exv10w19






Exhibit 10.19




EXECUTION




THIRD AMENDED AND RESTATED CREDIT AGREEMENT




Originally dated as of November 15, 2007

Amended and Restated as of July 11, 2008

Amended and Restated as of September 11, 2009



between



QUEST EASTERN RESOURCE LLC

as the Borrower,



ROYAL BANK OF CANADA,

as Administrative Agent and Collateral Agent



and



ROYAL BANK OF CANADA,

as Lender



$43,760,206.42 RENEWAL TERM LOAN



Dated as of September 21, 2010



 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
	 	 	3	 
	1.01 Defined Terms
	 	 	3	 
	1.02 Other Interpretive Provisions
	 	 	18	 
	1.02 References to Agreements and Laws
	 	 	19	 
	 
	 	 	 	 
	ARTICLE II. RENEWAL TERM LOAN
	 	 	19	 
	2.01 Renewal Term Loan
	 	 	19	 
	2.02 Initial Funding of the Renewal Term Loan, Conversions and
Continuations Thereof
	 	 	19	 
	2.03 Prepayments
	 	 	20	 
	2.04 Repayment of Renewal Term Loan
	 	 	21	 
	2.05 Interest
	 	 	21	 
	2.06 Computation of Interest
	 	 	22	 
	2.07 Evidence of Debt
	 	 	22	 
	2.08 Payments Generally
	 	 	22	 
	 
	 	 	 	 
	ARTICLE III TAXES AND YIELD PROTECTION
	 	 	23	 
	3.01 Taxes
	 	 	23	 
	3.02 Illegality
	 	 	25	 
	3.03 Inability to Determine Rates
	 	 	26	 
	3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on
Eurodollar Loans
	 	 	26	 
	3.05 Compensation for Losses
	 	 	27	 
	3.06 Matters Applicable to all Requests for Compensation
	 	 	27	 
	3.07 Survival
	 	 	27	 
	 
	 	 	 	 
	ARTICLE IV. CONDITIONS PRECEDENT
	 	 	28	 
	4.01 Conditions Precedent
	 	 	28	 
	 
	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES
	 	 	29	 
	5.01 Existence; Qualification and Power; Compliance with Laws
	 	 	29	 
	5.02 Authorization; No Contravention
	 	 	29	 
	5.03 Governmental Authorization
	 	 	30	 
	5.04 Binding Effect
	 	 	30	 
	5.05 Ownership of Property; Liens;
	 	 	30	 
	5.06 Environmental Compliance
	 	 	30	 
	5.07 Insurance
	 	 	30	 
	5.08 Taxes
	 	 	30	 
	5.09 Margin Regulations; Investment Company Act; Use of Proceeds
	 	 	31	 
	5.10 Disclosure; No Material Misstatements
	 	 	31	 
	5.11 Location of Business and Offices
	 	 	31	 






i









 






	 	 	 	 	 
	 	 	Page	 
	5.12 ERISA Compliance
	 	 	31	 
	5.13 Compliance with Laws
	 	 	32	 
	5.14 Third Party Approvals
	 	 	32	 
	5.15 Intentionally Deleted
	 	 	32	 
	5.16 Oil and Gas Leases
	 	 	32	 
	5.17 Oil and Gas Contracts
	 	 	32	 
	5.18 Producing Wells
	 	 	32	 
	5.19 Purchasers of Production
	 	 	33	 
	 
	 	 	 	 
	ARTICLE VI. AFFIRMATIVE COVENANTS
	 	 	33	 
	6.01 Reports
	 	 	33	 
	6.02 Certificates; Other Information
	 	 	33	 
	6.03 Notices
	 	 	33	 
	6.04 Payment of Obligations
	 	 	34	 
	6.05 Preservation of Existence, Etc.
	 	 	34	 
	6.06 Maintenance of Assets and Business
	 	 	34	 
	6.07 Maintenance of Insurance
	 	 	35	 
	6.08 Compliance with Laws and Contractual Obligations
	 	 	35	 
	6.09 Books and Records
	 	 	35	 
	6.10 Inspection Rights
	 	 	35	 
	6.11 Compliance with ERISA
	 	 	36	 
	6.12 Use of Proceeds
	 	 	36	 
	6.13 Intentionally Omitted
	 	 	36	 
	6.14 Further Assurances; Additional Collateral; In Lieu Letters
	 	 	36	 
	6.15 Title Defects
	 	 	37	 
	6.16 Leases
	 	 	37	 
	6.17 Oil and Gas Properties
	 	 	37	 
	6.18 Operation of Oil and Gas Properties
	 	 	37	 
	6.19 Change of Purchasers of Production
	 	 	38	 
	6.20 Liens on Oil and Gas Properties; Title Information
	 	 	38	 
	 
	 	 	 	 
	ARTICLE VII NEGATIVE COVENANTS
	 	 	38	 
	7.01 Liens
	 	 	38	 
	7.02 Investments
	 	 	41	 
	7.03 Hedging Agreements
	 	 	41	 
	7.04 Indebtedness
	 	 	41	 
	7.05 Lease Obligations
	 	 	42	 
	7.06 Fundamental Changes
	 	 	42	 
	7.07 Dispositions
	 	 	42	 
	7.08 Transfer Payments; Restricted Payments
	 	 	43	 
	7.09 ERISA
	 	 	43	 
	7.10 Nature of Business; Capital Expenditures; Risk Management
	 	 	43	 
	7.11 Transactions with Affiliates
	 	 	43	 
	7.12 Use of Proceeds
	 	 	43	 






ii









 







	 	 	 	 	 
	 	 	Page	 
	7.13 Material Amendment
	 	 	44	 
	 
	 	 	 	 
	ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
	 	 	44	 
	8.01 Events of Default
	 	 	44	 
	8.02 Remedies Upon Event of Default
	 	 	45	 
	8.03 Application of Funds
	 	 	46	 
	 
	 	 	 	 
	ARTICLE IX. ADMINISTRATIVE AGENT
	 	 	46	 
	9.01 Appointment and Authorization of Agents
	 	 	46	 
	9.02 Delegation of Duties
	 	 	46	 
	9.03 Default; Collateral
	 	 	46	 
	 
	 	 	 	 
	ARTICLE X MISCELLANEOUS
	 	 	47	 
	10.01
Amendments, Reconveyance of ORRI; Release of Collateral, Etc.
	 	 	47	 
	10.02 Notices and Other Communications; Facsimile Copies
	 	 	48	 
	10.03 No Waiver; Cumulative Remedies
	 	 	49	 
	10.04 Attorney Costs; Expenses and Taxes
	 	 	49	 
	10.05 Indemnification
	 	 	50	 
	10.06 Payments Set Aside
	 	 	51	 
	10.07 Successors and Assigns
	 	 	51	 
	10.08 Confidentiality
	 	 	53	 
	10.09 Set-off
	 	 	53	 
	10.10 Interest Rate Limitation
	 	 	54	 
	10.11 Counterparts
	 	 	54	 
	10.12 Integration
	 	 	54	 
	10.13 Survival of Representations and Warranties
	 	 	54	 
	10.14 Severability
	 	 	55	 
	10.15 Governing Law
	 	 	55	 
	10.16 Waiver
of Right to Trial by Jury, Etc.
	 	 	55	 
	10.17 Release
	 	 	56	 
	10.18 Release of Restatement Date Released Parties
	 	 	56	 
	10.19 Amendment and Restatement
	 	 	56	 
	10.20 ENTIRE AGREEMENT
	 	 	57	 






iii









 






	 	 	 

	SCHEDULES	 

	 	 	 

	2.01	 	Renewal Term Loan Commitment

	5.12	 	ERISA Compliance

	5.17	 	Take or Pay

	5.19	 	Purchasers of Production

	7.01	 	Existing Liens

	7.02	 	Investments

	7.04	 	Indebtedness

	7.11	 	Transactions With Affiliates

	10.02	 	Addresses for Notices to Borrower, Guarantors and Administrative Agent

	 	 	 

	EXHIBITS	 

	 
	Exhibit:

	 	Form of:
	A-1

	 	Borrowing Notice
	A-2

	 	Conversion/Continuation Notice
	A-3

	 	Repayment Notice
	B

	 	Renewal Term Loan Note
	C

	 	Assignment and Assumption






iv









 






THIRD AMENDED AND RESTATED CREDIT AGREEMENT




     THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of September 21, 2010,
between QUEST EASTERN RESOURCE LLC, a Delaware limited liability company, ROYAL BANK OF CANADA as
lender (together with any permitted successor or assign, “Lender”), and ROYAL BANK OF CANADA, as
Administrative Agent and Collateral Agent for Lender.



PRELIMINARY STATEMENTS




     A. Quest Resource Corporation, now known as PostRock Energy Services Corporation (the
“Original Borrower”, the Administrative Agent and Lender entered into a Credit Agreement dated as
of November 15, 2007 providing for an aggregate revolving credit facility of $50,000,000 (the
“Original Credit Agreement”).



     B. Pursuant to a Membership Interest Purchase Agreement dated as of June 5, 2008 between
PetroEdge Resources Partners, LLC, a Delaware limited liability company, as seller, and Original
Borrower, as buyer, on July 11, 2008 in consideration for the payment of $140 million the Original
Borrower acquired 100% of the limited liability company membership interest in PetroEdge Resources
(WV) LLC, a Delaware limited liability company. PetroEdge Resources (WV) LLC owned oil and gas
properties in Steuben County, New York, in Potter, Somerset and Lycoming Counties, Pennsylvania,
and in Braxton, Cabell, Calhoun, Doddridge, Gilmer, Kanawha, Lewis, Lincoln, Monongalia, Pleasants,
Putnam, Ritche, Wetzel and Wood Counties, West Virginia.



     C. Effective as of July 11, 2008, PetroEdge Resources (WV) LLC changed its name to Quest
Eastern Resource LLC.



     D. Pursuant to an Agreement for Purchase and Sale dated as of July 11, 2008 among Original
Borrower, Quest Eastern Resource LLC and Quest Cherokee, LLC, a Delaware limited liability company,
Quest Eastern Resource LLC agreed to sell its producing oil and gas properties to Quest Cherokee,
LLC for $70,000,000. Pursuant to an Assignment of Certain Lease Interests and Bill of Sale dated
as of July 11, 2008 among Quest Eastern Resource LLC, as assignor, and Quest Cherokee, LLC, as
assignee (the “Well Bore Assignment”), Quest Eastern Resource LLC conveyed and assigned to Quest
Cherokee, LLC all of its producing properties in Steuben County, New York, and in Braxton, Cabell,
Calhoun, Doddridge, Gilmer, Kanawha, Lewis, Lincoln, Monongalia, Pleasants, Putnam, Ritche, Wetzel
and Wood Counties, West Virginia.



     E. The Original Credit Agreement was amended and restated in its entirety by an Amended and
Restated Credit Agreement dated as of July 11, 2008 among the Original Borrower, Administrative
Agent and Lender (the “First Amended and Restated Credit Agreement”). Pursuant to the First
Amended and Restated Credit Agreement the outstanding balance of $35,000,000 owing under the
Original Credit Agreement was converted to a $35,000,000 term loan with a maturity date of July
11, 2010 (the “Original Term Loan”).



     F. Pursuant to a Guaranty dated July 11, 2008 (the “Quest Eastern Guaranty”), Quest Eastern
Resource LLC guaranteed the indebtedness of the Original Borrower under the First Amended and
Restated Credit Agreement. Additionally, Quest Eastern Resource LLC granted a mortgage lien to the
Administrative Agent for the benefit of the Lender on all of Quest Eastern Resource LLC’s oil and
gas properties remaining after giving effect to the Well Bore Assignment (other than the Steuben
County,



Quest Eastern Amended

and Restated Credit Agreement





1









 







New York oil and gas properties which were not mortgaged because of New York mortgage tax
considerations).




     G. In connection with a Fourth Amendment to the First Amended and Restated Credit Agreement,
dated as of May 29, 2009, in lieu of paying the 1% amendment fee payable in connection therewith,
the Original Borrower issued to Lender a $282,500.00 note dated May 29, 2009 with a maturity date
of July 11, 2010 evidencing a payment-in-kind loan in the same amount (the “First PIK Loan”).



     H. In connection with a Fifth Amendment to the First Amended and Restated Credit Agreement,
dated as of June 30, 2009, in lieu of paying a $25,000.00 amendment fee in connection therewith,
the Original Borrower issued to the Lender a $25,000.00 note dated June 30, 2009 with a maturity
date of July 11, 2010 evidencing a payment-in-kind loan in the same amount (the “Second PIK Loan”).



     I. In connection with a Fifth Amendment to the First Amended and Restated Credit Agreement,
dated as of June 30, 2009, in lieu of paying interest accrued on the indebtedness outstanding under
the First Amended and Restated Credit Agreement and due and payable on June 30, 2009, the Original
Borrower issued to Lender a $862,785.96 note dated June 30, 2009 with a maturity date of September
30, 2009 evidencing a loan in the same amount (the “Interest Deferral Loan”).



     J. The First Amended and Restated Credit Agreement was amended and restated in its entirety by
a Second Amended and Restated Credit Agreement dated as of September 11, 2009 among the Original
Borrower, Administrative Agent and Lender (the “Second Amended and Restated Credit Agreement”).
Pursuant to the Second Amended and Restated Credit Agreement, Lender agreed to advance up to an
additional $8,000,000 to the Original Borrower to fund the development by Quest Eastern Resource
LLC of three wells in Wetzel County, West Virginia pursuant to an Amended and Restated Farmout
Agreement dated January 13, 2009 but effective as of August 20, 2006 and to fund certain general
and administrative expenses, working capital and other corporate purposes of the Original Borrower
(the “Revolving O&G Development Loan”). The Revolving O&G Development Loan was non-interest
bearing but in consideration of the Revolving O&G Development Loan (i) the Original Borrower agreed
to pay on a deferred basis a $2,000,000 facility fee (the “2009 Facility Fee”) and (ii) Quest
Eastern Resource LLC granted to Lender a 2% overriding royalty interest on Quest Eastern Resource
LLC’s oil and gas properties and Quest Oil and Gas, LLC granted to Lender a 2% overriding royalty
interest on Quest Oil and Gas, LLC’s oil and gas properties.



     K. Pursuant to the Second Amended and Restated Credit Agreement, the maturity of the Revolving
O&G Development Loan, Interest Deferral Loan, First PIK Loan, and Second PIK Loan was extended to
October 9, 2010 and the maturity of the Original Term Loan (whose outstanding principal balance as
of September 11, 2009 was $28,250,000) was extended to January 11, 2012.



     L. The Original Borrower has requested that Lender in consideration for PEC (as hereafter
defined) entering into the Asset Sale Agreement (hereinafter defined) agree to (i) permit Quest
Eastern Resource LLC to assume, as borrower, the indebtedness owing under the Second Amended and
Restated Credit Agreement and in connection therewith to release (a) the Original Borrower from any
liability or obligation to repay amounts owing under the Second Amended and Restated Credit
Agreement and (b) each of Quest Mergersub, Inc., Quest Oil & Gas, LLC and Quest Energy Service, LLC
from their respective guarantees of the indebtedness owing under the Second Amended and Restated
Credit Agreement and from their respective mortgages and security agreements, (ii) renew, extend
and rearrange



Quest Eastern Amended

and Restated Credit Agreement





2









 







the indebtedness evidenced by the Original Term Loan, Revolving O&G Development Loan, Interest
Deferral Loan, First PIK Loan, and Second PIK Loan into a renewal term loan and lend an amount
equal to the unpaid 2009 Facility Fee resulting in a renewal term loan in the aggregate principal
amount of $43,760,206.42, which will bear interest and mature as herein provided, (iii) release the
liens on all the Collateral owned by the companies described in subsection (b) above, (iv) agree
upon an Approved Disposition to reconvey the ORRI’s to their respective grantors (or their
designees) respectively; and (v) amend and restated the Second Amended and Restated Credit
Agreement in its entirety, and Lender, subject to the terms and conditions set forth herein, has
agreed to the requests set forth in clauses (i)-(v) of this Preliminary Statement L and in
furtherance thereof the parties have agreed to amend and restate the Second Amended and Restated
Credit Agreement in its entirety.




     M. Administrative Agent and Lender agree upon the effectiveness of this Agreement to release
and discharge from any liability associated with the Indebtedness under this Agreement and under
the Loan Documents each of the Original Borrower, Quest Mergersub, Inc., Quest Energy Service, LLC
and Quest Oil & Gas, LLC (collectively with the Original Borrower, the “Restatement Date Released
Parties”).



     N. Borrower, Administrative Agent and Lender have agreed to amend and restate in its entirety
the Second Amended and Restated Credit Agreement on the terms and conditions set forth herein and
to renew, rearrange and extend the Indebtedness outstanding under the Second Amended and Restated
Credit Agreement (but not to repay or payoff such Indebtedness).



     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby agree that the Second Amended and Restated Credit Agreement is amended and
restated in its entirety to read as follows:



ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS




     1.01 Defined Terms.



     As used in this Agreement, the terms defined in the introductory paragraph hereof shall have
the meanings therein indicated and the following terms shall have the meanings set forth below:



     Administrative Agent means Royal Bank of Canada in its capacity as administrative agent under
any of the Loan Documents, or any successor administrative agent.



     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 Lender.



     Affiliate means, as to any Person, any other Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, such Person. A Person shall be
deemed to be controlled by any other Person if such other Person possesses, directly or indirectly,
power to direct or cause the direction of the management and policies of such Person whether by
contract or otherwise.



     Agent-Related Persons means the Administrative Agent (including any successor administrative
agent), the Collateral Agent (including any successor collateral agent) and their respective
Affiliates (including the officers, directors, employees, agents and attorneys-in-fact of such
Person).



Quest Eastern Amended

and Restated Credit Agreement





3









 








     Agreement means this Third Amended and Restated Credit Agreement.



     Applicable Rate means, from time to time, at the Borrower’s election either of the following
per annum rates: (i) the Eurodollar Rate plus 4%, or (ii) the Base Rate plus 3%.



     Approved Disposition means a Disposition of the limited liability company membership interest
in Borrower or of all or substantially all of the Oil and Gas Properties in a transaction permitted
under the Asset Sale Agreement.



     Asset Sale Agreement means that certain Asset Sale Agreement of even date herewith among PEC
and Lender providing that if pursuant to the Approved Disposition the limited liability company
membership interest in the Borrower or Oil and Gas Properties generate less than a specified amount
of Net Cash Proceeds, PEC will pay, either in cash or common stock of PEC or some combination of
both, a specified amount to the Lender.



     Assignment and Assumption means an Assignment and Assumption substantially in the form of
Exhibit C.



     Assumption Agreement means the Assumption Agreement, dated of even date herewith, by and
between PESC and the Borrower and consented to by the Lender, wherein the Borrower assumes all of
the obligations of PESC under the Second Amended and Restated Credit Agreement.



     Attorney Costs means and includes the reasonable fees and disbursements of any law firm or
other external counsel and the reasonable allocated cost of internal legal services and
disbursements of internal counsel.



     Authorizations means all filings, recordings, and registrations with, and all validations or
exemptions, approvals, orders, authorizations, consents, franchises, licenses, certificates, and
permits from, any Governmental Authority.



     Base Rate means for any day a fluctuating rate per annum equal to the greater of (a) the
Federal Funds Rate plus one-half of one percent (0.5%), and (b) the Prime Rate for such day. Any
change in the Base Rate due to a change in the Prime Rate or Federal Funds Rate shall be effective
automatically and without notice to Borrower or the Lender on the effective date of such change in
the Prime Rate or Federal Funds Rate, respectively.



     Base Rate Loan means a Loan that bears interest based on the Base Rate.



     Board means the Board of Governors of the Federal Reserve System of the United States.



     Borrower means Quest Eastern Resource LLC, a Delaware limited liability company, originally a
guarantor of the Indebtedness owing under the Second Amended and Restated Credit Agreement who has
assumed the Indebtedness owing under this Agreement pursuant to the Assumption Agreement.



     Borrowing means the borrowing of the Renewal Term Loan made by the Lender pursuant to Section
2.01 on the Restatement Date to renew, rearrange and extend the outstanding principal and accrued,
unpaid interest owing on the Original Term Loan, Revolving O&G Development Loan, Interest Deferral
Loan, First PIK Loan, and Second PIK Loan and to pay the 2009 Facility Fee.



Quest Eastern Amended

and Restated Credit Agreement





4









 








     Borrowing Notice means a notice of (a) the Borrowing, (b) a conversion of all or part of the
Renewal Term Loan from one Type to the other, or (c) a continuation of all or part of the Renewal
Term Loan as the same Type, pursuant to Section 2.02(a), which, if in writing, shall be
substantially in the form of Exhibit A-1 or A-2, as applicable.



     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 New York, or are in fact closed and, if such day
relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are
conducted by and between banks in the applicable offshore Dollar interbank market.



     Capital Lease means any capital lease or sublease which should be capitalized on a balance
sheet in accordance with GAAP.



     Cash Equivalents means:




     (a) United States Dollars;




     (b) direct general obligations, or obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest by, the United
States or any agency or instrumentality thereof having remaining maturities of not more than
thirteen (13) months, but excluding any such securities whose terms do not provide for
payment of a fixed dollar amount upon maturity or call for redemptions;




     (c) certificates of deposit and eurodollar-time deposits with remaining maturities of
thirteen (13) months or less, bankers acceptances with remaining maturities not exceeding
one hundred eighty (180) days, overnight bank deposits and other similar short term
instruments, in each case with any domestic commercial bank having capital and surplus in
excess of $250,000,000 and having a rating of at least “A2” by Moody’s or at least “A” by
S&P;




     (d) repurchase obligations with a remaining term of not more than thirteen (13) months
for underlying securities of the types described in (b) and (c) above entered into with any
financial institution meeting the qualifications in (c) above;




     (e) commercial paper (having remaining maturities of not more than two hundred seventy
(270) days) of any Person rated “P-1” or better by Moody’s or “A-1” or the equivalent by
S&P;




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




     (g) money market mutual or similar funds having assets in excess of $100,000,000, at
least 95% of the assets of which are comprised of assets specified in clause (a) through (f)
above, except that with respect to the maturities of the assets included in such funds the
requirements of clauses (a) through (f) shall not be applied to the individual assets
included in such funds but to the weighted-average maturity of all assets included in such
funds.



     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



Quest Eastern Amended

and Restated Credit Agreement





5









 







any Governmental Authority after the date of this Agreement or (c) compliance by the
Lender (or, for purposes of Section 3.04(b), by any Lending Office of the Lender or by the Lender’s
holding company) 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.




     Change of Control means (a) PESC shall fail to own, directly or indirectly, or fail to have
voting control over, 100% of the limited liability company membership interest in the Borrower
except in connection with (i) an Approved Disposition or (ii) a joint venture arrangement formed
between PESC and another Person, in which PESC continues to own at least forty percent (40%) of the
limited liability company membership interest in the Borrower, (b) any Person, entity or group
(other than PEC or White Deer Energy or its Affiliates) acquires beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act
of 1934) of 51% or more of the equity interests in PESC, or (c) a PEC Change of Control shall
occur.



     Code means the Internal Revenue Code of 1986.



     Collateral means (a) 100% of the limited liability company membership interest in Borrower
owned by PESC and (b) all property and interests in property and proceeds thereof now owned or
hereafter acquired by the Borrower in or upon which a Lien now or hereafter exists in favor of the
Lender, or the Administrative Agent or Collateral Agent on behalf of the Lender, including, but not
limited to substantially all of the Oil and Gas Properties and personal property of the Borrower,
whether under this Agreement or the Collateral Documents and delivered to the Administrative Agent,
Collateral Agent or the Lender.



     Collateral Agent means Royal Bank of Canada in its capacity as collateral agent under any of
the Loan Documents, or any successor collateral agent.



     Collateral Documents means each Mortgage, the Security Agreement and the Pledge Agreement.



     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.



     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 that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.



     Default Rate means an interest rate equal to (a) the Base Rate plus (b) the Applicable Rate,
if any, applicable to Base Rate Loans plus (c) 2% per annum; provided, however, that with respect
to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate
(including any
Applicable Rate) otherwise applicable to such Eurodollar Rate Loan plus 2% per annum, in each
case to the fullest extent permitted by applicable Laws.



     Deferred Payment Amount has the meaning set forth in the Asset Sale Agreement.



Quest Eastern Amended

and Restated Credit Agreement





6









 








     Disposition or Dispose means the sale (excluding the sale of inventory in the ordinary course
of business), transfer, license or other disposition (including any sale and leaseback transaction)
of any property (including stock, partnership and other equity interests but excluding sale of
inventory in the ordinary course of business) by any Person of property owned by such 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. For the avoidance of doubt,
an Approved Disposition is a Disposition.



     Dollar and $ means lawful money of the United States.



     Eligible Assignee means (a) an Affiliate of a Lender, and (b) any other Person (other than a
natural Person) approved by the Administrative Agent and, unless an Event of Default has occurred
and is continuing, the Borrower (the Borrower’s approval not to be unreasonably withheld,
conditioned or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not
include the Borrower, or any of its Affiliates.



     Environmental Law means any applicable Law that relates to (a) the condition or protection of
air, groundwater, surface water, soil, or other environmental media, (b) the environment, including
natural resources or any activity which affects the environment, (c) the regulation of any
pollutants, contaminants, wastes, substances, and Hazardous Substances, including, without
limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
§9601 et seq.) (“CERCLA”), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Federal Water
Pollution Control Act, as amended by the Clean Water Act (33 U.S.C. § 1251 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), the Emergency Planning and
Community Right to Know Act of 1986 (42 U.S.C. § 1100 1 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. § 1801 et seq.), the National Environmental Policy Act of 1969 (42
U.S.C. § 4321 et seq.), the Oil Pollution Act (33 U.S.C. § 2701 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. § 6901 et seq.), the Rivers and Harbors Act (33 U.S.C. §401 et seq.),
the Safe Drinking Water Act (42 U.S.C. § 201 and § 300f et seq.), the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984 (42 U.S.C. § 6901 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601
et seq.), and analogous state and local Laws, as any of the foregoing may have been and may be
amended or supplemented from time to time, and any analogous enacted or adopted Law, or (d) the
Release or threatened Release of Hazardous Substances.



     ERISA means the Employee Retirement Income Security Act of 1974 and any regulations issued
pursuant thereto.



     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 of this Agreement relating to obligations imposed under
Section 412 of the Code).



     ERISA Event means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by
the Borrower 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 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



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Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute 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 PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower.




     Escrowed Amount has the meaning set forth in the Asset Sale Agreement.



     Eurodollar Rate means for any Interest Period with respect to any Eurodollar Rate Loan, a rate
per annum described below:




     (a) the rate per annum equal to the rate determined by the Administrative Agent to be
the offered rate that appears on the page of the LIBOR I screen (or any successor thereto)
that displays an average British Bankers Association Interest Settlement Rate for deposits
in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, or




     (b) if the rate referenced in the preceding subsection (a) is not available, the rate
per annum determined by the Administrative Agent as the rate of interest (rounded upward to
the next 1/100th of 1%) at which deposits in Dollars for delivery on the first day of such
Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan
being made, continued or converted by the Administrative Agent and with a term equivalent to
such Interest Period would be offered by the Administrative Agent’s London Branch to major
banks in the offshore Dollar market at their request at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period.



     Eurodollar Rate Loan means a Loan that bears interest at a rate based on the Eurodollar Rate.



     Event of Default means any of the events or circumstances specified in Article VIII.



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



     FA Costs means and includes the reasonable fees and disbursements of any financial advisory or
consulting firm to Lender or the Administrative Agent.



     Federal Funds Rate means, for any day, the rate per annum (rounded upwards to the nearest
1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the next succeeding
Business Day, and (b) if no such rate
is so published on such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate charged to the Administrative Agent on such day on such transactions as
determined by the Administrative Agent.



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     First Amended and Restated Credit Agreement has the meaning set forth in Preliminary Statement
E.



     First PIK Loan has the meaning set forth in Preliminary Statement G.



     Foreign Lender means the Lender if it 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.



     G&A Formula means the Modified Massachusetts Formula, which establishes a three-part factor
using assets, payroll (labor/headcount), and revenue to allocate general and administrative
expenses. The G&A Formula will be adjusted annually subsequent to PEC’s annual audit and applied
to the entire year following such audit. For the remainder of 2010, general and administrative
expenses will be allocated based on the G&A formula for the first seven months of 2010. The
applicable percentages are 2.4% to Borrower; 15.5% to PostRock KPC Pipeline, LLC and 82.1% to
PESC.



     GAAP means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board and the
Public Company Accounting Oversights Board or such other principles as may be approved by a
significant segment of the accounting profession, that are applicable to the circumstances as of
the date of determination, consistently applied.



     Governmental Authority means any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative
tribunal, central bank or other legal entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.



     Guaranty Obligation means, as to any Person, (a) any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other
payment obligation of 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 or other payment
obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring
the obligee in respect of such Indebtedness or other payment obligation of the payment of such
Indebtedness or other payment obligation, (iii) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other payment obligation, or (iv) entered into for the purpose
of assuring in any other manner the obligees in respect of such Indebtedness or other payment
obligation of the payment thereof or to protect such obligees against loss in respect thereof (in
whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other
payment obligation of any other Person, whether or not such Indebtedness or other payment
obligation is assumed by such Person; provided, however, that the term “Guaranty Obligation” shall
not include endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guaranty Obligation shall be deemed to be the lesser of (a) an amount
equal to the stated or determinable outstanding amount of the related primary obligation
and (b) the maximum amount for which such guaranteeing Person may be liable pursuant to the
terms of the instrument embodying such Guaranty Obligation, unless the outstanding amount of such
primary obligation and the maximum amount for which such guaranteeing Person may be liable are not
stated or



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determinable, in which case the amount of such Guaranty Obligation shall be the maximum
reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in
good faith.




     Hazardous Substance means any substance that poses a threat to, or is regulated to protect,
human health, safety, public welfare, or the environment, including without limitation: (a) any
“hazardous substance,” “pollutant” or “contaminant,” and any “petroleum” or “natural gas liquids”
as those terms are defined or used under Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ( 42 U.S.C. §§ 9601 et seq.) (CERCLA), (b)
“solid waste” as defined by the federal Solid Waste Disposal Act (42 U. S.C. § § 6901 et seq.), (c)
asbestos or a material containing asbestos, (d) any material that contains lead or lead-based
paint, (e) any item or equipment that contains or is contaminated by polychlorinated biphenyls, (f)
any radioactive material, (g) urea formaldehyde, (h) putrescible materials, (i) infectious
materials, (j) toxic microorganisms, including mold, or (k) any substance the presence or Release
of which requires reporting, investigation or remediation under any Environmental Law.



     Hydrocarbons means crude oil, condensate, natural gas, natural gas liquids, coal bed methane
and other hydrocarbons and all products refined or separated therefrom.



     Indebtedness means, as to any Person at a particular time, all of the following:




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




     (b) the face amount of all letters of credit (including standby and commercial),
banker’s acceptances, surety bonds, and similar instruments issued for the account of such
Person, and, without duplication, all drafts drawn and unpaid thereunder;




     (c) whether or not so included as liabilities in accordance with GAAP, all obligations
of such Person to pay the deferred purchase price of property or services, other than trade
accounts payable in the ordinary course of business not overdue by more than 90 days, and
Indebtedness of others (excluding prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person, whether or not such Indebtedness shall have been
assumed by such Person or is limited in recourse;




     (d) all obligations of such Person under conditional sales or other title retention
agreements relating to property acquired by such Person;




     (e) Capital Leases and Synthetic Lease Obligations of such Person; and




     (f) all Guaranty Obligations of such Person in respect of any of the foregoing.



     For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner, unless such Indebtedness is
expressly made non-recourse to such Person except for customary exceptions acceptable to the
Required Lenders. The amount of any Capital Lease or Synthetic Lease Obligation as of any date
shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.
In addition, the
determination of Indebtedness of the Borrower and/or its Subsidiaries shall be made on a
consolidated basis without taking into account any Indebtedness owed by any such Person to any
other such Person.



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     Indemnified Liabilities has the meaning set forth in Section 10.05.



     Indemnitees has the meaning set forth in Section 10.05.



     Interest Deferral Loan has the meaning set forth in Preliminary Statement I.



     Interest Payment Date means, (a) as to a Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Eurodollar Rate Loan occurring on or after March 31, 2011; provided,
however, that if any Interest Period for a Eurodollar Rate Loan occurring on or after March 31,
2011 exceeds three months, the respective dates that fall every three months after the beginning of
such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the
last Business Day of each March, June, September and December, commencing March 31, 2011, and the
Maturity Date.



     Interest Period means, as to each Eurodollar Rate Loan, the period commencing on the date such
Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending
on the date one, two, three or six months thereafter, as selected by the Borrower in its Borrowing
Notice; provided that:




     (i) any Interest Period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar
Rate Loan, such Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day;




     (ii) any Interest Period pertaining to a Eurodollar Rate Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month at the end of such Interest Period; and




     (iii) no Interest Period shall extend beyond the Maturity Date.



     Investment means, as to any Person, any acquisition or investment by such 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, guaranty of Indebtedness of, or purchase or
other acquisition of any other Indebtedness or equity participation or interest in, another Person,
including any partnership or joint venture interest in 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, less all returns of principal or equity thereon, and shall, if made by
the transfer or exchange of property other than cash be deemed to have been made in an amount equal
to the fair market value of such property.



     IRS means the United States Internal Revenue Service.



     ISDA means the International Swaps and Derivatives Association, Inc.



     JOA means, collectively, each joint operating agreement to which Borrower is a party with
respect to any of its Oil and Gas Properties.



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     Laws means, collectively, all applicable international, foreign, federal, state and local
statutes, treaties, rules, 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, licenses, authorizations and permits of, any Governmental
Authority.



     Leases means oil and gas leases and all oil, gas and mineral leases constituting any part of
the Oil and Gas Properties.



     Lender has the meaning specified in the introductory paragraph hereto.



     Lending Office means, as to Lender, such other office or offices as the Lender may from time
to time notify the Borrower and the Administrative Agent.



     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 of any kind or nature whatsoever to secure or provide for payment of any
obligation of any Person (including any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the Uniform Commercial Code or comparable Laws of any
jurisdiction, other than any financing statement filed as a notice filing), including the interest
of a purchaser of accounts receivable.



     Loan Documents means this Agreement, the Renewal Term Loan Note, each of the Collateral
Documents, the Asset Sale Agreement and each other agreement, document or instrument delivered by
the Borrower from time to time in connection with this Agreement and the Note.



     Loan means the Renewal Term Loan and, with respect to all or a portion thereof, its Type as a
Base Rate Loan or Eurodollar Rate Loan.



     Marketable Title means good and indefeasible title, free and clear of all Liens other than
Permitted Liens.



     Margin Regulations means Regulations U, T and X of the Board.



     Material Adverse Effect means: (a) a material adverse change in, or a material adverse effect
upon, the operations, business, properties or financial condition of the Borrower; (b) a material
adverse effect on the ability of Borrower to perform its obligations under the Loan Documents to
which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect
or enforceability against the Borrower of the Loan Documents, except to the extent that any such
change or effect arises or results from (A) changes in general economic, capital market, regulatory
or political conditions or changes in Law or accounting policies or the interpretation thereof, (B)
changes that affect generally the industries in which the Borrower is engaged, (C) any changes or
fluctuations in the prices of oil, natural gas or any other commodity, or (D) any war, act of
terrorism, civil unrest, acts of God or similar events occurring after the Restatement Date;
provided however, that with respect to each case described in (a)-(c) foregoing, Material Adverse
Effect shall take into account the impact of the White Deer Energy
Investment and the closing of the transactions occurring contemporaneously with this Agreement
and shall exclude events that have been the subject of public filings of PEC or of which Lender
otherwise has knowledge.



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     Maturity Date means June 30, 2013.



     Maximum Amount and Maximum Rate respectively mean, for the Lender, the maximum non-usurious
amount and the maximum non-usurious rate of interest which, under applicable Law, the Lender is
permitted to contract for, charge, take, reserve, or receive on the Obligations.



     Midstream Business means gathering, transportation, fractionation, processing, marketing, and
storage of natural gas, crude oil, natural gas liquids and other liquid and gaseous hydrocarbons
and businesses closely related to the foregoing.



     Moody’s means Moody’s Investors Service, Inc.



     Mortgaged Properties means collectively all the Mortgaged Property as defined in the Mortgages
and Mortgaged Property individually means any one of such Mortgaged Properties.



     Mortgages means the mortgages, deeds of trust, or similar instruments executed by the Borrower
in favor of Administrative Agent or Collateral Agent, for the benefit of the Lender, and all
supplements, assignments, amendments, and restatements thereto (or any agreement in substitution
therefor) and Mortgage means each of such Mortgages.



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



     Net Cash Proceeds means with respect to any Disposition, cash (including any cash received by
way of Deferred Payment Amount as and when received or by release of an Escrowed Amount as and when
received) received by the Borrower in connection with and as consideration therefor, on or after
the date of consummation of such transaction, net of (i) an amount equal to any intercompany loans
made by PESC to Borrower after the Restatement Date and prior to the date of the Disposition; (ii)
all legal, accounting, investment banking, title and recording tax expenses, commissions and other
fees and expenses incurred including, without limitation, the commission to be paid to Robert W.
Baird & Company under a contract with PEC in which Robert W. Baird & Company is to solicit bids for
a sale of the Marcellus Assets (or 100% of the equity of the Borrower), and all federal, state,
provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP (after
taking into account any available tax credits or deductions and any tax sharing agreements), as a
consequence of such Disposition; (iii) all payments made on any Indebtedness (other than the
Indebtedness governed by this Agreement and the other Loan Documents) which is secured by any
assets subject to such Disposition, in accordance with the terms of any Lien upon such assets, or
which must by its terms, or in order to obtain a necessary consent to such Disposition, or by
applicable Law be repaid out of the proceeds from such Disposition; (iv) all distributions and
other payments required to be made to minority interest holders or joint ventures or to holders of
royalty or similar interests as a result of such Disposition; (v) appropriate amounts to be
provided by the seller as a reserve, in accordance with GAAP against any liabilities associated
with the assets disposed of in such Disposition and retained by the Borrower after such
Disposition; (vi) any Escrowed Amount, and (vii) any Deferred Payment Amount.



     Note means the Renewal Term Loan Note.



     Obligations means all advances to, and debts, liabilities, obligations, covenants and duties
of, the Borrower arising under the Loan Document, whether direct or indirect (including those
acquired by



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assumption), absolute or contingent, due or to become due, now existing or hereafter
arising and including interest that accrues after the commencement by or against the Borrower of
any proceeding under any Debtor Relief Laws naming the Borrower as the debtor in such proceeding.




     Oil and Gas Properties means fee, leasehold or other interests in or under mineral estates or
Hydrocarbon leases with respect to properties situated in the United States owned by the Borrower,
including overriding royalty and royalty interests, leasehold estate interests, net profits
interests, production payment interests and mineral fee interests, together with contracts executed
in connection therewith and all tenements, hereditaments, appurtenances and properties, real or
personal, appertaining, belonging, affixed or incidental thereto.



     Organization Documents means, (a) with respect to any corporation, the certificate or articles
of incorporation and the bylaws; (b) with respect to any limited liability company, the certificate
of formation 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 and any agreement, instrument, filing or notice with respect thereto filed in connection
with its formation with the secretary of state or other department in the state of its formation,
in each case as amended from time to time.



     Original Borrower has the meaning set forth in Preliminary Statement A.



     Original Credit Agreement has the meaning set forth in Preliminary Statement A.



     Original Term Loan has the meaning set forth in Preliminary Statement E.



     ORRI means those certain conveyances of overriding royalty interests by the Borrower and Quest
Oil and Gas, LLC to the Lender.



     Other Taxes has the meaning specified in Section 3.01(b).



     Outstanding Amount on any date means the outstanding principal amount of the Renewal Term
Loan.



     Participant has the meaning specified in Section 10.07(d).



     PBGC means the Pension Benefit Guaranty Corporation.



     PEC means PostRock Energy Corporation, a Delaware corporation.



     PEC Change of Control means the acquisition by any Person (other than White Deer Energy or its
Affiliates), or two or more Persons acting in concert, of beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934)
of 50% or more of the outstanding shares of, and warrants relating to, Voting Stock of PEC;
provided, however, that a merger of PEC into another entity in which the other entity is the
survivor shall not be deemed a PEC Change of Control if PEC’s stockholders of record as constituted
immediately prior to
such acquisition hold more than 50% of the outstanding shares of, and warrants relating to,
Voting Stock of the surviving entity; provided further, however, that in no event will the issuance
of new equity by PEC result in a PEC Change of Control.



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



     Permitted Liens means Liens permitted under Section 7.01 as described in such Section.



     Person means any individual, trustee, corporation, general partnership, limited partnership,
limited liability company, joint stock company, trust, unincorporated organization, bank, business
association, firm, joint venture or Governmental Authority.



     PESC means PostRock Energy Services Corporation, a Delaware corporation.



     Plan means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA)
established by the Borrower or any ERISA Affiliate.



     Pledge Agreement means the pledge agreement executed by PESC in favor of the Administrative
Agent and the Collateral Agent for the benefit of the Lender pledging 100% of the limited liability
company membership interest in Borrower, in form and substance acceptable to the Administrative
Agent, and all supplements, assignments, amendments, and restatements thereto (or any agreement in
substitution therefor).



     Prime Rate means for any day, the rate of interest in effect for such day as publicly
announced from time to time by the Administrative Agent as its U.S .“prime rate.” Such rate is a
rate set by the Administrative Agent based upon various factors including the Administrative
Agent’s costs and desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below such announced
rate.



     Proved Reserves means Proved Reserves as defined in the Definitions for Oil and Gas reserves
promulgated by the Society of Petroleum Engineers (or any generally recognized successor) as in
effect at the time in question.



     PV10 means the present worth of future net revenue, discounted to present value at the simple
interest rate of ten percent (10%) per year.



     Quest Eastern Guaranty has the meaning set forth in Preliminary Statement F.



     Related Parties means, with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person and such Person’s
Affiliate.



     Release means any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, disposal, deposit, dispersal, migrating, or other movement
into the air, ground, or surface water, or soil.



     Renewal Term Loan means an extension of credit by the Lender to the Borrower pursuant to
Section 2.01 of this Agreement.



     Renewal Term Loan Commitment means an amount equal to $43,760,206.42.



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     Renewal Term Loan Note means that certain promissory note in the original principal amount of
$43,760,206.42 dated of even date herewith, from Borrower payable to the order of Lender evidencing
the Renewal Term Loan.



     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.



     Repayment Notice means a notice of repayment of a Borrowing pursuant to Section 2.03(a),
which, if in writing, shall be substantially in the form of Exhibit A-3.



     Reserve Report means a report regarding the Proved Reserves attributable to the Oil and Gas
Properties, using the criteria and parameters required by and acceptable to the SEC and
incorporating the present cost of appropriate plugging and abandonment obligations to be incurred
in the future, taking into account any plugging and abandonment fund required to be accrued or
established by Borrower out of cash flow from the Oil and Gas Properties covered by such report
with respect to such future obligations.



     Responsible Officer means the president, chief executive officer, executive vice president,
senior vice president, vice president, chief financial officer, controller, treasurer or assistant
treasurer of Borrower or PESC, as applicable. Any document delivered hereunder that is signed by a
Responsible Officer of Borrower or PESC, as applicable, shall be conclusively presumed to have
been authorized by all necessary limited liability company and/or other action on its part and such
Responsible Officer shall be conclusively presumed to have acted on behalf of Borrower or PESC, as
applicable.



     Restatement Date means the date upon which all the conditions precedent in Section 4.01 have
been complied with or waived by Administrative Agent and this Agreement has been executed by
Borrower, the Lender and the Administrative Agent at which time it shall replace, amend and restate
the Second Amended and Restated Credit Agreement in its entirety.



     Restatement Date Released Parties has the meaning set forth in Preliminary Statement M.



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



     Restructure Transactions means the series of corporate transactions involving PESC and
Affiliates of PESC concluding on the date of this Agreement that includes the amendment of the
relevant Organization Documents and the amendment or termination of various agreements that relate
to the entities and their intercompany transactions or are impacted by such corporate transactions,
including the White Deer Energy Investment in PEC occurs.



     Revolving O&G Development Loan has the meaning set forth in Preliminary Statement J.



     Rights means rights, remedies, powers, privileges, and benefits.



     S&P means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.



     SEC means the Securities and Exchange Commission.



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     Second Amended and Restated Credit Agreement has the meaning set forth in Preliminary
Statement J.



     Second PIK Loan has the meaning set forth in Preliminary Statement H.



     Security Agreement means the pledge and security agreements executed by the Borrower in favor
of the Administrative Agent and the Collateral Agent for the benefit of the Lender, in form and
substance acceptable to the Administrative Agent, and all supplements, assignments, amendments, and
restatements thereto (or any agreement in substitution therefor).



     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
indirectly through one or more intermediaries, or both, by such Person.



     Swap Contract means (a) any and all interest 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 (any such master
agreement, together with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.



     Synthetic Lease Obligation means the monetary obligation of a Person under (a) a so-called
synthetic 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 are
depreciated for tax purposes by such Person.



     Taxes has the meaning set forth in Section 3.01(a).



     Transfer Payments by Borrower means any payment for services or materials or payment for or on
account of (i) costs or expenses directly incurred by PESC, and (ii) reimbursement of costs or
expenses including in connection with any contractual arrangement, tax sharing arrangement, general
and administrative overhead sharing arrangement or other agreement.



     2009 Facility Fee has the meaning set forth in Preliminary Statement J.



     Type means, with respect to all or a portion of the Renewal Term Loan, its character as a Base
Rate Loan or a Eurodollar Rate Loan.



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     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 or U.S. means the United States of America, its fifty states and the District of
Columbia.



     Voting Stock means the capital stock (or equivalent thereof) of any class or kind, of a
Person, the holders of which are entitled to vote for the election of directors, managers, or other
voting members of the governing body of such Person.



     Well Bore Assignment has the meaning set forth in Preliminary Statement D.



     White Deer Energy means any one or more of White Deer Energy L.P. a Cayman Islands exempted
limited partnership, White Deer Energy TE L.P., and White Deer Energy FI L.P.



     White Deer Energy Investment means the purchase, on or prior to the date hereof, by White Deer
Energy of shares of Series A Cumulative Redeemable Preferred Stock issued by PEC, together with
warrants to purchase common stock and Series B Preferred Stock, for at least $50,000,000 as an
initial investment, with White Deer Energy reserving $30,000,000 of additional capital to be
invested in equity of PEC under the terms and conditions of that certain Securities Purchase
Agreement, by and among PEC and White Deer Energy.



     1.02 Other Interpretive Provisions.



     (a) The meanings of defined terms are equally applicable to the singular and plural forms of
the defined terms.



     (b) (i) The words “herein” and “hereunder” and words of similar import when used in the Loan
Document shall refer to such Loan Document as a whole and not to any particular provision thereof.




     (ii) Unless otherwise specified herein, Article, Section, Exhibit and Schedule
references are to this Agreement.




     (iii) The term “including” is by way of example and not limitation.




     (iv) The term “documents” includes any and all instruments, documents, agreements,
certificates, notices, reports, financial statements and other writings, however evidenced.



     (c) 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.”



     (d) 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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     1.02 References to Agreements and Laws. Unless otherwise expressly provided herein, (a) references
to agreements (including the Loan Documents) and other contractual instruments shall be deemed to
include all subsequent amendments, restatements, extensions, supplements and other modifications
thereto, but only to the extent that such amendments, restatements, extensions, supplements and
other modifications are not prohibited by the Loan Document; and (b) references to any Law shall
include all statutory and regulatory provisions consolidating, amending, replacing, supplementing
or interpreting such Law.



ARTICLE II.

RENEWAL TERM LOAN




     2.01 Renewal Term Loan. The Renewal Term Loan is a renewal, extension and rearrangement of the
indebtedness evidenced by the Original Term Loan, the Revolving O&G Development Loan, the Interest
Deferral Loan, the First PIK Loan, and the Second PIK Loan outstanding as of the Restatement Date
and evidences the payment of the 2009 Facility Fee and Deferred Interest. It does not include the
accrued overriding royalties. The Borrower and Lender acknowledge that as of the Restatement Date
the amounts owing under such loans are as follows:



	 	 	 	 	 
	 	 	Outstanding amount or principal and accrued and
	Obligation	 	unpaid interest, if any
	Original Term Loan
	 	$	28,250,000.00	 
	Revolving O&G Development Loan
	 	$	7,300,000.00	 
	Interest Deferral Loan
	 	$	862,785.96	 
	First PIK Loan
	 	$	282,500.00	 
	Second PIK Loan
	 	$	25,000.00	 
	2009 Facility Fee
	 	$	2,000,000.00	 
	Deferred Interest
	 	$	5,039,920.46	 
	Accrued overriding royalties
	 	$	29,000.00	 





From and after the Restatement Date, interest shall accrue on the Renewal Term Loan at the
Applicable Rate, as further provided in Section 2.05. Interest may accrue on the Renewal Term Loan
at the Base Rate or Eurodollar Rate, as further provided herein.




     2.02 Initial Funding of the Renewal Term Loan, Conversions and Continuations Thereof Loans.



     (a) The initial funding of the Renewal Term Loan on the Restatement Date, each conversion of
all or a portion of the Renewal Term Loan from one Type to the other, and each continuation of all
or a portion of the Renewal Term Loan as the same Type shall be made upon the Borrower’s
irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice
must be received by the Administrative Agent not later than noon, New York time, (i) three Business
Days prior to the



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conversion to or continuation of Eurodollar Rate Loans, and (ii) one Business Day
prior to the conversion of Eurodollar Rate Loans to Base Rate Loans, or the requested date of the
initial funding of the Renewal Term Loan on the Restatement Date as a Base Rate Loan. Each such
telephonic notice must be confirmed promptly by delivery to the Administrative Agent of a written
Borrowing Notice, appropriately completed and signed by a Responsible Officer of the Borrower. The
conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $1,000,000
or a whole multiple of $1,000,000 in excess thereof. The Borrowing on the Restatement Date as a
Base Rate Loan shall be in the amount of the Renewal Term Loan Commitment and any conversion to
Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $10,000 in
excess thereof. Each Borrowing Notice (whether telephonic or written) shall specify (i) whether
the Borrower is requesting a Borrowing on the Restatement Date, a conversion of all or a portion of
the Renewal Term Loan from one Type to the other, or a continuation of all or a portion of the
Renewal Term Loan as the same Type, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the principal amount to be
borrowed, converted or continued, (iv) the Type of Loans to be borrowed or converted, and (v) if
applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to
specify a Type of Loan in a Borrowing Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Loan shall be made or continued as, or
converted to, a Base Rate Loan. Any such automatic conversion to a Base Rate Loan shall be
effective as of the last day of the Interest Period then in effect with respect to the applicable
Eurodollar Rate Loan. If the Borrower requests a Borrowing of, conversion to, or continuation of a
Eurodollar Rate Loan in any such Borrowing Notice, but fails to specify an Interest Period, it will
be deemed to have specified an Interest Period of one month.




     (b) Following receipt of a Borrowing Notice, the Administrative Agent shall promptly notify
the Lender of the applicable Borrowing, conversion or continuation, and if no timely notice of a
conversion or continuation is provided by the Borrower, the Administrative Agent shall notify the
Lender of the details of any automatic conversion to a Base Rate Loan described in the preceding
subsection. In the case of the Borrowing on the Restatement Date, the Lender shall be deemed to
have made the amount of its Renewal Term Loan available to the Borrower by making appropriate book
entries to show the Original Term Loan, Revolving O&G Development Loan, First PIK Loan, Second PIK
Loan and Interest Deferral Loan to have been refinanced in full and the Facility Fee has been paid
in full.



     (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted
only on the last day of the Interest Period for such Eurodollar Rate Loan. During the existence of
an Event of Default, no Loan may be converted to or continued as Eurodollar Rate Loan without the
consent of the Lender, and the Lender may demand that all or any portion of the then
outstanding Eurodollar Rate Loan be converted immediately to a Base Rate Loan. The Administrative
Agent shall promptly notify the Borrower and the Lender of the interest rate applicable to any
Eurodollar Rate Loan upon determination of such interest rate. The determination of the Eurodollar
Rate by the Administrative Agent shall be conclusive in the absence of manifest error.



     (d) After giving effect to the initial funding of the Renewal Term Loan, all conversions of
the Renewal Term Loan from one Type to the other, and all continuations of the Renewal Term Loan as
the same Type, there shall not be more than two (2) Interest Periods in effect at any given time
with respect to the Renewal Term Loan.



     2.03 Prepayments.



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     (a) Optional Prepayments. The Borrower may, upon delivery of a Repayment Notice to
the Administrative Agent, at any time or from time to time voluntarily prepay in whole or in part
the Renewal Term Loan outstanding hereunder without premium or penalty; provided that (i) such
notice must be received by the Administrative Agent not later than noon, New York time, (A) three
Business Days prior to any date of prepayment of Eurodollar Rate Loans, and (B) the date of
prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal
amount of $1,000,000 or a whole multiple of $250,000 in excess thereof; and (iii) any prepayment of
Base Rate Loans shall be in a principal amount of $25,000 or a whole multiple of $25,000 in excess
thereof; provided that any prepayment may be in an aggregate amount that is equal to the entire
Outstanding Amount of the Renewal Term Loan. Each such notice shall specify the date and amount of
such prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly
notify the Lender of its receipt of each such notice. The Borrower shall make such prepayment and
the payment amount specified in such notice shall be due and payable on the date specified therein.
Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon,
together with any additional amounts required pursuant to Section 3.05.



     (b) Mandatory Prepayments.




     (i) Dispositions. If any Net Cash Proceeds are received by the
Borrower from one or more Dispositions but excluding any Disposition permitted by
Section 7.07(a) and Section 7.07(c)), the Borrower shall immediately upon receipt of
such Net Cash Proceeds repay the Obligations in an aggregate amount equal to 100% of
such Net Cash Proceeds. Contemporaneously with such repayment, any amount payable
by PEC to Lender pursuant to the Asset Sale Agreement will be paid (or in the case
of the issuance of stock of PEC, delivered) to the Administrative Agent. If an
Approved Disposition has occurred and PEC has performed its obligations under the
Asset Sale Agreement, then Lender shall forgive any amount hereunder remaining
unpaid.




     (ii) Insurance Proceeds. If pursuant to Section 6.07(b) any payments
in excess of $1,000,000 are received by the Borrower in connection with any casualty
insurance policy and the Administrative Agent elects to apply any portion of such
payment as a mandatory prepayment of the Renewal Term Loan, Borrower shall
immediately upon receipt of such insurance proceeds repay the Obligations in an
aggregate amount equal to such portion in accordance with Section 6.07(b).



     (c) Prepayments: Interest/Consequential Loss. All prepayments under Section 2.03(a)
shall be made together with accrued interest to the date of such prepayment on the principal amount
prepaid.



     2.04 Repayment of Renewal Term Loan. The Borrower shall repay to the Lender on the Maturity
Date the Renewal Term Loan, including all interest accrued on the Renewal Term Loan.



     2.05 Interest.



     (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall
bear interest on the outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate and (ii) each
Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate



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     (b) If any amount payable by Borrower under the Loan Document is not paid when due (after
giving effect to any applicable grace periods), whether at stated maturity by acceleration or
otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at
all times equal to the Default Rate, but in no event to exceed the Maximum Rate. Furthermore,
while any Event of Default exists or after acceleration of the Renewal Term Loan (i) the Borrower
shall pay interest on the principal amount of all outstanding Obligations at a fluctuating interest
rate per annum at all times equal to the Default Rate, but in no event to exceed the Maximum Rate,
and (ii) accrued and unpaid interest on past due amounts (including interest on past due interest,
to the extent allowed by Law) shall be due and payable upon demand.



     (c) Interest on the Renewal Term Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified herein. Interest
hereunder shall be due and payable in accordance with the terms hereof before and after judgment,
and before and after the commencement of any proceeding under any Debtor Relief Law.



     (d) If the designated rate applicable to the Renewal Term Loan exceeds the Maximum Rate, the
rate of interest on such Loan shall be limited to the Maximum Rate, but any subsequent reductions
in such designated rate shall not reduce the rate of interest thereon below the Maximum Rate until
the total amount of interest accrued thereon equals the amount of interest which would have accrued
thereon if such designated rate had at all times been in effect. In the event that at maturity
(stated or by acceleration), or at final payment of the Outstanding Amount of the Renewal Term
Loan, the total amount of interest paid or accrued is less than the amount of interest which would
have accrued if such designated rates had at all times been in effect, then, at such time and to
the extent permitted by Law, the Borrower shall pay an amount equal to the difference between (a)
the lesser of the amount of interest which would have accrued if such designated rates had at all
times been in effect and the amount of interest which would have accrued if the Maximum Rate had at
all times been in effect, and (b) the amount of interest actually paid or accrued on such
Outstanding Amount.



     2.06 Computation of Interest. Computation of interest on Base Rate Loans shall be calculated on the basis of a year of 365 or
366 days, as the case may be, and the actual number of days elapsed. Computation of interest on
Eurodollar Rate Loans shall be calculated on the basis of a year of 360 days and the actual number
of days elapsed, which results in a higher yield to the payee thereof than a method based on a year
of 365 or 366 days. Interest shall accrue on each Loan for the day on which the Loan is made, and
shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion
is paid; provided that any Loan that is repaid on the same day on which it is made shall bear
interest for one day.



     2.07 Evidence of Debt. The Renewal Term Loan made by the Lender shall be evidenced by one or more
accounts or records maintained by the Lender and by the Administrative Agent in the ordinary course
of business. The accounts or records maintained by the Administrative Agent and the Lender shall
be conclusive absent manifest error of the amount of the Loans made by the Lender to the Borrower
and the interest and payments thereon. Any failure so to record or any error in doing so shall
not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Loans. In the event of any conflict between the accounts and records
maintained by the Lender and the accounts and records of the Administrative Agent in respect of
such matters, the accounts and records of the Lender shall control absent manifest error. Upon the
request of the Lender made through the Administrative Agent, the Renewal Term Loan may be evidenced
by a promissory note.



     2.08 Payments Generally.



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     (a) Subject to Sections 2.04 and 2.05, all payments to be made by the Borrower shall be made
without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the
Administrative Agent, for the account of the Lender, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than noon, New York time, on the date
specified herein. The Administrative Agent will promptly distribute to the Lender such payment in
like funds as received by wire transfer to the Lender’s Lending Office. All payments received by
the Administrative Agent after noon, New York time, shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue.



     (b) Subject to the definition of “Interest Period,” if any payment to be made by the Borrower
shall come due on a day other than a Business Day, payment shall be made on the next following
Business Day, and such extension of time shall be reflected in computing interest or fees, as the
case may be..



     (c) If no Event of Default exists and if no order of application is otherwise specified in the
Loan Documents, payments and prepayments of the Obligations shall be applied first to accrued
interest then due and payable on the Outstanding Amount of the Renewal Term Loan and then to the
remaining Obligations in the order and manner as Borrower may direct.



     (d) If at any time insufficient funds are received by and available to the Administrative
Agent to pay fully the Obligations, or if an Event of Default exists, any payment or prepayment
shall be applied in the following order: (i) to the payment of enforcement expenses incurred by the
Administrative Agent, including Attorney Costs; (ii) to the ratable payment of all fees, expenses
and indemnities (including amounts payable under Article III) for which the Administrative Agent
or Lender have not been paid or reimbursed in accordance with the Loan Documents (as used in this
Section 2.08(d)(ii), a “ratable

payment” for the Lender or the Administrative Agent shall be, on any date of determination,
that proportion which the portion of the total fees, expenses and indemnities owed to the Lender or
the Administrative Agent bears to the total aggregate fees, expenses and indemnities owed to the
Lender and the Administrative Agent on such date of determination); (iii) to the payment of accrued
and unpaid interest on the Outstanding Amount of, and to payment of the Outstanding Amount of, the
Renewal Term Loan; and (iv) to the payment of the remaining Obligations, if any, in the order and
manner the Lender deems appropriate.




     (e) Nothing herein shall be deemed to obligate the Lender to obtain the funds for the Renewal
Term Loan in any particular place or manner or to constitute a representation by the Lender that it
has obtained or will obtain the funds for the Renewal Term Loan in any particular place or manner.



ARTICLE III.

TAXES AND YIELD PROTECTION




     3.01 Taxes.



     (a) Any and all payments by the Borrower to or for the account of the Administrative Agent or
the Lender under the Loan Document shall be made free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and all liabilities with respect thereto; excluding, in the case
of the Administrative Agent and the Lender, taxes imposed on or measured by its net income
(including any franchise taxes imposed



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on or measured by its net income), by the jurisdiction (or
any political subdivision thereof) under the Laws of which the Administrative Agent or the Lender,
as the case may be, is organized or maintains its Lending Office (all such non-excluded taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as “Taxes”). If the Borrower shall be required by any
Laws to deduct any Taxes from or in respect of any sum payable under the Loan Document to the
Administrative Agent or the Lender, (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), each of the Administrative Agent and the Lender 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 taxation
authority or other authority in accordance with applicable Laws.




     (b) In addition, the Borrower agrees to pay any and all present or future stamp, mortgage,
court or documentary taxes and any other excise or property taxes or charges or similar levies
which arise from any payment made under the Loan Document or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, the Loan Document
(hereinafter referred to as “Other Taxes”).



     (c) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in
respect of any sum payable under the Loan Document to the Administrative Agent or the Lender, the
Borrower shall also pay to the Administrative Agent (for the account of the Lender) or to the
Lender, at the time interest is paid, such additional amount that the Lender specifies as necessary
to preserve the
after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net
income) the Lender would have received if such Taxes or Other Taxes had not been imposed.



     (d) The Borrower agrees to indemnify the Administrative Agent and the Lender for (i) the full
amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section) paid by the Administrative Agent and the
Lender, and (ii) amounts payable under Section 3.01(c) and (iii) any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto, except to the extent
such sums are determined by a court of competent jurisdiction by final and non-appealable judgment
to have resulted from the gross negligence or willful misconduct of the Administrative Agent or the
Lender, as applicable. Neither the Administrative Agent nor the Lender shall be entitled to receive
any payment with respect to any indemnity claim under this Section 3.01 with respect to Taxes or
Other Taxes that are incurred or accrued more than 180 days prior to the date such party gives
notice and demand with respect thereto to the Borrower. Payment under this subsection (d) shall be
made within 30 days after the date the Lender or the Administrative Agent makes a demand therefor.



     (e) 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.



     (f) A 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 resident for tax purposes, or any treaty
to which such jurisdiction is a party, with respect to payments hereunder or under 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 or reasonably requested by the Borrower or the Administrative
Agent, such properly



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completed and executed documentation prescribed by applicable Law, or
reasonably requested by Borrower, as will permit such payments to be made without withholding or at
a reduced rate of withholding. In addition, the Lender, if requested by the Borrower or the
Administrative Agent, shall deliver such other documentation prescribed by applicable Law or
reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not the Lender is subject to backup withholding or
information reporting requirements.




     Without limiting the generality of the foregoing, in the event that the Borrower is resident
for tax purposes in the United States, if Lender is a Foreign Lender it shall deliver to the
Borrower and the Administrative Agent (in such number of copies as shall be requested by the
recipient) from time to time upon the request of the Borrower or the Administrative Agent, but only
if Lender is legally entitled to do so, whichever of the following is applicable:




     (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility
for benefits of an income tax treaty to which the United States is a party;




     (ii) duly completed copies of Internal Revenue Service Form W-8ECI;




     (iii) in the case of Lender claiming the benefits of the exemption for portfolio
interest under section 881(c) of the Code, (x) a certificate to the effect that Lender is
not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent
shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C)
a “controlled foreign
corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed
copies of Internal Revenue Service Form W-8BEN; or




     (iv) any other form prescribed by applicable Law as a basis for claiming exemption from
or a reduction in United States Federal withholding tax duly completed together with such
supplementary documentation as may be prescribed by applicable Law to permit the Borrower to
determine the withholding or deduction required to be made.



     3.02 Illegality. If the Lender determines that any Change in Law has made it unlawful for the
Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or
materially restricts the authority of the Lender to purchase or sell, or to take deposits of,
Dollars in the applicable offshore Dollar market, or to determine or charge interest rates based
upon the Eurodollar Rate, then, on notice thereof by the Lender to the Borrower through the
Administrative Agent, any obligation of the Lender to make or continue Eurodollar Rate Loans or to
convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until the Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such determination no
longer exist. Upon receipt of such notice, the Borrower shall, upon demand from the Lender (with a
copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of
the Lender to Base Rate Loans, either on the last day of the Interest Period thereof, if the Lender
may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if the
Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment
or conversion, the Borrower shall also pay interest on the amount so prepaid or converted and all
amounts due under Section 3.05 in accordance with the terms thereof due to such prepayment or
conversion. Lender agrees to designate a different Lending Office if such designation will avoid
the need for such notice and will not, in the reasonable judgment of the Lender, otherwise be
materially disadvantageous to the Lender.



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     3.03 Inability to Determine Rates. If the Administrative Agent determines in connection with any
request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar
deposits are not being offered to banks in the applicable offshore Dollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan, or adequate and reasonable means do not
exist for determining the Eurodollar Rate for such Eurodollar Rate Loan, or (b) if the Lender
determines and notifies the Administrative Agent that the Eurodollar Rate for such Eurodollar Rate
Loan does not adequately and fairly reflect the cost to the Lender of funding such Eurodollar Rate
Loan, then the Administrative Agent will promptly notify the Borrower. Thereafter, the obligation
of the Lender to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative
Agent revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending
request for a conversion or continuation of Eurodollar Rate Loans or, failing that, will be deemed
to have converted such request into a request for a Base Rate Loans in the amount specified
therein.



     3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Loans.



     (a) If the Lender determines that as a result of a Change in Law, or the Lender’s compliance
therewith, there shall be any increase in the cost to the Lender of agreeing to make or making,
funding or maintaining Eurodollar Rate Loans, or a reduction in the amount received or receivable
by the Lender in connection with any of the foregoing (excluding for purposes of this subsection
(a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to
which Section 3.01 shall govern), (ii) changes in the basis of taxation of overall net income or
overall gross income by the United States or any foreign jurisdiction or any political subdivision
of either thereof under the Laws of which the Lender is organized or has its Lending Office, and
(iii) reserve requirements contemplated by Section 3.04(c) utilized, as to Eurodollar Rate Loans,
in the determination of the Eurodollar Rate), then from time to time upon demand of the Lender
(with a copy of such demand to the Administrative Agent), the Borrower shall pay to the Lender such
additional amounts as will compensate the Lender for such increased cost or reduction.



     (b) If the Lender determines a Change in Law has the effect of reducing the rate of return on
the capital of the Lender or any corporation controlling the Lender as a consequence of the
Lender’s obligations hereunder (taking into consideration its policies with respect to capital
adequacy and the Lender’s desired return on capital), then from time to time upon demand of the
Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to the
Lender such additional amounts as will compensate the Lender for such reduction.



     (c) The Borrower shall pay to the Lender, as long as the Lender shall be required under
regulations of the Board to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”),
additional costs on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual
costs of such reserves allocated to such Loan by the Lender (as determined by the Lender in good
faith, which determination shall be conclusive), which shall be due and payable on each date on
which interest is payable on such Loan; provided the Borrower shall have received at least 15 days’
prior notice (with a copy to the Administrative Agent) of such additional interest from the Lender.
If the Lender fails to give notice 15 days prior to the relevant Interest Payment Date, such
additional interest shall be due and payable 15 days from receipt of such notice.



     (d) Failure or delay on the part of the Lender to demand compensation pursuant to this Section
shall not constitute a waiver of the Lender’s right to demand such compensation; provided that



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the
Borrower shall not be required to compensate the Lender pursuant to this Section for any increased
costs or reductions incurred more than 180 days prior to the date that the Lender notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions and of the Lender’s
intention to claim compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 180-day period referred to above
shall be extended to include the period of retroactive effect thereof.



     3.05 Compensation for Losses. Upon demand of the Lender (with a copy to the Administrative Agent)
from time to time, the Borrower shall promptly compensate the Lender for and hold the Lender
harmless from any loss, cost or expense incurred by it as a result of:




     (a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate
Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary,
mandatory, automatic, by reason of acceleration, or otherwise); or



     (b) any failure by the Borrower to prepay, borrow, continue or convert any Loan other than a
Base Rate Loan on the date or in the amount notified by the Borrower; including any loss of
anticipated profits and any loss or expense arising from the liquidation or reemployment of funds
obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such
funds were obtained. The Borrower shall also pay any customary administrative fees charged by the
Lender in connection with the foregoing.



     For purposes of calculating amounts payable by the Borrower to the Lender under this Section
3.05, the Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the
Eurodollar Rate for such Loan by a matching deposit or other borrowing in the applicable offshore
Dollar interbank market for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded.



     3.06 Matters Applicable to all Requests for Compensation. A certificate of the Administrative
Agent or the Lender claiming compensation under this Article III and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error.
In determining such amount, the Administrative Agent or the Lender may use any reasonable averaging
and attribution methods.



     3.07 Survival. All of the Borrower’s obligations under this Article III shall survive payment in
full of all the Obligations.



     3.08 Mitigation Obligations. If the Lender requests compensation under Section 3.04 or if the
Borrower is required to pay any additional amount to the Lender or any Governmental Authority for
the account of the Lender pursuant to Section 3.01, then the Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Eurodollar Loans or to assign its
rights and obligations hereunder to another of its offices, branches or affiliates, if, in the
judgment of the Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 3.01 or Section 3.04, as the case may be, in the future and (ii) would
not subject the Lender to any un-reimbursed cost or expense and would not otherwise be
disadvantageous to the Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by the Lender in connection with any such designation or assignment.



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ARTICLE IV.

CONDITIONS PRECEDENT




     4.01 Conditions Precedent. The obligation of the Lender to renew, rearrange and extend the
Indebtedness outstanding under the Second Amended and Restated Credit Agreement and the
effectiveness of this Agreement is subject to the satisfaction of the following conditions
precedent:



     (a) White Deer Energy shall have invested no less than $50,000,000 in PEC via the purchase of
preferred equity, any required NASDAQ approval shall have been obtained, and the approval of the
Board of Directors of PEC shall have been obtained.



     (b) The Administrative Agent’s receipt of the following, each of which shall be originals or
facsimiles (followed promptly by originals) and unless otherwise specified, each properly executed
by a Responsible Officer of the Borrower or other Person party thereto, each dated the Restatement
Date and each in form and substance reasonably satisfactory to the Administrative Agent and its
legal counsel:




     (i) an executed counterpart of the Assumption Agreement and the Asset Sale Agreement;




     (ii) executed counterparts of this Agreement, the Pledge Agreement, amendments to the
Mortgage to reflect that it secures the Renewal Term Loan and an amendment to the Security
Agreement in sufficient number for distribution to the Administrative Agent, the Lender and
Borrower;




     (iii) a Renewal Term Loan Note executed by the Borrower in favor of the Lender in a
principal amount equal to the Lender’s Renewal Term Loan Commitment;




     (iv) such certificates of resolutions or other action, incumbency certificates and/or
other certificates of officers of Borrower, PESC and PEC as the Administrative Agent may
require to establish the identities of and verify the authority and capacity of each officer
thereof authorized to act in connection with the Asset Sale Agreement, this Agreement and
the other Loan Documents to which the Borrower, PESC or PEC is a party; and




     (v) such evidence as the Administrative Agent may reasonably require to verify that
Borrower, PESC and PEC is each duly organized or formed, validly existing, and in good
standing in the jurisdiction of its organization and is 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.



     (c) An opinion from counsel to Borrower, PESC and PEC, in form and substance reasonably
satisfactory to the Administrative Agent and its counsel.



     (d) The Borrower shall have paid Attorney Costs of the Administrative Agent to the extent
invoiced prior to, or on, the Restatement Date, subject to the limitation set forth in Section
10.04 hereof.



     (e) The Administrative Agent’s receipt of Collateral Documents or amendments thereto, executed
by Borrower and PESC, in appropriate form for recording, where necessary.



     4.02 Requirements of Lender and Administrative Agent.



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     The Borrower shall be entitle to receive, contemporaneously with the closing of this
Agreement, the following from Lender and Administrative Agent:



     (a) Assumption Agreement consented to by the Lender;



     (b) Termination of Guaranties of the Restatement Date Released Parties;



     (c) Release of all mortgages executed and liens created by each of the Restatement Date
Released Parties, except for PESC’s pledge of the limited liability company membership interest in
the Borrower; and



     (d) UCC 3 terminations evidencing release of all financing statements wherein any Restatement
Date Released Party shows as debtor (except for PESC) and UCC-3 amendment of the financing
statement of PESC to reflect only its pledge of the limited liability company membership interest
in the Borrower.



ARTICLE V.

REPRESENTATIONS AND WARRANTIES




     The Borrower represents and warrants to the Administrative Agent and the Lender that:



     5.01 Existence; Qualification and Power; Compliance with Laws. The Borrower (a) is a limited
liability company 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 governmental licenses, authorizations, consents and approvals to own its assets, carry on
its business and to 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, except in each case referred to in clause (a), (b) or (c),
to the extent that failure to do so could not reasonably be expected to have a Material Adverse
Effect, (d) is not a Person (I) whose property or interest in property is blocked or subject to
blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed.
Reg. 49079 (2001)), or (II) who engages in any dealings or transactions prohibited by Section 2 of
such executive order, or is otherwise associated with any such Person in any manner violative of
Section 2, or (III) on the list of Specially Designated Nationals and Blocked Persons or subject to
the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign
Assets Control regulation or executive order, and (e) is in compliance, in all material respects,
with (A) the Trading with the Enemy Act, as amended, and each of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
and any other enabling legislation or executive order relating thereto, and (B) the Uniting And
Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism
(USA Patriot Act of 2001). No part of the proceeds of the Renewal Term Loan will be used, directly
or indirectly, for any payments to any governmental official or employee, political party, official
of a political party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as amended.



     5.02 Authorization; No Contravention. The execution, delivery and performance by Borrower and PESC
of each Loan Document to which such Person is party have been duly authorized by



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all necessary
limited liability 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, any material Contractual Obligation (other
than the Liens created under the Loan Documents) to which such Person is a party or any order,
injunction, writ or decree of any Governmental Authority to which such Person or its property is
subject; or (c) violate any Law except in each case referred to in clause (b) or (c), to the extent
that any such conflict, breach, contravention, creation or violation could not reasonably be
expected to have a Material Adverse Effect.




     5.03 Governmental Authorization. No approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any Governmental Authority, except for the filings in connection
with the granting or continuation of security interests pursuant to the Collateral Documents or
filings to maintain the existence, foreign qualification and good standing of the Borrower and
PESC, is necessary or required in connection with the execution, delivery or performance by such
Person of this Agreement or any other Loan Document.



     5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been duly executed and delivered by Borrower and PESC. This Agreement
constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Person, enforceable against each such Person 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 equity or at Law.



     5.05 Ownership of Property; Liens. Borrower has good title to, or valid leasehold interests in,
all its real and personal property necessary or used in the ordinary conduct of its business,
except for such defects in title as would not, individually or in the aggregate, have a Material
Adverse Effect, the property of the Borrower is subject to no Liens, other than Permitted Liens,
and the equity of Borrower is subject to no Liens, other than Permitted Liens.



     5.06 Environmental Compliance. The Borrower has reasonably concluded that (a) there are no claims
alleging potential liability under or responsibility for violation of any Environmental Law except
any such claims that could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, (b) there is no environmental condition or circumstance, such as the
presence or Release of any Hazardous Substance, on any property owned, operated or used by the
Borrower that could reasonably be expected to have a Material Adverse Effect, and (c) there is no
violation by the Borrower of any Environmental Law, except for such violations as could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.



     5.07 Insurance. The properties of the Borrower are insured with financially sound and reputable
insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and
covering such risks as are consistent with past practice.



     5.08 Taxes. The Borrower has filed or has caused to be filed all federal, state and other material
tax returns and reports required to be filed, and has paid all federal, state and other material
taxes, assessments, fees and other governmental charges levied or imposed upon it or its
properties, income or assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP or to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse



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Effect. To the knowledge of the Borrower, there is no proposed tax
assessment against Borrower that would, if made, have a Material Adverse Effect.




     5.09 Margin Regulations; Investment Company Act; Use of Proceeds.



     (a) Borrower is not engaged nor will it 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 Board), or extending credit for the purpose of purchasing or carrying
margin stock.



     (b) Neither the Borrower, PESC nor PEC is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.



     5.10 Disclosure; No Material Misstatements. All material factual information hereto furnished in
connection with this Agreement by or on behalf of the Borrower in writing to the Administrative
Agent or the Lender for purposes of or in connection with this Agreement or any transaction
contemplated hereby, as modified or supplemented by other information so furnished, is true and
accurate in all material respects, and such information is not, or shall not be, as the case may
be, incomplete by omitting to state any material fact necessary to make such information, in light
of the circumstances under which it was made, not misleading. All estimates and projections
delivered to the Administrative Agent or the Lender in connection with this Agreement were based
upon information that was available at the time such estimates or projections were prepared and
believed to be correct and upon assumptions believed to be reasonable at that time; however, the
Borrower does not warrant that such estimates and projections will ultimately prove to have been
accurate.



     5.11 Location of Business and Offices. Borrower’s (i) jurisdiction of organization, (ii)
organizational identification number, (iii) correct legal name, and (iv) principal place of
business and chief executive offices are as set forth in the Security Agreement.



     5.12 ERISA Compliance. The representations and warranties set forth in this Section 5.12 shall
apply only if the Borrower or an ERISA Affiliate establishes a Plan.



     (a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state Laws, except to the extent that noncompliance could not
reasonably be expected to have a Material Adverse Effect and except to the extent disclosed on
Schedule 5.12. Each Plan that is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS, an application for such a letter is currently being
processed by the IRS with respect thereto or the Plan utilizes a prototype form plan document and
the prototype plan’s sponsor has received a favorable opinion or advisory letter from the IRS upon
which Borrower or such ERISA Affiliate may rely, and, to the knowledge of the Borrower, nothing has
occurred which would prevent, or cause the loss of, such qualification, except to the extent that
nonqualification could not reasonably be expected to have a Material Adverse Effect and except to
the extent disclosed on Schedule 5.12. 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, except to the
extent that nonpayment could not reasonably be expected to have a Material Adverse Effect except to
the extent disclosed on Schedule 5.12.



     (b) There are no pending or, to the knowledge of the Borrower, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably
be



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expected to have a Material Adverse Effect or except to the extent disclosed on Schedule 5.12.
Neither Borrower nor any ERISA Affiliate has engaged in or knowingly permitted to occur and, to
Borrower’s knowledge, no other party has engaged in or permitted to occur any 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 or except to the
extent disclosed on Schedule 5.12.




     (c) (i) No ERISA Event has occurred or is reasonably expected to occur that could reasonably
be expected to have a Material Adverse Effect; (ii) no Pension Plan has any Unfunded Pension
Liability that (when aggregated with any other Unfunded Pension Liability) has resulted or could
reasonably be expected to result in a Material Adverse Effect; and (iii) neither Borrower nor any
ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of
ERISA that could reasonably be expected to have a Material Adverse Effect.



     5.13 Compliance with Laws. Except with respect to Environmental Laws and Laws relating to taxes
(which are covered by Sections 5.06 and 5.08, respectively), and except as disclosed on Schedule
5.12, the Borrower is not in violation of any Laws, other than such violations which could not,
individually or collectively, reasonably be expected to have a Material Adverse Effect.



     5.14 Third Party Approvals. No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any party that is not a party to this Agreement is necessary or required
in connection with the execution, delivery or performance by the Borrower of this Agreement or any
other Loan Document except where obtained or where the failure to receive such approval, consent,
exemption, authorization, or the failure to do such other action by, or provide such notice could
not reasonably be expected to have a Material Adverse Effect; and provided, however, that the
transfer of rights in certain Collateral consisting of rights under contracts to a foreclosure
purchaser may, in some instances, require the consent of third parties who have rights in such
Collateral.



     5.15
Intentionally Deleted.



     5.16 Oil and Gas Leases. The Leases which constitute any part of the Oil and Gas Properties
are in full force and effect as to those portions thereof that comprise the Oil and Gas Properties.



     5.17 Oil and Gas Contracts. Except (a) as set out on Schedule 5.17 attached hereto, and (b)
as may subsequently occur and be disclosed by Borrower, Borrower is not obligated, by virtue of any
prepayment under any contract providing for the sale by Borrower of Hydrocarbons which contains a
“take-or-pay” clause or under any similar prepayment agreement or arrangement, including, “gas
balancing agreements,” to deliver a material amount of Hydrocarbons produced from the Oil and Gas
Properties at some future time without then or thereafter receiving full payment therefor (i.e., in
the case of oil, not in excess of sixty days, and in
the case of gas, not in excess of ninety days). Except (a) as set out on Schedule 5.17
attached hereto, and (b) as may subsequently occur and be disclosed by Borrower, the Oil and Gas
Properties are not subject to any contractual or other arrangement for the sale of crude oil which
cannot be canceled on ninety days’ (or less) notice, unless the price provided for therein is equal
to or greater than the prevailing market price in the vicinity. To the best of the Borrower’s
knowledge, the Oil and Gas Properties are not subject to any regulatory refund obligation and no
facts exist which might cause the same to be imposed.



     5.18 Producing Wells. All producing wells that constitute part of the Oil and Gas Properties
(a) have been, during all times that any such wells were operated by Borrower, and (b) to the
knowledge of Borrower, have been at all other times, drilled, operated and produced in conformity
with all applicable



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Laws, are subject to no penalties on account of past production, and are
bottomed under and are producing from, and the well bores are wholly within, the Oil and Gas
Properties, or on Leases which have been pooled, unitized or communitized with the Oil and Gas
Properties.




     5.19 Purchasers of Production. The names and business addresses of the Persons who (a) have
purchased any of Borrower’s interests in oil and gas produced from the Oil and Gas Properties
during the six calendar months preceding the Restatement Date, and (b) as of the Restatement Date,
are considered by Borrower to be potential future purchasers of Borrower’s interest in oil and gas
produced from the Oil and Gas Properties, are identified on Schedule 5.19 attached hereto.



ARTICLE VI.

AFFIRMATIVE COVENANTS




     So long as the Renewal Term Loan or other Obligation (other than contingent indemnity
obligations) shall remain unpaid or unsatisfied, the Borrower shall:



     6.01 Reports. Deliver to the Administrative Agent, in form and detail reasonably satisfactory to
the Administrative Agent and the Lender (and the Administrative Agent shall deliver to the Lender)
on or before each March 31 until the Maturity Date, the Borrower shall furnish to the
Administrative Agent a Reserve Report, which shall set out, as of the preceding December 31 the
Proved Reserves attributable to the Oil and Gas Properties and which Reserve Report shall be the
same as the report prepared for the SEC relating to December 31 of each year. Each Reserve Report
shall be prepared by Cawley Gillespie & Associates, Inc. or other independent reservoir engineers
acceptable to Administrative Agent.



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



     (a) copies of any JOA entered into by the Borrower not previously delivered to the
Administrative Agent; and



     (b) promptly, such additional information (that is in the possession of the Borrower or that
may be readily produced by the Borrower without undue effort or expense) regarding the business,
financial or corporate affairs of the Borrower as the Administrative Agent, at the request of
the Lender, may from time to time reasonably request.



     6.03 Notices. Promptly notify the Administrative Agent:



     (a) of the occurrence of any Default or Event of Default, as soon as possible but in any event
within ten (10) days after Borrower has knowledge thereof;



     (b) of any matter that has resulted or could reasonably be expected to result in a Material
Adverse Effect, including any of the following events if such has resulted or could reasonably be
expected to result in a Material Adverse Effect: (i) breach or non-performance of, or any default
under, a Contractual Obligation of the Borrower; (ii) any litigation, investigation by or required
by a Governmental Authority, proceeding or suspension of licenses or permits between the Borrower
and any Governmental Authority (other than any litigation disclosed on any schedule hereto); and
(iii) any dispute, litigation, investigation or proceeding involving the Borrower related to any
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     (c) of any litigation, investigation or proceeding (other than any litigation disclosed on any
schedule hereto) known to and affecting the Borrower and not previously known to or disclosed to
the Lender in which (i) the amount involved exceeds (individually or collectively) $1,000,000, or
(ii) injunctive relief or other relief is sought, which could be reasonably expected to have a
Material Adverse Effect;



     (d) of any material change in accounting policies or financial reporting practices by the
Borrower; and



     (e) by written notice (except in the case of the Restructure Transactions) at least ten (10)
days before any proposed (A) relocation of the Borrower’s principal place of business or chief
executive office, (B) change of the Borrower’s name, identity, or corporate, partnership or limited
liability company structure, (C) relocation of the place where the books and records concerning the
Borrower’s accounts are kept, (D) relocation of the Borrower’s Collateral (other than delivery of
inventory in the ordinary course of business to third party contractors for processing and sales of
inventory in the ordinary course of business or as permitted by the Loan Document) to a location
not described on Annex A to the Security Agreement to which Borrower is a party, and (E) change of
the Borrower’s jurisdiction of organization or organizational identification number, as applicable.



     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 or
other Loan Document that have been breached.



     6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable (a) the
Obligations, (b) all tax liabilities, assessments and governmental charges or levies upon it or its
properties or assets and (c) all lawful claims which, if unpaid, would by Law become a Lien upon
its property; except, in the case of clause (b) or (c), where (x) the validity thereof are being
contested in good faith by appropriate proceedings and (y) adequate reserves in accordance with
GAAP are being maintained by the appropriate Loan Party.



     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 Sections 7.06 and 7.07, and (b) take all reasonable action to maintain
all rights, privileges, permits, licenses and franchises material to the conduct of its business,
except in a transaction permitted by Sections 7.06 and 7.07, except where the failure to do so in
each case could not reasonably be expected to have a Material Adverse Effect.



     6.06 Maintenance of Assets and Business. (a) Keep all property material to the conduct of its
business in good working order and condition (ordinary wear and tear excepted) and make all
necessary repairs thereto and replacements thereof; provided that no item of operating equipment
need be repaired or replaced if the Borrower shall determine in good faith that such action is not
necessary or desirable for the continued efficient and profitable operation of the business of the
Borrower; (b) do all things necessary to obtain, renew, extend, and continue in effect all
Authorizations which may at any time and from time to time be necessary for the operation of its
business in compliance with applicable Law, except where the failure to so maintain, renew, extend,
or continue in effect 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
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     6.07 Maintenance of Insurance. (a) Maintain with responsible insurance companies insurance with
respect to its properties and business (including business interruption insurance) against such
casualties and contingencies and of such types and in such amounts as is customary in the case of
similar businesses and which is reasonably acceptable to the Administrative Agent and will (i)
furnish to the Administrative Agent on each anniversary of the Restatement Date a certificate or
certificates of insurance from the applicable insurance company evidencing the existence of
insurance required to be maintained by this Agreement and the other Loan Documents and evidencing
that Administrative Agent is listed as loss payee on property insurance and the Administrative
Agent and Lender are additional insureds on liability insurance, and (ii) upon request of the
Administrative Agent, furnish to the Lender at reasonable intervals a certificate of an Responsible
Officer of the Borrower setting forth the nature and extent of all insurance maintained in
accordance with this Section.



     (b) Borrower will notify Administrative Agent in writing within five (5) Business Days of its
receipt of any cash, checks, drafts, chattel paper and other instruments or writings for the
payment of money in full or partial payment of amounts due under any casualty insurance policy in
an amount in excess of $1,000,000. Upon receipt of such written notice, Borrower and
Administrative Agent will have twenty (20) Business Days to determine whether all or any portion of
such proceeds should be applied to reduce the Outstanding Amount of the Renewal Term Loan, or
retained by Borrower for reinvestment in its business. If, after such twenty (20) Business Day
period, the Administrative Agent elects to apply any portion of such proceeds to reduce the
Outstanding Amount of the Renewal Term Loan, the Borrower will transmit and deliver to the
Administrative Agent, in the form received, the amount elected by the Administrative Agent of such
cash, checks, drafts, chattel paper and other instruments or writings for the payment of money
(properly endorsed, where required, so that such items may be collected by the Administrative
Agent). Borrower may retain any portion of such proceeds in excess of the amount elected to be
applied. Except as the Administrative Agent may otherwise consent in writing, any such items which
may be received by the Borrower in excess of $1,000,000 and which Administrative Agent has elected
to apply to reduce the Outstanding Amount of the Renewal Term Loan will not be
commingled with any other funds or property of Borrower, but will be held separate and apart
from Borrower’s own funds or property and upon express trust for the Administrative Agent until
delivery is made to the Administrative Agent..



     6.08 Compliance with Laws and Contractual Obligations. (a) Comply in all material respects with
the requirements of all Laws (including Environmental Laws) applicable to it or to its business or
property, except in such instances in which (i) such requirement of Law is being contested in good
faith or a bona fide dispute exists with respect thereto, or (ii) the failure to comply therewith
could not be reasonably expected to have a Material Adverse Effect; and (b) comply with all
Contractual Obligations, except if the failure to comply therewith could not be reasonably expected
to have a Material Adverse Effect.



     6.09 Books and Records. Maintain (a) proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied (except as otherwise noted herein)
shall be made of all financial transactions and matters involving its assets and business, and (b)
maintain such books of record and account in material conformity with all applicable requirements
of any Governmental Authority having regulatory jurisdiction over it.



     6.10 Inspection Rights. Permit representatives and independent contractors acting jointly for the
Administrative Agent and the 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 officers and independent public accountants, at
such reasonable



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times during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Borrower; provided, however, that when an Event of Default exists
the Administrative Agent or the 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 Compliance with ERISA. With respect to each Plan maintained by the Borrower, do each of the
following: (a) maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state Laws, (b) cause each Plan which is
qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all
required contributions to any Plan subject to Section 412 of the Code, except to the extent that
noncompliance, with respect to each event listed above, could not be reasonably expected to have a
Material Adverse Effect and except to the extent disclosed on Schedule 5.12.



     6.12 Use of Proceeds. Use proceeds of the Renewal Term Loan to renew, rearrange and extend the
Original Term Loan, Revolving O&G Development Loan, Interest Deferral Loan, First PIK Loan, and
Second PIK Loan owed pursuant to the Second Amended and Restated Credit Agreement and to pay the
2009 Facility Fee.



     6.13 Intentionally Omitted.



     6.14 Further Assurances; Additional Collateral; In Lieu Letters. (a) The Borrower shall take such actions and execute and deliver such documents and instruments
as the Administrative Agent shall reasonably require to ensure that the Administrative Agent or
Collateral Agent on behalf of the Lender shall, at all times, have received currently effective,
duly executed Loan Documents granting Liens and security interests in substantially all of the
assets (other than Excluded Assets) of the Borrower, including all capital stock, partnership,
joint venture, membership interests, or other equity interests except for (i) any motor vehicle or
other equipment that has a certificate of title and a fair market value of less than $50,000, (ii)
the Excluded Assets, and (iii) those properties and assets as to which the Administrative Agent
shall determine in its sole discretion (in consultation with the Borrower) that the costs of
obtaining such security interest are excessive in relation to the value of the security to be
afforded thereby.



     (b) In connection with the actions required pursuant to the foregoing subsection (a), the
Borrower shall execute and deliver such stock certificates, blank stock powers, evidence of
corporate authorization, opinions of counsel, current valuations, evidence of title, and other
documents, and shall use commercially reasonable efforts to obtain third party consents, as shall
be reasonably requested by the Administrative Agent, in each case in form and substance reasonably
satisfactory to the Administrative Agent.



     (c) The Liens required by this Section 6.14 shall be first priority Liens in favor of the
Administrative Agent or Collateral Agent for the benefit of the Lender, subject to no other Liens
except Permitted Liens of the type described in Section 7.01. The Liens required by this Section
6.14 shall be perfected Liens in favor of the Administrative Agent or Collateral Agent for the
benefit of the Lender in all Collateral to the extent perfection has or will occur by (i) the
filing of a Uniform Commercial Code financing statement in the relevant jurisdiction, (ii) filing
or recording a mortgage in real property records of the county in which such real property or
fixtures is located, (iii) possession or control or (iv) the notation on a certificate of title.
If the Administrative Agent shall determine that, as of any date, the Borrower shall have failed to
comply with this Section 6.14, the Administrative Agent may (and at the



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direction of the Lender,
shall) notify the Borrower in writing of such failure and, within 30 days from and after receipt of
such written notice by the Borrower, the Borrower shall execute and deliver to the Administrative
Agent supplemental or additional Loan Documents, in form and substance reasonably satisfactory to
the Administrative Agent and its counsel, securing payment of the Renewal Term Loan Note and the
other Obligations and covering additional assets and properties not then encumbered by the Loan
Documents (together with such other information, as may be requested by the Administrative Agent,
each of which shall be in form and substance reasonably satisfactory to the Administrative Agent)
such that the Administrative Agent shall have received currently effective duly executed and
perfected Collateral Documents encumbering substantially all of the assets of the Borrower as
required by Section 6.14(a).




     (d) If an Event of Default exists and is continuing, Borrower agrees to deliver, whenever
requested by Administrative Agent, in its sole and absolute discretion, transfer orders or letters
in lieu thereof with respect to the production and proceeds of production from the Oil and Gas
Properties, in form and substance satisfactory to Administrative Agent.



     6.15 Title Defects. Cure any title defects to the Oil and Gas Properties material in value,
in the reasonable opinion of the Administrative Agent, within thirty (30) days after receipt of
written notice thereof from Administrative Agent and, in the event any title defects are not cured
in a timely manner, pay all related costs and fees reasonably incurred by the Administrative Agent
for the account of the Lender to do so.



     6.16 Leases. Keep and continue all Leases comprising the Oil and Gas Properties and related
contracts and agreements relating thereto in full force and effect in accordance with the terms
thereof and not permit the same to lapse or otherwise become impaired for failure to comply with
the obligations thereof, whether express or implied; provided, however, that this provision shall
not prevent the Borrower from abandoning and releasing any such Leases upon their termination as
the result of cessation of production in paying quantities that did not result from the Borrower’s
failure to maintain such production as a reasonably prudent operator. Subject to approval by the
Administrative Agent, Borrower shall have the right to replace Leases that lapse or become
impaired.



     6.17 Oil and Gas Properties. Borrower shall ensure that at all times it has available to
it, either through its employees or those of PESC and PESC’s subsidiaries or through independent
contractors, petroleum engineers with appropriate experience and expertise in the proper operation
and development of properties similar to the Oil and Gas Properties.



     6.18 Operation of Oil and Gas Properties. Operate or, to the extent that the right of
operation is vested in others, exercise all reasonable efforts to require the operator to operate
the Oil and Gas Properties and all wells drilled thereon and that may hereafter be drilled thereon,
continuously and in a prudent and workmanlike manner and in accordance with all Laws of the state
in which the Oil and Gas Properties are situated and the United States, as well as all rules,
regulations, and Laws of any Governmental Authority having jurisdiction to regulate the manner in
which the operation of the Oil and Gas Properties shall be carried on, and comply with all terms
and conditions of the Leases it now holds, and any assignment or contract obligating the Borrower
in any way with respect to the Oil and Gas Properties, except for any such non-compliance that
would not have a Material Adverse Effect; but nothing herein shall be construed to empower the
Borrower to bind the Administrative Agent or the Lender to any contract obligation, or render the
Administrative Agent or the Lender in any way responsible or liable for bills or obligations
incurred by the Borrower.



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     6.19 Change of Purchasers of Production. Annually on December 31st of each year
the Borrower shall notify the Administrative Agent in writing of the identity and address of each
Person who: (a) has purchased any of the Borrower’s interests in oil and gas produced from the Oil
and Gas Properties during the preceding six calendar months, and (b) are considered by Borrower to
be potential future purchasers of Borrower’s interest in oil and gas produced from the Oil and Gas
Properties.



     6.20 Liens on Oil and Gas Properties; Title Information. (a) At all times have granted in
favor of the Administrative Agent for the benefit of the Lender as security for the Obligations
first priority perfected Liens on no less than eighty percent (80%) of PV10 of the Proved Reserves
that are attributable to the Oil and Gas Properties.



     (b) On or before the delivery to the Administrative Agent of each Reserve Report required by
Section 6.01, the Borrower will deliver (or have previously delivered to the Administrative Agent)
title information in form and substance acceptable to the Administrative Agent comprising a minimum
of ninety percent (90%) of the PV10 of the Proved Reserves that are attributable to those Oil and
Gas Properties evaluated by such Reserve Report (it being acknowledged that landman title reports
on proved
but undeveloped Oil and Gas Properties shall be satisfactory to the Administrative Agent and
Lender for the purpose of demonstrating the status of title to such Oil and Gas Properties).



ARTICLE VII.

NEGATIVE COVENANTS




     So long as the Renewal Term Loan or other Obligation (other than contingent indemnity
obligations) shall remain unpaid or unsatisfied, the Borrower agrees that it shall not:



     7.01 Liens. Create, incur, assume or suffer to exist, any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than the following:



     (a) Liens pursuant to the Loan Document;



     (b) Liens existing on the Restatement Date and listed on Schedule 7.01 to this Agreement and
any renewals or extensions thereof; provided that the property covered thereby is not increased,
the amount of the Indebtedness secured thereby is not increased, and any renewal or extension of
the obligations secured or benefited thereby is permitted under this Agreement;



     (c) Liens for taxes, assessments, or other governmental charges or levies not yet due or which
are being contested in good faith and by appropriate proceedings, if adequate reserves with respect
thereto are maintained on the books of the applicable Person in accordance with GAAP;



     (d) landlord’s, royalty owner’s, supplier’s, constructor’s, operator’s vendor’s, carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary
course of business or which are incident to the exploration, development, operation and
maintenance of Oil and Gas Properties or other business of the Borrower not overdue for a period of
more than 90 days or which are being contested in good faith and by appropriate proceedings, if
adequate reserves with respect thereto are maintained on the books of the applicable Person;



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     (e) pledges or deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation;



     (f) deposits to secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case incurred in the ordinary course of business;



     (g) easements, rights of way, restrictions, servitudes, permits, conditions, covenants,
exception or reservations and other similar encumbrances, defects, irregularities and deficiencies
in title affecting real property which, in the aggregate, are not substantial in amount, and which
do not, taken as a whole, materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the applicable Person;



     (h) judgment Liens not giving rise to an Event of Default;



     (i) any Lien existing on any asset prior to acquisition thereof by the Borrower; provided that
(i) no such Lien shall be extended to cover property other than the asset being acquired, and (ii)
such Lien was not created in contemplation of or in connection with such acquisition;



     (j) Liens securing Capital Lease obligations; provided that the Indebtedness in respect of
such Capital Lease obligations is permitted under Section 7.04(d);



     (k) purchase money Liens upon or in any property acquired, constructed or improved by Borrower
(placed on such property at the time of such acquisition or the completion of the construction or
improvement or within 90 days thereafter) to secure the deferred portion of the purchase price of
such property or to secure Indebtedness incurred to finance the acquisition, construction or
improvement of such property; provided that (i) no such Lien shall be extended to cover property
other than the property being acquired, constructed or improved and (ii) the Indebtedness thereby
secured is permitted by Section 7.04(c);



     (l) Liens reserved in or exercisable under any lease or sublease to which the Borrower is a
lessee which secure the payment of rent or compliance with the terms of such lease or sublease;
provided, that the rent under such lease or sublease is not then overdue and the Borrower is in
material compliance with the terms and conditions thereof;



     (m) any interest or title of a lessor under any lease entered into by the Borrower in the
ordinary course of its business and covering only the assets so leased, and any interest of a
landowner in the case of easements entered into by the Borrower in the ordinary course of its
business and covering only the property subject to the easement;



     (n) Liens securing obligations (other than obligations representing Indebtedness for borrowed
money) under operating, reciprocal easement or similar agreements entered into in the ordinary
course of business of the Borrower;



     (o) licenses of patents, trademarks and other intellectual property rights granted by the
Borrower in the ordinary course of business and not interfering in any material respect with the
ordinary conduct of the business of the Borrower;



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



     (q) Liens on any additions, improvements, replacements, repairs, fixtures, appurtenances or
component parts thereof attaching to or required to be attached to property or assets pursuant to
the terms of any mortgage, pledge agreement, security agreement or other similar instrument,
creating a Lien upon such property or asset otherwise permitted under this Section;



     (r) Liens securing an obligation of a third party neither created, assumed nor guaranteed by
the Borrower upon lands over which easements or similar rights are acquired by the Borrower in the
ordinary course of business of the Borrower;



     (s) any Liens arising out of the refinancing, extension, renewal or refunding of any
Indebtedness secured by any Lien permitted by any of the foregoing clauses of this Section;
provided that such Indebtedness is not increased except for increases in an amount equal to a
reasonable premium or
other reasonable amount paid, and fees and expenses reasonably incurred, in connection with
such extension, renewal, refinancing, or replacement and in an amount equal to any existing
commitments unutilized thereunder, and is not secured by any additional assets;



     (t) Liens arising out of the cash collateralization of letter of credit reimbursement
obligations permitted under Section 7.04(h);



     (u) contractual Liens which arise in the ordinary course of business under JOAs, operating
agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for sale, purchase, transportation or exchange of
oil or natural gas, unitization and pooling declarations and agreements, area of mutual interest
agreements, royalty and overriding royalty agreements, marketing agreements, processing agreements,
net profits agreements, development agreements, gas balancing or deferred production agreements,
injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic
or other geophysical permits or agreements, and other agreements which are usual and customary in
the oil and gas business and are for claims which are not delinquent;



     (v) Rights reserved to or vested in a Governmental Authority having jurisdiction to control or
regulate any Oil and Gas Property in any manner whatsoever and all Laws of such Governmental
Authorities, so long as the Borrower is in compliance with all such Laws, except for any
non-compliance that would not result in a Material Adverse Effect;



     (w) consents to assignment and similar contractual provisions affecting an Oil and Gas
Property to the extent, and only to the extent, such consents are not affected by or required for
the execution, delivery, performance and enforcement of the Loan Document;



     (x) preferential rights to purchase and similar contractual provisions affecting an Oil and
Gas Property to the extent, and only to the extent, such consents are not affected by delivery of
the Loan Document or, if affected, have been waived; and



     (y) all defects and irregularities affecting title to an Oil and Gas Property that could not
operate to reduce the net revenue interest of the Borrower for such Oil and Gas Property (if any),
increase the working interest of the Borrower for such Oil and Gas Property (if any) without a
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increase in the corresponding net revenue interest, otherwise interfere materially
with the operation, value or use of such Oil and Gas Property or cause a Material Adverse Effect;




     7.02 Investments. Make or own any Investments, except:



     (a) Investments existing on the Restatement Date; provided the amount of such Investment may
not be increased by the Borrower after the Restatement Date;



     (b) Cash Equivalents;



     (c) Investment constituting Indebtedness permitted under Section 7.04(b);



     (d) Guarantees of Indebtedness permitted under Section 7.04;



     (e) Investments consisting of extensions of credit, including without limitation, in the
nature of accounts receivable, arising from the grant of trade credit or prepayments or similar
transactions entered into in the ordinary course of business and investments by the Borrower in
satisfaction or partial satisfaction thereof from financially troubled account debtors to prevent
or limit financial loss;



     (f) endorsements for collection or deposit in the ordinary course of business;



     (g) Investments in Oil and Gas Properties or assets used in the Midstream Business or Persons
whose primary assets consist of Oil and Gas Properties or whose primary business is the Midstream
Business;



     (h) Investments listed in Schedule 7.02; and



     (i) Investments (i) by Borrower in Subsidiaries formed to acquire Oil and Gas Properties or in
connection with the Midstream Businesses, and (ii) resulting from Borrower’s acquisition of equity
or joint venture interests in a Person primarily engaged in the ownership or development of Oil and
Gas Properties or in the Midstream Businesses.



     7.03 Hedging Agreements. Borrower shall not enter into any Swap Contract.



     7.04 Indebtedness.



     Create, incur, or assume any Indebtedness except:



     (a) Indebtedness incurred pursuant to the Loan Documents;



     (b) Indebtedness owed by Borrower to PEC or PESC and any Indebtedness as to which any
Transfer Payment is permitted to be made under Section 7.08; provided that in each such case such
Indebtedness is governed by an intercompany agreement and evidenced by bookkeeping entries;
provided further that the aggregate amount of such Indebtedness shall not exceed $2,000,000;



     (c) Indebtedness of the Borrower in respect of purchase money obligations for fixed or capital
assets within the limitations set forth in Section 7.01(k); provided, however, that the aggregate
amount of such Indebtedness at any one time outstanding shall not exceed $500,000;



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     (d) Indebtedness of the Borrower in respect of Capital Lease obligations; provided that, such
Capital Lease obligations will not require the payment of an aggregate amount in excess of $500,000
annually; provided further, that any Capital Lease obligation relating to compressors or
compression equipment shall be excluded from this subsection and dealt with in Section 7.05;



     (e) Indebtedness consisting of surety bonds that the Borrower is required to obtain in order
to comply with applicable Law or the requirements of any Governmental Authority;



     (f) Indebtedness secured by any Lien permitted under Section 7.01(i); provided, however, that
the aggregate amount of such Indebtedness at any one time outstanding shall not exceed $500,000;



     (g) other Indebtedness of the Borrower not to exceed $500,000 in the aggregate principal
amount outstanding at any time;



     (h) reimbursement obligations under letters of credit issued for the Borrower; provided the
aggregate amount of such reimbursement obligations in connection with such letters of credit shall
not exceed $1,500,000 at any time; and



     (i) Indebtedness existing on the date hereof and listed on Schedule 7.04.


provided, that if any Indebtedness is incurred pursuant to this Section 7.04, immediately after
such Indebtedness is created, incurred or assumed, no Default or Event of Default shall exist.




     7.05 Lease Obligations. Create or suffer to exist any obligations for the payment of rent for any
property under operating leases or agreements to lease (excluding leases of Oil and Gas
Properties), except for (i) operating leases (or Capital Lease obligations) for compressors and
compression equipment and services for which no dollar limitation shall be applicable, (ii)
operating leases (or Capital Lease obligations) entered into or assumed by the Borrower prior to
the date hereof or after the date hereof in the ordinary course of business; provided that, such
other operating leases (or Capital Lease Obligations) will not require the payment of an aggregate
amount of payments in excess of (excluding escalations resulting from a rise in the consumer price
or similar index) $2,000,000 annually, exclusive of expenses for maintenance, repairs, insurance,
taxes, assessments and similar changes, and (iii) other operating leases (other than those
constituting Synthetic Lease Obligations) entered into or assumed by the Borrower or any of its
Subsidiaries prior to the date hereof or after the date hereof in the ordinary course of business.



     7.06 Fundamental Changes. Merge, dissolve, liquidate or consolidate with or into any Person;
except that, so long as no Default or Event of Default exists or would result therefrom:



     (a) any Person may merge, dissolve or liquidate into the Borrower; provided that in the case
of a merger the Borrower is the surviving entity;



     (b) in connection with any Approved Disposition (i) any Person may merge into the Borrower
with such Person being the surviving entity and (ii) the Borrower may merge into any Person.



     7.07 Dispositions.



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



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     (a) Dispositions of equipment or real property for fair market value to the extent that (i)
such property is exchanged for credit against the purchase price of similar replacement property,
or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of
such replacement property;



     (b) other Dispositions pursuant to an Approved Disposition; provided the Borrower shall use
the Net Cash Proceeds thereof to prepay the Renewal Term Loan in accordance with Section 2.03(b);



     (c) Dispositions of property that is no longer commercially viable to maintain or is obsolete,
surplus or worn-out property; and



     (d) Dispositions permitted under Section 7.06.



     7.08 Transfer Payments; Restricted Payments. Declare or make any Transfer Payment or incur
any obligation (contingent or otherwise) to do so, except that (i) Borrower may make Transfer
Payments to PESC for direct costs and expenses incurred by PESC on its behalf, (ii) Borrower may
make Transfer Payments to PESC in an amount equal to the allocation, in accordance with the G&A
Formula, of Borrower’s general and administrative costs; and (iii) Borrower may make Transfer
Payments to PESC or PEC in an amount reasonably determined to be equal to Borrower’s consolidated
income tax liability (and to be reasonably acceptable to the Lender). Borrower shall not declare
or make any Restricted Payment, or incur any obligation (contingent or otherwise) to do so.



     7.09 ERISA. At any time engage in a transaction which could be subject to Section 4069 or 4212(c)
of ERISA, or knowingly permit any Plan maintained by the Borrower to: (a) engage in any non-exempt
“prohibited transaction” (as defined in Section 4975 of the Code); (b) fail to comply with ERISA or
any other applicable Laws, except as disclosed on Schedule 5.12; or (c) incur any material
“accumulated funding deficiency” (as defined in Section 302 of ERISA), which, with respect to each
event listed above, could be reasonably expected to have a Material Adverse Effect or except to the
extent disclosed on Schedule 5.12.



     7.10 Nature of Business; Risk Management. Engage in any line of business substantially different
from those lines of business conducted by the Borrower on the Restatement Date. Without the
written approval of the Administrative Agent, the Borrower may not materially change its risk
management policy.



     7.11 Transactions with Affiliates. Sell, lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (i) the transactions under the agreements listed
on Schedule 7.11, (ii) in the ordinary course of business at prices and on terms and conditions not
less favorable to the Borrower than could be obtained on an arm’s length basis from unrelated third
parties, (iii) payments to PESC or PEC in an amount equal to the taxes allocated to Borrower
permitted pursuant to Section 7.08(iii), (iv) any Transfer Payments to PESC permitted under
Sections 7.08(i) and (ii); (vi) any Indebtedness permitted under Section 7.04(b); and (vii) the
provision of gas gathering services by the Borrower and the provision of services as an operator by
the Borrower in the Appalachian region to PostRock MidContinent Production LLC and its
Subsidiaries.



     7.12 Use of Proceeds. Use the proceeds of the Renewal Term Loan, whether directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within



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the
meaning of Regulation U of the Board) or to extend credit to others for the purpose of purchasing
or carrying margin stock or to refund indebtedness originally incurred for such purpose.




     7.13 Material Amendment. Permit, except for amendments or assignments made to accommodate, permit, or otherwise made in
connection with, the Restructure Transactions (including the White Deer Energy Investment) any
amendment to any Borrower Organization Document, if such amendment could reasonably be expected to
(y) have a Material Adverse Effect on the ability of the Borrower to perform its obligations under
the Loan Documents to which it is a party or (z) otherwise materially adversely affect the Lender.



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 fails to pay (i) when and as required to be paid
herein, any amount of principal of the Renewal Term Loan or (ii) within three Business Days after
the same becomes due, any interest on the Renewal Term Loan, or 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), 6.05 (with respect to the Borrower’s existence),
6.10, 6.12,6.15, 6.16, 6.18 or Article VII; or



     (c) Other Defaults. Borrower fails to perform or observe any other covenant or
agreement (not specified in subsection (a) or (b) above) contained in the Loan Document on its part
to be performed or observed and such failure continues for 30 days after the date notice has been
given to the Borrower by the Administrative Agent or the Lender; or



     (d) Representations and Warranties. Any representation or warranty made or deemed
made by the Borrower herein, in any other Loan Document, or in any document delivered in connection
herewith or therewith proves to have been incorrect in any material respect when made or deemed
made; or



     (e) Intentionally Deleted.



     (f) Insolvency Proceedings, Etc. (i) The Borrower 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 takes any action to effect any of the foregoing; or (ii) 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 (iii) any proceeding under any Debtor Relief Law relating to Borrower or to all
or any part of its property is instituted without the consent of Borrower 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) The Borrower 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



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attachment or execution or similar process is issued or levied against property which is
a material part of
the property of the Borrower taken as a whole, and is not released, vacated or fully bonded
within 45 days after its issue or levy; or




     (h) Judgments. There is entered against the Borrower (i) a final non-appealable
judgment or order for the payment of money in an aggregate amount exceeding (individually or
collectively) $1,000,000 (to the extent not covered by third-party insurance as to which the
insurer does not dispute coverage), or (ii) any non-monetary final non-appealable judgment that has
or could reasonably be expected to have a Material Adverse Effect and, in either case, (A)
enforcement proceedings are commenced by any creditor upon such judgment or order and is not
released, vacated or fully bonded within 60 days after its attachment or levy; or (B) there is a
period of 60 consecutive days during which a stay of enforcement of such judgment, by reason of a
pending appeal or otherwise, is not in effect; or



     (i) ERISA. (i) If the Borrower maintains any Pension Plan or any Multiemployer Plan,
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 $1,000,000, or
(ii) if there is any Multiemployer Plan, the Borrower 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
$1,000,000; or



     (j) Invalidity of Loan Documents. Any Loan Document, at any time after its execution
and delivery and for any reason other than the agreement of the Lender or satisfaction in full of
all the Obligations (other than contingent indemnity obligations), ceases to be in full force and
effect, or is declared by a court of competent jurisdiction to be null and void, invalid or
unenforceable in any material respect; or the Borrower denies that it has any or further liability
or obligation under the Loan Document, or purports to revoke, terminate or rescind a Loan Document;
or



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



     (l) Dissolution. The Borrower shall dissolve, liquidate, or otherwise terminate its
existence, except as permitted in Section 7.06; or



     (m) Collateral; Impairment of Security, etc. (i) Any provision of the Loan Document
shall for any reason cease to be valid and binding on or enforceable against the Borrower or the
Borrower shall so state in writing or bring an action to limit its obligations or liabilities
thereunder; or (ii) any Collateral Document shall for any reason (other than pursuant to the terms
thereof) cease to create a valid security interest in the Collateral purported to be covered
thereby or such security interest shall for any reason (other than as permitted herein or in any
Collateral Document) cease to be a perfected and first priority security interest subject to
Permitted Liens.



     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 Lender:



     (a) 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, notice of intent to
accelerate,
notice of acceleration or other notice of any kind, all of which are hereby expressly waived
by the Borrower; and



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     (b) exercise on behalf of itself and the Lender all rights and remedies available to it and
the Lender under the Loan Documents or applicable Law;


provided, however, that upon the occurrence of any event specified in subsection (f) of Section
8.01, the unpaid principal amount of the outstanding Renewal Term Loan and all interest and other
amounts as aforesaid shall automatically become due and payable as of the date of such occurrence
and the Borrower’s obligation to pay such amounts shall be absolute and unconditional, and, to the
fullest extent permitted by applicable Law, shall not be subject to any defense or be affected by a
right of set-off, counterclaim or recoupment which the Borrower may now or hereafter have against
the Administrative Agent, the Lender or any other Person for any reason whatsoever.




     8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or
after the Renewal Term Loan has automatically become immediately due and payable 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 as set forth in Section 2.08(d).



ARTICLE IX.

ADMINISTRATIVE AGENT




     9.01 Appointment and Authorization of Agents. Lender hereby irrevocably appoints, designates
and authorizes the Administrative Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any other Loan Document, together
with such powers as are reasonably incidental thereto.



     9.02 Delegation of Duties. The Administrative Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents (including the Collateral Agent),
employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or
experts concerning all matters pertaining to such duties. Neither the Administrative Agent nor
Collateral Agent shall be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects in the absence of gross negligence or willful misconduct.



     9.03 Default; Collateral. (a) All rights of action under the Loan Documents and all right to the
Collateral, if any, hereunder may be enforced by the Administrative Agent (or Collateral Agent) and
any suit or proceeding instituted by the Administrative Agent (or Collateral Agent) in furtherance
of such enforcement shall be brought in its name as the Administrative Agent (or Collateral Agent)
without the necessity of joining as plaintiffs or defendants any other Lender, and the recovery of
any judgment shall be for the benefit of the Lender subject to the expenses of the Administrative
Agent and Collateral Agent. In actions with respect to any property of the Borrower or any other
Borrower, the Administrative Agent (and the Collateral Agent) is acting for the ratable benefit of
the Lender. Any and all agreements to subordinate (whether made
heretofore or hereafter) other indebtedness or obligations of Borrower to the Obligations shall be
construed as being for the ratable benefit of the Lender.



     (b) Lender authorizes and directs the Administrative Agent and the Collateral Agent to enter
into the Collateral Documents on behalf of and for the benefit of the Lender (or if previously
entered into, hereby ratifies the Administrative Agent’s and Collateral Agent’s previously entering
into such agreements and Collateral Documents).



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     (c) The Administrative Agent and Collateral Agent are each hereby authorized on behalf of the
Lender, without the necessity of any notice to or further consent from the Lender, from time to
time to take any action with respect to any Collateral or Collateral Documents which may be
necessary to perfect and maintain perfected the Liens upon the Collateral granted pursuant to the
Collateral Documents.



     (d) The Lender hereby irrevocably authorizes the Administrative Agent and/or Collateral Agent,
at its option and in its discretion, to release any Lien granted to or held by the Administrative
Agent or Collateral Agent upon any Collateral: (i) constituting property in which Borrower owned no
interest at the time the Lien was granted or at any time thereafter; (ii) constituting property
leased or granted to the Borrower under a lease, easement or right-of-way which has expired or been
terminated in a transaction permitted under the Loan Documents or is about to expire and which has
not been, and is not intended by Borrower to be, renewed; and (iii) consisting of an instrument
evidencing Indebtedness pledged to the Administrative Agent or Collateral Agent (for the benefit of
the Lender), if the Indebtedness evidenced thereby has been paid in full. In addition, the Lender
irrevocably authorize the Administrative Agent and Collateral Agent to release Liens upon
Collateral as contemplated in Section 10.01(b) or (c), or if approved, authorized, or ratified in
writing by the Lender. Upon request by the Administrative Agent (or Collateral Agent) at any time,
the Lender will confirm in writing the Administrative Agent’s (or Collateral Agent’s) authority to
release particular types or items of Collateral pursuant to this Section 9.03.



     (e) In furtherance of the authorizations set forth in this Section 9.03, the Lender hereby
irrevocably appoints the Administrative Agent and Collateral Agent its attorney-in-fact, with full
power of substitution, for and on behalf of and in the name of each the Lender (i) to enter into
Collateral Documents (including, without limitation, any appointments of substitute trustees under
any Collateral Documents), (ii) to take action with respect to the Collateral and Collateral
Documents to perfect, maintain, and preserve Lender’ Liens, and (iii) to execute instruments of
release or to take other action necessary to release Liens upon any Collateral to the extent
authorized in paragraph (f) hereof. This power of attorney shall be liberally, not restrictively,
construed so as to give the greatest latitude to the Administrative Agent’s and the Collateral
Agent’s power, as attorney, relative to the Collateral matters described in this Section 9.03. The
powers and authorities herein conferred on the Administrative Agent and Collateral Agent may be
exercised by the Administrative Agent or Collateral Agent through any Person who, at the time of
the execution of a particular instrument, is an officer of the Administrative Agent or Collateral
Agent (or any Person acting on behalf of the Administrative Agent or Collateral Agent pursuant to a
valid power of attorney). The power of attorney conferred by this Section 9.03(d) to the
Administrative Agent and Collateral Agent is granted for valuable consideration and is coupled with
an interest and is irrevocable so long as the Obligations, or any part thereof, shall remain
unpaid.



ARTICLE X.

MISCELLANEOUS




     10.01 Amendments, Reconveyance of ORRI; Release of Collateral, Etc. (a) No amendment or
waiver of any provision of this Agreement or any other Loan Document, and no consent to any
departure by the Borrower therefrom, shall be effective unless in writing signed by the Lender and
the Borrower 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.



     (b) Upon any sale, transfer, or Disposition of Collateral which is permitted pursuant to the
Loan Documents or in connection with any Approved Disposition, and upon 5 Business Days’ prior
written request by the Borrower (which request must be accompanied by (i) true and correct copies
of all



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material documents of transfer or Disposition, including any contract of sale and (ii) all
requested release instruments in form and substance satisfactory to the Administrative Agent, the
Administrative Agent and/or Collateral Agent shall (and is hereby irrevocably authorized by the
Lender to) execute such documents as may be necessary to evidence the release of Liens granted to
the Administrative Agent and/or Collateral Agent for the benefit of the Lender pursuant hereto in
such Collateral; provided any payment owing by PEC to Lender pursuant to the Asset Sale Agreement
shall be contemporaneously paid (or in the case of delivery of shares of PEC, such shares shall
have been delivered). Neither the Administrative Agent nor the Collateral Agent shall be required
to execute any release instruments on terms which, in the Administrative Agent’s (or Collateral
Agent’s) opinion, would expose the Administrative Agent or Collateral Agent to liability or create
any obligation or entail any consequence other than the release of Liens without recourse or
warranty. No such release shall impair the Administrative Agent’s and/or Collateral Agent’s Lien
on the proceeds of sale of such Collateral but only to the extent of Net Cash Proceeds related to
such Disposition and to the extent of any satisfaction of Obligations in accordance with the terms
of the Asset Sale Agreement. Lender and Administrative Agent agree that the Borrower shall have
the right first to repay any outstanding intercompany loans made by PESC to the Borrower after the
Restatement Date and prior to the date of such Disposition with the proceeds from any Disposition.




     (c) If (i) pursuant to an Approved Disposition, (A) 100% of the limited liability company
membership interest in Borrower is sold or (B) the Borrower sells all or substantially all of its
Oil and Gas Properties or (ii) the Renewal Term Loan and other Obligations (other than contingent
indemnity obligations) have been indefeasibly paid in full then, in either event, (x) the
Administrative Agent agrees to, and the Lender hereby instructs the Administrative Agent and
Collateral Agent to, at the Borrower’s expense, execute and authorize such releases of the
Collateral Documents as the Borrower shall reasonably request and this Agreement shall be deemed
terminated and (y) the Lender agrees to execute reconveyances of the ORRIs to their respective
grantors (or their designees). Lender further agrees that any payments owing under any ORRI shall
accrue and will not be payable until March 31, 2011; provided if an Approved Disposition occurs
prior to March 31, 2011, Lender agrees no payment will be made on account of accrued but unpaid
royalties under the ORRI.



     (d) The Lender and the Administrative Agent hereby waive (i) notice of the Restructure
Transactions, (ii) any notice period requirements relating to the Restructure Transactions; (iii)
any contents of the notice or other requirements associated with notice relating to the Restructure
Transactions; (iv) any provisions of the Second Amended and Restated Credit Agreement in regards to
the Restructure Transactions that would have the effect of prohibiting any or all of the
Restructure Transactions; and (v) any amendment or termination of Material Agreements (as defined
in the Amended and Restated Credit Agreement) that occurs in connection with the Restructure
Transactions.



     10.02 Notices and Other Communications; Facsimile Copies.



     (a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder and under the other Loan Documents shall be in writing
(including by facsimile transmission) and mailed, faxed or delivered, to the address, facsimile
number or (subject to subsection (c) below) electronic mail address specified for notices on
Schedule 10.02; or, in the case of the Borrower or the Administrative Agent, to such other address
as shall be designated by such party in a notice to the other parties, and in the case of any other
party, to such other address as shall be designated by such party in a notice to the Borrower and
the Administrative Agent. All such notices and other communications shall be deemed to be given or
made upon the earlier to occur of (i) actual receipt by the intended recipient and (ii) (A) if
delivered by hand or by courier, when signed for by the intended



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recipient; (B) if delivered by
mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by
facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by
electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when
delivered; provided, however, that notices and other communications to the Administrative Agent
pursuant to Article II shall not be effective until actually received by the Administrative Agent.
Any notice or other communication permitted to be given, made or confirmed by telephone hereunder
shall be given, made or confirmed by means of a telephone call to the intended recipient at the
number specified in accordance with this Section, it being understood and agreed that a voicemail
message shall in no event be effective as a notice, communication or confirmation hereunder.




     (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile or other electronic means. The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same force and effect as
manually-signed originals and shall be binding on the Borrower, the Administrative Agent and the
Lender. The Administrative Agent may also require that any such documents and signatures be
confirmed by a manually-signed original thereof; provided, however, that the failure to request or
deliver the same shall not limit the effectiveness of any facsimile document or signature.



     (c) Limited Use of Electronic Mail. Electronic mail and internet and intranet
websites may be used only to distribute routine communications, such as financial statements and
other information, and to distribute Loan Documents for execution by the parties thereto, and shall
not be recognized hereunder for any other purpose.



     (d) Reliance by Administrative Agent and Lender. The Administrative Agent and the
Lender shall be entitled to rely and act upon any notices 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 each Agent-Related
Person and the Lender 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 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 the Lender 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
or therein provided are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.



     10.04 Attorney Costs; Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the
Administrative Agent for all reasonable costs and expenses incurred in connection with the
development, preparation, negotiation, syndication, administration and execution of this Agreement
and the other Loan Documents, including the filing, recording, refiling or rerecording of any
mortgage, any pledge agreement and any Security Agreement and/or any Uniform Commercial Code
financing statements relating thereto and all amendments, supplements and modifications to any
thereof and any and all other documents or instruments of further assurance required to be filed or
recorded or refiled or rerecorded by the terms hereof or of any mortgage, any pledge agreement or
any security agreement, and any amendment, waiver, consent or other modification of the provisions
hereof and thereof (whether or not the transactions



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contemplated hereby or thereby are
consummated), and the consummation and administration of the transactions contemplated hereby and
thereby, provided however that all such costs and expenses, Attorney Costs and FA Costs of the
Administrative Agent and Lender relating to this Agreement shall not to exceed in the aggregate
$50,000, and provided further, however, that all such costs and expenses, Attorney Costs and FA
Costs of the Administrative Agent and Lender relating to this Agreement, together with all such
costs and expenses, Attorney Costs and FA Costs as defined in, and as provided for in, the credit
agreements of even date herewith relating to the $350 Million Borrowing Base Facility and the $15
Million Secured Pipeline Loan shall not exceed in the aggregate $1,000,000; and (b) to pay or
reimburse the Administrative Agent and the Lender for all costs and expenses incurred in connection
with the enforcement, attempted enforcement, or preservation of any rights or remedies under this
Agreement or the other Loan Documents (including all such costs and expenses incurred during any
workout or restructuring in respect of the Obligations and during any legal proceeding, including
any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and
expenses shall include all search, filing, recording, title insurance and appraisal charges and
fees and taxes related thereto, and other out-of-pocket expenses incurred by the Administrative
Agent and the cost of independent public accountants and other outside experts retained by the
Administrative Agent or the Lender. The agreements in this Section shall survive the repayment of
all the Obligations.




     10.05 Indemnification. Whether or not the transactions contemplated hereby are consummated, the
Borrower agrees to indemnify, save and hold harmless each Agent-Related Person, the Administrative
Agent, the Collateral Agent, the Lender and their respective Affiliates, directors, officers,
employees, counsel, agents and attorneys-in-fact (collectively the “Indemnitees”) from and against:
(a) any and all claims, demands, actions or causes of action that are asserted against any
Indemnitee by any Person (other than the
Administrative Agent or the Lender) relating directly or indirectly to a claim, demand, action or
cause of action that such Person asserts or may assert against the Borrower, PESC or any of their
respective officers or directors, arising out of or relating to, the Loan Documents, the use or
contemplated use of the proceeds of the Renewal Term Loan, or the relationship of the Borrower, the
Administrative Agent, the Collateral Agent and the Lender under this Agreement or any other Loan
Document; (b) any and all claims, demands, actions or causes of action that may at any time
(including at any time following repayment of the Obligations and the resignation of the
Administrative Agent or the replacement of the Lender) be asserted or imposed against any
Indemnitee by any Person or by the Borrower or PESC, arising out of or relating to, the Loan
Documents, the use or contemplated use of the proceeds of the Renewal Term Loan, or the
relationship of the Borrower, the Administrative Agent, the Collateral Agent and the Lender under
this Agreement or any other Loan Document; (c) without limiting the foregoing, any and all claims,
demands, actions or causes of action, judgments and orders, penalties and fines that are asserted
or imposed against any Indemnitee, (i) under the application of any Environmental Law applicable to
the Borrower or any of its properties or assets, including the treatment or disposal of Hazardous
Substances on any of its properties or assets, (ii) as a result of the breach or non-compliance by
the Borrower with any Environmental Law applicable to the Borrower, (iii) due to past ownership by
the Borrower of any of its properties or assets or past activity on any of its properties or assets
which, though lawful and fully permissible at the time, could result in present liability, (iv) due
to the presence, use, storage, treatment or disposal of Hazardous Substances on or under, or the
escape, seepage, leakage, spillage, discharge, emission or Release from, any of the properties
owned or operated by the Borrower (including any liability asserted or arising under any
Environmental Law), regardless of whether caused by, or within the control of, the Borrower, or (v)
due to any other environmental, health or safety condition in connection with the Loan Documents;
(d) any administrative or investigative proceeding by any Governmental Authority arising out of or
related to a claim, demand, action or cause of action described in subsection (a), (b) or (c)
above; and (e) any and all liabilities (including liabilities



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under indemnities), losses, costs,
damages or expenses (including Attorney Costs and settlement costs) that any Indemnitee suffers or
incurs as a result of the assertion of any foregoing claim, demand, action, cause of action or
proceeding, or as a result of the preparation of any defense in connection with any foregoing
claim, demand, action, cause of action or proceeding, in all cases, WHETHER OR NOT ARISING OUT OF
THE STRICT LIABILITY OR NEGLIGENCE OF AN INDEMNITEE, and whether or not an Indemnitee is a party to
such claim, demand, action, cause of action or proceeding (all the foregoing, collectively, the
“Indemnified Liabilities”); provided that such indemnity shall not, as to any Indemnitees, be
available to the extent that such liabilities, obligations, losses, damages, penalties, claims,
demands, actions, judgments, suits, costs, expenses or disbursements result from the gross
negligence or willful misconduct of such Indemnitee. The agreements in this Section shall survive
repayment of the Obligations.




     10.06 Payments Set Aside. To the extent that the Borrower makes a payment to the Administrative
Agent or the Lender, or the Administrative Agent or the Lender exercises its right of setoff, and
such payment or the proceeds of such set-off 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 or the 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) the Lender agrees to pay to
the Administrative Agent upon demand its applicable share 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 Rate from time to time in effect.



     10.07 Successors and Assigns.



     (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of the Lender and Lender may not assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the
provisions of paragraph (d) of this Section or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of paragraph (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
paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent and the Lender) any legal or equitable right, remedy or claim
under or by reason of this Agreement.



     (b) Lender may at any time assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement at the time owing to it; provided that:



     except in the case of an assignment of the entire remaining amount of the assigning Lender’s
Loans at the time owing to it or in the case of an assignment to an Affiliate of the Lender, the
outstanding principal balance of the Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and
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Date) shall not be less than $1,000,000, unless each of the
Administrative Agent and, so long as no Event of Default has occurred and is continuing, the
Borrower otherwise consent (Borrower’s consent not to be unreasonably withheld, conditioned or
delayed) 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 Loans assigned.
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
details form in form and substance satisfactory to the Administrative Agent.




     Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph
(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, the Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.07, 10.04 and 10.05 with respect to facts and
circumstances occurring prior to the effective date of such assignment. Any assignment or transfer
by the Lender of rights or obligations under this Agreement that does not comply with this
paragraph shall be treated for purposes of this Agreement as a sale by the Lender of a
participation in such rights and obligations in accordance with paragraph (d) of this Section.



     (c) The Administrative Agent, acting solely for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lender and principal amounts of the
Loans owing to, the Lender pursuant to the terms hereof from time to time (the “Register”). The
entries in the Register shall be conclusive absent manifest error, and the Borrower, the
Administrative Agent and the Lender may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as the Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for inspection by the
Borrower and the Lender, at any reasonable time and from time to time upon reasonable prior notice.



     (d) 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) (each, a “Participant”) in all or a portion of the
Lender’s rights and/or obligations under this Agreement (including all or a portion of its Loan
owing to it); provided that (i) the Lender’s obligations under this Agreement shall remain
unchanged, (ii) the Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with the Lender in connection with the Lender’s
rights and obligations under this Agreement. Any agreement or instrument pursuant to which the
Lender sells such a participation shall provide that the 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 the Lender will not,
without the consent of the Participant, agree to any amendment, modification or waiver that would
(i) postpone any date upon which any payment of money is scheduled to be paid to such Participant,
or (ii) reduce the principal, interest, fees or other amounts payable to such Participant. Subject
to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to
the benefits of Sections 3.01 and 3.04 to the same extent as if it were the Lender and had acquired
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to subsection (b) of this Section. To the extent permitted by
Law, each Participant also shall be entitled to the benefits of Section 10.09 as though it were the
Lender.




     (e) A Participant shall not be entitled to receive any greater payment under Section 3.01 or
3.04 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 the Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is
notified of the participation sold to such Participant and such Participant agrees, for the benefit
of the Borrower, to comply with Section 3.01 as though it were a Lender.



     (f) The 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 Renewal Term Loan Note, if any) to secure
obligations of the Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or assignment shall release the Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for the Lender as a party hereto.



     (g) If the consent of the Borrower to an assignment or to an Eligible Assignee is required
hereunder (including a consent to an assignment which does not meet the minimum assignment
threshold specified in clause (i) of the proviso to the first sentence of Section 10.07(b)), the
Borrower shall be deemed to have given its consent five Business Days after the date notice thereof
has been delivered by the assigning Lender (through the Administrative Agent) unless such consent
is expressly refused by the Borrower prior to such fifth Business Day.



     10.08 Confidentiality. The Lender agrees that it will not disclose without the prior consent of
the Borrower (other than to directors, officers, employees, auditors, accountants, counsel or other
professional advisors of the Administrative Agent or the Lender) any information with respect to
the Borrower which is furnished pursuant to this Agreement; provided that the Lender may disclose
any such information (a) as has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to or required by any municipal, state
or federal regulatory body having or claiming to have jurisdiction over the Lender or submitted to
or required by the Board or the Federal Deposit Insurance Corporation or similar organizations
(whether in the United States or elsewhere) or their successors, (c) as may be required or
appropriate in response to any summons or subpoena in connection with any litigation, (d) in order
to comply with any law, order, regulation or ruling applicable to the Lender, (e) to any Eligible
Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of
its rights or obligations under this Agreement; provided that such Eligible Assignee or Participant
or prospective Eligible Assignee or Participant executes an agreement containing provisions
substantially similar to those contained in this Section 10.08, (f) in connection with the exercise
of any remedy by the Lender if an Event of Default pertaining to the Loan Documents has occurred
and is continuing, (g) in connection with any litigation involving the Lender pertaining to the
Loan Documents, (h) to the Lender or the Administrative Agent, or (i) to any Affiliate of the
Lender (it being understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such information and obligated to keep such information confidential).



     10.09 Set-off. In addition to any rights and remedies of the Lender provided by Law, upon the
occurrence and during the continuance of any Event of Default, the Lender is authorized at any time
and from time to time, without prior notice to the Borrower, any such notice being waived by the
Borrower to the fullest extent permitted by Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held by, and other indebtedness at
any time owing by, the



Quest Eastern Amended

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53









 







Lender to or for the credit or the account of the Borrower against any and
all Obligations owing to the Administrative Agent and the Lender, now or hereafter existing,
irrespective of whether or not the Administrative Agent or the Lender shall have made demand under
this Agreement or any other Loan Document and although such Obligations may be contingent or
unmatured. Lender agrees promptly to notify the Borrower and the Administrative Agent after any
such set-off and application made by the Lender; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application.




     10.10 Interest Rate Limitation. Regardless of any provision contained in any Loan Document,
neither the Administrative Agent nor the Lender shall ever be entitled to contract for, charge,
take, reserve, receive, or apply, as interest on all or any part of the Obligations, any amount in
excess of the Maximum Rate, and, if the Lender ever does so, then such excess shall be deemed a
partial prepayment of principal and treated hereunder as such and any remaining excess shall be
refunded to the Borrower. In determining if the interest paid or payable exceeds the Maximum
Rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable Law, (a)
treat all Borrowings as but a single extension of credit (and the Lender and the Borrower agree
that such is the case and that provision herein for multiple Borrowings is for convenience only),
(b) characterize any nonprincipal payment as an expense, fee, or premium rather than as interest,
(c) exclude voluntary prepayments and the effects thereof, and (d) amortize, prorate, allocate, and
spread the total amount of interest throughout the entire contemplated term of the Obligations.
However, if the Obligations are paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period of existence thereof
exceeds the Maximum Amount, the Lender
shall refund such excess, and, in such event, the Lender shall not, to the extent permitted by Law,
be subject to any penalties provided by any Laws for contracting for, charging, taking, reserving
or receiving interest in excess of the Maximum Amount.



     10.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page of this Agreement by telecopy,
facsimile, photocopy or by sending a scanned copy by electronic mail shall be effective as delivery
of a manually executed counterpart of this Agreement. Any signature page of a counterpart may be
detached therefrom without impairing the legal effect of the signatures thereon and attached to
another counterpart identical in form thereto but having attached to it one or more additional
signature pages signed by other parties.



     10.12 Integration. This Agreement, together with the other Loan Documents, comprises the complete
and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all
prior agreements, written or oral, on such subject matter. In the event of any conflict between
the provisions of this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of
the Administrative Agent or the Lender in any other Loan Document shall not be deemed a conflict
with this Agreement. Each Loan Document was drafted with the joint participation of the respective
parties thereto and shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.



     10.13 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 the Lender, regardless of any investigation made by the Administrative Agent or the Lender or
on their behalf and notwithstanding that the Administrative Agent or the Lender may have had notice
or knowledge of



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any Default or Event of Default at the time of any Borrowing, and shall continue in
full force and effect as long as the Renewal Term Loan or any other Obligation shall remain unpaid
or unsatisfied.




     10.14 Severability. Any provision of this Agreement and the other Loan Documents to which the
Borrower is a party that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions thereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.



     10.15 Governing Law.



     (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE;
PROVIDED THAT THE ADMINISTRATIVE AGENT AND LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER
UNITED STATES FEDERAL LAW.



     (b) THE BORROWER AGREES TO THIS SECTION 10.15(b). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN THE BOROUGH OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK
AND APPELLATE COURTS FROM ANY THEREOF, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER, THE ADMINISTRATIVE AGENT AND LENDER CONSENTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE ADMINISTRATIVE AGENT AND
LENDER (1) IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT
RELATED THERETO, AND (2) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, AT ITS ADDRESS FOR NOTICES DESIGNATED
HEREIN. THE BORROWER, THE ADMINISTRATIVE AGENT AND LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH
STATE.



     10.16 Waiver of Right to Trial by Jury, Etc. EACH PARTY TO THIS AGREEMENT HEREBY (a) EXPRESSLY AND
IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES TO THE LOAN DOCUMENTS OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR
THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY,
AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH



Quest Eastern Amended

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55









 







ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH PARTY TO THIS AGREEMENT TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY; AND (b) EXPRESSLY AND IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH ACTION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES; PROVIDED THAT THE WAIVER CONTAINED IN THIS SECTION 10.16(b) SHALL NOT APPLY TO THE EXTENT
THAT THE PARTY AGAINST WHOM DAMAGES ARE SOUGHT HAS ENGAGED IN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.




     10.17 Release. As additional consideration for the execution, delivery and performance of this
Agreement by the parties hereto and to induce the Administrative Agent, the Collateral Agent and
the Lenders to enter into this Agreement, the Borrower warrants and represents to the
Administrative Agent, the Collateral Agent and the Lender that no facts, events, statuses or
conditions exist or have existed which, either now or with the
passage of time or giving of notice, or both, constitute or will constitute a basis for any claim
or cause of action against the Administrative Agent, the Collateral Agent or the Lender or any
defense to (i) the payment of Obligations under the Note and/or the Loan Documents, or (ii) the
performance of any of its obligations with respect to the Note and/or the Loan Documents. In the
event any such facts, events, statuses or conditions exist or have existed, Borrower
unconditionally and irrevocably hereby RELEASES, RELINQUISHES and forever DISCHARGES Administrative
Agent, the Collateral Agent and the Lender, as well as their predecessors, successors, assigns,
agents, officers, directors, shareholders, employees and representatives, of and from any and all
claims, demands, actions and causes of action of any and every kind or character, past or present,
which the Borrower may have against any of them or their predecessors, successors, assigns, agents,
officers, directors, shareholders, employees and representatives arising out of or with respect to
(a) any right or power to bring any claim for usury or to pursue any cause of action based on any
claim of usury, and (b) any and all transactions relating to the Loan Documents occurring prior to
the date hereof, including any loss, cost or damage, of any kind or character, arising out of or in
any way connected with or in any way resulting from the acts, actions or omissions of any of them,
and their predecessors, successors, assigns, agents, officers, directors, shareholders, employees
and representatives, including any breach of fiduciary duty, breach of any duty of fair dealing,
breach of confidence, breach of funding commitment, undue influence, duress, economic coercion,
conflict of interest, negligence, bad faith, malpractice, intentional or negligent infliction of
mental distress, tortious interference with contractual relations, tortious interference with
corporate governance or prospective business advantage, breach of contract, deceptive trade
practices, libel, slander or conspiracy, but in each case only to the extent permitted by
applicable Law.



     10.18 Release of Restatement Date Released Parties. As of the Restatement Date, the Administrative
Agent and the Lender hereby release and discharge from any liability associated with the
Indebtedness under this Agreement, the Second Amended and Restated Credit Agreement, the First
Amended and Restated Credit Agreement, the Original Credit Agreement and any Guaranty or other Loan
Document each of the Restatement Date Released Parties. The Administrative Agent is irrevocably
authorized by Lender to execute such releases and terminations of Liens and financings statements
as shall be appropriate in light of the release and discharge of the Restatement Date Released
Parties provided in this Section.



     10.19 Amendment and Restatement. This Agreement amends and restates in its entirety the Second
Amended and Restated Credit Agreement, which Second Amended and Restated Credit Agreement amended
and restated in its entirety the First Amended and Restated Credit Agreement, which First Amended
and Restated Credit Agreement amended and restated in its entirety the Original Credit



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Agreement,
and the Renewal Term Loan Note continues to evidence the Indebtedness incurred in connection with
Original Credit Agreement, as amended and restated by the First Amended and Restated Credit
Agreement, as amended and restated by the Second Amended and Restated Credit Agreement. All liens
and security interests created and existing under the Original Credit Agreement, First Amended and
Restated Credit Agreement and Second Amended and Restated Credit Agreement, other than those
granted by the Restatement Date Released Parties, shall continue in force and effect to secure the
Obligations of Borrower to the Lender pursuant to the Renewal Term Loan Note and this Agreement,
and Borrower hereby ratifies, adopts and confirms all such prior liens and security interests.




     10.20 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN 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 BETWEEN THE
PARTIES.



[Remainder of this page intentionally left blank.]




Quest Eastern Amended

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57









 







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




	 	 	 	 	 	 	 	 	 

	 	 	QUEST EASTERN RESOURCE LLC,	 	 
	 	 	a Delaware limited liability company, as Borrower,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	POSTROCK ENERGY SERVICES	 	 
	 	 	 	 	CORPORATION, its sole member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ David C. Lawler	 	 
	 

	 	 	 	 	 	 

David C. Lawler, President
	 	 
	 

	 	 	 	 	 	and Chief Executive Officer	 	 






Quest Eastern Amended

and Restated Credit Agreement





Signature Page 1







 









 








	 	 	 	 	 	 	 

	 	 	ROYAL BANK OF CANADA,	 	 
	 	 	as Administrative Agent and Collateral Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Susan Khokher	 	 
	 

	 	Name:
	 	Susan Khokher

	 	 
	 

	 	Title	 	Manager, Agency	 	 






Quest Eastern Amended

and Restated Credit Agreement




Signature Page 2







 









 








	 	 	 	 	 
	 	ROYAL BANK OF CANADA,

as Lender

 	 
	 	By:  	/s/
Leslie P. Vowell	 
	 	 	Leslie P. Vowell 	 
	 	 	Attorney-in-Fact 	 
	 



Quest Eastern Amended

and Restated Credit Agreement




Signature Page 3







 









 








EXHIBIT A-1




FORM OF BORROWING NOTICE




Date:                     ,      



To:     Royal Bank of Canada, as Administrative Agent



Ladies and Gentlemen:




     Reference is made to that certain Third Amended and Restated Credit Agreement, dated as of
September 21, 2010 (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 Quest Eastern Resource LLC, a Delaware limited liability company (the “Borrower”),
Royal Bank of Canada, as Administrative Agent and Collateral Agent, and the Lenders from time to
time party thereto.



     The undersigned hereby requests:


I. RENEWAL TERM LOAN





	 	1.	 	Amount of Renewal Term Loan Commitment: Maximum of
$43,760,206.42.
	 
	 	2.	 	Amount of Borrowing: $                     
	 
	 	3.	 	Requested date of Borrowing:                     , 2010.





     The undersigned hereby certifies that the following statements will be true on the date of the
proposed Borrowing after giving effect thereto and to the application of the proceeds therefrom:




     (a) the representations and warranties of the Borrower contained in Article V of the
Agreement are true and correct in all material respects as though made on and as of such
date (except such representations and warranties which expressly refer to an earlier date,
which are true and correct in all material respects as of such earlier date);




     (b) the amount of the requested Borrowing will not exceed the Renewal Term Loan
Commitment; and




     (c) no Default or Event of Default has occurred and is continuing, or would result from
such proposed Borrowing.



Exhibit A-1 Page 1

Form of Borrowing Notice




 









 








     The Borrowing requested herein complies with Section 2.02 of the Agreement, as applicable.



	 	 	 	 	 	 	 	 	 

	 	 	QUEST EASTERN RESOURCE LLC,

a Delaware limited liability company, as Borrower,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	POSTROCK ENERGY SERVICES

CORPORATION, its sole member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

David C. Lawler, President
	 	 
	 

	 	 	 	 	 	and Chief Executive Officer	 	 






Exhibit A-1 Page 2

Form of Borrowing Notice







 









 








EXHIBIT A-2




FORM OF CONVERSION/CONTINUATION NOTICE




Date:                     ,      



TO:     Royal Bank of Canada, as Administrative Agent



Ladies and Gentlemen:




     Reference is made to that certain Third Amended and Restated Credit Agreement, dated as of
September 21, 2010 (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 Quest Eastern Resource LLC, a Delaware limited liability company (the “Borrower”),
Royal Bank of Canada, as Administrative Agent and Collateral Agent, and the Lenders from time to
time party thereto.



     The undersigned hereby requests:


I. RENEWAL TERM LOAN FACILITY




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	1.	 	 	Amount of [conversion] [continuation]:	 	$                     	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	2.	 	 	Existing rate:	 	Check applicable blank	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(a)	 	Base Rate	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(b)	 	Eurodollar Rate Loan with	 	 	 	 
	 	 	 	 	 	 	 	 	Interest Period of:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(i)
	 	one month
	 	                    	 	 
	 

	 	 	 	 	 	 	 	(ii)
	 	two months
	 	                    	 	 
	 

	 	 	 	 	 	 	 	(iii)
	 	three months
	 	                    	 	 
	 

	 	 	 	 	 	 	 	(iv)
	 	six months
	 	                    	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	3.	 	 	If a Eurodollar Rate Loan, date of the last day of the Interest
Period for such Loan:                     , 201_.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	     The Loan described above is to be [converted] [continued] as follows:






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	4.	 	 	Requested date of
[conversion] [continuation]:                     , 200_.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	5.	 	 	Requested Type of Loan and applicable Dollar amount:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(a)	 	Base Rate Loan for $                     	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(b)	 	Eurodollar Rate Loan with Interest Period of:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(i)
	 	one month for
	 	$                     	 	 
	 

	 	 	 	 	 	 	 	(ii)
	 	two months for
	 	$                     	 	 
	 

	 	 	 	 	 	 	 	(iii)
	 	 three months for
	 	$                     	 	 
	 

	 	 	 	 	 	 	 	(iv)
	 	six months for
	 	$                     	 	 






Exhibit A-3 Page 1

Form of Conversion/Continuation Notice





 









 








     The [conversion] [continuation] requested herein complies with Section 2.02 of the Agreement,
as applicable.



	 	 	 	 	 	 	 	 	 

	 	 	QUEST EASTERN RESOURCE LLC,	 	 
	 	 	a Delaware limited liability company, as Borrower,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	POSTROCK ENERGY SERVICES

CORPORATION, its sole member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

David C. Lawler, President
	 	 
	 

	 	 	 	 	 	and Chief Executive Officer	 	 






Exhibit A-3 Page 2

Form of Conversion/Continuation Notice








 









 








EXHIBIT A-3




FORM OF REPAYMENT NOTICE




Date:                     ,      



To: Royal Bank of Canada, as Administrative Agent



Ladies and Gentlemen:




     Reference is made to that certain Third Amended and Restated Credit Agreement, dated as of
September 21, 2010 (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 Quest Eastern Resource LLC, a Delaware limited liability company (the “Borrower”),
Royal Bank of Canada, as Administrative Agent and Collateral Agent, and the Lenders from time to
time party thereto.



     The undersigned hereby is repaying the below described Loan(s) as follows:




	I.	 	RENEWAL TERM LOAN






	 	1.	 	Outstanding Principal Balance of Renewal Term Loan outstanding
prior to the repayment referred to herein: $                     
	 
	 	2.	 	Amount of repayment: $                     
	 
	 	3.	 	Date of repayment:                     , 201_.





     The repayment referred to herein complies with Section 2.03 of the Agreement.



	 	 	 	 	 	 	 	 	 

	 	 	QUEST EASTERN RESOURCE LLC,

a Delaware limited liability company, as Borrower,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	POSTROCK ENERGY SERVICES

CORPORATION, its sole member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

David C. Lawler, President
	 	 
	 

	 	 	 	 	 	and Chief Executive Officer	 	 






Exhibit A-3 Page 1

Form of Repayment Notice






 









 








EXHIBIT B




FORM OF RENEWAL TERM LOAN NOTE




			
	 	 	 
	$43,760,206.42
	 	September 21, 2010






     FOR VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to pay to the order of
ROYAL BANK OF CANADA (the “Lender”), on the Maturity Date (as defined in the Credit Agreement
referred to below) the principal amount of                      ($                    ), or such lesser principal
amount of the Renewal Term Loan made by Lender due and payable by the Borrower to the Lender on the
Maturity Date under that certain Third Amended and Restated Credit Agreement, dated as of even date
herewith (as amended, restated, extended, supplemented or otherwise modified in writing from time
to time, the “Credit Agreement”; the terms defined therein being used herein as therein defined),
among the Borrower, the Lender, and Royal Bank of Canada, as Administrative Agent and Collateral
Agent.



     The Borrower promises to pay principal and interest on the unpaid principal amount of Renewal
Term Loan from the date of such Renewal Term Loan until such principal amount is paid in full, at
such interest rates, and at such times as are specified in the Credit Agreement. All payments of
principal and interest shall be made to the Administrative Agent for the account of the Lender in
Dollars in immediately available funds to the account designated by the Administrative Agent in the
Credit Agreement. 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 Credit
Agreement.



     This Renewal Term Note is the Renewal Term Note referred to in the Credit Agreement, is
entitled to the benefits thereof and is subject to optional and mandatory prepayment in whole or in
part as provided therein. Upon the occurrence of one or more of the Events of Default specified in
the Credit Agreement, all amounts then remaining unpaid on this Renewal Term Note shall become, or
may be declared to be, immediately due and payable all as provided in the Credit Agreement. The
Renewal Term Loan 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 Renewal Term Note and endorse thereon the date, amount and maturity of its Renewal Term
Loan and payments with respect thereto.



     This Renewal Term Note is a Loan Document and is subject to Section 10.10 of the Credit
Agreement, which is incorporated herein by reference the same as if set forth herein verbatim.



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



Exhibit B Page 1

Form of Renewal Term Loan Note





 









 








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



	 	 	 	 	 	 	 	 	 

	 	 	QUEST EASTERN RESOURCE LLC,

a Delaware limited liability company, as Borrower,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	POSTROCK ENERGY SERVICES

CORPORATION, its sole member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

David C. Lawler, President
	 	 
	 

	 	 	 	 	 	and Chief Executive Officer	 	 






Exhibit B Page 2

Form of Renewal Term Loan Note








 









 









EXHIBIT C




FORM OF ASSIGNMENT AND ASSUMPTION




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



     For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as the 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 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 the 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 of [identify Lender]
	 	 	 	 	 	 	 	 
	 	 	3.	 	 	Borrower:
	 	Quest Eastern Resource LLC
	 	 	 	 	 	 	 	 
	 	 	4.	 	 	Administrative Agent:


	 	Royal Bank of Canada, as the
administrative agent under the Credit Agreement
	 	 	 	 	 	 	 	 
	 	 	5.	 	 	Credit Agreement:
	 	Third Amended and Restated Credit Agreement dated as of
September 21, 2010 among Quest Eastern Resource LLC, the Lender, and Royal Bank of
Canada, as Administrative Agent.






Exhibit C Page 1

Form of Assignment and Assumption






 









 









	 	6.	 	Assigned Interest:





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Aggregate Amount of	 	 	Amount of	 	 	 	 
	 	 	Commitment/Loans for	 	 	Commitment/Loans	 	 	Percentage Assigned of	 
	 	 	all Lender*	 	 	Assigned*	 	 	Commitment/Loans	 
	Renewal Term Loan:
	 	$	 	 	 	$	 	 	 	 	%	 





[7.      Trade Date:                                ]



Effective Date:                     , 201_ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE
THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]



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




	 	 	 	 	 
	 	ASSIGNOR

[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 
	 	ASSIGNEE

[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 





 




			
	*	 	Amount to be adjusted by the counterparties to take into account any payments or prepayments made
between the Trade Date and the Effective Date.




Consented to and Accepted:




	 	 	 	 	 

	[NAME OF ADMINISTRATIVE AGENT], as 

Administrative Agent	 	 
	 
	 	 	 	 
	By

	 	 
 

Title:
	 	 






Exhibit C Page 2

Form of Assignment and Assumption




 









 








	 	 	 	 	 	 	 

	[Consented to:]	 	 
	 
	 	 	 	 	 	 
	QUEST EASTERN RESOURCE LLC, 

a Delaware limited liability company, as Borrower,	 	 
	 
	 	 	 	 	 	 
	By:	 	POSTROCK ENERGY SERVICES	 	 
	 	 	CORPORATION, its sole member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

David C. Lawler, President
	 	 
	 

	 	 	 	and Chief Executive Officer	 	 






Exhibit C Page 3

Form of Assignment and Assumption




 









 








ANNEX 1

TO ASSIGNMENT AND ASSUMPTION

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 the 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 the
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 the 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 the Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of the 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 to the Assignment and Assumption is any documentation required to be delivered by
it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and
(b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the
Assignor or any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be performed by it as the
Lender.




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


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




Exhibit C Page 4

Form of Assignment and Assumption