principal amount of the obligations of the Borrower or any Restricted
Subsidiary secured thereby and (B) the aggregate fair market value (determined as of the date such
Lien is incurred) of the assets subject thereto (as to the Borrower and all Restricted
Subsidiaries) plus (ii) the amount of cash that is subject to Liens permitted by Section
9.03(l) at such time plus (iii) the aggregate amount of LC Exposure under all Letters of
Credit used to post collateral or margin to secure the Borrower’s or any Restricted Subsidiary’s
obligations under any Swap Agreement, does not exceed $55,000,000 in the aggregate at any one time;



     Notwithstanding the foregoing, (i) no Liens may at any time attach to (A) any Oil and Gas
Properties of the Borrower or its Restricted Subsidiaries of the types described in clauses (a),
(b), (c), (e) and (f) of the definition of Oil and Gas Properties evaluated in the Reserve Report
used in the most recent determination of the Borrowing Base, or (B) any Equity Interests issued by
any Restricted Subsidiary to the Borrower or any other Restricted Subsidiary other than, in the
case of clause (A) or (B) above,



74









 




Permitted Liens, and (ii) in no event may any Liens on any Property of the Borrower or any
Restricted Subsidiary secure any obligation of the Borrower or any Restricted Subsidiary under any
Swap Agreement other than Liens created pursuant to the Security Instruments and Liens permitted
under Section 9.03(l).  For the avoidance of doubt, to the extent any Lien could be attributable to
more than one subsection of this Section 9.03, the Borrower or any Restricted Subsidiary may
categorize all or any portion of such Lien to any one or more subsections of this Section 9.03 as
it elects and unless as otherwise expressly provided, in no event shall the same portion of any
Lien be deemed to utilize or be attributable to more than one subsection of this Section 9.03.  



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



     (a)     the Borrower may declare and pay dividends with respect to its Equity Interests payable
solely in additional shares of its Equity Interests or any other non-cash form (other than
Disqualified Capital Stock);



     (b)     Restricted Subsidiaries may declare and pay unlimited dividends, fees and other amounts
ratably with respect to their Equity Interests and may distribute any other Property to its direct
or indirect Equity Interest holders that are either the Borrower or a Guarantor;



     (c)     the Borrower may make Restricted Payments pursuant to and in accordance with stock option
plans, equity plans or other benefit or compensation plans providing for payments on account of
services provided by current or former directors, officers, employees or consultants of the
Borrower or its Restricted Subsidiaries or any of its Affiliates;



     (d)     to the extent not permitted by clauses (a) to (c) above, the Borrower may make (i)
Restricted Payments up to an aggregate amount of $20,000,000 and (ii) additional Restricted
Payments up to an aggregate amount of $55,000,000 (not including Restricted Payments made under the
foregoing clause (i)) if, in the case of Restricted Payments made under this clause (ii), (A) no
Default has occurred and is continuing at the time such Restricted Payment is made or would result
from the making of such Restricted Payment, (B) the Borrower’s Minimum Liquidity after giving
effect to such Restricted Payment is not less than the greater of (x) 30% of the Borrowing Base
then in effect and (y) $250,000,000, and (C) after giving effect to such Restricted Payment, the
Borrower is in pro forma compliance with Section 9.01;



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



     (f)     the Borrower may redeem the share purchase rights issued pursuant to that certain Rights
Agreement, dated as of March 11, 2003, between the Borrower and Mellon Investor Services LLC, as
Rights Agent, in accordance with the terms of such Rights Agreement; and



     (g)     the Borrower and any Restricted Subsidiary may dividend, distribute or transfer the Equity
Interests or, in connection with a Qualified IPO, other assets or Debt of an Unrestricted
Subsidiary.  


     For the avoidance of doubt, to the extent any Restricted Payment could be attributable to more
than one subsection of this Section 9.04, the Borrower or any Restricted Subsidiary may categorize
all or any portion of such Restricted Payment to any one or more subsections of this Section 9.04
as it elects and unless as otherwise expressly provided, in no event shall the same portion of any
Restricted Payment be deemed to utilize or be attributable to more than one subsection of this
Section 9.04.  


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     Section 9.05   Repayment of Debt; Amendment of Indentures.  The Borrower will not, and
will not permit any Restricted Subsidiary to:



     (a)     call, make or offer to make any optional or voluntary Redemption (whether in whole or in
part) of any Existing Debt or Permitted Additional Debt, provided, however, that the Borrower and
its Restricted Subsidiaries may (i) Redeem Existing Debt (other than the Existing Convertible
Debentures) or Permitted Additional Debt up to an aggregate amount of $20,000,000, (ii) Redeem the
Existing Convertible Debentures if, in the case of Redemptions made under this clause (ii), (A) no
Default or Borrowing Base Deficiency has occurred and is continuing at the time such Redemption is
made or would result from the making of such Redemption, and (B) the Borrower’s Minimum Liquidity
after giving effect to such Redemption is not less than the greater of (1) 15% of the Borrowing
Base then in effect and (2) $150,000,000, (iii) Redeem additional Existing Debt or Permitted
Additional Debt if, in the case of Redemptions made under this clause (iii), (x) no Default has
occurred and is continuing at the time such Redemption is made or would result from the making of
such Redemption, (y) the Borrower’s Minimum Liquidity after giving effect to such Redemption is not
less than the greater of (1) 30% of the Borrowing Base then in effect and (2) $250,000,000 and (z)
after giving effect to such Redemption, the Borrower is in pro forma compliance with Section 9.01,
and (iv) Redeem Existing Debt or Permitted Additional Debt in connection with any refinancing
thereof permitted pursuant to Section 9.02(o);



     (b)     amend, modify, waive or otherwise change, consent or agree to any amendment, modification,
waiver or other change to, any of the terms of the Existing Debt or Permitted Additional Debt if
(i) the effect thereof would be to shorten its maturity to be less than 91 days after the Maturity
Date or average life or increase the amount of any payment of principal thereof or increase the
rate or shorten any period for payment of interest thereon, (ii) such action requires the payment
of a consent fee that has not been approved by the Administrative Agent (such approval not to be
unreasonably withheld), or (iii) the effect thereof would be to add any guarantor or surety, unless
such guarantor or surety also guarantees the Secured Indebtedness pursuant to the Guaranty
Agreement and each of the Borrower and such guarantor or surety otherwise complies with Section
8.13(c); or



     (c)     if the Borrower or any Restricted Subsidiary issues any Debt that is subordinated in right
of payment to the Secured Indebtedness, designate any other Debt (other than the Secured
Indebtedness, the Existing Debt, and any Permitted Additional Debt) as “designated senior
indebtedness” or “designated guarantor senior indebtedness” or give any such other Debt any other
similar designation for the purposes of any instrument under which that subordinated Debt is
issued.  


     Section 9.06   Investments, Loans and Advances.  The Borrower will not, and will not
permit any Restricted Subsidiary to, make or permit to remain outstanding any Investments in or to
any Person, except that the foregoing restriction shall not apply to:



     (a)     Investments made prior to the Effective Date and reflected in the Financial Statements or
which are disclosed to the Lenders in Schedule 9.06.  


     (b)     Readily marketable direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof (or investments in mutual funds
or similar funds which invest solely in such obligations).  


     (c)     Investments in securities with maturities of six months or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory of the United
States, or by any political subdivision or taxing authority thereof, and rated at least “A” by S&P
or “A” by Moody’s.  


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     (d)     Repurchase obligations with a term of not more than 30 days for underlying securities of
the types described in clause (b) above entered into with a bank described in clause (e) below.  


     (e)     Time deposits maturing within one year from the date of creation thereof with, including
certificates of deposit issued by, any Lender or any other bank or trust company operating in the
United States or Canada that has capital, surplus and undivided profits aggregating at least
$100,000,000 (as of the date of such bank or trust company’s most recent reports).  


     (f)     All Investments held in the form of cash or cash equivalents.  


     (g)     All Investments in Sweep Accounts.  


     (h)     Commercial paper of a domestic issuer if at the time of purchase such commercial paper is
rated in one of the two highest ratings categories of S&P or Moody’s.  


     (i)     Money market mutual or similar funds having assets in excess of $100,000,000, at least 95%
of the assets of which are comprised of assets specified in clauses (b), (e), (f), (g), and (h)
above.  


     (j)     Investments (i) made by the Borrower in or to any Restricted Subsidiary, (ii) made by any
Restricted Subsidiary in or to the Borrower or any other Restricted Subsidiary, and (iii) made by
the Borrower or any Restricted Subsidiary in or to Unrestricted Subsidiaries; provided that, with
respect to any Investment described in clause (iii), the aggregate amount at any one time of all
such Investments (valued at cost as of the date of such Investment) made after the Effective Date
shall not exceed $45,000,000; provided that a conversion or exchange of Debt of an Unrestricted
Subsidiary held by the Borrower or a Restricted Subsidiary to or for equity of such Unrestricted
Subsidiary shall not be considered an incremental Investment for purposes of this clause (j).  


     (k)     Extensions of customer or trade credit in the ordinary course of business.  


     (l)     Guarantee obligations permitted by Section 9.02.  


     (m)     All Investments constituting Debt permitted by Section 9.02.  


     (n)     All Investments arising from transactions by the Borrower or any Restricted Subsidiary in
the ordinary course of business, including endorsements of negotiable instruments, earnest money
deposits and deposits to secure obligations that do not constitute Debt or obligations under Swap
Agreements, debt obligations and other Investments received by the Borrower or any Restricted
Subsidiary in connection with the bankruptcy or reorganization of customers and in settlement of
delinquent obligations of, and other disputes with, customers.  


     (o)     Any Investments by the Borrower or any Restricted Subsidiary in any Persons including,
without limitation, Unrestricted Subsidiaries; provided that, the aggregate amount of all such
Investments made pursuant to this clause (o) outstanding at any one time shall not exceed
$55,000,000 in the aggregate (measured on a cost basis).  


     (p)     All Investments by the Borrower or any Restricted Subsidiary in Persons in which the
Borrower or such Restricted Subsidiary, as applicable, owns an Equity Interest (i) that own, lease,
hold and/or are party to (A) any Oil and Gas Properties, (B) any processing, gathering or treating
systems, (C) any farm-out, farm-in, joint operating, joint venture or area of mutual interest
agreements, (D) any pipelines or other mid-stream activities, in each case located within or
related to the geographic boundaries of the United States of America and/or (E) any facility or
activity related to compressed or



77









 




liquefied natural gas or (ii) the purpose of which is to act as a direct or indirect holding
company for any Person that satisfies one or more provisions of subclause (i) of this clause (p),
provided, as to Investments made under this clause (p) (measured on a cost basis), (x) the Borrower
and its Restricted Subsidiaries do not make more than $45,000,000 in the aggregate of any such
Investments during any fiscal year and (y) the total amount of any such Investments at any one time
does not exceed $125,000,000 in the aggregate.  



     (q)     Entry into operating agreements, working interests, royalty interests, mineral leases,
processing, gathering and treating agreements, farm-in and farm-out agreements, development
agreements, contracts for the sale, transportation or exchange of oil, natural gas or CO2,
unitization agreements, pooling arrangements, service contracts, area of mutual interest
agreements, production sharing agreements, pipeline agreements or other similar or customary
agreements, transactions, properties, interests or arrangements, and Investments and expenditures
in connection therewith or pursuant thereto, in each case made in the ordinary course of any
businesses permitted under this Agreement.  


     (r)     The Investment by the Borrower prior to the Effective Date in the BBEP Common Units.  


     (s)     Loans and advances to directors, officers and employees in the ordinary course of business
consistent with prior practice, not to exceed an aggregate amount of $5,000,000 at any one time
outstanding.  


     (t)     Indemnities permitted under this Agreement.  


     (u)     Investments consisting of Swap Agreements entered into for non-speculative purposes,
subject to compliance with Section 9.03 and Section 9.13.  


     (v)     So long as no Default exists or results therefrom, loans to the Section 1031 Counterparty
participating in a Section 1031 Exchange provided that (i) the amount of any such loan does not
exceed the sum of (A) purchase price to be paid by the recipient of such loan for the purchase
price of the assets subject to the related Section 1031 Exchange, and (B) estimated capital
expenditures and operating expenses to be incurred with respect to such assets during the 180 day
period during which such Section 1031 Exchange is to be completed, (ii) such loan is secured by a
first priority security interest in the assets to be acquired by such recipient pursuant to the
Section 1031 Exchange, (iii) the Administrative Agent has a perfected first priority security
interest in such loan and any note or other document evidencing or securing such loan, (iv) the
documentation relating to such Section 1031 Exchange and the related Section 1031 Counterparty are
satisfactory to the Administrative Agent in its reasonable discretion and (v) the Administrative
Agent shall have received an opinion from Borrower’s counsel in form and substance satisfactory to
the Administrative Agent.  


     (w)     Guarantees by the Borrower or any Restricted Subsidiary of operating leases or of other
obligations that do not constitute Debt, in each case entered into by the Borrower or any
Restricted Subsidiary in the ordinary course of business.  


     (x)     Investments of any Person that becomes a Restricted Subsidiary of the Borrower after the
Effective Date to the extent that such Investments were not made in contemplation of or in
connection with such acquisition, merger, consolidation or amalgamation and were in existence on
the date of such acquisition, merger or consolidation.  


     (y)     Any Investment by the Borrower or one or more of its Restricted Subsidiaries in a Person,
if as a result of such Investment such Person becomes a Restricted Subsidiary or such Person is



78









 




merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of
its assets to, the Borrower or a Restricted Subsidiary.  



     (z)     Any Investment constituting non-cash consideration received in any asset sale permitted by
Section 9.10.  


     (aa)     Investments resulting from the delivery of credit support provided by, or on behalf of,
the Borrower or any Restricted Subsidiary to counterparties pursuant to any Swap Agreement, in each
case to the extent permitted by Section 8.17 and Section 9.03.  


     (bb)     Investments made in Unrestricted Subsidiaries consisting of Equity Interests issued by,
and assets or Debt of, other Unrestricted Subsidiaries in connection with a Qualified IPO.  


     For the avoidance of doubt, to the extent any Investment could be attributable to more than
one subsection of this Section 9.06, the Borrower or any Restricted Subsidiary may categorize all
or any portion of such Investment to any one or more subsections of this Section 9.06 as it elects
and unless as otherwise expressly provided, in no event shall the same portion of any Investment be
deemed to utilize or be attributable to more than one subsection of this Section 9.06.  For
purposes of Section 9.06(j), (o) and (p), the aggregate Investments thereunder shall be determined
net of the cost of any such Investment (x) that is subsequently sold, redeemed or repaid or (y) in
an Unrestricted Subsidiary that is subsequently designated as a Restricted Subsidiary.  


     Section 9.07   Designation and Conversion of Restricted and Unrestricted Subsidiaries.  (a) Unless designated as an Unrestricted Subsidiary on Schedule 7.11 as of the Effective Date or
thereafter, assuming compliance with Section 9.07(b), any Person that becomes a Domestic Subsidiary
of the Borrower or any of its Restricted Subsidiaries shall be classified as a Restricted
Subsidiary.  


     (b)     The Borrower may designate by written notification thereof to the Administrative Agent,
any Restricted Subsidiary, including a newly formed or newly acquired Subsidiary, as an
Unrestricted Subsidiary if (i) prior, and after giving effect, to such designation, neither a
Default nor a Borrowing Base Deficiency would exist and (ii) such designation is deemed to be an
Investment in an Unrestricted Subsidiary in an amount equal to the fair market value as of the date
of such designation of the Borrower’s direct and indirect ownership interest in such Subsidiary and
such Investment would be permitted to be made at the time of such designation under Section
9.06(j), (p) or (q).  


     (c)     The Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if
after giving effect to such designation, (i) the representations and warranties of the Borrower and
its Restricted Subsidiaries contained in each of the Loan Documents are true and correct on and as
of such date as if made on and as of the date of such redesignation (or, if stated to have been
made expressly as of an earlier date, were true and correct as of such date), (ii) no Default would
exist and (iii) the Borrower complies with the requirements of Section 8.13 and Section 8.15.  


     Section 9.08   Nature of Business; International Operations.  The Borrower will not, and
will not permit any Restricted Subsidiary to, engage in any business or activity other than
businesses or activities typical of an integrated energy company or businesses or activities
reasonably related thereto.  Notwithstanding the foregoing, this Section 9.08 shall not prohibit
the Borrower and its Restricted Subsidiaries from holding and developing the Properties or engaging
in any business or activity described on Schedule 9.08.  From and after the date hereof, the
Borrower and its Restricted Subsidiaries will not acquire or make any other expenditure (whether
such expenditure is capital, operating or otherwise) in or related to, any Oil and Gas Properties
not located in North America.  


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     Section 9.09   Mergers, Etc.  The Borrower will not, and will not permit any Restricted
Subsidiary to, merge into or with or consolidate with any other Person, or sell, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or substantially all of
its Property to any other Person (whether now owned or hereafter acquired) any such transaction, a
“consolidation”), or liquidate or dissolve; provided that



     (a)      any Restricted Subsidiary may (i) participate in a consolidation with (A) the Borrower
(provided that the Borrower shall be the continuing or surviving corporation), (B) any other
Restricted Subsidiary (provided that if a Guarantor is a party to such transaction, the survivor is
a Guarantor or becomes a party to the Guaranty Agreement as a Guarantor) or (C) any other
Subsidiary (provided that either (x) a Restricted Subsidiary shall be the continuing or surviving
Person or (y) if an Unrestricted Subsidiary is the continuing or surviving Person, (1) the
representations and warranties of the Borrower and its Restricted Subsidiaries contained in each of
the Loan Documents are true and correct on and as of such date as if made on and as of the date of
such consolidation (or, if stated to have been made expressly as of an earlier date, were true and
correct as of such date), (2) no Default or Borrowing Base Deficiency would exist and (3) the
Borrower is in compliance with the requirements of Section 8.13 and Section 8.15) or (ii) transfer
all or substantially all of its assets to a Guarantor or a Person that becomes a party to the
Guaranty Agreement as a Guarantor;



     (b)      the Borrower or any Restricted Subsidiary may participate in a consolidation (other than
as described in clause (a) above) if, at the time thereof and immediately after giving effect
thereto, no Default shall occur and be continuing and no Borrowing Base Deficiency would result
therefrom and, the Borrower or such Restricted Subsidiary, as the case may be, is the surviving
entity or the recipient of any such sale, lease or other disposition of Property, provided that no
such consolidation shall have the effect of releasing the Borrower or any Guarantor from any of its
obligations under this Agreement or any other Loan Document;



     (c)      any sale of all or substantially all of the assets of any Restricted Subsidiary provided
that such sale is permitted by Section 9.10; and



     (d)      any Restricted Subsidiary may liquidate or dissolve if (i) the continued existence and
operation of such Restricted Subsidiary is no longer in the best interests of the Borrower and its
Subsidiaries taken as a whole (as reasonably determined by a Responsible Officer of the Borrower),
(ii) such liquidation and dissolution is not disadvantageous in any material respect to the
Lenders, and (iii) at the time thereof and immediately after giving effect thereto, no Default
shall occur and be continuing and no Borrowing Base Deficiency would result therefrom.  


     Section 9.10   Sale of Properties and Termination of Oil and Gas Swap Agreements.  The
Borrower will not, and will not permit any Restricted Subsidiary to, sell, assign, farm-out, convey
or otherwise transfer (including by way of a Reclassification) any Oil and Gas Property evaluated
in the Reserve Report used in the most recent determination of the Borrowing Base or any interest
therein or any Restricted Subsidiary owning any such Oil and Gas Property or terminate, unwind,
cancel or otherwise dispose of any Oil and Gas Swap Agreement except for:



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



     (b)     farmouts of undeveloped acreage and assignments in connection with such farmouts or the
abandonment, farm-out, exchange, lease, sublease or other disposition of Oil and Gas Properties not
containing Proved Hydrocarbon Interests which were not evaluated in the Reserve Report used in the
most recent determination of the Borrowing Base in the ordinary cause of business;



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     (c)     the sale or transfer of equipment or other assets that are no longer necessary or useful
or are obsolete for the business of the Borrower or such Restricted Subsidiary or are replaced by
equipment or other assets usable in the ordinary course of business, of at least comparable value;



     (d)     the sale or other disposition (including Casualty Events and Reclassifications) of such
Oil and Gas Property or any interest therein or any Restricted Subsidiary owning such Oil and Gas
Property or the termination, unwinding, cancelation or other disposition of Oil and Gas Swap
Agreements; provided that:




     (i)     except in the case of a Reclassification, the consideration received in respect of
such sale or other disposition shall be equal to or greater than the fair market value of
the Oil and Gas Property (other than in the case of a Casualty Event), interest therein or
Restricted Subsidiary subject of such sale or other disposition (as reasonably determined by
any Responsible Officer of the Borrower);




     (ii)     no Event of Default or Borrowing Base Deficiency exists or results from such
termination, unwind, cancellation, sale or disposition (including any Casualty Event or
Reclassification);




     (iii)     if during any period between two successive Redetermination Dates the aggregate
amount of (A) the net cash proceeds received by the Borrower from the termination, unwind,
cancelation or other disposition of such Oil and Gas Swap Agreements plus (B) the Recognized
Value of such Oil and Gas Properties sold or disposed of (including by way of Casualty
Events and Reclassifications) exceeds five percent (5%) of the Borrowing Base in effect
during such period, then the Borrowing Base shall be automatically reduced, effective
immediately upon such termination, unwind, cancellation, sale or disposition (including any
Casualty Event or Reclassification) by the amount that (x) aggregate value that the
Administrative Agent attributed to such Oil and Gas Swap Agreements and Oil and Gas
Properties in connection with the most recent determination of the Borrowing Base exceeds
(y) five percent (5%) of the Borrowing Base in effect immediately prior to such
redetermination, and the Borrowing Base as so reduced shall become the new Borrowing Base
immediately upon the date of such termination, unwind, cancellation, sale or disposition
(including Casualty Events and Reclassifications), effective and applicable to the
Borrower, the Agents, each Issuing Bank and the Lenders on such date until the next
redetermination or modification thereof hereunder;




     (iv)     if such termination, unwind, cancellation, sale or disposition (including
Reclassifications, but excluding Casualty Events) would result in an automatic
redetermination of the Borrowing Base pursuant to this Section 9.10, the Borrower shall have
delivered reasonable prior written notice thereof to the Administrative Agent;




     (v)     if a Borrowing Base Deficiency would result from such termination, unwind,
cancellation, sale or disposition (including Reclassifications but excluding Casualty
Events) as a result of an automatic redetermination of the Borrowing Base pursuant to this
Section 9.10, the Borrower prepays Borrowings prior to or contemporaneously with the
consummation of such termination, unwind, cancellation, sale or disposition (including
Reclassifications but excluding Casualty Events), to the extent that such prepayment would
have been required under Section 3.04(c)(iii) (without giving effect to any 30-day period
for payment contained therein) after giving effect to such automatic redetermination of the
Borrowing Base; and



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     (vi)      if a Borrowing Base Deficiency would directly result from a Casualty Event as a
result of an automatic redetermination of the Borrowing Base pursuant to this Section 9.10,
Section 3.04(c)(ii) shall apply.  


     For purposes of this clause (d), such five percent (5%) shall be determined without giving
effect to any asset swaps of Oil and Gas Properties evaluated in the Reserve Report used in the
most recent determination of the Borrowing Base for other Oil and Gas Properties of equal or
greater Recognized Value;



     (e)     the sale of Oil and Gas Properties in connection with tax credit transactions complying
with §29 of the Code or any other analogous provision whether now existing or hereafter enacted,
which sale does not result in a reduction in the right of the Borrower or any Restricted Subsidiary
to receive the cash flow from such Oil and Gas Properties and which sale is on terms reasonably
acceptable to the Administrative Agent;



     (f)     transfers and other dispositions among the Borrower and the Restricted Subsidiaries
subject to compliance with Section 8.13; and



     (g)     transfers permitted by Section 9.09.  


     Section 9.11      Transactions with Affiliates.  The Borrower will not, and will not permit
any Restricted Subsidiary to, enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service, with any Affiliate
(other than the Guarantors), unless such transactions are not otherwise prohibited under this
Agreement and are upon fair and reasonable terms no less favorable to it than it would obtain in a
comparable arm’s length transaction with a Person not an Affiliate.  


     Section 9.12      Negative Pledge Agreements; Dividend Restrictions.  The Borrower will
not, and will not permit any Restricted Subsidiary to, create, incur, assume or suffer to exist any
contract, agreement or understanding which in any way prohibits or restricts the granting,
conveying, creation or imposition of any Lien on any of its Oil and Gas Property or its Equity
Interests in Restricted Subsidiaries in favor of the Administrative Agent and the Secured Parties
or restricts any Restricted Subsidiary from paying dividends or making distributions to the
Borrower or any Guarantor, or which requires the consent of or notice to other Persons in
connection therewith; provided, however, that the preceding restrictions will not apply to
encumbrances or restrictions arising under or by reason of (a) this Agreement or the Security
Instruments, (b) Debt permitted by Section 9.02 secured by Liens permitted by Section 9.03 (subject
to the penultimate sentence thereof and only to the extent related to the Property on which such
Liens were created), or any contract, agreement or understanding creating Liens permitted by
Section 9.03 (subject to the penultimate sentence thereof and only to the extent related to the
Property on which such Liens were created), (c) any leases or licenses or similar contracts as they
affect any Oil and Gas Property or Lien subject to a lease or license, (d) any restriction with
respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the direct or
indirect sale or disposition of all or substantially all the equity or Oil and Gas Property of such
Restricted Subsidiary (or the Oil and Gas Property that is subject to such restriction) pending the
closing of such sale or disposition, or (e) customary provisions with respect to the distribution
of Oil and Gas Property in joint venture agreements.  


     Section 9.13      Swap Agreements.  The Borrower will not, nor will the Borrower permit any
Restricted Subsidiary to, enter into any new Oil and Gas Swap Agreements which would cause the
volume of Hydrocarbons with respect to which a settlement payment is calculated under all Oil and
Gas Swap Agreements (including such new transactions) to which the Borrower and/or any Restricted
Subsidiary is a party as of the date such Oil and Gas Swap Agreements are entered into to exceed
(a) (i)



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for the calendar year in which such new Oil and Gas Swap Agreements are entered into (the
“Initial Measurement Period”), eighty-five percent (85%) of the aggregate of the Borrower’s
and its Restricted Subsidiaries’ anticipated production from Proved Hydrocarbon Interests for each
of oil and gas (including natural gas liquids), calculated separately, (ii) for the calendar year
immediately following the end of the Initial Measurement Period (the “Second Measurement
Period”), eighty percent (80%) of the aggregate of the Borrower’s and its Restricted
Subsidiaries’ anticipated production from Proved Hydrocarbon Interests for each of oil and gas
(including natural gas liquids), calculated separately, (iii) for the calendar year immediately
following the end of the Second Measurement Period (the “Third Measurement Period”),
seventy-five percent (75%) of the aggregate of the Borrower’s and its Restricted Subsidiaries’
anticipated production from Proved Hydrocarbon Interests for each of oil and gas (including natural
gas liquids), calculated separately and (iv) for the calendar year immediately following the end of
the Third Measurement Period and for each calendar year thereafter, one hundred percent (100%) of
the aggregate of the Borrower’s and its Restricted Subsidiaries’ anticipated production from Proved
Producing Hydrocarbon Interests for each of oil and gas (including natural gas liquids), calculated
separately, plus, in each case, (b) an amount not to exceed one hundred percent (100%) of
associated royalty owners’ oil, gas and/or natural gas liquids produced from the same wells, and
which oil, gas and/or natural gas liquids the Borrower has the authority to market and sell, during
the applicable measurement period; provided that the Borrower will not, nor will the Borrower
permit any Restricted Subsidiary to, permit its production from Proved Producing Hydrocarbon
Interests (whether or not included or reflected in the most recent Reserve Report delivered to the
Administrative Agent and the Lenders pursuant to Section 8.11) during the then current month to be
less than the aggregate amount of production from Proved Producing Hydrocarbon Interests which are
subject to Oil and Gas Swap Agreements during such month; provided further that the Borrower will
not, nor will the Borrower permit any Restricted Subsidiary to, (x) enter into any Oil and Gas Swap
Agreements except in the ordinary course of business (and not for speculative purposes), (y) enter
into any Swap Agreement for speculative purposes or with a counterparty that is not an Approved
Counterparty or (z) terminate, unwind, cancel or otherwise dispose of any Oil and Gas Swap
Agreement except to the extent permitted by Section 9.10.  For purposes of this Section 9.13, no
basis swap agreement, put option, or options to purchase put options shall constitute a Swap
Agreement.  



     Section 9.14    Ownership of Restricted Subsidiaries.  Except as otherwise permitted
hereunder, the Borrower shall not own, directly or indirectly, less than 100% of the issued and
outstanding Equity Interests of each Restricted Subsidiary.  


     Section 9.15    Amendments to Organizational Documents.  The Borrower shall not, and
shall not permit any Restricted Subsidiary to, amend, supplement or otherwise modify (or permit to
be amended, supplemented or modified) its Organization Documents in any manner that would be
reasonably expected to result in a Material Adverse Effect.  


ARTICLE 10

Events of Default; Remedies




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



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


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


     (c)     any representation or warranty made or deemed made by or on behalf of the Borrower or any
Restricted Subsidiary in or in connection with any Loan Document or any amendment or modification
of any Loan Document or waiver under such Loan Document, or in any report, certificate, financial
statement or other document furnished pursuant to the provisions hereof or any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any
material respect when made or deemed made (or, to the extent that any such representation and
warranty is qualified by materiality, any such representation and warranty (as so qualified) shall
proved to have been incorrect in any respect when made or deemed made).  


     (d)     the Borrower or any Restricted Subsidiary shall fail to observe or perform any covenant,
condition or agreement contained in Section 8.01(g), Section 8.02, Section 8.03 (as to the
existence of the Borrower or such Restricted Subsidiary only), Section 8.13, or ARTICLE 9.  


     (e)     the Borrower or any Restricted Subsidiary shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified in Section 10.01(a),
Section 10.01(b) or Section 10.01(d)) or any other Loan Document, and such failure shall continue
unremedied for a period of 30 days after the earlier to occur of (i) notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request of any Lender) and
(ii) a Responsible Officer of the Borrower or such Restricted Subsidiary otherwise becoming aware
of such failure); provided that, for the avoidance of doubt, if the Borrower fails to deliver any
financial statements, certificates or other information within the time period required by Sections
8.01, 8.02, 8.11 or 8.13 and subsequently delivers such financial statements, certificates or other
information as required by such Sections prior to acceleration or the exercise of any remedy by the
Lenders, then such Event of Default shall be deemed to have been cured and/or waived without any
further action by the Administrative Agent or Lenders.  


     (f)     the Borrower or any Restricted Subsidiary shall fail to make any payment of principal in
respect of any Material Debt, when and as the same shall become due and payable, beyond any
applicable grace period provided with respect thereto and which failure shall continue uncured or
unremedied.  


     (g)     any event or condition occurs that results in any Material Debt becoming due prior to its
scheduled maturity or that enables or permits (with or without the giving of notice, but after the
expiration of any applicable grace period provided with respect thereto) the holder or holders of
any Material Debt or any trustee or agent on its or their behalf to cause any Material Debt to
become due, or to require the Redemption thereof, prior to its scheduled maturity or require the
Borrower or any Restricted Subsidiary to make an offer in respect thereof; provided that this
clause (g) shall not apply to secured Debt that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Debt or to obligations of the Borrower or any
Guarantor in respect of any Swap Agreement unless such Person is the defaulting party under such
Swap Agreement and as a result thereof such Swap Agreement has been terminated.  


     (h)     an involuntary proceeding shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any
Restricted Subsidiary or its debts, or of a substantial part of its assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or
(ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower or any Restricted



84









 




Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 consecutive days or an order or decree approving or
ordering any of the foregoing shall be entered.  



     (i)     the Borrower or any Restricted Subsidiary shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii)
consent to the institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 10.01(h), (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower
or any Restricted Subsidiary or for a substantial part of its assets, (iv) file an answer admitting
the material allegations of a petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing.  


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


     (k)     one or more final, non-appealable judgments for the payment of money in an aggregate
amount in excess of $45,000,000 shall be rendered against the Borrower, any Restricted Subsidiary
or any combination thereof and the same shall remain undischarged for a period of 60 consecutive
days during which execution shall not be effectively stayed, bonded or satisfied.  


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


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


     (n)     a Change in Control shall occur.  


     Section 10.02    Remedies.  (a) In the case of an Event of Default other than one
described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter during
the continuance of such Event of Default, the Administrative Agent may, and at the request of the
Majority Lenders, shall, by notice to the Borrower, take either or both of the following actions,
at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Notes and the Loans then outstanding to be due and
payable in whole (or in part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared
to be due and payable, together with accrued interest thereon and all fees and other obligations of
the Borrower and the Guarantors accrued hereunder and under the Notes and the other Loan Documents
(including, without limitation, the payment of cash collateral to secure the LC Exposure as
provided in Section 2.08(j)), shall become due and payable immediately, without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or other notice of any
kind, all of which are hereby waived by the Borrower and each Guarantor; and in case of an Event of
Default described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), the Commitments shall
automatically terminate and the Notes and the principal of the Loans



85









 




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



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


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




     (i)      first, pro rata to payment or reimbursement of that portion of the Secured
Indebtedness constituting fees, expenses and indemnities payable to the Administrative
Agent, Arrangers and other Agents, each in their capacity as such;




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




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




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




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




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




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


ARTICLE 11

The Agents




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


     Section 11.02    Duties and Obligations of Administrative Agent.  The Administrative
Agent shall not have any duties or obligations except those expressly set forth in the Loan
Documents.  Without limiting the generality of the foregoing, (a) the Administrative Agent shall
not be subject to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing (the use of the term “agent” herein and in the other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law; rather, such term is used
merely as a matter of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties), (b) the



86









 




Administrative Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, and (c) except as expressly set forth
herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for
the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that
is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates
in any capacity.  The Administrative Agent shall be deemed not to have knowledge of any Default
unless and until written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and shall not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this Agreement or any other
Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder
or under any other Loan Document or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set forth herein or in
any other Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or document, (v) the
satisfaction of any condition set forth in ARTICLE 6 or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent or those conditions
precedent expressly required to be to the Administrative Agent’s satisfaction, (vi) the existence,
value, perfection or priority of any collateral security or the financial or other condition of the
Borrower and its Subsidiaries or any other obligor or guarantor, or (vii) any failure by the
Borrower or any other Person (other than itself) to perform any of its obligations hereunder or
under any other Loan Document or the performance or observance of any covenants, agreements or
other terms or conditions set forth herein or therein.  For purposes of determining compliance with
the conditions specified in ARTICLE 6, each Lender shall be deemed to have consented to, approved
or accepted or to be satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative
Agent shall have received written notice from such Lender prior to the proposed closing date
specifying its objection thereto.  



     Section 11.03    Action by Administrative Agent.  The Administrative Agent shall have no
duty to take any discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent is required to exercise in writing as directed by the Majority Lenders, the
Required Lenders or the Lenders, as applicable (or such other number or percentage of the Lenders
as shall be necessary under the circumstances as provided in Section 12.02) and in all cases the
Administrative Agent shall be fully justified in failing or refusing to act hereunder or under any
other Loan Documents unless it shall (a) receive written instructions from the Majority Lenders,
the Required Lenders or the Lenders, as applicable, (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section 12.02) specifying the
action to be taken and (b) be indemnified to its satisfaction by the Lenders against any and all
liability and expenses which may be incurred by it by reason of taking or continuing to take any
such action.  The instructions as aforesaid and any action taken or failure to act pursuant thereto
by the Administrative Agent shall be binding on all of the Lenders.  If a Default has occurred and
is continuing, then the Administrative Agent shall take such action with respect to such Default as
shall be directed by the requisite Lenders in the written instructions (with indemnities) described
in this Section 11.03, provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem advisable in the
best interests of the Lenders.  In no event, however, shall the Administrative Agent be required to
take any action which exposes the Administrative Agent to personal liability or which is contrary
to this Agreement, the Loan Documents or applicable law.  If a Default has occurred and is
continuing, neither the Syndication Agent nor the Co-Documentation Agents shall have any obligation
to perform any act in respect thereof.  The Administrative Agent shall not be liable for any action
taken or not taken by it with the consent or at the request of the Majority Lenders or the Lenders
(or such other number or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02), and otherwise the



87









 




Administrative Agent shall not be liable for any action taken or not taken by it in its
capacity as the Administrative Agent hereunder or under any other Loan Document or under any other
document or instrument referred to or provided for herein or therein or in connection herewith or
therewith INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own gross negligence or willful
misconduct.  



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


     Section 11.05    Subagents.  The Administrative Agent may perform any and all of its
duties and exercise its rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of
its duties and exercise its rights and powers through their respective Related Parties.  The
exculpatory provisions of the preceding Sections of this ARTICLE 11 shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall
apply to their respective activities in connection with the syndication of the credit facilities
provided for herein as well as activities as Administrative Agent.  


     Section 11.06    Resignation of Administrative Agent.  Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this Section 11.06, the
Administrative Agent may resign at any time by notifying the Lenders, each Issuing Bank and the
Borrower.  Upon any such resignation, the Majority Lenders shall have the right, in consultation
with the Borrower, to appoint a successor.  If no successor shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within thirty (30) days after the
retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the
Lenders and each Issuing Bank, appoint a successor Agent which shall be a bank with an office in
the United States, or an Affiliate of any such bank.  Upon the acceptance of its appointment as
Agent hereunder by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a
successor Agent shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor.  After the Agent’s resignation hereunder, the provisions
of this ARTICLE 11 and Section 12.03 shall continue in effect for the benefit of such retiring
Agent, its sub-agents and their respective Related Parties in respect of any actions taken or
omitted to be taken by any of them while it was acting as Agent.  


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


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     Section 11.08    No Reliance.  Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent, any other Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and each other Loan Document to which it is a party.  Each
Lender also acknowledges that it will, independently and without reliance upon the Administrative
Agent, any other Agent or any other Lender and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.  The Agents shall not be required to keep themselves
informed as to the performance or observance by the Borrower or any of its Subsidiaries of this
Agreement, the Loan Documents or any other document referred to or provided for herein or to
inspect the Properties or books of the Borrower or its Subsidiaries.  Except for notices, reports
and other documents and information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, no Agent or Arranger shall have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs, financial condition
or business of the Borrower (or any of its Affiliates) which may come into the possession of such
Agent or any of its Affiliates.  In this regard, each Lender acknowledges that Vinson & Elkins
L.L.P.  is acting in this transaction as special counsel to the Administrative Agent only, except
to the extent otherwise expressly stated in any legal opinion or any Loan Document.  Each other
party hereto will consult with its own legal counsel to the extent that it deems necessary in
connection with the Loan Documents and the matters contemplated therein.  


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



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



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


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



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


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     Section 11.10    Authority Of Administrative Agent To Release Collateral And Liens.  Each
Lender and each Issuing Bank hereby authorizes the Administrative Agent to release or subordinate
any Oil and Gas Property (other than, in the case of any such subordination, any Oil and Gas
Property of the type described in clauses (a), (b), (c), (e) and (f) of the definition thereof
evaluated in the Reserve Report used in the most recent determination of the Borrowing Base) or
other collateral that is permitted to be sold, Reclassified or released or be subject to a Lien
pursuant to the terms of the Loan Documents.  Each Lender and each Issuing Bank hereby authorizes
the Administrative Agent to execute and deliver to the Borrower, at the Borrower’s sole cost and
expense, any and all releases of Liens, termination statements, assignments or other documents
reasonably requested by the Borrower in connection with any sale, Reclassification or other
disposition of Oil or Gas Property to the extent such sale, Reclassification or other disposition
is permitted by the terms of Section 9.10 or is otherwise authorized by the terms of the Loan
Documents.  


     Section 11.11    The Arrangers, Syndication Agent and Co-Documentation Agents.  The
Arrangers, the Syndication Agent and the Co-Documentation Agents shall have no duties,
responsibilities or liabilities under this Agreement and the other Loan Documents other than their
duties, responsibilities and liabilities in their capacity as Lenders hereunder.  


ARTICLE 12

Miscellaneous




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




     (i)      if to the Borrower, to it at 801 Cherry St, Suite 3700, Unit 19, Fort Worth, Texas
76102, Attention: Vice President — Treasurer (Telecopy No.  (817) 665-5016), with a copy to
General Counsel (Telecopy No.  (817) 668-5012);




     (ii)      if to the Administrative Agent, JPMorgan as the Issuing Bank or Swingline Lender,
to it at 10 South Dearborn, Chicago, Illinois 60603-2003, Attention of Leonida Mischke
(Telecopy No.  (888) 292-9533), and for all other correspondence other than borrowings,
continuation, conversion and Letter of Credit requests 2200 Ross Avenue, 3rd Floor, Mail
Code TX1-2911, Dallas, Texas 75201, Attention: Kimberly A.  Bourgeois (Telecopy No.  (214)
965-3280); and




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


     (b)     Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent; provided
that the foregoing shall not apply to notices pursuant to ARTICLE 2, ARTICLE 3, ARTICLE 4 and
ARTICLE 5 unless set forth herein or otherwise agreed by the Administrative Agent and the
applicable Lender.  The Administrative Agent or the Borrower may, in its discretion, agree to
accept notices and other communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be limited to particular
notices or communications and any such approval of procedures in respect of electronic
communications by any Lender or the Administrative Agent may be revoked at any time by any such
Lender or by the Administrative Agent.  In connection with any such revocation, if such Lender or
the Administrative



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Agent elects not to receive electronic communications (including those by electronic mail),
then such electronic communications (including electronic mail) shall not be a valid method of
delivering notices hereunder to such Person notwithstanding any provision hereof to the contrary.  



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


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


     (b)     Neither this Agreement nor any provision hereof nor any Security Instrument nor any
provision thereof may be waived, amended or modified except pursuant to an agreement or agreements
in writing entered into by the Borrower and the Majority Lenders or by the Borrower and the
Administrative Agent with the consent of the Majority Lenders; provided that no such agreement
shall




     (i)      increase the Commitment or the Maximum Credit Amount of any Lender without the
written consent of such Lender;




     (ii)      increase the Borrowing Base without the written consent of the Super-majority
Lenders, decrease or maintain the Borrowing Base without the consent of Required Lenders or
modify Section 2.07 or 2.09 without the written consent of all of the Lenders (other than
any Defaulting Lender); provided that a Scheduled Redetermination may be postponed by the
Required Lenders;




     (iii)      reduce the principal amount of any Loan or LC Disbursement or reduce the rate of
interest thereon, or reduce any fees payable hereunder, or reduce any other Secured
Indebtedness hereunder or under any other Loan Document, without the written consent of each
Lender affected thereby;




     (iv)      postpone the scheduled date of payment or prepayment of the principal amount of
any Loan or LC Disbursement (which, for the avoidance of doubt, shall not include any
mandatory prepayment pursuant to Section 3.04(c)), or any interest thereon, or any fees
payable hereunder, or any other Secured Indebtedness hereunder or under any other Loan
Document, or reduce the amount of, waive or excuse any such payment, or postpone or extend
the Termination Date without the written consent of each Lender affected thereby;



91









 






     (v)      change Section 4.01(b) or Section 4.01(c) in a manner that would alter the pro rata
sharing of payments required thereby, or change Section 10.02(c), in each case, without the
written consent of each Lender;




     (vi)      waive or amend Section 3.04(c), Section 6.01, Section 8.13(a), or Section 12.14,
without the written consent of each Lender (other than any Defaulting Lender);




     (vii)      release any Guarantor (except as set forth in the Guaranty Agreement, Section
8.13(d), Section 9.10(d) or Section 12.17) or release all or substantially all of the
collateral (other than as provided in Section 11.10), without the written consent of each
Lender (other than any Defaulting Lender);




     (viii)      change any of the provisions of this Section 12.02(b) or any other provision
hereof specifying the number or percentage of Lenders required to waive, amend or modify any
rights hereunder or under any other Loan Documents or make any determination or grant any
consent hereunder or any other Loan Documents, in each case to the extent that such
provision specifies that all Lenders (including Defaulting Lenders) must make any
determination or grant any consent hereunder or under any other Loan Documents, without the
written consent of each Lender; or




     (ix)      change the definitions of “Required Lenders”, “Super-majority Lenders” or
“Majority Lenders” or any other provisions hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or under any other Loan
Documents or make any determination or grant any consent hereunder or any other Loan
Documents to the extent that such provision does not require the approval or consent of a
Defaulting Lender, in each case without the written consent of each Lender (other than any
Defaulting Lender);



     provided, further, that no such agreement shall amend, modify or otherwise affect the rights
or duties of the Administrative Agent, any other Agent, the Swingline Lender, or any Issuing Bank
hereunder or under any other Loan Document without the prior written consent of the Administrative
Agent, such other Agent, the Swingline Lender or such Issuing Bank, as the case may be.  Notwithstanding the foregoing, any supplement to Schedule 7.11 (Subsidiaries) shall be effective,
after compliance with the requirements of Section 12.17, simply by delivering to the Administrative
Agent a supplemental schedule clearly marked as such and, upon receipt, the Administrative Agent
will promptly deliver a copy thereof to the Lenders.  


     Section 12.03    Expenses, Indemnity; Damage Waiver.  (a) The Borrower shall pay (i) all
reasonable and substantiated out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates, including, without limitation, the reasonable and substantiated fees, charges and
disbursements of one (1) outside counsel, applicable local counsel and other outside consultants
for the Administrative Agent, the reasonable travel, photocopy, mailing, courier, telephone and
other similar expenses, and the cost of environmental audits and surveys and appraisals, in
connection with the syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after the execution hereof and
including advice of counsel to the Administrative Agent as to the rights and duties of the
Administrative Agent and the Lenders with respect thereto) of this Agreement and the other Loan
Documents and any amendments, modifications or waivers of or consents related to the provisions
hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable and substantiated out-of-pocket costs, expenses, Taxes,
assessments and other charges incurred by any Agent or any Lender in connection with any filing,
registration, recording or perfection of any security interest contemplated by this Agreement or
any Security Instrument or any



92









 




other document referred to therein, (iii) all reasonable and substantiated out-of-pocket
expenses incurred by each Issuing Bank in connection with the issuance, amendment, renewal or
extension of any Letter of Credit issued by such Issuing Bank or any demand for payment thereunder,
(iv) all out-of-pocket expenses incurred by any Agent, the Swingline Lender, any Issuing Bank or
any Lender, including the fees, charges and disbursements of any counsel for any Agent, the
Swingline Lender, any Issuing Bank or any Lender, in connection with the enforcement or protection
of its rights in connection with this Agreement or any other Loan Document, including its rights
under this Section 12.03, or in connection with the Loans made or Letters of Credit issued
hereunder, including, without limitation, all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of Credit.  



     (b)     THE BORROWER SHALL INDEMNIFY EACH AGENT, EACH ARRANGER, THE SWINGLINE LENDER, EACH ISSUING
BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON
BEING CALLED AN “INDEMNITEE”) AGAINST, AND DEFEND AND HOLD EACH INDEMNITEE HARMLESS FROM,
ANY AND ALL LOSSES, CLAIMS, DAMAGES, PENALTIES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE
FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST
ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR DELIVERY
OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR
THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR
RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY RESTRICTED SUBSIDIARY
TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL
REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT
OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS,
DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR
THE USE OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (a) ANY REFUSAL BY ANY ISSUING
BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN
CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT, OR (b)
THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE,
NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (v)
ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS
SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE LENDERS WERE NOT
ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY RESTRICTED SUBSIDIARY OR ANY OF THEIR
PROPERTIES OR OPERATIONS, INCLUDING, THE PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED
RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF HAZARDOUS MATERIALS ON
OR AT ANY OF THEIR PROPERTIES, (ix) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER
OR ANY OF ITS RESTRICTED SUBSIDIARIES, OR (x) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY
SHALL EXTEND TO EACH INDEMNITEE



93









 




NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER
WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT
LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE
OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR
MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE
TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (X) ARE DETERMINED
BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE, (Y) RELATE TO CLAIMS BETWEEN OR AMONG
ANY OF THE LENDERS, THE ADMINISTRATIVE AGENT, THE ARRANGERS OR ANY OF THEIR AFFILIATES,
SHAREHOLDERS, PARTNERS OR MEMBERS OR (Z) ARE IN RESPECT OF ANY PROPERTY FOR ANY OCCURRENCE ARISING
FROM THE ACTS OR OMISSIONS OF THE ADMINISTRATIVE AGENT OR ANY LENDER DURING THE PERIOD AFTER WHICH
SUCH PERSON, ITS SUCCESSORS OR ASSIGNS HAVE OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY
FORECLOSURE OR DEED IN LIEU OF FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE).  



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


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


     (e)     All amounts due under this Section 12.03 shall be payable not later than 30 days after
written demand therefor.  


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


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




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




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



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




     (A)      except for an assignment of the entire remaining amount of the assigning
Lender’s Commitment or Loans, (1) in the case of an assignment to a Lender or an
Affiliate of a Lender, the amount of the unused Commitment and Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $2,500,000 and the amount of the
Commitment or Loans of the assigning Lender after such assignment shall not be less
than $2,500,000 unless each of the Borrower and the Administrative Agent otherwise
consent, provided that no such consent of the Borrower shall be required if an Event
of Default has occurred and is continuing and (2) in the case of an assignment to an
assignee other than a Lender or an Affiliate of a Lender, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 and the amount of the unused Commitment and Loans of the assigning Lender
after such assignment shall not be less than $5,000,000 unless each of the Borrower
and the Administrative Agent otherwise consent, provided that no such consent of the
Borrower shall be required if an Event of Default has occurred and is continuing;




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




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




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




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




     (F)      the assignee must not be a Defaulting Lender.  


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



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



     (v)      Upon its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire
(unless the assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in Section 12.04(b) and any written consent to such assignment required by
Section 12.04(b), the Administrative Agent shall accept such Assignment and Assumption and
record the information contained therein in the Register.  No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as provided in
this Section 12.04(b).  


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



96









 




12.04(b).  To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 12.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 4.01(c) as though it were a Lender.  




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



     (iii)      Each Lender that sells a participation shall, acting solely for this purpose as a
non-fiduciary agent of the Borrower, maintain a register on which it enters the name and
address of each participant and the principal amounts (and related interest amounts) of each
participant’s interest in the Loans or other obligations under this Agreement (the
“Participant Register”).  The entries in the Participant Register shall be
conclusive, absent manifest error, and such Lender shall treat each person whose name is
recorded in the Participant Register as the owner of such participation for all purposes of
this Agreement notwithstanding any notice to the contrary.  No Lender shall have any
obligation to disclose all or any portion of the Participant Register to the Borrower or any
other Person (including the identity of any participant or any information relating to a
participant’s interest in any obligations under any Loan Document) except to the extent that
such disclosure is necessary to establish that such commitment, loan, letter of credit or
other obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations.  For the avoidance of doubt, the Administrative Agent (in its capacity
as Administrative Agent) shall have no responsibility for maintaining a Participant
Register.  


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


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


     Section 12.05    Survival; Revival; Reinstatement.  (a) All covenants, agreements,
representations and warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any other Loan Document
shall be considered to have been relied upon by the other parties hereto and shall survive the
execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of
Credit, regardless of any investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent, any other Agent, any Issuing Bank or any Lender may
have had notice or knowledge of any Default or any incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not expired or terminated.  The provisions of Section
5.01, Section 5.02, Section 5.03 and Section 12.03 and ARTICLE 11 shall survive and remain in
full



97









 




force and effect regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments
or the termination of this Agreement, any other Loan Document or any provision hereof or thereof.  



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


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


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


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


     Section 12.07    Severability.  Any provision of this Agreement or any other Loan
Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining provisions hereof or
thereof; and the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.  If it becomes illegal for any Lender to hold
or benefit from a Lien over real property pursuant to any law, such Lender shall notify the
Administrative Agent and disclaim any benefit of such security interest to the extent of such
illegality, but such illegality shall not invalidate or render unenforceable such Lien for the
benefit of each of the other Lenders.  


     Section 12.08    Right of Setoff.  If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other obligations (of
whatsoever kind, including, without limitation, obligations under Swap Agreements) at any time
owing by such Lender or Affiliate to or for
the credit or the account of the Borrower or any Restricted Subsidiary against any of and all
the



98









 




obligations of the Borrower or any Restricted Subsidiary owed to such Lender now or hereafter
existing under this Agreement or any other Loan Document, irrespective of whether or not such
Lender shall have made any demand under this Agreement or any other Loan Document and although such
obligations may be unmatured.  The rights of each Lender under this Section 12.08 are in addition
to other rights and remedies (including other rights of setoff) which such Lender or its Affiliates
may have.  



     Section 12.09    GOVERNING LAW; JURISDICTION.  (a) THIS AGREEMENT, THE NOTES AND ALL
CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT, TORT OR OTHERWISE) THAT MAY BE BASED UPON, ARISE
OUT OF OR RELATE IN ANY WAY TO THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.  


     (b)     ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, IN EITHER CASE LOCATED IN NEW YORK COUNTY, NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.  THIS SUBMISSION TO
JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER
ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.  


     (c)     EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS
SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME
EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR
ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.  


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



99









 




CONTEMPLATED HEREBY AND THEREBY
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.09.  



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


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


     Section 12.12    Interest Rate Limitation.  It is the intention of the parties hereto
that each Lender shall conform strictly to usury laws applicable to it.  Accordingly, if the
transactions contemplated hereby would be usurious as to any Lender under laws applicable to it
(including the laws of the United States of America and the State of Texas or any other
jurisdiction whose laws may be mandatorily applicable to such Lender notwithstanding the other
provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in any
of the Loan Documents or any agreement entered into in connection with or as security for the
Notes, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest
under law applicable to any Lender that is contracted for, taken, reserved, charged or received by
such Lender under any of the Loan Documents or agreements or otherwise in connection with the Loans
shall under no circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be canceled automatically and if theretofore paid shall be credited by such Lender on
the principal amount of the Secured Indebtedness (or, to the extent that the principal amount of
the Secured Indebtedness shall have been or would thereby be paid in full, refunded by such Lender
to the Borrower);
and (ii) in the event that the maturity of the Loans is accelerated by reason of an election
of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in
the event of any



100









 




required or permitted prepayment, then such consideration that constitutes
interest under law applicable to any Lender may never include more than the maximum amount allowed
by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise
shall be canceled automatically by such Lender as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited by such Lender on the principal amount of the Secured
Indebtedness (or, to the extent that the principal amount of the Secured Indebtedness shall have
been or would thereby be paid in full, refunded by such Lender to the Borrower).  All sums paid or
agreed to be paid to any Lender for the use, forbearance or detention of sums due hereunder shall,
to the extent permitted by law applicable to such Lender, be amortized, prorated, allocated and
spread throughout the actual full term of the Loans until payment in full so that the rate or
amount of interest on account of any Loans hereunder does not exceed the maximum amount allowed by
such applicable law.  If at any time and from time to time (A) the amount of interest payable to
any Lender on any date shall be computed at the Highest Lawful Rate applicable to such Lender
pursuant to this Section 12.12 and (B) in respect of any subsequent interest computation period the
amount of interest otherwise payable to such Lender would be less than the amount of interest
payable to such Lender computed at the Highest Lawful Rate applicable to such Lender, then the
amount of interest payable to such Lender in respect of such subsequent interest computation period
shall continue to be computed at the Highest Lawful Rate applicable to such Lender until the total
amount of interest payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed without giving effect
to this Section 12.12.  To the extent that Chapter 303 of the Texas Finance Code is relevant for
the purpose of determining the Highest Lawful Rate applicable to a Lender, such Lender elects to
determine the applicable rate ceiling under such Chapter by the weekly ceiling from time to time in
effect.  Chapter 346 of the Texas Finance Code does not apply to the Borrower’s obligations
hereunder.  



     Section 12.13    EXCULPATION PROVISIONS.  EACH OF THE PARTIES HERETO SPECIFICALLY AGREES
THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS
CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT
IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE
TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL
COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF
THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY.  EACH PARTY
HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY
EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY
HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”



     Section 12.14    Collateral Matters; Swap Agreements.  The benefit of the Security
Instruments and of the provisions of this Agreement relating to any collateral securing the Secured
Indebtedness shall also extend to and be available to the Secured Swap Providers (on a pro rata
basis in respect of any such obligations of the Borrower or any of its Restricted Subsidiaries to
them) with respect to any Swap Agreement, but excluding any additional transactions or
confirmations entered into (a) after such Secured Swap Provider ceases to be a Lender or an
Affiliate of a Lender or (b) after assignment by a Secured
Swap Provider to a Person that is not a Lender or an Affiliate of a Lender at the time of such
assignment.  



101











 




No Lender or any Affiliate of a Lender shall have any voting rights under any Loan
Document as a result of the existence of obligations owed to it under any such Swap Agreements.  



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


     Section 12.16    Flood Insurance Regulation.  Notwithstanding any provision in any
Security Instrument to the contrary, in no event is any Building (as defined in the applicable
Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood
Insurance Regulation) located in a special flood hazard area included in the definition of
“Mortgaged Property”, “Collateral” or similar definition in any Security Instrument and no such
Building or Manufactured (Mobile) Home shall be encumbered by any such Security Instrument.  


     Section 12.17    USA Patriot Act Notice.  Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub.  L.  107-56 (signed into law
October 26, 2001)) (the “Act”), it is required to obtain, verify and record information
that identifies the Borrower, which information includes the name and address of the Borrower and
other information that will allow such Lender to identify the Borrower in accordance with the Act.  


     Section 12.18    No Fiduciary Duty.  Each Agent, Lender and their respective Affiliates
(collectively, solely for purposes of this paragraph, the “Banks”), may have economic
interests that conflict with those of the Borrower and the Subsidiaries, their stockholders and/or
their Affiliates (collectively, solely for purposes of this paragraph, the “Obligors”).  The Borrower agrees that nothing in the Agreement or the Loan Documents or otherwise will be deemed
to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between
any Bank, on the one hand, and any Obligor, on the other.  The Borrower acknowledges and agrees
that (a) the transactions contemplated by the Loan Documents (including the exercise of rights and
remedies hereunder and thereunder) are arm’s-length commercial transactions between the Banks, on
the one hand, and the Obligors, on the other, and (ii) in connection therewith and with the process
leading thereto, (x) no Bank has assumed an advisory or fiduciary responsibility in favor of any
Obligor with respect to the transactions contemplated hereby (or the exercise of rights or remedies
with respect thereto) or the process leading thereto (irrespective of whether any Bank has advised,
is currently advising or will advise any Obligor on other matters) or any other obligation to any
Obligor except the obligations expressly set forth in the Loan Documents and (y) each Bank is
acting solely as principal and not as the agent or fiduciary of any Obligor, its management,
stockholders, creditors or any other Person.  The Borrower acknowledges and agrees that it has
consulted its own legal and financial advisors to the extent it deemed appropriate and that it is
responsible for making its own independent judgment with respect to such transactions and the
process leading thereto.  The Borrower agrees that it will not claim that any Bank has rendered
advisory services of any nature or respect, or owes a fiduciary or similar duty to any Obligor, in
connection with such transaction or the process leading thereto.  


[SIGNATURES BEGIN NEXT PAGE]








102









 








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


	 	 	 	 	 
	 	QUICKSILVER RESOURCES INC., a 

Delaware corporation
 	 
	 
	 	By:  	/s/ Philip W.  Cook
 	 
	 	 	Philip W.  Cook, 	 
	 	 	Senior Vice President – Chief Financial Officer 	 
	 








[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]









 








	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as a 

Lender, Issuing Bank, Swingline Lender and as

Administrative Agent
 	 
	 
	 	By:  	/s/ Brian P.  Orlando
 	 
	 	 	Brian P.  Orlando, 	 
	 	 	Authorized Officer 	 
	 








[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]









 








	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as a Lender

and as Syndication Agent
 	 
	 
	 	By:  	/s/ Ronald E.  McKaig
 	 
	 	 	Ronald E.  McKaig 	 
	 	 	Managing Director 	 
	 








[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]









 








	 	 	 	 	 
	 	BNP PARIBAS, as a Lender and as

Co-Documentation Agent
 	 
	 
	 	By:  	/s/ Richard Hawthorne
 	 
	 	 	Richard Hawthorne 	 
	 	 	Director 	 




	 	 	 	 	 
	 	By:  	                      /s/ Courtney Kubesch
 	 
	 	 	Courtney Kubesch 	 
	 	 	Vice President 	 
	 






[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]











 





	 	 	 	 	 
	 	DEUTSCHE BANK TRUST COMPANY

AMERICAS, as a Lender


 	 
	 	By:  	/s/ Evelyn Thierry
 	 
	 	 	Evelyn Thierry 	 
	 	 	Director 	 
	 
	 	 	 
	 	By:  	                                             /s/ Marguerite Sutton
 	 
	 	 	Marguerite Sutton, 	 
	 	 	Director 	 
	 
	 	DEUTSCHE BANK SECURITIES INC., as a

Co-Documentation Agent


 	 
	 	By:  	/s/ David Sisler
 	 
	 	 	David Sisler, 	 
	 	 	Director 	 
	 
	 	 	 
	 	By:  	                                              /s/ Scott Arndt
 	 
	 	 	Soctt Arndt, 	 
	 	 	Vice President 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]








 









 








	 	 	 	 	 
	 	WELLS FARGO BANK, N.A., as a Lender and

as Co-Documentation Agent


 	 
	 	By:  	/s/ Catherine Stacy
 	 
	 	 	Catherine Stacy 	 
	 	 	Vice President 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]




 









 








	 	 	 	 	 
	 	CITIBANK, N.A., as a Lender


 	 
	 	By:  	/s/ John F. Miller
 	 
	 	 	John F. Miller, 	 
	 	 	Attorney-inFact 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]




 









 








	 	 	 	 	 
	 	CREDIT SUISSE AG, CAYMAN ISLANDS

BRANCH, as a Lender


 	 
	 	By:  	/s/ Nupur Kumar
 	 
	 	 	Nupur Kumar, 	 
	 	 	Vice President 	 
	 
	 	 	 
	 	By:  	                                              /s/ Vipul Dhadda
 	 
	 	 	Vipul Dhadda, 	 
	 	 	Associate 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]




 









 








	 	 	 	 	 
	 	TORONTO DOMINION (NEW YORK) 

LLC, as a Lender


 	 
	 	By:  	/s/ Debbi L. Brito
 	 
	 	 	Debbi L. Brito, 	 
	 	 	Authorized Signatory 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]




 









 








	 	 	 	 	 
	 	UBS LOAN FINANCE LLC, as a Lender


 	 
	 	By:  	/s/ Mary E. Evans
 	 
	 	 	Mary E. Evans, 	 
	 	 	Associate Director 	 
	 
	 	 	 
	 	By:  	                                              /s/ Irja R. Otsa
 	 
	 	 	Irja R. Otsa,, 	 
	 	 	Associate Director 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]





 









 








	 	 	 	 	 
	 	COMPASS BANK, as a Lender


 	 
	 	By:  	/s/ Spencer Stasney
 	 
	 	 	Spencer Stasney, 	 
	 	 	Vice President 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]





 









 








	 	 	 	 	 
	 	THE BANK OF NOVA SCOTIA, as a

Lender


 	 
	 	By:  	/s/ John Frazell
 	 
	 	 	John Frazell, 	 
	 	 	Director 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]





 









 








	 	 	 	 	 
	 	CIBC INC., as a Lender


 	 
	 	By:  	/s/ Trudy W. Nelson
 	 
	 	 	Trudy W. Nelson, 	 
	 	 	Authorized Signaotry 	 
	 
	 	 	 
	 	By:  	                                              /s/ Richard Antl
 	 
	 	 	Richard Antl, 	 
	 	 	Authorized Signatory 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]





 









 








	 	 	 	 	 
	 	CREDIT AGRICOLE CORPORATE AND
 INVESTMENT
BANK, as a Lender


 	 
	 	By:  	/s/ Tom Byargeon
 	 
	 	 	Tom Byargeon, 	 
	 	 	Managing Director 	 
	 
	 	 	 
	 	By:  	                                              /s/ Sharada Manne
 	 
	 	 	Sharada Manne, 	 
	 	 	Director 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]





 









 








	 	 	 	 	 
	 	GOLDMAN SACHS BANK USA, as a Lender
 	 
	 
	 	By:  	/s/ Rebecca Kratz
 	 
	 	 	Rebecca Krtaz, 	 
	 	 	Authorized Signatory 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]





 









 








	 	 	 	 	 
	 	THE ROYAL BANK OF SCOTLAND plc, as a Lender


 	 
	 	By:  	/s/ Sandra Aultman
 	 
	 	 	Sandra Aultman, 	 
	 	 	Director 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]





 









 








	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION, as 

a Lender


 	 
	 	By:  	/s/ Daria Mahoney
 	 
	 	 	Daria Mahoney, 	 
	 	 	Vice President 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]





 









 








	 	 	 	 	 
	 	BRANCH BANKING AND TRUST, as
a Lender
	 

 
	 	By:  	/s/ Parul E. June
 	 
	 	 	Parul E. June, 	 
	 	 	Assistant Vice President 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]





 









 








	 	 	 	 	 
	 	COMERICA BANK, as a Lender


 	 
	 	By:  	/s/ James A. Morgan
 	 
	 	 	James A. Morgan, 	 
	 	 	Vice President 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]





 











 





	 	 	 	 	 
	 	



EXPORT DEVELOPMENT CANADA, as a Lender

 	 
	 
	 	By:  	/s/ Joanne Tognarelli
 	 
	 	 	Joanne Tognarelli, 	 
	 	 	Financing Manager 	 
	 



	 	 	 	 	 
	 	 	 
	 
	 	By:  	

/s/ Christiane de Billy
 	 
	 	 	Christiane de Billy, 	 
	 	 	Financing Manager 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources Inc.]






 









 








	 	 	 	 	 
	 	KEYBANK, N.A., as a Lender

 	 
	 
	 	By:  	/s/ David Morris
 	 
	 	 	David Morris, 	 
	 	 	Vice President 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources
Inc.]






 









 








	 	 	 	 	 
	 	



SUMITOMO MITSUI BANKING CORPORATION,
 as a Lender

 	 
	 
	 	By:  	/s/ Hiroshi Higuma
 	 
	 	 	Hiroshi Higuma, 	 
	 	 	Joint General Manager 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources
Inc.]







 









 








	 	 	 	 	 
	 	UNION BANK, N.A., as a Lender

 	 
	 
	 	By:  	/s/ Alison White
 	 
	 	 	Alison White, 	 
	 	 	Vice President 	 
	 



[Signature
Page to Credit Agreement – Quicksilver Resources
Inc.]