exv10w2






Exhibit 10.2




Execution Version




      




AMENDED AND RESTATED CREDIT AGREEMENT




Dated as of July 31, 2008




among




CONCHO RESOURCES INC.

as the Borrower,




JPMORGAN CHASE BANK, N.A.,

as Administrative Agent, Swing Line Lender and L/C Issuer,




BANK OF AMERICA, N.A.,

as Syndication Agent,




CALYON NEW YORK BRANCH,

ING CAPITAL LLC




and




BNP PARIBAS,

as Co-Documentation Agents




and




The Other Lenders Party Hereto




J.P. MORGAN SECURITIES INC.

and

BANC OF AMERICA SECURITIES LLC,

as

Joint Lead Arrangers and Joint Book Managers




      




			
	 	 	 
	
	 	






 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
	 	 	2	 
	1.01 Defined Terms
	 	 	2	 
	1.02 Other Interpretive Provisions
	 	 	25	 
	1.03 Accounting Terms
	 	 	26	 
	1.04 Rounding
	 	 	26	 
	1.05 Times of Day
	 	 	26	 
	1.06 Letter of Credit Amounts
	 	 	27	 
	1.07 Classifications of Loans and Borrowings
	 	 	27	 
	1.08 Oil and Gas Definitions
	 	 	27	 
	ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS
	 	 	27	 
	2.01 Revolving Loans
	 	 	27	 
	2.02 Loans and Borrowings
	 	 	27	 
	2.03 Requests for Revolving Borrowings
	 	 	28	 
	2.04 Letters of Credit
	 	 	29	 
	2.05 Swing Line Loans
	 	 	33	 
	2.06 Funding of Borrowings
	 	 	34	 
	2.07 Interest Elections
	 	 	35	 
	2.08 Termination or Reduction of Commitments; Reduction of Borrowing Base
	 	 	36	 
	2.09 Repayment of Loans
	 	 	37	 
	2.10 Optional Prepayment of Loans
	 	 	37	 
	2.11 Mandatory Prepayment of Loans
	 	 	38	 
	2.12 Fees
	 	 	39	 
	2.13 Interest
	 	 	40	 
	2.14 Alternate Rate of Interest
	 	 	41	 
	2.15 Increased Costs
	 	 	41	 
	2.16 Break Funding Payments
	 	 	42	 
	2.17 Taxes
	 	 	43	 
	2.18 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
	 	 	44	 
	2.19 Mitigation Obligations; Replacement of Lenders
	 	 	46	 






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	TABLE OF CONTENTS

	(continued)

	 
	 	 	Page	 
	2.20 Additional Lenders; Increases in Commitments and Maximum Facility
Amount
	 	 	47	 
	ARTICLE III BORROWING BASE AND CONFORMING BORROWING BASE
	 	 	48	 
	3.01 Initial Borrowing Base and Conforming Borrowing Base
	 	 	48	 
	3.02 Scheduled Redeterminations of the Borrowing Base; Procedures and Standards
	 	 	48	 
	3.03 Special Redeterminations
	 	 	49	 
	3.04 Notice of Redetermination
	 	 	50	 
	3.05 Senior Notes Adjustment
	 	 	50	 
	ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
	 	 	50	 
	4.01 Conditions of Initial Credit Extension
	 	 	50	 
	4.02 Conditions to all Credit Extensions
	 	 	54	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES
	 	 	55	 
	5.01 Existence, Qualification and Power; Compliance with Laws
	 	 	55	 
	5.02 Authorization; No Contravention
	 	 	56	 
	5.03 Governmental Authorization; Other Consents
	 	 	56	 
	5.04 Binding Effect
	 	 	56	 
	5.05 Financial Statements; No Material Adverse Effect
	 	 	56	 
	5.06 Litigation
	 	 	57	 
	5.07 No Default
	 	 	57	 
	5.08 Ownership of Property; Liens
	 	 	57	 
	5.09 Environmental Compliance
	 	 	57	 
	5.10 Insurance
	 	 	57	 
	5.11 Taxes
	 	 	57	 
	5.12 ERISA Compliance
	 	 	58	 
	5.13 Subsidiaries; Equity Interests
	 	 	59	 
	5.14 Margin Regulations; Investment Company Act
	 	 	59	 
	5.15 Disclosure
	 	 	59	 
	5.16 Compliance with Laws
	 	 	59	 
	5.17 Licenses, Permits and Franchises
	 	 	59	 
	5.18 Liens Under the Security Instruments
	 	 	60	 






- ii -









 






	 	 	 	 	 
	 	 	 	 
	TABLE OF CONTENTS

	(continued)

	 
	 	 	Page	 
	5.19 Mortgages with Respect to Borrowing Base Properties
	 	 	60	 
	5.20 Solvency
	 	 	60	 
	5.21 Direct Benefit
	 	 	60	 
	ARTICLE VI AFFIRMATIVE COVENANTS
	 	 	60	 
	6.01 Financial Statements
	 	 	60	 
	6.02 Certificates; Other Information
	 	 	61	 
	6.03 Notices
	 	 	63	 
	6.04 Payment of Obligations
	 	 	63	 
	6.05 Preservation of Existence, Etc
	 	 	64	 
	6.06 Maintenance of Properties
	 	 	64	 
	6.07 Maintenance of Insurance
	 	 	64	 
	6.08 Compliance with Laws
	 	 	64	 
	6.09 Books and Records
	 	 	64	 
	6.10 Inspection Rights
	 	 	64	 
	6.11 Use of Proceeds
	 	 	65	 
	6.12 Additional Guarantors
	 	 	65	 
	6.13 Operations
	 	 	66	 
	6.14 Delivery of Title Opinions
	 	 	66	 
	6.15 Minimum Hedging
	 	 	66	 
	6.16 Further Assurances
	 	 	66	 
	ARTICLE VII NEGATIVE COVENANTS
	 	 	67	 
	7.01 Liens
	 	 	68	 
	7.02 Investments
	 	 	68	 
	7.03 Indebtedness
	 	 	69	 
	7.04 Fundamental Changes
	 	 	70	 
	7.05 Dispositions
	 	 	71	 
	7.06 Restricted Payments
	 	 	72	 
	7.07 Change in Nature of Business
	 	 	72	 
	7.08 Transactions with Affiliates
	 	 	72	 
	7.09 Burdensome Agreements
	 	 	72	 






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	TABLE OF CONTENTS

	(continued)

	 
	 	 	Page	 
	7.10 Use of Proceeds
	 	 	72	 
	7.11 Financial Covenants
	 	 	73	 
	7.12 Swap Contracts
	 	 	73	 
	7.13 Limitation on Sale/Leasebacks
	 	 	74	 
	7.14 Disqualified Stock
	 	 	74	 
	ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
	 	 	74	 
	8.01 Events of Default
	 	 	74	 
	8.02 Remedies Upon Event of Default
	 	 	76	 
	8.03 Application of Funds
	 	 	77	 
	8.04 Production Proceeds
	 	 	77	 
	ARTICLE IX ADMINISTRATIVE AGENT
	 	 	78	 
	9.01 Appointment and Authority
	 	 	78	 
	9.02 Rights as a Lender
	 	 	78	 
	9.03 Exculpatory Provisions
	 	 	78	 
	9.04 Reliance by Administrative Agent
	 	 	79	 
	9.05 Delegation of Duties
	 	 	80	 
	9.06 Resignation of Administrative Agent
	 	 	80	 
	9.07 Non-Reliance on Administrative Agent and Other Lenders
	 	 	81	 
	9.08 No Other Duties, Etc
	 	 	81	 
	9.09 Administrative Agent May File Proofs of Claim
	 	 	81	 
	9.10 Collateral and Guaranty Matters
	 	 	82	 
	ARTICLE X MISCELLANEOUS
	 	 	82	 
	10.01 Amendments, Etc
	 	 	82	 
	10.02 Notices; Effectiveness; Electronic Communication
	 	 	84	 
	10.03 No Waiver; Cumulative Remedies
	 	 	85	 
	10.04 Expenses; Indemnity; Damage Waiver
	 	 	85	 
	10.05 Payments Set Aside
	 	 	87	 
	10.06 Successors and Assigns
	 	 	88	 
	10.07 Treatment of Certain Information; Confidentiality
	 	 	91	 
	10.08 Right of Setoff
	 	 	92	 






- iv -









 






	 	 	 	 	 
	 	 	 	 
	TABLE OF CONTENTS

	(continued)

	 
	 	 	Page	 
	10.09 Interest Rate Limitation
	 	 	92	 
	10.10 Counterparts; Integration; Effectiveness
	 	 	92	 
	10.11 Survival of Representations and Warranties
	 	 	93	 
	10.12 Severability
	 	 	93	 
	10.13 Governing Law; Jurisdiction; Etc
	 	 	93	 
	10.14 Waiver of Jury Trial
	 	 	94	 
	10.15 Hedging Agreements and Collateral
	 	 	94	 
	10.16 USA PATRIOT Act Notice
	 	 	95	 
	10.17 Original Credit Agreement
	 	 	95	 
	10.18 Reaffirmation and Grant of Security Interest
	 	 	95	 
	10.19 Reallocation of Aggregate Commitment
	 	 	95	 
	10.20 ENTIRE AGREEMENT
	 	 	96	 






- v -









 






SCHEDULES




	 	 	 	 	 	 	 
	 

	 	 	2.01	 	 	Commitments and Applicable Percentages
	 

	 	 	5.06	 	 	Litigation
	 

	 	 	5.13	 	 	Subsidiaries, Other Equity Investments; Equity Interests in the
Borrower
	 

	 	 	6.15	 	 	Minimum Hedging
	 

	 	 	7.01	 	 	Existing Liens
	 

	 	 	7.08	 	 	Affiliate Transactions
	 

	 	 	10.02	 	 	Administrative Agent’s Office; Certain Addresses for Notices






EXHIBITS




	 	 	 	 	 
	 

	 	 	 	Form of
	 

	 	A
	 	Note
	 

	 	B
	 	Compliance Certificate
	 

	 	C
	 	Assignment and Assumption
	 

	 	D
	 	Amended and Restated Guaranty
	 

	 	E
	 	Solvency Certificate
	 

	 	F
	 	Mortgage (without exhibits)
	 

	 	G
	 	Amended and Restated Pledge Agreement
	 

	 	H
	 	Counterpart Agreement
	 

	 	I
	 	Lender Certificate






- vi -









 





AMENDED AND RESTATED CREDIT AGREEMENT




     This AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into as of July
31, 2008, among CONCHO RESOURCES INC., a Delaware corporation (the “Borrower”), each lender
from time to time party hereto (collectively, the “Lenders” and individually, a
“Lender”), JPMORGAN CHASE BANK, N.A., as Administrative Agent, Swing Line Lender and L/C
Issuer, BANK OF AMERICA, N.A., as Syndication Agent, and CALYON NEW YORK BRANCH, ING CAPITAL LLC
and BNP PARIBAS, as Co-Documentation Agents.



     A. The Borrower has heretofore entered into that certain Credit Agreement dated as of February
24, 2006, by and among Borrower, various financial institutions and JPMorgan Chase Bank, N.A., as
administrative agent (as amended, supplemented or otherwise modified prior to the Closing Date, the
“Original Credit Agreement” and the loan facility provided pursuant thereto, the
“Existing Facility”).



     B. The Borrower has entered into a Purchase Agreement dated as of June 5, 2008 but effective
as of May 1, 2008 (the “Purchase Agreement”), pursuant to which the Borrower will acquire
from the Sellers (i) all of the issued and outstanding equity interests of Henry Holding LP, Henry
Capital LLC, Henry Energy LP, HELP Investment LLC, Aguasal Holding LLC, Henry Operating LLC, Henry
Petroleum LP, Quail Ranch LLC, Aguasal Management LLC, and Aguasal LP (each a “Target
Entity” and collectively, the “Target”) and (ii) certain oil, gas and other properties
and related interests in exchange for cash payments of approximately $590,000,000 (the “Henry
Acquisition”).



     C. On the Closing Date (as herewith defined) and immediately following the consummation of the
Henry Acquisition, the Borrower will cause (i) certain Target Entities to merge with one or more
other Target Entities or existing Subsidiaries (as herewith defined) of the Borrower, (ii) Henry
Holding LP to change its name to Concho Oil & Gas Holdings LP and (iii) Henry Operating LLC to
change its name to Concho GP LLC.



     D. To finance a portion of the Henry Acquisition and the repayment in full and termination
Borrower’s existing term loan facility and to refinance the Existing Facility, the Borrower, the
Administrative Agent, the Swing Line Lender, the L/C Issuer and the Lenders intend to execute and
deliver this Agreement.



     E. The Lenders, the L/C Issuer and the Swing Line Lender are willing, on the terms and subject
to the conditions hereinafter set forth (including ARTICLE IV), to amend and restate the Original
Credit Agreement so that the obligations outstanding under the Original Credit Agreement on the
Closing Date shall be continued as Obligations under this Agreement.



     F. The proceeds of loans and letters of credit hereunder will be used to fund the Henry
Acquisition, to repay the Term Facility (as hereinafter defined), for general corporate purposes
(including working capital and support for the Letters of Credit (including existing letters of
credit maintained by Target Entities)), and for the acquisition of oil and gas properties and
related assets and other purposes related to the exploration, production and development of oil and
gas properties.



CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




 - 1 - 









 





     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:



ARTICLE I




DEFINITIONS AND ACCOUNTING TERMS




     1.01 Defined Terms. As used in this Agreement, the following terms shall have the
meanings set forth 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 equal to (a) the LIBO Rate for such Interest Period multiplied
by (b) the Statutory Reserve Rate.



     “Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as contractual
representative of the Lenders hereunder pursuant to ARTICLE IX and not in its individual capacity
as a Lender, and any successor agent appointed pursuant to ARTICLE IX.



     “Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or account as
the Administrative Agent may from time to time notify to the Borrower and the Lenders.



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



     “Affiliate” means, with respect to any 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.



     “Aggregate Commitment” means an amount equal to the lesser of (i) the Maximum Facility
Amount and (ii) the Borrowing Base, as such Aggregate Commitment may be reduced or increased
pursuant to the terms of this Agreement.



     “Aggregate Credit Exposure” means, as of any date of determination, the aggregate
amount of the Revolving Credit Exposure of all of the Lenders as of such date.



     “Agreement” means this Credit Agreement, dated as of July 31, 2008, as it may be
amended, supplemented or otherwise modified from time to time.



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




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




 - 2 - 









 





     “Annual Engineering Report” means the Initial Engineering Report and each engineering
report delivered pursuant to Section 6.01(c).



     “Applicable Percentage” means with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s
Commitment at such time. If the commitment of each Lender to make Loans and the obligation of the
L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the
Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be
determined based on the Applicable Percentage of such Lender most recently in effect, giving effect
to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth
opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable.



     “Applicable Rate” means, for any day, with respect to any ABR Loan or Eurodollar Loan,
or with respect to the Unused Commitment Fees, as the case may be, the applicable rate per annum
set forth below under the caption “ABR Spread” , “Eurodollar Spread” or “Unused Commitment Fee”, as
the case may be, based upon the Borrowing Base Usage as set forth below:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Borrowing	 	Eurodollar	 	 	 	 	 	Unused
	Base Usage	 	Spread	 	ABR Spread	 	Commitment Fee
	≥110%
	 	 	2.75	%	 	 	1.25	%	 	 	0.50	%
	>100% and
<110%
	 	 	2.50	%	 	 	1.00	%	 	 	0.50	%
	≥90% and
≤100%
	 	 	2.00	%	 	 	0.75	%	 	 	0.50	%
	≥75% and
<90%
	 	 	1.75	%	 	 	0.50	%	 	 	0.375	%
	≥50% and
<75%
	 	 	1.50	%	 	 	0.25	%	 	 	0.375	%
	<50%
	 	 	1.25	%	 	 	0.00	%	 	 	0.25	%





Each change in the Applicable Rate 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 change.




     “Approved Counterparty” means, at any time and from time to time, (i) any Person
engaged in the business of writing Swap Contracts for commodity, interest rate or currency risk
that has (or the credit support provider of such Person has), at the time Borrower or any
Restricted Subsidiary enters into a Swap Agreement with such Person, a long term senior unsecured
debt credit rating of A- or better from S&P or A3 or better from Moody’s or (ii) any Lender
Counterparty.



     “Approved Fund” means any Fund 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.



CONCHO AMENDED AND RESTATED CREDIT AGREEMENT





 - 3 - 









 





     “Arrangers” means, collectively, J.P. Morgan Securities Inc. and Banc of America
Securities LLC, in their capacities as joint lead arrangers and joint book managers.



     “Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is required by
Section 10.06), and accepted by the Administrative Agent, in substantially the form of
Exhibit C or any other form approved by the Administrative Agent.



     “Attributable Indebtedness” means, on any date, (a) in respect of any capital lease of
any Person, the capitalized amount thereof that would appear on a balance sheet of such Person
prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease
Obligation, the capitalized amount of the remaining lease payments under the relevant lease that
would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.



     “Availability Period” means the period from and including the Closing Date to the
earliest of (i) the Maturity Date, (ii) the date of termination of the Aggregate Commitments
pursuant to Section 2.08, and (iii) the date of termination of the commitment of each Lender to
make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to
Section 8.02.



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



     “Borrower” has the meaning specified in the introductory paragraph hereto.



     “Borrowing” means (a) Revolving 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 or (b) a Swing Line Loan.



     “Borrowing Base” means, at any time, an amount equal to the amount determined pursuant
to Section 3.01, as the same may be redetermined, adjusted or reduced from time to time pursuant to
Section 3.02, 3.03, 3.05 or as otherwise adjusted or reduced, pursuant to Section 7.05(c);
provided, however, that in no event shall the Borrowing Base on any date exceed the
Maximum Facility Amount.



     “Borrowing Base Deficiency” means, as of any date, the amount, if any, by which the
Aggregate Credit Exposure on such date exceeds the Borrowing Base in effect on such date;
provided, that, for purposes of determining the existence and amount of any Borrowing Base
Deficiency, L/C Obligations will not be deemed to be outstanding to the extent such obligations are
secured by cash in the manner contemplated by Section 2.04(j).



     “Borrowing Base Properties” means, at any time, the properties and reserves (which
properties and reserves shall be free of any Liens other than Liens permitted under Section 7.01)
of Borrower and its Restricted Subsidiaries that were evaluated in the most recent Engineering
Report delivered to the Administrative Agent pursuant to this Agreement and other information
provided by the Borrower pursuant to Section 3.01 for the calculation of the Borrowing Base in
effect at such time.




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




 - 4 - 









 





     “Borrowing Base Usage” means, as of any date and for all purposes, the quotient,
expressed as a percentage, of (i) the Aggregate Credit Exposure as of such date, divided by
(ii) the Conforming Borrowing Base.



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



     “Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact closed in, the states of
Illinois or Texas and, if such day relates to any Eurodollar Loan, means any such day on which
dealings in Dollar deposits are conducted by and between banks in the London interbank Eurodollar
market.



     “Cash Collateralize” means the pledge and deposit with or delivery to the
Administrative Agent of, for the benefit of the L/C Issuer and the Lenders, as collateral for the
L/C Obligations, cash or deposit account balances pursuant to Section 2.04(j) and documentation in
form and substance reasonably satisfactory to the Administrative Agent and the L/C Issuer (which
documents are hereby consented to by the Lenders).



     “Change in Control” means,:




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




     (b) occupation of a majority of the seats (other than vacant seats) on the Board of
Directors of the Borrower by persons who were neither (1) nominated by the Board of
Directors of the Borrower nor (2) appointed by directors so nominated;




     (c) the failure of the Borrower to own, directly or indirectly, one hundred percent
(100%) of the issued and outstanding Equity Interests of COG GP (and any other general
partner in COG Oil & Gas) and COG LP; or




     (d) the occurrence of any “Change of Control” or “Change in Control” under and as
defined in any Senior Notes Documents.



     “Change in Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or
(c) compliance by any Lender or the L/C Issuer (or, for purposes of Section 10.09, by any lending
office of such Lender or by such Lender’s or the L/C Issuer’s holding company, if any)
with any request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.



     “Charges” has the meaning specified in Section 10.09.




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




 - 5 - 









 





     “Class” where used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans or Swing Line Loans.



     “Closing Date” means the first date all the conditions precedent in Section 4.01 are
satisfied or waived in accordance with Section 10.01.



     “Code” means the Internal Revenue Code of 1986, as amended.



     “COG GP” means COG Operating LLC, a Delaware limited liability company.



     “COG LP” means Concho LP LLC, a Delaware limited liability company.



     “COG Oil & Gas” means COG Oil & Gas LP, a Texas limited partnership.



     “COG Realty” means COG Realty LLC, a Texas limited liability company.



     “Commitment” means, with respect to each Lender, the commitment of such Lender to make
Revolving Loans and to acquire participations in L/C Obligations and Swing Line Loans hereunder,
expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section
2.08, (b) reduced or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.06, (c) increased from time to time pursuant to Section 2.20, and (d)
terminated pursuant to Sections 8.02 or 8.03. The initial amount of each Lender’s Commitment is
set forth on Schedule 2.01, or in the Register following any Assignment and Assumption to which
such Lender is a party or the delivery of a Lender Certificate to which such Lender is a party.



     “Compliance Certificate” means a certificate substantially in the form of
Exhibit B.



     “Concho Energy Services” means Concho Energy Services LLC, a Texas limited liability
company.



     “Concho Holdings” means Concho Equity Holdings LLC, a Delaware limited liability
company.



     “Conforming Borrowing Base” means, at any time an amount equal to the amount
determined in accordance with Section 3.01, as the same may be redetermined, adjusted or reduced
from time to time pursuant to Sections 3.02 and 3.03 or if such an amount is not otherwise
determined in accordance with such Sections, an amount equal to the Borrowing Base.



     “Consolidated Current Assets” means, as of any date of determination, the current
assets of the Borrower and its Restricted Subsidiaries determined on a consolidated basis in
accordance with GAAP, plus, to the extent not already included therein, all Unused
Commitments as of such
date; provided that for purposes of this definition, current assets shall exclude
non-cash assets required to be included in consolidated current assets of the Borrower and its
Restricted Subsidiaries as a result of the application of Financial Accounting Standard Board
Statements 133 or 143.




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




 - 6 - 









 





     “Consolidated Current Liabilities” means, as of any date of determination, the current
liabilities of the Borrower and its Restricted Subsidiaries determined on a consolidated basis in
accordance with GAAP, minus, to the extent included therein, the current portion of
long-term Indebtedness outstanding under this Agreement; provided that for purposes of this
definition, current liabilities shall exclude non-cash liabilities required to be included in
consolidated current liabilities of the Borrower and its Restricted Subsidiaries as a result of the
application of Financial Accounting Standard Board Statements 133 or 143, but shall expressly
include any unpaid liabilities for cash charges or payments that have been incurred as a result of
the termination of any Swap Contract.



     “Consolidated EBITDAX” means, for any period, for the Borrower and its Restricted
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income for such period
plus (a) the following to the extent deducted in calculating such Consolidated Net Income:
(i) Consolidated Interest Charges for such period, (ii) the provision for Federal, state, and local
income and franchise taxes payable by the Borrower and its Restricted Subsidiaries for such period,
(iii) depletion, depreciation, amortization and exploration expense and (iv) all other non-cash
items reducing such Consolidated Net Income and minus (b) the following to the extent
included in calculating such Consolidated Net Income: (i) Federal, state and local income tax
credits of the Borrower and its Restricted Subsidiaries for such period and (ii) all other non-cash
items increasing Consolidated Net Income for such period.



     “Consolidated Funded Indebtedness” means, as of any date and without duplication, all
Indebtedness of the Borrower and its Restricted Subsidiaries other than Indebtedness of the type
described in clause (e) and (f) of the definition of Indebtedness.



     “Consolidated Interest Charges” means, for any period, for the Borrower and its
Restricted Subsidiaries on a consolidated basis, the sum of (a) all interest, premium payments,
debt discount, fees, charges and related expenses of the Borrower and its Restricted Subsidiaries
in connection with borrowed money (including capitalized interest) or in connection with the
deferred purchase price of assets, in each case to the extent treated as interest in accordance
with GAAP, and (b) the portion of rent expense of the Borrower and its Restricted Subsidiaries with
respect to such period under capital leases that is treated as interest in accordance with GAAP.



     “Consolidated Leverage Ratio” means, as of any date of determination, the ratio of
(a) Consolidated Funded Indebtedness of the Borrower and its Restricted Subsidiaries on a
consolidated basis as of such date to (b) Consolidated EBITDAX for the period of the four fiscal
quarters most recently ended.



     “Consolidated Net Income” means, for any period, for the Borrower and its Subsidiaries
on a consolidated basis, the net income of the Borrower and its Subsidiaries (excluding
extraordinary gains and extraordinary losses and the net income of any Person (other than the
Borrower or a Restricted Subsidiary) for that period, except to the extent of the amount of
dividends and distributions actually received by the Borrower or a Restricted Subsidiary),
provided that the calculation of Consolidated Net Income shall exclude any non-cash charges or
losses and any non-cash income or gains, in each case, required to be included in net income of the
Borrower and its Subsidiaries as a result of the application of Financial Accounting Standard




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Board
Statements 123R, 133 or 143, but shall expressly include any cash charges or payments that have
been incurred as a result of the termination of any Swap Contract.



     “Contractual Obligation” means, as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound.



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



     “Counterpart Agreement” means a Counterpart Agreement substantially in the form of
Exhibit H delivered by a Restricted Subsidiary pursuant to Section 6.12.



     “Credit Extension” means each of the following: (a) a Borrowing and (b) the issuance
of a Letter of Credit by the L/C Issuer.



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



     “Default” means any event or condition that constitutes an Event of Default or that,
with the giving of any notice, the passage of time, or both, would be an Event of Default.



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



     “Designated Engineer” means, at any time, one or more of any of (a) Williamson
Petroleum Consultants, Inc., (b) Cawley Gillespie & Associates, Inc., (c) Netherland, Sewell &
Associates, Inc., (d) Ryder Scott Company, (e) Gruy Engineering Corporation or (f) any other
petroleum engineer selected by the Borrower and reasonably acceptable to the Administrative Agent.



     “Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by any Person, including
any sale,
assignment, transfer or other disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated therewith.



     “Disqualified Stock” means any Equity Interest which, 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




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of any event, matures or is mandatorily redeemable in cash, pursuant to a sinking fund obligation
or otherwise, or is redeemable at the sole option of the holder thereof, in whole or in part, on or
prior to the Maturity Date; provided, that any Equity Interest that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the rights to require the
issuer of such Equity Interest to repurchase or redeem such Equity Interest upon the occurrence of
(x) an “asset sale” or a “change of control” that also results in a Change in Control shall not
constitute Disqualified Stock or (y) a “default” or an “event of default” shall not constitute
Disqualified Stock; provided further, that in each case with respect to the
foregoing clauses (x) and (y), the obligations of the Borrower to repurchase or redeem such Equity
Interest is required only if permitted under the terms of this Agreement or with the consent of the
Majority Lenders or such obligations are subordinated to the Obligations on terms and conditions
reasonably satisfactory to the Majority Lenders.



     “Dollar” and “$” mean lawful money of the United States.



     “Domestic Subsidiary” means any Subsidiary that is organized under the laws of any
political subdivision of the United States.



     “Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved
Fund; and (d) any other Person (other than a natural person) approved by (i) the Administrative
Agent, the L/C Issuer and the Swing Line Lender, and (ii) unless an Event of Default has occurred
and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed);
provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.



     “Engineered Value” means the value attributed to the Borrowing Base Properties for
purposes of the most recent Redetermination of the Borrowing Base pursuant to ARTICLE III (or for
purposes of determining the Initial Borrowing Base in the event no such Redetermination has
occurred), based upon the discounted present value of the estimated net cash flow to be realized
from the production of hydrocarbons from the Borrowing Base Properties as set forth in the most
recent Engineering Report.



     “Engineering Report” means an Annual Engineering Report or an Interim Engineering
Report or both as the context may require.



     “Environmental Laws” means any federal, state, or local statute, or rule or regulation
promulgated thereunder, any judicial or administrative order or judgment to which the Borrower or
any of its Subsidiaries is a party or which are applicable to the Borrower or any of its
Subsidiaries or its or their respective properties (whether or not by consent), and any provision
or condition of any permit, license or other governmental operating authorization, relating to
protection of the environment, persons or the public welfare from actual or potential exposure or
the effects of exposure to any actual or potential release, discharge, spill or emission (whether
past or present) of, or regarding the manufacture, processing, production, gathering,
transportation, importation, use, treatment, storage or disposal of, any chemical, raw material,
pollutant, contaminant or toxic or hazardous substance or waste.




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     “Environmental Liability” means any liability (including any liability for damages,
costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other
Loan Party or any of their respective Subsidiaries directly or indirectly 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, agreement or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.



     “Equity Interests” means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the warrants, options or
other rights for the purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person
or warrants, rights or options for the purchase or acquisition from such Person of such shares (or
such other interests), and all of the other ownership or profit interests in such Person (including
partnership, membership or trust interests therein), whether voting or nonvoting, and whether or
not such shares, warrants, options, rights or other interests are outstanding on any date of
determination.



     “ERISA” means the Employee Retirement Income Security Act of 1974.



     “ERISA Affiliate” means any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the
Code).



     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2)
of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e)
of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a termination under
Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.



     “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.



     “Evaluation Date” means




     (a) June 30 and December 31 of each year; and




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     (b) each date which either the Borrower or the Required Lenders, at its or their
respective options, specifies as a date as of which the Borrowing Base is to be
redetermined, provided that each such date must be the first or last date of a calendar
month not earlier than ninety (90) days prior to the date of such specification.



     “Event of Default” has the meaning specified in Section 8.01.



     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the L/C
Issuer or any other recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by
the United States of America (or any political subdivision thereof), or by the jurisdiction under
the laws of which such recipient is organized or in which its principal office is located or, in
the case of any Lender, in which its applicable lending office is located, (b) any branch profits
taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction
in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under 2.19(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 2.17(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 from the Borrower with respect to such withholding tax pursuant to Section
2.17(e).



     “Existing Swap Contracts” means, any Swap Contracts entered into between any Loan
Party (prior to giving effect to the Henry Acquisition) and any Lender Counterparty (including any
Lender Counterparty under and as defined in the Original Credit Agreement) prior to the Closing
Date and in effect on the Closing Date.



     “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.



     “Fee Letter” means the agreement, dated June 5, 2008, among Borrower, the
Administrative Agent, Bank of America and the Arrangers.



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



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




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



     “GAAP” means those generally accepted accounting principles and practices that are
recognized as such by the Financial Accounting Standards Board (or any generally recognized
successor). If any change in any accounting principle or practice is required by the Financial
Accounting Standards Board (or any such successor) in order for such principle or practice to
continue as a generally accepted accounting principle or practice, all reports and financial
statements required hereunder with respect to the Borrower or with respect to the Borrower and its
Subsidiaries must be prepared in accordance with such change. In the event any changes in GAAP
materially affect the calculation of the Consolidated Leverage Ratio, Consolidated Current Assets
or Consolidated Current Liabilities, the Borrower and the Majority Lenders agree to enter into good
faith negotiations for an agreement to revise such tests to take into account such changes in GAAP;
until the Borrower and the Majority Lenders have entered into such an agreement, such financial
calculation shall continue to be made in accordance with GAAP as in effect immediately preceding
the date of such change.



     “Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or the European Central
Bank).



     “Guarantee” means, as to any Person, any (a) any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness payable
or performable by another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness, (ii) to purchase or
lease property, securities or services for the purpose of assuring the obligee in respect of such
Indebtedness of the payment or performance of such Indebtedness, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level of income or cash
flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness, or
(iv) entered into for the purpose of assuring in any other manner the obligee in respect of such
Indebtedness of the payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness of any other Person, whether or not such Indebtedness is assumed by such Person (or
any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).
The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has
a corresponding meaning.



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     “Guarantors” means, collectively, the Initial Guarantors, together with each other
Person that shall deliver a Guaranty (or a Counterpart Agreement with respect thereto) from time to
time.



     “Guaranty” means a Guaranty made by the Guarantors in favor of the Administrative
Agent and the Lenders, substantially in the form of Exhibit D.



     “Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants (including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature) that are regulated
pursuant to any Environmental Law.



     “Henry Acquisition” has the meaning specified in Recital B.



     “Henry Acquisition Documents” means the Purchase Agreement and all other assignments,
agreements, certificates and other documents and instruments now or hereafter executed and
delivered by, between or among the Borrower, and the Sellers pursuant to the Purchase Agreement or
in connection with the Henry Acquisition.



     “Indebtedness” means, as to any Person at a particular time, without duplication, all
of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:
(a) indebtedness of such Person for borrowed money; (b) indebtedness of such Person to pay the
deferred purchase price of property or services (other than customary payment terms taken in the
ordinary course of such Person’s business); (c) indebtedness of such Person evidenced by a bond,
debenture, note or similar instrument; (d) principal obligations under leases capitalized in
accordance with GAAP under which such Person is the lessee and all Synthetic Lease Obligations;
(e) indebtedness, contingent or otherwise, of such Person with respect to bankers’ acceptances or
the face amount of letters of credit or applications or reimbursement agreements therefor;
(f) guaranties of such Person of indebtedness or obligations of the type described in clauses
(a), (b), (c), (d) or (e) above of any other Person or
obligations to purchase or acquire or to otherwise protect or insure a creditor against loss in
respect of indebtedness or obligations of the type described in clauses (a), (b),
(c), (d) or (e) above of any other Person, but excluding endorsements in
the ordinary course of business of negotiable instruments in the course of collection;
(g) indebtedness or obligations of the type described in clauses (a), (b),
(c), (d) or (e) above, which are secured by a Lien on any property owned by
such Person, whether or not such indebtedness or obligations have been assumed by such Person
(limited however to the lesser of (1) the amount of its liability or (2) the value of such
property); and (h) the undischarged balance of any production payment created by such Person or for
the creation of which such Person directly or indirectly received payment; provided,
however, Indebtedness shall not include (1) accounts payable incurred in the ordinary
course of such Person’s business, or (2) any obligations in respect of (i) any Swap Contract that
is permitted under this Agreement and (ii) prepayments for gas production or net gas imbalances not
in excess of $5,000,000 in the aggregate at any time outstanding. For all purposes of this
Agreement, the Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer.




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     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Indemnitee” has the meaning specified in Section 10.04(b).



     “Initial Engineering Report” means, collectively, (i) those certain reports furnished
to the Administrative Agent prior to the Closing Date estimating the proved oil and gas reserves of
Borrower and its Subsidiaries as of December 31, 2007, as prepared by Netherland, Sewell &
Associates, Inc. and Cawley Gillespie & Associates, Inc. and (ii) that certain report furnished to
the Administrative Agent prior to the Closing Date estimating the proved oil and gas reserves of
the Target as of June 1, 2008 prepared by employees of the Borrower or a Restricted Subsidiary as
audited by Cawley Gillespie & Associates, Inc.



     “Initial Financial Statements” means (i) the audited consolidated balance sheet of
Borrower and its Restricted Subsidiaries for the fiscal year ended December 31, 2007, (ii) the
unaudited consolidated balance sheet of Borrower and its Restricted Subsidiaries for the fiscal
quarter ended March 31, 2008, and (iii) the unaudited consolidated tax-basis balance sheet of the
Target for the fiscal year ended December 31, 2007, and, in each case, the related consolidated
statements of income or operations, and consolidated statements of shareholders’ equity and cash
flows for such fiscal year and fiscal quarter, respectively, including the notes thereto.



     “Initial Guarantors” means, collectively, each Target Entity (or its successor with
respect to any Target Entity merged into any other Target Entity on the Closing Date) and each of
Concho Holdings, COG GP, COG LP, COG Oil & Gas, COG Realty and Concho Energy Services.



     “Interest Election Request” means a request by the Borrower to convert or continue a
Borrowing in accordance with Section 2.07.



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



     “Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three, six, nine or twelve months thereafter (if available), as
the Borrower may elect; provided, that (i) 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 (ii) 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




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which such Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.



     “Interim Engineering Report” has the meaning specified in Section 6.01(d).



     “Investment” means, as to any Person, any direct or indirect acquisition or investment
by such Person of or in any other Person, whether by means of (a) the purchase or other acquisition
of capital stock or other securities of another Person, (b) a loan, advance or capital contribution
to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other
Indebtedness or Equity Interest in, another Person, including any partnership or joint venture
interest in such other Person and any arrangement pursuant to which the investor Guarantees
Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or
a series of transactions) of assets of another Person that constitute a business unit. For
purposes of covenant compliance, the amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the value of such Investment.



     “IRS” means the United States Internal Revenue Service.



     “ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law & Practice (or such later
version thereof as may be in effect at the time of issuance).



     “Issuer Documents” means with respect to any Letter of Credit, the Letter Credit
Application, and any other document, agreement and instrument entered into by the L/C Issuer and
the Borrower (or any Subsidiary) or in favor the L/C Issuer and relating to any such Letter of
Credit.



     “JPMorgan Chase Bank ” means JPMorgan Chase Bank, N.A. and its successors.



     “Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or
judicial precedents or authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or administration thereof, and
all applicable administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case whether or not having the
force of law.



     “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount thereof.



     “L/C Disbursement” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or refinanced as a Revolving
Borrowing.



     “L/C Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate amount of all L/C Disbursements
that have not yet been reimbursed by or on behalf of the Borrower at such time.




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The L/C Exposure of any Lender at any time shall be its Applicable Percentage of the total L/C
Exposure at such time.




     “L/C Issuer” means JPMorgan Chase Bank in its capacity as the issuer of Letters of
Credit hereunder, and its successors in such capacity as provided in Section 2.04(i). The L/C
Issuer may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates
of the L/C Issuer, in which case the term “L/C Issuer” shall include any such Affiliate with
respect to Letters of Credit issued by such Affiliate.



     “L/C Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate of all L/C
Disbursements at such time. For purposes of computing the amount available to be drawn under any
Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with
Section 1.06. For all purposes of this Agreement, if on any date of determination a Letter of
Credit has expired by its terms but any amount may still be drawn thereunder by reason of the
operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.



     “Lenders” means the Persons listed on Schedule 2.01, including, as the context
requires, the Swing Line Lender, and any other Person that shall have become a party hereto
pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption.



     “Lender Counterparty” means any Lender or any Affiliate of a Lender that is
counterparty to a Swap Contract with any Loan Party.



     “Letter of Credit” means any standby letter of credit issued hereunder and, to the
extent outstanding on the Closing Date, any letter of credit issued under the Original Credit
Agreement and the letters of credit issued for the account of one or more of the Target Entities
and listed on Schedule A attached hereto, and any renewals of any of the foregoing letters of
credit after the Closing Date.



     “Letter of Credit Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.



     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period,
the rate appearing on Page 3750 of the Dow Jones Market Service (formerly known as the Telerate
Service) (or on any successor or substitute page of such Service, or any successor to or substitute
for such Service, providing rate quotations comparable to those currently provided on such page of
such Service, as determined by the Administrative Agent from time to time for purposes of providing
quotations of interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the
event that such rate is not available at such time for any reason, then the “LIBO Rate”
with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which
dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately




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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 mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other security interest
or preferential arrangement in the nature of a security interest of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any easement, right of way or
other encumbrance on title to real property, and any financing lease having substantially the same
economic effect as any of the foregoing).



     “Loan” means an extension of credit by a Lender to the Borrower under ARTICLE II in
the form of a Revolving Loan or a Swing Line Loan.



     “Loan Documents” means this Agreement, each Note, each Issuer Document, the Fee
Letter, each Guaranty, each Security Instrument, and any amendments to any of the foregoing, and
all other agreements, certificates, notices and disclosures at any time executed or certified by a
Responsible Officer of and on behalf of any Loan Party and delivered by such Loan Party or such
Responsible Officer in connection herewith or therewith (exclusive of term sheets, commitment
letters, correspondence and similar documents used in the negotiation hereof or thereof); provided
that, for the avoidance of doubt, no Swap Contract shall constitute a Loan Document.



     “Loan Parties” means, collectively, the Borrower and each Restricted Subsidiary.



     “Majority Lenders” means, at any time, Lenders having Revolving Credit Exposures and
Unused Commitments representing more than 50% of the sum of the Aggregate Credit Exposure and all
Unused Commitments of all Lenders at such time or, if the Aggregate Commitment has been terminated,
Lenders having Revolving Credit Exposures representing more than 50% of the sum of the Aggregate
Credit Exposure of all Lenders at such time; provided that the Commitment of and the Revolving
Credit Exposures held or deemed held by any Defaulting Lender shall be excluded for purposes of
making a determination of the Majority Lenders.



     “Material Adverse Effect” shall mean a material adverse effect on (a) the financial
condition of the Borrower and its Restricted Subsidiaries taken as a whole, (b) the ability of the
Borrower and its Restricted Subsidiaries, taken as a whole, to operate their respective businesses,
(c) the ability of the Borrower or any other Loan Party to meet its obligations under the Loan
Documents on a timely basis or (d) the ability of the Loan Parties taken as a whole to meet their
obligations under the Loan Documents on a timely basis.



     “Material Domestic Subsidiary” means any Domestic Subsidiary that owns or holds
assets, properties or interests (including oil and gas interests) with an aggregate fair market
value, on a consolidated basis, greater than five percent (5%) of the aggregate fair market value
of all of the assets, properties and interests (including oil and gas interests) of the Borrower
and its Restricted Subsidiaries, on a consolidated basis.



     “Maturity Date” means July 31, 2013.




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     “Maximum Facility Amount” means, initially, $1,200,000,000, as such amount may be
adjusted from time to time in accordance with Section 2.20.



     “Maximum Rate” has the meaning specified in Section 10.09.



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



     “Mortgage” means each mortgage, collateral mortgage, security agreement, assignment,
and deed of trust delivered by any Loan Party pursuant to the terms of the Loan Documents,
substantially in the form of Exhibit F hereto or such other form acceptable to the
Administrative Agent, in each case as amended, supplemented, restated or otherwise modified from
time to time.



     “Mortgaged Property” shall mean all property interests, real and personal, by or in
which any Loan Party or any other Person owns an undivided interest and which is subject to the
Liens, privileges, priorities or security interests existing and to exist under the terms of a
Mortgage.



     “Multiemployer Plan” means any employee benefit plan of the type described in Section
4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make
contributions, or during the preceding five plan years, has made or been obligated to make
contributions.



     “Net Cash Proceeds” means with respect to any Disposition (including any casualty
event or loss) of Borrowing Base Properties by the Borrower or any Restricted Subsidiary, the
excess, if any, of (i) the sum of cash and cash equivalents received in connection with such
Disposition, but only as and when so received, less (ii) the sum of (1) the principal amount of any
Indebtedness, if any, that is secured by such Borrowing Base Properties and that is required to be
repaid in connection with the sale thereof (other than the Loans), and (2) the out-of-pocket
expenses incurred by Borrower or such Restricted Subsidiary in connection with such Disposition.



     “Non-Consenting Lender” has the meaning specified in Section 2.19.



     “Note” means a promissory note made by the Borrower in favor of a Lender evidencing
Revolving Loans or Swing Line Loans, as applicable, made by such Lender, substantially in the form
of Exhibit A with appropriate modifications for each type of Loan.



     “Obligations” means all advances to, and debts, liabilities, obligations, covenants
and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan
or Letter of Credit, whether direct or indirect (including those acquired by assumption), or under
any Swap Contract with any Lender Counterparty (including obligations under the Existing Swap
Contracts and obligations arising under any transaction under any other Swap Contract with any
Person that was, at or after the time such transaction was entered into, a Lender Counterparty),
absolute or contingent, due or to become due, now existing or hereafter arising and including
interest and fees that accrue after the commencement by or against any Loan Party of any proceeding
under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.




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     “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-U.S. jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.



     “Original Credit Agreement” has the meaning specified in Recital A.



     “Original Loans” means the loans and other extensions of credit outstanding under the
Original Credit Agreement as of the Closing Date.



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



     “Participant” has the meaning specified in Section 10.06(d).



     “PBGC” means the Pension Benefit Guaranty Corporation.



     “Pension Plan” means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and
is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any
ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time
during the immediately preceding five plan years.



     “Permitted Encumbrances” means (a) Liens for taxes, assessments or other governmental
charges or levies if the same shall not at the particular time in question be due and delinquent
(or, if foreclosure, distraint, sale or other similar proceedings shall not have been commenced or,
if commenced, shall have been stayed) or are being contested in good faith and by appropriate
proceedings, and if the Borrower shall have set aside on its books such reserves (segregated to the
extent required by sound accounting practices) as may be adequate according to GAAP; (b) Liens of
carriers, warehousemen, mechanics, laborers, materialmen, landlords, vendors, workmen, and
operators arising in the ordinary course of business or incident to the exploration, development,
operations and maintenance of oil, gas and other hydrocarbon properties and related facilities and
assets, for sums not yet due or being contested in good faith and by appropriate proceedings, if
the Borrower shall have set aside on its books such reserves (segregated to the extent required by
sound accounting practices) as may be adequate according to GAAP; (c) Liens arising in the ordinary
course of the Loan Parties’ respective businesses in connection with worker’s compensation,
unemployment insurance and other social security legislation (other than ERISA); (d) Liens incurred
in the ordinary course of a Loan Party’s




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businesses to secure the performance of bids, tenders, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance and return-of-money bonds and other obligations
of a like nature; (e) Liens, easements, rights-of-way restrictions, servitudes, permits,
conditions, covenants, exceptions, reservations and other similar encumbrances and title defects
incurred in the ordinary course of a Loan Party’s businesses or existing on property and not in the
aggregate materially interfering with the ordinary conduct of a Loan Party’s businesses or a Loan
Party’s rights to the Borrowing Base Properties; (f) legal or equitable encumbrances deemed to
exist by reason of negative pledges permitted under Section 7.09 of this Agreement or the existence
of any litigation or other legal proceeding and any related lis pendens filing (excluding any
attachment prior to judgment, judgment lien or attachment lien in aid of execution on a judgment);
(g) rights of a common owner (only in its capacity as common owner) of any interest in property
held by any Loan Party; (h) farmout, carried working interest, joint operating, unitization,
royalty, overriding royalty, sales and similar agreements relating to the exploration or
development of, or production from, oil and gas properties incurred in the ordinary course of
business that do not in the aggregate have a Material Adverse Effect; (i) Liens arising pursuant to
Article 9.343 of the Texas Uniform Commercial Code or other similar statutory provisions of other
states with respect to production purchased from others; and (j) any defects, irregularities, or
deficiencies in title to easements, rights-of-way or other properties that do not in the aggregate
have a Material Adverse Effect; provided that the term “Permitted Encumbrances” shall not
include any Lien securing Indebtedness.



     “Permitted Investments” means:




     (a) Investments in:




     (1) open market commercial paper, maturing within 180 days after acquisition
thereof, if at the time of purchase such paper is rated in either of the two (2)
highest categories of S&P or Moody’s;




     (2) marketable obligations, maturing within one (1) year after acquisition
thereof, issued or unconditionally guaranteed by the United States of America or an
instrumentality or agency thereof and entitled to the full faith and credit of the
United States of America, and in money market and mutual funds that invest solely in
such obligations; or




     (3) demand deposits and time deposits (including certificates of deposit)
maturing within one (1) year from the date of deposit thereof, with any office of
any Lender or any Lender’s Affiliate or with a domestic office of any national or
state bank or trust company which is organized under the laws of the United States
of America or any state therein, which has capital, surplus and undivided profits of
at least $500,000,000 and whose certificates of deposit are rated in either of the
two (2) highest rating categories of S&P or Moody’s; or




     (b) Investments by any Loan Party in the ordinary course of business in (1) the
exploration, production and development of oil, natural gas and other liquid and gaseous
hydrocarbons and the gathering, processing, transmission and marketing of hydrocarbons and
activities related or ancillary thereto and (2) the ownership and




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maintenance of real property for the primary purpose of carrying out the activities
described in the foregoing clause (1).



     “Permitted Refinancing” means any Indebtedness of the Borrower, and Indebtedness
constituting Guarantees thereof by Restricted Subsidiaries, incurred or issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace (whether or not
contemporaneously), defease or refund, outstanding Senior Notes, in whole or in part from time to
time; provided that (i) the principal amount of such Permitted Refinancing (or if such Permitted
Refinancing is issued at a discount, the initial issuance price of such Permitted Refinancing) does
not exceed the then outstanding principal amount of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of any premiums and accrued interest paid
and fees and expenses incurred in connection therewith), (ii) such Permitted Refinancing has a
stated maturity no earlier than the first anniversary of the Maturity Date, (iii) no scheduled
principal payment is required under such Permitted Refinancing prior to the stated maturity of such
Permitted Refinancing, (iv) such Permitted Refinancing does not contain any covenants or events of
default that, taken as a whole, are materially more restrictive on any Loan Party, than those
imposed by the Senior Notes being extended, refinanced, renewed, replaced, defeased or refunded,
and (v) such Permitted Refinancing and any Guarantee in respect thereof is unsecured.



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



     “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of
ERISA) that is established by the Borrower or any ERISA Affiliate and that is subject to Section
412 of the Code or Title IV of ERISA.



     “Pledge Agreement” means any pledge agreement substantially in the form of
Exhibit G delivered pursuant to Section 4.01(a)(xi) or Section 6.12 hereof, as from time to
time amended, modified, or supplemented, as the case may be.



     “Prime Rate” means the rate of interest per annum publicly announced from time to time
by JPMorgan Chase Bank as its prime rate in effect at its principal office in Chicago, Illinois,
each change in the Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.



     “Purchase Agreement” has the meaning specified in Recital B.



     “Redetermination” means any Scheduled Redetermination or Special Redetermination.



     “Redetermination Date” means (a) with respect to any Scheduled Redetermination, each
April 1 and October 1 of each year, commencing October 1, 2008, and (b) with respect to any Special
Redetermination, the first day of the first month which is not less than twenty (20) Business Days
following the date of a request for a Special Redetermination.



     “Register” has the meaning specified in Section 10.06(c).




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



     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA,
other than events for which the 30 day notice period has been waived.



     “Required Lenders” means, at any time, Lenders having Revolving Credit Exposures and
Unused Commitments representing at least 66-2/3% of the sum of the Aggregate Credit Exposure and
all Unused Commitments of all Lenders at such time or, if the Aggregate Commitment has been
terminated, Lenders having Revolving Credit Exposures representing at least 66-2/3% of the sum of
the Aggregate Credit Exposure of all Lenders at such time; provided that the Commitment of and the
Revolving Credit Exposures held or deemed held by any Defaulting Lender shall be excluded for
purposes of making a determination of the Required Lenders.



     “Responsible Officer” means the chief executive officer, president, vice president,
chief financial officer, treasurer or assistant treasurer of a Loan Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to
have been authorized by all necessary corporate, partnership and/or other action on the part of
such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.



     “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity Interest of the
Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such capital stock or other Equity
Interest, or on account of any return of capital to the Borrower’s stockholders, partners or
members (or the equivalent Person thereof).



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



     “Revolving Borrowing” means a borrowing consisting of simultaneous Revolving Loans of
the same Type and, in the case of Eurodollar Loans, having the same Interest Period, made by each
of the Lenders pursuant to Section 2.01.



     “Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lender’s Loans, its L/C Exposure and its Swing Line
Exposure at such time.



     “Revolving Loan” means the Original Loans and the Loans made pursuant to Section 2.01.



     “S&P” means Standard & Poor’s Ratings Group and any successor thereto that is a
nationally recognized rating agency.




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     “Scheduled Redetermination” means any redetermination of the Borrowing Base or the
Conforming Borrowing Base pursuant to Section 3.02. When reference is made herein to any interval
or period between Scheduled Redeterminations, the date of this Agreement shall be deemed the first
such Scheduled Redetermination.



     “SEC” means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.



     “Secured Party” means the Administrative Agent, any Lender, any Lender Counterparty
and any other Person party to any Swap Contract with any Loan Party to the extent that any
Obligations owing to such Person arise from transactions entered into pursuant to such Swap
Contract at a time, or prior to the time, when such Person was a Lender Counterparty.



     “Security Instruments” shall mean any Guaranties, Mortgages, Pledge Agreements,
security agreements and any and all other agreements or instruments previously, now or hereafter
executed and delivered by any Loan Party or any other Person to guaranty, or provide security for
the payment or performance of, the Obligations, this Agreement, the Guaranties or any other Loan
Document, as any such instrument or agreement may be supplemented, amended, renewed, extended or
restated from time to time.



     “Sellers” means, collectively, James C. Henry, Paula Henry, Henry Securities Ltd, a
Texas limited partnership, Henchild, LLC, a Texas limited liability company and Henry Family
Investment Group, a Texas general partnership.



     “Senior Notes” is defined in Section 7.03(f).



     “Senior Notes Documents” is defined in Section 7.15.



     “Special Redetermination” means any redetermination of the Borrowing Base or the
Conforming Borrowing Base made pursuant to Section 3.03 or Section 6.15.



     “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 FRB 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” of a Person means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of securities or other
interests having ordinary voting power for the election of directors or other governing body (other
than securities or interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise controlled, directly,
or




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indirectly through one or more intermediaries, or both, by such Person. Unless otherwise
specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary
or Subsidiaries of the Borrower.



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



     “Swap Termination Value” means, in respect of any one or more Swap Contracts, after
taking into account the effect of any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts (which may include a
Lender Counterparty).



     “Swing Line Exposure” means, at any time, the aggregate principal amount of all Swing
Line Loans outstanding at such time. The Swing Line Exposure of any Lender at any time shall be
its Applicable Percentage of the total Swing Line Exposure at such time.



     “Swing Line Lender” means JPMorgan Chase Bank, in its capacity as lender of Swing Line
Loans hereunder.



     “Swing Line Loan” means a Loan made pursuant to Section 2.05.



     “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or
possession of property creating obligations that do not appear on the balance sheet of such Person
but which, upon the insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).



     “Target” has the meaning specified in Recital B.



     “Target Entity” has the meaning specified in Recital B.




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     “Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental Authority, including
any interest, additions to tax or penalties applicable thereto.



     “Term Agent” means, Bank of America, N.A. in its capacity as contractual
representative of the financial institutions and other Persons from time to time a party to the
Term Facility and any successor agent appointed pursuant to the terms of the Term Facility
Documents.



     “Term Facility” means the term loan facility evidenced by the Term Facility Documents.



     “Term Facility Documents” means that certain Credit Agreement dated March 27, 2007, by
and among the Borrower, the financial institutions named therein (including Bank of America, N.A.)
and the Term Agent and any promissory notes executed in connection therewith, security instruments
and any other agreements executed in connection with such Credit Agreement as the same may be
amended, modified, supplemented or restated from time to time to the extent permitted under this
Agreement.



     “Term Loans” means the term loans made under the Term Facility.



     “Threshold Amount” means $25,000,000.



     “Transactions” means the execution, delivery and performance by the Loan Parties of
this Agreement and the Loan Documents, the borrowing of Loans, the use of the proceeds thereof, the
issuance of Letters of Credit hereunder, the repayment of the Term Loans and the termination of the
Term Facility, the issuance by the Borrower of certain of its Equity Interests and the receipt of
not less than $200,000,000 of gross proceeds therefrom, and the consummation of the Henry
Acquisition.



     “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
Adjusted LIBO Rate or the Alternate Base Rate.



     “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets,
determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section
412 of the Code for the applicable plan year.



     “United States” and “U.S.” mean the United States of America.



     “Unrestricted Subsidiary” means (a) any Subsidiary that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors of the Borrower in the
manner provided below and (b) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors
of the Borrower may designate any Subsidiary (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries is a
Material Domestic Subsidiary or a Subsidiary owning Borrowing Base Properties.




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     “Unused Commitment” means, with respect to any Lender at any time, such Lender’s
Commitment at such time minus such Lender’s Revolving Credit Exposure (other than such Lender’s
Swing Line Exposure) at such time.



     “Unused Commitment Fee” has the meaning specified in Section 2.12(a).



     “Wholly Owned Subsidiary” means a Subsidiary all of the Equity Interests of which
(other than director’s qualifying shares or, in the case of Concho Holdings prior to any merger of
Concho Holdings with the Borrower or any other Restricted Subsidiary, up to 5% of the fully diluted
common stock of Concho Holdings) are owned by the Borrower or one or more other Wholly Owned
Subsidiaries.



     1.02 Other Interpretive Provisions. With reference to this Agreement and each other
Loan Document, unless otherwise specified herein or in such other Loan Document:




     (a) The definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase
“without limitation.” The word “will” shall be construed to have the same meaning
and effect as the word “shall.” Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document (including any
Organization Document) shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified (subject to
any restrictions on such amendments, supplements or modifications set forth herein or in any
other Loan Document), (ii) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (iii) the words “herein,” “hereof” and
“hereunder,” and words of similar import when used in any Loan Document, shall be
construed to refer to such Loan Document in its entirety and not to any particular provision
thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, the Loan Document in which such references appear, (v) any reference to any
law shall include all statutory and regulatory provisions consolidating, amending replacing
or interpreting such law and any reference to any law or regulation shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented from time to
time, and (vi) the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.




     (b) In the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means
“to and including.”




     (c) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this Agreement or
any other Loan Document.




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     1.03 Accounting Terms. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including financial ratios
and other financial calculations) required to be submitted pursuant to this Agreement shall be
prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time,
except as otherwise specifically prescribed herein.



     1.04 Rounding. Any financial ratios required to be maintained by the Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate component by the other
component, carrying the result to one place more than the number of places by which such ratio is
expressed herein and rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).



     1.05 Times of Day. Unless otherwise specified, all references herein to times of day
shall be references to Central time (daylight or standard, as applicable).



     1.06 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a
Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in
effect at such time; provided, however, that with respect to any Letter of Credit
that, by its terms or the terms of any Issuer Document related thereto, provides for one or more
automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be
deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such
increases, whether or not such maximum stated amount is in effect at such time.



     1.07 Classifications of Loans and Borrowings. For purposes of this Agreement, Loans
may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type
(e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving
Loan”). Borrowings also may be classified and referred to by Class (e.g., Revolving
Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g.,
a Eurodollar Revolving Borrowing).



     1.08 Oil and Gas Definitions. For purposes of this Agreement, the terms “proved [or]
proven reserves,” “proved [or] proven developed reserves,” “proved [or] proven undeveloped
reserves,” “proved [or] proven developed nonproducing reserves” and “proved [or] proven developed
producing reserves,” have the meaning given such terms from time to time and at the time in
question by the Society of Petroleum Engineers of the American Institute of Mining Engineers.



ARTICLE II




THE COMMITMENTS AND CREDIT EXTENSIONS




     2.01 Revolving Loans. Subject to the terms and conditions set forth herein, each
Lender agrees to continue the Original Loans and to make one or more additional Revolving Loans to
the Borrower from time to time on any Business Day 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 Aggregate Credit Exposure exceeding the Aggregate Commitment.
Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Revolving Loans.



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     2.02 Loans and Borrowings.




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




     (b) Subject to Section 2.14, each Revolving Borrowing shall be comprised entirely of
ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each
Swing Line Loan shall be an ABR Loan. Each Lender at its option may make any Eurodollar
Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation of
the Borrower to repay such Loan in accordance with the terms of this Agreement.




     (c) At the commencement of each Interest Period for any Eurodollar Revolving Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000
and not less than $1,000,000. At the time that each ABR Revolving Borrowing is made, such
Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not
less than $1,000,000; provided that an ABR Revolving Borrowing may be in an
aggregate amount that is equal to the entire unused balance of the Aggregate Commitment or
that is required to finance the reimbursement of an L/C Disbursement as contemplated by
2.04(e). Each Swing Line Loan shall be in an amount that is not less than $100,000.
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 six (6) Eurodollar Revolving Borrowings
outstanding.




     (d) 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.



     2.03 Requests for Revolving Borrowings. To request a Revolving Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m. three Business Days before the date of the proposed
Borrowing or (b) in the case of an ABR Revolving Borrowing, not later than 11:00 a.m. on the date
of the proposed Revolving Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Borrowing Request in a form approved by the Administrative Agent 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;





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     (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 2.06.


If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any
requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, 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.




     2.04 Letters of Credit.




     (a) General. Subject to the terms and conditions set forth herein, the
Borrower may request the issuance of Letters of Credit for its own or the account of any
Restricted Subsidiary in a form reasonably acceptable to the Administrative Agent and the
L/C Issuer, at any time and from time to time during the Availability Period. In the event
of any inconsistency between the terms and conditions of this Agreement and the terms and
conditions of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the L/C Issuer 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 L/C Issuer)
to the L/C Issuer and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter
of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be a Business
Day), the date on which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, 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. If requested by the L/C Issuer, the Borrower also
shall submit a Letter of Credit Application in connection with any request for a Letter of
Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the L/C Exposure shall not exceed $50,000,000 and (ii) the
Aggregate Credit Exposure shall not exceed the Aggregate Commitment.




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     (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 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 L/C Issuer or the Lenders, the L/C Issuer hereby grants to each Lender, and each
Lender hereby acquires from the L/C Issuer, a participation in such Letter of Credit equal
to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under
such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender
hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the
account of the L/C Issuer, such Lender’s Applicable Percentage of each L/C Disbursement made
by the L/C Issuer and not reimbursed by the Borrower on the date due as provided in
paragraph (e) of this Section, or of any reimbursement payment required to be refunded to
the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph 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 or reduction or termination of the Aggregate Commitments, and that
each such payment shall be made without any offset, abatement, withholding or reduction
whatsoever.




     (e) Reimbursement. If the L/C Issuer shall make any L/C Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such L/C Disbursement by paying
to the Administrative Agent an amount equal to such L/C Disbursement not later than 2:00
p.m. on the date that such L/C Disbursement is made, if the Borrower shall have received
notice of such L/C Disbursement prior to 10:00 a.m. on such date, otherwise not later than
2:00 p.m. on the Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to 10:00 a.m. on the day of receipt;
provided that the Borrower may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 that such payment be financed with an ABR
Revolving Borrowing or Swing Line Loan in an equivalent amount and, to the extent so
financed, the Borrower’ obligation to make such payment shall be discharged and replaced by
the resulting ABR Revolving Borrowing or Swing Line Loan. If the Borrower fails to make
such payment when due, the Administrative Agent shall notify each Lender of the applicable
L/C 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 2.06 with respect to Loans
made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the
payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the
L/C Issuer the amounts so received by it from the Lenders. Promptly following receipt by
the Administrative Agent





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of any payment from the Borrower pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the L/C Issuer or, to the extent that Lenders have made
payments pursuant to this paragraph to reimburse the L/C Issuer, then to such Lenders and
the L/C Issuer as their interests may appear. Any payment made by a Lender pursuant to this
paragraph to reimburse the L/C Issuer for any L/C Disbursement (other than the funding of
ABR Loans or a Swing Line Loan as contemplated above) shall not constitute a Loan and shall
not relieve the Borrower of its obligation to reimburse such L/C Disbursement.




     (f) Obligations Absolute. The Borrower’s obligation to reimburse L/C
Disbursements as provided in paragraph (e) above 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 or this Agreement, or any term or provision therein
or herein, (ii) any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the L/C Issuer under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms of such Letter
of Credit, or (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, constitute a legal or
equitable discharge of, or provide a right of setoff against, the Borrower’s obligations
hereunder. Neither the Administrative Agent, the Lenders nor the L/C Issuer, nor any of
their Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment or failure
to make any payment thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in transmission or
delivery of any draft, notice or other communication under or relating to any Letter of
Credit (including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond the control
of the L/C Issuer; provided that the foregoing shall not be construed to excuse the
L/C Issuer from liability to the Borrower to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by the L/C
Issuer’s failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties hereto
expressly agree that, in the absence of gross negligence or willful misconduct on the part
of the L/C Issuer (as finally determined by a court of competent jurisdiction), the L/C
Issuer shall be deemed to have exercised 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 L/C Issuer 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.



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




     (h) Interim Interest. If the L/C Issuer shall make any L/C Disbursement, then,
unless the Borrower shall reimburse such L/C Disbursement in full on the date such L/C
Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and
including the date such L/C Disbursement is made to but excluding the date that the Borrower
reimburses such L/C Disbursement, at the rate per annum then applicable to ABR Loans;
provided that, if the Borrower fails to reimburse such L/C Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the L/C Issuer, except that
interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of
this Section to reimburse the L/C Issuer shall be for the account of such Lender to the
extent of such payment.




     (i) Replacement of the L/C Issuer. The L/C Issuer may be replaced at any time
by written agreement among the Borrower, the Administrative Agent, the replaced L/C Issuer
and the successor L/C Issuer. The Administrative Agent shall notify the Lenders of any such
replacement of the L/C Issuer. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced L/C Issuer
pursuant to Section 2.12(b). From and after the effective date of any such replacement,
(i) the successor L/C Issuer shall have all the rights and obligations of the L/C Issuer
under this Agreement with respect to Letters of Credit to be issued thereafter and
(ii) references herein to the term “L/C Issuer” shall be deemed to refer to such successor
or to any previous L/C Issuer, or to such successor and all previous L/C Issuers, as the
context shall require. After the replacement of an L/C Issuer hereunder, the replaced L/C
Issuer shall remain a party hereto and shall continue to have all the rights and obligations
of an L/C Issuer under this Agreement with respect to Letters of Credit issued by it prior
to such replacement, but shall not be required to issue additional Letters of Credit.




     (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the Administrative
Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated,
Lenders with L/C Exposure representing greater than 66-2/3% of the total L/C Exposure)
demanding the deposit of cash collateral pursuant to this paragraph, 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 the L/C Exposure as of such
date plus any accrued and unpaid interest thereon, if any; provided that the
obligation to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without



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demand or other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (f) or (g) of Section 8.01. Such deposit shall
be held by the Administrative Agent as collateral for the payment and performance of the
Obligations. The Administrative Agent shall have exclusive dominion and control, including
the exclusive right of withdrawal, over such account. Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and 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 the L/C Issuer for L/C 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 L/C Exposure at such time or, if the maturity of the
Loans has been accelerated (but subject to the consent of Lenders with L/C Exposure
representing 66-2/3% or more of the total L/C Exposure), be applied to satisfy other
Obligations and to the extent any excess remains after payment in full in cash of all
Obligations and the termination of all Commitments, such excess shall be released to the
Borrower. If the Borrower is required to provide an amount of cash collateral hereunder as
a result of the occurrence of an Event of Default, 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.



     2.05 Swing Line Loans.




     (a) Subject to the terms and conditions set forth herein, the Swing Line Lender agrees
to make Swing Line Loans to the Borrower from time to time during the Availability Period,
in an aggregate principal amount at any time outstanding that will not result in (i) the
aggregate principal amount of outstanding Swing Line Loans exceeding $25,000,000 or (ii) the
Aggregate Credit Exposure exceeding the Aggregate Commitment, provided that the Swing Line
Lender shall not be required to make a Swing Line Loan to refinance an outstanding Swing
Line Loan. Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Swing Line Loans.




     (b) To request a Swing Line Loan, the Borrower shall notify the Administrative Agent of
such request by telephone (confirmed by telecopy), not later than 11:00 a.m. on the day of a
proposed Swing Line Loan. Each such notice shall be irrevocable and shall specify the
requested date (which shall be a Business Day) and amount of the requested Swing Line Loan.
The Administrative Agent will promptly advise the Swing Line Lender of any such notice
received from the Borrower. The Swing Line Lender shall make each Swing Line Loan available
to the Borrower by means of a credit to the general deposit account of the Borrower with the
Swing Line Lender (or, in the case of a Swing Line Loan made to finance the reimbursement of
an L/C Disbursement as provided in Section 2.04(e), by remittance to the L/C Issuer) by 2:00
p.m. on the requested date of such Swing Line Loan.




     (c) The Swing Line Lender may by written notice given to the Administrative Agent not
later than 10:00 a.m. on any Business Day require the Lenders to acquire



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participations on such Business Day in all or a portion of the Swing Line Loans
outstanding. Such notice shall specify the aggregate amount of Swing Line Loans in which
Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Lender, specifying in such notice such Lender’s Applicable
Percentage of such Swing Line Loan or Loans. Each Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
Administrative Agent, for the account of the Swing Line Lender, such Lender’s Applicable
Percentage of such Swing Line Loan or Loans. Each Lender acknowledges and agrees that its
obligation to acquire participations in Swing Line Loans pursuant to this paragraph is
absolute and unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or termination of the
Commitments, and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. Each Lender shall comply with its obligation under
this paragraph by wire transfer of immediately available funds, in the same manner as
provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the Swing Line Lender the amounts so received by
it from the Lenders. The Administrative Agent shall notify the Borrower of any
participations in any Swing Line Loan acquired pursuant to this paragraph, and thereafter
payments in respect of such Swing Line Loan shall be made to the Administrative Agent and
not to the Swing Line Lender. Any amounts received by the Swing Line Lender from the
Borrower (or other party on behalf of the Borrower) in respect of a Swing Line Loan after
receipt by the Swing Line Lender of the proceeds of a sale of participations therein shall
be promptly remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders
that shall have made their payments pursuant to this paragraph and to the Swing Line Lender,
as their interests may appear; provided that any such payment so remitted shall be repaid to
the Swing Line Lender or to the Administrative Agent, as applicable, if and to the extent
such payment is required to be refunded to the Borrower for any reason. The purchase of
participations in a Swing Line Loan pursuant to this paragraph shall not relieve the
Borrower of any default in the payment thereof.



     2.06 Funding of Borrowings.




     (a) 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 12:00 noon to the account of the
Administrative Agent most recently designated by it for such purpose by notice to the
Lenders; provided that Swing Line Loans shall be made as provided in Section 2.05. The
Administrative Agent will make such Loans available to the Borrower by promptly crediting
the amounts so received, in like funds, to a deposit account of the Borrower designated by
the Borrower in the applicable Borrowing Request; provided that ABR Loans made to
finance the reimbursement of an L/C Disbursement as provided in Section 2.04(e) shall be
remitted by the Administrative Agent to the L/C Issuer.




     (b) Unless the Administrative Agent shall have received notice from a Lender prior to
the proposed date of any Borrowing that such Lender will not make available to



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the Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in accordance
with paragraph (a) of this Section 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.



     2.07 Interest Elections.




     (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Revolving Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request; provided that all new
Borrowings made on the Closing Date shall be ABR Borrowings. 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 Revolving Borrowing, may elect Interest Periods therefor, all as
provided in this Section. 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. This Section
shall not apply to Swing Line Borrowings, which may not be converted or continued.




     (b) To make an election pursuant to this Section, 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 Revolving 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 or telecopy to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by the Borrower.




     (c) 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 clauses (iii) and (iv) below shall be
specified for each resulting Borrowing);



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




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




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




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




     (d) 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) If the Borrower fails to deliver a timely Interest Election Request with respect to
a Eurodollar Revolving Borrowing prior to the end of the Interest Period applicable thereto,
then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period
such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the Borrower,
then, so long as an Event of Default is continuing (i) no outstanding Revolving Borrowing
may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.



     2.08 Termination or Reduction of Commitments; Reduction of Borrowing Base.




     (a) Unless previously terminated, the Aggregate Commitments shall terminate on the
Maturity Date.




     (b) The Borrower may at any time terminate, or from time to time reduce, the Aggregate
Commitment; provided that (i) each reduction of the Aggregate Commitments shall be
in an amount that is an integral multiple of $5,000,000 and not less than $10,000,000 and
shall be applied ratably to each Lender’s Commitment, and (ii) the Borrower shall not
terminate or reduce the Aggregate Commitments if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 2.10 and Section 2.11, the Aggregate
Credit Exposure would exceed the Aggregate Commitments.




     (c) The Borrower shall notify the Administrative Agent of any election to terminate or
reduce the Aggregate Commitments under paragraph (b) of this Section 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 shall be irrevocable; provided



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that a notice of termination of the Aggregate Commitments 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 of the Aggregate Commitments shall be permanent. Each reduction of the
Aggregate Commitments shall be made ratably among the Lenders in accordance with their
respective Applicable Percentage.



     2.09 Repayment of Loans.




     (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each Loan on the Maturity
Date and (ii) to the Swing Line Lender the then unpaid principal amount of each Swing Line
Loan on the earlier of the Maturity Date and the fourteenth day after such Swing Line Loan
is made.




     (b) Each Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan
made by such Lender, including the amounts of principal and interest payable and paid to
such Lender from time to time hereunder.




     (c) The Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Class and Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender hereunder and (iii) the amount of
any sum received by the Administrative Agent hereunder for the account of the Lenders and
each Lender’s share thereof.




     (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of
this Section shall be prima facie evidence of the existence and amounts of
the obligations recorded therein; provided that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Loans in accordance with the terms of
this Agreement.




     (e) Any Lender or Participant may request that Loans made by it be evidenced by a Note.
In such event, the Borrower shall prepare, execute and deliver to such Lender or
Participant a Note payable to the order of such Lender or Participant (or, if requested by
such Lender or Participant, to such Lender or Participant and its registered assigns) and in
the form attached hereto as Exhibit A; provided that any Note issued to
evidence any Lender’s Loans shall be in a stated amount equal to such Lender’s Applicable
Percentage of the Maximum Facility Amount. Thereafter, the Loans evidenced by such Note and
interest thereon shall at all times (including after assignment pursuant to Section 10.06)
be represented by one or more Notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its registered
assigns).



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     2.10 Optional Prepayment of Loans.




     (a) The Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole and or in part, subject to prior notice in accordance with paragraph (b)
of this Section. Any prepayment by the Borrower of any Borrowing shall be without premium
or penalty, provided that the Borrower shall be obligated to pay any funding indemnification
amounts due under Section 2.16.




     (b) The Borrower shall notify the Administrative Agent (and, in the case of prepayment
of a Swing Line Loan, the Swing Line Lender) by telephone (confirmed by telecopy) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar Revolving Borrowing, not
later than 11:00 a.m. on the date of prepayment, (ii) in the case of prepayment of an ABR
Revolving Borrowing, not later than 11:00 a.m. on the date of prepayment or (iii) in the
case of prepayment of a Swing Line Loan, not later than 11:00 a.m. on the date of
prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and
the principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of prepayment is given in connection with a conditional notice of
termination or reduction of the Aggregate Commitment as contemplated by Section 2.08, then
such notice of prepayment may be revoked if such notice of termination or reduction is
revoked in accordance with Section 2.08. Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the
contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an
aggregate amount that is an integral multiple of $500,000 and not less than $500,000. Each
prepayment of a Revolving Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.13.



     2.11 Mandatory Prepayment of Loans.




     (a) Except as otherwise provided in Section 2.11(b) and 2.11(c), in the event a
Borrowing Base Deficiency exists, the Borrower shall, within ten (10) days after written
notice from the Administrative Agent to the Borrower of such Borrowing Base Deficiency,
notify the Administrative Agent that the Borrower intends to take one or more of the
following actions: (i) to provide the Lenders, within 30 days thereafter and by instruments
reasonably satisfactory in form and substance to the Administrative Agent, with additional
security consisting of oil and gas properties with a value and quality satisfactory to the
Required Lenders in their sole discretion to eliminate such Borrowing Base Deficiency,
(ii) within 30 days thereafter to prepay, without premium or penalty, the principal amount
of the Loans in an amount sufficient to eliminate such Borrowing Base Deficiency, (iii) to
prepay the principal amount of such Borrowing Base Deficiency in not more than six (6) equal
monthly installments plus accrued interest thereon and to make the first such monthly
payment on the 30th day after the Borrower’s receipt of notice of such Borrowing Base
Deficiency, or (iv) by a combination of such additional security and such prepayments, to
eliminate such Borrowing Base Deficiency. Thereafter the Borrower shall timely take the
actions it has elected and in any event within the time specified with respect to the
foregoing clauses (i) and (ii).



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     (b) If the Borrower or any Restricted Subsidiary Disposes of any Borrowing Base
Properties at any time a Borrowing Base Deficiency exists or if after giving effect to such
Disposition a Borrowing Base Deficiency would exist, the Borrower shall prepay the Loans in
an amount sufficient to eliminate such Borrowing Base Deficiency on the date it or any
Restricted Subsidiary receives the Net Cash Proceeds of such Disposition; provided that, in
the event such Disposition occurs at any time Borrower is taking any action permitted
pursuant to Section 2.11(a) to eliminate a Borrowing Base Deficiency arising for any reason
other than such Disposition or the issuance of Senior Notes, Borrower shall be deemed to
have complied with this Section 2.11(b) with respect to such Disposition if Borrower prepays
the Loans with the Net Cash Proceeds of such Disposition on the date it or any Restricted
Subsidiary receives the Net Cash Proceeds of such Disposition in an amount equal to the
lesser of (i) the amount of such Net Cash Proceeds or (ii) the amount required to eliminate
such Borrowing Base Deficiency. For the avoidance of doubt, Borrower shall be required to
continue to comply with Section 2.11(a) with respect to any Borrowing Base Deficiency
existing at the time of such Disposition for any reason other than such Disposition or the
issuance of Senior Notes.




     (c) If the Borrower issues any Senior Notes permitted under Section 7.03(f) at any time
a Borrowing Base Deficiency exists or if after giving effect to the adjustment to the
Borrowing Base and Conforming Borrowing Base required by Section 3.05 as a result of the
incurrence of such Indebtedness a Borrowing Base Deficiency would exist, the Borrower shall
prepay the Loans on the date the Borrower receives the net proceeds from the issuance of
such Senior Notes in an amount sufficient to eliminate such Borrowing Base Deficiency;
provided that, in the event such Senior Notes are issued at any time Borrower is taking any
action permitted pursuant to Section 2.11(a) to eliminate a Borrowing Base Deficiency
arising for any reason other than the issuance of such Senior Notes or any Disposition of
Borrowing Base Properties, Borrower shall be deemed to have complied with this Section
2.11(c) with respect to the issuance of such Senior Notes if Borrower prepays the Loans with
the net proceeds of such issuance of Senior Notes on the date it receives such net proceeds
in an amount equal to the lesser of (i) the amount of such net proceeds and (ii) the amount
required to eliminate such Borrowing Base Deficiency. For the avoidance of doubt, Borrower
shall be required to continue to comply with Section 2.11(a) with respect to any Borrowing
Base Deficiency existing at the time of such issuance of Senior Notes for any reason other
than such issuance or any Disposition of Borrowing Base Properties.




     (d) Any prepayment pursuant to this Section 2.11 shall not require prior notice and
shall be without premium or penalty but subject to any funding indemnification amounts
required by Section 2.16. Amounts applied to the prepayment of Borrowings pursuant to this
Section 2.11 shall be first applied to Swing Line Borrowings then outstanding and upon
payment in full of all outstanding Swing Line Borrowings, second, ratably to ABR Revolving
Borrowings then outstanding and, upon payment in full of all outstanding ABR Revolving
Borrowings, third, to Eurodollar Revolving Borrowings then outstanding, and if more than one
Eurodollar Revolving Borrowing is then outstanding, to each such Eurodollar Revolving
Borrowing beginning with the Eurodollar Revolving Borrowing with the least number of days
remaining in the Interest Period applicable thereto and ending with the Eurodollar Revolving
Borrowing with the most number of



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days remaining in the Interest Period applicable thereto, subject to the payment of any
funding indemnification amounts required by Section 2.16 but without penalty or premium.



     2.12 Fees.




     (a) The Borrower agrees to pay to the Administrative Agent, for the account of each
Lender, an unused commitment fee (the “Unused Commitment Fee”) equivalent to the
Applicable Rate times the daily average of the total Unused Commitments. Such Unused
Commitment Fee shall be calculated on the basis of a year consisting of 360 days. The
Unused Commitment Fee shall be calculated as of (and payable within fifteen days after) the
last day of March, June, September and December of each year, commencing with the first such
date to occur after the Closing Date, and on the Maturity Date (or such earlier date on
which the Aggregate Commitment terminates in accordance with the terms of this Agreement)
for any period then ending for which the Unused Commitment Fee shall not have been
theretofore paid.




     (b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each
Lender a participation fee with respect to its participations in Letters of Credit, which
shall accrue at the same Applicable Rate used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of each Lender’s L/C Exposure (excluding any
portion thereof attributable to unreimbursed L/C Disbursements) during the period from and
including the Closing 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 L/C Exposure, and
(ii) to the L/C Issuer a fronting fee, which shall accrue at the rate or rates per annum
separately agreed upon between the Borrower and the L/C Issuer, on the average daily amount
of the L/C Exposure (excluding any portion thereof attributable to unreimbursed L/C
Disbursements) during the period from and including the Closing Date to but excluding the
later of the date of termination of the Aggregate Commitment and the date on which there
ceases to be any L/C Exposure, as well as the L/C Issuer’s 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 within fifteen days
following such last day, commencing on the first such date to occur after the Closing Date;
provided that all such fees shall be payable on the date on which the Aggregate
Commitment terminates and any such fees accruing after the date on which the Aggregate
Commitment terminates shall be payable on demand. Any other fees payable to the L/C Issuer
pursuant to this paragraph 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 and shall be
payable for the actual number of days elapsed (including the first day but excluding the
last day).




     (c) As required under the Fee Letter, the Borrower agrees to pay (i) 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 and (ii) to



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Bank of America, for its own account, fees payable in the amounts and at the times
separately agreed upon between the Borrower and Bank of America.




     (d) All fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent (or to the L/C Issuer, in the case of fees payable to it)
for distribution, in the case of Unused Commitment Fees and participation fees, to the
Lenders. Fees paid shall not be refundable under any circumstances.



     2.13 Interest.




     (a) The Loans comprising each ABR Borrowing (including each Swing Line Loan) shall bear
interest at the Alternate Base Rate plus the Applicable Rate.




     (b) 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 Rate.




     (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any
fee or other amount payable by the Borrower hereunder 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, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the
rate applicable to ABR Loans as provided in paragraph (a) of this Section.




     (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment
Date for such Loan and upon termination of the Aggregate Commitment and on the Maturity
Date; provided that (i) interest accrued pursuant to paragraph (c) of this Section
shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan
(other than a prepayment of an ABR Loan prior to the end of the Availability Period at a
time when no Borrowing Base Deficiency exists), accrued interest on the principal amount
repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in
the event of any conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective date of
such conversion.




     (e) All interest hereunder shall be computed on the basis of a year of 360 days, 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.



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



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


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




     2.15 Increased Costs.



          (a) 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 the L/C Issuer; or




     (ii) impose on any Lender or the L/C Issuer or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such Lender or
any Letter of Credit or participation therein;




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 increase the cost to such Lender or the L/C Issuer of participating in, issuing
or maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender or the L/C Issuer, as the case may be,
such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the
case may be, for such additional costs incurred or reduction suffered.




     (b) If any Lender or the L/C Issuer determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such Lender’s or
the L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding
company, if any, as a consequence of this Agreement or the Loans made by, or participations
in Letters of Credit held by, such Lender, or the Letters of Credit issued by the L/C
Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the
L/C Issuer’s holding company could have achieved but for such Change in Law (taking into
consideration such Lender’s or the L/C Issuer’s policies and



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the policies of such Lender’s or the L/C Issuer’s holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender or the L/C
Issuer, as the case may be, such additional amount or amounts as will compensate such Lender
or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such
reduction suffered.




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




     (d) Failure or delay on the part of any Lender or the L/C Issuer to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s
right to demand such compensation; provided that the Borrower shall not be required
to compensate a Lender or the L/C Issuer pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender or the L/C Issuer,
as the case may be, notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or the L/C Issuer’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 270-day period referred to above
shall be extended to include the period of retroactive effect thereof.



     2.16 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 other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto
(regardless of whether such notice may be revoked under Section 2.10(b) and is revoked in
accordance therewith), 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
2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and
expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense
to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if
any, of (i) the amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such Lender would bid
were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the Eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this Section shall be
delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.



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     2.17 Taxes.




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




     (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.




     (c) The Borrower shall indemnify the Administrative Agent, each Lender and the L/C
Issuer, 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 the L/C Issuer, 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) and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or the L/C Issuer, or by the Administrative
Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive
absent manifest error.




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




     (f) If the Administrative Agent or a Lender determines, in its sole discretion, that it
has received a refund of any Taxes or Other Taxes as to which it has been



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indemnified by the Borrower or with respect to which the Borrower has paid additional
amounts pursuant to this Section 2.17, it shall pay over such refund to the Borrower (but
only to the extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 2.17 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental Authority with
respect to such refund); provided, that the Borrower, upon the request of the Administrative
Agent, the Swing Line Lender 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
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.



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




     (a) The Borrower shall make each payment required to be made by it hereunder (whether
of principal, interest, fees or reimbursement of L/C Disbursements, or of amounts payable
under Sections 2.15, 2.16 or 2.17, or otherwise) prior to 12:00 noon on the date when due,
in immediately available funds, without set-off or counterclaim. 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 at Mail
Code IL1-0010, 10 South Dearborn, Floor 07, Chicago, Illinois 60603-2003, except payments to
be made directly to the L/C Issuer or Swing Line Lender as expressly provided herein and
except that payments pursuant to Sections 2.15, 2.16, 2.17 and 10.04 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) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed L/C Disbursements,
interest and fees then due hereunder, such funds shall be applied in accordance with Section
8.03.




     (c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of its Loans or
participations in L/C Disbursements or Swing Line Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Loans and participations in
L/C Disbursements and Swing Line Loans and accrued interest thereon than the proportion
received by any other Lender, then the Lender receiving such greater




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proportion shall purchase (for cash at face value) participations in the Loans and
participations in L/C Disbursements and Swing Line 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 and participations in L/C Disbursements and Swing Line 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 paragraph shall not be construed to apply to any payment made by the
Borrower pursuant to and in accordance with the express terms of this Agreement or any
payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in L/C Disbursements to any assignee or
participant, other than to the Borrower or any Restricted Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may exercise against
the Borrower rights of set-off and counterclaim with respect to such participation as fully
as if such Lender were a direct creditor of the Borrower in the amount of such
participation.




     (d) Unless the Administrative Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Administrative Agent for the account of the
Lenders or the L/C Issuer hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or
the L/C Issuer, as the case may be, the amount due. In such event, if the Borrower has not
in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or L/C Issuer 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.




     (e) If any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.04(d) or 2.04(e), 2.06(b), 2.17(f) or 10.04(c), 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.



     2.19 Mitigation Obligations; Replacement of Lenders.




     (a) If any Lender requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its



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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 2.15 or 2.17,
as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection
with any such designation or assignment.




     (b) If any Lender requests compensation under Section 2.15, 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 2.17, or if any Lender defaults in its obligation
to fund Loans hereunder, then the Borrower may, at its sole expense and effort, upon notice
to such Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained in
Section 10.06), all its interests, rights and obligations under this Agreement to an
assignee that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrower shall have received
the prior written consent of the Administrative Agent (and if a Commitment is being
assigned, the L/C Issuer), 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 L/C Disbursements and Swing Line Loans, 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 2.15 or payments required to be made pursuant to
Section 2.17, 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.




     (c) If in connection with any proposed amendment, modification, termination, waiver or
consent with respect to any of the provisions of this Agreement or any other Loan Document
as contemplated by Section 10.01, the consent of Required Lenders or Majority Lenders, as
applicable, shall have been obtained but the consent of one or more of such other Lenders
(each a “Non-Consenting Lender”) whose consent is required has not been obtained or
if any Lender is a Defaulting Lender; then, the Borrower may, at its sole cost and expense,
elect to replace such Non-Consenting Lender or Defaulting Lender, as the case may be, as a
Lender party to this Agreement in accordance with and subject to the restrictions contained
in, and consents required by Section 10.06 (with the Borrower paying any applicable
processing and recordation fees); provided that such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and participations in
L/C 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). 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



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circumstances entitling the Borrower to require such assignment and delegation cease to
apply or, in the case of a Defaulting Lender, such Lender is no longer a Defaulting Lender.



     2.20 Additional Lenders; Increases in Commitments and Maximum Facility Amount. If (a)
no Default or Event of Default exists as of the date of such increase or would be caused by such
increase and (b) the Borrower shall concurrently pay any additional upfront fee required as a
result of such increase, the Borrower may, at any time and from time to time, increase the Maximum
Facility Amount to an amount not to exceed $1,500,000,000 by providing written notice of such
increase to the Administrative Agent. Each Lender shall have the right, but not the obligation, in
each such Lender’s sole discretion, to provide a portion of such increase in the Maximum Facility
Amount up to the portion of such increase that such Lender’s existing Commitment bears to the
aggregate amount of the existing Commitments of all Lenders electing to participate in such
requested increase by executing and delivering to the Borrower and the Administrative Agent a
certificate substantially in the form of Exhibit I hereto (a “Lender Certificate”). In the
event that within 10 Business Days of the Administrative Agent’s receipt of such written notice the
existing Lenders fail to provide increases in their respective Commitments sufficient to satisfy
such requested increase in the Maximum Facility Amount, the Borrower may adjust the previously
requested Maximum Facility Amount to reflect the increased Commitments of existing Lenders or one
or more financial institutions reasonably acceptable to the Administrative Agent may become a
Lender under this Agreement by executing and delivering to the Borrower and the Administrative
Agent a Lender Certificate. Upon receipt by the Administrative Agent of Lender Certificates
representing increases to existing Lender Commitments and/or Commitments from new Lenders as
provided in this Section 2.20 in an aggregate amount equal to the requested increase (as the same
may have been adjusted), (a) the Aggregate Commitment (including the Commitment of any Person that
becomes a Lender by delivery of such a Lender Certificate) and the Maximum Facility Amount,
automatically without further action by the Borrower, the Administrative Agent or any Lender shall
be increased on the effective date set forth in such Lender Certificates by the amount indicated in
such Lender Certificates, (b) the Register shall be amended to add such Commitment of such
additional Lender or to reflect the increase in the Commitment of an existing Lender, and the
Applicable Percentages of the Lenders shall be adjusted accordingly to reflect the additional
Lender or the increase in the Commitment of an existing Lender, (c) any such additional Lender
shall be deemed to be a party in all respects to this Agreement and any other Loan Documents to
which the Lenders are a party, and (d) upon the effective date set forth in such Lender
Certificate, any such Lender party to the Lender Certificate shall purchase a pro rata portion of
the outstanding Revolving Credit Exposure of each of the current Lenders such that the Lenders
(including any additional Lender, if applicable) shall have the appropriate portion of the
aggregate outstanding Revolving Credit Exposure of the Lenders (based in each case on such Lender’s
Applicable Percentage, as revised pursuant to this Section).



ARTICLE III




BORROWING BASE AND CONFORMING BORROWING BASE




     3.01 Initial Borrowing Base and Conforming Borrowing Base. During the period from the
Closing Date until the first Redetermination after the Closing Date, the Borrowing Base



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shall be $960,000,000. Until otherwise determined by the Lenders in accordance with this
Article III, the Conforming Borrowing Base shall equal the Borrowing Base. As soon as available
and in any event by April 1 and October 1 of each year, beginning October 1, 2008, the Borrower
shall deliver to the Administrative Agent and each Lender, in the case of each April 1
determination, an Annual Engineering Report and, in the case of each October 1 redetermination, an
Interim Engineering Report, together with such other information, reports and data concerning the
value of the Borrowing Base Properties as the Administrative Agent shall deem reasonably necessary
to determine the value of such Borrowing Base Properties. Simultaneously with the delivery to the
Administrative Agent and the Lenders of each Engineering Report, the Borrower shall submit to the
Administrative Agent and each Lender the Borrower’s requested amount of the Borrowing Base as of
the next Redetermination Date. Promptly (and in no event more than fifteen (15) days) after the
receipt by the Administrative Agent of such Engineering Report and Borrower’s requested amount for
the Borrowing Base, the Administrative Agent shall submit to the Lenders a recommended amount of
the Borrowing Base and, if applicable, the Conforming Borrowing Base as of the next Redetermination
Date.




     3.02 Scheduled Redeterminations of the Borrowing Base; Procedures and Standards.
Based in part on the Engineering Reports made available to the Administrative Agent and the Lenders
pursuant to Section 3.01, the Lenders shall redetermine the Borrowing Base and the Conforming
Borrowing Base on or prior to the next Redetermination Date (or such date promptly thereafter as
reasonably possible based on the engineering and other information available to the Lenders). Any
Borrowing Base or Conforming Borrowing Base which becomes effective as a result of any
Redetermination shall be subject to the following restrictions: (a) such Borrowing Base shall not
exceed the Maximum Facility Amount then in effect, (b) such Conforming Borrowing Base shall not
exceed such Borrowing Base, (c) to the extent such Borrowing Base or Conforming Borrowing Base
represents an increase in the Borrowing Base or the Conforming Borrowing Base in effect prior to
such Redetermination, such Borrowing Base or Conforming Borrowing Base, as the case may be, must be
approved by all Lenders, and (d) to the extent such Borrowing Base or Conforming Borrowing Base
represents a decrease in the Borrowing Base or Conforming Borrowing Base in effect prior to such
Redetermination or a reaffirmation of such prior Borrowing Base or Conforming Borrowing Base, such
Borrowing Base or Conforming Borrowing Base must be approved by the Administrative Agent and
Required Lenders. If a redetermined Borrowing Base or Conforming Borrowing Base is not approved by
the Administrative Agent and Required Lenders within twenty (20) days after the submission to the
Lenders by the Administrative Agent of its recommended Borrowing Base and Conforming Borrowing Base
pursuant to Section 3.01, or by all Lenders within such twenty (20) day period in the case of any
increase in the Borrowing Base or Conforming Borrowing Base, the Administrative Agent shall notify
each Lender that the recommended Borrowing Base and Conforming Borrowing Base, as the case may be,
has not been approved and request that each Lender submit to the Administrative Agent within ten
(10) days thereafter its proposed Borrowing Base and proposed Conforming Borrowing Base. Promptly
following the 10th day after the Administrative Agent’s request for each Lender’s
proposed Borrowing Base and proposed Conforming Borrowing Base, the Administrative Agent shall
determine the Borrowing Base and Conforming Borrowing Base for such Redetermination by calculating
the highest Borrowing Base and highest Conforming Borrowing Base then acceptable to the
Administrative Agent and a number of Lenders sufficient to constitute Required Lenders (or all
Lenders in the case of an increase in the Borrowing Base or the Conforming Borrowing Base). Each



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Redetermination shall be made by the Lenders in their sole discretion, but based on the
Administrative Agent’s and such Lender’s usual and customary procedures for evaluating oil and gas
properties as such exist at the time of such Redetermination, and including adjustments to reflect
the effect of any Swap Contracts of the Borrower and the Restricted Subsidiaries as such exist at
the time of such Redetermination. The Borrower acknowledges and agrees that each Redetermination
shall be based upon the loan collateral value which the Administrative Agent and each Lender in its
sole discretion (using such methodology, assumptions and discount rates as the Administrative Agent
and such Lender customarily uses in assigning collateral value to oil and gas properties) assigns
to the Borrowing Base Properties at the time in question and based upon such other credit factors
consistently applied (including, without limitation, the assets, liabilities, cash flow, business,
properties, prospects, management and ownership of the Loan Parties) as the Administrative Agent
and such Lender customarily considers in evaluating similar oil and gas credits. It is expressly
understood that the Administrative Agent and Lenders have no obligation to designate the Borrowing
Base or the Conforming Borrowing Base at any particular amounts, except in the exercise of their
discretion, whether in relation to the Aggregate Commitment or otherwise. If the Borrower does not
furnish all information, reports and data required to be delivered by any date specified in this
ARTICLE III, unless such failure is not the fault of the Borrower, the Administrative Agent and
Lenders may nonetheless designate the Borrowing Base and the Conforming Borrowing Base at any
amounts which the Administrative Agent and Lenders in their reasonable discretion determine and may
redesignate the Borrowing Base and the Conforming Borrowing Base from time to time thereafter until
the Administrative Agent and Lenders receive all such information, reports and data, whereupon the
Administrative Agent and Lenders shall designate a new Borrowing Base and a new Conforming
Borrowing Base, as described above.



     3.03 Special Redeterminations. In addition to Scheduled Redeterminations, the
Borrower shall be permitted to request a Special Redetermination of the Borrowing Base and the
Conforming Borrowing Base once between each Scheduled Redetermination and the Required Lenders
shall be permitted to request a Special Redetermination once between each Scheduled Redetermination
(excluding a Special Redetermination pursuant to Section 6.15). Any request by the Borrower
pursuant to this Section 3.03 shall be submitted to the Administrative Agent and each Lender and at
the time of such request the Borrower shall (1) notify the Administrative Agent and each Lender of
the Borrowing Base requested by the Borrower in connection with such Special Redetermination, and
(2) deliver to the Administrative Agent and each Lender an Interim Engineering Report prepared as
of a date prior to the date of such request that is reasonably acceptable to the Administrative
Agent. Any request by Required Lenders pursuant to this Section 3.03 shall be submitted to the
Administrative Agent and the Borrower. Any Special Redetermination shall be made by the
Administrative Agent and Lenders in accordance with the procedures and standards set forth in
Section 3.02; provided that no Engineering Report is required to be delivered to the Administrative
Agent or the Lenders in connection with any Special Redetermination requested by the Required
Lenders pursuant to this Section 3.03.



     3.04 Notice of Redetermination. Promptly following any Redetermination of the
Borrowing Base or the Conforming Borrowing Base, the Administrative Agent shall notify the Borrower
of the amount of the redetermined Borrowing Base and Conforming Borrowing Base, which Borrowing
Base and Conforming Borrowing Base shall be effective as of the date



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specified in such notice, and such Borrowing Base and Conforming Borrowing Base shall remain
in effect for all purposes of this Agreement until the next Redetermination.



     3.05 Senior Notes Adjustment. Upon the incurrence of any Indebtedness under any
Senior Notes permitted under Section 7.03(f) at any time and from time to time (other than
Permitted Refinancings of any such Senior Notes), the Borrowing Base and the Conforming Borrowing
Base then in effect shall each be reduced by $300 for every $1,000 in stated amount of such
Indebtedness as of the date such Indebtedness is incurred. For the avoidance of doubt, the stated
amount of such Indebtedness that constitutes Permitted Refinancings of existing Senior Notes shall
not be included for purposes of determining the reduction in the Borrowing Base and the Conforming
Borrowing Base required by this Section 3.05 and only the stated amount in excess of such Permitted
Refinancings shall be included in calculating the adjustment required by this Section 3.05.



ARTICLE IV




CONDITIONS PRECEDENT TO CREDIT EXTENSIONS




     4.01 Conditions of Initial Credit Extension. The obligation of the L/C Issuer and
each Lender to continue the Original Loans and to make its initial Credit Extension hereunder is
subject to satisfaction of the following conditions precedent:




     (a) The Administrative Agent’s receipt of the following, each of which shall be
originals or telecopies (followed promptly by originals) unless otherwise specified, each
properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing
Date (or, in the case of certificates of governmental officials, a recent date before the
Closing Date) and each in form and substance reasonably satisfactory to the Administrative
Agent and each of the Lenders:




     (i) executed counterparts of this Agreement and each Initial Guarantor’s
Guaranty (or an amendment to each Initial Guarantor’s Guaranty under and as defined
in the Original Credit Agreement) sufficient in number for distribution to the
Administrative Agent, each Lender and the Borrower;




     (ii) a Note executed by the Borrower in favor of each Lender requesting a Note;




     (iii) such certificates of resolutions, consents or other action, incumbency
certificates and/or other certificates of the Secretary or a Responsible Officers of
each Loan Party as the Administrative Agent may require evidencing the identity,
authority and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan Documents
to which such Loan Party is a party, together with copies certified by the Secretary
or a Responsible Officer of each Loan Party of each Loan Party’s Organization
Documents;




     (iv) such documents and certifications as the Administrative Agent may
reasonably require to evidence that each Loan Party is duly organized or


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formed, and that each Loan Party is validly existing, in good standing and
qualified to engage in business in each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such qualification,
except to the extent that failure to do so could not reasonably be expected to have
a Material Adverse Effect;




     (v) a favorable opinion of Vinson & Elkins LLP, as counsel to the Loan Parties,
addressed to the Administrative Agent, the L/C Issuer and each Lender, as to such
matters concerning the Loan Parties and the Loan Documents as the Administrative
Agent may reasonably request;




     (vi) a favorable opinion of Cotton, Bledsoe, Tighe & Dawson, PC, special
counsel to the Loan Parties in the State of New Mexico addressed to the
Administrative Agent, the L/C Issuer and each Lender, as to such matters of New
Mexico law concerning the Loan Documents as the Administrative Agent may reasonably
request;




     (vii) a certificate of a Responsible Officer of each Loan Party either
(A) attaching copies of all consents, licenses and approvals required in connection
with the execution, delivery and performance by such Loan Party and the validity
against such Loan Party of the Loan Documents to which it is a party, and such
consents, licenses and approvals shall be in full force and effect, or (B) stating
that no such consents, licenses or approvals are so required;




     (viii) a certificate signed by a Responsible Officer of the Borrower certifying
that (A) the conditions specified in Section 4.02(a) and Section 4.02(b) have been
satisfied, (B) there has been no event or circumstance since December 31, 2007 that
has had or could be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect, (C) contemporaneously with the initial
Borrowing under this Agreement, all obligations under the Term Facility shall have
been paid in full and the Term Facility Documents shall have been terminated (except
for continuing indemnity obligations which by their terms expressly survive
termination), (D) contemporaneously with the initial Borrowing under this Agreement,
Borrower shall have received a cash equity contribution of at least $200,000,000
from the issuance of its Equity Interests (other than Disqualified Stock) and (E)
contemporaneously with the initial Borrowing under this Agreement and in accordance
with applicable law, the Henry Acquisition shall have been consummated by Borrower
without waiver or amendment of any material term or condition of the Purchase
Agreement not otherwise consented to by the Administrative Agent;




     (ix) a certificate as to insurance concerning the Borrowing Base Properties and
other material assets of the Loan Parties, which certificate shall provide that the
Administrative Agent is an additional insured thereunder;




     (x) complete and original executed counterparts of the Mortgages (and
amendments of Mortgages previously filed in connection with the Original Credit


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Agreement), each duly executed by the appropriate Loan Party, together with
evidence of arrangements by Administrative Agent’s counsel for the completion of all
recordings and filings of such Mortgages and amendments as may be necessary or, in
the reasonable opinion of Administrative Agent, desirable effectively to create a
valid, perfected and first priority Lien against Borrowing Base Properties
representing at least 80% of the Engineered Value of all proved Borrowing Base
Properties included in the Initial Engineering Report;




     (xi) a Pledge Agreement (or an amendment of the Pledge Agreement under and as
defined in the Original Credit Agreement), duly executed and delivered by each
appropriate Loan Party, covering all Equity Interests owned by such Loan Party in
any Restricted Subsidiaries (other than Target Entities which are not Initial
Guarantors), together with all certificates (or other evidence acceptable to
Administrative Agent) evidencing the issued and outstanding Equity Interests of each
such Restricted Subsidiary of every class owned by such Loan Party (as applicable)
which, if certificated, shall be duly endorsed or accompanied by stock powers
executed in blank (as applicable), as Administrative Agent shall deem necessary or
appropriate to grant, evidence and perfect a security interest in the issued and
outstanding Equity Interests owned by such Loan Party in each Restricted Subsidiary
prior and superior in right to any other Person; and




     (xii) such other assurances, certificates, documents, consents or opinions as
the Administrative Agent, the L/C Issuer, the Swing Line Lender or the Majority
Lenders reasonably may require.




     (b) The Administrative Agent shall have received a copy, certified by the Borrower as
being true, correct and complete, of the Purchase Agreement (including the exhibits and
schedules thereto), together with such other instruments and documents delivered in
connection therewith as Administrative Agent shall request.




     (c) The Administrative Agent shall have received evidence or assurances satisfactory to
it that the obligations under the Term Facility shall have been (or concurrently with the
effectiveness of this Agreement and the initial Credit Extension hereunder, will be) repaid
in full and the Term Facility Documents have been (or are being) terminated.




     (d) The Administrative Agent shall have received evidence or assurances satisfactory to
it that, concurrently with the Closing Date, all Liens that burden or encumber the Borrowing
Base Properties, other than Permitted Encumbrances and Liens securing the “Obligations”
under and as defined in the Original Credit Agreement, have been or concurrently with the
initial Credit Extensions will be released, together with, if requested by the
Administrative Agent, original executed instruments releasing and terminating any such Liens
in a form suitable for filing in the applicable jurisdiction.




     (e) The Administrative Agent shall have received evidence or assurances satisfactory to
it that, prior to or contemporaneously with the Closing Date, Borrower


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shall have received a cash equity contribution of at least $200,000,000 from the
issuance of its Equity Interests (other than Disqualified Stock).




     (f) The Administrative Agent shall be reasonably satisfied with the progress of the
Borrower toward compliance with the title confirmation provisions of Section 6.14.




     (g) Any fees required to be paid on or before the Closing Date shall have been paid.




     (h) Unless waived by the Administrative Agent, the Borrower shall have paid all fees,
charges and disbursements of counsel to the Administrative Agent to the extent invoiced
prior to or on the Closing Date, plus such additional amounts of such charges and
disbursements as shall constitute its reasonable estimate of the charges and disbursements
incurred or to be incurred by it for filing and recording the Security Instruments (provided
that such estimate shall not thereafter preclude a final settling of accounts between the
Borrower and the Administrative Agent for such fees, charges and disbursements).




     (i) No event or condition shall have occurred since December 31, 2007, that could
reasonably be expected to result in a Material Adverse Effect.




     (j) Except as disclosed to the Lenders in Schedule 5.06, there shall be no pending or
threatened litigation, action or proceeding against the Borrower or any of its Subsidiaries,
or with respect to any Borrowing Base Properties, that, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.




     (k) The Administrative Agent shall have received a Solvency Certificate in the form
attached hereto as Exhibit E, dated the Closing Date, and signed by the chief financial
officer of the Borrower.




     (l) The Administrative Agent shall have received from the Borrower a pro forma
consolidated balance sheet of the Borrower and its Restricted Subsidiaries as of March 31,
2008, reflecting the consummation of the Transactions, the related financings and other
transactions contemplated by the Loan Documents to occur on or prior to the Closing Date,
which pro forma balance sheet shall be prepared consistent in all respects with the
information previously provided by the Borrower to the Administrative Agent and the Lenders
and otherwise in form and substance satisfactory to the Administrative Agent.




     (m) The Borrower shall have obtained all approvals required from any Governmental
Authority and all consents of other Persons, in each case that are necessary or advisable in
connection with the consummation of the Transactions and each of the foregoing shall be in
full force and effect and in form and substance reasonably satisfactory to the
Administrative Agent. All applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority which would restrain, prevent or
otherwise impose adverse conditions on the Transactions contemplated by the Loan Documents
or the Henry Acquisition Documents or the financing thereof and no action, request for stay,
petition for review or rehearing,



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reconsideration, or appeal with respect to any of the foregoing shall be pending, and
the time for any applicable agency to take action to set aside its consent on its own motion
shall have expired.




     (n) There shall not exist any action, suit, investigation, litigation or proceeding or
other legal or regulatory developments, pending or threatened in any court or before any
arbitrator or Governmental Authority that, in the reasonable opinion of Administrative
Agent, singly or in the aggregate, materially impairs the Transactions, or that could have a
Material Adverse Effect.




     (o) All partnership, corporate and other proceedings taken or to be taken in connection
with the Transactions and all documents incidental thereto shall be satisfactory in form and
substance to the Administrative Agent and its counsel, and the Administrative Agent and such
counsel shall have received all such counterpart originals or certified copies of such
documents as Administrative Agent may reasonably request.



     Without limiting the generality of the provisions of ARTICLE IX, for purposes of determining
compliance with the conditions specified in this Section 4.01, 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 thereunder 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 proposed Closing Date specifying its objection thereto.



     4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor any
request for Credit Extension (other than an Interest Election Request requesting only a conversion
of Revolving Loans to the other Type, or a continuation of Eurodollar Loans) is subject to the
following conditions precedent:




     (a) The representations and warranties of the Borrower and each other Loan Party
contained in ARTICLE V or any other Loan Document, or which are contained in any document
furnished at any time under or in connection herewith or therewith, shall be true and
correct in all material respects on and as of the date of such Credit Extension, except to
the extent that such representations and warranties specifically refer to an earlier date,
in which case they shall be true and correct as of such earlier date, and except that for
purposes of this Section 4.02, the representations and warranties contained in clause
(a) of Section 5.05 shall be deemed to refer to the Borrower and its Subsidiaries and
their most recent statements furnished pursuant to clauses (a) and (b),
respectively, of Section 6.01.




     (b) No Default shall exist, or would result from such proposed Credit Extension or from
the application of the proceeds thereof.




     (c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line
Lender shall have received, with respect to a Borrowing, a Borrowing Request in accordance
with the requirements hereof and, with respect to a Letter of Credit, a notice requesting
issuance of a Letter of Credit, or an amendment, renewal or extension of an



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outstanding Letter of Credit, as the case may be, in accordance with the requirements
hereof.



     Each request for Credit Extension (other than an Interest Election Request requesting only a
conversion of Revolving Loans to the other Type or a continuation of Eurodollar Loans) submitted by
the Borrower shall be deemed to be a representation and warranty that the conditions specified in
Section 4.02(a) and Section 4.02(b) have been satisfied on and as of the date of the applicable
Credit Extension.



ARTICLE V




REPRESENTATIONS AND WARRANTIES




     The Borrower represents and warrants to the Administrative Agent and the Lenders that (it
being understood that with respect to the Closing Date such representations and warranties are
deemed to be made concurrently with and after giving effect to the consummation of the
Transactions):



     5.01 Existence, Qualification and Power; Compliance with Laws. Each Loan Party (a) is
duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction
of its incorporation or organization, (b) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to (i) own its assets and carry on
its business and (ii) execute, deliver and perform its obligations under the Loan Documents to
which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of
each jurisdiction where its ownership, lease or operation of properties or the conduct of its
business requires such qualification or license, and (d) is in compliance with all Laws; except in
each case referred to in clause (b)(i), (c) or (d), to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.



     5.02 Authorization; No Contravention. The execution, delivery and performance by each
Loan Party of each Loan Document to which such Person is party, have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (a) contravene the
terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, or require any payment to be made under
(i) any Contractual Obligation to which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree
of any Governmental Authority or any arbitral award to which such Person or its property is
subject; or (c) violate any Law except to the extent that the failure of the foregoing clauses (b)
and (c) to be true and correct could not reasonably be expected to have a Material Adverse Effect.



     5.03 Governmental Authorization; Other Consents. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery or performance by,
or enforcement against, any Loan Party of this Agreement or any other Loan Document.



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     5.04 Binding Effect. This Agreement has been, and each other Loan Document, when
delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party
thereto. This Agreement constitutes, and each other Loan Document when so delivered will
constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan
Party that is party thereto in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and
subject to general principles of equity, regardless of whether considered in a proceeding in law or
in equity.



     5.05 Financial Statements; No Material Adverse Effect.




     (a) The Initial Financial Statements (i) with respect to the financial statements of
Borrower and its Subsidiaries (prior to giving effect to the Henry Acquisition), (A) were
prepared in accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein, and (B) fairly present the financial condition
of Borrower and its Subsidiaries as of the date thereof and their results of operations for
the period covered thereby (subject, in the case of clauses (A) and (B) with respect to the
financial statements for the period ending March 31, 2008, to the absence of footnotes and
to normal year-end audit adjustments), and (C) show all material indebtedness and other
liabilities, direct or contingent, of Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Indebtedness and (ii) to
Borrower’s knowledge, with respect to the financial statements of the Target, such financial
statements present fairly, in all material respects, the financial position and results of
operations of Target as of such dates and for such periods, subject to the absence of
footnotes.




     (b) Since December 31, 2007, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected to have a
Material Adverse Effect.



     5.06 Litigation. Except as set forth on Schedule 5.06, there are no actions, suits,
proceedings, claims or disputes pending or, to the knowledge of the Borrower after due and diligent
investigation, threatened or contemplated, at law, in equity, in arbitration or before any
Governmental Authority, by or against the Borrower or any of its Restricted Subsidiaries or against
any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby, or (b) either individually or
in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse
Effect.



     5.07 No Default. Neither the Borrower nor any Restricted Subsidiary is in default
under or with respect to any Contractual Obligation that could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and
is continuing or would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document. To the Borrower’s knowledge and as of the Closing Date, no
Person party to the Purchase Agreement is in default under the Purchase Agreement and all
representations and warranties of all such Persons made in the Purchase


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Agreement are true and correct as of the Closing Date, except to the extent that failure of
the same to be true and correct could not reasonably be expected to have a Material Adverse Effect.



     5.08 Ownership of Property; Liens. Each of the Borrower and each Restricted
Subsidiary has, or upon consummation of the Henry Acquisition will have, good record and marketable
title in fee simple to, or valid leasehold interests in, all real property necessary or used in the
ordinary conduct of its business, except for such defects in title as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. The property of the
Borrower and its Restricted Subsidiaries is subject to no Liens, other than Liens permitted under
Section 7.01.



     5.09 Environmental Compliance. The Borrower and its Restricted Subsidiaries conduct
in the ordinary course of business a review of the effect of existing Environmental Laws and claims
alleging potential liability or responsibility for violation of any Environmental Law on their
respective businesses, operations and properties, and as a result thereof the Borrower has
reasonably concluded that such Environmental Laws and claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.



     5.10 Insurance. The properties of the Borrower and its Restricted Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in
such amounts (after giving effect to any self-insurance compatible with the following standards),
with such deductibles and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the Borrower or the applicable
Restricted Subsidiary operates.



     5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other
material tax returns and reports required to be filed, and have paid all Federal, state and other
material taxes, assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. The Borrower is not aware of any proposed tax
assessment against the Borrower or any Subsidiary that would, if made and not timely paid, have a
Material Adverse Effect. Neither any Loan Party nor any Restricted Subsidiary thereof is party to
any tax sharing agreement.



     5.12 ERISA Compliance.




     (a) Each Plan is in compliance in all material respects with the applicable provisions
of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify
under Section 401(a) of the Code has received a favorable determination letter from the IRS
or an application for such a letter is currently being processed by the IRS with respect
thereto and, to the best knowledge of the Borrower, nothing has occurred which would
prevent, or cause the loss of, such qualification. The Borrower and each ERISA Affiliate
have made all required contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.



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     (b) There are no pending or, to the best knowledge of the Borrower, threatened claims,
actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that
could reasonably be expected to have a Material Adverse Effect. There has been no
prohibited transaction or violation of the fiduciary responsibility rules with respect to
any Plan that has resulted or could reasonably be expected to result in a Material Adverse
Effect.




     (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension
Plan has any Unfunded Pension Liability in excess of the Threshold Amount; (iii) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
in excess of the Threshold Amount under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
(and no event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a
transaction that could be subject to Sections 4069 or 4212(c) of ERISA.



     5.13 Subsidiaries; Equity Interests. As of the Closing Date, the Borrower has no
Subsidiaries other than those specifically disclosed in Part(a) of Schedule 5.13, and all
of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid
and nonassessable (except for such Equity Interests consisting of partnership interests and
membership interests) and are owned by a Loan Party as specified, and in the amounts specified, on
Part(a) of Schedule 5.13, free and clear of all Liens (except for Liens created by the Loan
Documents). As of the Closing Date, the Borrower has no Equity Interests in any other corporation
or entity other than those specifically disclosed in Part(b) of Schedule 5.13.



     5.14 Margin Regulations; Investment Company Act.




     (a) The Borrower is not engaged and will not engage, principally or as one of its
important activities, in the business of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the FRB), or extending credit for the purpose of
purchasing or carrying margin stock.




     (b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or
is required to be registered as an “investment company” under the Investment Company Act of
1940.



     5.15 Disclosure. The Borrower has disclosed to the Administrative Agent and the
Lenders all agreements, instruments and corporate or other restrictions to which it or any of its
Restricted Subsidiaries is subject, and all other matters known to it, that if violated,
individually or in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. No report, financial statement, certificate or other information furnished (whether in
writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, as modified or



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supplemented by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with respect to
projected information, the Borrower represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time.



     5.16 Compliance with Laws. Each of the Borrower and each Restricted Subsidiary is in
compliance in all material respects with the requirements of all Laws and all orders, writs,
injunctions and decrees applicable to it or to its properties, except in such instances in which
(a) such requirement of Law or order, writ, injunction or decree is being contested in good faith
by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either
individually or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.



     5.17 Licenses, Permits and Franchises. Neither the Borrower nor any Restricted
Subsidiary has failed to obtain any license, permit, franchise or other governmental authorization
necessary to the ownership or operation of any of its Borrowing Base Properties or other material
properties or to the conduct of the Borrower’s or such Restricted Subsidiary’s business, except any
failure or other matter that could not reasonably be expected to have a Material Adverse Effect.



     5.18 Liens Under the Security Instruments. Upon the execution and delivery of the
Security Instruments (including any amendments to the existing Mortgages executed and delivered
pursuant to the Original Credit Agreement) in accordance herewith, and where appropriate the filing
and recordation thereof with the appropriate filing or recording officers in each of the necessary
jurisdictions, the Liens granted and to be granted by any Loan Party to the Administrative Agent,
the L/C Issuer, the Lenders or the Trustee (as defined in any of the Security Instruments) on
behalf of the Administrative Agent, the L/C Issuer and the Lenders in such Loan Party’s assets
pursuant to the Security Instruments will be validly created, perfected and first priority Liens,
subject only to Liens permitted under Section 7.01.



     5.19 Mortgages with Respect to Borrowing Base Properties. As of the Closing Date, the
Engineered Value of all Borrowing Base Properties described in the Mortgages represents at least
80% of the Engineered Value of all proved Borrowing Base Properties included in the Initial
Engineering Report.



     5.20 Solvency. Each Loan Party is solvent and will continue to be solvent after the
making and guarantying of the Obligations.



     5.21 Direct Benefit. The initial Credit Extension hereunder and all additional Credit
Extensions are for the direct benefit of the Borrower and its Restricted Subsidiaries. The
Borrower and its Restricted Subsidiaries shall engage as an integrated group in the business of oil
and gas exploration and related activities and certain other legal business purposes, and any
benefits to the Borrower and its Restricted Subsidiaries is a benefit to all of them, both directly
or indirectly, inasmuch as the successful operation and condition of the Borrower and its
Restricted Subsidiaries is dependent upon the continued successful performance of the functions of
the integrated group as a whole.



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ARTICLE VI




AFFIRMATIVE COVENANTS




     So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the
Borrower shall, and shall (except in the case of the covenants set forth in Section 6.01, Section
6.02, and Section 6.03) cause each Restricted Subsidiary to:



     6.01 Financial Statements. Deliver to the Administrative Agent and each Lender, in
form and detail satisfactory to the Administrative Agent and the Majority Lenders:




     (a) as soon as available, but in any event not later than, with respect to each fiscal
year of the Borrower (commencing with the fiscal year ended December 31, 2008), 90 days
after the end of each such fiscal year, a consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal year, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP, such consolidated statements to be
audited and accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing reasonably acceptable to the Administrative
Agent, which report and opinion shall be prepared in accordance with generally accepted
auditing standards and shall not be subject to any “going concern” or like qualification or
exception or any qualification or exception as to the scope of such audit; and




     (b) as soon as available, but in any event within 45 days after the end of each of the
first three fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal
quarter ended June 30, 2008) the unaudited consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such fiscal quarter, the related unaudited consolidated
statement of income or operations, and the unaudited consolidated statement consolidated
shareholders’ equity and cash flows for such fiscal quarter and for the portion of the
Borrower’s fiscal year then ended, setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail, such
consolidated financial statements certified by a Responsible Officer of the Borrower as
fairly presenting the financial condition, results of operations, shareholders’ equity and
cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes; and




     (c) On or before April 1 of each Fiscal Year (i) commencing April 1, 2009, an
engineering report prepared or audited by a Designated Engineer, dated as of the preceding
January 1, covering oil and gas reserves attributable to the Borrowing Base Properties,
including a calculation of PV 10 Value (the present value of the Borrowing Base Properties
discounted at 10%); and (ii) commencing April 1, 2009, an annual operating budget prepared
by the Borrower in reasonable detail, based upon reasonable assumptions made in good faith
by the Borrower, which sets forth quarterly financial


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projections for the then current Fiscal Year and annual financial projections for each
Fiscal Year thereafter through the Maturity Date; and




     (d) On or before October 1 of each Fiscal Year commencing October 1, 2008 (and in
connection with a Special Redetermination requested by the Borrower, at the time of such
request), an engineering report prepared by the Borrower or a Restricted Subsidiary, dated
as of the preceding June 30 (or the date otherwise specified in this Agreement), in a form
reasonably satisfactory to the Administrative Agent covering oil and gas reserves
attributable to the Borrowing Base Properties, including a calculation of PV 10 Value (the
present value of the Borrowing Base Properties discounted at 10%) (an “Interim
Engineering Report”).



     6.02 Certificates; Other Information. Deliver to the Administrative Agent and each
Lender, in form and detail satisfactory to the Administrative Agent and the Majority Lenders:




     (a) concurrently with the delivery of the financial statements referred to in Section
6.01(a) and Section 6.01(b) (commencing with the delivery of the financial statements for
the fiscal quarter ended June 30, 2008), a duly completed Compliance Certificate signed by a
Responsible Officer of the Borrower;




     (b) promptly after any request by the Administrative Agent or any Lender, copies of any
detailed audit reports, management letters or recommendations submitted to the Board of
Directors (or the audit committee of the Board of Directors) of the Borrower by independent
accountants in connection with the accounts or books of the Borrower or any Subsidiary or
any audit of any of them;




     (c) promptly after the same are available and upon any request thereafter by the
Administrative Agent or any Lender, copies of each annual report, proxy or financial
statement or other report or communication sent to the stockholders of the Borrower, and
copies of all annual, regular, periodic and special reports and registration statements that
the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered to the
Administrative Agent pursuant hereto; and




     (d) promptly after requested, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary, or compliance with the
terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time
reasonably request.



     Documents required to be delivered pursuant to Section 6.01(a), Section 6.01(b) or Section
6.02(c) (to the extent any such documents are included in materials otherwise filed with the SEC)
may be delivered electronically and if so delivered, shall be deemed to have been delivered on the
date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet at the website address listed on Schedule 10.02; or (ii) on which
such documents are posted 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



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that: (i) the Borrower shall deliver paper copies of such documents to the Administrative
Agent or any Lender that requests the Borrower to deliver such paper copies until a written request
to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the
Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail)
of the posting of any such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents. Notwithstanding anything
contained herein, in every instance the Borrower shall be required to provide paper copies of the
Compliance Certificates required by Section 6.02(a) 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.




     The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers will
make available to the Lenders and the L/C Issuer materials and/or information provided by or on
behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the
Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and
(b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive
material non-public information with respect to the Borrower or its securities) (each, a
“Public Lender”). The Borrower hereby agrees that (w) all Borrower Materials that are to
be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a
minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x)
by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the
Administrative Agent, the Arrangers, the L/C Issuer and the Lenders to treat such Borrower
Materials as either publicly available information or not material information (although it may be
sensitive and proprietary) with respect to the Borrower or its securities for purposes of United
States Federal and state securities laws; (y) all Borrower Materials marked “PUBLIC” are permitted
to be made available through a portion of the Platform designated “Public Investor;” and (z) the
Administrative Agent and the Arrangers shall be entitled to treat Borrower’s Materials that are not
marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated
“Public Investor.”



     6.03 Notices. Promptly notify the Administrative Agent and each Lender:




     (a) of the occurrence of any Default;




     (b) of any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect, which may include, depending on the circumstances, (i) breach or
non-performance of, or any default under, a Contractual Obligation of the Borrower or any
Restricted Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension
between the Borrower or any Restricted Subsidiary and any Governmental Authority; or
(iii) the commencement of, or any material development in, any litigation or proceeding
affecting the Borrower or any Restricted Subsidiary, including pursuant to any applicable
Environmental Laws;




     (c) of the occurrence of any ERISA Event; and



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     (d) of any material change in accounting policies or financial reporting practices by
the Borrower or any Restricted Subsidiary.



     Each notice pursuant to this Section shall be accompanied by a statement of a Responsible
Officer of the Borrower setting forth details of the occurrence referred to therein and stating
what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant
to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and
any other Loan Document that have been breached.



     6.04 Payment of Obligations. Pay and discharge as the same shall become due and
payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets and (b) all lawful claims which,
if unpaid, would by law become a Lien upon any Borrowing Base Property or any other property
described in any Security Instrument; and 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 pay or discharge such obligations and liabilities could not reasonably
be expected to result in a Material Adverse Effect or otherwise result in an Event of Default
pursuant to Section 8.01(e).



     6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force
and effect its legal existence and good standing under the Laws of the jurisdiction of its
organization except in a transaction permitted by Section 7.04 or Section 7.05 or to the extent
that failure to do so could not reasonably be expected to have a Material Adverse Effect; (b) take
all reasonable action to maintain all rights, privileges, permits, licenses and franchises
necessary or desirable in the normal conduct of its business, except to the extent that failure to
do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew
all of its registered patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.



     6.06 Maintenance of Properties. (a) Maintain, preserve and protect the Borrowing Base
Properties and all of its other material properties and equipment necessary in the operation of the
Borrowing Base Properties and its business in good working order and condition, ordinary wear and
tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a Material Adverse
Effect; and (c) use the standard of care typical in the industry in the operation and maintenance
of its facilities and its oil and gas properties.



     6.07 Maintenance of Insurance. Maintain with financially sound and reputable
insurance companies not Affiliates of the Borrower, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by Persons engaged in the
same or similar business, of such types and in such amounts (after giving effect to any
self-insurance compatible with the following standards) as are customarily carried under similar
circumstances by such other Persons and providing for not less than 30 days’ prior notice to the
Administrative Agent of termination, lapse or cancellation of such insurance.



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     6.08 Compliance with Laws. Comply in all material respects with the requirements of
all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or
property, except in such instances in which (a) such requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings diligently conducted; or
(b) the failure to comply therewith could not reasonably be expected to have a Material Adverse
Effect.



     6.09 Books and Records. Maintain proper books of record and account, in which full,
true and correct entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the Borrower or such
Restricted Subsidiary, as the case may be.



     6.10 Inspection Rights. Permit representatives and independent contractors of the
Administrative Agent and each Lender to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with its directors, officers, and independent public
accountants, all at the expense and risk of the Administrative Agent or Lenders, as applicable, and
at such reasonable times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Borrower; provided, however, that when a
Default exists (and the Borrower has been notified in writing by the Administrative Agent of the
existence of such Default), the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the expense of the
Borrower at any time during normal business hours and without advance notice.



     6.11 Use of Proceeds. The proceeds of the Loans will be used only to (a) finance the
Henry Acquisition, (b) repay the amount outstanding under the Term Facility Documents, (c) pay the
fees, expenses and transaction costs of the Transactions, (d) satisfy reimbursement obligations
with respect to Letters of Credit, (e) make Restricted Payments permitted under Section 7.06, and
(f) finance the working capital needs of the Borrower, including capital expenditures, and for
general corporate purposes of the Borrower and the Restricted Subsidiaries, in the ordinary course
of business, including the exploration, acquisition and development of oil and gas properties.
Letters of Credit will be issued only to support general corporate purposes of the Borrower and the
Restricted Subsidiaries.



     6.12 Additional Guarantors. Notify the Administrative Agent at the time that any
additional Restricted Subsidiary of the Borrower is formed or acquired on or after the Closing
Date; and promptly thereafter (and in any event within sixty (60) days with respect to any Target
Entities which are not Initial Guarantors or thirty (30) days with respect to any other Restricted
Subsidiary), cause such Person to (a) become a Guarantor by executing and delivering to the
Administrative Agent a Counterpart Agreement, and (b) deliver to the Administrative Agent, as
requested, documents of the types referred to in clauses (iii) and (iv) of Section
4.01(a) and favorable opinions of counsel to such Person (which shall cover, among other things,
the legality, validity, binding effect and enforceability of the documentation referred to in
clause (a)), all in form, content and scope reasonably satisfactory to the Administrative Agent.
Upon delivery of any such Counterpart Agreement to the Administrative agent, notice of which is
hereby waived by each Credit Party, such Restricted Subsidiary shall be a Guarantor and shall be as
fully a party to the Guaranty as if such Restricted Subsidiary were an original signatory


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hereto. As and when requested by the Administrative Agent, (1) the Borrower will cause such
Restricted Subsidiary to execute a Mortgage (to the extent it owns Borrowing Base Properties and
such Mortgage is necessary to cause the Borrower to comply with Section 6.16(c)) or other security
agreement in form and substance acceptable to Administrative Agent (to the extent it owns personal
property and such security agreement is necessary to cause the Borrower to comply with Section
6.16(c)) and promptly take such actions to create and perfect Liens on such Restricted Subsidiary’s
assets to secure the Obligations as Administrative Agent, the L/C Issuer or the Majority Lenders
shall reasonably request, and (2) if any stock, membership interest, partnership interest or other
equity interest in, or Indebtedness of, such Restricted Subsidiary is owned by the Borrower or any
other Restricted Subsidiary, the Borrower will cause such stock, membership interest, partnership
interest or other equity interest, and promissory notes evidencing such Indebtedness, to be pledged
pursuant to a Pledge Agreement delivered to the Administrative Agent promptly after such Restricted
Subsidiary is formed or acquired or within such other time frame as acceptable to the
Administrative Agent and promptly take such actions to create and perfect Liens on such assets to
secure the Obligations as the Administrative Agent or the Majority Lenders shall reasonably
request. Any Restricted Subsidiary formed or acquired on or after the Closing Date shall be a
Wholly Owned Subsidiary.



     6.13 Operations. Cause all Borrowing Base Properties and all other material
properties to be regularly operated, maintained and developed in a good and workmanlike manner, as
would a prudent operator and in accordance with all applicable federal, state and local laws, rules
and regulations, except for any failure to so operate, maintain and develop that could not
reasonably be expected to have a Material Adverse Effect.



     6.14 Delivery of Title Opinions. As and when requested by the Administrative Agent,
deliver to the Administrative Agent such reports, opinions of counsel (which opinions are not
required to be addressed to the Administrative Agent) and other evidence of title as the
Administrative Agent shall deem reasonably necessary or appropriate to verify (i) clear and valid
title (except for such defects in title as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect) of the Borrower and its Restricted Subsidiaries to
not less than eighty percent (80%) of the Engineered Value of the Borrowing Base Properties that
are subject to a Mortgage and at least the working interest and net revenue interest in such oil
and gas properties set forth in the most recent Engineering Report and (ii) the validity,
perfection and priority of the Liens created by the Mortgages and Security Instruments and such
other matters regarding such Mortgages as Administrative Agent shall reasonably request, except
that opinions of counsel regarding priority of the Liens shall not be required.



     6.15 Minimum Hedging. Deliver to the Administrative Agent within 30 days after the
Closing Date a certificate confirming that the Borrower and its Restricted Subsidiaries, if
applicable, (a) are maintaining the Existing Swap Contracts and (b) have entered into additional
Swap Contracts with Approved Counterparties reasonably acceptable to the Administrative Agent
consisting of (i) costless collars with a minimum floor price per barrel and for at least the
minimum notional volumes of crude oil per month set forth on Schedule 6.15 for the calendar year
ending December 31, 2009, and (ii) swap transactions with respect to not less than the minimum
notional volumes of crude oil and natural gas at or above the minimum price and for at least the
minimum notional volumes per month set forth on Schedule 6.15 through December 31, 2012, or stating
what (if any) additional Swap Contracts have been entered into. Upon the



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request of the Majority Lenders, and to the extent each such Swap Contract allows, take all
actions necessary to cause all of its right, title and interest in each Swap Contract to which it
is a party to be collaterally assigned to the Administrative Agent, for the benefit of the Secured
Parties. Upon the request of the Administrative Agent, the Borrower shall, within thirty (30) days
of such request, provide to the Administrative Agent and each Lender copies of all agreements,
documents, confirmations and instruments evidencing any Swap Contract to which the Borrower or any
Restricted Subsidiary is then a party and not previously delivered to the Administrative Agent and
Lenders, and such other information regarding such Swap Contracts as the Administrative Agent and
Lenders may reasonably request. Failure by the Borrower to establish and maintain the Swap
Contracts required by clause (b) of this Section 6.15 shall not result in the occurrence of a
Default, provided that Required Lenders may request a Special Redetermination of the Borrowing Base
and the Conforming Borrowing Base notwithstanding the restrictions placed on the number of Special
Redeterminations the Required Lenders may request under Section 3.03.



     6.16 Further Assurances.




     (a) Promptly upon the request of Administrative Agent, the Borrower and its Restricted
Subsidiaries shall do, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re-register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates, letter-in-lieu, financing
statements and continuations thereof, termination statements, notices of assignments,
transfers, certificates, assurances and other instruments or evidence that the
Administrative Agent may reasonably require from time to time in order (i) to carry out more
effectively the purposes of this Agreement or any other Loan Document, (ii) to subject to
the Liens created by any of the Security Instruments any of the properties, rights or
interests covered by any of the Security Instruments, (iii) to perfect and maintain the
validity, effectiveness and priority of any of the Security Instruments and the Liens
intended to be created thereby, and (iv) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to the Administrative Agent the rights granted or now or
hereafter intended to be granted to the Administrative Agent, the L/C Issuer or any Lender
under any Loan Document or under any other document executed in connection therewith.




     (b) The Borrower and its Restricted Subsidiaries hereby authorize Administrative Agent
to file one or more financing or continuation statements, and amendments thereto, relative
to all or any part of the collateral securing the Obligations without the signature of the
Borrower or any relevant Restricted Subsidiary where permitted by law.




     (c) The Borrower shall, and shall cause each of its Restricted Subsidiaries to take
such actions and execute and deliver such documents and instruments as Administrative Agent
shall reasonably require to ensure that the Administrative Agent shall, at all times, have
received currently effective, duly executed Mortgages as may be necessary or, in the
reasonable opinion of Administrative Agent, desirable to effectively create a valid,
perfected and first priority Lien (subject only to Liens permitted under Section 7.01)
against Borrowing Base Properties representing at least 80% of the


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Engineered Value of all proved Borrowing Base Properties included in the most recent
Engineering Report provided to the Lenders, and the Borrower and its Restricted Subsidiaries
shall, at the request of Administrative Agent, execute and deliver such additional Mortgages
as may be necessary or, in the reasonable opinion of Administrative Agent, desirable to
effectively create a valid, perfected and first priority Lien, subject only to the Liens
permitted under Section 7.01, against 80% of the Engineered Value of the proved Borrowing
Base Properties included in the most recent Engineering Report provided to the Lenders.



ARTICLE VII




NEGATIVE COVENANTS




     So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the
Borrower shall not, nor shall it permit any Restricted Subsidiary to, directly or indirectly:



     7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any Borrowing Base
Property or any other material property, whether now owned or hereafter acquired, other than:




     (a) any Lien created pursuant to this Agreement or the Security Instruments;




     (b) Permitted Encumbrances;




     (c) any Lien on any property or asset of any Borrower or any Restricted Subsidiary
existing on the date hereof and set forth in Schedule 7.01; provided that
(i) such Lien shall not apply to any other property or asset of any Borrower or any
Restricted Subsidiary and (ii) such Lien shall secure only those obligations which it
secures on the date hereof and extensions, renewals and replacements thereof that do not
cause the outstanding principal amount of the Indebtedness of the Borrower or any Restricted
Subsidiary to exceed the amounts permitted under Section 7.03;




     (d) any Lien existing on any property or asset prior to the acquisition thereof by any
Borrower or any Restricted Subsidiary or existing on any 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 secures Indebtedness
permitted by clause (c) of Section 7.03, (ii) such Lien is not created in contemplation of
or in connection with such acquisition or such Person becoming a Restricted Subsidiary, as
the case may be, (iii) such Lien shall not apply to any other property or assets of any
Borrower or any other Restricted Subsidiary and (iv) 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 the case may be and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;




     (e) Liens on fixed or capital assets acquired, constructed or improved by any Borrower
or any Restricted Subsidiary; provided that (i) such Liens, secure Indebtedness



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permitted by clause (c) of Section 7.03, (ii) such security interests and the
Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement, (iii) the Indebtedness secured
thereby does not exceed the cost of acquiring, constructing or improving such fixed or
capital assets and (iv) such security interests shall not apply to any other property or
assets of any Borrower or any other Restricted Subsidiaries; and




     (f) Liens on any property or asset of any Borrower or any Restricted Subsidiary, other
than property or assets securing the Obligations or any Borrowing Base Properties, to secure
Indebtedness and obligations of such Borrower or such Restricted Subsidiary under Swap
Contracts permitted under Section 7.12 with counterparties other than a Lender Counterparty.



     7.02 Investments. Make any Investments, except:




     (a) Permitted Investments;




     (b) advances to officers, directors and employees of the Borrower and its Restricted
Subsidiaries in an aggregate amount not to exceed $250,000 at any time outstanding, for
travel, entertainment, relocation and similar ordinary business purposes;




     (c) Investments by any Loan Party consisting of intercompany Indebtedness permitted
under Section 7.03(b);




     (d) Investments consisting of extensions of credit in the nature of accounts receivable
or notes receivable arising from the grant of trade credit in the ordinary course of
business, and Investments received in satisfaction or partial satisfaction thereof from
financially troubled account debtors to the extent reasonably necessary in order to prevent
or limit loss; and




     (e) Guarantees permitted by Section 7.03;




     (f) Investments by any Loan Party in any Person that is, or thereby becomes, a
Restricted Subsidiary of the Borrower and a Guarantor; provided that, with respect
to any such Investment other than the transfer by the Borrower to a Restricted Subsidiary of
the shares of Concho Holdings, no Event of Default has occurred and is continuing or would
be caused by such Investment;




     (g) Investments reflected on the Balance Sheet included with the Initial Financial
Statements of Borrower; and




     (h) other Investments not otherwise described in the foregoing clauses (a) through (g)
in an aggregate amount not exceeding $10,000,000 at any time.



     7.03 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except:




     (a) Indebtedness under the Loan Documents;



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     (b) Indebtedness of the Borrower to any Guarantor and of any Guarantor to the Borrower
or any other Guarantor; provided, that (i) all such Indebtedness owing by a
Guarantor shall be unsecured and subordinated in right of payment, as provided in such
Guarantor’s Guaranty, to the payment in full of all of the Obligations and (ii) as and when
requested by Administrative Agent, all such Indebtedness owing by a Guarantor shall be
evidenced by promissory notes in form and substance reasonably satisfactory to the
Administrative Agent, and such promissory notes shall be subject to a first priority
security interest in favor of the Administrative Agent for the benefit of the Secured
Parties on terms and conditions reasonably satisfactory to the Administrative Agent;




     (c) Indebtedness, other than Indebtedness otherwise permitted by another clause of this
Section 7.03 that (together with any of the Loan Parties’ obligations for net gas imbalances
and prepayments of gas production in excess of $5,000,000) does not in the aggregate for the
Borrower and all of its Restricted Subsidiaries exceed $25,000,000 at any one time
outstanding;




     (d) guaranties of Indebtedness that is the primary obligation of the Borrower or a
Restricted Subsidiary of the Borrower and that is otherwise permitted under this Section
7.03;




     (e) obligations of the Borrower and its Restricted Subsidiaries outstanding at any one
time in respect of reimbursement obligations given in connection with any bond, surety or
similar requirement of a Governmental Authority (other than any such bond or surety related
to any judgment by any court, arbitrator or similar authority) concerning the operation of
the businesses and assets of the Borrower and its Restricted Subsidiaries; and




     (f) subject to any adjustment to the Borrowing Base and Conforming Borrowing Base
required under Section 3.05, unsecured Indebtedness of the Borrower evidenced by unsecured
senior notes or unsecured senior subordinated notes and Guarantees thereof in an aggregate
principal amount not to exceed $300,000,000 at any time outstanding (“Senior Notes”)
and any Permitted Refinancing of any Indebtedness incurred under this clause (f); provided
that (i) at the time of and immediately after giving effect to each issuance of such Senior
Notes or any Permitted Refinancing thereof, no Default shall have occurred and be
continuing, (ii) the final stated maturity date of such Senior Notes is not earlier than the
first anniversary after the Maturity Date (as in effect on the date of issuance of such
Senior Notes), (iii) the non-default stated interest rate of such Senior Notes does not
exceed 10% per annum, (iv) no scheduled principal amortization is required under such Senior
Notes prior to the stated maturity of such Senior Notes and (v) such Senior Notes are
evidenced by an indenture and related documents containing terms and conditions, covenants
and events of default that are customary for similar notes and that are, in each case,
reasonably satisfactory to the Administrative Agent.



     7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into
another Person, or Dispose of (whether in one transaction or in a series of transactions) all or



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substantially all of its assets (whether now owned or hereafter acquired) to or in favor of
any Person, except that, so long as no Default exists or would result therefrom:




     (a) any Restricted Subsidiary of the Borrower may merge with (i) the Borrower,
provided that the Borrower shall be the continuing or surviving Person, or (ii) any
other Restricted Subsidiary of the Borrower, provided that the continuing or
surviving Person is a Restricted Subsidiary;




     (b) any Restricted Subsidiary of the Borrower may Dispose of all or substantially all
of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another
Restricted Subsidiary of the Borrower; and




     (c) any Restricted Subsidiary of the Borrower may participate in a merger or
consolidation as part of a Disposition of such Restricted Subsidiary that is permitted under
Section 7.05(f).



     7.05 Dispositions. Make any Disposition or enter into any agreement to make any
Disposition, except:




     (a) Dispositions permitted by Section 7.04;




     (b) Dispositions made between Scheduled Redeterminations of Borrowing Base Properties
having a PV 10 value (present value of such property discounted at 10%, as determined in the
most recent Engineering Report) not exceeding, in the aggregate for the Borrower and its
Restricted Subsidiaries taken as a whole, 5% of the Borrowing Base most recently determined;




     (c) Subject to Section 2.11(b), any other Disposition of Borrowing Base Properties,
provided that:




     (i) at the option of the Required Lenders, (a) Administrative Agent shall
reduce the Borrowing Base by the Engineered Value attributed by Required Lenders to
such Borrowing Base Properties at the time of the last Borrowing Base
Redetermination, or (b) the Lenders shall have made a Redetermination of the
Borrowing Base taking such Disposition into account; in either case, such reduction
or Redetermination shall be effective upon the consummation of such Disposition; or




     (ii) the Borrower shall have submitted to the Administrative Agent and the
Required Lenders for inclusion in the Borrowing Base replacement properties which
are acceptable to Required Lenders using the evaluation parameters utilized by the
Lenders for Redeterminations of the Borrowing Base and Conforming Borrowing Base
pursuant to Section 3.02.




     (d) Dispositions of surplus equipment for fair and adequate consideration and equipment
that is worthless or obsolete or which is replaced by equipment of equal suitability and
value;


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     (e) Dispositions of inventory (including hydrocarbons sold as produced or processed and
seismic data) in the ordinary course of business on ordinary trade terms; and




     (f) So long as no Event of Default has occurred and is continuing or would be caused by
such Disposition, Dispositions of other assets not constituting Borrowing Base Properties,
including all (but not less than all) of the Borrower’s direct or indirect Equity Interests
in any Subsidiary that does not own Borrowing Base Properties, directly or indirectly, but
excluding any direct or indirect Equity Interests in any Restricted Subsidiary that does own
Borrowing Base Properties, directly or indirectly;



     provided, however, that any Disposition pursuant to clauses (b) through (f)
shall be for fair market value. Upon request by the Borrower, the Administrative Agent shall
promptly release any Liens it might have burdening assets or properties permitted to be Disposed of
under this Section at the time of such permitted disposition.



     7.06 Restricted Payments. Declare or make, directly or indirectly, any Restricted
Payment, or incur any obligation (contingent or otherwise) to do so, except that, so long as no
Default shall have occurred and be continuing at the time of any action described below or would
result therefrom:




     (a) each Restricted Subsidiary may make Restricted Payments to the Borrower or to any
other Restricted Subsidiary;




     (b) the Borrower and each Restricted Subsidiary of the Borrower may declare and make
dividend payments or other distributions payable solely in the common stock or other common
Equity Interests of such Person; and




     (c) the Borrower and each Restricted Subsidiary may make Investments permitted under
Section 7.02 regardless of whether such Investments otherwise constitute Restricted
Payments.



     7.07 Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by the Borrower and its Restricted
Subsidiaries on the date hereof or any business substantially related or incidental thereto.



     7.08 Transactions with Affiliates. Enter into any material transaction with any
Affiliate of the Borrower, whether or not in the ordinary course of business, other than on fair
and reasonable terms substantially as favorable to the Borrower or such Restricted Subsidiary as
would be obtainable by the Borrower or such Restricted Subsidiary at the time in a comparable arm’s
length transaction with a Person other than an Affiliate, provided that the foregoing restriction
shall not apply to (a) transactions between or among the Borrower and any Restricted Subsidiaries
and not including any other Affiliate or between and among Restricted Subsidiaries and not
including any other Affiliate, (b) any Investments permitted by Section 7.02, or (c) any agreement
listed on Schedule 7.08.



     7.09 Burdensome Agreements. Enter into any Contractual Obligation (other than this
Agreement or any other Loan Document) that, whether expressly or in effect, (a) limits the


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ability (i) of any Restricted Subsidiary to make Restricted Payments to the Borrower or any
Guarantor or to otherwise transfer property to the Borrower or any Guarantor, (ii) of any
Restricted Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the Borrower or any
Restricted Subsidiary to create, incur, assume or suffer to exist Liens in favor of the
Administrative Agent or the Lenders on property of such Person; provided, however,
that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any
holder of Indebtedness permitted under Section 7.03 solely to the extent any such negative pledge
relates to the property financed by or the subject of such Indebtedness; or (b) requires the grant
of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation
of such Person.



     7.10 Use of Proceeds. Use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock
(within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.



     7.11 Financial Covenants.




     (a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio of the
Borrower, as of the last day of any period of four consecutive fiscal quarters (commencing
with the four fiscal quarter period ending December 31, 2008) for which the financial
statements required under Section 6.01(a) or 6.01(b) are available, to be greater than 4.00
to 1.00.




     (b) Current Ratio. Permit the ratio of Consolidated Current Assets to
Consolidated Current Liabilities to be less than 1.00 to 1.00 as of the last day of any
fiscal quarter (commencing with the fiscal quarter ending September 30, 2008).



     For purposes of this Section 7.11, (i)  the Borrower’s Consolidated EBITDAX for the period of
four consecutive fiscal quarters ending December 31, 2008, shall be deemed to equal the Borrower’s
Consolidated EBITDAX for the fiscal quarter ending December 31, 2008, multiplied by the number
four, (ii) the Borrower’s Consolidated EBITDAX for the period of four consecutive fiscal quarters
ending March 31, 2009, shall be deemed to equal the Borrower’s Consolidated EBITDAX for the two
consecutive fiscal quarter period ending March 31, 2009, multiplied by the number two and (iii) the
Borrower’s Consolidated EBITDAX for the period of four consecutive fiscal quarters ending June 30,
2009, shall be deemed to equal the Borrower’s Consolidated EBITDAX for the three consecutive fiscal
quarter period ending June 30, 2009, multiplied by the fraction four-thirds.



     7.12 Swap Contracts. Be a party to, or in any manner be liable under, any Swap
Contract, except:




     (a) Swap Contracts entered into with the purpose and effect of mitigating risk with
respect to prices of oil, natural gas and/or gas liquids of the Borrower and its Restricted
Subsidiaries (including Swap Contracts entered into to unwind or offset other permitted Swap
Contracts); provided that at all times, on a net basis, (i) the aggregate


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notional volume of natural gas and natural gas liquids covered by market sensitive Swap
Contracts for any month in the forthcoming five year period shall not exceed 85% of the
estimated natural gas and gas liquids production from the proven producing reserves of the
Borrower and its Restricted Subsidiaries for such month in such forthcoming five year
period, and (ii) the aggregate notional volume of crude oil covered by market sensitive Swap
Contracts for any month in the forthcoming five year period shall not exceed 85% of the
estimated crude oil production from the proven producing reserves of the Borrower and its
Restricted Subsidiaries for such month in such forthcoming five year period; provided
further, that at the time the Swap Contract is entered into the counterparty to such
Swap Contract is an Approved Counterparty; and




     (b) Swap Contracts entered into with the purpose and effect of (i) fixing or limiting
interest rates on a principal amount of indebtedness of any Loan Party that is accruing
interest at a variable rate or (ii) obtaining variable interest rates on a principal amount
of indebtedness of any Loan Party that is accruing interest at a fixed rate (in each case
including Swap Contracts entered into to unwind or offset other permitted Swap Contracts),
provided that the aggregate notional amount of such Swap Contracts does not (on a net basis)
exceed the outstanding principal balance of the variable or fixed rate, as the case may be,
Indebtedness of the Loan Parties at the time such Swap Contract is entered into.



     7.13 Limitation on Sale/Leasebacks. Enter into any arrangement, directly or
indirectly, with any Person whereby the Borrower or such Restricted Subsidiary shall sell or
transfer any Borrowing Base Property or other material asset, and whereby the Borrower or such
Restricted Subsidiary shall then or immediately thereafter rent or lease as lessee such Borrowing
Base Property or other asset or any part thereof.



     7.14 Disqualified Stock. Issue any Disqualified Stock.



     7.15 Restrictions on Senior Notes. The Borrower will not, nor will it permit any
Restricted Subsidiary to, (a) except as otherwise provided in the second sentence of this Section
7.15 or with the proceeds of a Permitted Refinancing, voluntarily retire, redeem, defease,
repurchase or prepay prior to the scheduled due date thereof any part of the principal of, or
interest on, the Senior Notes, or (b) enter into or permit any modification or amendment of, or
waive any material right or obligation of any Person under the indenture and related documents
evidencing the Senior Notes (as amended, modified, supplemented or restated from time to time in
accordance with this Agreement, the “Senior Notes Documents”) if the effect of any such
modification or amendment is to (i) increase the maximum principal amount of the Indebtedness
evidenced by the Senior Notes Documents to an amount in excess of the amount permitted under
Section 7.03(f) or the rate of interest on any such Indebtedness to a rate in excess of the rate
permitted under Section 7.03(f) (other than as a result of the imposition of a default rate of
interest in accordance with the terms of the Senior Notes Documents), (ii) change or modify any
event of default or any covenant with respect to the Indebtedness evidenced by the Senior Note
Documents if the effect of such change or modification is to cause any one or more of the Senior
Notes Documents, taken as a whole, to be materially more restrictive on any Loan Party than such
Senior Notes Documents were prior to such change or addition, (iii) change (to an earlier date) the
scheduled dates upon which payments of principal or interest on the Indebtedness


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evidenced by the Senior Notes Documents are due, (iv) change any redemption or prepayment
provisions of the Indebtedness evidenced by the Senior Notes Documents, or (v) grant any Liens in
any assets or properties of any Loan Party to secure any of the Indebtedness or other obligations
evidenced by the Senior Notes Documents. Notwithstanding the foregoing, so long as no Default or
Borrowing Base Deficiency shall have occurred and be continuing or would result from the making of
such payment or remittance, the Borrower may voluntarily retire, redeem, defease, repurchase or
prepay the Indebtedness evidenced by the Senior Notes Documents (x) on or within five (5) Business
Days following the receipt thereof, with the proceeds of cash equity contributions received by the
Borrower in exchange for common stock, (y) with the Net Cash Proceeds from Dispositions permitted
under Section 7.05(c) subject to the Borrower’s compliance with Section 2.11(b) prior to making
such payment or remittance and (z) at any other time if immediately before and after giving effect
to such payment or remittance, Borrowing Base Usage is less than ninety percent (90%).



ARTICLE VIII




EVENTS OF DEFAULT AND REMEDIES




     8.01 Events of Default. Any of the following shall constitute an “Event of
Default”:




     (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when
and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation
(including any payments required pursuant to Section 2.11(a) or Section 2.11(b)), or
(ii) within three days after the same becomes due, any interest on any Loan or on any L/C
Obligation, or any fee due hereunder, or (iii) within five days after the same becomes due,
any other amount payable hereunder or under any other Loan Document; or




     (b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.03(a), Section 6.10 or Section 6.11 or
ARTICLE VII; or




     (c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above and excluding the
covenants contained in clause (b) of Section 6.15) contained in any Loan Document on its
part to be performed or observed and such failure continues for 30 days after notice thereof
from the Administrative Agent to the Borrower (which notice will be given at the request of
the Majority Lenders); or




     (d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the Borrower or
any other Loan Party herein, in any other Loan Document, or in any document delivered in
connection herewith or therewith shall prove to be false in any material respect when made
or deemed made; or




     (e) Cross-Default. (i) The Borrower or any Restricted Subsidiary (A) fails to
make any payment when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) in respect of any Indebtedness or Guarantee (other


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than Indebtedness hereunder and obligations under Swap Contracts) having an aggregate
principal amount (including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of more than the
Threshold Amount, or (B) fails to observe or perform any other agreement or condition
relating to any such Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, the effect of which default is to cause, or to
permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of
such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be
demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically
or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be
made by the Borrower or any Restricted Subsidiary prior to its stated maturity, or such
Guarantee to become payable or cash collateral in respect thereof to be required; or
(ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap
Contract or any other event analogous thereto) resulting from any event of default under
such Swap Contract as to which the Borrower or any Restricted Subsidiary is the Defaulting
Party (as defined in such Swap Contract) and the Swap Termination Value owed by the Borrower
or such Restricted Subsidiary as a result thereof is greater than the Threshold Amount; or




     (f) Insolvency Proceedings, Etc. Any Loan Party institutes or consents to the
institution of any proceeding under any Debtor Relief Law, or makes an assignment for the
benefit of creditors; or applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for
all or any material part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the application or consent
of such Person and the appointment continues undischarged or unstayed for 60 calendar days;
or any proceeding under any Debtor Relief Law relating to any such Person or to all or any
material part of its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such
proceeding; or




     (g) Inability to Pay Debts; Attachment. (i) Any Loan Party becomes unable or
admits in writing its inability or fails generally to pay its debts as they become due, or
(ii) any writ or warrant of attachment or execution or similar process is issued or levied
against all or any material part of the property of any such Person and is not released,
vacated or fully bonded within 30 days after its issue or levy; or




     (h) Judgments. There is entered against the Borrower or any Restricted
Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage), or (ii) any one or more
non-monetary final judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either case,
(A) enforcement proceedings are allowed and commenced by any creditor upon such judgment or
order, or (B) there is a period of 30 consecutive days during which a stay of


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enforcement of such judgment, by reason of a pending appeal or otherwise, is not in
effect; or




     (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result in liability
of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC
in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA
Affiliate fails to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or




     (j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted hereunder or
thereunder or satisfaction in full of all the Obligations, ceases to be in full force and
effect; or any Loan Party or any other Affiliate of the Borrower contests in any manner the
validity or enforceability of any provision of any Loan Document; or any Loan Party denies
that it has any or further liability or obligation under any Loan Document, or purports to
revoke, terminate or rescind any Loan Document; or




     (k) Change of Control. There occurs any Change of Control.



     8.02 Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the
Majority Lenders, take any or all of the following actions:




     (a) declare the commitment of each Lender to make Loans and any obligation of the L/C
Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and
obligation shall be terminated;




     (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued
and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower;




     (c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount
equal to the then outstanding amount of such L/C Obligations); and




     (d) exercise on behalf of itself and the Lenders all rights and remedies available to
it and the Lenders under the Loan Documents;


provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the
obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit
Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and
all interest and other amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall




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automatically become effective, in each case without further act of the Administrative Agent or any
Lender.




     8.03 Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C
Obligations have automatically been required to be Cash Collateralized as set forth in the proviso
to Section 8.02), any amounts received on account of the Obligations shall be applied by the
Administrative Agent in the following order:



     First, to payment of that portion of the Obligations constituting fees, indemnities,
expenses and other amounts (other than principal and interest but including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under ARTICLE II)
payable to the Administrative Agent or the trustee under the Mortgage, in each case, in its
capacity as such;



     Second, to payment of that portion of the Obligations constituting fees, indemnities
and other amounts (other than principal and interest) payable to the Lenders and the L/C Issuer
(including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer
and amounts payable under ARTICLE II), ratably among them in proportion to the amounts
described in this clause Second payable to them;



     Third, to payment of that portion of the Obligations constituting accrued and unpaid
interest on the Loans, L/C Disbursements and other Obligations, ratably among the Lenders and the
L/C Issuer in proportion to the respective amounts described in this clause Third payable
to them;



     Fourth, to payment of that portion of the Obligations constituting unpaid principal of
the Loans and L/C Disbursements or the Swap Termination Value owed to any Lender Counterparty,
ratably among the Lenders, the Lender Counterparties and the L/C Issuer in proportion to the
respective amounts described in this clause Fourth held by them;



     Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters
of Credit; and



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



     Subject to Section 2.04(j), amounts used to Cash Collateralize the aggregate undrawn amount of
Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such
Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all
Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied
to the other Obligations, if any, in the order set forth above.



     8.04 Production Proceeds. Notwithstanding that, by the terms of the Mortgage, the
Borrower and certain other Loan Parties are and will be assigning to the Administrative Agent and
Lenders all of the “Hydrocarbons” (as defined therein) and all proceeds of production
attributable to the Hydrocarbons or the Mortgaged Property, so long as no Default has occurred


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and is continuing, the Borrower or such other Loan Party, as applicable, may continue to
receive from the purchasers of production all such proceeds attributable to the Hydrocarbons or the
Mortgaged Property, subject, however, to the Liens created under the Security Instruments, which
Liens are hereby affirmed and ratified. Upon the occurrence of a Default and during the
continuance thereof, the Administrative Agent and Lenders may exercise all rights and remedies
granted under the Security Instruments or under applicable law, including the right to obtain
possession of all proceeds attributable to the Hydrocarbons and the Mortgaged Property then held by
the Borrower or any other Loan Party and to receive directly from the purchasers of production all
other proceeds attributable to the Hydrocarbons and the Mortgaged Property. In no case shall any
failure, whether intended or inadvertent, by the Administrative Agent or Lenders to collect
directly any such proceeds attributable to the Hydrocarbons or the Mortgaged Property constitute in
any way a waiver, remission or release of any of their rights under the Security Instruments or
under applicable law, nor shall any release of any proceeds attributable to the Hydrocarbons or the
Mortgaged Property by the Administrative Agent or Lenders to the Borrower constitute a waiver,
remission or release of any other proceeds attributable to the Hydrocarbons or the Mortgaged
Property or of any rights of the Administrative Agent or Lenders to thereafter collect other
proceeds attributable to the Hydrocarbons or the Mortgaged Property or any other rights.



ARTICLE IX




ADMINISTRATIVE AGENT




     9.01 Appointment and Authority. Each of the Lenders and the L/C Issuer hereby
irrevocably appoints JPMorgan Chase Bank to act on its behalf as the Administrative Agent hereunder
and under the other Loan Documents 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 or thereof, together with such actions and powers as are reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and
the L/C Issuer, and neither the Borrower nor any other Loan Party shall have rights as a third
party beneficiary of any of such provisions.



     9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated or unless the context otherwise requires, include the
Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and
its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with the Borrower or any
Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder
and without any duty to account therefor to the Lenders.



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


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




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




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



     The Administrative Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Majority Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Section 10.01 and Section 8.02) or (ii) in the
absence of its own gross negligence or willful misconduct (IT BEING THE INTENTION OF THE PARTIES
HERETO THAT THE ADMINISTRATIVE AGENT AND ANY RELATED PARTIES SHALL, IN ALL CASES, BE INDEMNIFIED
FOR ITS COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE). The Administrative Agent shall be deemed
not to have knowledge of any Default unless and until notice describing such Default is given to
the Administrative Agent by the Borrower, a Lender or the L/C Issuer.



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



     9.04 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 (including any electronic message,
Internet or intranet website posting or other distribution) believed by it to be genuine and to
have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying thereon. In


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determining compliance with any condition hereunder to the making of a Loan, or the issuance
of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the
L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender
or the L/C Issuer unless the Administrative Agent shall have received notice to the contrary from
such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of
Credit. 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.



     9.05 Delegation of Duties. The Administrative Agent may perform any and all of its
duties and exercise its rights and powers hereunder or under any other Loan Document 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 by or
through their respective Related Parties. The exculpatory provisions of this Article shall apply
to any such sub-agent and to the Related Parties of the 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.



     9.06 Resignation of Administrative Agent. The Administrative Agent may at any time
give notice of its resignation to the Lenders, the L/C Issuer and the Borrower. Upon receipt of
any such notice of resignation, the Majority Lenders shall have the right, in consultation with the
Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an
Affiliate of any such bank with an office in the United States. If no such successor shall have
been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may on behalf of the Lenders and the L/C Issuer, appoint a successor
Administrative Agent meeting the qualifications set forth above; provided that if the
Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become effective in accordance
with such notice and (1) the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents (except that in the case of any collateral
security held by the Administrative Agent on behalf of the Lenders or the L/C Issuer under any of
the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral
security until such time as a successor Administrative Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through the Administrative Agent
shall instead be made by or to each Lender and the L/C Issuer directly, until such time as the
Majority Lenders appoint a successor Administrative Agent as provided for above in this Section.
Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor
shall succeed to and become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be
discharged from all of its duties and obligations hereunder or under the other Loan Documents (if
not already discharged therefrom as provided above in this Section). The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article
and Section 10.04 shall continue in effect for the


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benefit of such retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them while the retiring
Administrative Agent was acting as Administrative Agent.



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



     9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of
the Bookrunners, the Arrangers, the Syndication Agent or the Documentation Agents listed on the
cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of
the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a
Lender or the L/C Issuer hereunder.



     9.09 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 any Loan Party, the Administrative Agent
(irrespective of whether the principal of any Loan or L/C Obligation 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, L/C Obligation and all other Obligations that are owing
and unpaid and to file such other documents as may be necessary or advisable in order to
have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of the Lenders,
the L/C Issuer and the Administrative Agent and their respective agents and counsel and all
other amounts due the Lenders, the L/C Issuer and the Administrative Agent under Section
2.12 and Section 10.04) 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 and the L/C Issuer 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 and the L/C Issuer, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses, disbursements




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and advances of the Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 2.12 and Section 10.04.




     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 or the L/C Issuer any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to
authorize the Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.



     9.10 Collateral and Guaranty Matters. The Lenders and the L/C Issuer irrevocably
authorize the Administrative Agent, at its option and in its discretion,




     (a) to release any Lien on any property granted to or held by the Administrative Agent
under any Loan Document (i) upon termination of the Aggregate Commitments and payment in
full of all Obligations (other than contingent indemnification obligations) and the
expiration or termination of all Letters of Credit, (ii) that is sold or to be sold as part
of or in connection with any sale permitted hereunder or under any other Loan Document, or
(iii) subject to Section 10.01, if approved, authorized or ratified in writing by the
Majority Lenders;




     (b) to subordinate any Lien on any property granted to or held by the Administrative
Agent under any Loan Document to the holder of any Lien on such property that is permitted
by Section 7.01(d) or Section 7.01(e), if appropriate; and




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



     Upon request by the Administrative Agent at any time, the Majority Lenders will confirm in
writing the Administrative Agent’s authority to release or subordinate its interest in particular
types or items of property, or to release any Guarantor from its obligations under the Guaranty
pursuant to this Section 9.10.



ARTICLE X




MISCELLANEOUS




     10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or
any other Loan Document (other than Letters of Credit or the Fee Letter, each of which shall be
modified only in accordance with their respective terms), and no consent to any departure by the
Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the
Majority Lenders and the Borrower or the applicable Loan Party, as the case may be, and
acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver or consent shall:




     (a) waive any condition set forth in Section 4.01(a) without the written consent of
each Lender;


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     (b) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 2.08 or Section 8.02) without the written consent of such
Lender;




     (c) postpone any date fixed by this Agreement for any payment or mandatory prepayment
of principal, interest, fees or other amounts due to the Lenders (or any of them) or any
scheduled or mandatory reduction of the Aggregate Commitments hereunder or under any other
Loan Document without the written consent of each Lender directly affected thereby;




     (d) reduce or forgive the principal of, or the rate of interest specified herein on,
any Loan or L/C Disbursement, or (subject to clause (iv) of the second proviso to this
Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document
without the written consent of each Lender directly affected thereby; provided,
however, that only the consent of the Majority Lenders shall be necessary to amend
Section 2.13(c) or to waive any obligation of the Borrower to pay interest at the rate
specified in Section 2.13(c);




     (e) change Section 2.18 or Section 8.03 in a manner that would alter the order of
application of amounts received or the pro rata sharing of payments required thereby without
the written consent of each Lender;




     (f) change any provision of this Section, Section 3.02, the definition of “Applicable
Percentage”, the definition of “Borrowing Base”, the definition of “Majority Lenders,” the
definition of “Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder (including, without limitation, any
provisions specifying the number or percentage of Lenders required to approve any Borrowing
Base), without the written consent of each Lender; or




     (g) release any Guarantor from its Guaranty (except as permitted by Section 9.10)
without the written consent of each Lender or release all or substantially all of the
collateral for the Obligations;


and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights
or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of
Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing
and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent in addition to the Lenders required above,
affect the rights or duties of the Administrative Agent under this Agreement or any other Loan
Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a
writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased or extended without the
consent of such Lender.



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     10.02 Notices; Effectiveness; Electronic Communication.




     (a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in subsection (b)
below), all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or registered
mail or sent by telecopier as follows, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable telephone
number, as follows:




     (i) if to the Borrower, the Administrative Agent, the L/C Issuer or the Swing
Line Lender, to the address, telecopier number or telephone number specified for
such Person on Schedule 10.02; and




     (ii) if to any other Lender, to the address, telecopier number or telephone
number specified in its Administrative Questionnaire.



     Notices sent by hand or overnight courier service, or mailed by certified or registered mail,
shall be deemed to have been given when received; notices sent by telecopier shall be deemed to
have been given when sent (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the next business day
for the recipient).




     (b) Electronic Communications. General communications (but not notices) to the
Borrower, the Lenders and the L/C Issuer hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent. The Administrative Agent or the Borrower
may, in its discretion, agree to accept 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 communications.



     Unless the Administrative Agent otherwise prescribes, (i) other communications sent to an
e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as available, return e-mail
or other written acknowledgement), provided that if such other communication is not sent
during the normal business hours of the recipient, such notice or communication shall be deemed to
have been sent at the opening of business on the next business day for the recipient, and
(ii) communications posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause
(i) of notification that such notice or communication is available and identifying the website
address therefor. For the avoidance of doubt, notices under this Agreement or any other Loan
Document may not be sent by or to the Borrower or the Administrative Agent via email.




     (c) Change of Address, Etc. Each of the Borrower, the Administrative Agent,
the L/C Issuer and the Swing Line Lender may change its address, telecopier or telephone
number for notices and other communications hereunder by notice to the other parties hereto.
Each other Lender may change its address, telecopier or telephone number for


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notices and other communications hereunder by notice to the Borrower, the
Administrative Agent, the L/C Issuer and the Swing Line Lender.




     (d) Reliance by Administrative Agent, L/C Issuer and Lenders. The
Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon
any notices (including telephonic Borrowing Requests and Swing Line Loan requests)
purportedly given by or on behalf of the Borrower even if (i) such notices were not made in
a manner specified herein, were incomplete or were not preceded or followed by any other
form of notice specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof. The Borrower shall indemnify the Administrative
Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses,
costs, expenses and liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrower. All telephonic notices to and other
telephonic communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such recording.



     10.03 No Waiver; Cumulative Remedies. No failure by any Lender, the L/C Issuer or the
Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.



     10.04 Expenses; Indemnity; Damage Waiver.




     (a) Costs and Expenses. The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including
the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in
connection with the syndication of the credit facilities provided for herein, the
preparation, negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the provisions hereof or
thereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in
connection with the issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, and, so long as an Event of Default has occurred and is continuing any
Lender or the L/C Issuer (including the fees, charges and disbursements of any counsel for
the Administrative Agent, and, so long as an Event of Default has occurred and is
continuing, counsel for any Lender or the L/C Issuer), in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the other Loan Documents,
including its rights under this Section, or (B) in connection with the Loans made or Letters
of Credit issued hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of Credit.


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     (b) INDEMNIFICATION BY THE BORROWER. THE BORROWER SHALL INDEMNIFY THE
ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF), EACH LENDER AND THE L/C ISSUER, AND EACH
RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN
“INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES,
CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES (INCLUDING THE FEES, CHARGES AND
DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE), AND SHALL INDEMNIFY AND HOLD HARMLESS EACH
INDEMNITEE FROM ALL FEES AND TIME CHARGES AND DISBURSEMENTS FOR ATTORNEYS WHO MAY BE
EMPLOYEES OF ANY INDEMNITEE, INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE
BY ANY THIRD PARTY OR BY THE BORROWER OR ANY OTHER LOAN PARTY ARISING OUT OF, IN CONNECTION
WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY
THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (II) ANY LOAN OR LETTER OF
CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE
L/C ISSUER 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), (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM
ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR ANY
ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR
(IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO
ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT
BY A THIRD PARTY OR BY THE BORROWER OR ANY OTHER LOAN PARTY, AND REGARDLESS OF WHETHER ANY
INDEMNITEE IS A PARTY THERETO, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE
OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE;
PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE
EXTENT THAT SUCH 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 OR (Y) RESULT FROM A
CLAIM BROUGHT BY THE BORROWER OR ANY OTHER LOAN PARTY AGAINST AN INDEMNITEE FOR BREACH IN
BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, IF
THE BORROWER OR SUCH LOAN PARTY HAS OBTAINED A FINAL AND


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NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT
JURISDICTION.




     (c) Reimbursement by Lenders. To the extent that the Borrower for any reason
fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to
be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer or any
Related Party of any of the foregoing (and without limiting its obligation to do so), each
Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C
Issuer or such Related Party, 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 the Administrative Agent (or any such sub-agent) or the L/C Issuer in its
capacity as such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent) or L/C Issuer in connection with such capacity.
The respective obligations of the Lenders under this Agreement are several and not joint
and no Lender shall be responsible for the failure of any other Lender to satisfy its
obligations hereunder.




     (d) WAIVER OF CONSEQUENTIAL DAMAGES, ETC. TO THE FULLEST 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, THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, ANY LOAN OR LETTER OF
CREDIT OR THE USE OF THE PROCEEDS THEREOF. NO INDEMNITEE REFERRED TO IN SUBSECTION (B)
ABOVE SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY UNINTENDED RECIPIENTS OF ANY
INFORMATION OR OTHER MATERIALS DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR
OTHER INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.




     (e) Payments. All amounts due under this Section shall be payable not later
than ten Business Days after demand therefor.




     (f) Survival. The agreements in this Section shall survive the resignation of
the Administrative Agent and the L/C Issuer, the replacement of any Lender, the termination
of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other
Obligations.



     10.05 Payments Set Aside. To the extent that any payment by or on behalf of the
Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or the


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Administrative Agent, the L/C Issuer or any Lender exercises its right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to
be fraudulent or preferential, set aside or required (including pursuant to any settlement entered
into by the Administrative Agent, the L/C Issuer or such Lender in its discretion) to be repaid to
a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief
Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C
Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share
(without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus
interest thereon from the date of such demand to the date such payment is made at a rate per annum
equal to the Federal Funds Effective Rate from time to time in effect. The obligations of the
Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in
full of the Obligations and the termination of this Agreement.



     10.06 Successors and Assigns.




     (a) Successors and Assigns Generally. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior written
consent of the Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in
accordance with the provisions of subsection (b) of this Section, (ii) by way of
participation in accordance with the provisions of subsection (d) of this Section, or
(iii) by way of pledge or assignment of a security interest subject to the restrictions of
subsection (f) of this Section (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent provided in subsection
(d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of
each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.




     (b) Assignments by Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans (including for purposes of this
subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing
to it); provided that




     (i) except in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the case
of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender, the aggregate amount of the Commitment (which for this purpose
includes Loans outstanding thereunder) or, if the Commitment is not then in effect,
the principal outstanding balance of the Loans, of the assignor subject to each such
assignment, determined as of the date the Assignment and


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Assumption with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the
Trade Date, shall not be less than $5,000,000, and the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or, if the
Commitment is not then in effect, the principal outstanding balance of the Loans,
assigned to the assignee 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 or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date, shall not be less than $5,000,000 and in an
integral multiple of $1,000,000, unless in each case the Administrative Agent and,
so long as no Event of Default has occurred and is continuing, the Borrower
otherwise consents (each such consent not to be unreasonably withheld or delayed);




     (ii) 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 with
respect to the Revolving Loans or the Commitment assigned, except that this clause
(ii) shall not apply to rights of the Swing Line Lender in respect of Swing Line
Loans;




     (iii) any assignment of a Commitment must be approved by the Administrative
Agent, the L/C Issuer and the Swing Line Lender (which approval may not to be
unreasonably withheld or delayed) unless the Person that is the proposed assignee is
itself a Lender (whether or not the proposed assignee would otherwise qualify as an
Eligible Assignee); and




     (iv) 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, and the Eligible Assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire.


Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c)
of this Section, from and after the effective date specified in each Assignment and Assumption, the
Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of a 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 2.15, Section 2.16, Section 2.17, and Section 10.04 with
respect to facts and circumstances occurring prior to the effective date of such assignment. Upon
request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender.
Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not
comply with this subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with subsection (d) of this
Section.



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     (c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and
L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be available for
inspection and copying by each of the Borrower and the L/C Issuer at any reasonable time and
from time to time upon reasonable prior notice. In addition, at any time that a request for
a consent for a material or substantive change to the Loan Documents is pending, any Lender
wishing to consult with other Lenders in connection therewith may request and receive from
the Administrative Agent a copy of the Register.




     (d) Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights
and/or obligations under this Agreement (including all or a portion of its Commitment and/or
the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line
Loans) owing to it); provided that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent, the Lenders and the L/C Issuer 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, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this Section, the
Borrower agrees that each Participant shall be entitled to the benefits of Section 2.15, Section
2.16 and Section 2.17 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender,
provided such Participant agrees to be subject to Section 2.18 as though it were a Lender.




     (e) Limitations upon Participant Rights. A Participant shall not be entitled
to receive any greater payment under Section 2.15 or Section 2.16 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 2.15 unless the Borrower is


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notified of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 3.01 as though it were a Lender.




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




     (g) Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be deemed to
include electronic signatures or the keeping of records in electronic form, each of which
shall be of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be, to the
extent and as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic Signatures and
Records Act, or any other similar state laws based on the Uniform Electronic Transactions
Act.



     10.07 Treatment of Certain Information; Confidentiality. Each of the Administrative
Agent, the Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents, advisors and
representatives (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority purporting to have
jurisdiction over it (including any self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any 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, to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction relating to the
Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach of this Section or
(y) becomes available to the Administrative Agent, any Lender, the L/C Issuer or any of their
respective Affiliates on a nonconfidential basis from a source other than the Borrower.



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


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confidential. Any Person required to maintain the confidentiality of Information as provided
in this Section shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.



     10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing,
each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any
time and from time to time, after obtaining the prior written consent of the Administrative Agent,
to the fullest extent permitted by applicable law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final, in whatever currency) at any time held
and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or
any such Affiliate to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement or any other Loan
Document to such Lender or the L/C Issuer, irrespective of whether or not such Lender or the L/C
Issuer shall have made any demand under this Agreement or any other Loan Document and although such
obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of
such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated
on such indebtedness. The rights of each Lender, the L/C Issuer and their respective Affiliates
under this Section are in addition to other rights and remedies (including other rights of setoff)
that such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C
Issuer agrees to notify the Borrower and the Administrative Agent promptly after any such setoff
and application, provided that the failure to give such notice shall not affect the
validity of such setoff and application.



     10.09 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if
at any time the interest rate applicable to any Loan, together with all fees, charges and other
amounts which are treated as interest on such Loan under applicable law (collectively the
“Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance
with applicable law, the rate of interest payable in respect of such Loan hereunder, together with
all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent
lawful, the interest and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be increased (but not
above the Maximum Rate therefor) until the earlier to occur of the following events: (a) payment
in full of the Loans of such Lender or (b) such cumulated amount, together with interest thereon at
the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.
Chapter 346 of the Texas Finance Code (which regulates certain revolving credit accounts (formerly
Tex. Rev. Civ. Stat. Ann. Art. 5069, Ch. 15)) shall not apply to this Agreement or to any Loan, nor
shall this Agreement or any Loan be governed by or be subject to the provisions of such Chapter 346
in any manner whatsoever.



     10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and the other Loan Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and


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understandings, oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, 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
that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement.



     10.11 Survival of Representations and Warranties. All representations and warranties
made hereunder and in any other Loan Document or other document delivered pursuant hereto or
thereto or in connection herewith or therewith shall survive the execution and delivery hereof and
thereof. Such representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by the Administrative
Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and
shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.



     10.12 Severability. If any provision of this Agreement or the other Loan Documents is
held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Agreement and the other Loan Documents shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable provisions. The
invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.



     10.13 Governing Law; Jurisdiction; Etc.




     (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS.




     (b) SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS SITTING IN DALLAS COUNTY AND OF THE UNITED
STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF TEXAS, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH TEXAS STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH


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ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR
IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER
OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.




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




     (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.



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



     10.15 Hedging Agreements and Collateral. The benefit of the Security Instruments and
of the provisions of this Agreement relating to the collateral secured hereunder shall also extend
to and be available on a pro rata basis to each Lender or any of its Affiliates to secure
obligations of any Loan Party owed under a Swap Contract with such Lender or its Affiliate, but in
each case, only to the extent such Swap Contract, and the transactions thereunder, are Existing


 CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- 95 -









 







Swap Contracts or are entered into in reliance upon a representation, warranty or
certification by such Loan Party that such transactions are being entered into in compliance with
this Agreement (such compliance to be determined at the time a Loan Party enters into any such Swap
Contract or transaction) and while such Person or its Affiliate is a Lender or prior to such time.



     10.16 USA PATRIOT Act Notice. Each Lender that is subject to the Act (as hereinafter
defined) and the Administrative Agent (for itself and not on behalf of any 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 or the Administrative Agent, as
applicable, to identify the Borrower in accordance with the Act.



     10.17 Original Credit Agreement. On the Closing Date, this Agreement shall supersede
and replace in its entirety the Original Credit Agreement; provided, however, that (a) all loans,
letters of credit, and other indebtedness, obligations and liabilities outstanding under the
Original Credit Agreement on such date shall continue to constitute Loans, Letters of Credit and
other indebtedness, obligations and liabilities under this Agreement, (b) the execution and
delivery of this Agreement or any of the Loan Documents hereunder shall not constitute a novation,
refinancing or any other fundamental change in the relationship among the parties and (c) the
Loans, Letters of Credit, and other indebtedness, obligations and liabilities outstanding
hereunder, to the extent outstanding under the Original Credit Agreement immediately prior to the
date hereof, shall constitute the same loans, letters of credit, and other indebtedness,
obligations and liabilities as were outstanding under the Original Credit Agreement.



     10.18 Reaffirmation and Grant of Security Interest. Each Loan Party hereby (i)
confirms that each Security Instrument (as defined in the Original Credit Agreement) to which it is
a party or is otherwise bound and all Collateral encumbered thereby, will continue to guarantee or
secure, as the case may be, to the fullest extent possible in accordance with the Loan Documents,
the payment and performance of all Obligations under this Agreement and the Secured Obligations (as
such term is defined in the Security Instruments) under the Security Instruments, as the case may
be, including without limitation the payment and performance of all such Obligations under this
Agreement and the Secured Obligations under the Security Instruments, and (ii) reaffirms its grant
to the Administrative Agent for the benefit of the Secured Parties of a continuing Lien on and
security interest in and to such Credit Party’s right, title and interest in, to and under all
Collateral as collateral security for the prompt payment and performance in full when due of the
Obligations under this Agreement and the Secured Obligations under the Security Instruments
(whether at stated maturity, by acceleration or otherwise) in accordance with the terms thereof.



     10.19 Reallocation of Aggregate Commitment. The Lenders (as defined in the Original
Credit Agreement) have agreed among themselves to reallocate the Aggregate Commitment (as defined
in the Original Credit Agreement) as contemplated by this Agreement and to adjust their interests
in the Aggregate Commitment and the Revolving Loans (as defined in the Original Credit Agreement)
accordingly. On the Closing Date and after giving effect to such reallocation and adjustment of
such Commitment and such Loans, the Lenders shall own the Applicable Percentages set forth on
Schedule 2.01. The outstanding Revolving Loans (as


CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- 96 -









 







defined in the Original Credit Agreement) and the funds delivered to the Administrative Agent
on the Closing Date by the Lenders shall be allocated such that after giving effect to such
allocation each of the Lenders shall own the Applicable Percentages of the Aggregate Commitment and
the Commitments set forth on Schedule 2.01 and such Lenders shall own the Loans consistent
with the Applicable Percentages set forth on Schedule 2.01. The Borrower shall pay any
funding indemnification amounts required by Section 2.16 of the Original Credit Agreement in the
event the payment of any principal of any Eurodollar Loan or the conversion of any Eurodollar Loan
other than on the last day of an Interest Period applicable thereto is required in connection with
the reallocation contemplated by this Section 10.19.



     10.20 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.


 CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- 97 -









 





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.



	 	 	 	 	 
	 	 	CONCHO RESOURCES INC.,
	 	 	a Delaware corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Steven L. Beal
	 

	 	 	 	 
	 	 	Name: Steven L. Beal
	 	 	Title: President





CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- Signature Page -















 






	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.,
	 	 	as Administrative Agent
	 
	 	 	 	 
	 

	 	By:
	 	/s/ J. Scott Fowler
	 

	 	 	 	 
	 	 	Name: J. Scott Fowler
	 	 	Title: Senior Vice President
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.,
	 	 	as a Lender, L/C Issuer and Swing Line Lender
	 
	 	 	 	 
	 

	 	By:
	 	/s/ J. Scott Fowler
	 

	 	 	 	 
	 	 	Name: J. Scott Fowler
	 	 	Title: Senior Vice President






CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- Signature Page -

















 





	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A,

as syndication Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen J. Hoffman
 

	 	 
	 	 	Name: Stephen J. Hoffman	 	 
	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	BNP PARIBAS,
 as a Co-Documentation Agent and
a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Courtney Kubesch
 

	 	 
	 	 	Name: Courtney Kubesch	 	 
	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Juan Carlos Sandoval
 

	 	 
	 	 	Name: Juan Carlos Sandoval	 	 
	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	CALYON NEW YORK BRANCH,
 as a Co-Documentation
Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas Byargeon
 

	 	 
	 	 	Name: Thomas Byargeon	 	 
	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	CALYON NEW YORK BRANCH,
 as a Co-Documentation
Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Sharada Manne
 

	 	 
	 	 	Name: Sharada Manne	 	 
	 	 	Title: Director	 	 






CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- Signature Page -




 









 





	 	 	 	 	 	 	 
	 	 	ING CAPITAL LLC,
 as a Co-Documentation Agent
and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Charles E. Hall
 

	 	 
	 	 	Name: Charles E. Hall	 	 
	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF SCOTLAND PLC, 
as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Julia R. Franklin
 

	 	 
	 	 	Name: Julia R. Franklin	 	 
	 	 	Title: Assistant Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	BANK TEXAS, N.A.,
 as a
Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. Michael Delbridge
 

	 	 
	 	 	Name: J. Michael Delbridge	 	 
	 	 	Title: Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	CITIBANK, N.A.
 (formerly Citibank, Texas,
N.A.), as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Ryan Monroe
 

	 	 
	 	 	Name: Ryan Monroe	 	 
	 	 	Title: Vice President	 	 






CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- Signature Page -




 









 





	 	 	 	 	 	 	 
	 	 	FORTIS CAPITAL CORP.,
 as a
Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michele Jones
 

	 	 
	 	 	Name: Michele Jones	 	 
	 	 	Title: Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Darrell Holley
 

	 	 
	 	 	Name: Darrell Holley	 	 
	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	THE FROST NATIONAL BANK
 as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John S. Warren
 

	 	 
	 	 	Name: John S. Warren	 	 
	 	 	Title: Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	NATIXIS
(f/k/a Natexis Banques Popularies), as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Carlos Quinteros
 

	 	 
	 	 	Name: Carlos Quinteros	 	 
	 	 	Title: Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Donovan C. Broussard
 

	 	 
	 	 	Name: Donovan C. Broussard	 	 
	 	 	Title: Managing Director	 	 






CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- Signature Page -





 











 





	 	 	 	 	 	 	 
	 	 	SCOTIABANC INC.,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ H. Thind
 

H. Thind
	 	 
	 

	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 
	 	 	STERLING BANK,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Jeff Forbis
 

Jeff Forbis
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Justin M. alexander
 

Justin M. alexander
	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Henry R. Biedrzycki
 

Henry R. Biedrzycki
	 	 
	 

	 	Title:
	 	Director	 	 






CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- Signature Page -




 









 





	 	 	 	 	 	 	 
	 	 	UNION BANK OF CALIFORNIA, N.A.,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Jarrod Bourgeois
 

Jarrod Bourgeois
	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Timothy Brendel
 

Timothy Brendel
	 	 
	 

	 	Title:
	 	Assistant Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	COMPASS BANK,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Kathleen J. Bowen
 

Kathleen J. Bowen
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	KEY BANK NATIONAL ASSOCIATION,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Thomas Rajan
 

Thomas Rajan
	 	 
	 

	 	Title:
	 	Managing Director	 	 






CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- Signature Page -




 









 





	 	 	 	 	 	 	 
	 	 	SUMITOMO MITSUI BANKING CORPORATION,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Mr. Masakazu Hasegawa
 

Mr. Masakazu Hasegawa
	 	 
	 

	 	Title:
	 	General Mangager	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS FARGO BANK, N.A.,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Reed V. Thompson
 

Reed V. Thompson
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	SUNTRUST BANK,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Yann Pirio
 

Yann Pirio
	 	 
	 

	 	Title:
	 	Director	 	 






CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- Signature Page -




 









 





	 	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Evelyn Thierry
 

Evelyn Thierry
	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Erin Morrissey
 

Erin Morrissey
	 	 
	 

	 	Title:
	 	Vice President	 	 






CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




- Signature Page -





 












 





SCHEDULE 2.01




COMMITMENTS

AND APPLICABLE PERCENTAGES




	 	 	 	 	 	 	 	 	 
	Lender	 	Commitment1	 	 	Applicable Percentage	 
	JPMorgan Chase Bank, N.A.
	 	$	61,000,000	 	 	 	6.3541667	%
	Bank of America, N.A.
	 	$	61,000,000	 	 	 	6.3541667	%
	BNP Paribas
	 	$	60,000,000	 	 	 	6.2500000	%
	Calyon New York Branch
	 	$	60,000,000	 	 	 	6.2500000	%
	ING Capital LLC
	 	$	60,000,000	 	 	 	6.2500000	%
	Scotiabanc Inc.
	 	$	50,000,000	 	 	 	5.2083333	%
	Union Bank of California, N.A.
	 	$	50,000,000	 	 	 	5.2083333	%
	Wachovia Bank, National Association
	 	$	50,000,000	 	 	 	5.2083333	%
	Bank of Scotland
	 	$	44,000,000	 	 	 	4.5833333	%
	Compass Bank
	 	$	44,000,000	 	 	 	4.5833333	%
	Fortis Capital Corp.
	 	$	44,000,000	 	 	 	4.5833333	%
	Key Bank National Association
	 	$	44,000,000	 	 	 	4.5833333	%
	Sumitomo Mitsui Banking Corporation
	 	$	44,000,000	 	 	 	4.5833333	%
	U.S. Bank National Association
	 	$	44,000,000	 	 	 	4.5833333	%
	Wells Fargo Bank
	 	$	44,000,000	 	 	 	4.5833333	%
	Natixis
	 	$	35,000,000	 	 	 	3.6458334	%
	Suntrust Bank
	 	$	35,000,000	 	 	 	3.6458334	%
	Sterling Bank
	 	$	30,000,000	 	 	 	3.1250000	%
	Bank Of Texas, N.A.
	 	$	25,000,000	 	 	 	2.6041667	%
	Citibank, N.A.
	 	$	25,000,000	 	 	 	2.6041667	%
	Deutsche Bank
	 	$	25,000,000	 	 	 	2.6041667	%
	The Frost National Bank
	 	$	25,000,000	 	 	 	2.6041667	%
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Total
	 	$	960,000,000	 	 	 	100.00000000	%
	 
	 	 	 	 	 	 








 




			
	1	 	As of the Closing Date and subject to adjustment as a result of
changes in the Borrowing Base and the Maximum Facility Amount.





CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




SCHEDULE 2.01




 









 





SCHEDULE 5.06




LITIGATION




None




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




SCHEDULE 5.06




 









 





SCHEDULE 5.13




SUBSIDIARIES, OTHER EQUITY INVESTMENTS

AND EQUITY INTERESTS IN THE BORROWER




Part (a). Subsidiaries.





Aguasal Holding LLC, a Texas limited liability company (owned 100% by Henry
Petroleum LP)




Concho Energy Services LLC, a Delaware limited liability company (owned 100% by COG
Operating LLC)




Concho GP LLC, a Texas limited liability company, formerly known as Henry Operating
LLC (owned 100% by Concho Oil & Gas Holdings LP)




Concho Equity Holdings LLC, a Delaware limited liability company (owned 100% by the
Borrower)




Concho Oil & Gas Holdings LP, a Texas limited partnership, formerly known as Henry
Holding LP (99% limited partner interest owned by Concho LP LLC and 1% general
partner interest owned by COG Operating LLC)




Henry Petroleum LP, a Texas limited partnership (99% limited partner interest owned
by Concho Oil & Gas Holdings LP and 1% general partner interest owned by Concho GP
LLC)




COG Operating LLC, a Delaware limited liability company (owned 100% by Concho Equity
Holdings LLC)




Concho LP LLC, a Delaware limited liability company (owned 100% by Concho Equity
Holdings LLC)




COG Oil & Gas LP, a Texas limited partnership (99% limited partner interest owned by
Concho LP LLC and 1% general partner interest owned by COG Operating LLC)




COG Realty, LLC, a Texas limited liability company (owned 100% by Concho Equity
Holdings LLC)




Quail Ranch LLC, a Texas limited liability company (owned 100% by Concho Oil & Gas 
Holdings LP)



Part (b). Other Equity Investments.




     None



CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




SCHEDULE 5.13




 









 





SCHEDULE 6.15




MINIMUM HEDGING




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Collars	 
	 	 	Borrower	 	 	Minimum	 
	Year	 	Oil (MBbs/Month)	 	 	Floor	 
	2009
	 	 	64	 	 	 	120	 






Target




	 	 	 	 	 	 	 	 	 
	 	 	Oil	 	 	Minimum	 
	Year	 	(MBb.s/Month)	 	 	Swap	 
	2008
	 	 	49	 	 	 	124.25	 
	2009
	 	 	29	 	 	 	123.00	 
	2010
	 	 	20	 	 	 	122.25	 
	2011
	 	 	28	 	 	 	122.25	 
	2012
	 	 	42	 	 	 	122.25	 






Target




	 	 	 	 	 	 	 	 	 
	 	 	Gas	 	 	Minimum	 
	Year	 	(MMcfs/Month)	 	 	Swap	 
	2008
	 	 	216	 	 	 	11.50	 
	2009
	 	 	174	 	 	 	11.25	 
	2010
	 	 	147	 	 	 	11.00	 
	2011
	 	 	128	 	 	 	10.50	 
	2012
	 	 	114	 	 	 	10.00	 






CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




SCHEDULE 6.15




 









 





SCHEDULE 7.01




EXISTING LIENS




None.




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




SCHEDULE 7.01




 









 





SCHEDULE 7.08




AFFILIATE AGREEMENTS




None.




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




SCHEDULE 7.08




 









 





SCHEDULE 10.02




ADMINISTRATIVE AGENT’S OFFICE;

CERTAIN ADDRESSES FOR NOTICES




BORROWER:




Concho Resources Inc.

550 W. Texas, Suite 1300

Midland, Texas 79701

Attention:     Steven L. Beal

Telephone:     (432) 683-7443

Telecopier:     (432) 683-7441

Electronic Mail: sbeal@conchoresources.com




with a copy to:




Concho Resources Inc.

550 W. Texas, Suite 130

Midland, Texas 79701

Attention: David Copeland

Telephone:      (432) 683-7443

Telecopier:     (432) 683-7441




Electronic
Mail: dcopeland@conchoresources.com




Website:     
www.conchoresources.com




ADMINISTRATIVE AGENT:




Administrative Agent’s Office

(for payments and Requests for Credit Extensions):




JPMorgan Chase Bank, N.A.

Mail Code IL1-0010

10 South Dearborn, Floor 07

Chicago, Illinois 60603-2003

Attn:     Teresita R. Siao

Telephone:     (312) 385-7051

Telecopier:     (312) 385-7096

Electronic Mail:     teresita.r.siao@jpmchase.com

Account Number:     9008109962

ABA: 021000021




Other Notices as Administrative Agent:




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




SCHEDULE 10.02




 









 





JPMorgan Chase Bank, N.A.

Mail Code IL1-0010

10 South Dearborn, Floor 07

Chicago, Illinois 60603-2003

Attn: Teresita R. Siao

Telephone: (312) 385-7051

Telecopier: (312) 385-7096

Electronic Mail: teresita.r.siao@jpmchase.com




with a copy to:




JPMorgan Chase Bank, N.A.

Mail Code TX1-2448

2200 Ross Avenue, 3rd Floor

Dallas, TX 75201-2787

Attn: J. Scott Fowler

Telephone: (214) 965-3226

Telecopier: (214)-965-3280

Electronic Mail: scott.fowler@jpmorgan.com




L/C ISSUER:

JPMorgan Chase Bank, N.A.

Mail Code IL1-0010

10 South Dearborn, Floor 07

Chicago, Illinois 60603-2003

Attn: Teresita R. Siao

Telephone: (312) 385-7051

Telecopier: (312) 385-7096

Electronic Mail: teresita.r.siao@jpmchase.com




SWING LINE LENDER:

JPMorgan Chase Bank, N.A.

Mail Code IL1-0010

10 South Dearborn, Floor 07

Chicago, Illinois 60603-2003

Attn: Teresita R. Siao

Telephone: (312) 385-7051

Telecopier: (312) 385-7096

Electronic Mail: teresita.r.siao@jpmchase.com

Account Number: 9008109962

ABA: 021000021




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




SCHEDULE 10.02





 











 





EXHIBIT A




FORM OF NOTE


___________


     FOR VALUE RECEIVED, the
 undersigned (the “Borrower”) hereby promises to pay to
               
              
            or registered assigns (the “Lender”), in accordance with the
provisions of the Agreement (as hereinafter defined), the principal amount of each Loan from time
to time made by the Lender to the Borrower under that certain Amended and Restated Credit
Agreement, dated as of July 31, 2008 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement;” the terms defined therein being
used herein as therein defined), among the Borrower, the Lenders from time to time party thereto,
and JPMorgan Chase Bank, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.



     The Borrower promises to pay interest on the unpaid principal amount of each Loan from the
date of such Loan until such principal amount is paid in full, at such interest rates and at such
times as provided in the Agreement. [Except as otherwise provided in Section 2.09(a) of the
Agreement with respect to Swing Line Loans, a][A]ll payments of principal and interest shall be
made to the Administrative Agent for the account of the Lender in Dollars in immediately available
funds at the Administrative Agent’s Office. If any amount is not paid in full when due hereunder,
such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the
date of actual payment (and before as well as after judgment) computed at the per annum rate set
forth in the Agreement.



     This Note is one of the Notes referred to in the Agreement, is entitled to the benefits
thereof and may be prepaid in whole or in part subject to the terms and conditions provided
therein. This Note is also entitled to the benefits of the Guaranty and is secured by collateral.
Upon the occurrence and continuation of one or more of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course
of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount
and maturity of its Loans and payments with respect thereto.



     The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment,
protest and demand and notice of protest, demand, dishonor and non-payment of this Note.



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



CONCHO RESOURCES INC.




FORM OF NOTE




	 	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	

EXHIBIT A






 









 






	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 






LOANS AND PAYMENTS WITH RESPECT THERETO




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Amount of	 	Outstanding	 	 
	 	 	 	 	 	 	End of	 	Principal or	 	Principal	 	 
	 	 	Type of	 	Amount of	 	Interest	 	Interest Paid	 	Balance This	 	Notation
	Date	 	Loan Made	 	Loan Made	 	Period	 	This Date	 	Date	 	Made By
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 





FORM OF NOTE




	 	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	
EXHIBIT A






 









 





EXHIBIT B




FORM OF COMPLIANCE CERTIFICATE




Financial Statement Date:                     ,




To:   JPMorgan Chase Bank, N.A., as Administrative Agent




Ladies and Gentlemen:




     Reference is made to that certain Amended and Restated Credit Agreement, dated as of July 31,
2008 (as amended, restated, extended, supplemented or otherwise modified in writing from time to
time, the “Agreement;” the terms defined therein being used herein as therein defined),
among Concho Resources Inc., a Delaware corporation (the “Borrower”), the Lenders from time
to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, L/C Issuer and Swing
Line Lender and Calyon New York Branch, ING Capital LLC and BNP Paribas, as Co-Documentation
Agents.



     The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the
                                                             of the Borrower, and that, as such, he/she is authorized to
execute and deliver this Certificate to the Administrative Agent on the behalf of the Borrower, and
that:



[Use following paragraph 1 for fiscal year-end financial statements]




     1. Attached hereto as Schedule 1 are the year-end audited financial statements
required by Section 6.01(a) of the Agreement for the fiscal year of the Borrower ended as of the
above date, together with the report and opinion of an independent certified public accountant
required by such section.



[Use following paragraph 1 for fiscal quarter-end financial statements]




     1. Attached hereto as Schedule 1 are the unaudited financial statements required by
Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower ended as of the above date.
Such financial statements fairly present the financial condition, results of operations and cash
flows of the Borrower and its Subsidiaries in accordance with GAAP as at such date and for such
period, subject only to normal year-end audit adjustments and the absence of footnotes.



     2. The undersigned has reviewed and is familiar with the terms of the Agreement and has made,
or has caused to be made under his/her supervision, a detailed review of the transactions and
condition (financial or otherwise) of the Borrower during the accounting period covered by the
attached financial statements.



     3. A review of the activities of the Borrower during such fiscal period has been made under
the supervision of the undersigned with a view to determining whether during such fiscal period the
Borrower performed and observed all its Obligations under the Loan Documents, and



FORM OF COMPLIANCE CERTIFICATE




	 	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	

EXHIBIT B






 









 






[select one:]




     [to the best knowledge of the undersigned during such fiscal period, the Borrower performed
and observed each covenant of the Loan Documents applicable to it.]



—or—




     [the covenants listed on Schedule 4 have not been performed or observed and
Schedule 4 lists each such Default and its nature and status:]



     4. Except as listed in Schedule 4, the representations and warranties of the Borrower
contained in ARTICLE V of the Agreement, and any representations and warranties of [the
Borrower][any Loan Party] that are contained in any document furnished at any time under or in
connection with the Loan Documents, are true and correct on and as of the date hereof, except to
the extent that such representations and warranties specifically refer to an earlier date, in which
case they are true and correct as of such earlier date, and except that for purposes of this
Compliance Certificate, the representations and warranties contained in Section 5.05(a) of the
Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a)
and (b), respectively, of Section 6.01 of the Agreement, including the statements in connection
with which this Compliance Certificate is delivered.



     5. The financial covenant analyses and information set forth on Schedule 2 attached
hereto are true and accurate in all material respects on and as of the date of this Certificate.



     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                                        ,
                    .


CONCHO
RESOURCES INC.




	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 









			
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	

EXHIBIT B






 









 





For the Quarter/Year ended                                         (“Statement Date”)




SCHEDULE 2

to the Compliance Certificate

($ in 000’s)




	 	 	 	 	 
	I. Section 7.11 (a) -Consolidated Leverage Ratio.
	 	 	 	 
	 
	 	 	 	 
	A. Consolidated Funded Indebtedness at Statement Date:
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	B. Consolidated EBITDAX for Subject Period:
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	C. Consolidated Leverage Ratio (Line I.A  ̧ Line I.B):
	 	                    
to 1
	 
	 	 	 	 
	Maximum permitted: 4.00 to 1.00
	 	 	 	 
	 
	 	 	 	 
	II.
Section 7.11 (b) - Current Ratio.
	 	 	 	 
	 
	 	 	 	 
	A. Consolidated Current Assets:
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	B. Consolidated Current Liabilities:
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	C. Consolidated Current Ratio (Line II.A  ̧ Line II.B):
	 	                    
to 1
	 
	 	 	 	 
	Minimum permitted: 1.00 to 1.00
	 	 	 	 






			
	  	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	SCHEDULE 2 to the Compliance Certificate






 









 





For the Quarter/Year ended                                         (“Statement Date”)




SCHEDULE 3

to the Compliance Certificate

($ in 000’s)




Consolidated EBITDAX

(in accordance with the definition of Consolidated EBITDAX

as set forth in the Agreement)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Twelve	 
	 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Months	 
	Consolidated EBITDAX	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 
	Consolidated Net
Income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ Consolidated
Interest Charges
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ income and
franchise taxes
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ depletion expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ depreciation expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ amortization expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ exploration expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ non-cash expenses
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- income tax credits
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- non-cash income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	= Consolidated EBITDAX
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






			
	  	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	SCHEDULE 3 to the Compliance Certificate






 









 





EXHIBIT C




ASSIGNMENT AND ASSUMPTION




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



     For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and percentage interest
identified below of all of such outstanding rights and obligations of the Assignor under the
respective facilities identified below (including, without limitation, the Letters of Credit and
the Swing Line Loans included in such
facilities)2 and (ii) to the extent permitted to
be assigned under applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under
or in connection with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned
pursuant to clauses (i) and (ii) above being referred to herein collectively as, the “Assigned
Interest”). Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or warranty by the
Assignor.



	 	 	 
	1.

	 	Assignor:            
                   
          
	 
	 	 
	2.

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

	 	Borrower:            
                  
           








 




			
	1	 	Include all applicable subfacilities.
	 
	2	 	Select as applicable.





FORM OF ASSIGNMENT AND ASSUMPTION




	 	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	 





EXHIBIT C



 









 






	 	 	 
	4.

	 	Administrative Agent: JPMorgan Chase Bank, N.A., as the administrative agent under
the Credit Agreement.
	 
	 	 
	5.

	 	Credit Agreement: Amended and Restated Credit Agreement, dated as of July 31, 2008,
among Concho Resources Inc., the Lenders from time to time party thereto, JPMorgan Chase Bank,
N.A., as Administrative Agent, L/C Issuer, and Swing Line Lender, and Calyon New York Branch,
ING Capital LLC and BNP Paribas, as Co-Documentation Agents.
	 
	 	 
	6.

	 	Assigned Interest:






	 	 	 	 	 	 	 	 	 
	 	 	Aggregate	 	 	 	 	 	 
	 	 	Amount of	 	Amount of	 	 	 	 
	 	 	Commitment/Loans	 	Commitment/Loans	 	Percentage Assigned of	 	CUSIP Number
	Facility Assigned4	 	for all Lenders5	 	Assigned5	 	Commitment/Loans6	 	(if any)
	                    

	 	$                     
	 	$                     
	 	                    %
	 	                    
	                    

	 	$                     
	 	$                     
	 	                    %
	 	                    
	                    

	 	$                     
	 	$                     
	 	                    %
	 	                    






	 	 	 
	7.

	 	[Trade
Date:                                        ]7





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






 




			
	4	 	Fill in the appropriate terminology for the types of
facilities under the Credit Agreement that are being assigned under this
Assignment (e.g. “Revolving Credit Commitment”, “Term Loan Commitment”, etc.).
	 
	5	 	Amount to be adjusted by the counterparties to take
into account any payments or prepayments made between the Trade Date and the
Effective Date.
	 
	6	 	Set forth, to at least 9 decimals, as a percentage of
the Commitment/Loans of all Lenders thereunder.
	 
	7	 	To be completed if the Assignor and the Assignee intend
that the minimum assignment amount is to be determined as of the Trade Date.





FORM OF ASSIGNMENT AND ASSUMPTION




	 	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	




EXHIBIT C




 









 






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



	 	 	 	 	 	 	 
	 	 	ASSIGNOR

	 	 	[NAME OF ASSIGNOR]
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	ASSIGNEE

	 	 	[NAME OF ASSIGNEE]
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 





[Consented
to and]8 Accepted:




	 	 	 	 	 	 	 
	JPMORGAN CHASE BANK, N.A., as

Administrative Agent	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	[Concho Resources
Inc.:]9	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 








 




			
	8	 	To be added only if the consent of the Administrative
Agent is required by the terms of the Credit Agreement.
	 
	9	 	To be added only if the consent of the Borrower and/or
other parties (e.g. Swing Line Lender, L/C Issuer) is required by the terms of
the Credit Agreement.





FORM OF ASSIGNMENT AND ASSUMPTION




	 	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	 





EXHIBIT C



 









 






ANNEX 1 TO ASSIGNMENT AND ASSUMPTION




[                                        ]1




STANDARD TERMS AND CONDITIONS FOR




ASSIGNMENT AND ASSUMPTION




          1. Representations and Warranties.




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




          1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement
(subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such
other documents and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached hereto is any
documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly
completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.






 




			
	1	 	Describe Credit Agreement at option of Administrative
Agent.





FORM OF ASSIGNMENT AND ASSUMPTION




	 	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	





EXHIBIT C



 









 






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




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




FORM OF ASSIGNMENT AND ASSUMPTION




	 	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	





EXHIBIT C



 









 





EXHIBIT D




FORM OF AMENDED AND RESTATED GUARANTY




FORM OF GUARANTY




	 	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	




EXHIBIT D




 









 






EXHIBIT E




FORM OF SOLVENCY CERTIFICATE




     The undersigned, as Chief Financial Officer of Concho Resources Inc., a Delaware corporation
(the “Borrower”), hereby gives this Certificate Regarding Solvency to induce JPMorgan Chase
Bank, N.A., as Administrative Agent for the Lenders (defined below) and the Lenders (the
“Administrative Agent”) to consummate certain financial accommodations pursuant to the
terms and conditions of that certain Amended and Restated Credit Agreement dated the date hereof
(the “Credit Agreement”) among the Borrower, certain Subsidiaries of the Borrower, as
Guarantors, the lenders signatory thereto (“Lenders”), and the Administrative Agent, Bank
of America, N.A., as Syndication Agent and Calyon New York Branch, ING Capital LLC and BNP Paribas,
as Co-Documentation Agents. Capitalized terms used in this certificate are defined in the Credit
Agreement, unless otherwise stated.



     The undersigned hereby certifies to the Administrative Agent that:



     1. The undersigned is familiar with the business and financial affairs of the Borrower,
including, without limitation, the Transactions and the matters hereinafter described.



     2. The undersigned has reviewed the pro-forma balance sheet of the Borrower, as of the date
thereof (the “Pro-Forma Balance Sheet”), a copy of which is attached as Exhibit
“A”, and the projections previously provided to the Administrative Agent (the
“Projections”). The undersigned is familiar with the process through which the Pro-Forma
Balance Sheet and the Projections were generated.



     3. The Pro-Forma Balance Sheet fairly presents in all material respects the financial position
of the Borrower as of the date thereof after giving effect to the Transactions. The Projections
are reasonable projections of the balance sheet, income statement and source and application of
funds for the periods covered thereby, based upon the assumptions set forth therein. The Borrower
believes that such assumptions set forth therein are reasonable in light of current business
conditions existing at the time of preparation thereof. The Projections represent the Borrower’s
good faith estimate as of the date thereof of the Borrower’s future financial performance, it being
recognized by the Administrative Agent that such financial information as it relates to future
events is not to be viewed as fact and that actual results during the period or periods covered
thereby may differ from the projected results set forth therein.



     4. Immediately following the consummation of, and after giving effect to, the transactions
contemplated by the Loan Documents and the Purchase Agreement and the application of the proceeds
from the fundings being made on the Closing Date, the Borrower is solvent.



FORM OF SOLVENCY CERTIFICATE




	 	 	 
	CONCHO AMENDED AND RESTATED CREDIT AGREEMENT
	 	





EXHIBIT E




 











 





     5. The Borrower does not intend to incur, or believe it will incur, debts beyond its ability
to pay as they mature.



	 	 	 	 	 	 	 
	 	 	DATED: July 31, 2008	 	 
	 
	 	 	 	 	 	 
	 	 	CONCHO RESOURCES INC.,	 	 
	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Steven L. Beal	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Steven L. Beal	 	 
	 

	 	Title:
	 	President	 	 






FORM OF SOLVENCY CERTIFICATE




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




EXHIBIT E




 









 





EXHIBIT “A”




Pro-Forma Balance Sheet




(see attached)




FORM OF SOLVENCY CERTIFICATE




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




EXHIBIT E




 









 





EXHIBIT F




FORM OF MORTGAGE




Form of Mortgage




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




EXHIBIT F




 









 





EXHIBIT G




FORM OF AMENDED AND RESTATED PLEDGE AGREEMENT




Form of Pledge Agreement




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




EXHIBIT G




 









 





EXHIBIT H




COUNTERPART AGREEMENT




     This COUNTERPART AGREEMENT, dated [                    ] (this “Counterpart Agreement”) is delivered
pursuant to that certain Amended and Restated Credit Agreement, dated as of July 31, 2008 (as it
may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined
therein and not otherwise defined herein being used herein as therein defined), by and among CONCHO
RESOURCES INC., as Borrower, CERTAIN SUBSIDIARIES OF BORROWER, as Guarantors, the LENDERS party
thereto, and JPMORGAN CHASE BANK, N.A., as Administrative Agent (the “Administrative Agent”), BANK
OF AMERICA, N.A., as Syndication Agent, and CALYON NEW YORK BRANCH, ING CAPITAL LLC and BNP
PARIBAS, as Co-Documentation Agents.



     Section 1. Pursuant to Section 6.12 of the Credit Agreement, the undersigned hereby:




     (a) agrees that this Counterpart Agreement may be attached to the Guaranty and
that by the execution and delivery hereof, the undersigned becomes a Guarantor under
the Guaranty and agrees to be bound by all of the terms thereof;




     (b) represents and warrants that each of the representations and warranties set
forth in the Credit Agreement, the Guaranty and each other Loan Document and
applicable to the undersigned is true and correct both before and after giving
effect to this Counterpart Agreement, except to the extent that any such
representation and warranty relates solely to any earlier date, in which case such
representation and warranty is true and correct as of such earlier date;




     (c) agrees to irrevocably and unconditionally guaranty the due and punctual
payment in full of all Obligations when the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) and in accordance
with the Guaranty;




     (d) (i) agrees that this counterpart may also be attached to the Pledge
Agreement, (ii) agrees that the undersigned will comply with all the terms and
conditions of the Pledge Agreement as if it were an original signatory thereto,
(iii) grants to Administrative Agent for the benefit of each of the Lender Parties
(as such term is defined in the Pledge Agreement) a security interest in all of the
undersigned’s right, title and interest in and to all “Collateral” (as such term is
defined in the Pledge Agreement) of the undersigned, in each case whether now or
hereafter existing or in which the undersigned now has or hereafter acquires an
interest and wherever the same may be located and (iv) agrees to deliver to the
Administrative Agent supplements to all schedules and other attachments to the
Pledge Agreement. All such Collateral shall be deemed to be part of the



Form of Counterpart Agreement




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




EXHIBIT H




 









 






“Collateral” and hereafter subject to each of the terms and conditions of the
Pledge Agreement; and



          Section 2. The undersigned agrees from time to time, upon request of Administrative Agent, to
take such additional actions and to execute and deliver such additional documents and instruments
as Administrative Agent may request to effect the transactions contemplated by, and to carry out
the intent of, this Counterpart Agreement. Neither this Counterpart Agreement nor any term hereof
may be changed, waived, discharged or terminated, except by an instrument in writing signed by the
undersigned and the Administrative Agent. Any notice or other communication herein required or
permitted to be given shall be given in pursuant to Section 5.4 of the Guaranty, and all for
purposes thereof, the notice address of the undersigned shall be the address as set forth on the
signature page hereof. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.




     THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.



Form of Counterpart Agreement




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




EXHIBIT H





 









 








     IN WITNESS WHEREOF, the undersigned has caused this Counterpart Agreement to be duly executed
and delivered by its duly authorized officer as of the date above first written.



	 	 	 	 	 	 	 	 	 
	 	 	[NAME OF SUBSIDIARY]	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 





	 	 	 	 	 	 	 
	Address for Notices:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Telecopier:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	with a copy to:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Telecopier:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 





ACKNOWLEDGED AND ACCEPTED, as of

the date above first written:




JPMORGAN CHASE BANK, N.A.,

as Administrative Agent




	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Form of Counterpart Agreement




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




EXHIBIT H




 









 





EXHIBIT I




FORM OF LENDER CERTIFICATE




                    , 20___




	 	 	 
	To:

	 	JPMORGAN CHASE BANK, N.A.,
	 

	 	as Administrative Agent






     The Borrower, the Administrative Agent and the Lenders have entered into that certain Amended
and Restated Credit Agreement dated as of July 31, 2008 (as the same has been and may further be
amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”). Unless otherwise defined herein, capitalized terms used herein have the meaning
specified in the Credit Agreement.



[Language for Existing Lender]




     [Please be advised that the undersigned has agreed to increase its Revolving Commitment under
the Credit Agreement effective                     , 20___from $                     to $                     and (b)
that it shall continue to be a Lender in all respects under the Credit Agreement and the other Loan
Documents.]



[Language for New Lender]




     [Please be advised that the undersigned has agreed (a) to become a Lender under the Credit
Agreement effective
                    , 20___ with a Commitment of $                     and (b) that it shall be
deemed to be a Lender in all respects under the Credit Agreement and the other Loan Documents.]



	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Form of Lender Certificate




CONCHO AMENDED AND RESTATED CREDIT AGREEMENT




EXHIBIT I