exv10w7



 





Exhibit 10.7



 

 








BRIDGE LOAN AGREEMENT




Dated as of November 21, 2006




among




RIATA ENERGY, INC.

(d/b/a SandRidge Energy, Inc.)

as the Borrower,




BANK OF AMERICA, N.A.,

as Administrative Agent




and




The Other Lenders Party Hereto




BANC OF AMERICA SECURITIES LLC

CREDIT SUISSE SECURITIES (USA) LLC

GOLDMAN SACHS CREDIT PARTNERS L.P.

LEHMAN BROTHERS INC.

Lead Arrangers and Bookrunners




 

 



















 








TABLE OF CONTENTS




	 	 	 	 	 
	      Section      
	 	Page	 
	 
	ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	1.01 Defined Terms
	 	 	1	 
	1.02 Other Interpretive Provisions
	 	 	22	 
	1.03 Accounting Terms
	 	 	23	 
	1.04 Petroleum Terms
	 	 	23	 
	1.05 Rounding
	 	 	24	 
	1.06 Times of Day
	 	 	24	 
	 
	 	 	 	 
	ARTICLE II. THE COMMITMENTS AND LOANS
	 	 	24	 
	2.01 Loans
	 	 	24	 
	2.02 Borrowings, Conversions and Continuations of Loans
	 	 	24	 
	2.03 Prepayments
	 	 	25	 
	2.04 Repayment of Loans
	 	 	27	 
	2.05 Interest
	 	 	27	 
	2.06 Fees
	 	 	28	 
	2.07 Computation of Interest and Fees
	 	 	28	 
	2.08 Evidence of Debt
	 	 	28	 
	2.09 Payments Generally; Administrative Agent’s Clawback
	 	 	28	 
	2.10 Sharing of Payments by Lenders
	 	 	30	 
	 
	 	 	 	 
	ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY
	 	 	31	 
	3.01 Taxes
	 	 	31	 
	3.02 Illegality
	 	 	33	 
	3.03 Inability to Determine Rates
	 	 	33	 
	3.04 Increased Costs; Reserves on Eurodollar Rate Loans
	 	 	33	 
	3.05 Compensation for Losses
	 	 	35	 
	3.06 Mitigation Obligations; Replacement of Lenders
	 	 	35	 
	3.07 Survival
	 	 	36	 
	 
	 	 	 	 
	ARTICLE IV. CONDITIONS PRECEDENT TO LOANS
	 	 	36	 
	 
	 	 	 	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES
	 	 	39	 
	5.01 Existence, Qualification and Power
	 	 	39	 
	5.02 Authorization; No Contravention
	 	 	39	 
	5.03 Governmental Authorization; Other Consents
	 	 	39	 
	5.04 Binding Effect
	 	 	40	 
	5.05 Financial Statements; No Material Adverse Effect
	 	 	40	 
	5.06 Litigation
	 	 	41	 
	5.07 No Default
	 	 	41	 
	5.08 Ownership of Property; Liens
	 	 	41	 
	5.09 Environmental Compliance
	 	 	41	 
	5.10 Insurance
	 	 	42	 
	5.11 Taxes
	 	 	42	 
	5.12 ERISA Compliance
	 	 	42	 
	5.13 Subsidiaries; Equity Interests; Loan Parties
	 	 	43	 
	5.14 Margin Regulations; Investment Company Act
	 	 	43	 
	5.15 Disclosure
	 	 	43	 
	5.16 Compliance with Laws
	 	 	44	 






i









 






	 	 	 	 	 
	      Section      
	 	Page	 
	 
	5.17 Solvency
	 	 	44	 
	5.18
Casualty, Etc.
	 	 	44	 
	5.19 Labor Matters
	 	 	44	 
	 
	 	 	 	 
	ARTICLE VI. AFFIRMATIVE COVENANTS
	 	 	44	 
	6.01 Financial Statements
	 	 	44	 
	6.02 Certificates; Other Information
	 	 	45	 
	6.03 Notices
	 	 	48	 
	6.04 Payment of Obligations
	 	 	49	 
	6.05
Preservation of Existence, Etc.
	 	 	49	 
	6.06 Maintenance of Properties
	 	 	49	 
	6.07 Maintenance of Insurance
	 	 	49	 
	6.08 Compliance with Laws
	 	 	49	 
	6.09 Books and Records
	 	 	49	 
	6.10 Inspection Rights
	 	 	49	 
	6.11 Use of Proceeds
	 	 	50	 
	6.12 Covenant to Guarantee Obligations
	 	 	50	 
	6.13 Compliance with Environmental Laws
	 	 	50	 
	6.14 [Reserved]
	 	 	51	 
	6.15 Use of Proceeds of the Permanent Securities
	 	 	51	 
	6.16 Exchange Notes
	 	 	51	 
	6.17 Change of Control
	 	 	52	 
	6.18 Registration Rights
	 	 	53	 
	 
	 	 	 	 
	ARTICLE VII. NEGATIVE COVENANTS
	 	 	53	 
	7.01 Liens
	 	 	53	 
	7.02 Investments
	 	 	55	 
	7.03 Indebtedness
	 	 	56	 
	7.04 Fundamental Changes
	 	 	57	 
	7.05 Dispositions
	 	 	57	 
	7.06 Restricted Payments
	 	 	58	 
	7.07 Change in Nature of Business
	 	 	59	 
	7.08 Transactions with Affiliates
	 	 	59	 
	7.09 Burdensome Agreements
	 	 	59	 
	7.10 Use of Proceeds
	 	 	59	 
	7.11 Financial Covenants
	 	 	60	 
	7.12 Hedge Transactions
	 	 	60	 
	 
	 	 	 	 
	ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
	 	 	60	 
	8.01 Events of Default
	 	 	60	 
	8.02 Remedies Upon Event of Default
	 	 	62	 
	8.03 Application of Funds
	 	 	62	 
	 
	 	 	 	 
	ARTICLE IX. ADMINISTRATIVE AGENT
	 	 	63	 
	9.01 Appointment and Authority
	 	 	63	 
	9.02 Rights as a Lender
	 	 	63	 
	9.03 Exculpatory Provisions
	 	 	64	 
	9.04 Reliance by Administrative Agent
	 	 	64	 
	9.05 Delegation of Duties
	 	 	65	 
	9.06 Resignation of Administrative Agent
	 	 	65	 
	9.07 Non-Reliance on Administrative Agent and Other Lenders
	 	 	66	 
	9.08 No
Other Duties, Etc.
	 	 	66	 






ii









 






	 	 	 	 	 
	      Section      
	 	Page	 
	 
	9.09 Administrative Agent May File Proofs of Claim
	 	 	66	 
	9.10 Guaranty Matters
	 	 	67	 
	 
	 	 	 	 
	ARTICLE X. MISCELLANEOUS
	 	 	67	 
	10.01
Amendments, Etc.
	 	 	67	 
	10.02 Notices; Effectiveness; Electronic Communication
	 	 	68	 
	10.03 No Waiver; Cumulative Remedies
	 	 	70	 
	10.04 Expenses; Indemnity; Damage Waiver
	 	 	70	 
	10.05 Payments Set Aside
	 	 	71	 
	10.06 Successors and Assigns
	 	 	72	 
	10.07 Treatment of Certain Information; Confidentiality
	 	 	75	 
	10.08 Right of Setoff
	 	 	76	 
	10.09 Interest Rate Limitation
	 	 	76	 
	10.10 Counterparts; Integration; Effectiveness
	 	 	77	 
	10.11 Survival of Representations and Warranties
	 	 	77	 
	10.12 Severability
	 	 	77	 
	10.13 Replacement of Lenders
	 	 	77	 
	10.14
Governing Law; Jurisdiction; Etc.
	 	 	78	 
	10.15 Waiver of Jury Trial
	 	 	79	 
	10.16 No Advisory or Fiduciary Responsibility
	 	 	79	 
	10.17 USA PATRIOT Act Notice
	 	 	80	 






iii









 





	 	 	 	 	 
	SCHEDULES	 	 
	 
	 	 	 	 
	 

	 	2.01
	 	Commitments and Applicable Percentages
	 

	 	5.03
	 	Governmental Authorizations
	 

	 	5.05
	 	Supplement to Interim Financial Statements
	 

	 	5.06
	 	Litigation
	 

	 	5.09
	 	Environmental Matters
	 

	 	5.13
	 	Subsidiaries; Other Equity Investments and Loan Parties
	 

	 	7.01
	 	Existing Liens
	 

	 	7.03
	 	Existing Indebtedness
	 

	 	10.02
	 	Administrative Agent’s Office; Certain Addresses for Notices
	 

	 	10.06
	 	Processing and Recordation Fees
	 
	 	 	 	 
	EXHIBITS	 	 
	 

	 	 	 	Form of
	 
	 	 	 	 
	 

	 	A
	 	Loan Notice
	 

	 	B
	 	Note
	 

	 	C
	 	Compliance Certificate
	 

	 	D
	 	Assignment and Assumption
	 

	 	E
	 	Guaranty
	 

	 	F
	 	Opinion of Counsel to the Loan Parties








iv









 








BRIDGE LOAN AGREEMENT




     This BRIDGE LOAN AGREEMENT (“Agreement”) is entered into as of November 21, 2006 among
RIATA ENERGY, INC., a Texas corporation (d/b/a SandRidge Energy, Inc.) (the “Borrower”),
each LENDER from time to time party hereto (collectively, the “Lenders” and individually, a
“Lender”), and BANK OF AMERICA, N.A., as Administrative Agent, and BANC OF AMERICA
SECURITIES LLC, CREDIT SUISSE SECURITIES (USA) LLC, GOLDMAN SACHS CREDIT PARTNERS L.P. and LEHMAN
BROTHERS INC., as Lead Arrangers and Bookrunners.



PRELIMINARY STATEMENTS:




     Capitalized terms used but not defined in these Preliminary Statements shall have respective
meanings set forth for such terms in Section 1.01 hereof.



     Pursuant to the Purchase and Sale Agreement dated November 21, 2006 (the “Acquisition
Agreement”) by and among SandRidge Holdings, Inc., a Delaware corporation and wholly-owned
subsidiary of the Borrower (“Buyer”) , American Real Estate Partners, L.P., a
Delaware limited partnership, American Real Estate Holdings Limited Partnership, a Delaware limited
partnership, AREP Oil & Gas Holdings LLC, a Delaware limited liability company, AREP O & G Holdings
LLC, a Delaware limited liability company (collectively, the “Seller”) and NEG Oil & Gas
LLC, a Delaware limited liability company (the “Target”) , Buyer has agreed to acquire
(the “Acquisition”) all of the membership interests of Target for not more than $1,269.0
million in cash, plus additional consideration in the form of common equity of the Borrower.



     The Borrower intends to finance the Acquisition, the costs and expenses related to the
Transaction, the repayment of certain existing indebtedness of the Borrower and the Target and the
Borrower’s and its Subsidiaries’ ongoing working capital and other general corporate purposes after
consummation of the Acquisition from the following sources: (a) at least $500.0 million in cash
proceeds to be received from the issuance and sale of convertible preferred equity (the
“Preferred Stock”), (b) at least $244.0 million of common equity of the Target currently
held by the Seller to be rolled over (directly or indirectly) into common equity of the Borrower;
(c) up to $150.0 million under a revolving senior secured credit facility (the “Senior Credit
Facility”) and (d) up to $850.0 million of senior unsecured loans under the bridge facility
provided under this Agreement.



     The Borrower has requested that the Lenders provide a bridge loan facility, and the Lenders
are willing to do so on the terms and conditions set forth herein.



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



ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS




     1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings
set forth below:



1









 





     “Acquisition” has the meaning specified in the Preliminary Statements.



     “Acquisition Agreement” has the meaning specified in the Preliminary Statements.



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



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



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



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



     “Aggregate Commitments” means the Commitments of all the Initial Lenders.



     “Agreement” means this Bridge Loan Agreement.



     “Applicable Rate” means (i) with respect to Eurodollar Rate Loans, the sum of 4.50%
plus the Incremental Margin, if any, and (ii) with respect to Base Rate Loans, the sum of 3.50%
plus the Incremental Margin, if any.



     “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.



     “Arranger” means each of Banc of America Securities LLC, Credit Suisse Securities
(USA) LLC, Goldman Sachs Credit Partners L.P. and Lehman Brothers Inc. in its capacity as lead
arranger and book manager in respect of this Agreement.



     “Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.



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



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



2









 





     “Audited Financial Statements” means the audited consolidated balance sheet of the
Borrower and its Subsidiaries for the fiscal year ended December 31, 2005, and the related
consolidated statements of income or operations, shareholders’ equity and cash flows for such
fiscal year of the Borrower and its Subsidiaries, including the notes thereto.



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



     “Base Rate” means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such
day as publicly announced from time to time by Bank of America as its “prime rate.” The “prime
rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs
and desired return, general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced rate. Any change in
such rate announced by Bank of America shall take effect at the opening of business on the day
specified in the public announcement of such change.



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



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



     “Borrower Existing Credit Agreement” means that certain First Amended and Restated
Master Credit Agreement dated as of January 12, 2006, among the Borrower (under its former name of
Riata Energy, Inc.), Bank of America , N.A. and certain subsidiaries of Borrower from time to time
party thereto as guarantors,



     “Borrower Materials” has the meaning specified in Section 6.02.



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



     “Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact closed in, the state
where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate
Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in
the London interbank eurodollar market.



     “Cash Equivalents” means any of the following types of Investments, to the extent
owned by the Borrower or any of its Subsidiaries:




     (a) readily marketable obligations issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof having maturities
of not more than 360 days from the date of acquisition thereof; provided that the
full faith and credit of the United States of America is pledged in support thereof;




     (b) time deposits with, or insured certificates of deposit or bankers’ acceptances of,
any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the
United States of America, any state thereof or the District of Columbia or



3









 







is the principal banking subsidiary of a bank holding company organized under the laws
of the United States of America, any state thereof or the District of Columbia, and is a
member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial
paper rated as described in clause (c) of this definition and (iii) has combined capital and
surplus of at least $1,000,000,000, in each case with maturities of not more than 90 days
from the date of acquisition thereof;




     (c) commercial paper issued by any Person organized under the laws of any state of the
United States of America and rated at least “Prime-1” (or the then equivalent grade) by
Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with
maturities of not more than 180 days from the date of acquisition thereof; and




     (d) Investments, classified in accordance with GAAP as current assets of the Borrower
or any of its Subsidiaries, in money market investment programs registered under the
Investment Company Act of 1940, which are administered by financial institutions that have
the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are
limited solely to Investments of the character, quality and maturity described in clauses
(a), (b) and (c) of this definition.



     “Casualty Event” means any loss, casualty or other insured damage to, or any
nationalization, taking under power of eminent domain or by condemnation or similar proceeding of,
any Oil and Gas Property of the Borrower or any of its Subsidiaries having a fair market value in
excess of $500,000.



     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability
Act of 1980.



     “CERCLIS” means the Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the U.S. Environmental Protection Agency.



     “CFC” means a Person that is a controlled foreign corporation under Section 957 of the
Code.



     “Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental Authority.



     “Change of Control” means an event or series of events by which:




     (a) at any time prior to the creation of a Public Market, the Ward/Mitchell Group shall
cease to own and control legally and beneficially (free and clear of all Liens), either
directly or indirectly, equity securities in the Borrower representing more than 30% of the
combined voting power of all of equity securities entitled to vote for members of the board
of directors or equivalent governing body of the Borrower on a fully-diluted basis (and
taking into account all such securities that the Ward/Mitchell Group has the right to
acquire pursuant to any option right (as defined in clause (b) below)); or



4









 






     (b) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other
fiduciary or administrator of any such plan) other than the Ward/Mitchell Group becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934, except that a person or group shall be deemed to have “beneficial ownership” of all
securities that such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time (such right, an “option
right”)), directly or indirectly, of more than a Control Percentage of the equity
securities of the Borrower entitled to vote for members of the board of directors or
equivalent governing body of the Borrower on a fully-diluted basis (and taking into account
all such securities that such “person” or “group” has the right to acquire pursuant to any
option right); for this purpose, “Control Percentage” means (i) prior to the
creation of the Public Market, the percentage of which the Ward/Mitchell Group is the
beneficial owner (determined as provided above) and (ii) at any time after the creation of a
Public Market, the greater of 30% and the percentage in (i); or




     (c) during any period of 24 consecutive months, a majority of the members of the board
of directors or other equivalent governing body of the Borrower cease to be composed of
individuals (i) who were members of that board or equivalent governing body on the first day
of such period, (ii) whose election or nomination to that board or equivalent governing body
was approved by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing body or
(iii) whose election or nomination to that board or other equivalent governing body was
approved by individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of that board or equivalent governing
body (excluding, in the case of both clause (ii) and clause (iii), any individual whose
initial nomination for, or assumption of office as, a member of that board or equivalent
governing body occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or group other
than a solicitation for the election of one or more directors by or on behalf of the board
of directors).



     “Change of Control Offer” has the meaning set forth in Section 6.17.



     “Change of Control Payment” has the meaning set forth in Section 6.17.



     “Change of Control Payment Date” has the meaning set forth in Section 6.17.



     “Closing Date” means the date of the Borrowing hereunder, as specified by the
Borrower in its Loan Notice.



     “Citi L/Cs” means letters of credit outstanding under the Target Existing Credit
Agreements.



5









 





     “Citi Payoff Documents” means documents executed and delivered in connection with the
termination of the Target Existing Credit Agreements which shall be satisfactory in form and
substance to the Administrative Agent.



     “Code” means the Internal Revenue Code of 1986.



     “Commitment” means, as to each Initial Lender, its obligation to make an Initial Loan
to the Borrower pursuant to Section 2.01, in the amount set forth opposite such Lender’s
name on Schedule 2.01.



     “Commitment Letter” means the letter agreement so denominated dated November 20, 2006
among the Borrower, the Administrative Agent, the Arranger and the other parties thereto.



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



     “Consolidated” refers to the consolidation of any Person, in accordance with GAAP,
with its properly consolidated subsidiaries. References herein to a Person’s Consolidated financial
statements, financial position, financial condition, liabilities, etc. refer to the consolidated
financial statements, financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.



     “Consolidated Current Assets” means, for any period, the aggregate amount of all
assets of Borrower and its Consolidated Subsidiaries which would be properly classified as current
assets in accordance with GAAP plus any Available Borrowing Base (as defined in the Senior Credit
Facility), but excluding any unrealized assets resulting from compliance with the Financial
Accounting Standards Board’s Statement 133 concerning mark-to-market requirements on hedging
transactions.



     “Consolidated Current Liabilities” means, for any period, the aggregate amount of all
liabilities of Borrower and its Consolidated Subsidiaries which would be properly classified as
current liabilities in accordance with GAAP, but excluding current maturities under the Senior
Credit Agreement, all amounts outstanding pursuant to this Agreement and any unrealized liabilities
resulting from compliance with the Financial Accounting Standards Board’s Statement 133 concerning
mark-to-market requirements on hedging transactions.



     “Consolidated Current Ratio” means, as of any date of determination, the ratio of (a)
Consolidated Current Assets as of such date to (b) Consolidated Current Liabilities as of such
date.



     “Consolidated EBITDAX” means for any period, the Consolidated Net Income of Borrower
for such period; plus each of the following (without duplication) determined for Borrower
and its Consolidated Subsidiaries on a Consolidated basis for such period: (a) any provision for
(or less any benefit from) income or franchise taxes included in determining Consolidated Net
Income; (b) any interest expense deducted in determining Consolidated Net Income; (c) any
depreciation, depletion, amortization or exploration expense deducted in determining Consolidated
Net Income; (d) any non-cash loss on change in fair value of derivative instruments deducted in
determining Consolidated Net Income; and (e) any other non-cash charge, expense or loss deducted in
determining Consolidated Net Income; and minus each



6









 







of the following (without duplication) determined for Borrower and its Consolidated
Subsidiaries on a Consolidated basis for such period, to the extent included in determining such
Consolidated Net Income for such period: (a) any non-cash gain on change in fair value of
derivative instruments; (b) any interest income included in determining Consolidated Net Income and
(c) any other non-cash income or gains; provided however, that in determining
Consolidated Net Income for the purposes of this definition for any period in which Borrower or any
of its Consolidated Subsidiaries has acquired or acquires additional Consolidated Subsidiaries
(whether by purchase, merger or otherwise) or has acquired or disposed of or acquires or disposes
of producing Oil and Gas Properties, (1) the Consolidated Net Income of such acquired Consolidated
Subsidiaries shall be included in such calculation on a pro forma basis as if they had been owned
by Borrower and its Consolidated Subsidiaries throughout such period, (2) the revenues attributable
to the oil and gas production from such acquired Oil and Gas Properties during such period, less
the direct operating expenses and severance and ad valorem taxes incurred with respect to such
properties during such period, shall be included in such calculation on a pro forma basis as if
they had been owned by Borrower and its Consolidated Subsidiaries throughout such period, and (3)
the revenues attributable to the oil and gas production from producing Oil and Gas Properties
disposed of during such period, less the direct operating expenses and severance and ad valorem
taxes incurred with respect to such properties during such period, shall be deducted in such
calculation on a pro forma basis as if they had not been owned by Borrower and its Consolidated
Subsidiaries throughout such period. Pro forma adjustments made in connection with Subsidiaries or
Oil and Gas Properties acquired or disposed of shall be consistent with Article 11 of Regulation
S-X and certified by the Borrower’s chief financial officer.



     “Consolidated Fixed Charges” means, for any period, the sum of (a) Consolidated
Interest Charges for such period, (b) the aggregate amount of scheduled principal payments made
during such period in respect of Long-Term Indebtedness of the Borrower and its Consolidated
Subsidiaries (except payments made by the Borrower or any Consolidated Subsidiary to the Borrower
or any Consolidated Subsidiary), and (c) the aggregate amount of principal payments (except
scheduled principal payments) made during such period in respect of Long-Term Indebtedness of the
Borrower and its Consolidated Subsidiaries (other than the Loans), but in the case of any principal
payment other than scheduled principal payments, only to the extent that such payment reduced any
scheduled principal payments that would have become due within one year after the date of such
payment.



     “Consolidated Fixed Charge Coverage Ratio” means, as of the last day of any fiscal
quarter, the ratio of (a) Consolidated EBITDAX for the period of the four prior fiscal quarters
ending on such date to (b) Consolidated Fixed Charges for such period.



     “Consolidated Funded Indebtedness” means, as of any date of determination, for the
Borrower and its Consolidated Subsidiaries on a Consolidated basis, the sum of (a) the outstanding
principal amount of all obligations, whether current or long-term, for borrowed money (including
Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements
or other similar instruments, (b) all purchase money Indebtedness, (c) all obligations in respect
of the deferred purchase price of property or services (other than trade accounts payable in the
ordinary course of business), (d) Attributable Indebtedness in respect of capital leases and
Synthetic Lease Obligations, (e) without duplication, all Guarantees with



7









 







respect to outstanding Indebtedness of the types specified in clauses (a) through (d) above of
Persons other than the Borrower or any Consolidated Subsidiary, and (f) all Indebtedness of the
types referred to in clauses (a) through (e) above of any partnership or joint venture (other than
a joint venture that is itself a corporation or limited liability company) in which the Borrower or
a Consolidated Subsidiary is a general partner or joint venturer, unless such Indebtedness is
expressly made non-recourse to the Borrower or such Consolidated Subsidiary.



     “Consolidated Interest Charges” means, for any period, for the Borrower and its
Consolidated Subsidiaries on a Consolidated basis, the sum of (a) all interest, premium payments,
debt discount, fees, charges and related expenses of the Borrower and its Subsidiaries in
connection with borrowed money (including capitalized interest) or in connection with the deferred
purchase price of assets, in each case to the extent treated as interest in accordance with GAAP
(but excluding amortization of debt discount and expense in connection with the Transaction), (b)
to the extent not reflected in (a), plus the net amount payable under Swap Contracts in respect of
interest rates (or minus the net amount receivable under Swap Contracts in respect of
interest rates) plus (c) the portion of rent expense of the Borrower and its Subsidiaries with
respect to such period under capital leases that is treated as interest in accordance with GAAP.



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



     “Consolidated Net Income” means, for any period, the net income (or loss) of Borrower
and its Consolidated Subsidiaries for such period determined in accordance with GAAP, provided that
the following shall be excluded in calculating Consolidated Net Income and Consolidated EBITDAX:
(i) any extraordinary items of gain or loss, (ii) any gain or loss from the sale of assets other
than in the ordinary course of business, (iii) any non-cash income, gains, losses or charges
resulting from the requirements of SFAS 133 or 143 and (iv) any professional fees related to the
Transaction.



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



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



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



8









 





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



     “Default Rate” means (a) the Base Rate plus (b) the Applicable Rate, if any,
applicable to Base Rate Loans plus (iii) 2% per annum; provided, however,
that (i) with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal
to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per
annum, and (ii) the Default Rate shall in no event be less than the Minimum Rate.



     “Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by any Person (or the
granting of any option or other right to do any of the foregoing), including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith. The issuance of Equity Interests by any Subsidiary to any
Person other than the Borrower or a wholly-owned Subsidiary shall be deemed a Disposition by the
Borrower of its direct or indirect Equity Interest in such Subsidiary to the extent of the
resulting dilution.



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



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



     “Eligible Assignee” means any Person that meets the requirements to be an assignee
under Section 10.06(b)(iii), (v) and (vi) (subject to such consents, if
any, as may be required under Section 10.06(b)(iii)).



     “Environmental Laws” means any and all Federal, state, local, and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the environment, including those
related to hazardous substances or wastes, air emissions and discharges to waste or public systems.



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



     “Environmental Permit” means any permit, approval, identification number, license or
other authorization required under any Environmental Law.



     “Equity Interests” means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the warrants, options or
other rights



9









 







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



     “Equity Issuance” means the issuance of the Preferred Stock.



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



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



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



     “Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar Rate
Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”),
as published by Reuters (or other commercially available source providing quotations of BBA LIBOR
as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for
delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.
If such rate is not available at such time for any reason, then the “Eurodollar Rate” for such
Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate
at which deposits in Dollars for delivery on the first day of such Interest Period in same day
funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by
Bank of America and with a term equivalent to such Interest Period would be offered by Bank of
America’s London Branch to major banks in the London interbank eurodollar market at their request
at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such
Interest Period.



10









 





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



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



     “Exchange Note” means a note of the Borrower issued pursuant to the Exchange Note
Indenture.



     “Exchange Note Indenture” means the indenture to be entered into to give effect to the
exchange right of the Lenders pursuant to Section 6.16, having terms and conditions substantially
the same as those applicable to the Extended Loans, except (i) as otherwise contemplated by Section
6.16 (ii) covenants (including mandatory repurchase offers) and events of default will be as
proposed by the Arrangers for the Permanent Securities and reasonably acceptable to the Borrower
and (iii) as otherwise agreed by the Borrower and the Required Lenders, and such other terms and
provisions not materially inconsistent therewith as may be customary for an indenture governing
debt securities of such nature.



     “Exchange Request” has the meaning set forth in Section 6.16(b)



     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any
other recipient of any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable Lending Office is located,
(b) any branch profits taxes imposed by the United States or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than
an assignee pursuant to a request by the Borrower under Section 10.13), any withholding tax
that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party hereto (or designates a new Lending Office) or is attributable to such Foreign Lender’s
failure or inability (other than as a result of a Change in Law) to comply with Section
3.01(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled,
at the time of designation of a new Lending Office (or assignment), to receive additional amounts
from the Borrower with respect to such withholding tax pursuant to Section 3.01(a).



     “Existing Credit Agreements” mean collectively the Borrower Existing Credit Agreement
and the Target Existing Credit Agreements.



     “Extended Loans” has the meaning set forth in Section 2.01(b).



     “Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole



11









 







multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as
determined by the Administrative Agent.



     “Fee Letter” means the letter agreement so denominated dated November 20, 2006 among
the Borrower, the Administrative Agent, the Arranger and the other parties thereto.



     “Final Maturity Date” means the sixth anniversary of the Closing Date.



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



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



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



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



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



     “Guarantee” means, as to any Person, any (a) any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness payable
or performable by another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation,
(ii) to purchase or lease property, securities or services for the purpose of assuring the obligee
in respect of such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of the primary obligor
so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered
into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or
other obligation of the payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other obligation of any other Person, whether



12









 







or not such Indebtedness or other obligation is assumed by such Person (or any right,
contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount
of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if
not stated or determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.



     “Guarantors” means, collectively, (i) NEG Oil & Gas LLC, ROC Gas Company, National
Onshore LP, National Offshore LP, NEG Operating LLC, Lariat Compression Company, Alsate Management
and Investment Company, Integra Energy, L.L.C., Petrosource Energy Company, L.P., Petrosource
Production Company, L.P. and SandRidge Holdings, Inc. and (ii) each Person which becomes a
Guarantor after the Closing Date pursuant to Section 6.12.



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



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



     “Hedge Transaction” means any commodity, interest rate, currency or other swap,
option, collar, futures contract or other contract pursuant to which a Person hedges risks related
to commodity prices, interest rates, currency exchange rates, securities prices or financial market
conditions. Hedge Transactions expressly include Oil and Gas Hedge Transactions.



     “Hydrocarbons” means oil, gas, casinghead gas, drip gasolines, natural gasoline,
condensate, distillate, and all other liquid and gaseous hydrocarbons produced or to be produced in
conjunction therewith, and all products, by-products and all other substances derived therefrom or
the processing thereof, and all other minerals and substances, including, but not limited to,
sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon dioxide, helium,
and any and all other minerals, ores, or substances of value, and the products and proceeds
therefrom, including, without limitation, all gas resulting from the insitu combustion of coal or
lignite.



     “Immaterial Title Deficiencies” has the meaning set forth in the Senior Credit
Facility.



     “Incremental Margin” means (i) prior to the date that is six months after the Closing
Date, 0%, and (ii) on and after such date that is six months after the Closing Date 0.50% plus, for
each further period of three months that shall have elapsed subsequent to such six month date,
0.25%.



     “Indebtedness” means, as to any Person at a particular time, without duplication, all
of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:



13









 






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




     (b) all direct or contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and
similar instruments;




     (c) net obligations of such Person under any Swap Contract;




     (d) all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business and, in each
case, not past due for more than 90 days after the date on which such trade account payable
was created);




     (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person (including indebtedness arising under conditional
sales or other title retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse;




     (f) capital leases and Synthetic Lease Obligations;




     (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interest in such Person or any other Person (other
than the Preferred Stock), valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and




     (h) all Guarantees of such Person in respect of any of the foregoing.



     For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a corporation or limited
liability company) in which such Person is a general partner or a joint venturer, unless such
Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under
any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such
date. The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed
to be the amount of Attributable Indebtedness in respect thereof as of such date.



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



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



     “Information” has the meaning specified in Section 10.07.



     “Initial Lenders” means Banc of America Bridge LLC, Credit Suisse, Cayman Islands
Branch, Goldman Sachs Credit Partners L.P. and Lehman Commercial Paper Inc.



     “Initial Loan” has the meaning set forth in Section 2.01(a).



14









 





     “Initial Maturity Date” means the first anniversary of the Closing Date.



     “Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the
last day of each Interest Period applicable to such Loan and the Initial Maturity Date or the Final
Maturity Date, as applicable; and (b) as to any Base Rate Loan, the last Business Day of each
March, June, September and December and the Initial Maturity Date or the Final Maturity Date, as
applicable.



     “Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the
date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan
and ending on the date three months thereafter provided  that:



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



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



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



     “Internal Control Event” means a material weakness in, or fraud that involves
management or other employees who have a significant role in, the Borrower’s internal controls over
financial reporting, in each case as described in the Securities Laws.



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



     “IRS” means the United States Internal Revenue Service.



     “Lariat” means Lariat Services, Inc., a Texas corporation and a wholly-owned
Subsidiary of the Borrower.



     “Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents
or authorities, including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration thereof, and all
applicable



15









 







administrative orders, licenses, authorizations and permits of, and agreements with, any
Governmental Authority.



     “Lead Arranger” means Banc of America Securities LLC.



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



     “Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other office or offices as
a Lender may from time to time notify the Borrower and the Administrative Agent.



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



     “Loan” means an Initial Loan or an Extended Loan.



     “Loan Documents” means this Agreement, the Notes, the Fee Letter, the Guaranty, the
Exchange Note Indenture and Exchange Notes.



     “Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from one
Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to Section
2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.



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



     “Long-Term Indebtedness” means any Indebtedness that, in accordance with GAAP,
constitutes (or, when incurred, constituted) a long-term liability.



     “Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual or contingent),
results of operations or condition (financial or otherwise) of the Borrower and its Subsidiaries
taken as a whole; (b) a material impairment of (i) the rights and remedies of the Administrative
Agent or any Lender under any Loan Document or (ii) the ability of the Loan Parties to perform
their obligations under the Loan Documents; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan Document to which it
is a party.



     “Minimum Rate” means a rate per annum equal to the sum of 9.00% plus the Incremental
Margin.



     “MNPI” has the meaning specified in Section 6.02.



     “Multiemployer Plan” means any employee benefit plan of the type described in Section
4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is



16









 







obligated to make contributions, or during the preceding five plan years, has made or been
obligated to make contributions.



     “Net Cash Proceeds” means:




(a) with respect to any Disposition by the Borrower or any of its Subsidiaries, the excess,
if any, of (i) the sum of cash and Cash Equivalents received in connection with such
transaction (including any cash or Cash Equivalents received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so
received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured
by the applicable asset and that is required to be repaid in connection with such
transaction (other than Indebtedness under the Loan Documents), (B) the reasonable and
customary out-of-pocket expenses incurred by the Borrower or such Subsidiary in connection
with such transaction and (C) income taxes reasonably estimated to be actually payable
within two years of the date of the relevant transaction as a result of any gain recognized
in connection therewith and (D) the Swap Termination Value, if any, associated with such
transaction; provided that, if the amount of any estimated taxes pursuant to
subclause (C) exceeds the amount of taxes actually required to be paid in cash in respect of
such Disposition, the aggregate amount of such excess shall constitute Net Cash Proceeds;
and




(b) with respect to the sale or issuance of any Equity Interests by the Borrower or any of
its Subsidiaries (or parent holding company), or the incurrence or issuance of any
Indebtedness by the Borrower or any of its Subsidiaries, the excess of (i) the sum of the
cash and Cash Equivalents received in connection with such transaction over (ii) the
underwriting discounts and commissions, and other reasonable and customary out-of-pocket
expenses, incurred by the Borrower or such Subsidiary in connection therewith.



     “Note” means a promissory note made by the Borrower in favor of a Lender evidencing
Loans made by such Lender, substantially in the form of Exhibit B.



     “Obligations” means all advances to, and debts, liabilities, obligations, covenants
and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any
Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent,
due or to become due, now existing or hereafter arising and including interest and fees that accrue
after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding
under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.



     “Oil and Gas Business” means the business of acquiring, exploring, or developing and
operating Oil and Gas Properties and the production, marketing, processing and transporting of
Hydrocarbons therefrom.



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



     “Oil and Gas Properties” means all oil, gas and/or mineral leases, oil, gas or mineral
properties, mineral servitudes and/or mineral rights of any kind (including, without limitation,



17









 







mineral fee interests, lease interests, farmout interests, overriding royalty and royalty
interests, net profits interests, oil payment interests, production payment interests and other
types of mineral interests), and all oil and gas gathering, treating, storage, processing and
handling assets.



     “Organization Documents” means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.



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



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



     “PBGC” means the Pension Benefit Guaranty Corporation.



     “PCAOB” means the Public Company Accounting Oversight Board.



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



     “Permanent Securities” means the senior unsecured notes or any other debt securities
or term loans of the Borrower to be issued after the Closing Date for the purpose of refinancing
all or a portion of the outstanding Loans.



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



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



     “Platform” has the meaning specified in Section 6.02.



     “Preferred Stock” has the meaning set forth in the Preliminary Statements.



18









 





     “Public Market” shall exist if (a) a Public Offering has been consummated and (b) any
Equity Interests of the Borrower have been distributed by means of an effective registration
statement under the Securities Act of 1933.



     “Public Offering” means a public offering of the Equity Interests of the Borrower
pursuant to an effective registration statement under the Securities Act of 1933.



     “Public-Side Lender” has the meaning specified in Section 6.02.



     “Refinancing Fee” means a fee payable to each Lender equal to 2.0% of the aggregate
outstanding principal amount of the Initial Loans of such Lender repaid, repurchased, redeemed or
otherwise acquired or retired for value, in whole or in part, other than with the proceeds of (i)
an issuance of Permanent Securities, (ii) the contemplated initial public offering of equity
securities of the Borrower following the consummation of the Acquisition, (iii) an asset sale or
(iv) the Senior Credit Facility. The Refinancing Fee shall be payable on the date of each such
repayment, repurchase, redemption, acquisition or retirement for value.



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



     “Registered Public Accounting Firm” has the meaning specified in the Securities Laws
and shall be independent of the Borrower as prescribed by the Securities Laws.



     “Related Documents” means the Acquisition Agreement, and the documentation for the
Equity Issuance.



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



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



     “Required Lenders” means, as of any date of determination, Lenders having more than
50% of the Aggregate Commitments or, if the Commitments shall have or shall have been terminated,
Lenders holding in the aggregate more than 50% of the outstanding principal amount of the Loans.



     “Responsible Officer” means the chief executive officer, president, chief financial
officer, treasurer, assistant treasurer or controller of a Loan Party and, solely for purposes of
notices given pursuant to Article II, any other officer of the applicable Loan Party so designated
by any of the foregoing officers in a notice to the Administrative Agent. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to
have been authorized by all necessary corporate, partnership and/or other action on the part of
such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.



     “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity Interest of the



19









 







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



     “Rollover Fee” means a fee payable to each Lender equal to 2.0% of the aggregate
principal amount of any Extended Loans made by such Lender on the Initial Maturity Date, payable in
full on the Initial Maturity Date.



     “Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.



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



     “Securities Laws” means the Securities Act of 1933 and regulations thereunder, the
Securities Exchange Act of 1934 and regulations thereunder, Sarbanes-Oxley and the applicable
accounting and auditing principles, rules, standards and practices promulgated, approved or
incorporated by the SEC or the PCAOB.



     “Seller” has the meaning specified in the Preliminary Statements.



     “Senior Credit Facility” has the meaning specified in the Preliminary
Statements.



     “Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become absolute and matured, (c)
such Person does not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is
not engaged in business or a transaction, and is not about to engage in business or a transaction,
for which such Person’s property would constitute an unreasonably small capital, and (e) such
Person is able to pay its debts and liabilities, contingent obligations and other commitments as
they mature in the ordinary course of business. The amount of contingent liabilities at any time
shall be computed as the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an actual or matured
liability.



     “Subsidiary” of a Person means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of securities or other
interests having ordinary voting power for the election of directors or other governing body (other
than securities or interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise controlled, directly,
or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise
specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary
or Subsidiaries of the Borrower.



20









 





     “Super-Majority Lenders” means, as of any date of determination, Lenders holding in
the aggregate 75% or more of the Total Outstandings.



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



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



     “Syndication Completion Date” means the earlier of (i) the date on which the Bridge
Lead Arranger notifies the Lenders that the Bridge Lead Arranger has completed its primary
syndication of the Initial Loans to its satisfaction but in any event not later than 60 days after
the initial launch of the syndication on IntraLinks or (ii) the 180th day after the
Closing Date.



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



     “Target” has the meaning specified in the Preliminary Statements.



     “Target Existing Credit Agreements” means (i) that certain Credit Agreement dated as
of December 20, 2005, among the Target (under its former name of AREP OIL & GAS LLC), Citicorp USA,
Inc., as Administrative Agent, Bear Stearns Corporate Lending Inc., as the Syndication Agent and
certain financial institutions from time to time party thereto as lenders and (ii) that certain
Amended and Restated Credit Agreement, dated as of December 20, 2005, by and among NEG Operating
LLC, a Delaware limited liability company, as borrower, NEG



21









 







Oil & Gas Sub LLC (as assignee of Target), a Delaware limited liability company, as lender and
administrative agent, and Citicorp USA, Inc., as Collateral Agent.



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



     “Threshold Amount” means $2,500,000.



     “Transaction” means, collectively, the Acquisition, the Equity Issuance,
the entering into and funding of the bridge loan facility under this Agreement, the entering into
and funding of the Senior Credit Facility, the refinancing of certain outstanding Indebtedness of
the Borrower and the Target under the Existing Credit Agreements, and all related transactions and
the payment of the fees and expenses incurred in connection with the consummation of the foregoing.



     “Type” means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.



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



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



     “Well Participation Program” means that the Well Participation Program effective as of
June 8, 2006 by and among the Borrower and certain executive officers of the Borrower, as in effect
on the Closing Date.



     “Ward/Mitchell Group” means (i) each of Tom L. Ward (“Ward”) and N. Malone Mitchell
III (“Mitchell”); (ii) the wife of either of them; (iii) a lineal descendant of either of them;
(iv) the estate of either of them; (v) any trust of which at least one of the trustees is Ward or
Mitchell, or the principal beneficiaries of which are any one or more of the Persons in (i)-(iv);
(vi) any Person which is Controlled by any one or more of the persons in (i)-(v); and (vii) any
group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) of which each of Ward and
Mitchell is a member.



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




     (a) The definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase
“without limitation.” The word “will” shall be construed to have the same meaning
and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of
or reference to any agreement, instrument or other document (including any Organization
Document)



22









 







shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions
on such amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (iii) the words “herein,” “hereof” and
“hereunder,” and words of similar import when used in any Loan Document, shall be
construed to refer to such Loan Document in its entirety and not to any particular provision
thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, the Loan Document in which such references appear, (v) any reference to any
law shall include all statutory and regulatory provisions consolidating, amending, replacing
or interpreting such law and any reference to any law or regulation shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented from time to
time, and (vi) the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.




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




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



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



     (b) Changes in GAAP. If at any time any change in GAAP would affect the computation
of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or
the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof
in light of such change in GAAP (subject to the approval of the Required Lenders); provided
that, until so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the
Administrative Agent and the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations
of such ratio or requirement made before and after giving effect to such change in GAAP.



     1.04 Petroleum Terms.



23









 





     As used herein, the terms “proved reserves,” “proved developed reserves,” “proved developed
producing reserves,” “proved developed nonproducing reserves,” and “proved undeveloped reserves”
have the meaning given such terms from time to time and at the time in question by the Society of
Petroleum Engineers of the American Institute of Mining Engineers.



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



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



ARTICLE II.

THE COMMITMENTS AND LOANS




     2.01 Loans. (a) Subject to the terms and conditions set forth herein, each Initial Lender
severally agrees to make a single term loan (an “Initial Loan”) to the Borrower on the
Closing Date in the amount of such Initial Lender’s Commitment. The Commitments are not revolving
in nature and shall terminate at the close of business on the Closing Date.



     (b) Each Lender severally agrees, if the Initial Loans have not been repaid prior to the
Initial Maturity Date, that the then outstanding principal amount of each of its Initial Loans
shall be automatically converted into a loan (individually, an “Extended Loan” and
collectively, the “Extended Loans”) to the Borrower on the Initial Maturity Date in an
aggregate principal amount equal to the then outstanding principal amount of such Initial Loan or
Loans upon satisfaction of the following conditions: (i) no Default shall have occurred and be
continuing; (ii) the Borrower shall have paid, or caused to be paid, in full all fees then due
pursuant to Section 2.06; (iii) any Note requested pursuant to Section 2.08 to evidence Extended
Loans shall have been duly issued; and (iv) no order, decree or injunction from any Governmental
Authority enjoining the conversion of any Initial Loan into an Extended Loan shall be in effect.
Upon the conversion of the Initial Loans into Extended Loans, each Lender shall cancel on its
records a principal amount of the Initial Loans held by such Lender corresponding to the principal
amount of the Extended Loans issued to such Lender, which corresponding principal amount of the
Initial Loans shall be satisfied by the conversion of such Initial Loans into Extended Loans in
accordance with this Section 2.01(b).



     2.02 Borrowings, Conversions and Continuations of Loans.



     (a) The Borrowing, each conversion of Loans from one Type to the other, and each continuation
of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative
Agent, which may be given by telephone. Each such notice must be received by the Administrative
Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any
Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of
Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of



24









 







any Borrowing of Base Rate Loans. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must
be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice,
appropriately completed and signed by a Responsible Officer of the Borrower. Each conversion or
continuation of Loans shall be in a principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i)
whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other,
or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) in the case of a conversion
or continuation, the principal amount of Loans to be converted or continued, and (iv) the Type of
Loans to be borrowed or to which existing Loans are to be converted. If the Borrower fails to
specify a Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice requesting
a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base
Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day
of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans.



     (b) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each
Lender of the amount of its ratable share of the applicable Loans, and if no timely notice of a
conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each
Lender of the details of any automatic conversion to Base Rate Loans described in the preceding
subsection. In the case of the Borrowing, each Lender shall make the amount of its Loan available
to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not
later than 1:00 p.m. on the Closing Date. Upon satisfaction of the conditions set forth in Article
IV, the Administrative Agent shall make all funds so received available to the Borrower in like
funds as received by the Administrative Agent either by (i) crediting the account of the Borrower
on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds,
in each case in accordance with instructions provided to (and reasonably acceptable to) the
Administrative Agent by the Borrower.



     (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted
only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of
a Default, no Loans may be requested as, converted to or continued as Eurodollar Rate Loans without
the consent of the Required Lenders.



     (d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the
interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of
such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent
shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in
determining the Base Rate promptly following the public announcement of such change.



     (e) After giving effect to all Borrowings, all conversions of Loans from one Type to the
other, and all continuations of Loans as the same Type, there shall not be more than five Interest
Periods in effect with respect to Loans.



     2.03 Prepayments.



25









 





     (a) Optional. The Borrower may, upon notice to the Administrative Agent, at any time
or from time to time voluntarily prepay Loans in whole or in part without premium or penalty, but
subject to the Refinancing Fee, if applicable; provided that (i) such notice must be
received by the Administrative Agent not later than 11:00 a.m. three Business Days prior to any
date of prepayment and (ii) any partial prepayment shall be in a principal amount of $5,000,000 or
a whole multiple of $1,000,000 in excess thereof. Each such notice shall specify the date and
amount of such prepayment and the Type(s) of Loans to be prepaid and, if Eurodollar Rate Loans are
to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify
each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable
Percentage of such prepayment. If such notice is given by the Borrower, the Borrower shall make
such prepayment and the payment amount specified in such notice shall be due and payable on the
date specified therein. Any prepayment shall be accompanied by all accrued interest on the amount
prepaid, together with any additional amounts required pursuant to Section 3.05.



     (b) Mandatory.



          (i) If the Borrower or any of its Subsidiaries Disposes of any property (other than any
Disposition of any property permitted by Section 7.05(g)) which results in the realization
by such Person of Net Cash Proceeds, the Borrower shall, subject to the prior application of such
Net Cash Proceeds pursuant to the provisions of the Senior Credit Facility regarding the
application of such Net Cash Proceeds, prepay an aggregate principal amount of Loans equal to 100%
of such Net Cash Proceeds immediately upon receipt thereof by such Person; provided that, the
proceeds of any Disposition permitted by Section 7.05(g) shall not constitute Net Cash Proceeds to
the extent that (A) such proceeds are reinvested in replacement properties or assets, or other
productive properties or assets, acquired by the Borrower or a Subsidiary of a kind then used or
usable in the business of the applicable Person within 180 days from the date of receipt thereof or
(B) if the applicable Borrower or Subsidiary intends to acquire replacement properties or assets,
or other productive properties or assets, with such proceeds as part of a like-kind exchange under
Section 1031 of the Code, the potential replacement properties or assets are identified by such
Borrower or Subsidiary within 180 days from the date the ownership to the sold assets is
transferred to the buyer of such property and the proceeds from such property are reinvested to
acquire such replacement properties or assets within 180 days from the date the ownership to the
sold assets is transferred to the buyer of such property; provided further that, the proceeds of
any Casualty Event shall not constitute Net Cash Proceeds to the extent that such proceeds are
reinvested in replacement properties or assets, or other productive properties or assets, acquired
by the Borrower or a Guarantor of a kind then used or usable in the business of the applicable
Person within 180 days from the date of receipt thereof.; and




          (ii) Upon the incurrence or issuance subsequent to the Closing Date by the Borrower or any of
its Subsidiaries of any Indebtedness (other than Indebtedness expressly permitted to be incurred or
issued pursuant to Section 7.03 (b)-(k)) or the issuance subsequent to the Closing Date by
the Borrower or any of its Subsidiaries (or by any direct or indirect parent holding company of
which the Borrower is a wholly-owned Subsidiary) of any Equity Interests (other than any such
issuance to the Borrower or a wholly owned Subsidiary), the Borrower shall




26









 




prepay an aggregate
principal amount of Loans equal to 100% of all Net Cash Proceeds received therefrom immediately
upon receipt thereof by the Borrower or such Subsidiary.




     (c) Applications. Prepayments made pursuant to this Section 2.03 shall be applied
ratably to the Loans of the Lenders.



     2.04 Repayment of Loans.



     (a) Subject to Section 2.01(b), the Initial Loans will mature on the Initial Maturity Date
and, to the extent then unpaid, will be converted into Extended Loans or become due and payable
pursuant to Section 2.01(b).



     (b) The Extended Loans will mature on the Final Maturity Date.



     2.05 Interest.



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



     (b) Subject to the provisions of subsection (c) below, the rate of interest applicable to the
Loans shall at no time be less than the Minimum Rate or greater than 11.00% per annum.



     (c) (i) If any amount of principal of any Loan is not paid when due (without regard to any
applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount
shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws.



     (ii) If any amount (other than principal of any Loan) payable by the Borrower under any Loan
Document is not paid when due (without regard to any applicable grace periods), whether at stated
maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount
shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws.



     (iii) Upon the request of the Required Lenders, while any Event of Default exists, the
Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a
fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws.



     (iv) Accrued and unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.



     (v) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date
applicable thereto and at such other times as may be specified herein. Interest hereunder shall be
due and payable in accordance with the terms hereof before and after



27









 







judgment, and before and after
the commencement of any proceeding under any Debtor Relief Law.



     2.06 Fees. The Borrower shall pay to the Administrative Agent, the Arrangers and the Lenders,
as applicable, for their own respective accounts fees in the amounts and at the times specified in
the Fee Letter, including, if applicable, the Rollover Fee and the Refinancing Fee. Such fees
shall be fully earned when paid and shall not be refundable for any reason whatsoever.



     2.07 Computation of Interest and Fees. All computations of interest for Base Rate Loans when
the Base Rate is determined by Bank of America’s “prime rate” shall be made on the basis of a year
of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees
and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year).
Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a
Loan, or any portion thereof, for the day on which the Loan or such portion is paid. Each
determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.



     2.08 Evidence of Debt.



     The Loans made by each Lender shall be evidenced by one or more accounts or records maintained
by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or
records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest
error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments
thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrower hereunder to pay any amount owing with respect to the
Obligations. In the event of any conflict between the accounts and records maintained by any
Lender and the accounts and records of the Administrative Agent in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of manifest error.
Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute
and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such
Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its
Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and
payments with respect thereto.



     2.09 Payments Generally; Administrative Agent’s Clawback.



     (a) General. All payments to be made by the Borrower shall be made without condition
or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly
provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent,
for the account of the respective Lenders to which such payment is owed, at the Administrative
Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date
specified herein. The Administrative Agent will promptly distribute to each Lender its ratable
share of such payment in like funds as received by wire transfer to such Lender’s Lending Office.
All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the
next succeeding Business Day and any applicable interest or fee



28









 







shall continue to accrue. If any
payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall
be made on the next following Business Day, and such extension of time shall be reflected in
computing interest or fees, as the case may be.



     (b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the Closing Date that such
Lender will not make available to the Administrative Agent such Lender’s share of the Borrowing,
the Administrative Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.02 and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of
the Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in
immediately available funds with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to the Administrative
Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds
Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation, plus any administrative, processing or similar fees customarily charged by
the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be
made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such
Lender shall pay such interest to the Administrative Agent for the same or an overlapping period,
the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by
the Borrower for such period. If such Lender pays its share of the Borrowing to the Administrative
Agent, then the amount so paid shall constitute such Lender’s Loan included in the Borrowing. Any
payment by the Borrower shall be without prejudice to any claim the Borrower may have against a
Lender that shall have failed to make such payment to the Administrative Agent.



     (ii) Payments by Borrower; Presumptions by Administrative Agent. Unless the
Administrative Agent shall have received notice from the Borrower prior to the date on which any
payment is due to the Administrative Agent for the account of the Lenders hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith
on demand the amount so distributed to such Lender, in immediately available funds with interest
thereon, for each day from and including the date such amount is distributed to it to but excluding
the date of payment to the Administrative Agent, at the greater of the
Federal Funds Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation.



     A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount
owing under this subsection (b) shall be conclusive, absent manifest error.



     (c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing
provisions of this Article II, and such funds are not made available to the Borrower by the
Administrative Agent because the conditions to the Initial Loans set forth in Article IV
are



29









 







not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall
return such funds (in like funds as received from such Lender) to such Lender, without interest.



     (d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make
Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The
failure of any Lender to make any Loan or to make any payment under Section 10.04(c) on any
date required hereunder shall not relieve any other Lender of its corresponding obligation to do so
on such date, and no Lender shall be responsible for the failure of any other Lender to so make its
Loan or to make its payment under Section 10.04(c).



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



     2.10 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff
or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of
the Loans made by it resulting in such Lender’s receiving payment of a proportion of the aggregate
amount of such Loans and accrued interest thereon greater than its pro rata share
thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the
Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the
Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans and other amounts
owing them, provided that:




     (i) if any such participations or subparticipations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the extent of such
recovery, without interest; and




     (ii) the provisions of this Section shall not be construed to apply to (x) any payment
made by the Borrower pursuant to and in accordance with the express terms of this Agreement
or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans




     to any assignee or participant, other than to the Borrower or any Subsidiary thereof
(as to which the provisions of this Section shall apply).



     The Borrower consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.



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ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY




     3.01 Taxes.



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



     (b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.



     (c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent and each Lender, within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative Agent or, such
Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender,
shall be conclusive absent manifest error.



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



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



31









 







applicable law or
reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to backup withholding or
information reporting requirements.



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




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




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




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




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



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



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     3.02 Illegality. If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending
Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates
based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on
the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative
Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base
Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such determination no
longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with
a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of
such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such
prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or
converted.



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



     3.04 Increased Costs; Reserves on Eurodollar Rate Loans.



     (a) Increased Costs Generally. If any Change in Law shall:




     (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for the account
of, or credit extended or participated in by, any Lender (except any reserve requirement
contemplated by Section 3.04(e));




     (ii) subject any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Eurodollar Rate Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Indemnified Taxes or Other Taxes
covered by Section 3.01 and the imposition of, or any change in the rate of, any
Excluded Tax payable by such Lender); or



33









 






     (iii) impose on any Lender or the London interbank market any other condition, cost or
expense affecting this Agreement or Eurodollar Rate Loans made by such Lender;


and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Rate Loan (or of maintaining its obligation to make any such Loan), or
to reduce the amount of any sum received or receivable by such Lender (whether of principal,
interest or any other amount) then, upon request of such Lender, the Borrower will pay to such
Lender such additional amount or amounts as will compensate such Lender for such additional costs
incurred or reduction suffered.




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



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



     (d) Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of
such Lender’s right to demand such compensation, provided that the Borrower shall not be
required to compensate a Lender pursuant to the foregoing provisions of this Section for any
increased costs incurred or reductions suffered more than 180 days prior to the date that such
Lender notifies the Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender’s intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month
period referred to above shall be extended to include the period of retroactive effect thereof).



     (e) Reserves on Eurodollar Rate Loans. The Borrower shall pay to each Lender, as long
as such Lender shall be required to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan
equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by
such Lender in good faith, which determination shall be conclusive), which shall be due and payable
on each date on which interest is payable on such Loan, provided the Borrower shall have received
at least 10 days’ prior notice (with a copy to the Administrative Agent) of such



34









 







additional interest from such Lender. If a Lender fails to give notice 10 days prior to the relevant Interest
Payment Date, such additional interest shall be due and payable 10 days from receipt of such
notice.



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



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



     (b) any failure by the Borrower (for a reason other than the failure of such Lender to make a
Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in
the amount notified by the Borrower; or



     (c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest
Period therefor as a result of a request by the Borrower pursuant to Section 10.13;


including any loss or expense arising from the liquidation or reemployment of funds obtained by it
to maintain such Loan or from fees payable to terminate the deposits from which such funds were
obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in
connection with the foregoing.



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




     3.06 Mitigation Obligations; Replacement of Lenders.



     (a) Designation of a Different Lending Office. If any Lender requests compensation
under Section 3.04, or the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if
any Lender gives a notice pursuant to Section 3.02, then such Lender shall use reasonable
efforts to designate a different Lending Office for funding or booking its Loans hereunder or to
assign its rights and obligations hereunder to another of its offices, branches or affiliates, if,
in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the
future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and
(ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such designation or assignment.



     (b) Replacement of Lenders. If any Lender requests compensation under Section
3.04, or if the Borrower is required to pay any additional amount to any Lender or any



35









 







Governmental Authority for the account of any Lender pursuant to Section 3.01, the Borrower
may replace such Lender in accordance with Section 10.13.



     3.07 Survival. All of the Borrower’s obligations under this Article III shall survive
termination of the Aggregate Commitments and repayment of all other Obligations hereunder.



ARTICLE IV.

CONDITIONS PRECEDENT TO LOANS




     The obligation of each Initial Lender to make its Initial Loan hereunder is subject to
satisfaction of the following conditions precedent:



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




     (i) executed counterparts of this Agreement and the Guaranty, sufficient in number for
distribution to the Administrative Agent, each Lender and the Borrower;




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




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




     (iv) such documents and certifications as the Administrative Agent may reasonably
require to evidence that each Loan Party is duly organized or formed, and is validly
existing, in good standing and qualified to engage in business in each jurisdiction where
its ownership, lease or operation of properties or the conduct of its business requires such
qualification, except to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect;




     (v) a favorable opinion of Vinson and Elkins LLP, counsel to the Loan Parties,
addressed to the Administrative Agent and each Lender, as to the matters set forth in
Exhibit F and such other matters concerning the Loan Parties and the Loan Documents
as the Required Lenders may reasonably request;




     (vi) a certificate of a Responsible Officer of each Loan Party either (A) attaching
copies, or an exhibit, of all consents, licenses and approvals required in connection with
the execution, delivery and performance by such Loan Party and the validity against such
Loan Party of the Loan Documents to which it is a party, and such



36









 







consents, licenses and
approvals shall be in full force and effect, or (B) stating that no such consents, licenses
or approvals are so required;




     (vii) a certificate signed by a Responsible Officer of the Borrower certifying (A) that
the conditions specified in paragraphs (xx) and (xxi) below have been satisfied and (B) that
there has been no event or circumstance since the date of the Audited Financial Statements
that has had or could be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect;




     (viii) certificates attesting to the Solvency of each Loan Party before and after
giving effect to the Transaction and the incurrence of indebtedness related thereto, from
its chief financial officer;




     (ix) such reports and audits prepared by the Borrower or any of its Affiliates or any
advisor engaged by the Borrower or any of its Affiliates with respect to the Target and its
Subsidiaries as the Administrative Agent may reasonably request; and




     (x) certified copies of each of the Related Documents, duly executed by the parties
thereto and in form and substance satisfactory to the Lenders, together with all agreements,
instruments and other documents delivered in connection therewith as the Administrative
Agent shall reasonably request;




     (xi) the following financial information: (A) audited consolidated financial statements
of each of the Borrower and the Target for the three fiscal years ended most recently prior
to the Acquisition, unaudited consolidated financial statements of each of the Borrower and
the Target for any interim quarterly periods that have ended since the most recent of such
audited financial statements, and pro forma financial statements of the Borrower giving
effect to the Transaction for the most recently completed fiscal year and the period
commencing with the end of the most recently completed fiscal year and
ending with the most recently completed quarter, which in each case, (1) shall be
satisfactory in form and substance to the Lead Arranger and the Lenders, (2) shall not be
materially inconsistent with the Information heretofore provided to the Lenders, and (3)
shall meet the requirements of Regulation S-X under the Securities Act of 1933, as amended,
and all other accounting rules and regulations of the SEC promulgated thereunder applicable
to a registration statement under such Act on Form S-1; (B) forecasts prepared by management
of the Borrower, each in form satisfactory to the Administrative Agent and the Lenders, of
balance sheets, income statements and cash flow statements for the first year following the
Closing Date and for each year commencing with the first fiscal year following the Closing
Date for the term of this Agreement; and (C) evidence satisfactory to the Administrative
Agent that (1) Consolidated EBITDAX for the twelve-month period ended June 30, 2006
calculated on a pro forma basis giving effect to the Transaction was not less than
$290,000,000, (2) the ratio of Consolidated Funded Indebtedness at the Closing Date to
Consolidated EBITDAX for the twelve months ended June 30, 2006 (which ratio shall be
calculated reflecting the Transaction on a pro forma basis) was not greater than 3.3:1.0 and
(3) the pro forma financial statements delivered pursuant to clause (A) above and the
forecasts delivered pursuant to clause (B) above were prepared in good faith on the basis of
the




37









 




assumptions stated therein, which assumptions are fair in light of the then existing
conditions, and, in the case of each of (1), (2) and (3) above, and the chief financial
officer of the Borrower shall have provided the Administrative Agent and the Lenders a
written certification to that effect.




     (xii) evidence of (x) the receipt by the Borrower of not less than $500,000,000 cash
proceeds from the Preferred Stock and (y) the effectiveness of the Senior Credit Facility;



     (xiii) such other certificates, documents, or opinions as the Administrative Agent or
the Required Lenders reasonably may require;



     (xiv) any fees required to be paid on or before the Closing Date shall have been paid;



     (xv) unless waived by the Administrative Agent, the Borrower shall have paid all fees,
charges and disbursements of counsel to the Administrative Agent (directly to such counsel
if requested by the Administrative Agent) to the extent invoiced prior to or on the Closing
Date, plus such additional amounts of such fees, charges and disbursements as shall
constitute its reasonable estimate of such fees, charges and disbursements incurred or to be
incurred by it through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between the Borrower and the Administrative
Agent);



     (xvi) the Closing Date shall have occurred on or before November 22, 2006;



     (xvii) all applicable waiting periods (including, without limitation, the requisite
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1975) shall have
expired or terminated without any action being taken by any authority that could restrain,
prevent or impose any material adverse conditions on any of the Borrower, the
Target, their respective Subsidiaries or the Transaction or that could seek or threaten
any of the foregoing, and no law or regulation shall be applicable that in the judgment of
the Lead Arranger could have such effect;



     (xviii) the Acquisition shall have been consummated substantially in accordance with
the terms of the Acquisition Agreement, without any waiver or amendment not consented to by
the Lenders of any material term, provision or condition set forth therein, other than
waivers or amendments that could not reasonably be expected to have a Material Adverse
Effect, and in compliance with all applicable requirements of Law;



     (xix) there shall have been no change, occurrence or development since June 30, 2006
that could reasonably be expected to have a Material Adverse Effect;



     (xx) the representations and warranties of the Borrower and each other Loan Party
contained in Article V or any other Loan Document, or which are contained in any
document furnished at any time under or in connection herewith or therewith, shall be true
and correct on and as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which case



38









 







they shall be true and correct as of such earlier date, and except that for purposes of this
Article IV, the representations and warranties contained in subsections (a) and (b)
of Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01;



          (xxi) no Default shall exist, or would result from the Initial Loans or from the
application of the proceeds thereof.



     Without limiting the generality of the provisions of Section 9.04, for purposes of
determining compliance with the conditions specified in this Article IV, each Lender that
has signed this Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its objection thereto.



ARTICLE V.




REPRESENTATIONS AND WARRANTIES




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



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



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



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



39









 







Document or Related Document, or for the consummation of the Transaction, except for (i) the authorizations, approvals,
actions, notices and filings listed on Schedule 5.03, all of which have been duly obtained,
taken, given or made and are in full force and effect, (ii) routine authorizations, approvals,
actions, notices and filings in the ordinary course of business (e.g. tax filings, annual reports,
environmental filings, etc. ); (iii) any necessary authorizations, approvals, actions, notices and
filings (including the filing of a shelf registration statement) necessary in order to comply with
Sections 6.16 and 6.18 and (iv) authorizations, approvals and consents necessary in
connection with the Borrower’s mineral class leases with the general land office of State of Texas.
All applicable waiting periods in connection with the Transaction have expired without any action
having been taken by any Governmental Authority restraining, preventing or imposing materially
adverse conditions upon the Transaction or the rights of the Loan Parties or their Subsidiaries
freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or
hereafter acquired by any of them.



     5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms.



     5.05 Financial Statements; No Material Adverse Effect. (a) The Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise expressly noted
therein; (ii) fairly present in all material respects the financial condition of the Borrower and
its Subsidiaries as of the date thereof and their results of operations for the period covered
thereby in accordance with GAAP consistently applied throughout the period covered thereby, except
as otherwise expressly noted therein; and (iii) show all material indebtedness and other
liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Indebtedness.



     (b) The unaudited consolidated balance sheet of the Borrower and its Subsidiaries dated
September 30, 2006, and the related consolidated statements of income or operations, shareholders’
equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (ii) fairly present in all material respects the financial condition of the
Borrower and its Subsidiaries as of the date thereof and their results of operations for the period
covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to
normal year-end audit adjustments. Schedule 5.05 sets forth all material indebtedness and
other liabilities, direct or contingent, of the Borrower and its consolidated Subsidiaries as of
the date of such financial statements, including liabilities for taxes, material commitments and
Indebtedness.



     (c) Since the date of the Audited Financial Statements, there has been no event or
circumstance, either individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.



     (d) The consolidated pro forma balance sheet of the Borrower and its Subsidiaries as at June
30, 2006, and the related consolidated pro forma statements of income and cash flows of the
Borrower and its Subsidiaries for the twelve months then ended, certified by the chief



40









 







financial
officer or treasurer of the Borrower, copies of which have been furnished to each Lender, fairly
present the consolidated pro forma financial condition of the Borrower and its Subsidiaries as at
such date and the consolidated pro forma results of operations of the Borrower and its Subsidiaries
for the period ended on such date, in each case giving effect to the Transaction, all in accordance
with GAAP (except for the absence of footnotes and subject to year-end audit adjustments).



     (e) The consolidated forecasted balance sheets, statements of income and cash flows of the
Borrower and its Subsidiaries delivered pursuant to Article IV or Section 6.01(c)
were prepared in good faith on the basis of the assumptions stated therein, which assumptions were
reasonable in light of the conditions existing at the time of delivery of such forecasts, and
represented, at the time of delivery, the Borrower’s reasonable estimate of its future financial
condition and performance.



     5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to
the knowledge of the Borrower after due and diligent investigation, threatened, at law, in equity,
in arbitration or before any Governmental Authority, by or against the Borrower or any of its
Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain
to this Agreement, any other Loan Document, any Related Document or the consummation of the
Transaction, or (b) except as specifically disclosed in Schedule 5.06 (the “Disclosed
Litigation”), either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, and there has been no change in the status, or financial effect on any
Loan Party or any Subsidiary thereof, of the matters described in Schedule 5.06 that could
reasonably be expected to have a Material Adverse Effect.



     5.07 No Default. Neither any Loan Party nor any Subsidiary thereof is in default under or
with respect to, or a party to, any Contractual Obligation that could, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred
and is continuing or would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.



     5.08 Ownership of Property; Liens. (a) Each Loan Party and each of its Subsidiaries has good
record and marketable title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of its business, except for such defects in title as
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.



     (b) The property of each Loan Party and each of its Subsidiaries is subject to no Liens, other
than Liens permitted by Section 7.01.



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



          (b) As of the Closing Date and except (i) as otherwise set forth in Schedule 5.09 or
(ii) to the extent the same could not, individually or in the aggregate,



41









 







reasonably be expected to
have a Material Adverse Effect, none of the properties currently or formerly owned or operated by
any Loan Party or any of its Subsidiaries is listed or proposed for listing on the National
Priorities List under 42 USC § 9605(a)(8)(B) or on the CERCLIS or any analogous foreign, state or
local list or is adjacent to any such property; there is no asbestos or asbestos-containing
material on any property currently owned or operated by any Loan Party or any of its Subsidiaries;
and Hazardous Materials have not been released, discharged or disposed of on any property currently
or formerly owned or operated by any Loan Party or any of its Subsidiaries in quantities or in a
manner as to create Environmental Liability.



          (c) As of the Closing Date and except (i) as otherwise set forth in Schedule 5.09 or
(ii) to the extent the same could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, neither any Loan Party nor any of its Subsidiaries is undertaking,
and has not completed, either individually or together with other potentially
responsible parties, any investigation or assessment or remedial or response action relating
to any actual or threatened release, discharge or disposal of Hazardous Materials at any site,
location or operation, either voluntarily or pursuant to the order of any Governmental Authority or
the requirements of any Environmental Law that is reasonably expected to result in material
Environmental Liability to any Loan Party or any of its Subsidiaries; and all Hazardous Materials
generated, used, treated, handled or stored at, or transported to or from, any property currently
or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in
a manner not reasonably expected to result in material Environmental Liability to any Loan Party or
any of its Subsidiaries.




     5.10 Insurance. The properties of the Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the Borrower, in such
amounts, with such deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where the Borrower or the
applicable Subsidiary operates.



     5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other
material tax returns and reports required to be filed, and have paid all Federal, state and other
material taxes, assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax assessment against
the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.



     5.12 ERISA Compliance. (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws except for such events of
noncompliance which could not, in the aggregate, reasonably be expected to result in a Material
Adverse Effect.



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



42









 





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



     5.13 Subsidiaries; Equity Interests; Loan Parties. As of the Closing Date, no Loan Party has
any Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, and
all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are (in the
case of corporate securities) fully paid and non-assessable and are owned by a Loan Party in the
amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens except those
permitted under the Loan Documents or permitted by Section 7.01. As of the Closing Date, no Loan
Party has any equity investments in any other corporation or entity other than those specifically
disclosed in Part (b) of Schedule 5.13. Set forth on Part (c) of Schedule 5.13 is
a complete and accurate list of all Loan Parties, showing as of the Closing Date (as to each Loan
Party) the jurisdiction of its incorporation, the address of its principal place of business and
its U.S. taxpayer identification number or, in the case of any non-U.S. Loan Party that does not
have a U.S. taxpayer identification number, its unique identification number issued to it by the
jurisdiction of its incorporation. As of the Closing Date, the copy of the charter of each Loan
Party and each amendment thereto provided pursuant to Article IV(iv) is a true and correct
copy of each such document, each of which is valid and in full force and effect.



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



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



     5.15 Disclosure. The Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries
is subject, and all other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. No report, financial statement,
certificate or other information furnished in writing by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case
as modified or supplemented by other information so furnished) contains as of the date so furnished
any material misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial



43









 







information, the Borrower represents
only that such information was prepared in good faith based upon assumptions believed to be
reasonable at the time.



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



     5.17 Solvency. Each Loan Party is, individually and together with its Subsidiaries on a
Consolidated basis, Solvent.



     5.18 Casualty, Etc. Neither the businesses nor the properties of any Loan Party or any of its
Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.



     5.19 Labor Matters.




          There are no collective bargaining agreements or Multiemployer Plans covering the employees of
the Borrower or any of its Subsidiaries as of the Closing Date and neither the Borrower nor any
Subsidiary has suffered any strikes, walkouts, work stoppages or other material labor difficulty
within the last five years that, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.




ARTICLE VI.




AFFIRMATIVE COVENANTS




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



     6.01 Financial Statements. Deliver to the Administrative Agent and the Lenders as
contemplated by the penultimate paragraph of Section 6.02:



     (a) as soon as available, but in any event within 90 days after the end of each fiscal year of
the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such fiscal year, and the related consolidated and consolidating statements of income or
operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable detail and
prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a
report and opinion of a Registered Public Accounting Firm of nationally recognized standing, which
report and opinion shall be prepared in accordance with generally accepted auditing standards and
applicable Securities Laws and shall not be subject to any “going concern” or like



44









 







qualification or
exception or any qualification or exception as to the scope of such audit or with respect to the
absence of any material misstatement and (ii) commencing at such time as the Borrower is required
to prepare the same for SEC reporting purposes, an opinion of such Registered Public Accounting
Firm independently assessing the Borrower’s internal controls over financial reporting in
accordance with Item 308 of the SEC Regulation S-K, PCAOB Auditing Standard No. 2, and Section 404
of Sarbanes-Oxley expressing a conclusion that contains no statement that there is a material
weakness in such internal controls, except for such material weaknesses as to which the Required
Lenders do not object, and such consolidating statements to be certified by the chief executive
officer, chief financial officer, treasurer or controller of the Borrower to the effect that such
statements are fairly stated in all material respects when considered in relation to the
consolidated financial statements of the Borrower and its Subsidiaries;



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



     (c) as soon as available, but in any event within 90 days after the end of each fiscal year
(commencing April 1, 2007) of the Borrower, an annual business plan and budget of the Borrower and
its Subsidiaries on a Consolidated basis, including forecasts prepared by management of the
Borrower, in form satisfactory to the Administrative Agent and the Required Lenders, of
consolidated balance sheets and statements of income or operations of the Borrower and its
Subsidiaries on a monthly basis for the immediately following fiscal year.


As to any information contained in materials furnished pursuant to Section 6.02(d), the
Borrower shall not be separately required to furnish such information under clause (a) or (b)
above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish
the information and materials described in clauses (a) and (b) above at the times specified
therein.




     6.02 Certificates; Other Information. Deliver to the Administrative Agent and the Lenders as
contemplated by the penultimate paragraph of this Section 6.02:



     (a) concurrently with the delivery of the financial statements referred to in Sections
6.01(a) and (b) (commencing with the delivery of the financial statements for the
fiscal quarter ended December 31, 2006), a duly completed Compliance Certificate signed by the
chief executive officer, chief financial officer, treasurer or controller of the Borrower;



     (b) promptly after any request by the Administrative Agent or any Lender, copies of any
detailed audit reports, management letters or recommendations submitted to the board of



45









 







directors
(or the audit committee of the board of directors) of the Borrower by independent accountants in
connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of
them;



     (c) promptly after the same are available, copies of all annual, regular, periodic and special
reports, registration statements and proxy statements which the Borrower may file or be required to
file with the SEC under Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, or with any
national securities exchange, and in any case not otherwise required to be delivered to the
Administrative Agent pursuant hereto;



     (d) promptly after the furnishing thereof, copies of any statement or report furnished to any
holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise required to be furnished to the
Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;



     (e) [reserved];



     (f) promptly, and in any event within five Business Days after receipt thereof by any Loan
Party or any Subsidiary thereof, copies of each notice or other correspondence received from the
SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or
possible investigation by such agency regarding financial or other operational results of any Loan
Party or any Subsidiary thereof;



     (g) not later than five Business Days after receipt thereof by any Loan Party or any
Subsidiary thereof, copies of all notices, requests and other documents (including amendments,
waivers and other modifications) so received under or pursuant to any Related Document or
instrument, indenture, loan or credit or similar agreement regarding or related to any breach or
default by any party thereto or any other event that could materially impair the value of the
interests or the rights of any Loan Party or otherwise have a Material Adverse Effect and, from
time to time upon request by the Administrative Agent, such information and reports regarding the
Related Documents and such instruments, indentures and loan and credit and similar agreements as
the Administrative Agent may reasonably request;



     (h) promptly after the assertion or occurrence thereof, notice of any action or proceeding
against or of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental
Law or Environmental Permit that could reasonably be expected to have a Material Adverse Effect;



     (i) [reserved];



     (j) as soon as available, but in any event within 30 days after the Closing Date, a duly
completed Compliance Certificate (on a pro forma basis) as of the last day of the fiscal quarter of
the Borrower ended on September 30, 2006, signed by a Responsible Officer of the Borrower; and



     (k) promptly, such additional information regarding the business, financial or corporate
affairs of the Borrower or any Subsidiary, or compliance with the terms of the Loan



46









 







Documents, as
the Administrative Agent or any Lender may from time to time reasonably request.



     Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(d) (to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on
the Borrower’s website on the Internet at the website address listed on Schedule 10.02; or
(ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative Agent); provided
that: (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or
any Lender that requests the Borrower to deliver such paper copies until a written request to cease
delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower
shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the
posting of any such documents and provide to the Administrative Agent by electronic mail electronic
versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein,
in every instance the Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 6.02(b) to the Administrative Agent. Except for such
Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery
or to maintain copies of the documents referred to above, and in any event shall have no
responsibility to monitor compliance by the Borrower with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such
documents.



     The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will
make available to the Lenders materials and/or information provided by or on behalf of the Borrower
hereunder (collectively, “Borrower Materials”) either by posting the Borrower Materials on
IntraLinks or another similar electronic system (the “Platform”) or by delivery or
electronic communication to the applicable Lenders and (b) certain of the Lenders may be
“public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information
with respect to the Borrower or its securities except as contemplated below) (each, a
“Public-Side Lender”). The Borrower hereby agrees that so long as the Borrower is the
issuer of any outstanding debt or equity securities that are registered or issued pursuant to a
private offering or is actively contemplating issuing any such securities (x) all Borrower
Materials that are to be posted on the Platform shall be clearly and conspicuously marked
“PUBLIC-SIDE” which, at a minimum, shall mean that the words “PUBLIC-SIDE” shall appear prominently
on the first page thereof; (y) by marking Borrower Materials “PUBLIC-SIDE,” the Borrower shall be
deemed to have authorized the Administrative Agent, the Arrangers and the Lenders to treat
such Borrower Materials as not containing any material non-public information with respect to
the Borrower or its securities for purposes of United States Federal and state securities laws
(provided, however, that (A) prior to the creation of a Public Market, Lenders
shall treat such Borrower Materials as containing material non-public information with respect to
the Borrower and its Subsidiaries (“MNPI”), and the Borrower shall be deemed to have
represented to the Lenders that it expects such Borrower Materials will cease to be MNPI at the
time of creation of a Public Market and (B) to the extent such Borrower Materials constitute
Information, they shall be treated as set forth in Section 10.07); and (z) any Borrower
Materials that are not marked



47









 







“PUBLIC-SIDE” as contemplated above shall be treated as containing
MNPI, shall not be posted on the Platform and shall be available to Lenders only upon request
therefor (which request may apply generally to all such Borrower Materials). Any such request
shall constitute a confirmation from the applicable Lender that it has compliance procedures for
dealing with such MNPI, and that it will use and maintain such information only in compliance with
those procedures, its contractual obligations and applicable law, including federal and state
securities laws.



     Each Public-Side Lender shall designate individuals or advisors authorized to act on behalf of
the Public-Side Lender to receive Borrower Materials not designated as “PUBLIC-SIDE” pursuant to
the immediately preceding paragraph, including any notices pursuant to Section 6.03.



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



     (a) of the occurrence of any Default;



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



     (c) of the occurrence of any ERISA Event;



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



     (e) of the determination by the Registered Public Accounting Firm providing the opinion
required (but only if required) under Section 6.01(a)(ii) (in connection with its
preparation of such opinion) or the Borrower’s determination at any time of the occurrence or
existence of any Internal Control Event; and



     (f) of the (i) occurrence of any Disposition of property or assets for which the Borrower is
required to make a mandatory prepayment pursuant to Section 2.03(b)(i), and (ii)
incurrence or issuance of any Indebtedness or Equity Interests for which the Borrower is
required to make a mandatory prepayment pursuant to Section 2.03(b)(ii).



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



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     6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable, (a)
all tax liabilities, assessments and governmental charges or levies upon it or its properties or
assets, unless the same are being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or
such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its
property, except, in the case of (a) or (b), for such amounts that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.



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



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



     6.07 Maintenance of Insurance. Maintain (at its own expense) insurance with financially sound
and reputable insurance companies, as well as insurance in such amounts, with such limitations or
deductibles, against such risks, and in such form as are customarily maintained by companies of
established repute engaged in the same or similar businesses operating in the same or similar
locations.



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



     6.09 Books and Records. (a) Maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Borrower or such Subsidiary, as
the case may be; and (b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory jurisdiction over the
Borrower or such Subsidiary, as the case may be.



     6.10 Inspection Rights. Permit representatives and independent contractors of the
Administrative Agent and each Lender to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to



49









 







discuss its affairs, finances and accounts with its directors, officers, and independent public
accountants, all at the expense of the Borrower and at such reasonable times during normal business
hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower;
provided, however, that when an Event of Default exists the Administrative Agent or
any Lender (or any of their respective representatives or independent contractors) may do any of
the foregoing at the expense of the Borrower at any time during normal business hours and without
advance notice.



     6.11 Use of Proceeds. The Borrower shall apply the proceeds of the Credit Extensions to (i)
partially finance the Acquisition, (ii) refinance the Borrower’s existing senior secured revolving
credit facility under the Borrower Existing Credit Agreement, (iii) refinance the Target’s existing
credit facilities under the Target Existing Credit Agreements, (iv) pay certain fees and expenses
incurred in connection with the Acquisition and entering into this Agreement, (v) provide working
capital for the Borrower and its Subsidiaries including the issuance of letters of credit, capital
expenditures, and other lawful corporate purposes, and (vi) finance permitted acquisitions by the
Borrower and its Subsidiaries of oil and gas properties and other assets related to the
exploration, production and development of oil and gas properties.



     6.12 Covenant to Guarantee Obligations. Upon the formation or acquisition of any new direct
or indirect Subsidiary (excluding any CFC or any Subsidiary that is held directly or indirectly by
a CFC) by any Loan Party, then the Borrower shall, at the Borrower’s expense:



          (i) within 20 days after such formation or acquisition (or such longer period as the
Administrative Agent may in its discretion approve), cause such Subsidiary, and cause
each direct and indirect parent (except, if applicable, Lariat, L.L.C., Cholla Pipeline, L.P.
or Sagebrush Pipeline, LLC) of such Subsidiary (if it has not already done so), to duly execute and
deliver to the Administrative Agent a guaranty or guaranty supplement, in form and substance
satisfactory to the Administrative Agent, guaranteeing the other Loan Parties’ obligations under
the Loan Documents, and




          (ii) within 60 days after such formation or acquisition (or such longer period as the
Administrative Agent may in its discretion approve), deliver to the Administrative Agent, upon the
request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion,
addressed to the Administrative Agent and the other Secured Parties, of counsel for the Loan
Parties acceptable to the Administrative Agent as to the matters contained in clause (i) above, and
as to such other matters as the Administrative Agent may reasonably request.




     6.13 Compliance with Environmental Laws. Comply, and cause all lessees and other Persons
operating or occupying its properties to comply, in all material respects, with all applicable
Environmental Laws and Environmental Permits; obtain and renew all material Environmental Permits
necessary for its current operations and properties; and conduct any investigation, study, sampling
and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and
clean up all Hazardous Materials from any of its properties, in accordance in all material respects
with the requirements of all applicable Environmental Laws; provided, however, that
neither the Borrower nor any of its Subsidiaries shall be required to undertake any such cleanup,
removal, remedial or other action to the extent that its obligation to do so is not required by
applicable Environmental Laws or being contested in good faith and by



50









 







proper proceedings and
appropriate reserves are being maintained with respect to such circumstances in accordance with
GAAP.



     6.14 [Reserved]



     6.15 Use of Proceeds of the Permanent Securities.




     The Borrower will use the net proceeds received from the sale of the Permanent Securities to
repay the Loans.



     6.16 Exchange Notes.



     The Borrower will, as promptly as practicable on or after the Initial Maturity Date, (i)
select a bank or trust company reasonably acceptable to the Required Lenders to act as Exchange
Note Trustee, (ii) enter into the Exchange Note Indenture, and (iii) cause counsel to the Borrower
to deliver to the Administrative Agent an executed legal opinion in form and substance customary
for a transaction of that type to be mutually agreed upon by the Borrower and the Administrative
Agent (including, without limitation, with respect to due authorization, execution and delivery;
validity; and enforceability of the documents referred to in clause (ii) above.



     (b) The Borrower will, within 15 Business Days following the written request (the
“Exchange Request”) of the holders of any Loans at any time after the Initial Maturity Date
(provided that after giving effect thereto, not less than $100,000,000 aggregate
principal amount of Exchange Notes would be outstanding).




          (i) execute and deliver, cause each other Loan Party to execute and deliver, and cause
the Exchange Note Trustee to execute and deliver, the Exchange Note Indenture if such
Exchange Note Indenture has not previously been executed and delivered; and




          (ii) execute and deliver to such holder or beneficial owner in accordance with the
Exchange Note Indenture an Exchange Note bearing interest as set forth therein (which, at
the election of such holder or beneficial owner, may be fixed at a rate not higher than the
rate then applicable to such Loan) in exchange for such Loan dated the date of the issuance
of such Exchange Note, payable to the order of such holder or owner, as the case may be, in
the same principal amount as such Loan (or portion thereof) being exchanged.



               The Exchange Request shall specify the principal amount of the Loans to be exchanged pursuant
to this Section which shall be at least $5,000,000 and integral multiples of $1,000,000 in excess
thereof or the entire remaining aggregate principal amount of the Loans of such Lender. Such
Lender may elect in its Exchange Request that the rate of interest applicable to the Exchange Notes
to be issued to it be fixed at the rate applicable to the Extended Loans at the time of issuance of
such Exchange Notes, in which event such Exchange Notes shall bear interest at such fixed rate and,
notwithstanding the provisions of Section 2.03(a), such Exchange Notes will not be subject to
optional redemption or prepayment until the fourth anniversary of the Closing Date and will
thereafter be optionally redeemable at par plus accrued interest plus a premium equal to one half
of the fixed interest rate applicable thereto, declining ratably to par on the date that is one
year prior to the Final Maturity Date. Loans delivered to the Borrower under this Section in
exchange for Exchange Notes shall be canceled by the Borrower, and the



51









 







corresponding amount of the
Loan deemed repaid and the Exchange Notes shall be governed by and construed in accordance with the
terms of the Exchange Note Indenture.



               The Exchange Note Trustee shall at all times be a corporation organized and doing business
under the laws of the United States or the State of New York, in good standing and having its
principal offices in the Borough of Manhattan, in The City of New York, which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or examination by
federal or state authority and which has a combined capital and surplus of not less than
$500,000,000.



     6.17 Change of Control.



     If a Change of Control occurs, each Lender will have the right to require the Borrower to
prepay all of such Lender’s Loans at a purchase price in cash equal to 101% of the principal amount
of such Lender’s Loans, plus accrued and unpaid interest to the date of prepayment.



     No later than the date that is 60 days after any Change of Control, the Borrower will mail a
notice (the “Change of Control Offer”) to each Lender, with a copy to the Administrative
Agent:



               (1) stating that a Change of Control has occurred or may occur and that such Lender has the
right to require the Borrower to prepay such Lender’s Loans at a purchase price in cash equal to
101% of the principal amount plus accrued and unpaid interest to, but not including, the date of
prepayment (subject to the right of Lenders of record on a record date to receive interest on the
relevant Interest Payment Date) (the “Change of Control Payment”);



               (2) stating the prepayment date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed) (the “Change of Control Payment Date”);



               (3) describing the circumstances and relevant facts regarding the transaction or transactions
that constitute the Change of Control;



               (4) describing the procedures determined by the Borrower, consistent with this Agreement, that
a Lender must follow in order to have its Loans prepaid; and



               (5) if such notice is mailed prior to the occurrence of a Change of Control, stating that the
Change of Control Offer is conditional on the occurrence of such Change of Control.



               On the Change of Control Payment Date, if the Change of Control shall have occurred, the
Borrower will, to the extent lawful pay to the Administrative Agent for application to the
repayment of all Loans properly tendered pursuant to the Change of Control Offer an amount equal to
the Change of Control Payment in respect of all Loans so tendered.



               The Borrower will not be required to make a Change of Control Offer upon a Change of Control
if a third party makes the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth herein applicable to a Change of



52









 







Control Offer made by
the Borrower and purchases all Loans validly tendered and not withdrawn under such Change of
Control Offer.



     6.18 Registration Rights.



     Within 365 days after the Closing Date the Borrower shall file a shelf registration statement
with the Securities and Exchange Commission and the Borrower shall use its best efforts to cause
such shelf registration statement to be declared effective by the Initial Maturity Date and keep
such shelf registration statement effective, with respect to resales of the Exchange Notes, for as
long as it is required by the holders to resell the Exchange Notes. Upon failure to comply with
the foregoing requirements (a “Registration Default”), the Borrower shall pay liquidated damages to
each holder of Exchange Notes with respect to the first 90-day period immediately following the
occurrence of the first Registration Default in an amount equal to one-half of one percent (0.50%)
per annum on the principal amount of Exchange Notes held by such holder. The amount of the
liquidated damages will increase by an additional one-half of one percent (0.50%) per annum on the
principal amount of Exchange Notes with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to a maximum
amount of liquidated damages for all Registration Defaults of 1.5% per annum.



ARTICLE VII.




NEGATIVE COVENANTS




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



     7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, or sign or file or suffer to exist
under the Uniform Commercial Code of any jurisdiction a financing statement that names the Borrower
or any of its Subsidiaries as debtor, or assign any accounts or other right to receive income,
other than the following:



     (a) Liens pursuant to the Senior Credit Facility and any refinancing thereof permitted by
Section 7.03(b);



     (b) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or
extensions thereof, provided that (i) the property covered thereby is not changed, (ii) the
amount secured or benefited thereby is not increased except as contemplated by Section
7.03(c), (iii) the direct or any contingent obligor with respect thereto is not changed, and
(iv) any renewal or extension of the obligations secured or benefited thereby is permitted by
Section 7.03(c);



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



     (d) operators’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business which are not overdue for a period of



53









 







more
than 90 days or which are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the books of the applicable
Person;



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



     (f) Liens to secure the performance of bids, trade contracts and leases (other than
Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;



     (g) (i) easements, rights-of-way, restrictions and other similar encumbrances affecting real
property which, in the aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or materially interfere with the
ordinary conduct of the business of the applicable Person and (ii) Immaterial Title Deficiencies;



     (h) Liens securing judgments for the payment of money not constituting an Event of Default
under Section 8.01(h);



     (i) Liens on pipelines and pipeline facilities that arise by operation of law or other like
Liens arising by operation of law in the ordinary course of business and incident to the
exploration, development, operation and maintenance of Oil and Gas Properties each of which is in
respect of obligations that do not constitute Indebtedness and that are not delinquent or which are
being contested in good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP;



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



     (k) Permitted Encumbrances (as defined in the Senior Credit Facility);



     (l) Liens existing on assets at the time of acquisition thereof, or Liens existing on assets
of an Person at the time such Person became a Subsidiary, which in each case were not created in
contemplation thereof;



54









 





     (m) UCC financing statements filed in connection with an operating lease under which the
Borrower or a Subsidiary is the lessee;



     (n) Liens on assets of Lariat securing obligations of Lariat;



     (o) Liens securing Indebtedness permitted under Section 7.03(f); provided that
(i) such Liens do not at any time encumber any property other than the property financed by such
Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market
value, whichever is lower, of the property being acquired on the date of acquisition; and



     (p) Liens created by the Citi Payoff Documents securing reimbursement obligations in respect
of the Citi L/Cs; provided that the aggregate amount of cash collateral pledged thereunder shall
not exceed $20,000,000.



     7.02 Investments. Make any Investments, except:



     (a) Investments held by the Borrower or such Subsidiary in the form of Cash Equivalents;



     (b) advances to officers, directors and employees of the Borrower and Subsidiaries in an
aggregate amount not to exceed $500,000 at any time outstanding, for travel, entertainment,
relocation and analogous ordinary business purposes;



     (c) Investments of the Borrower in any now existing or hereafter acquired wholly-owned
Subsidiary and Investments of any Subsidiary in the Borrower or in another now existing or
hereafter acquired wholly-owned Subsidiary; provided, however, that (i) in the case
of any Investments in Lariat, the aggregate amount of such Investment shall not exceed (x)
$1,000,000 less (y) the aggregate amount of Restricted Payments made to Lariat pursuant to
Section 7.06(a) and (ii) in the case of an Investment constituting the acquisition from a
third party of a Person which thereby becomes a wholly-owned Subsidiary, such Investment is
permitted pursuant to another clause of this Section 7.02;



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



     (e) Investments in Oil and Gas Properties (or in Persons substantially all of whose assets
consist of Oil and Gas Properties and which become wholly-owned Subsidiaries pursuant to such
Investment);



     (f) Guarantees permitted by Section 7.03;



     (g) Investments received in connection with bankruptcy or reorganization of, or settlement of
delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course
of business;



55









 





     (h) Investments (including, without limitation, capital contributions) in general or limited
partnerships or other types of entities (each a “venture”) entered into by the Borrower or
a Subsidiary with others in the ordinary course of business; provided that (i) any such venture is
engaged exclusively in oil and gas exploration, development, production, processing and related
activities, including transportation, (ii) the interest in such venture is acquired in the ordinary
course of business and on fair and reasonable terms and (iii) the aggregate net amount of such
Investments after the date hereof does not exceed $15,000,000;



     (i) Investments in SageBrush Pipeline LLC in an aggregate amount not exceeding $7,500,000; and



     (j) other Investments not exceeding $6,000,000 in the aggregate in any fiscal year of the
Borrower.



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



     (a) Indebtedness under the Loan Documents, and any refinancing thereof, provided that such
refinancing is (i) unsecured, (ii) requires no scheduled amortization prior to the 6th
anniversary of the Closing Date and (iii) is otherwise on market terms and conditions;



     (b) Indebtedness under the Senior Credit Facility, and any refinancing thereof, provided that
the aggregate principal amount thereof may at no time exceed the lesser of (i) $750,000,000 and
(ii) the amount of the Borrowing Base as determined in accordance with the provisions of the Senior
Credit Facility;



     (c) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and any
refinancings, refundings, renewals or extensions thereof; provided that (i) the amount of
such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and
expenses reasonably incurred, in connection with such refinancing and by an amount equal to any
existing commitments unutilized thereunder and the direct or any contingent obligor with respect
thereto is not changed, as a result of or in connection with such refinancing, refunding, renewal
or extension and (ii) the terms relating to principal amount, amortization, maturity, collateral
(if any) and subordination (if any), and other material terms taken as a whole, of any such
refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and
of any instrument issued in connection therewith, are no less favorable in any material respect to
the Loan Parties or the Lenders than the terms of any agreement or instrument governing the
Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to
any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then
applicable market interest rate;



     (d) Guarantees of the Borrower or any Guarantor in respect of Indebtedness otherwise permitted
hereunder of the Borrower or any Guarantor;



     (e) obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or
arising under any Swap Contract, provided that (i) such obligations are (or were) entered
into by such Person in the ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held or reasonably



56









 







anticipated by such Person, or changes in the value of securities issued by such Person, and not
for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain
any provision exonerating the non-defaulting party from its obligation to make payments on
outstanding transactions to the defaulting party (other than customary netting arrangements);



     (f) Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase money
obligations for fixed or capital assets within the limitations set forth in Section
7.01(o); provided, however, that the aggregate amount of all such Indebtedness
at any one time outstanding shall not exceed 17,500,000;



     (g) Indebtedness of the Borrower or a Subsidiary owing to the Borrower or a wholly-owned
Subsidiary (other than Lariat);



     (h) Indebtedness incurred by Lariat;



     (i) Indebtedness in respect of the Citi L/Cs in an aggregate amount not exceeding $20,000,000;



     (j) other unsecured Indebtedness in an aggregate principal amount not to exceed $12,000,000 at
any time outstanding; and



     (k) Indebtedness in respect of surety bonds obtained by the Borrower or a Subsidiary in the
ordinary course of business and supporting other obligations undertaken by the Borrower or a
Subsidiary in the ordinary course of business which other obligations do not constitute
Indebtedness.



     7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another
Person, or Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any
Person, except that, so long as no Default exists or would result therefrom:



     (a) any Subsidiary may merge with (i) the Borrower, provided that the Borrower shall
be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided
that when any wholly-owned Subsidiary is merging with another Subsidiary, the wholly-owned
Subsidiary shall be the continuing or surviving Person;



     (b) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or to another Subsidiary; provided that if the
transferor in such a transaction is a wholly-owned Subsidiary, then the transferee must either be
the Borrower or a wholly-owned Subsidiary;



     (c) Dispositions permitted by Section 7.05(g); and



     (d) the Borrower and its Subsidiaries may consummate the Acquisition.



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



57









 





     (a) Dispositions of obsolete or worn out property or assets, whether now owned or hereafter
acquired, in the ordinary course of business;



     (b) Dispositions of inventory (including Hydrocarbons sold after severance) in the ordinary
course of business;



     (c) Dispositions of equipment or real property or other asset (other than (x) Oil and Gas
Properties or (y) Investments in Subsidiaries) to the extent that (i) such equipment, property or
other asset is exchanged for credit against the purchase price of similar replacement equipment,
property or other asset or (ii) the proceeds of such Disposition are reasonably promptly applied
to the purchase price of such replacement equipment, property, or other asset;



     (d) Dispositions of property or assets by any Subsidiary to the Borrower or to a wholly-owned
Subsidiary or by the Borrower to any wholly-owned Subsidiary; provided that if the
transferor of such property or assets is a Guarantor, the transferee thereof must either be the
Borrower or a Guarantor;



     (e) Dispositions permitted by Section 7.04(a), (b) or (d);



     (f) a Disposition for fair value of Oil and Gas Properties in the Piceance Basin;



     (g) Dispositions (including Casualty Events) of Oil and Gas Properties which are sold or
otherwise transferred for fair consideration to Persons who are not Affiliates of Borrower and (2)
farmouts of undeveloped acreage and assignments in connection with such farmouts or the
abandonment, farm-out, the exchange, provided that no Event of Default exists at the time of any
such sale (other than Defaults that will be cured upon the application of the proceeds of such sale
or other transfer); and



     (h) Dispositions of interest in Oil and Gas Properties in respect of Immaterial Title
Deficiencies in order to discharge such Immaterial Title Deficiencies or an obligation giving rise
thereto.



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



     (a) each Subsidiary may make Restricted Payments to the Borrower, the Guarantors and any other
Person that owns an Equity Interest in such Subsidiary, ratably according to their respective
holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;
provided, however, that in the case of any Restricted Payments to Lariat Services,
Inc., the aggregate amount of such Restricted Payments shall not exceed (i) $1,000,000 less (ii)
the aggregate amount of Investment in Lariat made pursuant to Section 7.02(c);



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



58









 





     (c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity
Interests issued by it with the proceeds received from the substantially concurrent issue of new
shares of its common stock or other common Equity Interests;



     (d) (i) so long as no Event of Default exists, the Borrower may pay regular cash dividends on
the Preferred Stock and make cash payments pursuant to Section 6(f) of the Certificate of
Designations for the Preferred Stock; (ii) so long as no Default exists, the Borrower may make cash
payments pursuant to Section 7(a) or 9(e) of the Certificate of Designations for the Preferred
Stock; and (iii) the Borrower may make payment-in-kind dividends on the Preferred Stock and issue
its common stock upon conversion of the Preferred Stock; and



     (e) the Borrower and each Subsidiary may repurchase Equity Interests held by an employee upon
termination of employment; provided that the aggregate amount of such Restricted Payments shall not
exceed $ 500,000.



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



     7.08 Transactions with Affiliates. Enter into any transaction of any kind with any Affiliate
of the Borrower, whether or not in the ordinary course of business, other than on fair and
reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be
obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction
with a Person other than an Affiliate, provided that the foregoing restriction shall not apply to
(i) transactions between or among the Borrower and any of its wholly-owned Subsidiaries or between
and among any wholly-owned Subsidiaries or (ii) payment of customary cash and non-cash
compensation, including stock option and similar employee benefit plans, to directors and officers
on an arm’s length basis.



     7.09 Burdensome Agreements. After the date of this Agreement, enter into any Contractual
Obligation (other than (x) this Agreement or any other Loan Document, (y) the Senior Credit
Facility and (z) the documentation governing any permitted refinancing hereof and thereof) that (a)
limits the ability (i) of any Subsidiary to make Restricted Payments to the Borrower or any
Guarantor or to otherwise transfer property to the Borrower or any Guarantor, (ii) of any
Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the Borrower or any Subsidiary
to create, incur, assume or suffer to exist Liens on property of such Person to secure any of the
Loan Documents; provided, however, that this clause (iii) shall not prohibit any
negative pledge incurred or
provided in favor of any holder of Indebtedness permitted under Section 7.03(f) solely
to the extent any such negative pledge relates to the property financed by or the subject of such
Indebtedness or property subject to a Lien permitted hereunder which secures such Indebtedness; or
(b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to
secure another obligation of such Person; or amend any Contractual Obligation existing on the date
of this Agreement so as to impose or make more restrictive such a limitation.



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



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



     7.11 Financial Covenants.



     (a)  Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge
Coverage Ratio as of the end of any fiscal quarter of the Borrower to be less than 2.0:1.0.



     (b) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio at any time to
be greater than 4.5:1.0.



     (c) Consolidated Current Ratio. Permit the Consolidated Current Ratio at any time to
be less than 0.9:1.0.



     7.12 Hedge Transactions.



     Enter into any Oil and Gas Hedge Transactions which would cause the notional volume of
Hydrocarbons for each of crude oil and natural gas, calculated separately, with respect to which a
settlement payment is calculated under such Oil and Gas Hedge Transactions (other than basis swaps,
floors and puts on volumes hedged pursuant to Swap Contracts) to exceed eighty five percent (85%)
of Borrower’s or such Subsidiary’s reasonably anticipated production from Proved Reserves during
the period from the immediately preceding settlement date (or the commencement of such Hedge
Transaction if there is no prior settlement date) to such settlement date.



ARTICLE VIII.




EVENTS OF DEFAULT AND REMEDIES




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



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



     (b) Specific Covenants. The Borrower fails to perform or observe any term, covenant
or agreement contained in any of Section 6.03(a), 6.05(a), 6.11 or
6.12 or Article VII; or



     (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or
agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part
to be performed or observed and such failure continues for 30 days; or



     (d) Representations and Warranties. Any representation, warranty, or certification
made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any



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other
Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect
or misleading in any material respect when made or deemed made; or



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



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



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



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



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commenced by any creditor upon such judgment or order, or (B) there is a period of 30 consecutive
days during which a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or



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



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



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



     (a) declare the commitment of each Lender to make Loans to be terminated, whereupon such
commitments and obligation shall be terminated;



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



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



provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the
obligation of each Lender to make Loans shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically
become due and payable, in each case without further act of the Administrative Agent or any Lender.



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




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     First, to payment of that portion of the Obligations constituting fees, indemnities,
expenses and other amounts (including fees, charges and disbursements of counsel to the
Administrative Agent and amounts payable under Article III) payable to the Administrative
Agent in its capacity as such;



     Second, to payment of that portion of the Obligations constituting fees, indemnities and
other amounts (other than principal and interest) payable to the Lenders (including fees, charges
and disbursements of counsel to the respective Lenders (including fees and time charges for
attorneys who may be employees of any Lender) and amounts payable under Article III),
ratably among them in proportion to the respective amounts described in this clause Second
payable to them;



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



     Fourth, to payment of that portion of the Obligations constituting unpaid principal of the
Loans, ratably among the Lenders in proportion to the respective amounts described in this clause
Fourth held by them; and



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



ARTICLE
IX.

ADMINISTRATIVE AGENT




     9.01Appointment and Authority.



     Each of the Lenders hereby irrevocably appoints Bank of America to act on its behalf as the
Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto. Except to the extent Sections 9.01(b) and 9.06 expressly
contemplate rights of others, the provisions of this Article are solely for the benefit of the
Administrative Agent and the Lenders, and the Borrower shall not have rights as a third party
beneficiary of any of such provisions.



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



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



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




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




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




     The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the
consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii)
in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice describing such Default is
given to the Administrative Agent by the Borrower or a Lender.



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



     9.04 Reliance by Administrative Agent.



     The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or otherwise



64









 







authenticated
by the proper Person. The Administrative Agent also may rely upon any statement made to it orally
or by telephone and believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition hereunder to the
making of a Loan that by its
terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that
such condition is satisfactory to such Lender, unless the Administrative Agent shall have received
notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent
may consult with legal counsel (who may be counsel for the Borrower), independent accountants and
other experts selected by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.



     9.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise
its rights and powers hereunder or under any other Loan Document by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent
may perform any and all of its duties and exercise its rights and powers by or through their
respective Related Parties. The exculpatory provisions of this Article shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall
apply to their respective activities in connection with the syndication of the credit facilities
provided for herein as well as activities as Administrative Agent.



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



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



     9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Arrangers shall
have any powers, duties or responsibilities under this Agreement or any of the other Loan
Documents, except (i) in its capacity, as applicable, as the Administrative Agent or a Lender
hereunder or (ii) as expressly provided herein or therein.



     9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any
Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative
Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall
have made any demand on the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise



          (a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to
file such other documents as may be necessary or advisable in order to have the claims of
the Lenders and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders and the Administrative
Agent and their respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Sections 2.06 and 10.04) allowed in such
judicial proceeding; and




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



and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such payments to the
Administrative Agent and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its
agents and counsel, and any other amounts due the Administrative Agent under Sections 2.06
and 10.04.




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



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9.10 Guaranty Matters. The Lenders irrevocably authorize the Administrative Agent, at its
option and in its discretion, to release any Guarantor from its obligations under the
Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder.



     Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing
the Administrative Agent’s authority to release any Guarantor from its obligations under the
Guaranty pursuant to this Section 9.10. In each case as specified in this Section
9.10, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the
applicable Loan Party such documents as such Loan Party may reasonably request to evidence the
release of such Guarantor from its obligations under the Guaranty, in each case in accordance with
the terms of the Loan Documents and this Section 9.10.



ARTICLE X.

MISCELLANEOUS




     10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall
be effective unless in writing signed by the Required Lenders and the Borrower or the applicable
Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver
or consent shall be effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such amendment, waiver or consent shall:



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



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



     (c) reduce the principal of, or the rate of interest specified herein on, any Loan or (subject to
clause (iv) of the second proviso to this Section 10.01) any fees or other amounts payable
hereunder or under any other Loan Document without the written consent of each Lender directly
affected thereby; provided, however, that only the consent of the Required Lenders
shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the
Borrower to pay interest at the Default Rate;



     (d) change Section 2.10 or Section 8.03 in a manner that would alter the pro rata
sharing of payments required thereby without the written consent of each Lender;



     (e) change any provision of this Section or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to amend, waive or
otherwise modify any rights hereunder or make any determination or grant any consent hereunder
without the written consent of each Lender; or



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     (f) release all or substantially all of the value of the Guaranty without the written consent of
each Lender.


and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders required above, affect
the rights or duties of the Administrative Agent under this Agreement or any other Loan Document;
and (ii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing
executed only by the parties thereto.




     10.02
Notices; Effectiveness; Electronic Communication.



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



          (i) if to the Borrower or the Administrative Agent, to the address, telecopier number,
electronic mail address or telephone number specified for such Person on Schedule
10.02; and





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



Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received; notices sent by telecopier shall be deemed to have been
given when sent (except that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next business day for the recipient).
Notices delivered through electronic communications to the extent provided in subsection (b) below,
shall be effective as provided in such subsection (b).




     (b) Electronic Communications. Notices and other communications to the Lenders hereunder
may be delivered or furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by the Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender pursuant to Article II if such
Lender, as applicable, has notified the Administrative Agent that it is incapable of receiving
notices under such Article by electronic communication. The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.



     Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to
an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as available, return e-mail
or other written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such



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notice or communication shall be
deemed to have been sent at the opening of business on the next business day for the recipient, and
(ii) notices or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is available and
identifying the website address therefor.




     (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES
(AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE
ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE
BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE
BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its
Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any
Lender, or any other Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative
Agent’s transmission of Borrower Materials through the Internet, except to the extent that such
losses, claims, damages, liabilities or expenses are determined by a court of competent
jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Agent Party; provided, however, that in no event shall
any Agent Party have any liability to the Borrower, any Lender or any other Person for indirect,
special, incidental, consequential or punitive damages (as opposed to direct or actual damages).



     (d) Change of Address, Etc. Each of the Borrower and the Administrative Agent may change
its address, telecopier or telephone number for notices and other communications hereunder by
notice to the other parties hereto. Each other Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the Borrower, and the
Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time
to time to ensure that the Administrative Agent has on record (i) an effective address, contact
name, telephone number, telecopier number and electronic mail address to which notices and other
communications may be sent and (ii) accurate wire instructions for such Lender.



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



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     10.03 No Waiver; Cumulative Remedies.



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



     10.04 Expenses; Indemnity; Damage Waiver.



     (a) Costs and Expenses. The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent), in connection with the syndication of the
credit facilities provided for herein, the preparation, negotiation, execution, delivery and
administration of this Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by the Administrative
Agent or any Lender (including the fees, charges and disbursements of any counsel for the
Administrative Agent or any Lender), and shall pay all fees and time charges for attorneys who may
be employees of the Administrative Agent or any Lender in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the other Loan Documents,
including its rights under this Section, or (B) in connection with the Loans made hereunder,
including all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans.



     (b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent
(and any sub-agent thereof) and each Lender and each Related Party of any of the foregoing Persons
(each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses (including the fees,
charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless
each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees
of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party
or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of
(i) the execution or delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder, the consummation of the transactions contemplated
hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its
Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any
Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any
Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in
part, out of the comparative, contributory or sole negligence of the Indemnitee; provided that



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such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or related expenses (x)
are determined by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a
claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith
of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or
such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.




     (c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to
indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it
to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the
foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent)
or such Related Party, as the case may be, such Lender’s ratable share (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the Administrative Agent
(or any such sub-agent) in its capacity as such, or against any Related Party of any of the
foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such
capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions
of Section 2.09(d).



     (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable
law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnitee referred to in
subsection (b) above shall be liable for any damages arising from the use by unintended recipients
of any information or other materials distributed to such unintended recipients by such Indemnitee
through telecommunications, electronic or other information transmission systems in connection with
this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other
than for direct or actual damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and nonappealable judgment of a court of competent
jurisdiction.



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



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



     10.05 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the
Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right
of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required



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




     10.06 Successors and Assigns.



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



     (b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all
or a portion of its rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it); provided that any such assignment shall
be subject to the following conditions:



          (i) Minimum Amounts.





          (A) in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment or the Loans at the time owing to it or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum
amount need be assigned; and




          (B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the principal
outstanding balance of the Loans of the assigning Lender subject to each such
assignment, determined as of the date the Assignment and Assumption with



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respect to
such assignment is delivered to the Administrative Agent or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date, shall not be less
than $5,000,000 unless the Administrativ Agent otherwise consents
(each such consent not to be)
unreasonably withheld or delayed); provided, however, that
concurrent assignments to members of an Assignee Group and concurrent assignments
from members of an Assignee Group to a single assignee (or to an assignee and
members of its Assignee Group) will be treated as a single assignment for purposes
of determining whether such minimum amount has been met..



          (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender’s rights and obligations under this
Agreement with respect to the Loans or the Commitment assigned;




          (iii) Required Consents. No consent shall be required for any assignment except
(x) to the extent required by subsection (b)(i)(B) of this Section and (y) subsequent to
the Syndication Completion Date, the consent of the Administrative Agent (such consent not
to be unreasonably withheld or delayed) shall be required if such assignment is to a Person
that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such
Lender.




          (iv) Assignment and Assumption. The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee in the amount, if any, required as set forth in Schedule
10.06; provided, however, that the Administrative Agent may, in its
sole discretion, elect to waive such processing and recordation fee in the case of any
assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent
an Administrative Questionnaire.




          (v) No Assignment to Borrower. No such assignment shall be made to the Borrower or
any of the Borrower’s Affiliates or Subsidiaries.




          (vi) No Assignment to Natural Persons. No such assignment shall be made to a
natural person.




          (vii) No Assignment During Syndication. Except pursuant to transactions arranged
by the Bridge Lead Arranger, no Lender may sell or assign (other than to an Affiliate) any
portion of its interest in the Initial Loans until the Syndication Completion Date



Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c)
of this Section, from and after the effective date specified in each Assignment and Assumption, the
assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning


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 Lender’s rights and obligations
under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be
entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04
with respect to facts and circumstances occurring prior to the effective date of such assignment.
Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that
does not comply with this subsection shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in accordance with subsection
(d) of this Section.




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



     (d) Participations. Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent (except as set forth below), sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries)
(each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations
under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the Borrower, the Administrative Agent and the Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s rights and obligations
under this Agreement and (iv) prior to the Syndication Completion Date, no such participation may
be granted by any Lender except to an Affiliate of such Lender.



     Any agreement or instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of Sections
3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.08 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.03 as
though it were a Lender.



     (e) Limitations upon Participant Rights. A Participant shall not be entitled to receive
any greater payment under Section 3.01 or 3.04 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such Participant, unless
the sale of the



74









 







participation to such Participant is made with the Borrower’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to
the benefits of Section 3.01 unless the Borrower is notified of the participation sold to
such Participant and such Participant agrees, for the benefit of the Borrower, to comply with
Section 3.01(e) as though it were a Lender.



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



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



     (h) Notice to Lead Arranger. The Lead Arranger shall be notified of any assignment or
participation (except to an Affiliate of the transferor Lender) until the 180th day
after the Closing Date.



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



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     For purposes of this Section, “Information” means all information received from the
Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective
businesses, other than any such information that is available to the Administrative Agent or any
Lender on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary,
provided that, in the case of information received from the Borrower or any Subsidiary
after the date hereof, such information is clearly identified at
the time of delivery as nonpublic and confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to confidential information of a
similar nature.



     Each of the Administrative Agent and the Lenders acknowledges that (a) the Information may include
material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it
has developed compliance procedures regarding the use of material non-public information and (c) it
will handle such material non-public information in accordance with applicable Law, including
Federal and state securities Laws.



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



     10.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate
of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the
Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrower. In determining whether the interest contracted for,
charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person
may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations hereunder.



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     10.10 Counterparts; Integration; Effectiveness.
This Agreement may be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Loan Documents constitute the
entire contract among the parties relating to the subject matter hereof and, except as otherwise
expressly provided in the Commitment Letter, supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except as provided in
Article IV, this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement.



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



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



     10.13 Replacement of Lenders. If (i) any Lender requests compensation under Section 3.04 or (ii)
the Borrower is required to pay any additional amount to any Lender or any Governmental Authority
for the account of any Lender pursuant to Section 3.01, or (iii) any Lender is unwilling to
approve an amendment hereto which has been approved by Super Majority Lenders but requires approval
of such Lender to be effective, then the Borrower may, at its sole expense and effort, upon notice
to such Lender and the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and consents required
by, Section 10.06), all of its interests, rights and obligations under this Agreement and
the related Loan Documents to an assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment), provided that:



     (a) the Borrower shall have paid to the Administrative Agent the assignment fee specified in
Section 10.06(b);



77









 





     (b) such Lender shall have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and
under the other Loan Documents (including any amounts under Section 3.05) from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts);



     (c) in the case of any such assignment resulting from a claim for compensation under Section
3.04 or payments required to be made pursuant to Section 3.01, such assignment will
result in a reduction in such compensation or payments thereafter;



     (d) in the case of an assignment resulting from clause (iv) above, such assignment will result in
effectiveness of such increase or amendment; and



     (e) such assignment does not conflict with applicable Laws.



     A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.



     10.14 Governing Law; Jurisdiction; Etc.



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



     (b) SUBMISSION TO JURISDICTION. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.



     (c) WAIVER OF VENUE. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO



78









 




THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED
TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.




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



     10.15
Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.



     10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction
contemplated hereby, the Borrower acknowledges and agrees that: (i) the credit facility provided
for hereunder and any related arranging or other services in connection therewith (including in
connection with any amendment, waiver or other modification hereof or of any other Loan Document)
are an arm’s-length commercial transaction between the Borrower and its Affiliates, on the one
hand, and the Administrative Agent and the Arrangers, on the other hand, and the Borrower is
capable of evaluating and understanding and understands and accepts the terms, risks and conditions
of the transactions contemplated hereby and by the other Loan Documents (including any amendment,
waiver or other modification hereof or thereof); (ii) in connection with the process leading to
such transaction, each of the Administrative Agent and the Arrangers is and has been acting solely
as a principal and is not the financial advisor, agent or fiduciary, for the Borrower or any of its
Affiliates, stockholders, creditors or employees or any other Person; (iii) neither the
Administrative Agent nor any Arranger has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Borrower with respect to any of the transactions contemplated hereby
or the process leading thereto, including with respect to any amendment, waiver or other
modification hereof or of any other Loan Document (irrespective of whether the Administrative Agent
or any Arranger has advised or is
currently advising the Borrower or any of its Affiliates on other matters) and neither the
Administrative Agent nor any Arranger has any obligation to the Borrower or any of its Affiliates
with respect to the



79









 




transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; (iv) the Administrative Agent and the Arrangers and their
respective Affiliates may be engaged in a broad range of transactions that involve interests that
differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor any
Arranger has any obligation to disclose any of such interests by virtue of any advisory, agency or
fiduciary relationship; and (v) the Administrative Agent and the Arrangers have not provided and
will not provide any legal, accounting, regulatory or tax advice with respect to any of the
transactions contemplated hereby (including any amendment, waiver or other modification hereof or
of any other Loan Document) and the Borrower has consulted its own legal, accounting, regulatory
and tax advisors to the extent it has deemed appropriate. The Borrower hereby waives and releases,
to the fullest extent permitted by law, any claims that it may have against the Administrative
Agent and any Arranger with respect to any breach or alleged breach of agency or fiduciary duty.



10.17
USA PATRIOT Act Notice. Each Lender that is subject to the Act (as hereinafter defined) and the
Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)) (the “Act”), it is required to obtain, verify and record information
that identifies the Borrower, which information includes the name and address of the Borrower and
other information that will allow such Lender or the Administrative Agent, as applicable, to
identify the Borrower in accordance with the Act.





80









 





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



	 	 	 	 	 	 	 
	 	 	RIATA ENERGY, INC.	 	 
	 	 	(d/b/a SandRidge Energy, Inc.)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Matthew McCann 	 	 
	

				 


	 

	 	Name:	 	Matthew McCann 	 	 
	 

	 	Title:	 	Vice President, Legal 	 	 





 









 





	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as	 	 
	 	 	Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jeffrey J. McLane 	 	 
	

				 


	 

	 	Name:	 	Jeffrey J. McLane 	 	 
	 

	 	Title:	 	Principal 	 	 
	 
	 	 	 	 	 	 
	 	 	BANC OF AMERICA BRIDGE LLC, as a	 	 
	 

	 	Lender	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jeffrey J. McLane 	 	 
	

				 


	 

	 	Name:	 	Jeffrey J. McLane 	 	 
	 

	 	Title:	 	Principal 	 	 
	 
	 	 	 	 	 	 
	 	 	BANC OF AMERICA SECURITIES LLC, as	 	 
	 	 	Lead Arranger and Bookrunner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jeffrey J. McLane 	 	 
	

				 


	 

	 	Name:	 	Jeffrey J. McLane 	 	 
	 

	 	Title:	 	Principal 	 	 





 









 





	 	 	 	 	 	 	 
	 	 	CREDIT SUISSE SECURITIES (USA) LLC, as	 	 
	 	 	Lead Arranger and Bookrunner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ Timothy Perry	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 Timothy Perry	 	 
	 

	 	Title:	 	 Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	CREDIT SUISSE, CAYMAN ISLANDS	 	 
	 	 	BRANCH, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ SoVonna Day Goins	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 SoVonna Day Goins	 	 
	 

	 	Title:	 	 Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ Adam Forchheimer	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 Adam Forchheimer	 	 
	 

	 	Title:	 	 Vice President	 	 





 









 





	 	 	 	 	 	 	 
	 	 	GOLDMAN SACHS CREDIT PARTNERS L.P.,	 	 
	 	 	as Lead Arranger, Bookrunner and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ Bruce H. Mendelsohn	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 Bruce H. Mendelsohn	 	 
	 

	 	Title:	 	 Authorized Signatory	 	 





 









 





	 	 	 	 	 	 	 
	 	 	LEHMAN BROTHERS INC., as Lead Arranger
	 	 	and Bookrunner
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ Frank P. Turner	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 Frank P. Turner	 	 
	 

	 	Title:	 	 Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	LEHMAN COMMERCIAL PAPER INC., as a Lender
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ Frank P. Turner	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 Frank P. Turner	 	 
	 

	 	Title:	 	 Vice President	 	 





 









 





SCHEDULE 2.01

COMMITMENTS




	 	 	 	 	 
	Lender	 	Commitment
	 
	Banc of America Bridge LLC
	 	$	212,500,000	 
	Credit Suisse, Cayman Islands Branch
	 	$	212,500,000	 
	Goldman Sachs Credit Partners L.P.
	 	$	212,500,000	 
	Lehman Commercial Paper Inc.
	 	$	212,500,000	 
	 
	 	 	 	 
	Total
	 	$	850,000,000	 
	 
	 	 	 	 





 









 





SCHEDULE 5.03




GOVERNMENTAL AUTHORIZATIONS




None.




 









 





SCHEDULE 5.05




SUPPLEMENT TO INTERIM FINANCIAL STATEMENTS




(Continued on next page)





 










 





Supplement to Interim Financial Statements: Existing Indebtedness




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	6/30/2006	 	9/30/2006	 	11/13/2006	 	Collateral
	SYMBOL ENERGY
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LARCO
	 	 	2,287,129.15	 	 	 	2,287,129.15	 	 	 	2,287,129.15	 	 	NA
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SAGEBRUSH
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BANK OF AMERICA
	 	 	4,000,000.00	 	 	 	4,000,000.00	 	 	 	4,000,000.00	 	 	All Bank of America cash accounts
	ROC
	 	 	700,000.00	 	 	 	1,325,000.00	 	 	 	1,325,000.00	 	 	NA
	PREMIUM ASSIGNMENT
	 	 	10,359.97	 	 	 	—	 	 	 	 	 	 	NA
	 	 	 	 	 
	 
	 	 	4,710,359.97	 	 	 	5,325,000.00	 	 	 	5,325,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ALSATE
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P REI
	 	 	7,970,907.91	 	 	 	7,970,907.91	 	 	 	7,970,907.91	 	 	NA
	PREMIUM ASSIGNMENT
	 	 	322,860.95	 	 	 	304,162.45	 	 	 	229,672.13	 	 	Unsecured
	 	 	 	 	 
	 
	 	 	8,293,768.86	 	 	 	8,275,070.36	 	 	 	8,200,580.04	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	HONDO HEAVY HAUL
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JOHN DEERE
	 	 	—	 	 	 	—	 	 	 	168,012.51	 	 	John Deere 724J Loader with 9' Forks
	N/P PACCAR FINANCIAL
	 	 	384,994.98	 	 	 	358,536.00	 	 	 	351,780.61	 	 	Quantity of 6 2003 Peterbilt 379-127 Vehicles
	 	 	 	 	 
	 
	 	 	384,994.98	 	 	 	358,536.00	 	 	 	519,793.12	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LARIAT
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MERRILL LYNCH #1
	 	 	15,672,564.49	 	 	 	14,778,781.18	 	 	 	14,473,910.39	 	 	Rig #1 - Rig #7 and Ancillary Equipment
	MERRILL LYNCH #2
	 	 	2,002,641.96	 	 	 	1,856,607.25	 	 	 	1,818,373.93	 	 	Rig #13 and All Associated Equipment
	MERRILL LYNCH #3
	 	 	4,105,940.24	 	 	 	3,890,110.21	 	 	 	3,815,375.61	 	 	Rig #12 and All Associated Equipment
	MERRILL LYNCH #4
	 	 	2,109,383.64	 	 	 	2,000,975.86	 	 	 	1,963,550.55	 	 	Rig #14 and All Associated Equipment
	MERRILL LYNCH #5
	 	 	914,242.41	 	 	 	869,762.16	 	 	 	854,396.64	 	 	Service/Workover Rigs
	MERRILL LYNCH #6
	 	 	1,589,597.17	 	 	 	1,512,265.89	 	 	 	1,485,551.88	 	 	Rig #15 and All Associated Equipment
	MERRILL LYNCH #7
	 	 	1,837,650.55	 	 	 	1,749,080.20	 	 	 	1,718,787.04	 	 	Rig #16 and All Associated Equipment






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	6/30/2006	 	9/30/2006	 	11/13/2006	 	Collateral
	MERRILL LYNCH #8
	 	 	2,318,074.35	 	 	 	2,207,733.29	 	 	 	2,169,571.35	 	 	Rig #19 and All Associated Equipment
	MERRILL LYNCH #9
	 	 	812,153.10	 	 	 	774,503.80	 	 	 	761,471.46	 	 	Misc Trucks & Equipment
	MERRILL LYNCH #10
	 	 	8,134,304.10	 	 	 	5,766,007.12	 	 	 	5,766,007.12	 	 	Rig #22 and 3 Pulling Units
	MERRILL LYNCH #11
	 	 	5,924,100.00	 	 	 	7,918,474.04	 	 	 	7,807,394.01	 	 	Rig #24 and All Associated Equipment
	MERRILL LYNCH #12
	 	 	—	 	 	 	7,997,535.00	 	 	 	7,916,205.44	 	 	Rig #26
	MERRILL LYNCH #13
	 	 	—	 	 	 	888,615.00	 	 	 	888,615.00	 	 	Pulling Units 11, 12, 13, & 17
	MERRILL LYNCH #14
	 	 	—	 	 	 	—	 	 	 	6,220,305.00	 	 	Rig #28
	PREMIUM ASSIGNMENT
	 	 	441,536.00	 	 	 	254,692.21	 	 	 	128,148.37	 	 	Unsecured
	DAIMLER CHRYSLER #7493
	 	 	1,288.60	 	 	 	—	 	 	 	0.00	 	 	NA
	DAIMLER CHRYSLER #11970
	 	 	26,034.00	 	 	 	22,765.18	 	 	 	20,565.14	 	 	2005 Sterling Acterra Tractor
	DAIMLER CHRYSLER #11974
	 	 	26,034.00	 	 	 	22,765.18	 	 	 	20,565.14	 	 	2005 Sterling Acterra Tractor
	N/P DIAMLER CHRYSLER #83592
	 	 	88,728.22	 	 	 	81,834.37	 	 	 	77,168.77	 	 	2007 Western Star 4900 Tractor
	N/P DIAMLER CHRYSLER #83593
	 	 	88,728.22	 	 	 	81,834.37	 	 	 	77,168.77	 	 	2007 Western Star 4900 Tractor
	N/P DIAMLER CHRYSLER #81856
	 	 	38,941.00	 	 	 	35,915.54	 	 	 	33,867.81	 	 	2007 Sterling Acterra Tractor
	N/P DIAMLER CHRYSLER #66004
	 	 	83,400.00	 	 	 	77,119.75	 	 	 	72,869.43	 	 	2007 Western Star 4900 Tractor
	N/P DIAMLERCHRYSLER #81858
	 	 	40,320.19	 	 	 	37,294.73	 	 	 	35,246.11	 	 	2007 Sterling Acterra Tractor
	N/P DIAMLERCHRYSLER #81859
	 	 	 	 	 	 	38,521.62	 	 	 	36,474.56	 	 	2007 Sterling Acterra Tractor
	N/P DIAMLERCHRYSLER #81860
	 	 	 	 	 	 	38,521.62	 	 	 	36,474.46	 	 	2007 Sterling Acterra Tractor
	N/P DIAMLERCHRYSLER #81861
	 	 	 	 	 	 	39,535.67	 	 	 	37,501.23	 	 	2007 Sterling Acterra Tractor
	N/P JOHN DEERE #2582
	 	 	95,019.00	 	 	 	77,576.97	 	 	 	65,853.97	 	 	2005 330CLC Excavator
	N/P JOHN DEERE CREDIT #9496
	 	 	42,503.97	 	 	 	39,359.77	 	 	 	37,226.34	 	 	850C Long Track Crawler Dozer
	N/P JOHN DEERE CREDIT #6211
	 	 	76,246.09	 	 	 	70,605.85	 	 	 	66,778.80	 	 	1050C Crawler Dozer
	N/P JOHN DEERE CREDIT #2526
	 	 	39,847.85	 	 	 	36,900.15	 	 	 	34,900.04	 	 	850C Long Track Crawler Dozer
	N/P JOHN DEERE CREDIT #6277
	 	 	70,985.96	 	 	 	65,734.84	 	 	 	62,171.82	 	 	1050C Crawler Dozer
	N/P JOHN DEERE CREDIT #64644
	 	 	 	 	 	 	61,286.53	 	 	 	57,754.11	 	 	544H Loader
	N/P JOHN DEERE CREDIT #79513
	 	 	78,447.04	 	 	 	72,458.80	 	 	 	68,395.35	 	 	544H Loader






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	6/30/2006	 	9/30/2006	 	11/13/2006	 	Collateral
	N/P JOHN DEERE CREDIT #79321
	 	 	58,765.00	 	 	 	54,417.91	 	 	 	51,468.28	 	 	544H Loader
	N/P JOHN DEERE CREDIT #87862
	 	 	 	 	 	 	 	 	 	 	72,076.66	 	 	544H Loader
	JOHN DEERE CREDIT #6762
	 	 	17,207.00	 	 	 	14,048.33	 	 	 	11,925.55	 	 	2005 310SG Wheel Loader Backhoe
	N/P JDC #3291
	 	 	6,357.00	 	 	 	1,600.45	 	 	 	0.00	 	 	NA
	N/P JDC #3935
	 	 	118,732.00	 	 	 	102,352.48	 	 	 	91,272.96	 	 	724J Loader
	CIT GROUP
	 	 	5,504.00	 	 	 	 	 	 	 	 	 	 	 
	PACCAR #24856 & #24870
	 	 	 	 	 	 	155,126.70	 	 	 	149,818.25	 	 	Quantity of 2 2004 Peterbilts
	PACCAR
	 	 	147,882.47	 	 	 	114,592.70	 	 	 	92,124.20	 	 	Kenworths
	PACCAR #5780267
	 	 	 	 	 	 	 	 	 	 	296,538.19	 	 	Quantity of 2 2007 Peterbilts and Quantity of 2 2004 Peterbilts
	PACCAR #5783865
	 	 	 	 	 	 	 	 	 	 	152,716.41	 	 	Quantity of 2 2004 Peterbilts
	GMAC #9231
	 	 	3,393.16	 	 	 	846.15	 	 	 	 	 	 	 
	GMAC #9210
	 	 	1,942.00	 	 	 	—	 	 	 	 	 	 	NA
	 	 	 	 	 
	 
	 	 	47,018,494.77	 	 	 	53,808,158.87	 	 	 	59,546,586.14	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	REI
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BANK OF AMERICA
	 	 	36,435,900.00	 	 	 	102,403,656.50	 	 	 	117,452,113.25	 	 	Oil & Gas Properties
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LARCO
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RIATA ENERGY
	 	 	5,635,243.89	 	 	 	5,635,243.89	 	 	 	5,635,243.89	 	 	NA
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RIAGRA
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P REI
	 	 	8,983,980.36	 	 	 	8,983,980.36	 	 	 	8,983,980.36	 	 	NA
	JOHN DEERE
	 	 	—	 	 	 	—	 	 	 	0.00	 	 	NA
	 	 	 	 	 
	 
	 	 	8,983,980.36	 	 	 	8,983,980.36	 	 	 	8,983,980.36	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ROC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P REI
	 	 	62,333.53	 	 	 	62,333.53	 	 	 	62,333.53	 	 	NA
	PREMIUM ASSIGNMENT
	 	 	6,108.00	 	 	 	—	 	 	 	0.00	 	 	NA
	 	 	 	 	 
	 
	 	 	68,441.53	 	 	 	62,333.53	 	 	 	62,333.53	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PSEC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P REI
	 	 	31,813,722.36	 	 	 	31,813,722.36	 	 	 	31,813,722.36	 	 	NA






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	6/30/2006	 	9/30/2006	 	11/13/2006	 	Collateral
	PREMIUM ASSIGNMENT
	 	 	71,336.64	 	 	 	38,566.48	 	 	 	30,967.38	 	 	Unsecured
	SUBORDINATED DEBT-REI
	 	 	6,540,000.00	 	 	 	6,540,000.00	 	 	 	6,540,000.00	 	 	NA
	SUBORDINATED DEBT-OUTSIDE
	 	 	—	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	38,425,059.00	 	 	 	38,392,288.84	 	 	 	38,384,689.74	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PSPC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P REI
	 	 	5,902,097.77	 	 	 	5,902,097.77	 	 	 	5,902,097.77	 	 	NA
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	HONDO
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PACCAR
	 	 	9,640.31	 	 	 	—	 	 	 	0.00	 	 	NA
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL
	 	 	158,155,110.59	 	 	 	231,433,495.27	 	 	 	252,299,546.99	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LESS INTER-CO NOTES
	 	 	69,895,414.97	 	 	 	70,520,414.97	 	 	 	70,520,414.97	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL
	 	 	88,259,695.62	 	 	 	160,913,080.30	 	 	 	181,779,132.02	 	 	 






 









 





SCHEDULE 5.06




LITIGATION




     ConocoPhillips Company, (Successor by merger to Conoco, Inc.), Plaintiff, vs. Riata
Energy, Inc., Wes-Tex Drilling Company, L.P., Manti Resources, Inc., and Manti Longfellow,
Ltd., Defendants; No. 9846; In the 112th District Court in and for Pecos County, Tx



     Riata Energy, Inc. and Riata Piceance, LLC, Plaintiffs, V. Elliott Roosevelt, Jr.,
E.R. Family Limited Partnership and Ceres Resource Partners, L.P., Defendants.; No.
04-11461-E; In the 101st Judicial District Court in and for Dallas County, Tx



     Harvey Y. Yates Company, Plaintiff, v Riata Energy, Inc. Defendant; No. 10376; In the
112TH District Court in and for Pecos County, Tx



 









 





SCHEDULE 5.09




ENVIRONMENTAL MATTERS




None.




 









 





SCHEDULE 5.13




SUBSIDIARIES,

OTHER EQUITY INVESTMENTS

AND LOAN PARTY INFORMATION




(Continued on next page)





 










 





	 	 	 
	Riata Energy, Inc. dba SandRidge Energy, Inc.

	 	SCHEDULE 5.13






PART A AND PART B — all Subsidiaries and Equity Interests of Loan Parties




	 	 	 	 	 	 	 	 	 	 	 
	Symbol	 	Company Name	 	Address	 	City/State/Zip	 	FEIN	 	OWNERSHIP
	REI	 	Riata Energy, Inc.
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	76-0002820	 	 
	 	 	 
	 	 	 	 	 	 	 	 
	SUBSIDIARY ENTITIES	 	 	 	 	 	 	 	 
	 	 	Algerita Energy, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-1400800	 	100%REI
	AEI	 	Alsate Management and Investment Co
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	75-2541245	 	100%REI
	 	 	Cup Of The Day #1, LLC
	 	701 S. Tyler, Ste 102	 	Amarillo, TX  79201	 	13-4301747	 	100%AEI
	CSLLC	 	Chaparral Supply, LLC
	 	P. O. Box 1417	 	Ft. Stockton, Texas 79735	 	26-0036758	 	100%AEI
	IEL	 	Integra Energy, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	75-2887527	 	85%AEI
	 	 	Cholla Management, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	01-0557493	 	100%IEL
	CHOLP	 	Cholla Pipeline, LP
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	26-0025092	 	36%IEL, 17%ROC
	TPL	 	Transpecos Logging, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	75-2897434	 	100%AEI
	 	 	Black Bayou Exploration, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-4790561	 	100%REI
	LSI	 	Lariat Services, Inc.
	 	2402 West Wall	 	Midland, TX  79701	 	75-2500702	 	100%REI
	LARCO	 	Lariat Compression Company
	 	5432 N. Highway 1053	 	Ft. Stockton, TX 79735	 	75-2545523	 	100%LSI
	SYMENE	 	Symbol Energy, Inc.
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-2882968	 	100%LARCO
	HONDO	 	Hondo Heavy Haul
	 	13416 W. 1-20 East	 	Odessa, TX 79765	 	20-3568524	 	100%LSI
	 	 	Larclay, GP, LLC
	 	701 S. Taylor, Suite 426	 	Amarillo, TX  79101	 	20-4727861	 	50%LSI
	 	 	Larclay, L.P.
	 	701 S. Taylor, Suite 426	 	Amarillo, TX  79101	 	20-4728095	 	50%LSI
	MCRLLC	 	Midcontinent Resources, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-0096928	 	100%REI
	PSEML	 	PetroSource Energy Management, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-1237622	 	100%REI
	PSEC	 	PetroSource Energy Company, LP
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-2629471	 	99%REI, 1% PSEM
	 	 	 
	 	 	 	 	 	 	 	 
	PSCO2	 	PSCO2, LP
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	76-0547903	 	99%PSEC, 1% PSEML
	 	 	 
	 	 	 	 	 	 	 	 
	PSPC	 	PetroSource Production Company, LP
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-1918006	 	99%PSEC, 1% PSEML
	 	 	PSE Holdings, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	75-2950920	 	100%REI
	PSEM	 	PSE Management, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-2622462	 	100%REI
	RLC	 	Riagra Land & Cattle
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	75-2569335	 	100%REI
	RDI	 	Riata Drilling Company, Inc.
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	75-2563168	 	100%REI
	RIAN	 	Riata Energy Operating, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-0333569	 	100%REI
	REIPIC	 	Riata Piceance, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-0023468	 	100%REI
	 	 	Riata Wolfcamp Management, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-2214412	 	100%REI
	ROC	 	ROC Gas Company
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	75-2541148	 	100%REI
	SBP	 	Sagebrush Pipeline, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-1550515	 	70%ROC
	SMM	 	Sierra Madera Management, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	43-1969581	 	100%REI
	SMCO2	 	Sierra Madera CO2 Pipeline, Ltd
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	47-0881558	 	99%REI, 1% SMM






 









 






	 	 	 	 	 	 	 	 	 	 	 
	Symbol	 	Company Name	 	Address	 	City/State/Zip	 	FEIN	 	OWNERSHIP
	SandRidge Holdings, Inc. Acquisition	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	20-5878401	 	100% REI
	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 
	NEG	 	NEG Oil & Gas, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	03-0573934	 	100% Sandridge
	 	 	 
	 	 	 	 	 	 	 	 
	SUBSIDIARY ENTITIES	 	 	 	 	 	 	 	 
	NEGH	 	NEG Holding, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	75-2958833	 	100%NEG
	NEGO	 	NEG Operating, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	87-0776535	 	100%NEGH
	NGXGP	 	NGX GP of Delaware LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	87-0776542	 	100%NEGO
	NGXLP	 	NGX LP Of Delaware LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	87-0776545	 	100%NEGO
	 	 	 
	 	 	 	 	 	 	 	 
	NGXELP	 	NGX Energy Limited Partnership
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	87-0776546	 	99%NGXLP, 1%NGXGP
	SHANA	 	Shana National LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	87-0776549	 	100%NEGO
	MIDR	 	Mid River, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	87-0776548	 	100%NEG
	OFFGP	 	Offshore GP, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	87-0776539	 	100%NEG
	OFFLP	 	Offshore LP, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	87-0776538	 	100%NEG
	 	 	 
	 	 	 	 	 	 	 	 
	NOFFSH	 	National Offshore LP
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	11-3758786	 	99%OFFLP, 1%OFFGP
	ONGP	 	Onshore GP, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	76-0833283	 	100%NEG
	ONLP	 	Onshore LP, LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	87-0776536	 	100%NEG
	NONSH	 	National Onshore LP
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	47-0953489	 	99%ONLP, 1%ONGP
	GBPIPE	 	Galveston Bay Pipeline Company
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	76-0595703	 	100%NONSH
	GBPROC	 	Galveston Bay Processing Company
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	76-0570422	 	100%NONSH






PART C — LOAN PARTIES INFORMATION




	 	 	 	 	 	 	 	 	 
	Company Name	 	Address	 	City/State/Zip	 	Jurisdiction	 	FEIN Number
	Alsate Investment and Management Company
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Texas	 	75-2541245
	Integra Energy, L.L.C.
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Texas	 	75-2887527
	Lariat Compression Company
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Texas	 	75-2545523
	NEG Oil & Gas LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Delaware	 	03-0573934
	NEG Operating LLC
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Delaware	 	87-0776535
	National Offshore LP
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Delaware	 	11-3758786
	National Onshore LP
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Delaware	 	47-0953489
	PetroSource Energy Company, LP
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Texas	 	20-2629471
	PetroSource Production Company, L.P.
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Texas	 	20-1918006
	Riata Energy, Inc.
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Texas	 	76-0002820
	ROC Gas Company
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Texas	 	75-2541148
	Sandridge Holdings, Inc.
	 	1601 NW Expwy, 1600	 	Oklahoma City, OK 73118	 	Delaware	 	20-5878401






 









 





SCHEDULE 7.01




EXISTING LIENS



Liens granted to Bank of America, N.A. on the plant and pipeline owned by SageBrush Pipeline, LLC
pursuant to $4,000,000 Note (the “Note”) issued by SageBrush Pipeline, LLC as Borrower to Bank of
America, N.A. as lender with a maturity of January 31, 2007.





 









 








SCHEDULE 7.03




EXISTING INDEBTEDNESS




(Continued on next page)




 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	6/30/2006	 	9/30/2006	 	11/13/2006	 	Collateral
	SYMBOL ENERGY
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LARCO
	 	 	2,287,129.15	 	 	 	2,287,129.15	 	 	 	2,287,129.15	 	 	NA
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SAGEBRUSH
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BANK OF AMERICA
	 	 	4,000,000.00	 	 	 	4,000,000.00	 	 	 	4,000,000.00	 	 	All Bank of America cash accounts
	ROC
	 	 	700,000.00	 	 	 	1,325,000.00	 	 	 	1,325,000.00	 	 	NA
	PREMIUM ASSIGNMENT
	 	 	10,359.97	 	 	 	—	 	 	 	 	 	 	NA
	 	 	 	 	 
	 
	 	 	4,710,359.97	 	 	 	5,325,000.00	 	 	 	5,325,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ALSATE
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P REI
	 	 	7,970,907.91	 	 	 	7,970,907.91	 	 	 	7,970,907.91	 	 	NA
	PREMIUM ASSIGNMENT
	 	 	322,860.95	 	 	 	304,162.45	 	 	 	229,672.13	 	 	Unsecured
	 	 	 	 	 
	 
	 	 	8,293,768.86	 	 	 	8,275,070.36	 	 	 	8,200,580.04	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	HONDO HEAVY HAUL
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JOHN DEERE
	 	 	—	 	 	 	—	 	 	 	168,012.51	 	 	John Deere 724J Loader with 9’ Forks
	N/P PACCAR FINANCIAL
	 	 	384,994.98	 	 	 	358,536.00	 	 	 	351,780.61	 	 	Quantity of 6 2003 Peterbilt
379-127 Vehicles
	 	 	 	 	 
	 
	 	 	384,994.98	 	 	 	358,536.00	 	 	 	519,793.12	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LARIAT
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MERRILL LYNCH #1
	 	 	15,672,564.49	 	 	 	14,778,781.18	 	 	 	14,473,910.39	 	 	Rig #1 - Rig #7 and Ancillary Equipment
	MERRILL LYNCH #2
	 	 	2,002,641.96	 	 	 	1,856,607.25	 	 	 	1,818,373.93	 	 	Rig #13 and All Associated Equipment
	MERRILL LYNCH #3
	 	 	4,105,940.24	 	 	 	3,890,110.21	 	 	 	3,815,375.61	 	 	Rig #12 and All Associated Equipment
	MERRILL LYNCH #4
	 	 	2,109,383.64	 	 	 	2,000,975.86	 	 	 	1,963,550.55	 	 	Rig #14 and All Associated Equipment
	MERRILL LYNCH #5
	 	 	914,242.41	 	 	 	869,762.16	 	 	 	854,396.64	 	 	Service/Workover Rigs
	MERRILL LYNCH #6
	 	 	1,589,597.17	 	 	 	1,512,265.89	 	 	 	1,485,551.88	 	 	Rig #15 and All Associated Equipment
	MERRILL LYNCH #7
	 	 	1,837,650.55	 	 	 	1,749,080.20	 	 	 	1,718,787.04	 	 	Rig #16 and All Associated Equipment
	MERRILL LYNCH #8
	 	 	2,318,074.35	 	 	 	2,207,733.29	 	 	 	2,169,571.35	 	 	Rig #19 and All Associated Equipment







 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	6/30/2006	 	9/30/2006	 	11/13/2006	 	Collateral
	MERRILL LYNCH #9
	 	 	812,153.10	 	 	 	774,503.80	 	 	 	761,471.46	 	 	Misc Trucks & Equipment
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MERRILL LYNCH #10
	 	 	8,134,304.10	 	 	 	5,766,007.12	 	 	 	5,766,007.12	 	 	Rig #22 and 3 Pulling Units
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MERRILL LYNCH #11
	 	 	5,924,100.00	 	 	 	7,918,474.04	 	 	 	7,807,394.01	 	 	Rig #24 and All Associated Equipment
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MERRILL LYNCH #12
	 	 	—	 	 	 	7,997,535.00	 	 	 	7,916,205.44	 	 	Rig #26
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MERRILL LYNCH #13
	 	 	—	 	 	 	888,615.00	 	 	 	888,615.00	 	 	Pulling Units 11, 12, 13, & 17
	MERRILL LYNCH #14
	 	 	—	 	 	 	—	 	 	 	6,220,305.00	 	 	Rig #28
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PREMIUM ASSIGNMENT
	 	 	441,536.00	 	 	 	254,692.21	 	 	 	128,148.37	 	 	Unsecured
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	DAIMLER CHRYSLER #7493
	 	 	1,288.60	 	 	 	—	 	 	 	0.00	 	 	NA
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	DAIMLER CHRYSLER #11970
	 	 	26,034.00	 	 	 	22,765.18	 	 	 	20,565.14	 	 	2005 Sterling Acterra Tractor
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	DAIMLER CHRYSLER #11974
	 	 	26,034.00	 	 	 	22,765.18	 	 	 	20,565.14	 	 	2005 Sterling Acterra Tractor
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P DIAMLER CHRYSLER #83592
	 	 	88,728.22	 	 	 	81,834.37	 	 	 	77,168.77	 	 	2007 Western Star 4900 Tractor
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P DIAMLER CHRYSLER #83593
	 	 	88,728.22	 	 	 	81,834.37	 	 	 	77,168.77	 	 	2007 Western Star 4900 Tractor
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P DIAMLER CHRYSLER #81856
	 	 	38,941.00	 	 	 	35,915.54	 	 	 	33,867.81	 	 	2007 Sterling Acterra Tractor
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P DIAMLER CHRYSLER #66004
	 	 	83,400.00	 	 	 	77,119.75	 	 	 	72,869.43	 	 	2007 Western Star 4900 Tractor
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P DIAMLERCHRYSLER #81858
	 	 	40,320.19	 	 	 	37,294.73	 	 	 	35,246.11	 	 	2007 Sterling Acterra Tractor
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P DIAMLERCHRYSLER #81859
	 	 	 	 	 	 	38,521.62	 	 	 	36,474.56	 	 	2007 Sterling Acterra Tractor
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P DIAMLERCHRYSLER #81860
	 	 	 	 	 	 	38,521.62	 	 	 	36,474.46	 	 	2007 Sterling Acterra Tractor
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P DIAMLERCHRYSLER #81861
	 	 	 	 	 	 	39,535.67	 	 	 	37,501.23	 	 	2007 Sterling Acterra Tractor
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JOHN DEERE #2582
	 	 	95,019.00	 	 	 	77,576.97	 	 	 	65,853.97	 	 	2005 330CLC Excavator
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JOHN DEERE CREDIT #9496
	 	 	42,503.97	 	 	 	39,359.77	 	 	 	37,226.34	 	 	850C Long Track Crawler Dozer
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JOHN DEERE CREDIT #6211
	 	 	76,246.09	 	 	 	70,605.85	 	 	 	66,778.80	 	 	1050C Crawler Dozer
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JOHN DEERE CREDIT #2526
	 	 	39,847.85	 	 	 	36,900.15	 	 	 	34,900.04	 	 	850C Long Track Crawler Dozer
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JOHN DEERE CREDIT #6277
	 	 	70,985.96	 	 	 	65,734.84	 	 	 	62,171.82	 	 	1050C Crawler Dozer
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JOHN DEERE CREDIT #64644
	 	 	 	 	 	 	61,286.53	 	 	 	57,754.11	 	 	544H Loader
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JOHN DEERE CREDIT #79513
	 	 	78,447.04	 	 	 	72,458.80	 	 	 	68,395.35	 	 	544H Loader
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JOHN DEERE CREDIT #79321
	 	 	58,765.00	 	 	 	54,417.91	 	 	 	51,468.28	 	 	544H Loader
	N/P JOHN DEERE CREDIT #87862
	 	 	 	 	 	 	 	 	 	 	72,076.66	 	 	544H Loader






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	6/30/2006	 	9/30/2006	 	11/13/2006	 	Collateral
	JOHN DEERE CREDIT #6762
	 	 	17,207.00	 	 	 	14,048.33	 	 	 	11,925.55	 	 	2005 310SG Wheel Loader Backhoe
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JDC #3291
	 	 	6,357.00	 	 	 	1,600.45	 	 	 	0.00	 	 	NA
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P JDC #3935
	 	 	118,732.00	 	 	 	102,352.48	 	 	 	91,272.96	 	 	724J Loader
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CIT GROUP
	 	 	5,504.00	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PACCAR #24856 & #24870
	 	 	 	 	 	 	155,126.70	 	 	 	149,818.25	 	 	Quantity of 2 2004 Peterbilts
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PACCAR
	 	 	147,882.47	 	 	 	114,592.70	 	 	 	92,124.20	 	 	Kenworths
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PACCAR #5780267
	 	 	 	 	 	 	 	 	 	 	296,538.19	 	 	Quantity of 2 2007 Peterbilts and Quantity of 2 2004 Peterbilts
	PACCAR #5783865
	 	 	 	 	 	 	 	 	 	 	152,716.41	 	 	Quantity of 2 2004 Peterbilts
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GMAC #9231
	 	 	3,393.16	 	 	 	846.15	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GMAC #9210
	 	 	1,942.00	 	 	 	—	 	 	 	 	 	 	NA
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	47,018,494.77	 	 	 	53,808,158.87	 	 	 	59,546,586.14	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	REI
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BANK OF AMERICA
	 	 	36,435,900.00	 	 	 	102,403,656.50	 	 	 	117,452,113.25	 	 	Oil & Gas Properties
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LARCO
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RIATA ENERGY
	 	 	5,635,243.89	 	 	 	5,635,243.89	 	 	 	5,635,243.89	 	 	NA
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RIAGRA
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P REI
	 	 	8,983,980.36	 	 	 	8,983,980.36	 	 	 	8,983,980.36	 	 	NA
	JOHN DEERE
	 	 	—	 	 	 	—	 	 	 	0.00	 	 	NA
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	8,983,980.36	 	 	 	8,983,980.36	 	 	 	8,983,980.36	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ROC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P REI
	 	 	62,333.53	 	 	 	62,333.53	 	 	 	62,333.53	 	 	NA
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PREMIUM ASSIGNMENT
	 	 	6,108.00	 	 	 	—	 	 	 	0.00	 	 	NA
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	68,441.53	 	 	 	62,333.53	 	 	 	62,333.53	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PSEC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P REI
	 	 	31,813,722.36	 	 	 	31,813,722.36	 	 	 	31,813,722.36	 	 	NA
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PREMIUM ASSIGNMENT
	 	 	71,336.64	 	 	 	38,566.48	 	 	 	30,967.38	 	 	Unsecured
	SUBORDINATED DEBT-REI
	 	 	6,540,000.00	 	 	 	6,540,000.00	 	 	 	6,540,000.00	 	 	NA






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	6/30/2006	 	9/30/2006	 	11/13/2006	 	Collateral
	SUBORDINATED DEBT-OUTSIDE
	 	 	—	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	38,425,059.00	 	 	 	38,392,288.84	 	 	 	38,384,689.74	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PSPC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N/P REI
	 	 	5,902,097.77	 	 	 	5,902,097.77	 	 	 	5,902,097.77	 	 	NA
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	HONDO
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PACCAR
	 	 	9,640.31	 	 	 	—	 	 	 	0.00	 	 	NA
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL
	 	 	158,155,110.59	 	 	 	231,433,495.27	 	 	 	252,299,546.99	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LESS INTER-CO NOTES
	 	 	69,895,414.97	 	 	 	70,520,414.97	 	 	 	70,520,414.97	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL
	 	 	88,259,695.62	 	 	 	160,913,080.30	 	 	 	181,779,132.02	 	 	 






 









 






SCHEDULE 10.02




ADMINISTRATIVE AGENT’S OFFICE;

CERTAIN ADDRESSES FOR NOTICES




BORROWER:




	 
	Riata Energy, Inc. (d/b/a Sandridge Energy, Inc.)

	1601 Northwest Expressway, Suite 1600

	Oklahoma City, OK 73118

	Attention: Matt McCann

	Telephone: (405) 753-5600

	Telecopier: (405) 753-5988

	Electronic Mail: mmccann@sdrge.com

	Website Address:      www.sandridgeenergy.com

	U.S. Taxpayer Identification Number: 76-0002820







ADMINISTRATIVE AGENT:




Administrative Agent’s Office

(for payments and Requests for Credit Extensions):

Bank of America, N.A.

One Independence Center

101 North Tryon Street

Mail Code: NC1-001-04-39

Charlotte, NC 28255-001

Attention: Melissa Mullis

Telephone: (704) 386-9372

Telecopier: (704) 286-2445

Account No.: 1366212250600

Ref: SandRidge Energy, Inc.

ABA# 026009593




Other Notices as Administrative Agent:

Bank of America, N.A.

Agency Management

231 South LaSalle Street

Mail Code: IL1-231-08-30

Chicago, IL 60697

Attention: Suzanne M. Paul

Telephone: (312) 923-1640

Telecopier: (877) 206-8435

Electronic Mail: suzanne.m.paul@bankofamerica.com




 









 





SCHEDULE 10.06




PROCESSING AND RECORDATION FEES




     The Administrative Agent will charge a processing and recordation fee (an “Assignment
Fee”) in the amount of $2,500 for each assignment; provided, however, that in
the event of two or more concurrent assignments to members of the same Assignee Group (which may be
effected by a suballocation of an assigned amount among members of such Assignee Group) or two or
more concurrent assignments by members of the same Assignee Group to a single Eligible Assignee (or
to an Eligible Assignee and members of its Assignee Group), the Assignment Fee will be $2,500 plus
the amount set forth below:



	 	 	 	 	 	 	 	 	 
	 	 	Transaction	 	Assignment Fee	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	First four concurrent assignments or suballocations to
members of an Assignee Group (or from members of an
Assignee Group, as applicable)
	 	 	-0-	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Each additional concurrent assignment or suballocation to a
member of such Assignee Group (or from a member of such
Assignee Group, as applicable)
	 	$	500	 	 	 







 









 





EXHIBIT A




FORM OF LOAN NOTICE




Date:                                         ,                     




To: Bank of America, N.A., as Administrative Agent




Ladies and Gentlemen:




     Reference is made to that certain Bridge Loan Agreement, dated as of November 21, 2006 (as
amended, restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined), among Riata
Energy, Inc. (d/b/a SandRidge Energy, Inc.), a Texas corporation (the “Borrower”), the
Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent.



     The undersigned hereby requests (select one):



     o A Borrowing of Initial Loans                      o A conversion or continuation of Loans



	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	1. 	 	On
	 	 	 	 	 	(a Business Day).
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	2.	 	In the amount of $.	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	3. 	 	Comprised of .	 	 
	 

	 	 	 	 	 	 	 	 

[Type of Loan requested]
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	4. 	 	For Eurodollar Rate Loans: with an Interest Period of                      months.






     The Borrowing, if any, requested herein complies with the provisos to the first sentence of
Section 2.01 of the Agreement.



	 	 	 	 	 	 	 
	 	 	RIATA ENERGY, INC.
	 
	 	 	 	 	 	 
	 	 	(d/b/a SandRidge Energy, Inc.)
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 






Form of Loan Notice




A-1









 





EXHIBIT B




FORM OF NOTE




                                        




     FOR VALUE RECEIVED, the undersigned (the “Borrower”) hereby promises to pay to
                                         or registered assigns (the “Lender”), in accordance with the
provisions of the Agreement (as hereinafter defined), the principal amount of each Loan owed by the
Borrower to the Lender under that certain Bridge Loan Agreement, dated as of November 21, 2006 (as
amended, restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined), among the
Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative
Agent.



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



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



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




Form of Note




B-1









 





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



	 	 	 	 	 	 	 
	 	 	RIATA ENERGY, INC.
	 
	 	 	 	 	 	 
	 	 	(d/b/a SandRidge Energy, Inc.)
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 







Form of Note




B-2









 





LOANS AND PAYMENTS WITH RESPECT THERETO




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

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





Form of Note




B-3









 





EXHIBIT C




FORM OF COMPLIANCE CERTIFICATE




Financial Statement Date:                     ,




To: Bank of America, N.A., as Administrative Agent




Ladies and Gentlemen:




     Reference is made to that certain Credit Agreement, dated as of November 21, 2006 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined), among Riata
Energy, Inc. (d/b/a SandRidge Energy, Inc.), a Texas corporation (the “Borrower”), the
Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent.



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



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




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



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




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



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



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



[select one:]





Form of Compliance Certificate




C-1









 








     [to the best knowledge of the undersigned during such fiscal period, the Borrower performed
and observed each covenant and condition of the Loan Documents applicable to it, and no Default has
occurred and is continuing.]



—or—




     [the following covenants or conditions have not been performed or observed and the following
is a list of each such Default and its nature and status:]



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



     5. The financial covenant analyses and information set forth on Schedules 2 and
3 attached hereto are true and accurate on and as of the date of this Certificate.



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



	 	 	 	 	 	 	 
	 	 	RIATA ENERGY, INC.
	 
	 	 	 	 	 	 
	 	 	(d/b/a SandRidge Energy, Inc.)
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 







Form of Compliance Certificate





C-2









 





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




SCHEDULE 2

to the Compliance Certificate

($ in 000’s)




	 	 	 	 	 	 	 	 	 
	I.	 	Section 7.11 (a) – Consolidated Fixed Charge Coverage Ratio.	 	 	 	 
	 
	 
	 	A.	 	Consolidated EBITDAX for four consecutive fiscal quarters	 	 	 	 
	 
	 	 	 	ending on above date (“Subject Period”) (from Schedule 3)	 	$	 	 
	 
	 	B.	 	Consolidated Fixed Charges for Subject Period:	 	$	 
	 
	 	C.	 	Consolidated Fixed Charge Coverage Ratio (Line I.A  ̧	 	 	 	 
	 
	 	 	 	Line I.B):	 	 	 	to 1
	 
	 	D.	 	Minimum Required Consolidated Fixed Charge	 	 	 	 
	 
	 	 	 	Coverage Ratio	 		2.0 to 1
	 
	II.	 	Section 7.11 (b) – Consolidated Leverage Ratio.	 	 	 	 
	 
	 
	 	A.	 	Consolidated Funded Indebtedness at Statement Date:	 	$	 
	 
	 	B.	 	Consolidated EBITDAX for Subject Period (Line I.A.):	 	$	 
	 
	 	C.	 	Consolidated Leverage Ratio (Line II.A  ̧ Line II.B):	 	 	 	to 1
	 
	 	D.	 	Maximum Permitted Consolidated Leverage Ratio	 	 	4.5 to 1
	 
	III.	 	Section 7.11 (c) – Consolidated Current Ratio.	 	 	 	 
	 
	 
	 	A.	 	Consolidated Current Assets at Statement Date:	 	$	 
	 
	 	B.	 	Consolidated Current Liabilities at Statement Date:	 	$	 
	 
	 	C.	 	Consolidated Current Ratio (Line III.A  ̧ Line III.B):	 	 	 	to 1
	 
	 	D.	 	Minimum Required Consolidated Current Ratio:	 	 	0.9 to 1







Form of Compliance Certificate





C-3









 





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




SCHEDULE 3

to the Compliance Certificate
 ($ in 000’s)




Consolidated EBITDAX

(in accordance with the definition of Consolidated EBITDAX

as set forth in the Agreement)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Twelve	 
	Consolidated	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Months	 
	EBITDA	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 
	Consolidated Net Income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ income or franchise
taxes
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ interest expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ depreciation expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ amortization expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ exploration expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ non-cash loss on
change in fair value
of derivative
instruments
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ other non-cash
expenses
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- non-cash gain on
change in fair value
of derivative
instruments
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- income tax credits
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 







Form of Compliance Certificate




C-4









 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Twelve	 
	Consolidated	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Months	 
	EBITDA	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 
	- interest income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- other non-cash
income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	= Consolidated
EBITDAX
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 







Form of Compliance Certificate




C-4









 





EXHIBIT D




ASSIGNMENT AND ASSUMPTION




     This Assignment and Assumption (this “Assignment and Assumption ”) is dated as of the
Effective Date set forth below and is entered into by and between [the][each]1 Assignor
identified in item 1 below ([the][each, an] “Assignor”) and [the][each]2 Assignee
identified in item 2 below ([the][each, an] “Assignee”). [It is understood and agreed that the
rights and obligations of [the Assignors][the Assignees]3 hereunder are several and not
joint.]4 Capitalized terms used but not defined herein shall have the meanings given
to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of
which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex
1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.



     For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the
Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and
assumes from [the Assignor][the respective Assignors], subject to and in accordance with the
Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’]
rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under
the Credit Agreement and any other documents or instruments delivered pursuant thereto to the
extent related to the amount and percentage interest identified below of all of such outstanding
rights and obligations of [the Assignor][the respective Assignors] under the respective facilities
identified below and (ii) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the
respective Assignors (in their respective capacities as Lenders)] against any Person, whether known
or unknown, arising under or in connection with the Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed thereby or in any way
based on or related to any of the foregoing, including, but not limited to, contract claims, tort
claims, malpractice claims, statutory claims and all other claims at law or in equity related to
the rights and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i)
and (ii) above being referred to herein collectively as





 




			
	1	 	For bracketed language here and elsewhere in this form relating to the
Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If
the assignment is from multiple Assignors, choose the second bracketed language.
	 
	2	 	For bracketed language here and elsewhere in this form relating to the
Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If
the assignment is to multiple Assignees, choose the second bracketed language.
	 
	3	 	Select as appropriate.
	 
	4	 	Include bracketed language if there are either multiple Assignors or multiple
Assignees.






Form of Assignment and Assumption




D-1









 




[ the][an] “Assigned Interest”).Each such sale and assignment is without recourse to
[the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without
representation or warranty by [the][any] Assignor.




	 	 	 	 	 	 	 
	1.

	 	Assignor[s]:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	2.

	 	Assignee[s]:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]
	 
	 	 	 	 	 	 
	3.

	 	Borrower(s):	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	4.	 	Administrative Agent: Bank of America, N.A., as the administrative agent under the Credit
	 	 	Agreement
	 
	 	 	 	 	 	 
	5.	 	Credit Agreement: [Bridge Loan Agreement, dated as of [________, ______], among
	 	 	[_________________], the Lenders from time to time party thereto, and Bank of America, N.A.,
	 	 	as Administrative Agent.
	 
	 	 	 	 	 	 
	6.	 	Assigned Interest[s]:5
	 
	 	 	 	 	 	 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Aggregate	 	 	Amount of	 	 	Percentage	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Amount of	 	 	Commitment	 	 	Assigned of	 	 	 	 
	 	 	 	 	 	 	Facility	 	 	Commitment/Loans	 	 	/Loans	 	 	Commitment/	 	 	CUSIP	 
	Assignor[s]6	 	Assignee[s]7	 	 	Assigned8	 	 	for all Lenders9	 	 	Assigned	 	 	Loans10	 	 	Number	 	 
	 
	 	 	 	 	 	 	 	 	 	$	 	 	 	$	 	 	 	 	%	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	$	 	 	 	$	 	 	 	 	%	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	$	 	 	 	$	 	 	 	 	%	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





[7. Trade Date: __________________]11






 




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






Form of Assignment and Assumption




D-2









 




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




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



	 	 	 	 	 
	 	ASSIGNOR

[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	ASSIGNEE

[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Title:  	 
	 	 	 	 
	 



[Consented to and]12 Accepted:




BANK OF AMERICA, N.A., as
 Administrative
Agent




	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 






Consented to:13




RIATA ENERGY, INC.

(d/b/a SandRidge Energy, Inc.)




	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 








 




			
	12	 	To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.
	 
	13	 	To be added only if the consent of the Borrower is required by the terms of the
Credit Agreement.






Form of Assignment and Assumption




D-3









 





ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

[                              ] 14




STANDARD TERMS AND CONDITIONS FOR




ASSIGNMENT AND ASSUMPTION




          1. Representations and Warranties.




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




          1.2. Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it meets all the requirements to be an assignee under Section
10.06(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be
required under Section 10.06(b)(iii) of the Credit Agreement), (iii) from and after the Effective
Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to
the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type
represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in
making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets
of such type, (v) it has received a copy of the Credit Agreement, and has received or has been
accorded the opportunity to receive copies of the most recent financial statements delivered
pursuant to Section ___thereof, as applicable, and such other documents and information as it deems
appropriate to make its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and decision to enter into






 




			
	14	 	Describe Credit Agreement at option of Administrative Agent.






Form of Assignment and Assumption




D-4









 




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




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




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





Form of Assignment and Assumption




D-5









 





EXHIBIT E




EXECUTION COPY




GUARANTY




dated as of November 21, 2006




from




THE GUARANTORS NAMED HEREIN




and




THE ADDITIONAL GUARANTORS REFERRED TO HEREIN




in favor of




THE GUARANTEED PARTIES REFERRED HEREIN
















 









TABLE OF CONTENTS




	 	 	 	 	 
	Section	 	Page	 
	 
	 	 	 	 
	Section 1. Guaranty; Limitation of Liability
	 	 	1	 
	 
	 	 	 	 
	Section 2. Guaranty Absolute
	 	 	2	 
	 
	 	 	 	 
	Section 3. Waivers and Acknowledgments
	 	 	3	 
	 
	 	 	 	 
	Section 4. Subrogation
	 	 	4	 
	 
	 	 	 	 
	Section 5. Payments Free and Clear of Taxes, Etc
	 	 	5	 
	 
	 	 	 	 
	Section 6. Representations and Warranties
	 	 	7	 
	 
	 	 	 	 
	Section 7. Covenants
	 	 	7	 
	 
	 	 	 	 
	Section 8. Amendments, Guaranty Supplements, Etc
	 	 	7	 
	 
	 	 	 	 
	Section 9. Notices, Etc
	 	 	8	 
	 
	 	 	 	 
	Section 10. No Waiver; Remedies
	 	 	8	 
	 
	 	 	 	 
	Section 11. Right of Set-off
	 	 	8	 
	 
	 	 	 	 
	Section 12. Subordination
	 	 	9	 
	 
	 	 	 	 
	Section 13. Continuing Guaranty; Assignments under the Bridge Loan Agreement
	 	 	10	 
	 
	 	 	 	 
	Section 14. Execution in Counterparts
	 	 	10	 
	 
	 	 	 	 
	Section 15. Terms Generally; References and Titles
	 	 	10	 
	 
	 	 	 	 
	Section 16. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc
	 	 	11	 
	 
	 	 	 	 
	Exhibit A  —  Guaranty Supplement
	 	 	 	 






 









 






GUARANTY




          GUARANTY dated as of November 21, 2006 made by the Persons listed on the signature pages
hereof and the Additional Guarantors (as defined in Section 8(b)) (such Persons so listed and the
Additional Guarantors being, collectively, the “Guarantors” and, individually, each a “Guarantor”)
in favor of the Guaranteed Parties (as defined below).




          PRELIMINARY STATEMENT. Riata Energy, Inc. (d/b/a SandRidge Energy, Inc.), a Texas Corporation
(the “Borrower”), is party to a Bridge Loan Agreement dated as of November 21, 2006 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the “Bridge Loan
Agreement”; capitalized terms defined therein and not otherwise defined herein being used herein as
therein defined) with certain Lenders party thereto, Bank of America, N.A., as Administrative Agent
(the “Administrative Agent”) and Banc of America Securities LLC, Credit Suisse Securities (USA)
LLC, Goldman Sachs Credit Partners L.P. and Lehman Brothers Inc. as Lead Arrangers and Bookrunners.
Each Guarantor may receive, directly or indirectly, a portion of the proceeds of the Loans under
the Bridge Loan Agreement and will derive substantial direct and indirect benefits from the
transactions contemplated by the Bridge Loan Agreement. It is a condition precedent to the making
of Loans by the Guaranteed Parties under the Bridge Loan Agreement that each Guarantor shall have
executed and delivered this Guaranty. The Lenders and the Administrative Agent are herein called
the “Guaranteed Parties”.




          NOW, THEREFORE, in consideration of the premises and in order to induce the Guaranteed Parties
to enter into, and to make Loans under, the Bridge Loan Agreement, each Guarantor, jointly and
severally with each other Guarantor, agrees as follows:




          Section 1. Guaranty; Limitation of Liability. (a) Each Guarantor absolutely,
unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled
maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all
Obligations of each other Loan Party (such Obligations being the “Guaranteed Obligations”), and
will pay any and all expenses (including fees and expenses of counsel) incurred by the
Administrative Agent or any other Guaranteed Party in enforcing any rights under this Guaranty or
any other Loan Document. Without limiting the generality of the foregoing, each Guarantor’s
liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would
be owed by any other Loan Party to any Guaranteed Party but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such other Loan Party.




          (b) Each Guarantor and by its acceptance of this Guaranty the Administrative Agent and each
other Guaranteed Party, confirm that it is the intention of all such Persons that this Guaranty and
the Obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law (as hereinafter defined), the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal


 









 







 or
state law to the extent applicable to this Guaranty and the Obligations of each Guarantor
hereunder. To effectuate the foregoing intention, the Administrative Agent, the other Guaranteed
Parties and the Guarantors irrevocably agree that the Obligations of each Guarantor under this
Guaranty at any time shall be limited to the maximum amount as will result in the Obligations of
such Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance. For
purposes hereof, “Bankruptcy Law” means law with respect to any proceeding of the type referred to
in Section 8.01(f) of the Bridge Loan Agreement or Title 11, U.S. Code, or any similar foreign,
federal or state law for the relief of debtors.




          (c) If any payment shall be required to be made to any Guaranteed Party under this Guaranty or
any other guaranty, then, subject to Section 4, each Guarantor will contribute, to the maximum
extent permitted by law, such amounts to each other Guarantor and each other guarantor so as to
maximize the aggregate amount paid to the Guaranteed Parties under or in respect of the Loan
Documents.




          Section 2. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of
any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of any Guaranteed Party with respect thereto. The Obligations of each
Guarantor under or in respect of this Guaranty are independent of the Guaranteed Obligations or any
other obligations of any other Loan Party arising under the Loan Documents or otherwise with
respect to any Loan, and a separate action or actions may be brought and prosecuted against each
Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the
Borrower or any other Loan Party or whether the Borrower or any other Loan Party is joined in any
such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable,
absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any
defenses it may now have or hereafter acquire in any way relating to, any or all of the following:





     (a) any lack of validity or enforceability of any Loan Document or any agreement or
instrument relating thereto;




     (b) any change in the time, manner or place of payment of, or in any other term of, all
or any of the Guaranteed Obligations, of any other Loan Party under or in respect of the
Loan Documents, or any other amendment or waiver of or any consent to departure from any
Loan Document, including any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Loan Party or any of its Subsidiaries or otherwise;




     (c) any taking, exchange, release or non-perfection of any Collateral or any other
collateral, or any taking, release or amendment or waiver of, or consent to departure from,
any other guaranty, for all or any of the Guaranteed Obligations;




     (d) any manner of application of Collateral or any other collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral or any other collateral for all or any of the Guaranteed
Obligations or any other obligations of any Loan Party arising under the Loan Documents



2









 







or otherwise with respect to any Loan or any other assets of any Loan Party or any of its
Subsidiaries;




     (e) any change, restructuring or termination of the corporate structure or existence of
any Loan Party or any of its Subsidiaries;




     (f) any failure of any Guaranteed Party to disclose to any Loan Party any information
relating to the business, condition (financial or otherwise), operations, performance,
properties or prospects of any other Loan Party now or hereafter known to such Guaranteed
Party;




     (g) the failure of any other Person to execute or deliver this Guaranty, any Guaranty
Supplement (as hereinafter defined) or any other guaranty or agreement or the release or
reduction of liability of any Guarantor or other guarantor or surety with respect to the
Guaranteed Obligations; or




     (h) any other circumstance (including any statute of limitations) or any existence of
or reliance on any representation by any Guaranteed Party that might otherwise constitute a
defense available to, or a discharge of, any Loan Party or any other guarantor or surety.


This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any
Guaranteed Party or any other Person upon the insolvency, bankruptcy or reorganization of the
Borrower or any other Loan Party or otherwise, all as though such payment had been due but not made
at such time.




          Section 3. Waivers and Acknowledgments. (a) Each Guarantor unconditionally and
irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for
performance, notice of nonperformance, default, acceleration, protest or dishonor and any other
notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that
any Guaranteed Party protect, secure, perfect or insure any Lien or any property subject thereto or
exhaust any right or take any action against any Loan Party or any other Person or any Collateral.




          (b) Each Guarantor unconditionally and irrevocably waives any right to revoke this Guaranty
and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed
Obligations, whether existing now or in the future.




          (c) Each Guarantor unconditionally and irrevocably waives:





     (i) any defense arising by reason of any claim or defense based upon an election of
remedies by any Guaranteed Party that in any manner impairs, reduces, releases or otherwise
adversely affects the subrogation, reimbursement, exoneration, contribution or
indemnification rights of such Guarantor or other rights of such Guarantor to proceed
against any of the other Loan Parties, any other guarantor or any other Person or any
Collateral, and



3









 






     (ii) any defense based on any right of set-off or counterclaim against or in respect of
the Obligations of such Guarantor hereunder.



          (d) Each Guarantor acknowledges that the Administrative Agent may, without notice to or demand
upon such Guarantor and without affecting the liability of such Guarantor under this Guaranty,
foreclose under any mortgage or other security agreement by non-judicial sale, and each Guarantor
hereby waives any defense to the recovery by the Administrative Agent and the other Guaranteed
Parties against such Guarantor of any deficiency after such non-judicial sale and any defense or
benefits that may be afforded by applicable law.




          (e) Each Guarantor unconditionally and irrevocably waives any duty on the part of any
Guaranteed Party to disclose to such Guarantor any matter, fact or thing relating to the business,
condition (financial or otherwise), operations, performance, properties or prospects of any other
Loan Party or any of its Subsidiaries now or hereafter known by such Guaranteed Party.




          (f) Each Guarantor acknowledges that it will receive substantial direct and indirect benefits
from the financing arrangements contemplated by the Loan Documents and that the waivers set forth
in Section 2 and this Section 3 are knowingly made in contemplation of such benefits and it has
determined that this Guaranty is necessary and convenient to the conduct, promotion and attainment
of the business of such Guarantor.




          Section 4.
Subrogation.  Each Guarantor unconditionally and irrevocably agrees not to
exercise any rights that it may now have or hereafter acquire against the Borrower, any other Loan
Party or any other insider guarantor that arise from the existence, payment, performance or
enforcement of such Guarantor’s Obligations under or in respect of this Guaranty or any other Loan
Document, including any right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of any Guaranteed Party against
the Borrower, any other Loan Party or any other insider guarantor or any Collateral, whether or not
such claim, remedy or right arises in equity or under contract, statute or common law, including
the right to take or receive from the Borrower, any other Loan Party or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until all of the
Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in
full in cash and the Commitments shall have expired or been terminated. If any amount shall be
paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the
latest of:





     (a) the payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty and




     (b) the irrevocable termination or expiration in whole of all Commitments,


such amount shall be received and held in trust for the benefit of the Guaranteed Parties, shall be
segregated from other property and funds of such Guarantor and shall forthwith be paid or delivered
to the Administrative Agent in the same form as so received (with any necessary endorsement or
assignment) to be credited and applied to the Guaranteed Obligations and all


4









 






other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as Collateral for any Guaranteed Obligations or other amounts payable
under this Guaranty thereafter arising. If:





     (i) any Guarantor shall make payment to any Guaranteed Party of all or any part of the
Guaranteed Obligations,




     (ii) all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash and




     (iii) all Commitments shall have been irrevocably terminated or shall have irrevocably
expired in whole,


the Guaranteed Parties will, at such Guarantor’s request and expense, execute and deliver to such
Guarantor appropriate documents, without recourse and without representation or warranty, necessary
to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from such payment or other condition made by such Guarantor pursuant to this
Guaranty.




          Section 5. Payments Free and Clear of Taxes, Etc.




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




          (b) Without limiting the provisions of subsection (a) above, each Guarantor shall timely pay
any Other Taxes to the relevant Governmental Authority in accordance with applicable law.




          (c) Each Guarantor shall indemnify each Guaranteed Party, within 10 days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes which (i) arise from any payment made hereunder or under any other Loan Document (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section)
and (ii) are paid by such Guaranteed Party, and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental Authority but net of any
foreign tax credit or the benefit of any deduction or other tax benefit determined in good faith by
such Guaranteed Party to be attributable to the imposition of such Indemnified Tax. A certificate
as to the amount of such payment or liability delivered in good faith to a Guarantor by a
Guaranteed Party (with a copy to the Administrative Agent), or by


5









 







the Administrative Agent on its own behalf or on behalf of a Guaranteed Party, shall be conclusive absent manifest error.




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




          (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which a Guarantor is resident for tax purposes, or any treaty
to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan
Document shall deliver to such Guarantor (with a copy to the Administrative Agent), at the time or
times prescribed by applicable law or reasonably requested by a Guarantor or the Administrative
Agent, such properly completed and executed documentation prescribed by applicable law as will
permit such payments to be made without withholding or at a reduced rate of withholding. In
addition, any Lender, if requested by a Guarantor or the Administrative Agent, shall deliver such
other documentation prescribed by applicable law or reasonably requested by such Guarantor or the
Administrative Agent as will enable such Guarantor or the Administrative Agent to determine whether
or not such Lender is subject to backup withholding or information reporting requirements.




          (f) Without limiting the generality of the foregoing, in the event that a Guarantor is
resident for tax purposes in the United States of America, any Foreign Lender shall deliver to the
Borrower and the Administrative Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a Lender under the Bridge
Loan Agreement (and from time to time thereafter upon the request of the Borrower or the
Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of
the following is applicable:





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




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




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




     (iv) any other form prescribed by applicable law as a basis for claiming exemption from
or a reduction in United States Federal withholding tax duly completed



6









 







together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to
determine the withholding or deduction required to be made.



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




          Section 6. Representations and Warranties. Each Guarantor makes each representation
and warranty made in the Loan Documents by the Borrower with respect to such Guarantor and each
Guarantor hereby further represents and warrants as follows:





     (a) There are no conditions precedent to the effectiveness of this Guaranty that have
not been satisfied or waived.




     (b) Such Guarantor has, independently and without reliance upon any Guaranteed Party
and based on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Guaranty and each other Loan Document to
which it is or is to be a party, and such Guarantor has established adequate means of
obtaining from each other Loan Party on a continuing basis information pertaining to, and is
now and on a continuing basis will be completely familiar with, the business, condition
(financial or otherwise), operations, performance, properties and prospects of such other
Loan Party.



          Section 7. Covenants. So long as any part of the Guaranteed Obligations shall remain unpaid or any Guaranteed Party
shall have any Commitment, each Guarantor will perform and observe, and cause each of its
Subsidiaries to perform and observe, all of the terms, covenants and agreements set forth in the
Loan Documents on its or their part to be performed or observed or that the Borrower has agreed to
cause such Guarantor or such Subsidiaries to perform or observe.




          Section 8. Amendments, Guaranty Supplements, Etc. (a) No amendment or waiver of any
provision of this Guaranty and no consent to any departure by any Guarantor herefrom shall in any
event be effective unless the same shall be entered into in accordance with Section 10.01 of the
Bridge Loan Agreement.




7









 








          (b) Upon the execution and delivery by any Person of a guaranty supplement in substantially
the form of Exhibit A hereto (each, a “Guaranty Supplement”), (i) such Person shall be referred to
as an “Additional Guarantor” and shall become and be a Guarantor hereunder, and each reference in
this Guaranty to a “Guarantor” shall also mean and be a reference to such Additional Guarantor, and
each reference in any other Loan Document to a “Subsidiary Guarantor” shall also mean and be a
reference to such Additional Guarantor, and (ii) each reference herein to “this Guaranty”,
“hereunder”, “hereof” or words of like import referring to this Guaranty, and each reference in any
other Loan Document to the “Guaranty”, “thereunder”, “thereof” or words of like import referring to
this Guaranty, shall mean and be a reference to this Guaranty as supplemented by such Guaranty
Supplement and all other Guaranty Supplements.




          Section 9. Notices, Etc. All notices and other communications provided for hereunder
shall be in writing (including telecopy communication) and mailed, telecopied, or delivered to it,
if to any Guarantor, addressed to it in care of the Borrower at the Borrower’s address in
accordance with Section 10.02 of the Bridge Loan Agreement, if to the Administrative Agent or any
other Guaranteed Party, at its address in accordance with Section 10.02 of the Bridge Loan
Agreement, or, as to any party, at such other address as shall be designated by such party in a
written notice to each other party. All such notices and other communications shall, when mailed
or telecopied, be effective when deposited in the mails or transmitted by telecopier, respectively.
Delivery of an executed counterpart of a signature page to any amendment or waiver of any
provision of this Guaranty or of any Guaranty Supplement by telecopier shall be effective as
delivery of an original executed counterpart thereof.




          Section 10. No Waiver; Remedies. No failure on the part of any Guaranteed Party to
exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.




          Section 11. Right of Set-off. To secure the repayment of the Guaranteed Obligations, each Guarantor grants to each
Guaranteed Party, and each of their respective Affiliates, a security interest, a lien, and a right
of offset, each of which shall be in addition to all other interests, liens, and rights of any
Guaranteed Party, at common Law, under the Loan Documents or otherwise, and each of which shall be
upon and against:





     (a) any and all moneys, securities or other property (and the proceeds therefrom) of
such Guarantor now or hereafter held or received by or in transit to any Guaranteed Party,
from or for the account of such Guarantor, whether for safekeeping, custody, pledge,
transmission, collection or otherwise,




     (b) any and all deposits (general or special, time or demand, provisional or final) of
such Guarantor with any Guaranteed Party, or any of their respective Affiliates and




     (c) any other credits and claims of Borrower at any time existing against any
Guaranteed Party, including claims under certificates of deposit. At any time and from



8









 







time to time after the occurrence of any Event of Default, each Guaranteed Party is authorized to
foreclose upon, or to offset against the Guaranteed Obligations then due and payable (in
either case without notice to such Guarantor), any and all items hereinabove referred to;
irrespective of whether or not such Guaranteed Party shall have made any demand under this
Guaranty, any other Loan Document and although such obligations of such Guarantor may be
contingent or unmatured or are owed to a branch or office of such Guaranteed Party different
from the branch or office holding such items.


The remedies of foreclosure and offset are separate and cumulative, and either may be exercised
independently of the other without regard to procedures or restrictions applicable to the other..




          Section 12. Subordination. Each Guarantor subordinates any and all debts, liabilities
and other Obligations owed to such Guarantor by each other Loan Party (the “Subordinated
Obligations”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth
in this Section 12:





     (a) Except during the continuance of an Event of Default (including the commencement
and continuation of any proceeding under any Bankruptcy Law relating to any other Loan
Party), each Guarantor may receive regularly scheduled payments from any other Loan Party on
account of the Subordinated Obligations. After the occurrence and during the continuance of
any Event of Default (including the commencement and continuation of any proceeding under
any Bankruptcy Law relating to any other Loan Party), however, unless the Administrative
Agent otherwise agrees, no Guarantor shall demand, accept or take any action to collect any
payment on account of the Subordinated Obligations.




     (b) In any proceeding under any Bankruptcy Law relating to any other Loan Party, the
Guaranteed Parties shall be entitled to receive payment in full in cash of all Guaranteed
Obligations (including all interest and expenses accruing after the commencement of a proceeding under any Bankruptcy Law, whether or not constituting an
allowed claim in such proceeding (“Post Petition Interest”)) before such Guarantor receives
payment of any Subordinated Obligations.




     (c) After the occurrence and during the continuance of any Event of Default (including
the commencement and continuation of any proceeding under any Bankruptcy Law relating to any
other Loan Party), each Guarantor shall, if the Administrative Agent so requests, collect,
enforce and receive payments on account of the Subordinated Obligations as trustee for the
Guaranteed Parties and deliver such payments to the Administrative Agent on account of the
Guaranteed Obligations (including all Post Petition Interest), together with any necessary
endorsements or other instruments of transfer, but without reducing or affecting in any
manner the liability of such Guarantor under the other provisions of this Guaranty.




     (d) After the occurrence and during the continuance of any Event of Default (including
the commencement and continuation of any proceeding under any Bankruptcy Law relating to any
other Loan Party), the Administrative Agent is authorized and empowered (but without any
obligation to so do), in its discretion:



9









 






     (i) in the name of each Guarantor, to collect and enforce, and to submit claims in
respect of, Subordinated Obligations and to apply any amounts received thereon to the
Guaranteed Obligations (including any and all Post Petition Interest), and




     (ii) to require each Guarantor (A) to collect and enforce, and to submit claims in
respect of, Subordinated Obligations and (B) to pay any amounts received on such obligations
to the Administrative Agent for application to the Guaranteed Obligations (including any and
all Post Petition Interest).



          Section 13. Continuing Guaranty; Assignments under the Bridge Loan Agreement. This
Guaranty is a continuing guaranty and shall:





     (a) remain in full force and effect until it is released in accordance with the Bridge
Loan Agreement,




     (b) be binding upon the Guarantor, its successors and assigns and




     (c) inure to the benefit of and be enforceable by the Guaranteed Parties and their
permitted successors, transferees and assigns.


Without limiting the generality of clause (c) of the immediately preceding sentence, any Guaranteed
Party may assign or otherwise transfer all or any portion of its rights and obligations under the
Bridge Loan Agreement (including all or any portion of its Commitments, the Loans owing to it and
the Note or Notes held by it) to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Guaranteed Party herein or
otherwise, as and to the extent provided in Section 10.06 of the Bridge Loan
Agreement. No Guarantor shall have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Guaranteed Parties.




          Section 14. Execution in Counterparts. This Guaranty and each amendment, waiver and
consent with respect hereto may be executed in any number of counterparts and by different parties
thereto in separate counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Guaranty by telecopier shall be effective as
delivery of an original executed counterpart of this Guaranty.




          Section 15. Terms Generally; References and Titles. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The
words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” Unless the context requires otherwise:





     (a) any definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions
on such amendments, supplements or modifications set forth herein);



10









 






     (b) any reference herein to any Person shall be construed to include such Person’s
successors and assigns;




     (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be
construed to refer to this Guaranty in its entirety and not to any particular provision
hereof;




     (d) all references herein to Articles, Sections and Exhibits shall be construed to
refer to Articles and Sections of, and Exhibits and Schedules to, this Guaranty;




     (e) any reference to any law or regulation herein shall, unless otherwise specified,
refer to such law or regulation as amended, modified or supplemented from time to time; and




     (f) the words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights.


References to any document, instrument, or agreement shall include:





     (i) all exhibits, schedules, and other attachments thereto, and




     (ii) shall include all documents, instruments, or agreements issued or executed in
replacement thereof.


Titles appearing at the beginning of any subdivisions are for convenience only and do not
constitute any part of such subdivisions and shall be disregarded in construing the language
contained in such subdivisions. The phrases “this section” and “this subsection” and similar
phrases refer only to the sections or subsections hereof in which such phrases occur. The word
“or” is not exclusive. Accounting terms have the meanings assigned to them by GAAP, as applied by
the accounting entity to which they refer. References to “days” shall mean calendar days, unless
the term “Business Day” is used. Unless otherwise specified, references herein to any particular
Person also refer to its successors and permitted assigns.




          Section 16.
Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a) THIS GUARANTY
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.




     (b) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND
OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH GUARANTOR
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL



11









 







CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY OR ANY OTHER LOAN
DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY GUARANTEED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST ANY GUARANTOR OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.



     (c) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY
COURT REFERRED TO IN SUBSECTION (b) ABOVE. EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.



     (d) EACH GUARANTOR IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN SECTION 9. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.



     (e) EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, (I)
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, AND (II) ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY SUCH LEGAL PROCEEDING ANY “SPECIAL DAMAGES,” AS DEFINED BELOW. EACH
GUARANTOR (X) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (Y) ACKNOWLEDGES THAT THE OTHER PARTIES TO THE LOAN
DOCUMENTS HAVE BEEN INDUCED TO ENTER THEREIN BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
IN THIS SECTION. AS USED IN THIS SECTION, “SPECIAL DAMAGES” INCLUDES ALL SPECIAL, CONSEQUENTIAL,
EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR
FUNDS WHICH ANY PARTY HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY.



12









 





          IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed and delivered
by its officer thereunto duly authorized as of the date first-above written.




	 	 	 	 	 
	 	NEG OIL & GAS LLC

 	 
	 	By:  	 /s/ Tom L. Ward	 
	 	 	Name:  	 Tom L. Ward	 
	 	 	Title:  	 Chairman and Chief Executive Officer	 
	 
	 	NATIONAL ONSHORE LP

 	 
	 	By:  	 /s/ Tom L. Ward	 
	 	 	Name:  	 Tom L. Ward	 
	 	 	Title:  	 Chairman and Chief Executive Officer	 
	 
	 	NATIONAL OFFSHORE LP

 	 
	 	By:  	 /s/ Tom L. Ward	 
	 	 	Name:  	 Tom L. Ward	 
	 	 	Title:  	 Chairman and Chief Executive Officer	 
	 
	 	ROC GAS COMPANY

 	 
	 	By:  	 /s/ Tom L. Ward	 
	 	 	Name:  	 Tom L. Ward	 
	 	 	Title:  	 Chairman and Chief Executive Officer	 
	 
	 	LARIAT COMPRESSION COMPANY

 	 
	 	By:  	 /s/ Tom L. Ward	 
	 	 	Name:  	 Tom L. Ward	 
	 	 	Title:  	 Chairman and Chief Executive Officer	 



 









 






	 	 	 	 	 
	 	ALSATE MANAGEMENT AND INVESTMENT COMPANY

 	 
	 	By:  	 /s/ Tom L. Ward	 
	 	 	Name:  	 Tom L. Ward	 
	 	 	Title:  	 Chairman and Chief Executive Officer	 
	 
	 	INTEGRA ENERGY, L.L.C.

 	 
	 	By:  	Alsate Management and Investment Company, managing member
 	 
	 	 	 
	 	By:  	 /s/ Tom L. Ward	 
	 	 	Name:  	 Tom L. Ward	 
	 	 	Title:  	 Chairman and Chief Executive Officer	 
	 
	 	PETROSOURCE ENERGY COMPANY, LP

 	 
	 	By:  	 /s/ Tom L. Ward	 
	 	 	Name:  	 Tom L. Ward	 
	 	 	Title:  	 Chairman and Chief Executive Officer	 
	 
	 	PETROSOURCE PRODUCTION COMPANY, L.P.

 	 
	 	By:  	 /s/ Tom L. Ward	 
	 	 	Name:  	 Tom L. Ward	 
	 	 	Title:  	 Chairman and Chief Executive Officer	 
	 
	 	NEG OPERATING LLC

 	 
	 	By:  	 /s/ Tom L. Ward	 
	 	 	Name:  	 Tom L. Ward	 
	 	 	Title:  	 Chairman and Chief Executive Officer	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	SANDRIDGE HOLDINGS, INC.

 	 
	 	By:  	 /s/ Tom L. Ward	 
	 	 	Name:  	 Tom L. Ward	 
	 	 	Title:  	 Chairman and Chief Executive Officer	 
	 




 









 








Exhibit A

To The

Guaranty




FORM OF GUARANTY SUPPLEMENT




                         ,           




BANK OF AMERICA, N.A., as Administrative Agent

9 West 57th Street

New York, New York 10019




Bridge Loan Agreement dated as of November 21, 2006 among

Riata Energy, Inc. (d/b/a SandRidge Energy, Inc.) (the “Borrower”),

the Guaranteed Parties party to the Bridge Loan Agreement Agreement,

Bank of America, N.A., as Administrative Agent and Banc of America Securities LLC, Credit

Suisse Securities (USA) LLC, Goldman Sachs Credit Partners L.P. and Lehman Brothers Inc. as

Lead Arrangers and Bookrunners




Ladies and Gentlemen:




          Reference is made to the above-captioned Bridge Loan Agreement and to the Guaranty referred to
therein (such Guaranty, as in effect on the date hereof and as it may hereafter be amended,
supplemented or otherwise modified from time to time, together with this Guaranty Supplement, being
the “Guaranty”). Capitalized terms defined in the Guaranty or in the Bridge Loan Agreement and not
otherwise defined herein are used herein as therein defined.




          Section 1. Guaranty; Limitation of Liability. (a) The undersigned absolutely,
unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled
maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all
Obligations of each other Loan Party (such Obligations being the “Guaranteed Obligations”), and
will pay any and all expenses (including fees and expenses of counsel) incurred by the
Administrative Agent or any other Guaranteed Party in enforcing any rights under this Guaranty or
any other Loan Document. Without limiting the generality of the foregoing, each Guarantor’s
liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would
be owed by any other Loan Party to any Guaranteed Party but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such other Loan Party.




          (b) The undersigned, and by their acceptance of this Guaranty Supplement, the Administrative
Agent and each other Guaranteed Party, confirm that it is the intention of all such Persons that
this Guaranty Supplement, the Guaranty and the Obligations of the undersigned hereunder and
thereunder not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar foreign, federal or state law to the extent applicable to this Guaranty


A-1









 







Supplement, the Guaranty and the Obligations of the undersigned hereunder and thereunder. To
effectuate the foregoing intention, the Administrative Agent, the other Guaranteed Parties and the
undersigned hereby irrevocably agree that the Obligations of the undersigned under this Guaranty
Supplement and the Guaranty at any time shall be limited to the maximum amount as will result in
the Obligations of the undersigned under this Guaranty Supplement and the Guaranty not constituting
a fraudulent transfer or conveyance.




          (c) If any payment shall be required to be made to any Guaranteed Party under this Guaranty
Supplement, the Guaranty or any other guaranty, then, subject to Section 4, the undersigned will
contribute, to the maximum extent permitted by applicable law, such amounts to each other Guarantor
and each other guarantor so as to maximize the aggregate amount paid to the Guaranteed Parties
under or in respect of the Loan Documents.




          Section 2. Obligations Under the Guaranty. The undersigned hereby agrees, as of the
date first-above written, to be bound as a Guarantor by all of the terms and conditions of the
Guaranty to the same extent as each of the other Guarantors thereunder. The undersigned further
agrees, as of the date first above written, that each reference in the Subsidiary Guaranty to an
“Additional Guarantor” or a “Guarantor” shall also mean and be a reference to the undersigned, and
each reference in any other Loan Document to a “Guarantor” or a “Loan Party” shall also mean and be
a reference to the undersigned.




          Section 3. Representations and Warranties. As of the date first-above written, the
undersigned makes each representation and warranty set forth in Section 6 of the Guaranty to the
same extent as each other Guarantor.




          Section 4. Delivery by Telecopier. Delivery of an executed counterpart of a signature
page to this Guaranty Supplement by telecopier shall be effective as delivery of an original
executed counterpart of this Guaranty Supplement.




          Section 5. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a) THIS GUARANTY
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.





     (b) THE UNDERSIGNED IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND
OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY SUPPLEMENT, THE GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE UNDERSIGNED IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT. THE UNDERSIGNED AGREES THAT A FINAL



A-2









 







JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY SUPPLEMENT, THE GUARANTY OR ANY OTHER LOAN
DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY GUARANTEED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS GUARANTY SUPPLEMENT, THE GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST
THE UNDERSIGNED OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.



     (c) THE UNDERSIGNED IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY SUPPLEMENT, THE GUARANTY OR ANY
OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN SUBSECTION (b) ABOVE. THE UNDERSIGNED IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.



     (d) THE UNDERSIGNED IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN SECTION 9 OF THE GUARANTY. NOTHING IN THIS GUARANTY SUPPLEMENT OR THE GUARANTY WILL
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE
LAW.



     (e) THE UNDERSIGNED IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, (I)
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS GUARANTY ORANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, AND (II) ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY SUCH LEGAL PROCEEDING ANY “SPECIAL DAMAGES,” AS DEFINED BELOW. THE
UNDERSIGNED (X) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (Y) ACKNOWLEDGES THAT THE OTHER PARTIES TO THE LOAN DOCUMENTS HAVE BEEN INDUCED TO ENTER THEREIN
BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS SECTION. AS USED IN THIS SECTION,
“SPECIAL DAMAGES” INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS
OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH ANY PARTY HAS EXPRESSLY PROMISED TO
PAY OR DELIVER TO ANY OTHER PARTY.



A-3









 





	 	 	 	 	 
	 	Very truly yours,



[NAME OF ADDITIONAL GUARANTOR]

 	 
	 	By 	 	 
	 	 	Title: 	 
	 




A-4











 





EXHIBIT F




OPINION OF COUNSEL TO THE LOAN PARTIES