**Exhibit10.1**

 

**FIRST AMENDED AND RESTATEDSENIOR SECURED CREDIT AGREEMENT**

 

Dated as of August  7, 2009

 

between

 

**HILAND HOLDINGS GP, LP**

 

as Borrower

 

and

 

**THE SECURITY NATIONAL BANK OFENID**

 

as Lender

 

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** **

**FIRSTAMENDED AND RESTATED SENIOR SECUREDCREDIT AGREEMENT**

** **

ThisFirst Amended and Restated Senior Secured Credit Agreement is made, executedand delivered effective as of August 7, 2009 (this “Agreement”), byand between HILAND HOLDINGS GP, LP, a Delaware limited partnership (the “Borrower”),and THE SECURITY NATIONAL BANK OF ENID, a national bank association (“SNB”).

 

**W I T N E S S:**

 

WHEREAS,SNB, concurrently with the execution of this Agreement, has acquired fromMidFirst Bank (and its assignees) (i) that certain promissory note (ornotes) of Borrower payable to MidFirst Bank (the “Note” or “Notes”), such Noteor Notes having been issued by Borrower pursuant to that certain Senior SecuredCredit Agreement dated as of September 26, 2006 and entered into byBorrower and MidFirst Bank (the “Existing Credit Agreement”), (ii) theExisting Credit Agreement, and (iii) all Loan Document (as defined in theExisting Credit Agrrement), including the Note or Notes, pertaining to thecredit facility provided for in the Existing Credit Agreement; and

 

WHEREAS,the Existing Credit Agreement provided for an original credit facility toBorrower in the original amount of $25,000,000, and the Borrower, subsequent tothe date of the Existing Credit Agreement, voluntarily reduced the creditfacility to $10,000,000 as evidenced by Borrower’s letter to MidFirst Bankdated May 12, 2009, and further voluntarily reduced the credit facilityfrom $10,000,000 to $3,000,000 as evidenced by Borrower’s letter to MidFirstBank dated August 4, 2009; and

 

WHEREAS,the Borrower has requested SNB amend, renew and restate the existing (which hasa current outstanding principal balance of $1,204,616.71) so as to provide fora maximum term credit facility of $3,000,000, and SNB is willing to do so uponthe terms and subject to the conditions set forth in this Agreement;

 

WHEREAS,this Agreement amends, restates and renews the original Credit Agreementbetween Borrower and MidFirst Bank dated as of September 25, 2006, asamended;

 

NOW,THEREFORE, in consideration of the foregoing premises, the mutual agreementsherein contained and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, each party hereto agrees asfollows:

 

# ***ARTICLE IDEFINITIONS AND ACCOUNTING TERMS***

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## SECTION 1.01.  Certain Defined Terms.  As used in this Agreement, the followingterms shall have the following meanings (such meanings to be equally applicableto both the singular and plural forms of the terms defined):

##  

“Advance” means an advance of funds by SNB to the Borrowerpursuant to the Term Loan.

 

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“Affiliate” of any Person means any other Person which, directlyor indirectly, controls or is controlled by or is under common control withsuch Person (excluding any trustee under, or any committee with responsibilityfor administering, any Plan).  A Personshall be deemed to be:

 

(a)           “controlledby” any other Person if such other Person possesses, directly or indirectly,power: (i) to vote 10% or more of the securities having at the time of anydetermination hereunder voting power for the election of directors of suchPerson; or (ii) to direct or cause the direction of the management andpolicies of such Person whether by contract or otherwise; or

 

(b)           “controlledby” or “under common control with” such other Person if such other Person isthe executor, administrator, or other personal representative of such Person.

 

Without limitation, each unit holder holding 10% or more of thesecurities of the Borrower and each Subsidiary of the Borrower and eachsubsidiary of any subsidiary of the Borrower shall be considered an Affiliateof the Borrower.

 

“Applicable Rate” means the rate of interestcharged on the Loan, which is National Prime Rate plus one percent (1%), but inno event less than five percent (5%), to be adjusted as changes occur in theNational Prime Rate.

 

“Borrowing” means a borrowing of an Advance made by SNB pursuantto Section 2.01.

 

“Business Day” means a day of the year on which banks are notrequired or authorized by law to close.

 

“Capital Expenditures” means material payments for assets thatwill benefit more than one accounting period, as determined in accordance withGAAP.

 

“Capitalized Lease” means any lease of real or personal propertyto the Borrower or any Subsidiary that is or should be capitalized on thebalance sheet of such Person in accordance with GAAP, together with any otherlease to such Person which is in substance a financing lease, including,without limitation, any lease under which (a) such Person has or will havean option to purchase the property subject thereto at a nominal amount or anamount less than a reasonable estimate of the fair market value of suchproperty as of the date the lease is entered into or (b) the term of thelease approximates or exceeds the expected useful life of the property leased thereunder.

 

“Cash Equivalents” means obligations issued by the United Statesgovernment or any agency thereof, and negotiable bank certificates of depositand bankers’ acceptances issued and payable in the United States; in any casematuring not later than one year after issuance.

 

“Cash Interest Expense” means for any Person for any period,total cash interest expense (including without limitation that attributable toCapitalized Lease obligations) of such Person for such period with respect toall outstanding Debt of such Person (including, without limitation, 

 

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all commissions, discounts and other fees and chargesowed by such Person with respect to letters of credit and bankers’ acceptancefinancing.

 

“Change in Control” shall be deemed to have occurred if (a) anysale, lease, exchange or other transfer (in one transaction or a series ofrelated transactions) of all, or substantially all, of the assets of theBorrower occurs; (b) any “person” as such term is used in Sections 13(d) and14(d) of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), or two or more persons acting in concert, (i) is or becomes,directly or indirectly, the “beneficial owner,” as defined in Rule 13d-3under the Exchange Act, of securities of the Borrower that represent 33% ormore of the combined voting power of the Borrower’s then outstandingsecurities, or (ii) acquires the power (whether or not exercised) to electa majority of the members of the Borrower’s Board of Directors.

 

“Consolidated” refers to the consolidation ofaccounts (including without limitation those of the Borrower and itsSubsidiaries) in accordance with GAAP.

 

“Consolidated Cash Flow” means the cash flow available to theBorrower including, without limitation, management fees paid to the Borrower,dividends paid to the Borrower and amounts available from Subsidiaries to bepaid as dividends to Borrower under surplus debentures or under sale/leasebacktransactions during such period all determined in each case withoutduplication, and all determined in accordance with GAAP.

 

“Consolidated Net Worth” means the sum of the shareholders’equity of the Borrower and its Consolidated Subsidiaries (excluding unrealizedportfolio gains and losses), calculated in accordance with GAAP, but anycapital units that are redeemable shall not be counted toward unitholders’equity.

 

“Consolidated Total Debt” means at any date, the aggregateprincipal amount of all Debt of the Borrower and its Subsidiaries at such date,determined in accordance with GAAP.

 

“Contingent Liability” means any agreement, undertaking orarrangement by which any Person (outside the ordinary course of business)guarantees, endorses, acts as surety for or otherwise becomes or is contingentlyliable for (by direct or indirect agreement, contingent or otherwise, toprovide funds for payment by, to supply funds to, or otherwise to invest in, adebtor, or otherwise to assure a creditor against loss) the Debt, obligation orother liability of any other Person (other than by endorsements of instrumentsin the course of collection), or for the payment of dividends or otherdistributions upon the shares of any other Person or undertakes or agrees(contingently or otherwise) to purchase, repurchase, or otherwise acquire orbecome responsible for any Debt, obligation or liability or any securitytherefor, or to provide funds for the payment or discharge thereof (whether inthe form of loans, advances, unit purchases, capital contributions or otherwise),or to maintain solvency, assets, level of income, or other financial conditionof any other Person, or to make payment or transfer property to any otherPerson other than for fair value received. The amount of any Person’s obligation under any Contingent Liabilityshall (subject to any limitation set forth therein) be deemed to be the lesserof (i) the outstanding principal amount (or maximum permitted principalamount, if larger) of the Debt, 

 

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obligation or other liability guaranteed or supportedthereby or (ii) the maximum stated amount so guaranteed or supported.

 

“Contractual Obligation” means, relative to any Person, anyobligation, commitment or undertaking under any agreement or other instrument towhich such Person is a party or by which it or any of its property is bound orsubject.

 

“Controlled Group” means the Borrower and any corporation, tradeor business that is, along with the Borrower, a member of a controlled group ofcorporations or a controlled group of trades or businesses as described insections 414(b) and 414(c), respectively, of the Code or in section 4001of ERISA.

 

“Debt” means, with respect to any Person, at any date, withoutduplication, (a) all obligations of such Person for borrowed money or inrespect of loans or advances; (b) all obligations of such Person evidencedby bonds, debentures, notes or other similar instruments; (c) allobligations in respect of letters of credit which have been drawn but notreimbursed by the Person for whose account such letter of credit was issued,and bankers’ acceptances issued for the account of such Person; (d) allobligations in respect of Capitalized Leases of such Person; (e) whetheror not so included as liabilities in accordance with GAAP, all obligations ofsuch Person to pay the deferred purchase price of property or services; (f) Debtof such Person secured by a Lien on property owned or being purchased by suchPerson (including Debt arising under conditional sales or other title retentionagreements) whether or not such Debt is limited in recourse (it beingunderstood, however, that if recourse is limited to such property, the amountof such Debt shall be limited to the lesser of the face amount of such Debt andthe fair market value of all property of such Person securing such Debt); (g) anyDebt of another Person secured by a Lien on any assets of such first Person,whether or not such Debt is assumed by such first Person (it being understoodthat if such Person has not assumed or otherwise become personally liable forany such Debt, the amount of the Debt of such person in connection therewithshall be limited to the lesser of the face amount of such Debt and the fairmarket value of all property of such Person securing such Debt); (h) anyDebt of a partnership in which such Person is a general partner unless suchDebt is nonrecourse to such Person; and (i) all Contingent Liabilities ofsuch Person; except that Debt shall not include (x) unsecured currentliabilities incurred in the ordinary course of business and paid within 90 daysafter the due date (unless contested diligently in good faith by appropriateproceedings and, if requested by the Lender, reserved against in conformitywith GAAP) other than liabilities that are for money borrowed or are evidencedby bonds, debentures, notes or other similar instruments or (y) anyobligations of such Person under any Primary Policy.

 

“Default” means any Event of Default or any event that wouldconstitute an Event of Default but for the requirement that notice be given ortime elapse or both.

 

“Effective Date” has the meaning specified in Section 3.01.

 

“ERISA” means the Employee Retirement Income Security Act of1974, as amended, and any successor statute of similar import, together with theregulations promulgated thereunder 

 

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and under the Internal Revenue Code, in each case asin effect from time to time.  Referencesto sections of ERISA also refer to successor sections.

 

“ERISA Event” means, with respect to the Borrower or anySubsidiary, (a) a Reportable Event (other than a Reportable Event notsubject to the provision for 30-day notice to the PBGC under regulations issuedunder section 4043 of ERISA), (b) the withdrawal of the Borrower or anyAffiliate from a Plan during a plan year in which it was a “substantialemployer” as defined in section 4001(a)(2) of ERISA if such withdrawalwould have a Material Adverse Effect on the Borrower, or on the Borrower andits Subsidiaries taken as a whole, (c) the filing of a notice of intent toterminate a Plan under a distress termination or the treatment of a Planamendment as a distress termination under section 4041(c) of ERISA, (d) theinstitution of proceedings to terminate a Plan by the PBGC under section 4042of ERISA, (e) the failure to make required contributions which wouldresult in the imposition of a Lien under section 412 of the Code or section 302of ERISA, or (f) any other event or condition which might reasonably beexpected to constitute grounds under section 4042 of ERISA for the terminationof, or the appointment of a trustee to administer, any Plan.

 

“Events of Default” has the meaning specified in Section 6.01.

 

“Executive Officer” means, as to any Person, the president, thechief financial officer, the chief executive officer, the general counsel, thetreasurer or the secretary.

 

“Existing Indebtedness” means the Debt of the Borrower or anySubsidiary reflected on Schedule 1.1 attached hereto.

 

“Financial Statements” means the financial statements referredto in Section 5.01(a).

 

“Fiscal Year” means any period of twelveconsecutive calendar months ending on the last day of December.

 

“Fiscal Quarter” means any quarter of a Fiscal Year.

 

“FRB” means the Board of Governors of the Federal ReserveSystem, and any Governmental Authority succeeding to any of its principalfunctions.

 

“GAAP” means generally accepted accounting principles set forthfrom time to time in the opinions and pronouncements of the AccountingPrinciples Board and the American Institute of Certified Public Accountants andstatements and pronouncements of the Financial Accounting Standards Board (oragencies with similar functions of comparable stature and authority within theU.S. accounting profession), which are applicable to the circumstances as ofthe date of determination.

 

“Governmental Authority” means any nation or government, anystate or other political subdivision thereof, and any entity exercisingexecutive, legislative, judicial, regulatory or administrative functions of orpertaining to government.

 

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“Internal Revenue Code” means the Internal Revenue Code of 1986,as amended from time to time, and the regulations promulgated and rulingsissued thereunder.

 

“Late Charge” has the meaning specified in Section 2.04.

 

“Law” means all ordinances, statutes, rule, regulations, orders,injunctions, policies, writs or decrees of any Governmental Authority orpolitical subdivision or agency thereof or any court or similar entity ortribunal established by any thereof.

 

“Lenders” means SNB and each Person that executes and deliversto SNB a participation agreement acceptable to SNB and becomes a party to thisAgreement, as contemplated by the terms of Section 7.07(a).  SNB and each such other Person shall beconsidered Lenders only so long as they retain interests herein.

 

“Lien” means, when used with respect to any Person, any interestin any real or personal property, asset or other right held, owned or beingpurchased or acquired by such Person for its own use, consumption or enjoymentwhich secures payment or performance of any obligation and shall include anymortgage, lien, pledge, encumbrance, charge, retained title of a conditionalvendor or lessor, or other security agreement, mortgage, deed of trust, chattelmortgage, assignment, pledge, retention of title, financing or similarstatement or notice, or other encumbrance arising as a matter of law, judicialprocess or otherwise.

 

**“**Loan Documents” meansthis Agreement, the Note, each Notice of Borrowing, each Guaranty, theAssignment Agreement, the Pledge Agreement, each Security Agreement, and allother agreements, instruments, certificates, financing statements, documents,schedules or other written indicia delivered by the Borrower or any of itsSubsidiaries or any other Person in connection with any of the foregoing.

 

“Loan” means the Term Loan.

 

“Material Adverse Effect” means, the occurrenceof an event (including any adverse determination in any litigation, arbitration,or governmental investigation or proceeding), which has or could reasonably beexpected to have a materially adverse effect on (a) the assets, business,financial condition or operations of the Borrower and its Subsidiaries taken asa whole; or (b) the ability of the Borrower to perform any of its paymentor other material obligations under any of the Loan Documents; or (c) thelegality, validity, binding effect or enforceability against the Borrower orany Subsidiary of any Loan Document that by its terms purports to bind theBorrower or any Subsidiary.

 

“Material Subsidiary” means (a) each other Subsidiary ofthe Borrower and Subsidiary of Subsidiaries of the Borrower that either (i) asof the end of the most recently completed Fiscal Year of the Borrower for whichaudited financial statements are available, has assets that exceed 10% of thetotal Consolidated assets of the Borrower and all its Subsidiaries as of thelast day of such period or (ii) for the most recently completed FiscalYear of the Borrower for which audited 

 

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financial statements are available, has revenues thatexceed 10% of the Consolidated revenue of the Borrower and all of itsSubsidiaries for such period.

 

“Multiemployer Plan” means a “multiemployer plan” as defined insection 4001(a)(3) of ERISA, and to which the Borrower or any of theSubsidiaries is making, or is obligated to make, contributions, or has made, orhas been obligated to make, contributions.

 

“National Prime Rate” shall mean the annual rate ofinterest, from day to day, as published in the Wall Street Journal, EasternEdition, Money Rates section (or, if no longer available or published, asimilar publication) and designated as the Prime Rate, which is the base rateon corporate loans at large U.S. money center commercial banks, or if two (2) suchrates are published, the higher of the two (2) rates.

 

**“**Net Income” meansfiscal year-to-date after-tax net income from continuing operations asdetermined in accordance with GAAP.

 

“Net Worth” means the sum of the shareholders’ equity of theBorrower and its Consolidated Subsidiaries, calculated in accordance with GAAP,but any capital units that are redeemable shall not be counted towardshareholders’ equity.

 

“Note” means the Term Loan Note.

 

“Notice of Borrowing” has the meaning specified in Section 2.01(c).

 

“Obligations”means shall mean the obligations of the Borrower:

 

(a)           topay the principal, interest, commitment fees and any other liabilities of theBorrower to SNB under this Agreement and the other Loan Documents in accordancewith the terms thereof;

 

(b)           toreimburse SNB, on demand, for all of SNB’s expenses and costs, including,without limitation, the reasonable fees and expenses of its counsel, inconnection with the negotiation, preparation, administration, amendment,modification, or enforcement of this Agreement and the documents requiredhereunder.

 

“Operating Lease” means any lease of real or personal propertyto the Borrower or any Subsidiary that is not a Capitalized Lease.

 

“Organization Documents” means, for any corporation orcooperative, the certificate or articles of incorporation, the bylaws, anycertificate of determination or instrument relating to the rights of preferredshareholders of such corporation, any shareholder rights agreement, and allapplicable resolutions of the board of directors (or any committee thereof) ofsuch corporation.

 

“PBGC” means the Pension Benefit Guaranty Corporation (or anysuccessor).

 

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“Permitted Investment” means, at any time:

 

(a)           anyevidence of Debt issued or guaranteed by the United States Government;

 

###### (b)           commercial paper, maturingnot more than one year from the date of issue, which is issued by (i) acorporation (except an Affiliate of the Borrower) rated at least A-2 byS&P, P-2 by Moody’s or D-2 by Duff & Phelps Credit Rating Company,or (ii) any Lender (or its holding company);

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###### (c)           any certificate of depositor bankers’ acceptance or eurodollar time deposit, maturing not more than threeyears after the date of issue, which is issued by either (i) a financialinstitution which is rated at least BBB+ by S&P or Duff & PhelpsCredit Rating Company or Baa1 by Moody’s or 3 or above by the NationalAssociation of Insurance Commissioners, or (ii) any Lender;

######  

### (d)           any repurchase agreementwith a term of one year or less which (i) is entered into with (A) anyLender, or (B) any other commercial banking institution of the staturereferred to in clause (c)(i), and (ii) is secured by a fullyperfected Lien in any obligation of the type described in any of clauses (a) through(c) that has a market value at the time such repurchase agreementis entered into of not less than 100% of the repurchase obligation of suchLender (or other commercial banking institution) thereunder;

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### (e)           investments in money marketfunds that invest solely in Permitted Investments described in clauses (a) through(d);

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### (f)            investments in short-termasset management accounts offered by any Lender for the purpose of investing inloans to any corporation (other than an Affiliate of the Borrower) organizedunder the laws of any state of the United States or of the District of Columbiaand rated at least A-1 by S&P or P-1 by Moody’s;

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### (g)           investments in non-equitysecurities which are rated at least BBB by S&P or Duff & PhelpsCredit Rating Company or Baa3 by Moody’s or 2 or above by the NationalAssociation of Insurance Commissioners, provided that the value of suchinvestments held by the Borrower or by any Subsidiary that have any of thelowest of such ratings does not exceed ten percent (10%) of the value of allPermitted Investments held by such Person, determined in accordance with GAAP,as applicable;

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### (h)           investment in equitysecurities, including common and subordinated units, limited to 10% of theconsolidated assets;

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### (i)            investments in non-equitysecurities which are not rated but are determined by the Borrower’s investmentmanagers to be of comparable quality to investments permitted under clause(g); provided, however, that as promptly as practicable uponreceipt of a written notice from SNB stating that an investment is notpermitted under this clause (i), the Borrower shall sell suchinvestment; and

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### (j)            investments in the capitalunits or preferred equity interests issued by a Material Subsidiary, providedthat all assets thereof are invested solely in Permitted Investments describedin clauses (a) through (i).

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“Person” means an individual, partnership, corporation(including a business trust), joint stock company, trust, unincorporatedassociation, joint venture, limited liability company or other entity, or agovernment or any political subdivision or agency thereof.

 

“Plan” means any “employee pension benefit plan,” as such termis defined in ERISA, which is subject to Title IV of ERISA (other than aMultiemployer Plan), and as to which any entity in the Controlled Group has ormay have any liability, including any liability by reason of having been asubstantial employer within the meaning of section 4063 of ERISA for any timewithin the preceding five years or by reason of being deemed to be acontributing sponsor under section 4069 of ERISA.

 

“Pledge Agreement” has the meaning specified in Section 3.01(g).

 

“Pledged CollateralMarket Value” means the cumulative value of the following in each caseowned by the Borrower and its Subsidiaries: (a) the Hiland Common Units (asdefined in Section 3.01 (g)(i) below), (b) the Hiland Subordinated Units (asdefined in Section 3.01 (g)(i) below) and (c) any assets acquired after theClosing Date in which a security interest has been granted to Lender andperfected, in each case, pursuant to the terms hereof. For purposes of thisdefinition, the value of (i) the Hiland Common Units on any date shall be theclosing price for such Hiland Common Units as reflected on the NASDAQsecurities exchange on such date, (ii) the Hiland Subordinated Units on anydate shall be deemed to equal 85% of the value of the Hiland Common Units onsuch date and (iii) the assets referred to in clause (c) above shall be thefair market value of such assets as reasonably valued by Lender and subject tothird-party verification as deemed necessary by the Administrative Agent.

 

“Quarterly Statement” means a quarterly financial statement thatotherwise meets the requirements set forth in the definition of “AnnualStatement.”

 

“Requirement of Law” for any Person means the OrganizationDocuments of such Person, and any law, treaty, rule, ordinance or regulation ordetermination of an arbitrator or a court or other governmental authority, ineach case applicable to or binding upon such Person or any of its property orto which such Person or any of its property is subject.

 

“S&P” means Standard & Poor’s, a division of TheMcGraw-Hill Companies, Inc.

 

“Security Agreement” has the meaningspecified in Section 3.01.

 

“Senior Debt” means the Obligations.

 

“Senior Debt Leverage Ratio” means the ratio of Senior Debt toConsolidated Net Worth.

 

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“Subsidiary” means a Person of which the indicated Person and/orits other Subsidiaries, individually or in the aggregate, own, directly orindirectly, such number of outstanding shares or other equity interests as haveat the time of any determination hereunder more than 50% of the ordinary votingpower; provided that, Hiland Partners, LP, a Delaware limited partnership andits subsidiaries and Hiland Partners GP, LLC, a Delaware limited liabilitycompany and its subsidiaries shall not be considered “Subsidiary” for thepurposes of this Agreement., “Subsidiary” means a direct or indirect Subsidiaryof the Borrower.

 

“Term Loan” means the Loan made to the Borrower by SNB pursuantto Section 2.01.

 

“Term Loan Commitment” has the meaning specified in Section 2.01.

 

“Term Loan Note” has the meaning specified in Section 2.01.

 

“Termination Date” has the meaning specified in Section 2.01.

 

“Welfare Plan” means any “employee welfare benefit plan” as suchterm is defined in ERISA, as to which the Borrower has any liability.

 

## SECTION 1.02.  Computation of Periods.  In this Agreement in the computation ofperiods from a specified date to a later specified date, the word “from” means “fromand including” and the words “to” and “until” each mean “to but excluding”.

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## SECTION 1.03.  Conventions.  Unless otherwise defined or the contextotherwise requires, all financial and accounting terms used herein or in any ofthe Loan Documents or any certificate or other document made or delivered pursuanthereto shall be defined in accordance with GAAP, as the context mayrequire.  When used in this Agreement,the term “financial statements” shall include the notes and schedules thereto,except that Borrower shall not be required to furnish notes and schedules withany Quarterly Statement.  When usedherein, the terms “best knowledge of” or “to the best knowledge of” any Personshall mean matters within the actual knowledge of such Person (or an ExecutiveOfficer or general partner of such Person) or which should have been known bysuch Person after reasonable inquiry. The definition of any agreement, instrument or document shall alsoinclude any amendment or modification of or supplement to the same.  References to the Borrower or any Subsidiaryshall also include its permitted successors and assigns.

 

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# * *

# ***ARTICLE IIAMOUNTS AND TERMS OF THE LOANS***

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SECTION 2.01. The Term Loan Facility.  Upon the terms and conditions set forthherein, SNB shall make available to the Borrower, commencing on the EffectiveDate and until the Termination Date, Advances under the Term Loan in theaggregate maximum principal amount not to exceed Three Million Dollars($3,000,000) (the “Term Loan Commitment”); provided, however, there shall be nore-advances of principal once the Term Loan has been fully advanced.

 

(a)           Generally.  On the Effective Date subject to the termsand conditions set forth herein, SNB shall provide to the Borrower the Loan inthe form of one or more Advances under the Term Loan Facility which shall beused by the Borrower as set forth herein and the initial Advance shall occur onthe Effective Date and shall be in the amount $2,500,000, including theexisting principal balance of $1,204,616.71. The Borrower shall not be permitted to reborrow any amount or anyportion of any amount repaid by the Borrower under this Term Loan.  The principal balance of the Loan shall bearinterest at the Applicable Rate, which is National Prime Rate plus one percent(1%) but in no event shall the Applicable Rate be less than five percent(5%).  The Applicable Rate shall beadjusted on the same date of any change in the National Prime Rate.

 

(b)           Commitment. Subject to the terms andconditions set forth herein, Lender agrees to make Advances on the Loan to theBorrower from time to time in an aggregate principal amount that will notresult in (i) the principal balance due under the Loan exceeding fiftypercent (50%) of the Pledged Collateral Market Value.

 

## (c)           Principal And InterestPayments.  Commencingwith the first day of September, 2009, and on the first day of each monththereafter until the Maturity Date, the Borrower shall pay all accrued intereston the Term Loan due as of the date of payment. All principal and unpaid interestshall become fully due and payable on December 31, 2009.

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### (d)           Default Interest.  Upon the occurrence and during thecontinuance of an Event of Default, the Borrower shall pay interest, on theunpaid principal balance under the Note at a rate equal to the National PrimeRate plus seven percent (7%).

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### (e)           Term Note.  The obligations of the Borrower to repay theaggregate outstanding principal under the Term Loan and to pay accruedinterest, fees and expenses thereon shall be evidenced by a promissory note, ina principal amount equal to the Term Loan Commitment, in form and substancesatisfactory to SNB, to be executed and delivered to SNB concurrently with theexecution and delivery of this Agreement (as amended, the “Term Note”). SNB ishereby authorized to record the date, type, and amount of each Advance, thedate and amount of each payment or prepayment of principal thereof, on theschedule annexed to and constituting a part of the Term Note, and any suchrecordation shall constitute *prima facie*evidence of the accuracy of the information so recorded absent manifest error,provided that neither the failure to record nor any error in such recordationshall affect the Borrower’s obligations under the Term Note.

 

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SECTION 2.02.  NOT USED

 

SECTION 2.03.  Prepayments.(a) The  Borrower shall have theright to prepay an Advance, in whole or in part, without penalty or premium, atany time.

 

(b)           All prepayments under this Section 2.03shall be made without set-off, deduction or counterclaim, shall include paymentof any accrued and unpaid interest and fees in respect of the Loan and (ifapplicable), and applications of prepayments to principal shall first beapplied to any installment of principal then due, and then be applied to theprincipal due in the reverse order of maturity, and no partial prepayment shallrelieve the Borrower of the obligation to pay each subsequent installment ofprincipal when due.

 

## SECTION 2.04.  Late Charges.  Any payment owed by the Borrower under anyLoan Document not made by the Borrower within 10 days of the date when dueshall, at the option of SNB, bear late charges thereon calculated at a rateequal to five percent (5%) of each deliquent payment ( “Late Charge”).

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## SECTION 2.05.  Payments and Computations. (a) TheBorrower shall make each payment hereunder, irrespective of any right ofcounterclaim or set-off, not later than 1:00 P.M. (Oklahoma time) on theday when due  to SNB.

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### (b)           Whenever anypayment due hereunder or under any other Loan Document shall be stated to bedue on a day other than a Business Day, such payment shall be made on the nextsucceeding Business Day, and such extension of time shall in such case beincluded in the computation of payment of interest or fee, as the case may be; provided,however, that such extension of time shall not be applicable forpurposes of calculating or complying with any of the covenants containedherein.

###  

(c)           All computations by SNBshall be conclusive and binding for all purposes absent manifest error. Bothprincipal and interest are payable in lawful money of the United States ofAmerica and in immediately available funds.

 

## SECTION 2.06.  Taxes. (a) Any and all paymentsby the Borrower under any Loan Document to or for the account of SNB shall bemade, in accordance with Section 2.05 or the applicable provisions of suchother documents, free and clear of and without deduction for any and allpresent or future taxes, levies, imposts, deductions, charges or withholdings,and all liabilities with respect thereto, excluding, taxes imposed onSNB’s overall net income, and taxes imposed on SNB in lieu of net income taxes,by the jurisdiction under the laws of which SNB is organized or doing business(other than as a result of the making of the Advances) or any politicalsubdivision thereof (all such non-excluded taxes, levies, imposts, deductions,charges, withholdings and liabilities in respect of payments under any LoanDocument being hereinafter referred to as “Taxes”).  If the Borrower shall be required by law todeduct any Taxes from or in respect of any sum payable under any Loan Documentto SNB, (i) the sum payable shall be increased as may be necessary so thatafter making all required deductions (including deductions applicable to additionalsums payable under this Section 2.06) SNB receives an amount equal to 

 

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##  

## the sum it would havereceived had no such deductions been made, (ii) the Borrower shall makesuch deductions and (iii) the Borrower shall pay the full amount deductedto the relevant taxation authority or other authority in accordance withapplicable law.

##  

### (b)           In addition,the Borrower shall pay any present or future stamp or documentary taxes or anyother excise or property taxes, charges or similar levies that arise from anypayment made under any Loan Document or from the execution, delivery orregistration of, performing under, or otherwise with respect to, this Agreementor the Note(s) or any other documents to be delivered hereunder(hereinafter referred to as “Other Taxes”).

###  

### (c)           The Borrowershall indemnify SNB for and hold it harmless against the full amount of Taxesor Other Taxes (including, without limitation, taxes of any kind imposed orasserted by any jurisdiction on amounts payable under this Section 2.06)imposed on or paid by SNB (as the case may be) and any liability (includingpenalties, interest and expenses) arising therefrom or with respectthereto.  This indemnification shall bemade within 30 days from the date SNB makes written demand therefore.

###  

### (d)           Within 30 daysafter the date of any payment of Taxes, the Borrower shall furnish to SNB, atits address referred to in Section 7.02, the original or a certified copyof a receipt evidencing such payment to the extent such a receipt is issuedtherefor, or other written proof of payment thereof that is reasonablysatisfactory to SNB.

###  

## SECTION 2.07.  Use of Proceeds.  The proceeds of the Loans shall be availableand the Borrower agrees that it shall use the Loan proceeds for generalcorporate purposes consistent with this Agreement.

##  

# ***ARTICLE IIICONDITIONS TO EFFECTIVENESS AND LENDING***

# * *

## SECTION 3.01.  Conditions Precedent to Effectiveness ofthis Agreement.  This Agreement shallbecome effective on the date (the “Effective Date”) SNB determines thefollowing conditions precedent have been satisfied:

##  

## (a)           Since December 31, 2008there shall have occurred no event or circumstance that individually or in theaggregate could reasonably be expected to have a Material Adverse Effect.

##  

#### (b)           There shall exist no action,suit, investigation, litigation or proceeding affecting the Borrower or any ofits Subsidiaries pending or threatened in writing before any court,governmental agency or arbitrator that (i) could be reasonably likely tohave a Material Adverse Effect or (ii) purports to affect the legality,validity or enforceability of any Loan Document or the consummation of thetransactions contemplated hereby.

####  

#### (c)           All governmental and thirdparty consents and approvals necessary in connection with the transactionscontemplated hereby shall have been obtained (without the

 

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####  

#### imposition of any conditionsthat are not acceptable to SNB) and shall remain in effect, and no law orregulation shall be applicable in the reasonable judgment of SNB thatrestrains, prevents or imposes materially adverse conditions upon thetransactions contemplated hereby.

####  

#### (d)           The Borrower shall havenotified SNB in writing as to its proposed Effective Date.

####  

#### (e)           The Borrower shall have paidall accrued fees and expenses of SNB (including the accrued fees and expensesof counsel to SNB).

####  

#### (f)            On the Effective Date, thefollowing statements shall be true and correct in all material respects and SNBshall have received a certificate signed by a duly authorized officer of theBorrower, dated the Effective Date, stating that:

####  

##### (i)            The representations andwarranties contained in each Loan Document are correct on and as of theEffective Date (except any representation that speaks as of a specified priordate), and

#####  

##### (ii)           No event has occurred and iscontinuing that constitutes a Default or Event of Default.

#####  

#### (g)           SNB shall have received onor before the Effective Date the following, each dated such day, in form andsubstance satisfactory to SNB and in sufficient copies:

####  

##### (i)            A pledge agreement, pledging2,321,471 common units of Hiland Partners, LP, a Delaware limited partnership(the ‘Hiland Common Units”) and 3,020,000 subordinated units of HilandPartners, LP, a Delaware limited partnership (the “Hiland Subordinated Units”),all owned by the Borrower, in form and substance acceptable to SNB (as amended,the “Pledge Agreement”), duly executed by the Borrower.

#####  

##### (ii)           If required by SNB, asecurity agreement, granting SNB a first-priority security interest in thecollateral described therein, in form and substance acceptable to SNB (asamended, the “Security Agreement”), duly executed by the Borrower.

#####  

##### (iii)          Evidence that all otheraction that SNB may deem necessary or desirable in order to perfect and protectthe first priority liens and security interests created under the SecurityAgreement, including, without limitation, the filing of Uniform Commercial Codefinancing statements and the delivery to SNB of certificates covering thecommon units and subordinated units intended to be subject to a first-prioritypledge under the terms of the Pledge Agreement together with executed stockpowers.

#####  

##### (v)           Certified copies of theresolutions of the Board of Directors of the Borrower approving the LoanDocuments, and of all documents evidencing other necessary corporate action andgovernmental approvals, if any, with respect to the Loan Documents.

#####  

##### 15

##### 

#####  

##### (vii)         A certificate of the Secretaryor an Assistant Secretary of the Borrower certifying the names and truesignatures of the officers of such party authorized to sign the Loan Documentsand the other documents to be delivered hereunder, together with OrganizationDocuments and Certificates of Good Standing.

#####  

##### (viii)        NOT USED.

#####  

##### (ix)           NOT USED.

#####  

##### (x)            A copy of the draft auditedConsolidated balance sheets of the Borrower and its Subsidiaries as of FiscalYear ending December 31, 2008, and the related Consolidated statements ofincome and cash flows for such Fiscal Year all prepared in accordance with GAAP(subject to normal year-end adjustments and except that footnote and scheduledisclosure may be abbreviated), accompanied by the certification of the chiefexecutive officer, chief financial officer or treasurer of the Borrower that tothe best knowledge and belief of the Borrower all such financial statements arecomplete and correct and present fairly in accordance with GAAP (subject tonormal year-end adjustments) the Consolidated results of operations and cashflows of the Borrower as at the end of such Fiscal Year and that the auditedversion of such financial statements will not be materially different.

#####  

##### (xi)           A duly executed original ofeach other Loan Document.

#####  

##### (xii)          A copy (certified by theBorrower as true and complete) of the existing documents evidencing theExisting Indebtedness.

#####  

#### (h)           SNB shall have received anyschedules (satisfactory to SNB) to this Agreement, in form and substancesatisfactory to SNB.

####  

(i)            SNB shall have received suchother documents, or such other action shall have been taken, in connection withthe foregoing, as SNB may reasonablyrequest.

 

SECTION 3.02.  ConditionsPrecedent to the Making of the Advance. The obligation of SNB to make the Advance on the occasion of eachBorrowing shall be subject to the conditions precedent that the Effective Dateshall have occurred and on the date of such Borrowing, the following statementsshall be true:

 

(i)            the representations andwarranties contained in each Loan Document are correct on and as of such date,and

 

(ii)           no event has occurred and iscontinuing, or would result from such Borrowing or from the application of theproceeds therefrom, that constitutes a Default or Event of Default;

 

(b)           The Borrower shall have paidall accrued fees and expenses of SNB (including the accrued fees and expensesof counsel to SNB);

 

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# ***ARTICLE IV***

# ***REPRESENTATIONS AND WARRANTIES***

# * *

SECTION 4.01.  Representationsand Warranties of the Borrower.  TheBorrower represents and warrants as follows:

 

a)             Due Organization,Authorization, etc.  TheBorrower and each Subsidiary (i) is a corporation, limited liabilitycompany or partnership duly organized, validly existing and (to the extentapplicable) in good standing under the laws of its jurisdiction of formation, (ii) isduly qualified to do business and (to the extent applicable) in good standing ineach jurisdiction where, because of the nature of its activities or properties,such qualification is required except where the failure to qualify would nothave a Material Adverse Effect, which jurisdictions are set forth with respectto the Borrower and each Subsidiary on Schedule 4.01(a),  (iii) has the requisite corporate powerand authority and the right to own and operate its properties, to lease theproperty it operates under lease, and to conduct its business as now andproposed to be conducted, and (iv) has obtained all material licenses,permits, consents or approvals from or by, and has made all filings with, andgiven all notices to, all Governmental Authorities having jurisdiction, to theextent required for such ownership, operation and conduct (including, withoutlimitation, the consummation of the transactions contemplated by thisAgreement) as to each of the foregoing, except where the failure to do so wouldnot have a Material Adverse Effect.  Theexecution, delivery and performance by the Borrower and its Subsidiaries of theLoan Documents to which they are parties respectively, and the consummation ofthe transactions contemplated thereby are within their respective corporatepowers and have been duly authorized by all necessary corporate action(including, without limitation, shareholder approval, if required).  Each of the Borrower and its Subsidiaries hasreceived all other material consents and approvals (if any shall be required)necessary for such execution, delivery and performance, and such execution,delivery and performance do not and will not contravene or conflict with, orcreate a Lien or right of termination or acceleration under, any Requirement ofLaw or Contractual Obligation binding upon the Borrower or such Material Subsidiaries.  Each of this Agreement and each other LoanDocument is (or when executed and delivered will be) the legal, valid, andbinding obligation of such of the Borrower and its Subsidiaries as are partiesto such agreements respectively, enforceable against such parties in accordancewith such agreements’ respective term, except (i) as limited by applicablebankruptcy, insolvency, reorganization, moratorium, and other laws of generalapplication affecting creditors’ rights generally and (ii) as limited bylaws relating to the availability of specific performance, injunctive relief orother equitable remedies; provided that the Borrower assumes forpurposes of this Section 4.01(a) that this Agreement and the otherLoan Documents have been validly executed and delivered by each of the partiesthereto other than the Borrower and its Subsidiaries.

 

(b)           Books of Account.  All books of account of the Borrower and eachSubsidiary fully and fairly disclose all of the transactions, properties,assets, investments,

 

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liabilitiesand obligations of the Borrower and each such Subsidiary in all materialrespects and all of such books of account are in the possession of the Borrowerand each such Subsidiary and are true, correct and complete in all materialrespects.

 

(c)           Financial Statements.  (i)  With respect to any representationand warranty which is deemed to be made after the date hereof by the Borrower,the balance sheet and statements of operations, of shareholders’ equity and ofcash flow, which as of such date shall most recently have been furnished by oron behalf of the Borrower to SNB for the purposes of or in connection with thisAgreement or any transaction contemplated hereby, shall have been prepared inaccordance with GAAP consistently applied (except as disclosed therein and, inthe case of interim financial statements, for the absence of footnotedisclosures), and shall present fairly the Consolidated financial condition ofthe corporations covered thereby as at the dates thereof for the periods thenended, subject, in the case of quarterly financial statements, to normalyear-end audit adjustments.  (ii) Exceptas set forth on Schedule 4.01(c), there has been no change in the business,assets, operations or financial condition of the Borrower or any Subsidiarywhich has had or could reasonably be expected to have a Material Adverse Effectfrom that shown on the Borrower’s audited consolidated financial statementsdated December 31, 2008, the Subsidiaries’ Annual Statements dated December 31,2008, all of which statements have been furnished to SNB.

 

(d)           Litigation and ContingentLiabilities.  Except asset forth (including estimates of the dollar amounts involved) in Schedule4.01(d), no claim, litigation (including, without limitation, derivativeactions), arbitration, governmental investigation or proceeding or inquiry ispending or threatened against the Borrower or any of its Subsidiaries (i) whichwould, if adversely determined, have a Material Adverse Effect or (ii) whichrelates to any of the transactions contemplated hereby.  Other than any liability incident to suchclaims, litigation or proceedings, the Borrower has no material ContingentLiabilities not provided for or referred to in the financial statementsdelivered pursuant to Section 3.01(g)(x).

 

(e)           Employee Benefit Plans.  Set forth on Schedule 4.01(e) is a listof all welfare plans and all pension plans, within the meaning of sections 3(1) and(2) of ERISA, respectively, which, to the knowledge of the Borrower, aremaintained with respect to employees of the Borrower or its Subsidiaries.  Also set forth in Schedule 4.01(e) is alist of all Multiemployer Plans, all Welfare Plans and all Plans which theBorrower has adopted or expects to adopt.

 

(f)            Investment Company Act.  Neither the Borrower nor any of itsSubsidiaries is an “investment company” or a company “controlled by aninvestment company,” within the meaning of the Investment Company Act of 1940,as amended.

 

(g)           Regulations U and X.  Neither the Borrower nor any of itsSubsidiaries is engaged principally, or as one of its important activities, inthe business of extending credit for the purpose of purchasing or carryingmargin stock.  None of the Borrower, anyof its Subsidiaries, any Affiliate of any of them or any Person acting on theirbehalf has taken or will take action to cause the execution, delivery orperformance of this Agreement, the making or

 

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existenceof the Advances or the use of proceeds of Advances to violate Regulations U orX of the FRB.

 

(h)           Proceeds.  The proceeds of the Advances will be used asprovided in Section 2.07.  None ofsuch proceeds will be used in violation of applicable law, and none of suchproceeds will be used, directly or indirectly, for the purpose, whetherimmediate, incidental or ultimate, of buying or carrying any margin stock asdefined in Regulation U or X of the FRB.

 

(i)            Ownership of Properties.  On the date of any Loan or Advance, the Borrowerand its Subsidiaries will have good title to all of their respective materialproperties and assets, real and personal, of any nature whatsoever and, exceptas set forth on Schedule 4.01(i) and except for Liens permitted under Section 5.02(l),all such assets are free and clear of all Liens.

 

(j)            Accuracy of Information.  All factual written information furnishedheretofore or contemporaneously herewith by or on behalf of the Borrower or anyof its Subsidiaries to SNB for purposes of or in connection with this Agreementor any of the transactions contemplated hereby, as supplemented to the datehereof, is and all other such factual written information hereafter furnishedby or on behalf of the Borrower or any of its Subsidiaries (including, withoutlimitation, information such as notice of judgments involving the officers anddirectors of the Borrower and its Subsidiaries) to SNB will be true andaccurate in every material respect on the date as of which such information isdated or certified and not incomplete by omitting to state any material factnecessary to make such information not misleading.

 

(k)           Subsidiaries.  Schedule 4.01(k) contains a completelist of the Borrower’s Subsidiaries indicating which Subsidiaries are MaterialSubsidiaries and/or Insurance Subsidiaries. Except as indicated on Schedule 4.01(k), each Subsidiary is awholly-owned Subsidiary of the Borrower.

 

(l)            Taxes.  Each of the Borrower and each of itsSubsidiaries has filed all tax returns that are required to be filed by it, andhas paid or provided adequate reserves for the payment of all material taxes,including, without limitation, all payroll taxes and federal and statewithholding taxes, and all assessments payable by it that have become due,other than (a) those that are not yet delinquent or that are disclosed onSchedule 4.01(l) and are being contested in good faith by appropriateproceedings and with respect to which reserves have been established, except asset forth on Schedule 4.01(l), and are being maintained, in accordance withGAAP or (b) those which the failure to file or pay would not have aMaterial Adverse Effect.  Except as setforth in Schedule 4.01(l), there is no ongoing audit or, to the Borrower’sknowledge, other governmental investigation of the tax liability of theBorrower or any of its Subsidiaries and there is no unresolved claim by ataxing authority concerning the Borrower’s or any such Subsidiary’s taxliability, for any period for which returns have been filed or were due.  As used in this Section 4.01(l), theterm “taxes” includes all taxes of any nature whatsoever and howeverdenominated, including, without limitation, excise, import, governmental fees,duties and all other charges, as well as additions to tax, penalties andinterest thereon, imposed by any government or instrumentality, whetherfederal, state, local, foreign or other.

 

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(m)          Securities Laws.  Neither the Borrower nor any Affiliate of theBorrower, nor anyone acting on behalf of any such Person, has directly orindirectly offered any interest in the Loans for sale to, or solicited anyoffer to acquire any such interest from, or has sold any such interest to anyPerson that would subject the issuance or sale of the Loans or any otherliability to registration under the Securities Act of 1933, as amended.

 

(n)           Compliance with Laws.  Neither the Borrower nor any of itsSubsidiaries, by virtue of consummating the transactions evidenced by the LoanDocuments or otherwise, is in violation of any law, ordinance, rule,regulation, order, policy, guideline or other requirement of any GovernmentalAuthority, if the effect of such violation could reasonably be expected to havea Material Adverse Effect and, to the best of the Borrower’s knowledge, no suchviolation has been alleged and each of the Borrower and its Subsidiaries (i) hasfiled in a timely manner all reports, documents and other materials required tobe filed by it with any Governmental Authority, and the information containedin each of such filings is true, correct and complete in all material respectsand (ii) has retained all records and documents required to be retained byit pursuant to any law, ordinance, rule, regulation, order, policy, guidelineor other requirement of any Governmental Authority, if the failure to so retainsuch records and documents could reasonably be expected to have a MaterialAdverse Effect.

 

(o)           No Defaults.  No event of default (or other eventauthorizing the creditor to accelerate indebtedness) has occurred under anycredit agreement or other agreement containing an obligation for the Borroweror any Subsidiary to make payments in excess of $150,000.

 

# ***ARTICLE V***

# ***COVENANTS OF THE BORROWER***

# * *

SECTION 5.01.  AffirmativeCovenants.  So long as any portion ofany Loan or Advance shall remain unpaid or SNB shall have any commitment tomake an Advance hereunder, the Borrower will and will cause each of itsSubsidiaries, as applicable, to:

 

(a)           Reports,Certificates, Financial Ratio and Other Information.  Furnish or cause to be furnished to SNB:

 

(i)            GAAP FinancialStatements:

 

(A)          Within 45 days after theclose of each of the first three Fiscal Quarters of each Fiscal Year of theBorrower, a copy of the unaudited Consolidated balance sheets of the Borrowerand its Subsidiaries, as of the close of such quarter and the relatedConsolidated statements of income for that portion of the Fiscal Year ending asof the close of such Fiscal Quarter, all prepared in accordance with GAAP(subject to normal year-end

 

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adjustments).  Such financial statements shall be completeand correct in accordance with GAAP (subject to normal year end adjustments).

 

(ii)           Debt to WorthRatio.  As of June 30, 2009, anduntil the Loan is paid in full, the Borrower shall maintain a ratio between (a) theBorrower’s total debt and (b) the Borrower’s total net worth (asdetermined by GAAP) of not greater than 1.25:1.

 

(iii)          Notice of Default, Etc.  Immediately after an Executive Officer of theBorrower knows or has reason to know of the existence of any Default or Eventof Default, or any development or other information which would have a MaterialAdverse Effect, telephonic or e-mail notice specifying the nature of suchDefault or Event of Default or development or information, including theanticipated effect thereof, which notice shall be promptly confirmed in writingby the Borrower by certified or registered mail, recognized courier, handdelivery or telecopier within two (2) Business Days.

 

(iv)          Notice of Litigation andERISA.  Promptly upon learning of theoccurrence of any of the following, written notice thereof, describing the sameand the steps being taken by the Borrower with respect thereto:  (A) the institution of, or any adversedetermination in, any litigation, arbitration proceeding or governmentalproceeding (including any Internal Revenue Service or Department of Laborproceeding with respect to any Plan or Welfare Plan) which could, if adverselydetermined, be reasonably expected to have a Material Adverse Effect and whichis not Ordinary Course Litigation, (B) an ERISA Event, and an event withrespect to any Plan which could result in the incurrence by the Borrower or anyof its Subsidiaries of any material liability (other than a liability forcontributions or premiums), fine or penalty, (C) the commencement of anydispute which might lead to the modification, transfer, revocation, suspensionor termination of this Agreement or any Loan Document or (D) any otherevent which could be reasonably expected to have a Material Adverse Effect.

 

(v)           New Subsidiaries.  Promptly upon formation or acquisition of anySubsidiary, written notice of the name, purpose and capitalization of suchSubsidiary and whether such Subsidiary is a Material Subsidiary; and cause suchSubsidiary, to become a party to the Guaranty, pledge the shares of suchSubsidiary pursuant to the terms of the Pledge Agreement, and take such otheractions in connection therewith, as may be requested by SNB.

 

(vi)          Other Information.  From time to time such other informationconcerning the Borrower or any Subsidiary as SNB may reasonably request.

 

(b)           Corporate Existence; ForeignQualification.  Do andcause to be done at all times all things necessary to (i) maintain andpreserve (in the existing jurisdiction of incorporation) the corporateexistence of the Borrower and each Material Subsidiary of the Borrower, and (ii) be,and ensure that each Material Subsidiary of the Borrower is, duly qualified todo business and (to the extent applicable) be in good standing as a foreigncorporation in each jurisdiction where the nature of its business makes suchqualification necessary unless the failure to be so qualified would not have aMaterial Adverse Effect.

 

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(c)           Books, Records, Inspectionsand Collateral.  (i) Maintain,and cause each of its Subsidiaries to maintain, materially complete andaccurate books and records in accordance with GAAP and in addition, withrespect to each Subsidiary, (ii) permit, and cause each of itsSubsidiaries to permit, access at reasonable times by SNB to its books andrecords, (iii) permit, and cause each of its Subsidiaries to permit, SNBor its designated representative to inspect during normal business hours itsproperties and operations, (iv) permit, and cause each of its Subsidiariesto permit, SNB to discuss its business, operations and financial condition withits officers and its independent accountants, and (v) maintain, and causeeach of its Subsidiaries to maintain all material books and records and allcollateral described in the Security Agreements only at the headquarters officeof the Borrower.

 

(d)           Insurance.  Maintain, and cause each of its MaterialSubsidiaries to maintain, insurance policies to such extent and against suchhazards and liabilities  as are shown inSchedule 4.01(t) as in effect on the date hereof and as otherwise may berequired by SNB or by law or as may be customarily maintained by prudentcompanies similarly situated.

 

(e)           Taxes and Liabilities.  Pay, and cause each of its Subsidiaries topay, when due all material taxes, assessments and other material liabilitiesexcept as contested in good faith and by appropriate proceedings with respectto which reserves have been established, and are being maintained, inaccordance with GAAP except where failure to pay would not have a MaterialAdverse Effect.

 

(f)            Employee Benefit Plans.  Maintain, and cause each of its Subsidiariesto maintain, each Plan and Welfare Plan in compliance in all material respectswith all applicable Requirements of Law except where failure to so comply wouldnot have a Material Adverse Effect.

 

(g)           Compliance with Laws.  Comply, and cause each of its Subsidiaries tocomply, (i) with all federal and local laws, rules and regulationsrelated to its businesses, and (ii) with all Contractual Obligationsbinding upon such entity, except in each case where failure to so comply wouldnot in the aggregate have a Material Adverse Effect.

 

(h)           Conduct of Business.  Engage, and cause each Material Subsidiary toengage, in insurance business and related activities in all material respects(including without limitation lines of insurance underwritten) the same aspresently engaged in.

 

SECTION 5.02.  NegativeCovenants.  So long as any Advanceshall remain unpaid or the commitment to make any Advance remains in effect,the Borrower will and will cause each of its Subsidiaries, as applicable, to:

 

(a)           Mergers, Consolidations andSales.  Without SNB’s written consent,Borrower shall not, and not permit any of its Subsidiaries to, (i) mergeor consolidate, or purchase or otherwise acquire all or substantially all ofthe assets or stock of any class of, or any partnership or joint ventureinterest in, any other Person (other than a newly formed Subsidiary or theacquisition of a Subsidiary which complies with clause (B) of this Section 5.02(a) orthe

 

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acquisitionof shares of a Subsidiary held by minority shareholders), or (ii) in thecase of any Subsidiary, issue capital stock to any person other than theBorrower, or (iii) sell, transfer, pledge, convey, repurchase, retire(except as required by applicable law) or otherwise grant an interest in anycapital stock, or (iv) sell, transfer, pledge, convey, lease or otherwiseconvey an interest in all or any substantial part of its assets (includingwithout limitation the capital stock of Subsidiaries) other than any sale,transfer, conveyance or lease in the ordinary course of business or any sale orassignment of receivables; except for (A) any such merger or consolidationof any direct wholly owned Subsidiary of the Borrower into, with or to Borroweror any other direct wholly owned Subsidiary, (B) purchases or acquisitionswhich otherwise comply with the terms hereof provided (x) no Default orEvent of Default has occurred and is continuing or would result therefrom and (y) thepurchase price for any single purchase or acquisition does not exceed 10% ofNet Worth minus all amounts which in accordance with GAAP would becharacterized as intangible assets (including goodwill) as of the date of suchpurchase or acquisition (calculated on a pro forma basis giving effect to suchacquisition or purchase) and (z) the aggregate purchase price of allpurchases and acquisitions after the Effective Date does not exceed 20% of NetWorth minus all amounts which in accordance with GAAP would be characterized asintangible assets (including goodwill) and (C) sales of assets and capitalstock of Subsidiaries that are not Material Subsidiaries, provided thatas to (A), (B) and (C) above, no Default or Event of Default hasoccurred and is continuing.

 

(b)           Regulations U and X.  Not, and not permit any of its Subsidiariesto, hold margin stock (as such term is defined in Regulation U of the FRB)having a value in excess of 20% of the value of the assets of the Borrower andits Subsidiaries taken as a whole after taking into account the application ofthe proceeds of the Advances.

 

(c)           Other Agreements.  Not, and not permit any of its Subsidiariesto, enter into any agreement containing any provision which would be materiallyviolated or materially breached by the performance of obligations hereunder orunder any instrument or document delivered or to be delivered by it hereunderor in connection herewith.

 

(d)           Transactions with Affiliates. Not, and notpermit any Subsidiary to, enter into, or cause, suffer or permit to exist,directly or indirectly, any arrangement, transaction or contract with any ofits Affiliates unless such arrangement, transaction or contract is on an arm’slength basis; provided that (i) transactions between the Borrower and anywholly-owned Subsidiary of the Borrower, or between any wholly-ownedSubsidiaries of the Borrower, and (ii) investments described in clause (i) ofthe definition of “Permitted Investments” shall be excluded from therestrictions set forth in this Section 5.02(d).

 

(e)           Liens.  Not create or permit to exist any Lien on anyassets of the Borrower (including, without limitation, the capital stock of theSubsidiaries) or any of the Borrower’s Subsidiaries, now or hereafter existingor acquired, or on the capital stock of any of the Borrower’s Subsidiaries,except the following:  (A) Liens forcurrent taxes not delinquent or for taxes being contested in good faith and byappropriate proceedings and with respect to which adequate reserves have beenestablished, and are being maintained, in accordance with GAAP, (B) easements,party wall agreements, rights of way, restrictions, minor defects orirregularities in title and other similar Liens not interfering in any materialrespect with the ordinary course of

 

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thebusiness of the Borrower and its Subsidiaries taken as a whole; (C) Liensin connection with the acquisition of fixed assets after the date hereof andattaching only to the property being acquired, (D) Liens incurred in theordinary course of business in connection with workers’ compensation,unemployment insurance or other forms of governmental insurance or benefits andLiens pursuant to letters of credit or other security arrangements inconnection with such insurance or benefits, (E) mechanics’, workers’,materialmen’s, landlord liens and other like Liens for amounts payable by theBorrower or its Subsidiaries, arising in the ordinary course of business inrespect of obligations which are not delinquent or which are being contested ingood faith and by appropriate proceedings and with respect to which adequate reserveshave been established, and are being maintained, in accordance with GAAP, (F) Lienslisted on Schedule 5.02(e) in effect on the date hereof; (G) attachments,judgments and other similar Liens for sums payable by the Borrower or itsSubsidiaries not exceeding $50,000 in the aggregate at any one time; (H) attachments,judgments and other similar Liens for sums exceeding the $50,000 limitdescribed in clause (G), the execution or other enforcement of such Liens iseffectively stayed and claims secured thereby are being actively contested ingood faith and by appropriate proceedings and have been bonded off; and (I) Lienspursuant to the Loan Documents.

 

(f)            Restrictions on NegativePledge Agreements.  Not, andnot permit any of its Subsidiaries to, enter into or assume any agreement,other than any Loan Document, that places any restrictions upon the right ofthe Borrower or any of its Subsidiaries to sell, pledge or otherwise dispose ofany material portion of its properties now owned or hereafter acquired.

 

(g)           No Amendment of CertainDocuments.  Not enterinto or permit any amendment, modification or waiver of or supplement to theOrganization Documents that would (i) create or amend redemptionprovisions applicable to the Borrower’s capital units to provide for mandatoryredemption or redemption at the option of the holder prior to the repayment ofthe Loans, or (ii) in any other manner be materially adverse to theinterests of SNB.

 

(h)           Subsidiaries.  Not permit any Subsidiaries to (i) expendcash other than in the ordinary course of operations (including payment ofclaims) and loans to the Borrower during any Fiscal Year of the Borrower inexcess of $150,000; or (ii) enter into, or cause, suffer or permit toexist, directly or indirectly, any arrangement, transaction (other than loansto Borrower permitted under (i)) or contract unless such arrangement,transaction or contract (A) is on an arm’s length basis, and (B) shallnot be in connection with the making of any loans or advances or the issuance ofany guarantees to or for the benefit of any Affiliate or otherwise; provided,however, this Section 5.02(h) shall not affect any Subsidiaries’ability to declare and pay dividends to the Borrower.

 

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**ARTICLE VI**

**EVENTS OF DEFAULT**

 

SECTION 6.01.  Events ofDefault.  If any of the followingevents (“Events of Default”) shall occur and be continuing:

 

(a)           Non-Payment of Principal andInterest on Loan or Reduction in Pledged Collateral Market Value.  Default in the payment when due of anyprincipal of or interest on any Loan; or the principal balance due under theLoan exceeds fifty percent (50%) of the Pledged Collateral Market Value; or

 

(b)           Non-Payment of Fees, Etc.  Default and continuation thereof for fivedays in the payment when due of fees or of any other amount (except as setforth in Section 6.01(a)) payable hereunder or under the other LoanDocuments; or

 

(c)           Non-Payment of Other Debt.  (i) Default in the payment when due andcontinuance of such default after any applicable grace period (whether or notsuch Debt is accelerated) of any amount payable under any Debt (other thanAdvances) of, or guaranteed by, the Borrower or any of its Subsidiaries if theaggregate amount of such other Debt of the Borrower and/or any of itsSubsidiaries which is due and payable or which is or maybe accelerated, byreason of such default or defaults is $150,000 or more, or (ii) default inthe performance or observance of any other obligation or condition andcontinuance of such default after any applicable grace period with respect toany Debt (other than Advances) of, or guaranteed by, the Borrower and/or any ofits Subsidiaries if (in the case of clause (B)) the effect of such defaultor defaults is to accelerate or permit the acceleration of the maturity of anysuch Debt of $150,000 or more in the aggregate prior to its expressed maturity;or

 

(d)           Other Material Obligations.  Except for obligations covered under otherprovisions of this Article VI, default in the payment when due, or in theperformance or observance of, any material obligation of, or material conditionagreed to by, the Borrower or any of its Subsidiaries with respect to anymaterial purchase or lease obligation of $150,000 or more (unless the existenceof any such default is being contested by the Borrower in good faith and byappropriate proceedings and the Borrower has established, and is maintaining,adequate reserves therefor in accordance with GAAP) which default continues fora period of 30 days; or

 

(e)           Bankruptcy, Insolvency, Etc.  (i) The Borrower or any Subsidiarybecomes insolvent or generally fails to pay, or admits in writing its inabilityto pay, debts as they become due; (ii) there shall be commenced by oragainst any such Person any case, proceeding or other action (A) under anyexisting or future law of any jurisdiction, domestic or foreign, relating tobankruptcy, insolvency, supervision, conservatorship, liquidation,reorganization or relief of debtors, seeking to have an order for reliefentered with respect to it, or seeking to adjudicate it a bankrupt orinsolvent, or seeking reorganization, rehabilitation, conservation,supervision, arrangement, adjustment, winding-up, liquidation, dissolution,composition or other relief with respect to it or its debts, obligations orliabilities, or (B) seeking appointment of a receiver, trustee, custodian,rehabilitator, conservator, supervisor, liquidator or other similar officialfor it or for all or any substantial part of its assets, in each case which (1) resultsin the entry of an order for relief or any such adjudication or appointment or (2) iffiled against such Person, remains undismissed, undischarged or unstayed for aperiod of 60 days;  (iii) thereshall

 

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becommenced against any such Person any case, proceeding or other action seekingissuance of a warrant of attachment, execution, distrait or similar processagainst all or any substantial part of its assets which results in the entry ofan order for any such relief which shall not have been vacated, discharged, orstayed or bonded pending appeal within 60 days from the entry thereof;  (iv) any of such Persons shall take anyaction in furtherance of, or indicating its consent to, approval of, oracquiescence in, any of the acts set forth in clause (ii) or (iii) above;or (v) any Governmental Authority shall issue any order of conservation,supervision or any other order of like effect relating to any of such Persons;or

 

(f)            Non-compliance withCovenants.  Failure bythe Borrower or any Subsidiary to comply with any of its covenants set forth inSection 5.02, or any other failure of any of the requirements of Section 5.02to be satisfied at any time; or

 

(g)           Non-compliance with OtherProvisions.  Failure bythe Borrower or any Subsidiary to comply with or to perform any provision ofthis Agreement or the other Loan Documents (and not constituting an Event ofDefault under any of the other provisions of this Article VI and suchfailure shall continue unremedied for a period of 30 days;or

 

(h)           Warranties andRepresentations.  Anywarranty or representation made by or on behalf of the Borrower or anySubsidiary herein or in any other Loan Document is inaccurate or incorrect oris breached or false or misleading in any material respect as of the date suchwarranty or representation is made; or any schedule, certificate, financialstatement, report, notice, or other instrument furnished by or on behalf ofBorrower or any Subsidiary to SNB is false, misleading, or incomplete in anymaterial respect on the date as of which the facts therein set forth are statedor certified; or

 

(i)            Employee Benefit Plans.  A contribution failure occurs with respect toany Plan sufficient to give rise to a Lien against the Borrower or any of itsSubsidiaries under section 302(f)(1) of ERISA (as in effect on theEffective Date) or withdrawal by one or more companies in the Controlled Groupfrom one or more Multiemployer Plans to which it or they have an obligation tocontribute and the withdrawal liability (without unaccrued interest) toMultiemployer Plans as a result of such withdrawal or withdrawals (includingany outstanding withdrawal liability that the Controlled Group has incurred onthe date of such withdrawal) is $100,000 or more, or any other event describedin Section 5.01(a)(x) has occurred and is continuing; or

 

(j)            Loan Documents.  Any action shall be taken by or on behalf ofthe Borrower or any Affiliate thereof to discontinue any of the Loan Documentsor to contest the validity, binding nature or enforceability of any thereof, orany Lien created or intended to be created by any Loan Document shall cease tobe a duly perfected first-priority Lien (other than as may be permitted by theterms of such Loan Document), or applicable Laws shall have changed since theEffective Date to adversely affect the rights of SNB or any other Lender underthe Loan Documents; or

 

(k)           Change in Control Or Cessationof Pubic Trading of the Hiland Common Units. A Change in Control occurs or the Hiland Common Units cease to bepublicly traded; or

 

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(l)            Judgments.  A final judgment or judgments that exceed anaggregate of $250,000 at any one time shall be rendered against the Borrower orany Subsidiary and shall not have been discharged or vacated or had executionthereof stayed pending appeal within 60 days after entry or filing of suchjudgment(s); or

 

(m)          Change in Law AffectingDividends.  Any changeis made in applicable Law that restricts the authority of any Subsidiary toissue dividends which restriction is reasonably likely to have a MaterialAdverse Effect on the ability of the Borrower to perform its obligationshereunder; or

 

(o)           Cross-Default.  A default or event of default shall haveoccurred and be continuing in any other agreement between the Borrower or anyAffiliate of Borrower as obligor and SNB as obligee; or then, and in any suchevent, SNB (i) by notice to the Borrower, may declare the obligation tomake Advances and/or Loans to be terminated, whereupon the same shall forthwithterminate, and (ii) by notice to the Borrower, may declare the Loans, allinterest thereon and all other amounts payable under this Agreement to beforthwith due and payable, whereupon the Loans, all such interest and all suchamounts shall become and be forthwith due and payable, without presentment,demand, protest or further notice of any kind, all of which are herebyexpressly waived by the Borrower; provided, however, that in theevent of an actual or deemed entry of an order for relief with respect to theBorrower under the United States Bankruptcy Code, (A) the obligation ofSNB to make Advances and/or Loans shall automatically be terminated and (B) theLoans, all such interest and all such amounts shall automatically become and bedue and payable, without presentment, demand, protest or any notice of anykind, all of which are hereby expressly waived by the Borrower.  In addition, if any Event of Default hasoccurred and is continuing, SNB may exercise any of its rights provided in thePledge Agreement, the Guaranties, the Security Agreements, the AssignmentAgreement and each other Loan Document or available under the UniformCommercial Code or other applicable Laws. Without limitation, SNB may appoint a receiver or trustee to assumecontrol over all or any part of the business or assets of the Borrower or anyof its Subsidiaries (subject only to any restrictions that may be imposed bythe Authority).

 

# ***ARTICLEVII***

# ***MISCELLANEOUS***

# * *

SECTION 7.01. Amendments, Etc.  Noamendment of any provision of any Loan Document shall be effective unless thesame shall be in writing and signed by SNB and each party to such LoanDocument.  No consent to any departure bythe Borrower or any other party (other than SNB) from the requirements of anyLoan Document shall be effective unless the same shall be in writing and signedby SNB, and then such consent shall be effective only in the specific instanceand for the specific purpose for which given.

 

SECTION 7.02. Notices, Etc.  Except forNotices of Borrowing, all notices and other communications provided forhereunder shall be in writing and sent by certified or registered mail,recognized courier, hand delivery, or telecopier, or to the extent provided in Section 5.01(a)(v) bye-mail; if to the Borrower, at its address at****P.O. Box 5103, Enid, Oklahoma 73702-

 

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5103, Fax (580) 616-2080 Attention: Chief Financial Officer;if to SNB, at its address at 201 West Broadway, Enid, Oklahoma 73701, to theattention of Mr. Brad B. Blankenship, President or, as to the Borrower orSNB, at such other address as shall be designated by such party in a writtennotice to the other party.  All suchnotices and communications sent as provided above shall be effective upondispatch, except that notices and communications to SNB pursuant to Article II, IIIor VII shall not be effective until received by SNB.  Delivery by email or telecopier of anexecuted counterpart of any amendment or waiver of any provision of thisAgreement or any other Loan Document or of any Exhibit hereto to beexecuted and delivered hereunder shall be effective as delivery of a manuallyexecuted counterpart thereof.

 

SECTION 7.03. No Waiver; Remedies.  Nofailure on the part of SNB to exercise, and no delay in exercising, any righthereunder or under any other Loan Document shall operate as a waiver thereof;nor shall any single or partial exercise of any such right preclude any otheror further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulativeand not exclusive of any remedies provided by law.

 

## SECTION 7.04. Costs and Expenses. (a) Regardless of whether any Loan maybe extended, the Borrower agrees to pay from time to time on demand allreasonable costs and expenses of SNB in connection with the preparation,execution, delivery, administration, modification and amendment of thisAgreement, the other Loan Documents and the other documents to be deliveredthereunder, including, without limitation, (A) all due diligence,syndication (including printing, distribution and Lender meetings)transportation, computer, duplication, appraisal, consultant, filing, and auditexpenses and (B) the fees and expenses of counsel for SNB with respectthereto and with respect to advising SNB as to its rights and responsibilitiesunder this Agreement.  The Borrowerfurther agrees to pay on demand all costs and expenses of SNB (including,without limitation, counsel fees and expenses), in connection with theenforcement (whether through negotiations, legal proceedings or otherwise) ofthis Agreement, the other Loan Documents and the other documents to bedelivered hereunder, including, without limitation, reasonable fees andexpenses of counsel for SNB in connection with the enforcement of rights underthis Section 7.04(a).

##  

(b)           The Borrower agrees to indemnify and hold harmless SNB and its Affiliatesand its officers, directors, employees, agents and advisors (each, an “IndemnifiedParty”), on an after-tax basis (notwithstanding anything to the contraryherein), from and against any and all claims, damages, losses, liabilities andexpenses (including, without limitation, reasonable fees and expenses ofcounsel) incurred by or asserted or awarded against any Indemnified Party, ineach case arising out of or in connection with or by reason of (including,without limitation, in connection with any investigation, litigation orproceeding or preparation of a defense in connection therewith) the Note(s),this Agreement, any other Loan Document, any of the transactions contemplatedherein or therein, the Borrower or any Subsidiary’s nonperformance or breach ormisrepresentation hereunder or thereunder, or the actual or proposed use of theproceeds of the Loan, or the properties pledged as collateral under the LoanDocuments, except to the extent such claim, damage, loss, liability or expenseis found in a final, non-appealable judgment by a court of competentjurisdiction to have resulted from such Indemnified Party’s gross negligence orwillful misconduct.  In the case of aninvestigation, litigation or other proceeding to which the indemnity in this Section 7.04(b) applies,such

 

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indemnity shall be effective whether or not suchinvestigation, litigation or proceeding is brought by the Borrower, itsdirectors, equityholders or creditors or an Indemnified Party or any otherPerson, whether or not any Indemnified Party is otherwise a party thereto andwhether or not the transactions contemplated hereby are consummated.  The Borrower also agrees not to assert anyclaim for special, indirect, consequential or punitive damages against SNB, anyof their Affiliates, or any of their respective directors, officers, employees,attorneys and agents, on any theory of liability, arising out of or otherwiserelating to the Note(s), this Agreement, any other Loan Document, any of thetransactions contemplated herein or the actual or proposed use of the proceedsof the Loans.

 

### (c)           Without prejudice to the survival of any other agreement of the Borrowerhereunder, the agreements and obligations of the Borrower contained inSections 2.06 and this 7.04 shall survive the payment in full ofprincipal, interest and all other amounts payable hereunder and under theNote(s).

###  

SECTION 7.05. Right of Set-off.  Upon theoccurrence and during the continuance of any Event of Default, each of SNB andits Affiliates is hereby authorized at any time and from time to time, to thefullest 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 andother indebtedness at any time owing by SNB or such Affiliate to or for thecredit or the account of the Borrower or any of its Affiliates against any andall of the obligations of the Borrower or any of its Affiliates under any LoanDocument.  The rights of SNB and itsAffiliates under this Section are in addition to other rights and remedies(including, without limitation, other rights of set-off) that SNB and itsAffiliates may have.

 

SECTION 7.06. Binding Effect.  ThisAgreement shall become effective when it shall have been executed by theBorrower and SNB and upon satisfaction of the conditions precedent set forth inSection 3.01 and thereafter shall be binding upon and inure to the benefitof the Borrower, SNB and their respective successors and assigns, except thatthe Borrower shall not (and shall not permit any Subsidiary to) assign itsrights under any Loan Document or any obligation or interest therein withoutthe prior written consent of SNB (which SNB may withhold in its solediscretion).

 

SECTION 7.07. Assignments and Participations. (a) SNB or another Lender may assign to one or more Persons all ora portion of its rights and obligations under this Agreement (including,without limitation, all or a portion of the Loans owing to it and the Note(s) heldby it).  Upon any such assignment, (x) theassignee thereunder shall be a party hereto and, to the extent that rights andobligations hereunder have been assigned to it, have the rights and obligationsof a Lender hereunder and (y) the Lender assignor thereunder shall, to theextent that rights and obligations hereunder have been assigned by it,relinquish its rights (other than its rights under Sections 2.06 and 7.04 tothe extent any claim thereunder relates to an event arising prior suchassignment) and be released from its obligations under this Agreement (and, inthe case of an assignment covering all or the remaining portion of an assigningSNB’s rights and obligations under this Agreement, SNB shall cease to be aparty hereto).

 

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(b)           SNB and each other Lender may sell participations to one or more banks orother entities (other than the Borrower or any of its Affiliates) in or to allor a portion of its rights and obligations under this Agreement (including,without limitation, all or a portion of the Loans owing to it and any Note(s) heldby it); provided, however, that (i) such Lender’sobligations under this Agreement shall remain unchanged, (ii) such Lendershall remain solely responsible to the other parties hereto for the performanceof such obligations, (iii) such Lender shall remain the holder of any suchNote for all purposes of this Agreement, (iv) the Borrower and the otherLenders shall continue to deal solely and directly with such Lender inconnection with such Lender’s rights and obligations under this Agreement and (v) noparticipant under any such participation shall have any right to approve anyamendment or waiver of any provision of any Loan Document, or any consent toany departure by the Borrower therefrom, except to the extent that suchamendment, waiver or consent would reduce the principal of, or interest on, theNote(s) or any fees or other amounts payable hereunder, in each case tothe extent subject to such participation, or postpone any date fixed for anypayment of principal of, or interest on, the Note(s) or any fees or otheramounts payable hereunder, in each case to the extent subject to suchparticipation.

 

(c)           Any Lender may, in connection with any assignment or participation orproposed assignment or participation pursuant to this Section 7.07, discloseto the assignee or participant or proposed assignee or participant, anyinformation relating to the Borrower furnished to such Lender by or on behalfof the Borrower.

 

SECTION 7.08. Confidentiality.  TheBorrower will, and will cause each of its Subsidiaries to, keep the existenceof the credit facility provided hereunder and the terms of the Loan Documentsconfidential, except that the Borrower or any Subsidiary may disclose suchinformation (A) at the request or pursuant to any requirement of any GovernmentalAuthority to which such party is subject or in connection with an examinationof such party by any such authority; (B) pursuant to subpoena or othercourt process; (C) when required to do so in accordance with theprovisions of any applicable Requirement of Law; (D) to the extentreasonably required in connection with any litigation or proceeding to whichsuch party may be party; and (E) to such party’s independent auditors andother professional advisors.

 

SECTION 7.09. Further Assurances.  The Borrowershall (and shall cause its Subsidiaries to) at its expense execute anyamendments hereto or other documents or instruments, or take such otheractions, (i) as may be necessary to create and perfect a first priorityand exclusive security interest in any personal property acquired by theBorrower or any of its Subsidiaries to secure the obligations of the Borrowerand the Subsidiaries under the Loan Documents, or to continue the perfection ofthe Liens created by the Loan Documents, and (ii) as SNB or any otherLender may reasonably request to protect SNB’s or any other Lender’s rightsunder the Loan Documents or otherwise to effectuate the purposes thereof,including without limitation in connection with any assignment contemplated bythe terms of Section 7.07.

 

SECTION 7.10. Governing Law.  ThisAgreement and each other Loan Document shall be governed by, and construed inaccordance with, the internal Law of the State of Oklahoma.

 

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SECTION 7.11. Execution in Counterparts. This Agreement may be executed in any number of counterparts and bydifferent parties hereto in separate counterparts, each of which when soexecuted shall be deemed to be an original and all of which taken togethershall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to thisAgreement by telecopier shall be effective as delivery of a manually executedcounterpart of this Agreement.

 

SECTION 7.12. Waiver of Jury Trial.  Boththe Borrower and SNB hereby irrevocably waives all right to trial by jury inany action, proceeding or counterclaim (whether based on contract, tort orotherwise) arising out of or relating to any Loan Document, the Advances or theactions of SNB in the negotiation, administration, performance or enforcementthereof.

 

SECTION 7.13. Jurisdiction, Etc. (a) Each of the parties hereto herebyirrevocably and unconditionally submitsto the nonexclusive jurisdiction of anyOklahoma state court or federal court of the United States of America sittingin Oklahoma, and any appellate court from any thereof, in any action orproceeding arising out of or relating to this Agreement or any other LoanDocument, or for recognition or enforcement of any judgment, and each of the partieshereto hereby irrevocably and unconditionally agrees that all claims in respectof any such action or proceeding may be heard and determined in any suchOklahoma state court or, to the extent permitted by law, in such federal court.The Borrower hereby irrevocably consents to the service of process in anyaction or proceeding in such courts by the mailing thereof by any partieshereto by registered or certified mail, postage prepaid, to the Borrower at itsaddress specified pursuant to Section 7.02.  Each of the parties hereto agrees that a finaljudgment in any such action or proceeding shall be conclusive and may beenforced in other jurisdictions by suit on the judgment or in any other mannerprovided by law.  Nothing in thisAgreement shall affect any right that any party may otherwise have to bring anyaction or proceeding relating to this Agreement or the Note in the courts ofany jurisdiction.

 

(b)           Each of the parties hereto irrevocably and unconditionally waives, to thefullest extent it may legally and effectively do so, any objection that it maynow or hereafter have to the laying of venue of any suit, action or proceedingarising out of or relating to this Agreement or the Note in any Oklahoma stateor federal court.  Each of the partieshereto hereby irrevocably waives, to the fullest extent permitted by law, thedefense of an inconvenient forum to the maintenance of such action orproceeding in any such court.

 

IN WITNESS WHEREOF, the partieshereto have caused this Agreement to be executed by their respective officersthereunto duly authorized, as of the date first above written.

 
|   | HILAND HOLDINGS GP, LP, a Delaware limited  partnership |
|--------|---------------------------------------------------------|
|   |                                                    |   |
|   | By:                                                     | Hiland Partners GP Holdings, LLC, its general  partner |
|   |                                                    |   |
|   | By :                                               |   |

 

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|   | Name :                        | Matthew S. Harrison                                            |
|--------|------------------------------------|----------------------------------------------------------------|
|   | Title:                             | Vice President-Finance, Chief Financial Officer  and Secretary |
|   |                               |                                                           |
|   | THE SECURITY NATIONAL BANK OF ENID |
|   |                               |                                                           |
|   |                               |                                                           |
|   | By :                          |                                                           |
|   |                               | Brad B. Blankenship, President                                 |

 

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Schedules

 
| Schedule 4.01(a) | -      | Jurisdictions           |
|------------------|--------|-------------------------|
|             |   |                    |
| Schedule 4.01(c) | -      | Adverse Changes         |
|             |   |                    |
| Schedule 4.01(d) | -      | Litigation              |
|             |   |                    |
| Schedule 4.01(e) | -      | Employee Benefit Plans  |
|             |   |                    |
| Schedule 4.01(i) | -      | Ownership of Properties |
|             |   |                    |
| Schedule 4.01(k) | -      | Subsidiaries            |
|             |   |                    |
| Schedule 4.01(l) | -      | Taxes                   |
|             |   |                    |
| Schedule 5.02(e) | -      | Liens                   |

 

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